Reid Hoffman - Blitzscaling

HarperCollins Publishers

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First published in the US by Currency, an imprint of the Crown Publishing Group, a division of Penguin Random House LLC, New York

This UK edition published by HarperCollins Publishers 2018

FIRST EDITION

© Reid Hoffman and Chris Yeh 2018

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Source ISBN: 9780008303631

Ebook Edition © October 2018 ISBN: 9780008303655

Version 2018-09-10

Cover

Title Page

Copyright

Foreword by Bill Gates

Introduction

Part I: What Is Blitzscaling?

Software Is Eating (and Saving) the World

The Types of Scaling

The Three Basics of Blitzscaling

The Five Stages of Blitzscaling

The Three Key Techniques of Blitzscaling

Part II: Business Model Innovation

Designing to Maximize Growth: The Four Growth Factors

Designing to Maximize Growth: The Two Growth Limiters

Proven Business Model Patterns

The Underlying Principles of Business Model Innovation

Analyzing a Few Billion-Dollar Business Models

Part III: Strategy Innovation

When Should I Start to Blitzscale?

When Should I Stop Blitzscaling?

Can I Choose Not to Blitzscale?

Blitzscaling Is Iterative

How Blitzscaling Strategy Changes in Each Stage

How the Role of the Founder Changes in Each Stage

Part IV: Management Innovation

Eight Key Transitions

Nine Counterintuitive Rules of Blitzscaling

The Never-ending Need for Change

Part V: The Broader Landscape of Blitzscaling

Blitzscaling Beyond High Tech

Blitzscaling Within a Larger Organization

Blitzscaling Beyond Business

Blitzscaling in Greater Silicon Valley

Other Blitzscaling Regions to Watch

China: The Land of Blitzscaling

Defending Against Blitzscaling

Part VI: Responsible Blitzscaling

Blitzscaling in Society

Framework for Responsible Blitzscaling

The Response Spectrum

Balancing Responsibility and Velocity as the Organization Grows

Conclusion

Acknowledgments

Appendix A: Disclosures

Appendix B: The Blitzscalers

Appendix C: CS183C Essays

List of Searchable Terms

About the Authors

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About the Publisher

I’ve known Reid Hoffman for years. Our friendship started on my visits to Silicon Valley to meet with Greylock Partners, the venture capital firm where Reid is a partner, so I could learn about the companies they were investing in. I was always impressed by his sharp mind and brilliant business sense. Reid is famous for hosting long dinners where the conversation runs late into the night, and we’ve spent many meals breaking down the technology industry, analyzing the promise of artificial intelligence, and more. When Microsoft CEO Satya Nadella started talking about acquiring LinkedIn, I knew it would be an amazing fit.

Of all the things I’ve discussed with Reid, the most thought-provoking might be blitzscaling. It is an idea that applies to many different industries, as he and Chris explain in the last section of this book. But prioritizing speed over efficiency—even in the face of uncertainty—is especially important when your business model depends on having lots of members and getting feedback from them. If you get in early and start getting that feedback and your competitors don’t, then you’re on the path to success. In any business where scale really matters, getting in early and doing it fast can make the difference.

This is especially true for two-sided business models, where you have two user groups that create positive network effects for each other. For example, LinkedIn wants to attract people who are looking for work as well as employers who want to hire them. Airbnb wants guests looking for a place to stay as well as hosts with space to rent. Uber wants to attract drivers as well as riders.

And a software company with an operating system to sell wants app developers as well as end users. Microsoft definitely went through a blitzscaling phase (although we didn’t call it that at the time). We got on the learning curve early and were able to build a reputation as a serious company. We had an extreme culture of working hard and getting things done fast.

The ideas behind blitzscaling aren’t just for startups and scale-ups. They’re important for big, established companies too. The window for action can be tiny and it can close quickly. Even a few months of hesitation can mean the difference between leading and chasing.

Reid and Chris’s ideas are more practical than ever, because it is now possible to get big fast in a way that simply wasn’t feasible a few decades ago. There is a rich ecosystem of service providers and outsourcing companies to support rapid growth. Many companies have gone through their own big growth spurts, so there are lots of examples to learn from. User feedback comes in a constant stream of data. Product cycles have dropped from yearly to weekly or daily. And good reviews can spread in an instant online, so a strong product can quickly attract a big audience.

In other words, the case studies you’re about to explore and the tools you’re about to gain have never been more relevant. This is an ideal moment to be reading this book. I’m glad Reid and Chris are sharing their insights.

2011: SAN FRANCISCO, AIRBNB HEADQUARTERS

“They’re probably going to kill you.”

The year was 2011, and in the offices of Airbnb, then a scrappy little forty-person start-up, its cofounder and CEO Brian Chesky had just received some very bad news.

Brian pondered the implications of the ominous prediction he’d just heard from Andrew Mason, the cofounder and CEO of Groupon. He didn’t like it.

Brian and his cofounders, Joe Gebbia and Nathan Blecharcyzk, had already fought their way through plenty of obstacles to build Airbnb, a website that makes it easy for people to rent out their rooms or homes for the night. In the beginning, every investor the founders approached had turned them down or, worse, ignored them. The company was on the upswing now, but the painful early days were still fresh in their minds, and they weren’t looking for another battle.