For most leaders, growing a business is a gradual, ongoing process: double down on the products that sell best, develop low-risk expansion strategies, and upgrade the team over time.
But now there’s a new way to grow. Platform companies such as Amazon, Facebook, Spotify and Alibaba have attained massive scale at incredible speed by betting everything on one bold, fast push for market share.
Silicon Valley authors Reid Hoffman (co-founder of LinkedIn) and Chris Yeh have coined a term for this type of growth: Blitzscaling. In their new book of that name, they reveal how ambitious companies can fling caution to the winds in a white-knuckle race for growth.
“Bitzscaling prioritizes speed over efficiency in an environment of uncertainty,” says Yeh, an entrepreneur, investor and writer who helped Hoffman develop his theories while they co-taught a course on scaling at Stanford University. On a recent visit to Toronto to promote his book (and the national Scale-Up program at Wilfrid Laurier University’s Lazaridis Institute), Yeh explained the more counterintuitive aspects of hypergrowth. And while the principles of blitzscaling were inspired by $100-billion case studies, Yeh notes that any entrepreneur can learn from them.
In a nutshell, blitzscaling is an updated version of the old entrepreneurial bromide: “Ready, Fire, Aim!” The authors believe that today’s most enticing markets are platforms on which people share content or conduct business (again, think Uber, Airbnb, even LinkedIn). All benefit from the network effect: the more people who use the platform, the more valuable it becomes. That ensures only one brand of each platform will likely emerge dominant – which means new startups be the first to claim their turf and wrap their arms around their customers.
Hoffman and Yeh call this “first-scaler advantage.” The goal of blitzscaling is to hit the market hard with a product that’s just good enough. Then you create as much noise as your budget will allow, crossing your fingers that awareness will lead to adoption, and that buzz will draw the best talent to you and attract the savviest investors.
Clearly, blitzscaling involves a lot of risk. “It combines the gut-wrenching uncertainty of startup growth with the potential for a much bigger, more embarrassing, more consequential failure,” the authors write. But, “if the prize to be won is big enough, and the competition to win it is intense enough, blitzscaling becomes a rational, even optimal strategy.”
To win, blitzscaling businesses need to innovate in three dimensions: business model, strategy and management. LinkedIn, Hoffman notes, created a new business model because it was the first social platform to cater to people’s business identities, and focus on interpersonal relationships. Airbnb adopted a strategy of growing in many international markets at once – not one country at a time, as conventional companies might do.
Management innovation means force-growing the quality of your people, replacing generalists with specialists and managers with executives. Companies moving at warp speed can’t afford many mistakes, so they must also identify the organization’s most meaningful data and incorporate it into their daily decision-making.
As you can see, most of these techniques apply as much to your business as to any Silicon Valley startup. But consider the “Nine Counterintuitive Rules of Blitzscaling,” and see how many you’re ready to adopt.
- Embrace chaos: When you’re growing too fast for strategic plans and budgets to keep up, you have to take action with incomplete information. How you figure that out will determine your success.
- Hire Ms. Right Now, not Ms. Right: Since the future may never come, hire the people you need right now, not the ideal executive you’ll need next year. Know when to let people go when their moment passes.
- Seek out bad management: Professional management is a luxury few startups can afford. Focus on learning from change, not eliminating mistakes.
- Launch a product that embarrasses you: When speed matters, launching an imperfect product early lets you climb the learning curve faster.
- Let fires burn: “At every stage of blitzscaling,” the authors note, “there are always far more problems and issues clamoring for your attention than you have the resources to address.” Ignore the small fires and focus on those that threaten to scorch the whole show.
- Do things that don’t scale: To gain initial traction, look for one-off growth hacks, even if they’re unsustainable. Early on, for instance, to create a professional environment, Airbnb’s founders took their own photos of members’ properties.
- Ignore your customers: The authors humbly suggest the mantra, “Provide whatever customer service you can, as long as it doesn’t slow you down… and that may mean no service!”
- Raise too much money: Excess cash helps you manage the unforeseeable.
- Evolve your culture: Whatever other shortcuts you take, don’t sacrifice culture. Everyone needs to understand your organization’s goals, values and risk tolerance.
If you have trouble memorizing this list, let Yeh sum it all up for you. “Every one of our counter-intuitive rules is about speed,” he says. “The message is, stop fiddling around and trying to achieve perfection. Get your product out there. You need real market feedback from real users.
“It is what will help you succeed and grow.”
• Rick Spence is a writer, consultant and speaker specializing in entrepreneurship.
[email protected] | Twitter.com/RickSpence