Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

by Reid Hoffman

prioritizing speed over efficiency—even in the face of uncertainty—is especially important when your business model depends on having lots of members and getting feedback from them. If you get in early and start getting that feedback and your competitors don’t, then you’re on the path to success. In any business where scale really matters, getting in early and doing it fast can make the difference.

Blitzscaling drives “lightning” growth by prioritizing speed over efficiency, even in an environment of uncertainty.

When a market is up for grabs, the risk isn’t inefficiency—the risk is playing it too safe. If you win, efficiency isn’t that important; if you lose, efficiency is completely irrelevant.

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.

you usually need more money to blitzscale than to fastscale, because you have to keep enough capital in reserve to recover from the many mistakes you’re likely to make along the way.

If the prize to be won is big enough, and the competition to win it is intense enough, blitzscaling becomes a rational, even optimal strategy.

The canonical sequence that companies like Google and Facebook have gone through begins with classic start-up growth while establishing product/market fit, then shifts into blitzscaling to achieve critical mass and/or market dominance ahead of the competition, then relaxes down to fastscaling as the business matures, and finally downshifts to classic scale-up growth when the company is an established industry leader.

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

The first technique of blitzscaling is to design an innovative business model that can truly grow.

“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!”

Technology innovation is a key factor in retaining the gains produced by business model innovation.

Ideally, you design your business model innovation before you start your company.

For successful blitzscaling, the competitive advantage comes from the growth factors built into the business model, such as network effects, whereby the first company to achieve critical scale triggers a feedback loop that allows it to dominate a winner-take-all or winner-take-most market and achieve a lasting first-scaler advantage.

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.

distribution techniques fall into two general categories: leveraging existing networks and virality.

Virality almost always requires a product that is either free or freemium (i.e., free up to a certain point, after which the user has to pay to upgrade—Dropbox, for example, offers 2 GB of free storage). We can’t recall a single instance of a company that grew to a massive scale by leveraging the virality of a paid product.

“Do everything by hand until it’s too painful, then automate it.”

Brilliant thinking is rare, but courage is in even shorter supply than genius.

Google uses smaller teams to work on new products and larger teams to sustain and grow existing products—Google

“When we were smaller, being willing to break things allowed us to move faster. But as we grew, the willingness to break things actually started slowing us down, because increasing complexity made it harder and harder to fix things once they broke. By taking the extra time to focus on stable infrastructure, we reduce the impact and time to recover from breaking things, so that we can actually move faster.”

Being first to launch in a market might earn you congratulations on being a product visionary, but if you aren’t also the first to scale, you’ll end up as a footnote in a Wikipedia article about your competitor who did.

If taking on additional cost and uncertainty doesn’t actually confer an advantage, it’s better to follow the traditional rules of business (at least for the time being) so that when blitzscaling does become appropriate, your organization can be efficient, well maintained, and more ready to scale.

Because blitzscaling is—by definition—an inefficient use of capital, it only makes sense when speed and momentum are important.

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.

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.

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.

No one likes firing employees who have been there from the beginning, but think of it this way: if your executives can’t scale, your business won’t scale either.

if you have to choose between losing a cherished employee and allowing him to flounder in a role for which he isn’t suited, it is better to have an honest conversation and an amicable parting than it is to allow both the employee and ultimately the company to fail.

Electronic communications are great for establishing regular contact, but face-to-face interaction is still important for establishing a deeper, more emotionally resonant relationship.

“If this is a decision based on opinions, then my opinion wins,” said Jeff. “However, data beats opinion. So bring data.”

if you’re building a global business, there are three key elements you need to put in place. A set of managers who are responsible for, and have strong executive control over, their individual markets globally An understanding of how those markets differ, which leads to a variety of plans for how to grow in each of those markets A unified executive team to coordinate global operations, including the activity of the individual managers leading operations in each country

A strong executive team meets on a regular basis and focuses on the most important initiatives and issues, including active planning for the future.

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.

Keep in mind that you should be embarrassed by your initial release—not ashamed or indicted! The desire for speed is not an excuse to cut dangerous corners. If you trigger lawsuits or burn through your money without learning, it means you did launch too soon.

When anecdotal user feedback and data contradict each other, listen to the data.

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 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?

Building culture into your hiring processes means that you’re excluding people by design, and you have to be careful not to restrict your hiring to the point of total homogeneity. Successful organizations need a combination of conformity and diversity.

Founders and CEOs are cultural role models; if they don’t exemplify the culture, it will inevitably weaken.

Ortega devised this model when he was sixteen years old—don’t order inventory and hope it sells; instead, figure out what people want, and then make it.

Society provides the ecosystem in which you live, and in which your business operates, which means that it can rightly claim some responsibility for your success. In other words, your success is contingent upon society functioning properly.

Like it or not, when your company is a City or a Nation, you need to start thinking like a mayor or a president and set rules for the good of humanity as a whole rather than just for the good of your profits.