Tan: High-value AI software flattens operational costs that traditionally scale linearly
Kimberly Tan · Unbundling the BPO: How AI Is Disrupting Outsourced Work · Apr 3, 2025 · at 12:31
Kimberly Tan, Partner at a16z, explains a mental model for identifying high-value startup opportunities in replacing labor-heavy business functions with AI.
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“Another way to think about it is what sorts of operational work scales linearly as the company grows, meaning it's always going to be a consistent cost on the company. And, you know, as you get more customers, you have more customer support requests or As you grow your business, you'll have more invoices you have to process. That just means that is a consistent, linearly growing cost for these companies, that they're always going to have to figure out what is the right cost-benefit analysis. And if you're able to make that cost plateau or even go down, that's a very clear value proposition for companies, and it actually enables them to grow their top line in a much more efficient way.”
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