{"id":8152,"date":"2026-06-17T10:30:52","date_gmt":"2026-06-17T05:00:52","guid":{"rendered":"https:\/\/sketharaman.com\/blog\/?p=8152"},"modified":"2026-06-13T19:17:22","modified_gmt":"2026-06-13T13:47:22","slug":"circular-deals-dont-fake-revenue-they-distort-demand","status":"publish","type":"post","link":"https:\/\/sketharaman.com\/blog\/2026\/06\/17\/circular-deals-dont-fake-revenue-they-distort-demand\/","title":{"rendered":"Circular Deals Don\u2019t Fake Revenue &#8211; They Distort Demand"},"content":{"rendered":"<p>In her article entitled\u00a0<a href=\"https:\/\/martech.org\/ai-moved-forward-marketing-did-not\/\" target=\"_blank\" rel=\"noopener\"><strong>AI moved forward, marketing did not<\/strong><\/a>,\u00a0Melissa Reeve, Co-Founder, <em>Agile Marketing Alliance<\/em>, makes a valid point:<\/p>\n<blockquote><p>Marketers were early adopters of AI, but while it has evolved most teams are still stuck using it like a smarter autocomplete.<\/p><\/blockquote>\n<p>According to Reeve, the key reason for marketing to miss the AI race is erosion of trust with the early LLM models.<\/p>\n<p>Marketers used ChatGPT to write something and it came up with hallucinations. As a result, they learned to keep genAI on a tight leash and used it for low-stakes drafts. That was rational at the time. The problem is that the <em>lesson calcified into a habit<\/em>. (If only they&#8217;d read my <a href=\"https:\/\/gtm360.com\/blog\/2025\/01\/22\/chatgpt-data-analysis-objections-v-rebuttals\/\" target=\"_blank\" rel=\"noopener\">&#8220;what me worry&#8221; takes on hallucination<\/a> instead!)<\/p>\n<p>As a result, marketers failed to realize that the LLMs that they were skeptical about evolved over time. From drafting and summarizing in the fall of 2023 (GPT-4), LLMs are now capable of autonomously executing complex, multi-step tasks for hours three years later (Claude Sonnet 4.5). Most marketers have missed the evolution.<\/p>\n<p>To appreciate just how far genAI has come, the author asked ChatGPT to do a fairly complex task:<br \/>\n<!--BLOCKQUOTE, NO LHS LINE, GRAY--><\/p>\n<blockquote class=\"skr-bq-noline\">\n<div style=\"background-color: #fafafa; padding: 15px 30px;\">I asked a current-generation model to take a published blog post, research three competitive angles I hadn\u2019t covered, draft a follow-up piece with a different argument.<\/div>\n<\/blockquote>\n<p><!----------END----------><\/p>\n<p>I used the same prompt on my recent blog post.<!----------START----------><!--BLOCKQUOTE, NO LHS LINE, GREEN--><\/p>\n<blockquote class=\"skr-bq-noline\">\n<div style=\"background-color: #00c89640; padding: 15px 30px;\">Take my published blog post https:\/\/gtm360.com\/blog\/2026\/03\/04\/ai-didnt-invent-circular-deals\/, research additional angles I haven&#8217;t covered, and draft a follow-up piece with an orthogonal argument.<\/div>\n<\/blockquote>\n<p><!----------END----------><\/p>\n<p>Here&#8217;s what I got back from ChatGPT seconds later.<br \/>\n<!--BLOCKQUOTE, NO LHS LINE, GRAY--><\/p>\n<blockquote class=\"skr-bq-noline\">\n<div style=\"background-color: #fafafa; padding: 15px 30px;\">\n<p><strong>Circular Deals Don\u2019t Fake Revenue &#8211; They Distort Demand<\/strong><\/p>\n<p><a href=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2026\/05\/ai-circular-deal-nvidia-oracle-distort-fi.jpg\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-14387 size-full\" src=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2026\/05\/ai-circular-deal-nvidia-oracle-distort-fi.jpg\" alt=\"\" width=\"630\" height=\"280\" \/><\/a><\/p>\n<p>In my previous post entitled <a href=\"https:\/\/gtm360.com\/blog\/2026\/03\/04\/ai-didnt-invent-circular-deals\/\" target=\"_blank\" rel=\"noopener\">AI Didn\u2019t Invent Circular Deals<\/a> , I argued that circular deals are not new. I averred that<\/p>\n<ul>\n<li>They\u2019ve been around for decades.<\/li>\n<li>They\u2019re not necessarily round-tripping.<\/li>\n<li>And they often create real value.<\/li>\n<\/ul>\n<p>All true.<\/p>\n<p>But that still leaves a nagging question:<\/p>\n<blockquote><p>If everything is legitimate\u2026 why does it feel uncomfortable?<\/p><\/blockquote>\n<p>Because circular deals don\u2019t just affect revenue.\u00a0They affect what that revenue *means*.<\/p>\n<p>Let&#8217;s see how.<\/p>\n<p><strong>1. When Investment Becomes Demand<\/strong><\/p>\n<p>In a normal market:<\/p>\n<p>Customers create demand.\u00a0Vendors fulfill it.<\/p>\n<p>In a circular deal:<\/p>\n<p>Investors fund a company.\u00a0The company spends that money with the investor.\u00a0Revenue is booked.<\/p>\n<p>Nothing illegal. Nothing fake.<\/p>\n<p>But something subtle has changed.<\/p>\n<p>&gt; Demand is no longer fully independent.<\/p>\n<p>It\u2019s a bit like the old company town store.<\/p>\n<p>Workers are paid by the company &#8211; and spend that money at the company store.<\/p>\n<p>The transactions are real.\u00a0The revenue is real.\u00a0But the demand is\u2026 funded.<\/p>\n<p>&gt; Capital flows out &#8211; and quietly flows back.<\/p>\n<p><strong>2. Circularity Couples the System<\/strong><\/p>\n<p>One circular deal is harmless. But an ecosystem of them is different.<\/p>\n<p>In AI today:<\/p>\n<p>The same companies are investors, suppliers, and customers.\u00a0Capital and revenue move in a loop.<\/p>\n<p>That loop works &#8211; until it doesn\u2019t.<\/p>\n<p>When one player slows:<\/p>\n<ul>\n<li>Demand falls<\/li>\n<li>Revenue falls<\/li>\n<li>Valuations fall<\/li>\n<\/ul>\n<p><em>together<\/em>.<\/p>\n<p>&gt; Circularity doesn\u2019t just connect companies.<\/p>\n<p>&gt; It couples them.<\/p>\n<p><strong>3. This Isn\u2019t Just Finance. It\u2019s GTM<\/strong><\/p>\n<p>We treat these as financial structures.<\/p>\n<p>They are.<\/p>\n<p>But they\u2019re also go-to-market strategy.<\/p>\n<p>What do they actually do?<\/p>\n<ul>\n<li>Pre-secure a customer<\/li>\n<li>Lock in consumption<\/li>\n<li>Manufacture traction<\/li>\n<\/ul>\n<p>In effect:<\/p>\n<p>&gt; You\u2019re not just funding a company.<br \/>\n&gt; You\u2019re underwriting its revenue.<\/p>\n<p>That\u2019s not a bug.<\/p>\n<p>In emerging markets, it\u2019s often the only way to get started.<\/p>\n<p><strong>Closing Thought<\/strong><\/p>\n<p>Circular deals are not new.\u00a0They are not necessarily problematic.\u00a0And they are not the same as round-tripping.<\/p>\n<p>But they do something important.\u00a0They blur a line we usually take for granted:<\/p>\n<p>&gt; The line between market demand and funded demand.<\/p>\n<p>So the real question isn\u2019t:<\/p>\n<p>\u201cAre these revenues real?\u201d<\/p>\n<p>They are.<\/p>\n<p>The real question is:<\/p>\n<p>&gt; How much of this demand comes from the market &#8211; and how much is simply circulating within the system?<\/p>\n<\/div>\n<\/blockquote>\n<p><!----------END----------><\/p>\n<p><em>Voil\u00e0<\/em>. ChatGPT delivered. First time. I have not made a single edit to the above text.<\/p>\n<p>I agree with Melissa Reeve that the ceiling of what AI can do in marketing has indeed moved up. It&#8217;s down to marketers to keep up or be left behind.<\/p>\n<p>As an aside, this made me wonder whether LLMs possess critical thinking ability. So I described this specific exercise and posed the question to fellow members of a PANIIT AI group.<\/p>\n<p>As it often happens in gatherings of high-IQ humans, the group regularly has heated debates on several high-level intellectual themes &#8211; but, when confronted with a pointed question in a specific context, silence follows.<\/p>\n<p>This time was no different. Nobody answered.<\/p>\n<p>Then I asked ChatGPT the same question.<\/p>\n<p>Click <a href=\"https:\/\/chatgpt.com\/share\/6a009305-8fb8-8323-a945-740dc6f7eede\" target=\"_blank\" rel=\"noopener\"><strong>here<\/strong> <\/a>to read its full answer.<\/p>\n<blockquote><p>tl;dr: GenAI is very good at simulating the outputs of critical thinking. And increasingly, that simulation is powerful enough to be useful in real world business.<\/p><\/blockquote>\n<p>I tend to agree with this take and look forward to hearing your thoughts in the comments below.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In her article entitled\u00a0AI moved forward, marketing did not,\u00a0Melissa Reeve, Co-Founder, Agile Marketing Alliance, makes a valid point: Marketers were early adopters of AI, but while it has evolved most&hellip;<\/p>\n","protected":false},"author":1,"featured_media":8152,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,7,1],"tags":[],"class_list":["post-8152","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-b1-integrated-marketing","category-bfsi","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/posts\/8152","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/comments?post=8152"}],"version-history":[{"count":1,"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/posts\/8152\/revisions"}],"predecessor-version":[{"id":8153,"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/posts\/8152\/revisions\/8153"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/posts\/8152"}],"wp:attachment":[{"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/media?parent=8152"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/categories?post=8152"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/tags?post=8152"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}