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It was the fall of 2010, and Pony Ma (Chinese name: Ma Huateng) was trying to figure out what came next for Tencent, the company he had run since founding it in 1998 with four classmates from Shenzhen University. Thanks to its core product, the QQ instant messaging service, which had 650 million monthly active users, Tencent had become one of China’s most valuable Internet companies with revenues of nearly $2 billion, a market capitalization of over $33 billion, and more than ten thousand employees. However, QQ was now a mature desktop product based on late-1990s technology, and its user base had stopped growing. Its American counterpart, AOL Instant Messenger, was already in a swift decline. Ma was convinced that Tencent had to develop a new breakthrough product for the emerging smartphone platform—or else. “Internet companies that can react will survive,” he said, “and those who can’t will die.” The message Pony Ma read that night was from one of Tencent’s employees, Allen Zhang (Chinese name: Zhang Xiaolong), a fellow entrepreneur whose company, Foxmail, Tencent had acquired five years earlier. Zhang now ran the company’s Guangzhou R&D division, which was a two-hour drive from Tencent’s Shenzhen headquarters. He had been monitoring the rapid growth of a new social messaging product called Kik, which was especially popular among young people. He decided that Tencent needed to create its own social messenger for smartphones—and quickly.
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We’re reminded of the famous scene from the movie Glengarry Glen Ross, in which Alec Baldwin’s character, Blake, is speaking to a group of salesmen: As you all know, first prize is a Cadillac Eldorado. Anyone wanna see second prize? Second prize is a set of steak knives. Third prize is you’re fired. Get the picture? First prize in the first wave of consumer social networking went to Facebook; second prize to MySpace; third prize to Friendster. Remember Friendster? You need to win first prize in order to survive in the Internet era.
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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.
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When outsiders look at Silicon Valley, they often think that the key to this question is innovative technology. But as you’ll read, technological innovation alone doesn’t make for a thriving company. Silicon Valley insiders and well-read outsiders believe that the key is the combination of talent, capital, and entrepreneurial culture that makes it easy to start new companies. This too is wrong.
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The truth is there is absolutely nothing guaranteed as a one-size-fits-all, must-follow rulebook for everyone. However, there are patterns. So in addition to individual tips and tricks, this book offers a set of frameworks and strategies for leaders, entrepreneurs, and intrapreneurs to adapt
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When you blitzscale, you deliberately make decisions and commit to them even though your confidence level is substantially lower than 100 percent. You accept the risk of making the wrong decision and willingly pay the cost of significant operating inefficiencies in exchange for the ability to move faster. These risks and costs are acceptable because the risk and cost of being too slow is even greater. But blitzscaling is more than just plunging ahead blindly in an effort to “get big fast” to win the market. To mitigate the downside of the risks you take, you should try to focus them—line them up with a small number of hypotheses about how your business will develop so that you can more easily understand and monitor what drives your success or failure. You also have to be prepared to execute with more than 100 percent effort to compensate for the bets that don’t go your way.
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Rather, blitzscaling is prioritizing speed over efficiency in the face of uncertainty. We can better understand blitzscaling by comparing it to other forms of rapid growth.
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Classic start-up growth prioritizes efficiency in the face of uncertainty. Starting a company is like jumping off a cliff and assembling an airplane on the way down; being resource-efficient lets you “glide” to minimize the rate of descent, giving you the time to learn things about your market, technology, and team before you hit the ground. This kind of controlled, efficient growth reduces uncertainty and is a good strategy to follow while you’re trying to establish certainty around what the authors Eric Ries and Steve Blank call product/market fit: your product satisfies a strong market demand for the solution to a specific problem or need. Classic scale-up growth focuses on growing efficiently once the company has achieved certainty about the environment. This approach reflects classic corporate management techniques, such as applying “hurdle rates” so that the return on investment (ROI) of corporate projects consistently exceeds the cost of capital. This kind of optimization is a good strategy to follow when you’re trying to maximize returns in an established, stable market. Fastscaling means that you’re willing to sacrifice efficiency for the sake of increasing your growth rate. However, because fastscaling takes place in an environment of certainty, the costs are well understood and predictable. Fastscaling is a good strategy for gaining market share or trying to achieve revenue milestones. Indeed, the financial services industry is often happy to finance fastscaling, whether by buying stocks and bonds or lending money. Analysts and bankers feel confident that they can create elaborate financial models that work out to the penny the likely ROI of a fastscaling investment.
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1. BLITZSCALING IS BOTH AN OFFENSIVE STRATEGY AND A DEFENSIVE STRATEGY.
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2. BLITZSCALING THRIVES ON POSITIVE FEEDBACK LOOPS, IN THAT THE COMPANY THAT GROWS TO SCALE FIRST REAPS SIGNIFICANT COMPETITIVE ADVANTAGES.
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Consider the case of two very similar companies, Twitter and Tumblr. Both had brilliant, product-oriented founders in Evan “Ev” Williams and David Karp. Both were hot social media start-ups. Both grew at a remarkable rate after establishing product/market fit. Both had a major impact on popular culture. Yet Twitter went public and achieved a market capitalization that peaked at nearly $37 billion, while Tumblr was acquired by Yahoo!—another start-up that used blitzscaling to become a scale-up, only to decline and fade away—for “only” $1 billion. Was this dumb luck on Twitter’s side? Perhaps. Luck always plays a larger role than founders, investors, and the media would like to admit. But a major difference was that Twitter could draw on numerous networks for advice and help that Tumblr could not. For example, Twitter was able to bring in Dick Costolo, a savvy executive with prior scaling experience at Google. In contrast, even though Tumblr was arguably the most prominent start-up in its New York City ecosystem, it couldn’t easily draw upon a pool of local talent who had experience dealing with rapid growth. According to Greylock’s John Lilly, for every executive role that Tumblr needed to fill, there were less than a handful of candidates in all of New York City.
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3. DESPITE ITS INCREDIBLE ADVANTAGES AND POTENTIAL PAYOFFS, BLITZSCALING ALSO COMES WITH MASSIVE RISKS.
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Blitzscaling a start-up isn’t a linear process; a global giant isn’t simply a start-up that’s been multiplied by one thousand, working out of a gleaming high-rise headquarters instead of a grimy garage. Each major increment of growth represents a qualitative as well as quantitative change. Drew Houston of Dropbox expressed this well when he told me, “The chessboard keeps adding new pieces and new dimensions over time.”
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THE FIVE STAGES OF BLITZSCALING Stage 1 (Family) 1–9 employees Stage 2 (Tribe) 10s of employees Stage 3 (Village) 100s of employees Stage 4 (City) 1000s of employees Stage 5 (Nation) 10000s of employees
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Some of the other measures of scale include the number of users (user scale), the number of customers (customer scale), and total annual revenues (business scale).
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As we’ll discuss, operational scalability is one of the primary growth limiters that scale-ups need to address. When a business can grow users, customers, and revenues faster than the number of employees without collapsing under the weight of its own growth, the business can achieve greater profitability and keep growing without being as tightly constrained by the need for financial or human capital. In contrast, when the number of employees grows faster than users, customers, and revenues, it’s a major red flag that could indicate issues with the fundamental business model.
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TECHNIQUE #1: BUSINESS MODEL INNOVATION The first technique of blitzscaling is to design an innovative business model that can truly grow.
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As a start-up, Dropbox competes with giants like Microsoft and Google, who ought to have major advantages in technology, finance, and market power. Dropbox founder and CEO Drew Houston knows that his company can’t simply rely on better technology or outexecuting the competition: “If your playbook is the same as your competitor’s, you are in trouble, because chances are they are just going to run your playbook with a lot more resources!” Drew had to design a better business model, in which the focus on sharing files means that the number of files Dropbox has to store (or in the past, pay Amazon to store) increases far more slowly than the value created for the customer and thus the revenues Dropbox can collect from those customers.
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We were growing exponentially, at 5 percent per day, and we were losing money on every single transaction we processed. The funny thing is that some of our critics called us insane for paying customers bonuses to refer their friends. Those referral bonuses were actually brilliant, because their cost was so much lower than the standard cost of acquiring new financial services customers via advertising. (We’ll discuss the power and importance of this kind of viral marketing later on.) The insanity, in fact, was that we were allowing our users to accept credit card payments, sticking PayPal with the cost of paying 3 percent of each transaction to the credit card processors, while charging our users nothing. I remember once telling my old college friend and PayPal cofounder/CEO Peter Thiel, “Peter, if you and I were standing on the roof of our office and throwing stacks of hundred-dollar bills off the edge as fast as our arms could go, we still wouldn’t be losing money as quickly as we are right now.” We ended up solving the problem by charging businesses to accept payments, much as the credit card processors did, but funding those payments using automated clearinghouse (ACH) bank transactions, which cost a fraction of the charges associated with the credit card networks.
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TECHNIQUE #2: STRATEGY INNOVATION The most obvious element of blitzscaling is the pursuit of extreme growth, which, when combined with an innovative business model, can generate massive value and long-term competitive advantage. Many start-ups believe they are pursuing a strategy of extreme growth, when in fact they have the goal and the wish for extreme growth but no understanding of an actual strategy that will get them there. To achieve your goals, you have to know what you plan to do and, just as important, what you plan not to do.
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At the same time, blitzscaling also goes beyond just risk taking. It may be risky to bet the company, as Walt Disney did when he borrowed against his own life insurance to build Disneyland, but it’s not blitzscaling. Blitzscaling would have involved inefficiencies like paying construction crews to work twenty-four hours a day in order to get Disneyland open a few months earlier, or reducing ticket prices 90 percent to get to one million visitors faster—knowing that those one million visitors were networked to ten million more.
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TECHNIQUE #3: MANAGEMENT INNOVATION The final technique required for blitzscaling is management innovation. This is necessary because of the extreme strains placed on the organization and its employees by hypergrowth. I am fond of pointing out to entrepreneurs and executives that “in theory, you don’t need practice.” What I mean is that no matter how brilliant your business model and growth strategy, you won’t be able to build a real-world (i.e., non-theoretical) blockbuster company without a lot of practice. But that problem is magnified when you’re trying to blitzscale. The kind of growth involved in blitzscaling typically means major human resources challenges. Tripling the number of employees each year isn’t uncommon for a blitzscaling company. This requires a radically different approach to management than that of a typical growth company, which would be happy to grow 15 percent per year and can take time finding a few perfect hires and obsessing about corporate culture. As we will discuss in more detail later in the book, companies that blitzscale have to rapidly navigate a set of key transitions as their organizations grow, and have to embrace counterintuitive rules like hiring “good enough” people, launching flawed and imperfect products, letting fires burn, and ignoring angry customers.
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In contrast, and much to their misfortune, start-ups that relied purely on technology innovation without any real business model innovation largely went bust.
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To really understand why these business models succeed, we need to clearly define what we mean by “business model” in the first place. Part of the problem is that the term can be interpreted in so many different ways. The great management thinker Peter Drucker wrote that business models are essentially theories composed of assumptions about the business, which circumstances might require to change over time. Harvard Business School professor and author Clay Christensen believes that you need to focus on the concept of the “job-to-be-done”; that is, when a customer buys a product, she is “hiring” it to do a particular job. Then there’s Brian Chesky of Airbnb, who said simply, “Build a product people love. Hire amazing people. What else is there to do? Everything else is fake work.”
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If you want to find your best business model, you should try to design one that maximizes four key growth factors and minimizes two key growth limiters.
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DESIGNING TO MAXIMIZE GROWTH: THE FOUR GROWTH FACTORS GROWTH FACTOR #1: MARKET SIZE The most basic growth factor to consider for your business model is market size. This focus on market size may sound obvious, and it’s right out of Pitch Deck 101 for start-ups, but if you want to build a massive company, you need to begin with the basics and eliminate ideas that serve too small of a market.
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GROWTH FACTOR #2: DISTRIBUTION The second growth factor needed for a strong, scalable business is distribution. Many people in Silicon Valley like to focus on building products that are, in the famous words of the late Steve Jobs, “insanely great.” Great products are certainly a positive—we’ll discuss the lack of product quality as a growth limiter later on—but the cold and unromantic fact is that a good product with great distribution will almost always beat a great product with poor distribution. Dropbox is a company with a great product, but it succeeded because of its great distribution. In an interview for Reid’s Masters of Scale podcast, founder and CEO Drew Houston said that he believes that too many start-ups overlook the importance of distribution: Most of the orthodoxy in Silicon Valley is about building a good product. I think that’s because most companies in the Valley don’t survive beyond the building-the-product phase. You have to be good at building a product, then you have to be just as good at getting users, then you have to be just as good at building a business model. If you’re missing any of the links in the chain, the whole chain is broken. The challenge of distribution has become even greater in the “mobile first” era. Unlike the Web, where search engine optimization and e-mail links were broadly applicable and successful distribution channels, mobile app stores offer little opportunity for serendipitous product discovery. When you go to Apple’s or Google’s app store, you’re searching for a specific product. Few people install apps just for the hell of it. As a result, the business model innovators who have succeeded (e.g., Instagram, WhatsApp, Snap) have had to find creative ways to get broad distribution for their product—without spending a lot of money. These distribution techniques fall into two general categories: leveraging existing networks and virality.
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At PayPal, we combined organic and incentivized virality. The payment product was inherently viral; if someone e-mailed you money using PayPal, you had to set up an account to get paid. But we enhanced this organic virality with monetary incentives. If you referred a friend to PayPal, you got $10, and your friend got $10. This combination of organic and incentivized virality allowed PayPal to grow 7 to 10 percent per day. As the PayPal network grew, we reduced the incentives to $5 and $5, then finally eliminated them altogether.
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Incentives don’t have to be monetary; like PayPal, Dropbox used a similar combination of organic virality (as users share files with nonusers) and incentivized virality (Basic account holders get 500 MB of extra storage per user they refer; Pro account holders get 1 GB) to grow. Even though Dropbox invested in partnerships with leading PC makers like Dell, Drew Houston credits virality with driving the company’s rapid growth, helping it double its one hundred thousand users at launch to two hundred thousand users just ten days later, then skyrocket to one million users just seven months after that.
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GROWTH FACTOR #3: HIGH GROSS MARGINS One of the key growth factors that entrepreneurs often overlook is the power of high gross margins.
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GROWTH FACTOR #4: NETWORK EFFECTS Market size, distribution, and gross margins are important factors in growing a company, but the final growth factor plays the key role in sustaining that growth long enough to build a massively valuable and lasting franchise.
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On his industrial organization of information technology website, the NYU professor Arun Sundararajan classifies network effects into five broad categories: Direct Network Effects: Increases in usage lead to direct increases in value. (Examples: Facebook, messaging apps like WeChat and WhatsApp) Indirect Network Effects: Increases in usage encourage consumption of complementary goods, which increases the value of the original product. (Example: Adoption of an operating system such as Microsoft Windows, iOS, or Android encourages third-party software developers to build applications, increasing the value of the platform.) Two-Sided Network Effects: Increases in usage by one set of users increases the value to a different set of complementary users, and vice versa. (Example: Marketplaces such as eBay, Uber, and Airbnb) Local Network Effects: Increases in usage by a small subset of users increases the value for a connected user. (Example: Back in the days of metered calls, certain wireless carriers allowed subscribers to specify a limited number of “favorites” whose calls didn’t count against the monthly allotment of call minutes.) Compatibility and Standards: The use of one technology product encourages the use of compatible products. (Example: within the Microsoft Office suite, Word’s dominance meant that its document file format became the standard; this has allowed it to destroy competitors like WordPerfect and fend off open-source solutions like OpenDocument.)
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GROWTH LIMITER #1: LACK OF PRODUCT/MARKET FIT Product/market fit enables rapid growth, while the lack of it makes growth expensive and difficult. The concept of product/market fit originates in Marc Andreessen’s seminal blog post “The Only Thing That Matters.” In his essay, Andreessen argues that the most important factor in successful start-ups is the combination of market and product.
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The best way for a small, resource-strapped team to assess potential strategies is to leverage what we dubbed “network intelligence” in our previous book, The Alliance. Even a small group of founders is likely to have a huge collective personal network of smart people with relevant knowledge or experience. Initiate a conversation, inviting them to challenge your idea and tell you what else you should consider.
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GROWTH LIMITER #2: OPERATIONAL SCALABILITY Designing a scalable economic model isn’t enough if you can’t scale up your operations to meet demand. Too often, entrepreneurs dismiss the challenges of operational scalability by saying, “Managing explosive growth is a high-class problem.” High-class problems are still problems; it may feel better for your ego to be wrestling with the issues of growth rather than simply trying to avoid missing payroll, but both can still kill your company. Rather than dismiss these challenges, the wisest innovators design operational scalability into their models.
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PROVEN PATTERN #7: FEEDS One of the most underrated and underappreciated proven patterns is the news feed. Facebook’s powerful network effects allow the site to attract its users, but its innovation of the news feed has made it a world-class business. Yet Facebook is hardly the only feed-centric success story. Companies like Twitter, Instagram, and Slack have all built multibillion-dollar market values around the news feed pattern. The power of the news feed comes from its ability to drive user engagement, which in turn drives both advertising revenue and long-term retention.
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The best entrepreneurs don’t just follow Moore’s Law; they anticipate it. Consider Reed Hastings, the cofounder and CEO of Netflix. When he started Netflix, his long-term vision was to provide television on demand, delivered via the Internet. But back in 1997, the technology simply wasn’t ready for his vision—remember, this was during the era of dial-up Internet access. One hour of high-definition video requires transmitting 40 GB of compressed data (over 400 GB without compression). A standard 28.8K modem from that era would have taken over four months to transmit a single episode of Stranger Things. However, there was a technological innovation that would allow Netflix to get partway to Hastings’s ultimate vision—the DVD. Hastings realized that movie DVDs, then selling for around $20, were both compact and durable. This made them perfect for running a movie-rental-by-mail business. Hastings has said that he got the idea from a computer science class in which one of the assignments was to calculate the bandwidth of a station wagon full of backup tapes driving across the country! This was truly a case of technological innovation enabling business model innovation. Blockbuster Video had built a successful business around buying VHS tapes for around $100 and renting them out from physical stores, but the bulky, expensive, fragile tapes would never have supported a rental-by-mail business.
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If you’ve ever shopped on Amazon, you’ve probably bought a product from a third-party seller; Jeff Bezos has said that almost 50 percent of units purchased on Amazon come from them. Because this marketplace business doesn’t require tying up Amazon’s capital in inventory (it ties up the third-party sellers’ capital instead), its gross margins likely resemble high-margin eBay’s more than it does low-margin Walmart’s. As Benchmark’s Matt Cohler notes, “I sometimes wonder if Amazon’s owned-inventory business is just a marketing loss leader and a capital-intensive competitive moat.”
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Facebook achieved product/market fit for its core consumer experience almost immediately, hence its rapid growth. However, part of what makes Facebook a great company and Mark Zuckerberg a great CEO is that Facebook has been able to achieve product/market fit in additional and less obvious areas at other points in the company’s history. Many people forget how Facebook struggled with the transition from desktop to mobile. Facebook’s initial mobile product provided a slow, suboptimal experience, and adoption of that product was accordingly slow. Fortunately for Facebook, Mark Zuckerberg saw that the market was going mobile and put a moratorium on new feature development in order to focus the entire team on building a new, far superior mobile product. In parallel, he also moved quickly and decisively to acquire Instagram and WhatsApp; when they were announced, both acquisitions were considered pricey, but in hindsight they were clearly bargains. Today, Facebook has over 1.7 billion active mobile users each month, and mobile advertising accounts for 81 percent of the company’s advertising revenue. Over 56 percent of Facebook users access the service exclusively via mobile. Equally important was Facebook’s ability to achieve product/market fit for its advertisers. When Facebook began, the conventional wisdom was that user-generated content like Facebook would never be able to attract advertisers, who would not want their brands appearing with poor-quality or even inappropriate content. Google’s search model was what worked in online advertising. Facebook was able to overturn the conventional wisdom by developing algorithms to block inappropriate content, and by learning from Twitter’s sponsored update model and incorporating ads into the Facebook News Feed. The news feed model has been especially effective for monetizing mobile usage. In a return to what worked in the print world, advertisements are intermixed with content, and as you page through the magazine or scroll through the feed, you encounter advertisements as part of your normal flow, as opposed to the interruptions of pop-up or takeover ads, or the easily ignored static placement of the traditional banner ad. Yet Facebook’s News Feed is even better for advertisers than a magazine, because Facebook’s core social actions (clicking, liking, sharing) train users to engage with whatever appears in the News Feed, including advertisements!
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Remember, the objective of blitzscaling is to achieve “lightning” growth despite the increased risks and costs. The only time that it makes sense to blitzscale is when (whether for offensive or defensive reasons) you have determined that speed into the market is the critical strategy to achieve massive outcomes. You don’t necessarily need to have solved your revenue model before deciding to blitzscale. In fact, a key element of blitzscaling is often the willingness of investors to fund growth before the revenue model is proven—after all, it’s pretty easy to fund growth after the revenue model is proven.
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Once you decide to blitzscale, the key question you need to ask and answer is “How can we move faster?” This isn’t simply a matter of working harder or smarter with the same resources. It’s doing things that other companies normally don’t do, or choosing not to do things that they do because you’re willing to tolerate greater uncertainty or lesser efficiency. For example, in 2015, Payal Kadakia, the founder of ClassPass (a monthly subscription service for fitness classes) decided that she needed to double the size of her staff in just three months so that ClassPass would be able expand into more cities. To achieve this kind of speed, Kadakia and her team abandoned traditional hiring processes and followed two simple rules. First, they hired people from their personal networks, with an emphasis on “branded” talent. For example, if an employee had a friend, and that friend worked for the management consulting firm Bain & Company, that friend got hired because ClassPass could assume that the person was smart and would get along with people. Second, some of the time saved by not interviewing for skills allowed the team to interview for alignment with the company’s mission. Crazy? Perhaps. But ClassPass was in a crowded, emerging market, and being able to hire faster than the competition helped it maintain and increase its leadership position.
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For many years, independent bookstores had carved out a market niche by positioning themselves relative to competition from chain stores such as Barnes & Noble and Borders. The rise of Amazon and its pursuit of a blitzscaling strategy significantly changed the competitive landscape for those bookstores, forcing them to respond. In 1994, the American Booksellers Association had over 8,000 members; by 2009, that number had declined to 1,651, down nearly 80 percent. Shockingly, that number has grown every year since 2009, rebounding to 2,321 in 2017. We’ll delve more into how independent bookstores managed to survive in the age of Amazon when we examine how to defend your business against blitzscaling competitors.
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In 2013, Paul Graham, the cofounder of Y Combinator, wrote a famous essay titled “Do Things That Don’t Scale,” in which he argues that start-ups are like old-fashioned cars with engine cranks. To get them started, founders need to engage in a separate and laborious process that couldn’t possibly work at scale, such as personally recruiting a product’s first users. This essay is a classic, but it may give some readers the mistaken impression that once the “engine” starts, all you need to do is keep doing things that scale. In other words, the conventional (and erroneous) wisdom says: Step 1: Do things that don’t scale. Step 2: Achieve scale. Step 3: Do things that scale.
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Blitzscaling extends the simple three-step process of “Do Things That Don’t Scale” as follows: 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 complete market dominance.
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How the Role of the Founder Changes in Each Stage
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HOW THE ROLE OF THE FOUNDER CHANGES IN EACH STAGE The role a founder plays in the blitzscaling process changes in each stage (and an employee’s role relative to the founder will likely also change). As the organization grows, the specific skills required to lead it evolve as well. Stage 1 (Family): The Founder Personally Pulls the Levers of Hypergrowth In the very early days of a company, a founder has to do everything, including implementing the techniques of blitzscaling. For example, if your business relies on viral marketing for distribution, you probably will do everything from writing the copy for the invitation e-mails to segmenting the data on open and conversion rates. Stage 2 (Tribe): The Founder Manages the People Who Are Pulling the Levers As the organization grows, a founder probably starts to manage a team of employees. Even if you retain some individual responsibilities, the bulk of your value creation comes from working with the team members and helping them be more productive. For example, if you now run the engineering team, you might still be doing some work to maintain the earlier code you wrote, but your focus should be on managing the other engineers and letting them build new features. Stage 3 (Village): The Founder Designs an Organization That Pulls the Levers The Village-stage transition can be difficult for you as a founder, because it is at this phase that it becomes harder to see the immediate impact of your work. While you might know and interact with frontline employees, you’re not likely to be their direct manager anymore. Now you need to take a big-picture view and focus on designing the organization. Founders who don’t find this interesting or appealing may choose to remain individual contributors or team managers. This is also the stage at which organizations hire executives from the outside; we’ll discuss this further in the next part. Stage 4 (City): The Founder Makes High-Level Decisions About Goals and Strategies When the company reaches the City stage, the founder’s role is to make the big strategic decisions. These decisions may very well have tactical implications, but now it’s someone else’s job to work those out. At Facebook, one of the key high-level decisions that Mark Zuckerberg made was to halt new feature development for nearly two years to focus on Facebook’s mobile product. When he made this gutsy decision in early 2012, Facebook was deep into the City stage, with over four thousand employees. He didn’t personally hire the developers who joined the mobile team, or design the new mobile app, but he made the tough call, then held accountable those who were pulling the levers directly. Stage 5 (Nation): The Founder Figures Out How to Pull the Organization Back from Blitzscaling and Start Blitzscaling New Product Lines and Business Units Even though managing a Nation-stage company has some things in common with managing a traditional business, it’s critical to keep blitzscaling, even as you implement some traditional management practices. When Steve Jobs returned to Apple, for example, he both focused on traditional measures of operational effectiveness and invested in building new, insanely great products. On the traditional management side, he slashed inventories and improved Apple’s financial management, but he also launched major new products, such as the iPod, iTunes, the iPhone, and the iPad.
Part IV: Management Innovation
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One of the key features that sets global giants apart from those companies that flame out or implode before they can reach market dominance is an ability to evolve and optimize their management practices at each stage of growth. The proven techniques we’ll describe in this part fall into two main categories: eight key transitions, which help guide the company through the stages of blitzscaling, and nine counterintuitive rules, which turn the conventional wisdom of traditional management on its head in order to cope with blitzscaling’s frenzied pace of growth.
Eight Key Transitions
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TRANSITION #1: SMALL TEAMS TO LARGE TEAMS The first and most obvious management challenge for blitzscaling organizations to navigate is the shift from small teams to large teams. Even if a rapidly growing company tries to organize itself as a collection of small teams, it still requires a very different approach to pursue its corporate goals and initiatives. Nor is growth simply a matter of turning a crank. Every aspect of people management, from recruiting to coaching to communications, has to adapt to the different stages of blitzscaling.
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One metaphor I use to explain this shift is to take yet another analogy from military history: the marines take the beach, the army takes the country, and the police govern the country. Marines are start-up people who are used to dealing with chaos and improvising solutions on the spot. Army soldiers are scale-up people, who know how to rapidly seize and secure territory once your forces make it off the beach. And police officers are stability people, whose job is to sustain rather than disrupt. The marines and the army can usually work together, and the army and the police can usually work together, but the marines and the police rarely work well together. As you blitzscale, you may need to find new beaches for your marines to take rather than ask them to help patrol the existing ones.
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TRANSITION #2: GENERALISTS TO SPECIALISTS Another important organizational arc is moving from generalists to specialists. During the early stages of blitzscaling, the need for speed and adaptability places a hefty premium on hiring smart generalists who can get many different things done in an uncertain and rapidly changing environment.
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Google even codified the value of generalists in its Associate Product Manager (APM) program, an initiative Marissa Mayer founded because she believed that hiring technical people straight out of college as product generalists would result in flexible, adaptable employees who could fill a lot of needs. Today, distinguished APM alumni include Quip founder/CEO (and former Facebook CTO) Bret Taylor, Asana cofounder Justin Rosenstein, and Optimizely cofounders Dan Siroker and Pete Koomen.
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TRANSITION #3: CONTRIBUTORS TO MANAGERS TO EXECUTIVES The terms “manager” and “executive” are often used interchangeably. We believe that managers and executives play very different roles. Most of the confusion probably comes from the tendency in early-stage start-ups for the same person to play the role of manager and executive. These are separate roles, even when the same person plays them. Managers are frontline leaders who worry about day-to-day tactics: they create, implement, and execute detailed plans that allow the organization to either do new things or do existing things more efficiently. By contrast, the role of the executive is to lead managers. For the most part, executives don’t manage individual contributors. Instead, they focus on vision and strategy. Yet they are still connected to the frontline employees because they are also responsible for the “fighting spirit” of their organizations; they need to be role models who help people persist through inevitable adversity.
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Every employee has likely reported to managers with varying styles and qualities; when promoted to a first-time manager, they can draw on these experiences to help develop their own management style. But when an organization needs executives for the first time, internally promoted managers can’t draw on the experience working with executives at that company—because there weren’t any. There are no role models to provide guidance. We call this situation the “Standard Start-up Leadership Vacuum,” and the result is that inexperienced founders find themselves having to hire and integrate experienced executives from the outside. The situation is made worse when those founders wait until the strain on the organization has become unbearable before making the new hires, meaning that all the leaders are new to the company precisely at the time when tension and uncertainty are running high. The key to navigating this transition is open-mindedness: insiders need to be open to the outside ideas of the new executives, while the outsiders need to be open to learning from what happened before they arrived.
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TRANSITION #4: DIALOGUE TO BROADCASTING One area that undergoes the most change during blitzscaling is the internal communications process. As the company grows, you have to shift from informal, in-person, individual conversations to formal, electronic, “push” broadcasting and online “pull” resources. You also have to shift from sharing all information by default to deciding on what is secret and what is shareable. If you don’t manage to develop an effective internal communications strategy, your organization will become disjointed and start to fall apart.
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TRANSITION #5: INSPIRATION TO DATA “What is the role of data in scaling your company?” In an interview with Reid, Jeff Bezos of Amazon discussed how he makes data a critical part of his management process. “If this is a decision based on opinions, then my opinion wins,” said Jeff. “However, data beats opinion. So bring data.” Jeff follows this policy faithfully; on one occasion, he argued that Amazon customers would never answer questions from potential customers about a product. Just too much friction, he thought. The product team didn’t try to change Jeff’s opinion with rhetoric and argument; instead, they e-mailed product questions to a thousand Amazon customers who had recently purchased a product and tracked the responses. The data their simple experiment produced changed Jeff’s mind, and the “Customer Questions & Answers” section that resulted has added billions of dollars in incremental sales by increasing conversion rates.
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Most companies, even in the highly competitive world of the consumer Internet, still think it’s sufficient to conduct a lot of A/B tests and iterate accordingly. This is an effective tactic but poor strategy, since local optimizations do not necessarily lead to a globally optimal result. A dedicated growth team can look at the big picture and see how product and marketing decisions interact to produce (or not produce) the desired results. According to Greylock’s Josh Elman, “The best growth teams identify the core insights that get users from ‘curious’ to ‘activated habitual’ users and build every feature and program in the product—including the nonsoftware features that are a part of the whole product—to get users through this hurdle faster.” A growth team also helps by making growth a number one priority rather than a second-or third-class citizen. Elman likes to compare a typical marketing team to a Dickensian orphan, pleading with the product and engineering teams for resources: “Please, sir, may I have another landing page?” Any product changes or engineering infrastructure needed to drive growth, no matter how potentially valuable, typically end up taking a back seat to the product or engineering team’s own road maps. In contrast, a growth team’s engineers can move far faster because building scalable and extensible testing infrastructure is a core part of their jobs.
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TRANSITION #6: SINGLE FOCUS TO MULTITHREADING As the company grows, the product focus will also undergo a major change, from a single-threading to a multithreading approach. What we mean by this is that start-ups in the early stages of blitzscaling are generally single-product companies that focus on doing one thing extremely well. But to keep the company growing in the later stages, scale-ups need to manage multiple product lines or even business units. We don’t know of a single start-up that succeeded without starting out as single-threaded. That focus is the key to beating larger competitors in the early stages of a company’s existence.
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Multithreading comes with a definite cost. Some people are eager to jump to multithreading as quickly as possible because they think it increases their competitive bandwidth. In reality, you should be thoughtful and careful about making this decision. Companies like Google grant a great deal of freedom to individual units, and, as a result, the different products and services do not fit together seamlessly. Many of Google’s services are strong enough to succeed on their own, but this means that they are succeeding in spite of, rather than because of, multithreading. In contrast, Apple’s highly centralized approach allows it to produce highly integrated and polished products, but, as a result, it restricts itself to a much smaller product line. Of course, this is intentional; Steve Jobs always wanted to run as close to single-threaded as possible to maintain Apple’s unity of purpose. One of the first things Steve did when he returned to Apple as CEO in 1997 was to reduce the company’s product line from dozens to a simple two-by-two matrix: consumer desktop, pro desktop, consumer laptop, and pro laptop. “Deciding what not to do is as important as deciding what to do,” he told his biographer Walter Isaacson. Another famous Steve story involves an Apple strategy off-site where Apple’s top one hundred people worked for a day to reduce Apple’s strategy to ten key priorities, at which point Steve crossed off the bottom seven items and said, “We can only do three.”
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Assuming that you make the decision to multithread your organization, the optimal management approach is to think of each thread as a different company. For each thread, you’ll need to identify a leadership team (“cofounders”) and create an incentive structure that allows it to operate with a great deal of independence and reap the benefits of success, without making your current managers so envious that it tears the organization apart. This is always challenging!
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TRANSITION #7: PIRATE TO NAVY This key transition is the shift from playing offense to playing offense and defense at the same time. More poetically, it’s the shift from being a pirate to being part of the navy. It requires an evolution in strategy as well as an evolution in company culture.
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TRANSITION #8: SCALING YOURSELF: FOUNDER TO LEADER All founders need some universal skills to succeed. They need the ability to take bold risks in pursuit of a vision that isn’t self-evident to others. They need the ability to learn (since they’re trying to do something brand-new). And to play a long-term role at their start-up turned scale-up, they need the ability to live with and resolve the inevitable paradoxes of being a founder. When I asked Dropbox founder Drew Houston to look back on his experience, he told me, “I think a lot of entrepreneurs start with a lot of insecurity about what they don’t know. What you want is not to be paralyzed by it, but to harness it—to use that nervous energy to learn and make yourself better. You’ve got to keep your personal learning curve ahead of the company’s growth curve.” Maintaining a certain humility and a sense of perspective can help you navigate the changes in your role as you blitzscale your company. If you truly want to blitzscale, then speed has to take priority over everything—including your own ego. There are only three ways to scale yourself: delegation, amplification, and just plain making yourself better.
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To learn more about the role and value of a chief of staff, I recommend that you read Ben’s essay on the topic, “10,000 Hours with Reid Hoffman,” which you can find on his personal website, Casnocha.com.
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Since you’re going to face new challenges during every stage of blitzscaling, you have to make yourself into a learning machine. My friend Elon Musk is a great example. He dropped out of Stanford’s PhD program in applied physics because he thought he could learn more on his own! He started SpaceX and Tesla by learning literal rocket science and carmaking. So how do you accelerate your learning curve so that you can learn more faster? The key is to stand, as Isaac Newton wrote, “on the shoulders of giants.” This means talking with other smart people, often, so that you can learn from their successes and failures. It’s usually easier and less painful to learn from another’s mistakes than from your own. When I need to learn about a new subject, I’ll definitely devour some books on the topic, but I almost always supplement this reading by seeking out dialogue with leading experts in the field.
Nine Counterintuitive Rules of Blitzscaling
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NINE COUNTERINTUITIVE RULES OF BLITZSCALING Blitzscaling a company isn’t easy; if it were, everyone would do it. Like most things of value in this world, blitzscaling is contrarian. To succeed, you’ll have to violate many of the management “rules” that are designed for efficiency and risk minimization. In fact, to achieve your aggressive growth goals in the face of uncertainty and change, you need to follow a new set of rules that fly in the face of what is taught in business schools and are completely counterintuitive to accepted “best practices” of either early-stage start-ups or classic corporate management.
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RULE #1: EMBRACE CHAOS
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RULE #2: HIRE MS. RIGHT NOW, NOT MS. RIGHT For most of Silicon Valley’s history, the conventional wisdom on hiring executives into a start-up was to quickly bring in an executive who could scale. This meant hiring someone who had experience with much bigger organizations, the idea being that their experience would come in handy at a later stage. In today’s start-up world, this rule no longer applies. The Darwinian competition is so fierce that your organization needs to be “all in” on the current stage of scaling. You need managers and executives who are “just right” for the current phase of growth; after all, you won’t have to worry about that next phase if your team can’t actually get you there. Hiring someone who has been managing a thousand people to run a ten-person company is actually counterproductive, because the skills needed to succeed during those two phases are very different. The ideal, of course, is to hire executives who can not only excel at your current phase but stretch to cover the next phase as well. But that “scalability” should be a secondary concern. The primary concern is current value. You can worry about whether to scale or replace an individual executive when the company approaches its next phase.
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RULE 3: TOLERATE “BAD” MANAGEMENT When blitzscaling, speed is more important than having a “well-run” organization. Under normal circumstances, you should strive for organizational coherence and stability. Chaotic, unstable organizations make employees nervous and hurt morale. But when you’re scaling up at lightning speed, you may need to reorganize the company three times in a single year, or repeatedly churn through members of your management team. When your organization is growing 300 percent per year, you might have to promote people before they’re ready and then swap them out if they sink rather than swim.
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While PayPal was a great success, the company was badly managed—and I write that statement as one of its senior managers. We did a few good things, such as making sure that every employee had a clear primary job and staying focused when working on certain important projects, but for the most part PayPal’s management was a lack of management. There were no one-on-one career development conversations with employees. There was no work done to form teams beyond simply picking who was going to belong to them. The few rules we had were more about individual incentives rather than team management. For example, when people were late to a meeting, the last person to arrive was fined $100 to enforce discipline. Yet while we knew meetings were important, we didn’t designate a note taker to capture key points and action items, a common and basic practice in Silicon Valley. But PayPal’s “bad” management provided a number of counterintuitive strengths while we were blitzscaling. During the critical times when PayPal was developing its business model innovations and scaling up, we found ourselves needing to navigate a series of make-or-break challenges, or, as I like to call them, “Oh shit!” moments. Oh shit, we have a fraud problem and we’re losing millions of dollars we don’t have. Oh shit, Visa says we have to change the product or they’ll shut us down. Oh shit, eBay, our most important business partner, just started its own venture to directly compete with us. Because of our “bad” management, we didn’t have any preconceived notions of “this is what the company must look like in three years.” The chaotic nature of our management actually kept us nimble in the face of these serious, unexpected land mines.
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RULE 4: LAUNCH A PRODUCT THAT EMBARRASSES YOU It’s not that you should strive to produce a bad product. Rather, if you need to choose between getting to market quickly with an imperfect product or getting to market slowly with a “perfect” product, choose the imperfect product nearly every time.
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RULE 5: LET FIRES BURN I often tell entrepreneurs that starting a company is like jumping off a cliff and assembling an airplane on the way down. The default outcome for any start-up is death, which means that you have to move quickly and decisively to avoid that default outcome at all costs. That doesn’t leave a lot of time for dotting each i or crossing each t. At every stage of blitzscaling, there are always far more problems and issues clamoring for your attention than you have the resources to address. You might feel like a firefighter, except instead of trying to extinguish a blaze in one contained spot, you can see separate fires all around you—and you don’t have time to put out all of them. One of the ways that blitzscaling entrepreneurs can stay alive is by deciding to let certain fires burn so that they can focus on the fires that if allowed to rage unchecked really will destroy the company. My Greylock colleague Joseph Ansanelli says, “What you say ‘no’ to is more important than what you say ‘yes’ to.”
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I believe that there is a Maslovian hierarchy of fires that applies to most rapidly growing start-ups, where the top of the list is the most important fire to fight first: Distribution Product Revenue model Operations Competition What’s next? What this means is that for most consumer Internet start-ups, the most important fire is distribution; if your distribution goes up in flames, your company is doomed. If you are able to contain that fire, however, it will make fighting the other fires a whole lot easier. Acquiring users gives you feedback on how to improve your product. Acquiring millions of users or thousands of customers makes it a lot easier to generate revenue. Generating revenue makes it easier to pay for the infrastructure and personnel to scale up your operations, either out of cash flow or by raising investment. And if you have a successful and growing business, then it makes sense to worry about the competition.
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In the case of LinkedIn, after we had fixed our distribution problem by building in virality and generating a significant user base, we had people harping on the revenue model fire. If I received a nickel for every time someone asked me, “How is LinkedIn going to make money?” during those days I probably wouldn’t have needed another revenue model! But I knew that we should ignore that fire, because (1) the lack of revenue wasn’t going to be the proximate cause of death unless it prevented us from raising money and (2) the product fire was far more urgent and required our focused attention. If we couldn’t find the distribution to acquire a critical mass of at least a million users, and build a product they found compelling enough to become regular users of the service (or at least respond to LinkedIn requests), the revenue model would be irrelevant. At the time, potential Series A investors wanted to see a business model that showed how LinkedIn would get to profitability. I told potential investors that we weren’t going to generate revenue until after the next round of funding, and that therefore it shouldn’t matter to them. They insisted anyway, so the team and I generated a financial model that included revenue sources. I don’t even remember what we put in it!
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RULE #6: DO THINGS THAT DON’T SCALE (THROWAWAY WORK) Paul Graham, the cofounder of Y Combinator, wrote a famous essay in which he advised entrepreneurs to do things that don’t scale. This advice is spot-on for young start-ups, but it’s even more important for blitzscaling start-ups. Engineers hate doing throwaway work. Not only is it wasteful, it offends their sense of efficiency. They are firm believers in the conventional wisdom that says it’s better to build your product right the first time, so you only have to build it once. But when you’re blitzscaling, inefficiency is the rule, not the exception. To prioritize speed, you might invest less in security, write code that isn’t scalable, and wait for things to start breaking before you build QA tools and processes. It’s true that all of these decisions will lead to problems later on, but you might not have a later on if you take too long to build the product. A hack that takes a tenth of the time may be more useful than an elegantly engineered solution, even if it has to be thrown away later.
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Much the same logic applies to nearly every aspect of your business. You’ll often have to do things that don’t scale when it comes to sales (e.g., founder Marc Benioff brought in Salesforce.com’s first customer, Blue Martini Software, by calling in a favor from its CEO Monte Zweben), operations (e.g., Paul English listed his personal cell phone number as the original customer service line for Kayak), and so on. Nor is the world neatly divided into “things that don’t scale” and “things that scale,” with the former smoothly—and permanently—giving way to the latter. The code or process that scales during one stage of blitzscaling may break down at the very next stage, and whatever you replace it with might not scale at first either. Consider how the founders of Airbnb solved the problem of hosts posting poor-quality photos of their rental properties on Airbnb.com: they became the photographers. As Brian Chesky told me, “We would borrow cameras from our RISD [Rhode Island School of Design] friends in Brooklyn, then literally knock on the doors of all our hosts.” Together, Brian and cofounder Joe Gebbia could photograph about ten homes per day (cofounder Nathan Blecharczyk had to stay at the apartment that doubled as their office, making sure the site didn’t crash). Talk about doing things that don’t scale! Once, a host asked Brian when he’d get paid, and Brian pulled the company checkbook out of his backpack and wrote him a check. “I guess you’re not a very big company,” the host said as he pocketed the check. As Airbnb took off, the photography function had to scale up considerably. So the founders hired photographers from Craigslist, hit up their RISD friends, and even recruited Airbnb hosts who listed photography as a hobby. By tapping these sources, the company was able to build a stable of five to ten photographers who were paid $50 per home, and whom they tracked using the sophisticated management tool of a spreadsheet with photographers and their assignments. Pretty soon, this system too was overwhelmed. So they hired Ellie Thiele as a summer intern from Syracuse University, and made managing photographers her full-time job. By focusing solely on managing the photography, Ellie was able to increase the number of active photographers to about fifty. It was only at this point that Airbnb went to a truly scalable solution: software. Nathan wrote some code, adding two buttons to the site; one for hosts to request a photographer and the other for Ellie to trigger a payment when a photographer finished an assignment. Eventually the founders hired Joe Zadeh as an entry-level engineer and asked him to work with Ellie to fully automate the photography process. Airbnb worked its way through three different ways of handling photography before building any code, and has rewritten the photography system multiple times since then. It wouldn’t have made sense for Airbnb to start by building a scalable automated photography system; at the point when the company began this journey, the site was receiving a mere ten visitors per day, and the only engineering resource was Nathan Blecharczyk. Any work he did on this problem would have delayed all the other engineering work Airbnb needed to get done to grow its business. By doing things that didn’t scale, the company was able to grow despite the resource constraints and the “wasted” work of building spreadsheets that would have to be thrown away later.
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RULE #7: IGNORE YOUR CUSTOMERS The fundamental rule of customer service has long been “The customer is always right.” But for many blitzscaling companies, the key rule is “Provide whatever customer service you can as long as it doesn’t slow you down…and that may mean no service!” Many blitzscaling start-ups will offer e-mail support only, or no support at all, relying on users to find and help one another on discussion forums.
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Our experiences at PayPal offer a telling example of how hypergrowth requires rapid changes in your approach to customer service. In February 2000, transaction volume was increasing 3 to 5 percent per day, on a compounding basis. Each day we were falling behind to the tune of thousands of unanswered e-mails, which compounded the problem because the users who didn’t get a response to their initial e-mail would simply write in again. Conventional wisdom would have called for us to devote as many people as possible to customer support. But that’s the opposite of what we did. Out of a forty-person team, we had two support people (and our office manager was spending half of his time to help out). We had much more urgent fires to fight. For example, during that same time period, we were (1) raising our first major round of venture capital, (2) starting to compete with Billpoint, our biggest partner eBay’s attempt to clone our business, and (3) negotiating a merger with Elon Musk’s X.com. Suffice it to say that things were busy, and we didn’t have the bandwidth to solve the customer service problem. So we ignored our customers! After all, none of their complaints stopped transaction volume from growing exponentially. Of course, ignoring our customers had its own cost. Even though PayPal was only listed in the local Palo Alto phone directory, enough people looked up the number and dialed random extensions that at any time of day, every phone would be ringing with an angry customer on the other end. We stopped picking up the phones. Ignoring customers is a temporary solution. Eventually, after we raised a significant round of venture capital and had announced the X.com merger, we had the time and resources to deal with the problem. We forged an alliance with the governor of Nebraska and announced that we were hiring for customer support positions in Omaha. Why Omaha? X.com already had a small customer service team located there. Why had X.com picked Omaha? One of its early employees had a sister living there who offered to help the fledgling start-up take customer service calls. We ended up flying out most of the company to hold group interviews so we could hire and train one hundred new support employees within thirty days.
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RULE 8: RAISE TOO MUCH MONEY Entrepreneurs generally try to avoid raising more capital than they need. Raising excessive amounts of capital dilutes their stake in the company and introduces a preference overhang (all that money has to be paid back to investors before the founders and employees get to participate in the upside). Yet when blitzscaling, you should always raise more—preferably much more—than you need. “Excess” cash allows you to better account for the unforeseeable—and the only thing that’s foreseeable about blitzscaling is that you will at some point encounter the unforeseeable. That includes anything from a stock market crash or outlandish expenses to an opportunity you couldn’t predict in a market that didn’t exist when you started out. The fact is, most entrepreneurs are far more likely to raise too little rather than too much money. Nobel Prize–winning economist Daniel Kahneman and his longtime collaborator, the late Amos Tversky, described this general phenomenon when they wrote about the “planning fallacy” in their 1979 paper “Intuitive Prediction: Biases and Corrective Procedures.” The planning fallacy is that you make a plan, which is usually a best-case scenario. Then you assume that the outcome will follow your plan, even when you should know better. Almost every entrepreneur I’ve ever worked with falls prey to the planning fallacy, especially first-time entrepreneurs!
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RULE #9: EVOLVE YOUR CULTURE Nearly all founders, business gurus, and academics agree that organizational culture is important. While there are a lot of inefficiencies you can tolerate and fires you can let burn during your blitzscaling journey, ignoring your culture is not an option. Brian Chesky of Airbnb defines culture in a simple and concise way: “a shared way of doing things.” Clearly defining the way an organization does things matters, because blitzscaling requires aggressive, focused action, and unclear, hazy cultures get in the way of actually implementing strategy. Netflix cofounder and CEO Reed Hastings told me, “Weak cultures are diffuse; people act differently, and don’t understand each other, and it becomes political.” Mark Zuckerberg and Sheryl Sandberg have done many wonderful things at Facebook, and one of them is building a unified culture that is devoted to aggressive experimentation and data-driven decision making, as summarized by Mark’s original motto “Move fast and break things.” Facebook’s culture helps employees understand that they shouldn’t be afraid to try things that might fail. This allows Facebook to move faster, and to move on from failed experiments quickly. Imagine if someone asked a random employee from your start-up the following questions: What is your organization trying to do? How are you trying to achieve those goals? What acceptable risks are you incurring to achieve those goals more quickly? When you have to trade off certain values, which ones take priority? What kind of behavior do you hire, promote, or fire for? Would she be able to answer those questions? If you asked another employee, would he give the same answers? When organizations have strong cultures, their employees give consistent answers and act accordingly.
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The late Steve Jobs used architecture as a core part of his deliberate communications strategy at Pixar. He designed Pixar headquarters so that the front doors, main stairs, main theater, and screening rooms all led to the atrium, which contained the café and mailboxes, ensuring that employees from all departments and specialties would see people from other groups on a regular basis, thus reinforcing Pixar’s collaborative, inclusive culture. In Walter Isaacson’s biography of Steve Jobs, John Lasseter, Pixar’s chief creative officer says, “Steve’s theory worked from day one. I kept running into people I hadn’t seen for months. I’ve never seen a building that promoted collaboration and creativity as well as this one.”
Blitzscaling Beyond Business
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the Obama campaign also utilized technology to build and manage an army of volunteers to get out the vote. Here, the Obama campaign benefited from a remarkable piece of luck; shortly before announcing his candidacy, the campaign reached out to the young social network Facebook to set up an official page. The person they reached, Facebook cofounder Chris Hughes, became convinced that Barack Obama could win the presidency and change the world, and Hughes left Facebook to join the campaign. Hughes brought with him his personal experiences working at one of the world’s great blitzscaling companies, and moved quickly to apply the tools of Silicon Valley to the Obama campaign. Hughes and his team ended up creating three key tools that leveraged growth factors to help Obama win the election. The first was my.barackobama.com, or MyBO for short. MyBO was a social network that leveraged existing networks of Obama supporters, allowing them to connect with one another, as well as create groups, plan events, and raise funds. Over the course of the campaign, volunteers used MyBO to create two million profiles, host two hundred thousand off-line events, and raise $30 million. The second tool was the Neighbor-to-Neighbor canvassing tool. When MyBO users logged in, Neighbor-to-Neighbor provided a list of undecided voters they could call or visit. Neighbor-to-Neighbor tapped into online databases to match volunteers with people they would likely connect with, taking into account factors like age, profession, languages spoken, and military service. Neighbor-to-Neighbor generated some eight million calls—and tremendous word of mouth. The final tool was the Vote for Change voter registration site, which automatically sorted out the fiendishly complicated nest of local voter registration rules to help potential Obama voters register correctly. For example, college students would log in and be asked for the location of both their college and childhood home; Vote for Change would then help them register in the state where a student’s vote was more badly needed. During the campaign, Vote for Change helped one million people register to vote—roughly the same number that two thousand paid staff could handle using the old-fashioned door-to-door method.
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fate of a nation. This book is actually the third in a series that covers adapting to the Networked Age. The Start-up of You focuses on how individuals can adapt their careers to a rapidly changing world by remaining in a state of “Permanent Beta.” (Visit thestartupofyou.com for more resources and inspiration.) The Alliance analyzes how companies and managers should adapt their talent-management strategies to build stronger relationships with employees despite an uncertain future. (Visit alliedtalent.com to get help introducing these frameworks into your organization.) This volume is both a prequel and a sequel; it explains how blitzscaling helped create the Networked Age, and how entrepreneurs, leaders, companies, and governments can shape the coming change.