After hearing about this book from a lot of people, I finally picked up the book Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies . Hopefully I want to read some more books & I plan to use this blog as a place to collect my own thoughts on the subject.

Blitzscaling, is a framework, to help founders rapidly scale their company. This raises questions:

• Which sucessful companies have used blitzscaling?: Companies like Google,Facebook,Airbnb, Amazon, Dropbox and Uber have successfully used blitzscaling to their advantage, before such a concept has existed.
• Do I need to blitzscale?: Depends, on whether you currently need rapid growth, and are willing to commit to decisions with higher risk associated with it.

You accept the risk of making the wrong decision, because you are willing to pay the cost of inefficiencies for the trade-off of speed. Blitzscaling is more than just making a startup its making a startup on steroids.

Software is Eating the World

The current reality is that software is eating the world (atleast, Marc Andereessen says so). And I believe he’s absolutely right. Most of what we interact on a day to day basis is software, from our phones to our laptops to most of our jobs. Take Uber for example, software(Uber) has eaten over the taxi industry, or Netflix taking over the contemporary TV show industry. There are plenty of new technology entering the world, waiting to change it, from AI, to Blockchain, to AR/VR, to Cloud. The potential is limitless.

Core Idea of Blitzscaling

Blitzscaling is not just rapid growth. Blitzscaling is priotizing speed over efficiency in the face of uncertainity.

This raises one question. If blitzscaling is risky and has more uncertainity, why do it in the first place itself? If you’re willing to blitzscale in an industry where everyone else isn’t then you have a tremendous first-mover advantage to capture the market. And you don’t blitzscale the whole time.

Most companies always go through the classic “S-curve” of growth. Initally companies like Google or Facebook follow classic start-up growth while establishing Product/Market Fit, then they start to blitzscale and hit exponential growth. After the rapid growth stops, they start to fastscale, ie move with certainty while speedily. And finally they start to follow classic scale-up growth, ie certainty with efficiency.

Three Basics of Blitzscaling

These core ideas describe what it means to blitzscale.

1. Blitzscaling is both an offensive strategy and a defensive strategy

Blitzscaling allows you to attack larger companies by surprise, while gaining ‘first’ mover advantages.

2. Blitzscaling thrives on Positive Feedback Loops.

The feedback loops that one experiences, are both from employees and investors. Once you’ve become the industry leader, both employees and investors pour in. The best and brightest employees wish to work for companies that are bold and scale fast. Investors want to bet on someone who can prove their market size.

3. Despite its Advantages and Potential payoffs, Blitzscaling also has massive risks.

Blitzscaling can get you to a large size in terms of market share and revenue growth, but there were things that you sacrificed to get there. Until recently, Facebook’s motto was, “Move Fast and Break things”. But then after problems with technical debt and large number of bugs hindering their process, they had to revamp the site.

5 Stages of Blitzscaling

• Stage 1: Family (1-9 Employees)
• Stage 2: Tribe (10s Employees)
• Stage 3: Village (100s Employees)
• Stage 4: City (1000s Employees)
• Stage 5: Nation (10000s Employees)

At each stage the founder needs to employ different strategies in management and in innovation. The authors use these rough estimates to indicate breakpoints where shift needs to occur and other indicators can be used instead of employee size, like number of users,etc.

Key Techniques of Blitzscaling

Technique 1: Business Model Innovation

The key idea to blitscaling is to have an innovative business model much like Uber, or Airbnb or Google’s Adwords. Technological innovation does drive startups, and yet Dropbox’s CEO and founder Drew Houston said “If your playbook is the same as your competitor’s, you are in trouble, because chances are they are just joint to run your playbook with a lot more resources.”

The key is to combine new technologies with effective distribution to potential customers, with a scalable and high-margin revenue model, and an effective approach that allows you to serve those customers. Go back and read that sentence slower again.

You would ideally like to have designed the core business model innovation before the company itself. That happened with LinkedIn with their two-way nature of the enterprise and publics relation for hiring, but many companies find business model innovation after they have commenced operations. Take the example of PayPal, referral bonuses were bringing in large amounts of customers but by accepting the credit card payments they were loosing money. They later fixed the problem by charging the businesses to accept payment.

Technique 2: Strategy Innovation

To achieve your goals, you need to have an actual strategy to get there. One can not merely wish for extreme growth and obtain it. Also, growth does not create value in and of itself. Selling 20$ bills at 1$ can create huge volumes, but cannot create any sustainable value.

Most sucessful blitzscalers used built in growth factors, such as network effects to trigger this exponential growth. Uber’s agressive expansion, allows customers to hail rides faster. This encourages more drivers to join uber, which leads to more customers joining uber, and so on.

Technique 3: Management Innovation

Due to the hyper-growth experienced, you will need fresh management innovation to handle the growth of the organization and its employees. Companies that blitzscale have to navigate key transitions as their organizations grow, and have to embrace certain counterintuitive rules, like hiring ‘good-enough’ employees, launching flawed and imperfect products, and certain times ignoring angry customers.

Read Part 2 as well!