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

by Reid Hoffman

Fortunately, Google found product/market fit by refining Overture’s advertising auction model. Google’s AdWords product was so much better at monetizing search through its self-service, relevance-driven, auction system that by the time those competitors managed to play catch-up, Google had amassed the financial resources that allowed it to invest whatever was necessary to maintain product superiority. Google doesn’t always get product/market fit right (and if it had run out of money before hitting upon AdWords, the search business might have died before ever achieving that fit). This is a reflection of its very intentional product management philosophy, which relies on bottom-up innovation and a high tolerance for failure. When it works, as in Gmail, which was a bottom-up project launched by Paul Buchheit, it can produce killer products. But when it fails, it results in killed products, as demonstrated by projects like Buzz, Wave, and Glass. To overcome this risk of failure, Google relies on both its financial strength (which comes from its high gross margins, among other things) and a willingness to decisively cut its losses. For example, when Google bought YouTube (which had clearly achieved product/market fit), it was willing to abandon its own Google Video service, even though it had invested heavily in that product. Other massively successful companies take a very different approach. In contrast to Google, where new ideas can come from anywhere in the company and ther...