The Great AI MRR Scam of 2026 Explained

Okay, guys. So, I wanted to make a bit of a different video today. Obviously, you guys are very, very used to me sitting inside on my laptop doing some kind of AI tutorial, but you know, sun's out and I decided to kind of make a different style video. Haven't made one of these in a while. I did used to make them. I don't know if anyone remembers that, but a couple of years ago, I used to just turn the camera on and start recording. So, I'm going to do that today. I'm going to talk about something I've been wanting to talk about for a little while now, which is um yeah, a problem basically that I'm seeing crop up on YouTube and other things like that. I've always tried to make a point of calling these things out, even if it's not like to someone specific. Um it's just like a general thing and you guys can draw your own conclusions from it. But yeah, I'm calling it the MR scam of 2026. The AIMR scam. Basically, if you don't know what MR is, it's the most common way to kind of track how well a business is doing. Subscription based business. MR is monthly recurring revenue. And then ARR is annual recurring revenue. Those two things are pretty important to understand what they mean. It's just your monthly revenue and your annual revenue, right? And everybody does this through Stripe. 95% of these people, they're using Stripe, right? And I'm going to explain how it works. And then like I said, you guys can draw your own conclusions from it. I'm not calling out anyone particularly. It's just something that I wanted to explain to people what's going on so that you can kind of cut through the the noise. Right? So the way this works is monthly recurring revenue is actually affected by annual recurring revenue, right? So you can have a monthly recurring revenue that is purely like you're not going to see that the business isn't going to see any of that money for a year, right? and they might never see that money. And let me explain why, right? Because if you have a price of, let's say, $100 a month, just to keep things simple, or $100 a year, right? That gets split into, you know, 10 bucks a month, whatever it is, eight bucks a month. You don't know or Stripe doesn't know how many of those eight bucks a month are actually going to happen because you can put a 90% discount on that annual recurring revenue. Make it cost $10. Someone can give you $10, right? And that adds $10 to the MR, right, for an entire year unless they cancel obviously. And then also it adds $100 to ARR, which is annual recurring revenue. Even if that the business doesn't see money after the second month, right? So let's say someone signs up for the first month or they sign up for annual, right? And then they cancel permanently. They only get one annual payment of $10, right? But it seems like much more than that in the business because the way AR and the way MR actually affect each other. Specifically on Stripe, I don't know about other platforms. I only use Stripe. I've only ever used Stripe. So I can't talk about other platforms. But this issue basically means that you can claim the numbers, the monthly numbers or the annual numbers as being much higher than they probably will be, right? Because let's say 10 people sign up for a yearly. How many of those 10 people are going to pay next year? Right? On average, I don't know what the average is. It's probably like a churn of I would say 80% on like a vibe coded tool that has no thought behind it whatsoever. Right? So, let's say you make you viode a tool, you offer people a 99% discount um for an annual plan, right? The next year, Stripe has them for the entire year. Even if they cancel on the very last day, for the entire year, that boosts that number, the AR r and the MR R, right? Specifically, those two numbers. And the likelihood that, you know, most people don't sign up for a year and then cancel immediately. Most people sign up for a year because they want to support the business for an entire year. This is coming from someone who had harbor when we first released it was, you know, 30,000 a month MR, right? being completely transparent that dropped 90% in a year because so many people cancelled. We didn't know what we were doing. We didn't have product management. We didn't think about, you know, how to onboard users, how to keep users, stickiness, that kind of stuff, right? We were just a VIP, well, not even VIP code. We were just a react app onepage blog writer that obviously people signed up for a year because they wanted to support me, they wanted to support the channel, they wanted to support the project. We hired an entire team around that and you know the team ended up not doing kind of what we expected or as much as we expected let's say but that was probably on us as much as on on the team right um so I actually understand these things and I know these things and I know how you know MMR can be 30,000 right but the actual amount of money that you get or have gone is much much lower right so obviously gross volume is something to look at but gross volume again if you sell enough monthly plans or enough annual plans uh 50% off, 60% off, 90% off, you can easily make, you know, 20 30k, right, in a in of gross revenue in a month. But that and then that looks like monthly recurring revenue, right? So you look at the the gross, right, the amount of sales that were made and then you look at the monthly recurring revenue and you say like, you know, the monthly recurring revenue has gone up and the gross volume has gone up. But that monthly recurring revenue, they're not the business isn't going to see money until next year. And then they might not even see that role, right? This is the kind of the crux of this. The money, it looks like it's going to be every month because it's monthly recurring revenue. That's what it's called. But it's actual, it's actually annual recurring revenue. And they might not ever ever see that money, right? likelihood is they won't see that money or next year what happened to us was a lot of people signed up for a year they forgot about it they paid and then they asked us for a refund right and I gave them a refund obviously as much as possible because um you know I don't want people to pay for a yearly that they didn't want to pay for so I am speaking from experience I understand these things this happened to me as well and you know the monthly looked really really good but we we never saw that money we refunded it a lot of it so although the monthly recurring revenue looked really really good and the the annual recurring revenue looked really really good. People cancel the month before. So you have 11 months of monthly recurring revenue that actually is not monthly recurring revenue. It's just the annual divided by 12, right? And then that only is canceled when the user cancels. So just think about that. They can pay, they can stay on the tool for 11 months, cancel on the 11th month, and that entire 11 months, the ARR and MR are boosted artificially because it's an annual subscription that they they will never see that money, right? So, that's how they're doing it, guys. I want to talk about this because I'm seeing this on X, right? I'm getting more and more onto Twitter. It's kind of annoying. It's another algorithm that's just taking over my life. But, it's really good to find, you know, information about these things. And um just because someone pays for a year doesn't mean they're going to pay the next year. That's kind of the main thing I want you to stay from this. In fact, it's really really common for them to pay and then ask for a refund or cancel on the 11th month. But that entire time, the entire 11 months, the business looks much more stable than it actually is. And loads of these AI companies doing it. So I'm not going to mention any names. I don't want to get into any trouble or anything like that. Don't want to make any accusations. But yeah, basically just want to talk about this quickly, guys. I'm going to leave the video there. Thank you so much for watching. I'm probably going to do more videos like this cuz I may as well. It's nice. They're just behind the sun. And if you are watching all the way to the end of the video, you're absolute legend.