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

by Reid Hoffman

One interesting approach is to have all employees use a teleconferencing service rather than allow headquarters employees to have a better in-person experience than the rest of the company. For example, at the asset management company BlackRock, certain meetings are held by teleconference, even for the subset of employees who could gather in a single conference room so that all employees are on an equal footing.

The all-hands needs to have a formal questions period so that employees can request needed information and feel part of the decision-making process. At LinkedIn we have moderators in each office gather questions for management.

Brian Chesky addresses this need at Airbnb by sending a long e-mail to every employee each Sunday night. Chesky’s e-mail isn’t simply a recitation of key performance indicators, which could be just as easily accessed on a dashboard somewhere; rather, Chesky shares his thinking on a topic he considers important to the company. This broadcast communication’s length, specificity, and authenticity transmit to every Airbnb employee an understanding of who Chesky is and what matters to him.

“Leaders [who] write things down tend to deal with [fewer] communications issues. You have to clarify your thought processes in a completely different way. If you just have a meeting and say, ‘Okay, so we’ve all decided,’ then people play telephone.”

breakfast with that month’s newly hired employees.

For example, Mark Pincus of Zynga holds Monday morning coffee talks with all new employees joining that week. Electronic communications are great for establishing regular contact, but face-to-face interaction is still important for establishing a deeper, more emotionally resonant relationship. Reed Hastings meets this need by not having an office at all, and wandering the halls and conference rooms of Netflix.

“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,

In other words, if you don’t have customers to listen to, the best you can do is listen to your gut.

Sometimes even a single metric can tell you a lot. At YouTube, Shishir Mehrotra decided that their single clarifying metric would be watch time.

Whatever metric(s) you select, that information must be easy to access and provide clear context.

it pays to invest in the infrastructure necessary to support fast, data-driven decision making.

What matters isn’t what you collect but what you convey to decision makers.

Using a common dashboard will allow you not only to see how the threads interlock but also to coordinate the work of different groups. Through the dashboard each group can tell the others, “This is what we’re working on; this is how we’re doing it; and this is how we’re working together with the rest of you.”

Almost all quality Village-size businesses will use a dashboard to assess the daily health of their companies. Your organization’s dashboard will tell you what you want to track and ensure that you’re keenly aware

At the City and Nation stages, you’ll almost certainly need a dedicated BI team to ensure that the necessary data is getting to the people who need to support and carry out key decisions.

The numbers might not measure the real health of the business or reveal the real major threats you face.

“Don’t try a second channel until you have your main flywheel working. Most successful companies dominate one channel.”

The shift to multithreading usually occurs during the City stage of blitzscaling. Once the company has more than a thousand employees, the organization is large enough to support the creation of multiple divisions or business units.

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.

“Deciding what not to do is as important as deciding what to do,”

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.”

This is why it’s generally better to have your ten best people working on a single important project rather than splitting them to attack two different opportunities.

But if you succeed as a pirate, you’ll eventually win enough wealth and territory to blitzscale to the Village, City, and Nation stages. At that point, even the most inveterate pirates will have to trade in their Jolly Roger for the flag of a legitimate, disciplined navy. If they don’t, their organizations will devolve into chaos.

While start-ups and their founders may benefit from behaving like ethical pirates, they should never behave like sociopathic criminals. Besides the fact that such an approach is morally wrong, as a practical matter, you simply can’t build a world-changing company as an outlaw, and it is difficult to make the shift from deviant to mainstream society. And this is particularly true in a world where social media is quick to shine a spotlight on unethical practices that can tarnish a company’s reputation forever. Go afoul of the law, and your customers will neither forgive nor forget.

Any given management structure is likely to be temporary. You can’t run a Village the same way you run a Tribe, and you can’t run a City the same way you run a Village. But without structure, you won’t make it to the next stage of growth.

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.

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.

Talk with other entrepreneurs. Not just famous entrepreneurs, but people who are one year ahead, two years ahead, five years ahead. You learn very different and important things from those kinds of people. It really helps to have a sense of the longer-term arc, because the game changes quietly from phase to phase.

Keep in mind that you should be embarrassed by your initial release—not ashamed or indicted!

If you trigger lawsuits or burn through your money without learning, it means you did launch too soon. The point of launching your product early is to learn as quickly as possible.

Before you release your product, make sure you know what you’re trying to learn, and how much risk you can take without endangering your customers or your reputation.

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

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.

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.

“What you say ‘no’ to is more important than what you say ‘yes’ to.”

You can’t ignore those fires forever—they are actually dangerous and will event...

The art, of course, is knowing which fires to let burn. Prioritizing your fires tends to be a function of a combination of different factors. The first is urgency: Which fire is going to damage or kill your business the soonest?

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.

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! Rather than waste weeks on it, we simply set aside a single evening, drank a couple of glasses of wine, and put together the model (I might have been a little miffed at having to spend even a single evening, but it was pretty good wine, so it wasn’t a total waste).

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.

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.

“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.

But for blitzscaling companies, letting customers feel ignored is often one of the fires that’s easier for you to let burn until you have finished fighting the bigger, more deadly fires.

For technology start-ups, the amount of money you need to raise will tend to be a function of two primary factors: people costs and the cost of outbound customer acquisition.

At Amazon, Jeff Bezos famously bans PowerPoint decks and insists on written memos, which are read in silence at the beginning of each meeting. This memo policy is one of the ways that Amazon encourages a culture of truth telling. Memos have to be specific and comprehensive, and those who read the memos have to respond in kind rather than simply sit through some broad bullet points on a PowerPoint deck and nod vague agreement.

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.

When he visited our Blitzscaling class at Stanford, Eric Schmidt shared how Google’s hiring strategy shaped its culture. “The people that you hire make your culture,” Eric said. “We’d hire people who were special in some way. You don’t hire generic people—you hire people who have had stress and achievement.”

First, there can be a fine line between a strong culture and a cult. By definition, culture is narrowing to some degree. 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. The right kind of sameness (e.g., smart, driven, intelligent, hardworking, mission-driven) can give a company an edge, as was certainly the case at PayPal. But too much sameness can result in groupthink, bias, and stagnation.

This diversity debt is a serious problem for individual companies, and for society as a whole. Homogeneity harms companies because groupthink reduces the resilience and adaptability of the companies, and it harms society if those many opportunities blitzscaling provides aren’t fully open to all qualified people, whatever their gender, sexuality, religion, or ancestry.