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

by Reid Hoffman

According to research at Wharton, Stockholm actually produces the second highest number of billion-dollar “unicorn” start-ups after Silicon Valley itself. Around 65 percent of working-age (eighteen to sixty-four years old) Swedish adults think there are good opportunities to start a company in Sweden, compared with 47 percent of working-age Americans. For example, Stockholm’s streaming music giant, Spotify, has a record of blitzscaling that most Silicon Valley unicorns would envy. Spotify’s cofounders, Daniel Ek and Martin Lorentzon, are both serial entrepreneurs with prior blitzscaling experience—Ek was the CTO of Stardoll, while Lorentzon cofounded Tradedoubler. Spotify uses the proven freemium business model, offering a basic free service and encouraging users to subscribe for higher-quality audio and zero ads. Since its launch in 2008, Spotify has pursued a course of extremely aggressive investment, raising over $2.5 billion in funding from Silicon Valley VCs, such as Founders Fund, Accel, and Kleiner Perkins Caufield & Byers, as well as global investors with scale experience, such as Li Ka-shing’s Horizons and Yuri Milner’s Digital Sky Technologies (DST), while growing from one million paying subscribers in 2011 to sixty million paying subscribers in 2017. It’s worth noting that despite their success in Stockholm, in 2016 Ek and Lorentzon began to fear that policies like restrictive and expensive housing regulations for immigrants and heavy taxation of stock options c...