Blitzscaling Quotes

“The downside, of course, is that the cost of failure is much higher than if you proceeded with deliberate caution and waited for proof before making commitments. But this additional cost can be dwarfed by the potential benefits of achieving first-scaler advantage in a valuable winner-take-most or winner-take-all market.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“its market. Blitzscaling requires capital—whether from investors or from cash flow—to fund relatively inefficient growth. If investors are willing to act quickly and provide large amounts of capital, the risk that a competitor decides to blitzscale is higher.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“Because blitzscaling is—by definition—an inefficient use of capital, it only makes sense when speed and momentum are important. Blitzscaling is like the afterburners on a fighter jet that allow you to fly at double or triple normal speed but consume fuel at a shockingly high rate. You don’t just switch on the afterburners and never turn them off.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“While blitzscaling requires risk taking, it doesn’t require unnecessary risk taking. Indeed, the higher level of risk associated with blitzscaling makes risk management even more valuable and important. As Yahoo! cofounder Jerry Yang told us in an interview for Reid’s Masters of Scale podcast, “All bold strategies have a risk. If you don’t see it, you’re flying risk-blind.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“While it may seem like blitzscaling is a strategy that only works in “hot” markets, it can be successful under any market conditions. The key nuance is that a company’s rate of growth needs to be measured on a relative rather than absolute scale.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“One of the reasons businesses tend to rely on blitzscaling is that speed is one of the primary advantages they hold vis-à-vis large companies. Start-ups can act quickly to capitalize on the new opportunities created by technological advances. If they dawdle and proceed at the same pace as a big company, they’re fighting on an even playing field, which means that the big company’s resources will likely confer massive advantage.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“Yet despite these offensive reasons to scale, the most common driver of blitzscaling is the threat of competition. Even without competition, you would still want to achieve first-scaler advantage and climb the learning curve, but you might prefer the less risky fastscaling approach to growth. Ask yourself, “Can somebody else realize this opportunity before me?” If the answer is yes, moving faster probably reduces the risk of competition more than it raises the risk of failure. The more intense the competition, the faster you should try to move.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“Another way to use blitzscaling to create a lasting competitive advantage is to be the first to climb a steep learning curve. Some opportunities, such as self-driving cars, require you to solve hard, complex problems. The more rapidly you scale, the more data you have to drive learning (or train machine learning), which improves your product, making it easier to scale further in the market while your competitors who have just begun to learn lag far behind.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“It’s important not to confuse critical mass with first-mover advantage. Being first to launch in a market might earn you congratulations on being a product visionary, but if you aren’t also the first to scale, you’ll end up as a footnote in a Wikipedia article about your competitor who did.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“Blitzscaling is unlikely to prove successful if another company has already achieved first-scaler advantage.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“If the gross margins of this new opportunity are low, the market size has to be even bigger to make it a big opportunity. You have to know that the ultimate size of the prize is worth it.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“You don’t necessarily need to have solved your revenue model before deciding to blitzscale. In fact, a key element of blitzscaling is often the willingness of investors to fund growth before the revenue model is proven—after all, it’s pretty easy to fund growth after the revenue model is proven.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“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.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“How did Facebook successfully overcome the growth limiter of operational scalability? On the technology side, one of the philosophies that helped Facebook become successful was its famous motto “Move fast and break things.” This emphasis on speed, which came directly from Mark Zuckerberg, allowed Facebook to achieve rapid product development and continuous product improvement. Even today, every new software engineer who joins Facebook is asked to make a revision to the Facebook codebase (potentially affecting millions or even billions of users) on his or her first day of work. However, as Facebook’s user base and engineering team grew to a massive size, Mark had to change the philosophy to “Move fast and break things with stable infrastructure.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“The problem is that, by definition, business model innovation involves trying something that is new, and thus unproven!”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“As we’ve already seen, most great ideas look dumb at first. Being contrarian doesn’t mean that dumb people disagree with you; it means that smart people disagree with you!”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“As we’ve discussed, key growth factors like distribution and network effects tend to provide disproportionate rewards to a company that is the first in its space to achieve critical scale. Being contrarian and right gives you a huge advantage because you get a head start on achieving scale.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“This emphasis makes sense in an environment where companies need to seek product/market fit for new and rapidly changing products and markets.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“At a higher level of abstraction, successful scale-ups place more emphasis on adaptation than optimization”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“Broadcast television succeeded by providing the same thing to all its viewers—a model driven by the technological innovation of broadcasting content via wireless signals and later coaxial cable. Netflix succeeds by providing a carefully personalized experience to each of its many viewers, giving it a huge advantage over its traditional television competitors. Moreover, Netflix produces exactly what it knows its customers want based on their past viewing habits, eliminating the waste of all those pilots, and only loses customers when they make a proactive decision to cancel their subscription”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“When we first started raising money in 1997, we thought we’d be mostly streaming in 5 years,” Hastings told us when he visited our Blitzscaling class at Stanford. “In 2002, we had no streaming. So we thought that by 2007, it would be half our business. In 2007, we were still nowhere. So we made the same prediction. And this time we were wrong the other way—by 2012, streaming was 60% of our business.” It may have taken longer than Hastings expected, but Moore’s Law eventually came through for him.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“DVD technology allowed Netflix to create a completely new business model. Rather than renting out individual movies and being charged exorbitant late fees if they failed to return the VHS tape in time, Netflix customers paid $20 per month for a subscription to “unlimited” movies—provided they checked out just one movie at a time. This allowed Netflix to eliminate Blockbuster’s widely loathed late fees and capture the powerful and certain revenue stream from the proven model of a subscription service. Netflix took off, and even went public as a DVD-by-mail service. But Hastings never lost sight of his ultimate vision for Netflix—on-demand television delivered via the Internet”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“However, there was a technological innovation that would allow Netflix to get partway to Hastings’s ultimate vision—the DVD. Hastings realized that movie DVDs, then selling for around $20, were both compact and durable. This made them perfect for running a movie-rental-by-mail business.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“The best entrepreneurs don’t just follow Moore’s Law; they anticipate it. Consider Reed Hastings, the cofounder and CEO of Netflix. When he started Netflix, his long-term vision was to provide television on demand, delivered via the Internet. But back in 1997, the technology simply wasn’t ready for his vision”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“One of the most underrated and underappreciated proven patterns is the news feed. Facebook’s powerful network effects allow the site to attract its users, but its innovation of the news feed has made it a world-class business.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“Another, less obvious benefit to this model is that once a subscription business achieves scale, the predictability of its revenue streams allows it to be more aggressive with long-term investments, since it isn’t obliged to maintain large cash balances to weather short-term variations in the business.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“important, valuable companies that follow this pattern. One reason marketplaces are powerful is because they often tap into two-sided network effects. While it is difficult to create a successful marketplace from a cold start, the first marketplace that does manage to achieve liquidity—the ability for buyers and sellers to quickly and efficiently find a counterparty to conduct a transaction—becomes very attractive to both sides of the market. As buyers and sellers pour in, the marketplace becomes even more attractive to both parties, triggering a positive feedback loop that makes it very hard for new entrants to win any market share.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“since transactions on today’s platforms are conducted through application programming interfaces (APIs) rather than person-to-person negotiations, they proceed swiftly, seamlessly, and in incredible volumes, all with barely any human intervention. If a platform achieves scale and becomes the de facto standard for its industry, the network effects of compatibility and standards (combined with the ability to rapidly iterate and optimize the platform) create a significant and lasting competitive advantage that can be nearly unassailable. This dominance lets the market leader “tax” all the participants who want to use the platform, much as levies were imposed in the bygone Republic of Venice. For example, the iTunes store takes a 30 percent share of the proceeds whenever a song, a movie, a book, or an app is sold on that platform. These platform revenues tend to have very high gross margins,”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“The other main challenge of operational scalability comes from the strain of scaling up the nonhuman infrastructure of the business. It doesn’t matter how much demand you generate if your infrastructure can’t handle it.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“Founder Brian Chesky describes this strategy succinctly: “Do everything by hand until it’s too painful, then automate”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies