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

by Reid Hoffman

The salespeople you need to ignite hypergrowth are totally different from the salespeople you’ll need at scale. When you’re trying to sell your product for the first time, you need aggressive, adaptable salespeople who aren’t big on following rules. By the time you’ve achieved scale, you’ll need thorough, process-oriented salespeople who can keep a machine running smoothly. You’re not going to find one person who is great at both.

Very few people excel at being an individual contributor, a manager, and an executive, and even those rare employees are likely to have a preferred role.

We were also fortunate in our timing. One thing that holds teams together in the absence of management is an opportunity to win.

Is that “bad” management? Maybe. But if bad management saves you from building a warehouse in the wrong part of town and lets you quickly turn that structure into a successful hotel (or saves you from losing money on mobile cash and lets you quickly capture the market for global payments), then it might be the best approach you can take.

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. Getting to market fast allows you to start getting the feedback you need to improve it.

Speed really matters, and launching early lets you climb the learning curve to a great product faster.

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. The point of launching your product early is to learn as quickly as possible. But your learning is useless if you don’t have the ability to iterate.

A free consumer product can get away with the most flaws, because consumers tend to be very tolerant when it comes to something that doesn’t cost them anything. A free enterprise product needs to be more refined; even if it is free, the stakes are higher in a professional setting. A paid enterprise product needs to be even more refined, but it can still have significant flaws, because these types of products are intended for expert users who may have no choice but to use the product. A paid consumer product has the least room for error. While consumers are very tolerant of flaws in free products, they expect products they pay for to be nearly perfect and will grouse loudly about any significant flaws they find: “What am I paying for here?”

Plus, if your people can’t let fires burn, they’ll spend all of their time fighting them, which won’t leave any time for coming up with breakthrough opportunities to advance the business.

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.

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.

Most blitzscaling start-ups have a high burn rate. This is because the drivers of growth, such as sales and marketing, often require significant investments that exceed the cash coming from product sales. It usually takes a lot of money to make a killer company, which is why we have venture capitalists!

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.

Remember, starting a company is like jumping off a cliff and assembling an airplane on the way down. If you run out of money for the fuel and parts you need to get airborne, no one will ever get to find out how efficiently you spent it along the way!

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.

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?

When organizations have strong cultures, their employees give consistent answers and act accordingly.

The primary culture of an organization typically originates in the functional area that is most critical to the success of the company. Early on, engineering predominated, and engineering culture formed the basis of things like the HP Way. As the technology industry matured, sales assumed a greater importance, and sales-oriented cultures arose at companies like Oracle and Cisco. Companies today might also have a product culture, design culture, marketing culture, finance culture, or even an operations culture. Any and all of these cultures can be successful, but you should focus on whichever function is key for your organization to succeed. In addition to the role this choice plays in the company’s values, the executive in charge of the functional area that drives the culture also tends to be the most likely successor to the CEO.

Most cultures begin to form organically. As we’ve discussed previously, the founders of the organization have a major influence on the culture, simply because of who they are. If a founder believes that certain beliefs and practices are fundamental keys to winning, those beliefs and practices tend to be transmitted to the people who work closely with him or her.

If you want to operate with very few rules, you need to set context.” Yet while early employees often fear that deliberate cultural development will bring bureaucracy, as Reed argues, culture is actually a substitute for bureaucracy and rules. The stronger you make your culture, the less you’ll have to bind people’s behavior with rigid directives.

After all, the strongest influences on organizational culture are often who you hire, promote, and fire.

The problem is that you end up hiring mercenaries rather than missionaries. And if you’re tripling the company’s size each year, you can shift your company from a majority-missionary culture to a majority-mercenary culture in a single year.

You have to walk a fine line as you evolve your culture—evolve it too slowly, and it will hold you back from adapting to new businesses and the changing world around you. Evolve it too quickly, and the Ship of Theseus illusion breaks down, and people no longer feel like they belong.

“If we are to preserve culture, we must continue to create it.”

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.

Just as start-ups incur “technical debt” by taking shortcuts with their code, they can incur “diversity debt” by taking shortcuts with their hiring practices.

Another pitfall is cultural hypocrisy. If you preach the gospel of your strong culture, you have to live up to it, or you’ll be doing more harm than good. When you talk the talk but don’t walk the walk, employees will recognize the hypocrisy. Credibility has to be earned, not simply asserted.

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

Every exciting new technology or market that once supported massive wealth creation eventually becomes a stable, boring industry.

The best entrepreneurs and companies use successful blitzscaling in one market to jump into another.

The never-ending need for change should fill you with both fear and hope. Fear, because you can never rest or stand still. Hope, because new markets are always emerging,

“Give customers what they want and get it to them faster than anyone else.”

On the other hand, if a start-up can play the same game, scale may not provide a significant advantage unless there is a massive difference in scale. For example, when Airbnb was blitzscaling, it was competing with HomeAway, an established player that had much greater scale. However, HomeAway had achieved its scale via a string of twenty-one acquisitions, which meant that all of its acquisitions were running on different technology platforms and serving different clienteles. Indeed, HomeAway’s scale was actually a disadvantage! HomeAway itself was later acquired by Expedia, as part of that company’s response to the competitive threat of Airbnb.

To borrow an analogy from sports, you may need to take repeated shots on goal before scoring. Established players have a much easier time financing multiple shots on goal.

A major issue faced by established players is that the incentives tend to favor cautious expansion rather than aggressive blitzscaling. Successful companies generally assume that they already have something valuable, which means risk taking tends to be penalized. If you make the play and fail, you’ve destroyed a valuable thing. That’s not something a start-up faces—a start-up is dead by default, so there is nothing to lose.

The incentives that drive individual employees can also have a negative impact on blitzscaling attempts inside an established company. The employee or executive who proposes a risky blitzscaling initiative is the one who stands to gain the most (promotions, bonuses, clout, etc.) from its success. In contrast, other employees gain little from that success, and might even end up losing if that success allows its champion to jump over them for promotions or bonuses. And if the initiative is unsuccessful and costs the company a large sum of money, its employees all bear the cost of failure as well. Is it any wonder that so many bold initiatives are killed in committee?

Another (largely self-inflicted) disadvantage for large companies is the inability or unwillingness to stage their investments. This results from internal incentives, which tend to reward managers based on the revenues that they oversee, while penalizing failure and undervaluing growth opportunities.

“Staying in Day 1 requires you to experiment patiently, accept failures, plant seeds, protect saplings, and double down when you see customer delight.”

Uncertainty by itself isn’t risk; it simply produces unknowns, and unknowns aren’t inherently negative. As anyone who has ever read a mystery novel or traveled to a new city or learned a new language can attest, one of the great joys of life is the journey of discovery, of turning the unknown into the known. However, when you combine uncertainty with the possibility of a negative outcome, you produce risk. The magnitude of the risk is a function of the probability, and severity, of that potential negative outcome. Blitzscaling always involves risks, but all risks aren’t equal. This is why you need to distinguish between systemic and nonsystemic risk.

Speed and uncertainty are the new stability. The only way to thrive in this fast-changing world is to accept the inevitability of change. Use it to your advantage, whether you’re focused on your individual life or the fate of a nation.

First, be an infinite learner. The best and worst thing about the rapid pace of change today is that there are no experts with ten-plus years of experience in any emerging phenomenon. If you’re able to climb the learning curve faster than others, you have the opportunity to create massive value from it. While we wish we could write a simple, comprehensive list of rules that would guarantee your success, it’s unclear how anyone could describe a strategy that would apply to all the potential changes that will occur in the next few years, let alone decades. The landscape is always changing, and learning is how you adapt. Second, be a first responder. As new technologies and trends emerge, the uncertainty of where they are headed will paralyze many people and keep them from acting. Those who are willing to act—and act quickly—despite the uncertainty will have a disproportionate advantage. Seek out blitzscaling companies and markets; that’s where you’ll find the greatest growth and opportunity. Finally, and somewhat paradoxically, be a source of stability. In a world of constant change and uncertainty, people will need reassurance and support. Offering stability and calm in the middle of the storm while others are caught in the tumult will make you a natural leader.

We believe that the future can and should be better than the past, and that it’s worth tolerating the discomfort we feel when blitzscaling to get to the future as quickly as we can.

The companies that choose to blitzscale will soon set the pace of progress in every industry. It’s up to you to lead this change—for yourself, for your company, and for society as a whole. Race you to the future.