Book Byte #95 "Blitzscaling" by Reid Hoffman

The Lightning-Fast Path to Building Massively Valuable Companies

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📣 Curious Quotes from the Author

“There’s a common misconception that Silicon Valley is the accelerator of the world. The real story is that the world keeps getting faster—Silicon Valley is just the first place to figure out how to keep pace. While Silicon Valley certainly has many key networks and resources that make it easier to apply the techniques we’re going to lay out for you, blitzscaling is made up of basic principles that do not depend on geography. We’re going to show you examples from overlooked parts of the United States, such as Detroit (Rocket Mortgage) and Connecticut (Priceline), as well as from international companies, such as WeChat and Spotify. In the process you’ll see how the lessons of blitzscaling can be adapted to help build great companies in nearly any ecosystem, albeit with differing degrees of difficulty. That’s the mission of this book. We want to share the secret weapon that has allowed Silicon Valley to punch so much (more than a hundred times) above its population index so that those lessons can be applied far beyond the sixty-mile stretch between the Golden Gate Bridge and San Jose. It is sorely needed.”

“In fact, the same basic ingredients can easily be found in numerous start-up clusters in the United States and around the world: Austin, Boston, New York, Seattle, Shanghai, Bangalore, Istanbul, Stockholm, Tel Aviv, and Dubai. To discover the secret to Silicon Valley’s success, you need to look beyond the standard origin story. When people think of Silicon Valley, the first things that spring to mind—after the HBO television show, of course—are the names of famous start-ups and their equally glamorized founders: Apple, Google, Facebook; Jobs/ Wozniak, Page/ Brin, Zuckerberg. The success narrative of these hallowed names has become so universally familiar that people from countries around the world can tell it just as well as Sand Hill Road venture capitalists. It goes something like this: A brilliant entrepreneur discovers an incredible opportunity. After dropping out of college, he or she gathers a small team who are happy to work for equity, sets up shop in a humble garage, plays foosball, raises money from sage venture capitalists, and proceeds to change the world—after which, of course, the founders and early employees live happily ever after, using the wealth they’ve amassed to fund both a new generation of entrepreneurs and a set of eponymous buildings for Stanford University’s Computer Science Department. It’s an exciting and inspiring story. We get the appeal. There’s only one problem. It’s incomplete and deceptive in several important ways. First, while “Silicon Valley” and “start-ups” are used almost synonymously these days, only a tiny fraction of the world’s start-ups actually originate in Silicon Valley, and this fraction has been getting smaller as start-up knowledge spreads around the globe. Thanks to the Internet, entrepreneurs everywhere have access to the same information. Moreover, as other markets have matured, smart founders from around the globe are electing to build companies in start-up hubs in their home countries rather than immigrating to Silicon Valley.”

“We tried a number of single-threaded efforts to meet the challenge. We rolled out features one after another, such as a recommendation engine for people that our users should meet and a professional Q&A service. None of them worked well enough to solve the problem. We concluded that the problem might require a Swiss Army knife approach with multiple use cases for multiple groups of users. After all, some people might want a news feed, some might want to track their career progress, and some might be keen on continuing education. Fortunately, LinkedIn had grown to the point where the organization could support multiple threads. We reorganized the product team so that each director of product could focus on a different approach to address engagement. Even though none of those efforts alone proved a silver bullet, the overall combination of them significantly improved user engagement.”

“To achieve massive success, you need to have a big new opportunity—one where the market size and gross margins intersect to create enormous potential value, and there isn’t a dominant market leader or oligopoly. A big new opportunity often arises because a technological innovation creates a new market or scrambles an existing one.”

“Blitzscaling is a strategy and set of techniques for driving and managing extremely rapid growth that prioritize speed over efficiency in an environment of uncertainty. Put another way, it’s an accelerant that allows your company to grow at a furious pace that knocks the competition out of the water.”

“Blitzscaling is prioritizing speed over efficiency in the face of uncertainty.”

📚 Cognition of the Book’s Big Idea:

Blitzscaling necessitates enormous ambition and a willingness to take significant risks in the hopes of a great payback. However, there are some patterns emerging that can lead this type of ambitious thinking. Embracing uncertainty and risk while valuing speed over efficiency, capitalizing on four growth determinants, and overcoming growth constraints can all help a company prepare for rapid and vast expansion that will be sustainable in the long run. However, those in charge must also be realistic about the direction their firm is taking, with a management strategy and a business plan that foresee the changes and problems of rapid expansion. With a clear goal, blitzscaling can help a company dominate an ecosystem for the foreseeable future.

Examine blitzscaling success stories from sectors other than IT. Because they offer the best examples of blitzscaling in action, we concentrated on tech businesses but it can be used for other examples. Blitzscaling can, however, occur outside of the tech sector and even outside of the corporate world in general. Examples of businesses and institutions outside of the tech sector that have used blitzscaling include the apparel retailer Zara, the nonprofit educational institution Khan Academy, and Barack Obama's 2008 presidential campaign. Look up the strategies they used to achieve and see what components you can recognize!

🛠️Fixing the Tech Industry

This Idea of Blitzscaling has both excelled the Tech Industry to what it is today and also destroyed a lot of careers and jobs in the process.

Growth at all costs turns into Growth at the Cost of Humans, and while being employed in Tech seemingly has gifted us the benefits of being in said companies, we are not immune to layoffs and disruptions. Google is seeing this now with AI. They’ve perfected a product seemingly untouchable in the market today, yet AI is one of the fastest growing products today could very well eliminate the need for us to do search queries anymore.

Whatever Technology is invented, know that one day, those too will be disrupted. Change is the only constant to put your confidence in that will happen.

🤝Collaborate with others with this Social Media Prompt:

What product have you used forever and loved suddenly got changed or turned off and you suffered for it?