I told my mum that we hit $1M ARR recently. She innocently asks me what ARR means. She barely has a high school education. She knows nothing about tech or what we even do.
The Conversation
Her: "So you make $1M every single year?"
Me: "Well… no… we should make it based on how we calculated revenue last month"
Her: "But you said it was annual recurring revenue. How do you actually make money?"
Me: "Our customers pay upfront for a quarter and then we multiply that by 4"
Her: "So you don't really have any recurring revenue if they can cancel after the quarter ends"
She's Right
So I guess she's right. Blazel has no recurring revenue based on the strict definition of what ARR means.
She would be absolutely mortified with how some Founders are calculating their ARR. This kind of financial blindness is more common than you'd think.
The Takeaway
Sometimes the simplest questions expose the biggest gaps in how we think about our businesses. If your metrics can't survive a conversation with someone who knows nothing about tech, maybe it's time to rethink how you're measuring success.
Honest accounting isn't just good ethics. It's good business. The founders who build real, sustainable companies are the ones who face these uncomfortable truths early. That's how you become a better CEO.
Take a hard look at your own metrics and ask yourself: would they pass the mum test?