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

by Reid Hoffman

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. Over the years, many have criticized Amazon for its risky strategy of consuming capital without delivering consistent profits, but Amazon is probably glad that its “inefficiency” helped it win several key markets—online retail, ebooks, and cloud computing, to name just a few.

Blitzscaling requires you to move at a pace that is almost certainly uncomfortable for your team. You will definitely make many mistakes as you navigate an environment full of uncertainty; the art lies in developing the skill to learn quickly from those mistakes and return to a relentlessly rapid advance.

Until recently, “Move fast and break things” was Facebook’s famous motto. Yet rapid growth can cause nearly as many problems as it solves. As Mark Zuckerberg told me in an interview for my Masters of Scale podcast, “We got to a point where it was taking us more time to go back and fix the bugs and issues that we’re creating than the speed that we were gaining by going faster.” In one famous incident, a summer intern introduced a bug that brought down the entire Facebook site for thirty minutes.

Silicon Valley venture capitalists want entrepreneurs to pursue exponential growth even if doing so costs more money and increases the chances that the business could fail, resulting in a bigger loss. Dropping below even 40 percent annual growth is a warning sign for investors.

The real value creation comes when innovative technology enables innovative products and services with innovative business models. Even though the business models of Google, Alibaba, and Facebook might seem obvious—even inevitable—after the fact, they weren’t widely appreciated at the time they launched. How many people in 1999 would have realized that running tiny text ads next to the equivalent of an electronic card catalog would lead to the world’s most valuable software company?

Given the desire for home runs like eBay, most venture capitalists filter investment opportunities based on market size. If a company can’t achieve “venture scale” (generally, a market of at least $1 billion in annual sales), then most VCs won’t invest, even if it is a good business. It simply isn’t large enough to help them achieve their goal of returning more than three times their investors’ money.

Most nonobvious opportunities arise from a change in the market that the incumbents aren’t willing or able to adapt to.

The only time that it makes sense to blitzscale is when (whether for offensive or defensive reasons) you have determined that speed into the market is the critical strategy to achieve massive outcomes.

Once you decide to blitzscale, the key question you need to ask and answer is “How can we move faster?” This isn’t simply a matter of working harder or smarter with the same resources. It’s doing things that other companies normally don’t do, or choosing not to do things that they do because you’re willing to tolerate greater uncertainty or lesser efficiency.

just because you can blitzscale doesn’t mean that you should. Throwing out the rules of business doesn’t guarantee success any more than following the rules does.

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. These larger teams cannot operate spontaneously and informally; an individual employee might only see certain team members a few times a year, if ever. 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. Wendy Kopp, the founder of Teach for America, learned this lesson the hard way. In an interview for Reid’s Masters of Scale podcast, she told us, “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!”

We call this situation the “Standard Start-up Leadership Vacuum,” and the result is that inexperienced founders find themselves having to hire and integrate experienced executives from the outside. The situation is made worse when those founders wait until the strain on the organization has become unbearable before making the new hires, meaning that all the leaders are new to the company precisely at the time when tension and uncertainty are running high. 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.

“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.

Most companies, even in the highly competitive world of the consumer Internet, still think it’s sufficient to conduct a lot of A/B tests and iterate accordingly. This is an effective tactic but poor strategy, since local optimizations do not necessarily lead to a globally optimal result.

The incentives of multithreading have to reflect the success of each thread, while still keeping the leadership of each thread invested in the success of all the rest. Without this balance, the different threads might engage in internecine warfare over resources, and the individual leadership teams might prioritize the success of a secondary thread over the health of the entire company.

This transition can be challenging. Founders and early employees often resist changing their approach; after all, didn’t it bring about their initial success? Plus, entrepreneurs tend to have a rebellious streak; natural-born rule followers don’t always fare so well in a chaotic, “move fast and break things” start-up environment. But failing to make the transition from pirate to navy can lead to disaster.

Rules are not holy scripture—they exist to make the world a better place, and thus if you can improve the rules, you should. On the other hand, rules usually exist for a reason. You need to have some humility when breaking rules and recognize that you might not understand all the consequences. It’s not always cheating to break the rules, but it is always a high-beta activity, hence the need for caution and compassion.

At the Nation stage, the transformation from pirate to navy is complete. (If it’s not, either you don’t have a Nation or you have failed to make the shift and your Nation is in chaos—witness Uber in 2017.)

At this phase, you should try to make your opponents defend every bit of their territories, because, if you succeed, they will be stretched too thin to ward off the attacks you actually consider important.

The failure to build a unified executive team is sadly common. Some entrepreneurs find it difficult to accept the increased structure and decreased freedom of a formal staff; many of these people started companies precisely because they disliked the feeling of working in a large organization.

Kalanick, in other words, was doing what felt good to him rather than what the organization needed.

Kalanick was trying to be the hub and the spokes rather than helping the organization build the ability to get things done without his personal oversight.

Even someone as smart as Larry Page learned this during the early days of Google; he tried to run Google’s engineering department without management by having all four hundred employees report directly to then-VP of engineering Wayne Rosing. The failure of this experiment convinced him to allow then-CEO Eric Schmidt to build a real organizational structure at Google.

All founders need some universal skills to succeed. They need the ability to take bold risks in pursuit of a vision that isn’t self-evident to others.

If you truly want to blitzscale, then speed has to take priority over everything—including your own ego. There are only three ways to scale yourself: delegation, amplification, and just plain making yourself better.

To learn more about the role and value of a chief of staff, I recommend that you read Ben’s essay on the topic, “10,000 Hours with Reid Hoffman,” which you can find on his personal website, Casnocha.com.

I was too busy chopping wood to sharpen the axe.

Plus, when you model the behavior of taking the time to improve yourself, you help encourage the rest of the company to develop a culture of learning.

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.

I’ve known a number of talented people who prefer joining early-stage companies because while they don’t want to take on the challenge of being founders, they do want to be, in the words of Aaron Burr in Hamilton, “in the room where it happens.”

When blitzscaling, speed is more important than having a “well-run” organization. Under normal circumstances, you should strive for organizational coherence and stability. Chaotic, unstable organizations make employees nervous and hurt morale. But when you’re scaling up at lightning speed, you may need to reorganize the company three times in a single year, or repeatedly churn through members of your management team.

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.

Most of us are willing to fight fires; it’s a smaller subset of people who are capable of noting the presence of a roaring blaze that might soon cut off all escape routes without allowing it to distract them from their laser-focused effort to fight an even more urgent fire.

Only spend money to fix things that are on the critical path to reach the next phase of scale; everything else can wait. As I described earlier, at PayPal we deliberately avoided spending money on customer service because we knew it wasn’t a critical path. The more you can keep juggling and defer spending, the more likely you’ll be able to raise money without the pressure of a short runway.

Imagine if someone asked a random employee from your start-up the following questions: 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? Would she be able to answer those questions? If you asked another employee, would he give the same answers? When organizations have strong cultures, their employees give consistent answers and act accordingly.

So how do you develop a strong culture at your organization? I believe that the best approach represents a middle ground between hoping that the culture evolves organically through benign neglect and trying to define a comprehensive culture up front. The former approach risks developing a weak culture or one that doesn’t fit the company’s needs; the latter may be too rigid and inflexible.

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

These pressures are compounded by the fact that blitzscaling companies grow so quickly that they often become key players in society before they’ve had time to fully mature. This can result in problematic corporate cultures, adversarial relationships with regulators, and questionable decision making.

It also tempting to believe that the easiest way to ensure responsible behavior is to legislate it. The problem is, we live in a globally competitive marketplace. A government that slows the growth of companies within its borders by weighing them down with inflexible legislation is just making it easier for irresponsible blitzscalers from outside those borders to dominate emerging industries.

Balancing the dual priorities of responsibility and velocity is a tricky dance that may look very different at each stage of growth.

As the company achieves success and grows into the Village stage, it’s time to ask yourself, “What things, if I don’t fix them now, will be functionally impossible to fix at scale?” It’s especially difficult to find the balance between morality and velocity during this stage, because the company is probably firing on all cylinders and pursuing all-out lightning-fast growth, and if you pause or slow down to fix things, a competitor might grab the first-scaler advantage from right under your nose. That’s why the question asks what is “impossible,” not just what is “difficult.”

Governments, politicians, and regulators should try to understand how blitzscaling can help rather than harm society. The rapid change that blitzscaling brings can be disruptive and thus frightening. The natural impulse is to try to slow down blitzscaling, whether through taxes or regulations. The problem with giving in to this understandable instinct is that change is going to happen whether it originates in your backyard or not. Slowing things down might make you feel more comfortable, but it comes at the cost of allowing competitors from other areas to gain lasting dominance of the global market. Blitzscaling attracts investment capital and creates major new industries; as a community or a nation, you want more blitzscaling companies, not fewer.

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.

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.