Recurring Revenue is the Foundation of Success
Today is the start of Venture Atlanta. Thirty-one companies were selected from more than 200 applicants to give an 8 minute presentation to more than 700 people. As a sponsor for the second year in a row, I had the pleasure of serving on the selection committee for the presenting companies. Most of the 700 attendees are venture capitalists and private equity firms looking for the next Google or Facebook. These presenting companies represent the best new ideas in Georgia and some of these companies will shape the way we think tomorrow.
By the end of this two-day conference, we will have witnessed 31 companies that are struggling to survive talk about the growth of their recurring revenue model. They know that in order to succeed they must sell to a customer once and get paid a monthly amount forever. This is not a new idea for companies: Netflix, XM Radio, Comcast sells to us once and gets paid whether we tune in or not. They know the only way to survive the uncertainty of business is to have a stable revenue that pays the monthly bills, like payroll and rent. And with some good fortune, these companies will hopefully create more recurring revenue than they have expenses, which gives them amazing leverage to take risks on new ideas. Innovation comes from the ability to take risks and recurring revenue gives them the freedom to fail because next month they will get a brand new check.
Which begs the question: why do so few people adopt the recurring revenue model for their personal finances? Imagine if you had a pool of assets that paid 100 percent of your family overhead with room to spare. Uncertainty and anxiety would be replaced with clarity and comfort because every single month a new check arrives. This place is called the Point of Independence (POI) and it is our goal for every client. The recurring revenue model works in business and it works even better at home.