Ops Debt

Efficient growth is all the rage in downturns. Prioritizing growth efficiency as opposed to absolute growth is smart, and when capital is limited or expensive its an even wiser move. Sadly most of this metrics is predicated on companies leveraging product led growth. What I believe VCs really are looking for here is network effects, or some other advantage you have in distributing your product to the market. Not all workflows are collaborative by their nature, many are single player silos that don’t enable this type of distribution. So if you cant rely on some free or near free way of distributing your product, how can you make your growth more efficient? Focus on removing “Ops Debt”. Similar in theory to “Tech debt”

Technical debt (also known as design debt[1] or code debt, but can be also related to other technical endeavors) is a concept in software development that reflects the implied cost of additional rework caused by choosing an easy (limited) solution now instead of using a better approach that would take longer.[2]

“Ops debt” is the mess of manual or non-scalable processes you create as you grow. At first Ops debt appears small and linear, that spreadsheet you use to manage projects, the Nth person you hire in Prof Services to get customers live, the dev ops processes you run for every new customer, the savage wizardry your finance team runs to manage your credit facility and AR, the servers your CTO manages in his brother in laws basement, the list goes on and on. None of these things are bad out of the gate, what is inefficient is allowing them to persist and exponentially grow costs as they have a 1:1 relationship with growth.

In the current climate products that reduce Ops debt will create operational leverage and increased efficiencies.

Examples:

Cloud: AWS reduced the need for owned data centers, and reduced the burden of dev ops.

Payment: Stripe and Bolt, enable customers to take payments all over the globe without having to grow a payments team like Airbnb to 100+ engineers.

Cash management: Modern Treasury/Tesorio/Inter prime and others are enabling treasury/cash management teams to build complex processes to manage cash flows and payments without scaling heads.

Im currently looking to invest in companies solving high volume and or, high value, critical processes with platforms, giving leverage to the people who carry them out on a daily basis.