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

by Reid Hoffman

Baldwin and Clark describe in their book, Design Rules, Vol 1: The Power of Modularity,

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.

Even if you don’t compete with blitzscalers for customers, you probably compete with them for office space and employees.

“Do Things That Don’t Scale,”

HOW THE ROLE OF THE FOUNDER CHANGES IN EACH STAGE

Stage 1 (Family): The Founder Personally Pulls the Levers of Hypergrowth

Stage 2 (Tribe): The Founder Manages the People Who Are Pulling the Levers

Stage 3 (Village): The Founder Designs an Organization That Pulls the Levers

Stage 4 (City): The Founder Makes High-Level Decisions About Goals and Strategies

Stage 5 (Nation): The Founder Figures Out How to Pull the Organization Back from Blitzscaling and Start Blitzscaling New Product Lines and Business Units

TRANSITION #1: SMALL TEAMS TO LARGE TEAMS

Small teams, which are especially common in the Family and Tribe stages of blitzscaling, can operate spontaneously and informally thanks to the personal relationships and frequent contact between team members.

As the business grows into the Village stage and beyond, its organization necessarily includes larger teams, such as departments with tens of employees often dispersed across various offices and places.

Coordinating the efforts of tens or hundreds of individuals—and ensuring alignment with the goals of the entire organization as a whole—requires planning and formal processes, often to the chagrin of an idealistic founder more interested in long-term vision than the minutiae of day-to-day management.

“I started out twenty-eight years ago with a total disdain for organizational matters. I just thought everyone who comes to this should be mission-driven, and we’re not going to have any hierarchy, and we’re going to pay everyone the same thing. About five years into this, I realized if I didn’t become obsessed with the very mundane matter of how to manage effectively, we’d never get there!”

At the Family stage, it’s often the case that every member of the team is involved in every major decision. At the Village stage and beyond, this is nearly impossible.

“People have elastic limits,” he told us. “Of the first hundred people, only a few scaled to a ten-thousand-person organization. It was hard to predict who would scale. People who were smarter than me didn’t always scale.”

An employee who runs the engineering “department” at the Family stage might consider it a demotion to be one of several directors of engineering at the City or Nation stage, but you can point out that at the Family stage she was managing a team of three engineers and now she oversees a team of one hundred. Encourage employees to focus less on their job titles and more on how each tour of duty’s activities and experiences prepare them for greater responsibilities in the future.

TRANSITION #2: 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. But as the company grows, it needs to shift to hiring specialists who are less fungible but have expertise in an area that is crucial to scaling the organization.

In many cases, you should work to retain your generalists, both for their cultural and institutional knowledge, and for their ability to tackle new problems. But if you are unable to do so, and early generalists decide to leave the organization, you should try to maintain a positive relationship with them as members of your corporate alumni network.

In the Family stage, you should hire only generalists.

Even at the Tribe stage, hiring a specialist should be considered a major exception—for example, if you need an engineer with a very specialized area of expertise, such as data science or machine learning. The Village stage is where it becomes prudent to hire specialists, as both executives and key contributors. At the Tribe stage you want employees with skill sets flexible enough to pivot along with the company,

Almost any executive hire at the City or Nation stage is going to be a specialist. But even at these largest, latest stages, you should still mix in some number of generalists.

Think of generalists as the “stem cells” of your organization. Your body has a small number of stem cells that have the capability to morph into various other types of cells as needed.

TRANSITION #3: CONTRIBUTORS TO MANAGERS TO EXECUTIVES

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.

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.

When a company is in the Family stage, it may not need any formal managers. And even if it does, that role is generally filled by the founder/CEO. As the company grows into a Tribe, it will need managers to run the various functional departments, such as engineering and sales.

When the company reaches the Village stage, it will need executives. It simply isn’t possible to coordinate a company with hundreds of employees without executives to manage and lead multiple managers.

A company in the Village stage might have hundreds of employees. The engineering department alone would require multiple teams and team leaders who would report to a VP of engineering charged with coordinating the teams and architecting the overall organization of the department.

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.

Hire someone who is already a known quantity to at least one member of the team.

Bring the new executive in at a lower level initially and let the executive prove himself or herself.

Once the executive has earned the team’s trust and credibility, consider promoting him or her.

As your company progresses from a Village to a City or even a Nation, you’ll continue to need to hire executives, both because the growth in size will require you to add layers above your frontline managers, and because your executives won’t always have what it takes to scale to the next stage. But once your organization has successful executives who can serve as role models and mentors, you will be able to start promoting promising managers with personal experience working with those successful executives from within.

Gulati and DeSantola cite the example of Cloudflare, whose founders publicly committed to building a completely flat organization without hierarchy or job titles.

the results, as documented in a Harvard Business School case study by Tom Eisenmann and Alex Godden, were poor:

Blitzscaling organizations need organization, not just to coordinate their many resources and activities, but in order to maximize speed.

TRANSITION #4: DIALOGUE TO BROADCASTING

As the company grows, you have to shift from informal, in-person, individual conversations to formal, electronic, “push” broadcasting and online “pull” resources.

In the Family stage, the entire organization is typically under the same roof, possibly even all working in the same room. As a result, information spreads quite naturally without any additional intervention—possibly more than you’d like.

as early as the Tribe stage, you will need to begin implementing processes to supplement the one-to-one dialogue.

nearly every Tribe-size start-up holds a weekly company meeting,

A Tribal meeting should be well organized, with an agenda and other materials provided in advance so that participants can engage in an interactive discussion rather than simply listen to senior leaders talking or, worse, suffer through text-dense PowerPoint presentations.

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.

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.

With technology eliminating the logistical challenges, the company all-hands is highly scalable; these broadcast techniques can work for organizations even as th...

It’s also at this point that the founder/CEO needs to make a conscious effort to develop broadcast channels to reach far-flung employees who might not otherwise feel a personal connection with the company’s leader.

at the Village stage, the company likely exceeds Dunbar’s number (the number of individuals with whom any one person can maintain stable relationships), and the founder simply won’t have time to meet one on one with every employee with any reasonable frequency.