To blitzscale is in itself a strategic choice, it is itself a form of strategy innovation. To blitzscale or not to is a difficult decision dependent on multiple factors. Let us see what drives this choice.

When should I start to Blitzscale?

Short answer, when you have determined that speed into the market is the critical strategy to achieve massive gains. Blitzscaling also requires investors to fund growth before the revenue model is proven, after the model is proven just about anyone would invest. Slack had spent 5 years and $17 million on development before its public launch in Feb 2014, and this is all before its model had been proven.

To fuel blitzscaling the opportunity must be large enough. This often arises from a tech innovation. Youtube came up at the right time, since networks were strong enough to stream video and cell cameras were good enough to record videos.

The most frequent offensive reason for blitzscaling is to achieve a critical mass that confers a lasting competitive advantage (first-mover advantage). This is usually capturing economies of scale, like Amazon or critical mass that triggers network effects, as with Uber and Airbnb.

Blitzscaling was also used to climb steep learning curves by companies like Netflix. Netflix climbed a series of S-curves like DVD mailing, to Internet Video streaming, to making its own content.

Yet the largest offensive reasons is the threat of competition. In the spring of 2011, Airbnb faced competition from a German clone, Wimdu. Their hands were forced to blitzscale and attack their competition head on.

Once you’ve decided to blitzscale you need to ask yourself, “How can we move faster?”. This isn’t simply adding more resources or working harder. It’s doing things that other companies don’t do.

When should I stop Blitzscaling?

Understand this, blitzscaling is not a permanent strategy. Its a temporary strategy when you require fast growth, and can’t be sustained when the market stops growing or reaches its upper bounds.

Blitzscaling is an inefficient use of capital, and only makes sense when speed and momentum are important. The key early-warning signs that you’ve outgrown blitzscaling are:

• Declining rate of growth
• Worsening unit economics
• Decreasing per-employee productivity
• Increasing management overhead
• Internal conflict
  • “What went wrong?”/”Whose responsible?”
  • CEO changing

When this occurs, that means that your current strategy won’t scale further, and its time to begin the cycle again.

Can I choose not to Blitzscale?

Blitzscaling isn’t for every company. Certain markets like the luxury commodities, are designed for smaller volumes, & higher quality, blitzscaling here makes no sense. Similarly, Amazon being a small online bookstore also makes no sense.

But if the conditions for are ripe for blitzscaling then your competitors will take on those risks and try to reap the potential rewards.

Blitzscaling is iterative

Blitzscaling is an excersise in serial problem solving. Each time you’ve solved a problem, you’ve only temporarily solved the problem. The same problem may arise under a new set of circumstances.

Paul Graham (cofounder of Y Combinator) famously said “Do things that don’t scale”. When Airbnb realized that postings with pictures are more likely to get chosen, they went to all the listings in NYC and took the photographs by hand. Only later, they started to outsource to photographers.

So, the process as descibed by blitzscaling by extending Paul’s philosophy:

Step 1: Do things that don’t scale.

Step 2: Reach the next stage of blitzscaling.

Step 3: Figure out how to do one set of things that scale, while somehow also finding a way to do a completely different set of things that don’t scale.

Step 4: Reach the next stage of blitzscaling

Step 5: Repeat over and over until you reach market dominance.

How Blitzscaling Strategy changes in each stage?

Speed is always relative, what might be hypergrowth at one stage might be only average at another stage.

During the Family(1-9 employees) and Tribe(10s of employees) stages your options look like:

• Be the only competent player. (Which is impossible, there are always many smart enterpreneurs)
• Be the first player to have figured out a brilliant growth strategy. (example: PayPal)
• Pursue scale more agressively (example: Amazon)

Pursuing scale agressively, can only be done by asuming success and making commitments and investments accordingly. Of course this means that the cost of failure will be a lot higher as well.

During the Village(100s of employees) and City(1000s of employees) stages, each sub-organization will have its own varied speed. Some will be focusing on optimizing efficiency (scale-up growth), others will be focusing on speed (Fastscaling), and others will be speeding in the face of uncertainity (blitscaling).

In the Nation(10,000s of employees) the strategy shifts again. Scaling at this stage means incubating and growing new businesses. Just like how Google also created Gmail, Google Docs/Slides, & Android, the company must now start to climb other S-curves.

How does the role of the Founder change in each stage?

As the organization grows the specific skills required to led it evolves as well. The founder should start to mold himself differently to suit the stage at which his company is.

• Stage 1 (0-10 Employees): Founder personally pulls the Levers of Hypergrowth
• Stage 2 (10s of Employees): Founder Manages the People who are pulling the Levers
• Stage 3 (100s of Employees): Founder designs an organization that pulls the Levers
• Stage 4 (1000s of Employees): Founder makes high level decisions about goals and strategies

• Stage 5 (10,000s of Employees): Founder figures out how to pull the organization back from blitzscaling adn starts blitscaling new product lines and business units

• Final Part is coming up! *

For Part 1, about what blitzscaling really is, find it here!

*For Part 2 about how we can Innovate Business Models, find it *here! *