Blitzscaling Quotes

“WhatsApp had a freemium business model; the service was free for a year, after which it cost $1 per year. This low-friction model essentially eliminated the need for people working in functions like sales, marketing, and customer service, allowing WhatsApp to grow to five hundred million monthly active users by the time of its acquisition by Facebook, with a staff of just forty-three employees, a ratio of over ten million active users per employee!”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“When you start a new company, the key product/market fit question you need to answer is whether you have discovered a nonobvious market opportunity where you have a unique advantage or approach, and one that competing players won’t see until you’ve had a chance to build a healthy lead.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“in one of the most influential business books of all time, Geoffrey Moore’s Crossing the Chasm. Moore argues that technology companies often run into problems when they try to transition from a market of early adopters to the mainstream—the proverbial “chasm.” He recommends that companies focus on niche beachhead markets, from which the company can expand outward using a “bowling pin” strategy in which these markets help to open up adjacent markets. This strategy is even more important for network effects businesses.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“A key element of leveraging network effects is the aggressive pursuit of network growth and adoption. Because the impact of network effects increases in a superlinear fashion, at lower levels of scale, network effects actually exert downward pressure on user adoption. Once all your friends are on Facebook, you have to be on Facebook too. But conversely, why would you join Facebook if none of your friends had joined yet? The same is true for the first user of marketplaces like eBay and Airbnb. With network effects businesses, you can’t start small and hope to grow slowly; until your product is widely adopted in a particular market, it offers little value to potential users.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“The magic of network effects is that they generate a positive feedback loop that results in superlinear growth and value creation. This superlinear effect makes it very difficult for any node in the network to switch from an incumbent to an alternative (“customer lock-in”), since it is almost impossible for any new entrant to match the value of plugging into the existing network. (Nodes in these networks are typically customers or users, as in the canonical example of the fax machine, or the more recent example of Facebook, but can also be data elements or other fundamental assets valuable in a business.)”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“Many blitzscalers, such as Amazon or the Chinese hardware makers Huawei and Xiaomi, deliberately price their products to maximize market share rather than gross margins. As Jeff Bezos is fond of saying, “Your margin is my opportunity”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“it’s not necessarily any easier to sell a low-margin product than a high-margin product.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“Most of the valuable companies we’re focusing on in this book have gross margins of over 60, 70, or even 80 percent.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“old economy” businesses often have low gross margins. Growing wheat is a low-margin business, as is selling goods in a store or serving food in a restaurant.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“Gross margins, which represent sales minus the cost of goods sold, are probably the best measure of long-term unit economics. The higher the gross margin, the more valuable each dollar of sales is to the company because it means that for each dollar of sales, the company has more cash available to fund growth and expansion.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“We can’t recall a single instance of a company that grew to a massive scale by leveraging the virality of a paid product.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“Virality almost always requires a product that is either free or freemium”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“Viral” distribution occurs when the users of a product bring more users, and those users bring additional users, and so on, much like an infectious virus spreads from host to host. Virality can either be organic—occurring during the course of normal usage of the product—or incentivized by some kind of reward.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“The second growth factor needed for a strong, scalable business is distribution.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“As Aaron Levie, the founder of the online file storage company Box noted in a tweet in 2014, “Sizing the market for a disruptor based on an incumbent’s market is like sizing a car industry off how many horses there were in 1910.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“When evaluating market size, it’s also critical to try to account for how lower costs and product improvements can expand markets by appealing to new customers, in addition to seizing market share from existing players.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“Ideally, the market itself is also growing quickly, which can make a smaller market attractive and a large market irresistible.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“A big market has both a large number of potential customers and a variety of efficient channels for reaching those customers.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“The most basic growth factor to consider for your business model is market size.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“a company’s business model describes how it generates financial returns by producing, selling, and supporting its products.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“Because blitzscaling often requires spending significant amounts of capital in ways that traditional business wisdom would consider “wasteful,” implementing a financial strategy that supports this aggressive spending is a critical part of blitzscaling.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“For successful blitzscaling, the competitive advantage comes from the growth factors built into the business model, such as network effects, whereby the first company to achieve critical scale triggers a feedback loop that allows it to dominate a winner-take-all or winner-take-most market and achieve a lasting first-scaler advantage”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“growth doesn’t create value in and of itself; for that, it has to be paired with a working business model.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“Many start-ups believe they are pursuing a strategy of extreme growth, when in fact they have the goal and the wish for extreme growth but no understanding of an actual strategy that will get them there. To achieve your goals, you have to know what you plan to do and, just as important, what you plan not to do.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“The key is to combine new technologies with effective distribution to potential customers, a scalable and high-margin revenue model, and an approach that allows you to serve those customers given your probable resource constraints.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“Technology innovation is a key factor in retaining the gains produced by business model innovation. After all, if one technology innovation can create a new market, another technology innovation can render it obsolete, seemingly overnight. While Uber has achieved massive scale, the greatest threat to its future doesn’t come in the form of direct competitors like Didi Chuxing, though these are formidable threats. The greatest threat to Uber’s business is the technology innovation of autonomous vehicles, which could make obsolete one of Uber’s biggest competitive advantages—its carefully cultivated network of drivers—essentially overnight.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“Technology innovation is the most common trigger for launching a new market or upending an existing one.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“If your playbook is the same as your competitor’s, you are in trouble, because chances are they are just going to run your playbook with a lot more resources!”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“Business model innovation is how start-ups are able to outcompete established competitors who typically hold a host of advantages over any upstarts.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

“operational scalability is one of the primary growth limiters that scale-ups need to address. When a business can grow users, customers, and revenues faster than the number of employees without collapsing under the weight of its own growth, the business can achieve greater profitability and keep growing without being as tightly constrained by the need for financial or human capital.”
― Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies