The $100M ARR Problem No One Wants to Talk About

Chapter 003

From experimental revenue traps to what durable AI companies are getting right, this week’s conversation was a reality check for anyone building in AI.

Here’s what’s been on my mind this week.

The AI Growth Illusion (This Week’s [Un]Churned 🎙️)

This week on the [Un]Churned podcast, I sat down with Cassie Young, Partner at Primary Ventures, and Kyle Poyar, Founder of Growth Unhinged, to unpack a pattern they’re seeing across AI SaaS. The headline numbers look incredible. Triple-digit growth. Exploding ARR. Big rounds. But underneath, many companies are struggling to retain customers once the novelty wears off.

Kyle shared research showing that AI-native B2B companies often see median gross retention around 40%. Cassie hears the same story from customers featured in flashy fundraising announcements: “We tried it, but we’re not using it anymore.” Early usage created momentum, but real value never locked in. They both point to the same root cause: experimental revenue.

The companies that last are obsessed with a narrow ICP, getting customers live in production quickly, and defining ROI customers can explain without the founder in the room. AI can expand budgets by delivering outcomes, but only when Customer Success is treated as a core operating philosophy, not a post-sales afterthought.

If you’re building, selling, or scaling an AI product right now, this episode is a must-listen.

A Gross Retention Wake-Up Call

Cassie Young’s article expands on a theme we kept circling in the episode. Retention doesn’t fail all at once. It erodes quietly until renewals expose it.

The case is straightforward and uncomfortable. Gross retention is under pressure not because Customer Success stopped working, but because AI has lowered switching costs and raised the bar for real, provable value. Contracts can mask that gap for a while. Renewals won’t.

What I like most is the reframing. This isn’t a retention collapse. It’s a reset. The teams that treat this moment as a Customer Success renaissance are rebuilding around outcomes, tighter feedback loops, and earlier signals of value.

If your GRR looks fine but something still feels off, this will put language to it.

👉 Read the full piece: Tech Is on the Brink of a Gross Retention Apocalypse (and a Customer Success Renaissance)

The AI Churn Wave Is Already Here

This is the written version of a point Kyle made on the podcast that stuck with me. AI churn shows up in usage patterns long before it shows up in revenue. Low-friction trials and experimental usage are creating a widening gap between reported growth and revenue that actually sticks.

What makes this piece valuable is how grounded it is. Kyle connects the macro shift to signals teams can act on now. Usage depth. Time-to-value. Whether AI is embedded in real workflows or just being tested.

If you want to understand where AI churn starts and how to get ahead of it, this is a strong place to start.

👉 Read the full piece: The AI Churn Wave

The AI-Centric Imperative

This McKinsey piece stood out to me because it explains why many of the signals AI companies celebrate—logins, usage, even early ARR—are becoming weaker indicators of real value in an agent-driven world.

What matters now is whether AI is in production, tied to outcomes, and business-critical long before renewal is on the table. For Customer Success leaders, it’s a clarifying shift. Retention in AI isn’t about pilots or novelty. It’s about ownership, accountability, and delivering outcomes customers can’t walk away from.

If you’re rethinking how to measure value in an AI-first product, this is a useful lens.

👉 Read the full piece: The AI-Centric Imperative: Navigating the Next Software Frontier

Wrapping Up

This week reinforced a hard truth.

AI can accelerate growth. It can unlock new budgets. It can even reshape entire categories. But none of that matters if customers don’t stick around once the experiment ends.

Retention is still the work.

See you next Monday 🧠

— Josh

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🎧 Listen to more episodes of [Un]Churned