What you could learn from Blitzscaling by Reid Hoffman and Chris Yeh (2018, 299 pages)

Posted by Max on January 15, 2019 in Book reviews | Leave a comment

In their book, Reid and Chris argue that blitzscaling is a general framework and specific techniques that allow companies to achieve massive scale at incredible speed. The authors use examples of Airbnb, Google, Uber, Zappos and Tencent (among others) to bring their frameworks to life and rienforce thier asertions.

The main tenant of blitzscaling is to prioritise speed over efficiency, to grow customers and revenue ‘lightening fast’. Reid argues that blitzscaling is not for every company, it is highly risky and you need to meet the four criteria of explosive growth:

1. Market size with a large total addressable market and underserved initial addressable market
2. Good potential for Distribution, through existing networks or virality
3. High gross margins
4. Network effects, where the value of your product will increases as number of customers increase

Reid suggests that there are five stages of blitzscaling. While it is similar to my own music analogy, it is more granular and uses the number of employees to differentiate, rather than level of success.

Stage	Name	Number of Employees
1	Family	1-9
2	Tribe	10s
3	Village	100s
4	City	1,000s
5	Nation	10,000s

The book advocates three key techniques for bliztscaling:

Business model innovation. How you make money by acquiring and serving customers. The key is to combine new technologies with effective distribution and a scalable, high margin revenue model.

Strategy innovation. Find new opportunities to compete, where there are no competitors (blue oceans) or poor levels of competition.

Management innovation. Gain an advantage by making better decisions, faster, and being able to execute quickly, typically by moving from

• small teams to large teams
• generalists to specialists
• individuals to contributors to managers to executives
• dialogue to broadcasting
• inspiration to data
• single focus to multithreading

When blitzscaling, leadership must focus on (in priority order):

1. distribution
2. product
3. revenue model
4. operations
5. competition
6. what’s next

What is most helpful, it the list of counter-intuitive rules to help:

1. hire ‘good enough’ for now
2. embrace chaos
3. tolerate bad management
4. launching flawed and imperfect products
5. do things that don’t scale
6. letting fires burn
7. ignore angry customers
8. raise too much money
9. evolve your culture

Beware of the two growth limiters:

1. Lack of product/market fit (see Andressens’s article here)
2. Operational scalability (human limitgations such as customer service, or infrastrucutre

I learnt the following from Blitzscaling:

• Check growth and constraining factors when looking at new products and new markets
• ocus relentlessly on what impacts the customer and the company and ‘let other fires burn’

You can buy blitzscaling here on Amazon UK