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

by Reid Hoffman

Groupon and Twitter. Groupon was one of the fastest-growing companies of all time, thanks to its leadership position in the rapidly-emerging daily deals market. Unfortunately, the daily deals market suddenly stopped growing. The problem was actually an ironic echo of bad blitzscaling—Groupon merchants used Groupon’s daily deals as an inefficient way to generate rapid revenue growth, only to discover that the promotions didn’t lead to repeat business or any other long-term competitive advantage or value. Groupon began suffering from internal turmoil, and, sure enough, Andrew Mason was replaced as CEO. It didn’t help. What Groupon should have done is to stop blitzscaling. The pursuit of inefficient growth was overheating the market and making it unsustainable. If Groupon had reduced the discounts it required of merchants, growth would have declined, but the business generated by those smaller discounts would have been more sustainable.