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

by Reid Hoffman

A big market has both a large number of potential customers and a variety of efficient channels for reaching those customers.

These distribution techniques fall into two general categories: leveraging existing networks and virality.

Leveraging an existing network can have downsides, of course. What the existing network gives (or unknowingly allows to be taken), the existing network can also take away. Zynga, the leading social games company, achieved great success leveraging Facebook for distribution, but had to dramatically reengineer its distribution model after Facebook decided to stop allowing people playing Zynga games to post their progress to their Facebook friends.

All other factors being equal, investors almost always place a much higher value on companies with higher potential gross margins than companies that have already maximized their realized gross margins.

When the business can’t change the economics of the product (free services like Facebook can’t lower their prices), it can instead sway the expectations of potential users. The value users place on the service when deciding whether or not to adopt it depends on both the current level of adoption and their expectations for future adoption. If they think others are going to jump on board, the perceived value of the service increases, and they become more likely to adopt it.

Founder Brian Chesky describes this strategy succinctly: “Do everything by hand until it’s too painful, then automate it.”

If the gross margins of this new opportunity are low, the market size has to be even bigger to make it a big opportunity.

For example, The Alliance outlines how tours of duty keep employees engaged. Visit alliedtalent.com for more information and resources.

As we’ll discuss a little later, instead of hiring for the skills you think you might need in the future, you should be hiring for the skills you need right now.

Bring the new executive in at a lower level initially and let the executive prove himself or herself.

Dunbar’s number (the number of individuals with whom any one person can maintain stable relationships),

Our friend John Lilly likes to distinguish between “genius-driven design” (e.g., Apple) and “data-driven design” (e.g.,

Google).

One of the people I’ve personally seen handle these issues with exceptional skill is Deep Nishar, LinkedIn’s former head of product and now at SoftBank. Deep set up LinkedIn’s different product threads and expertly managed the product leaders to create a broader sense of ownership via a web of alignment. Each product leader was the owner of a primary thread, but was also partially accountable and compensated for his or her work in supporting a fellow product leader as a secondary thread. This produced an additional layer

of alignment, which reinforced the alignment of all being part of the LinkedIn “holding company.”

thinks of himself as troubleshooter in chief as much as a CEO,” Lashinsky writes. But while acting as a troubleshooter in chief might be a good fit for his personality, at the City or Nation stage, getting too involved in the details of individual problems is probably a poor use of a CEO’s time. Kalanick, in other words, was doing what felt good to him rather than what the organization needed.

You’ve got to keep your personal learning curve ahead of the company’s growth curve.”

There are only three ways to scale yourself: delegation, amplification, and just plain making yourself better.

Start-ups get off the ground thanks to the individual talent and hard work of founders like Mark Zuckerberg and Brian Chesky, but they blitzscale into giant companies like Facebook and Airbnb because these founders learn how to delegate.

A key technique I use to overcome this challenge is to picture the hire as a specific living, breathing person rather than as a role written down on a piece of paper. When you try to picture an abstract “head of product,” for example, you might have a hard time visualizing this faceless entity doing a better job than you are. But when you picture a particular individual (say, Joe Zadeh of Airbnb), all of a sudden your mind shifts to thinking, “Wow,

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 have a freelance researcher on my team, Brett Bolkowy, who helps me learn new things and answer key questions by finding the best information on any particular topic. Another key team member, Ian Alas, helps me with creative projects like the visual summaries I prepare for my books. The slide shows he created for my book The Start-up of You have been viewed nearly fifteen million times. Now that’s amplification!

This may sound like a lot of work, but it’s important to leave yourself time and space for reflection and feedback. It’s easy to get caught up in an endless to-do list and to lose sight of what is important. That’s one of the things I learned from Mark Zuckerberg and Sheryl Sandberg. Mark and Sheryl meet first thing every Monday and at the end of every Friday—no matter how busy they are or what else has come up. The Friday meeting is especially important because it gives them time to look back over the week and reflect on what they’ve learned.

One thing to look for when evaluating a potential hire is whether the person seems self-aware of which stages of the process he or she excels at and prefers.

When your organization is growing 300 percent per year, you might have to promote people before they’re ready and then swap them out if they sink rather than swim.

The ideal is a tight OODA loop—observe, orient, decide, act—over and over again.

My Greylock colleague Joseph Ansanelli says, “What you say ‘no’ to is more important than what you say ‘yes’ to.”

realized that the value of the optionality from additional funding far outweighed the potential negatives of equity dilution. Even if the money doesn’t prove to be necessary, a major financing round can also have positive signaling effects—it helps convince the rest of the world that your company is likely to emerge as the market leader, and can discourage investors from backing additional competitors.

They should be compatible with your current culture but also bring elements that help change it for the better.

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.

First, measure your demographics and make that information transparent and available, both internally and externally. As with any metric, you can’t manage what you don’t measure. Second, institute the equivalent of the National Football League’s Rooney Rule, which requires NFL teams to interview (but not necessarily hire) at least one minority candidate for any senior football operations position. And third, tie at least part of executive compensation to the company’s progress toward its diversity goals.

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?

At a high level, gross margin is a measure of impact per dollar, and the greater the impact per dollar, the more amenable a not-for-profit business should be to blitzscaling.

Our suggested framework for risk evaluation is to consider two separate axes: Known versus Unknown and Systemic versus Nonsystemic.