Blitzscaling by Reid Hoffman and Chris Yeh

By: Reid Hoffman and Chris Yeh

42 MINUTE AUDIO / 5,400 WORDS (20 PAGES)

Blitzscaling_cover_full_quality.jpg

SYNOPSIS

Blitzscaling is all about rapidly growing and scaling a business or product. Learn the techniques that digital companies like Google, Linkedin and Facebook use to scale and double in size in a short period of time.

Read case studies on how entrepreneurs have applied these techniques to build massive companies in short time frames. Blitzscaling is a process that must be understood by managers, executives and venture capitalists who want to invest or develop such companies.

 

TOP 20 INSIGHTS

  1. Blitzscaling is an aggressive growth program that prioritizes speed over efficiency. It is both a general framework and a set of specific strategies and tactics.

  2. While Blitzscaling is credited as a Silicon Valley creation, many of the tactics and benefits can be used and enjoyed by just about any industry.

  3. Blitzscaling uses 3 Techniques, the most important of which is design an innovative business model that can truly grow—ideally, before starting the company.

  4. Within the innovative business model are 4 Growth Factors: Market Size, Growth Size, High Distribution Margin, and Network Effects. The most important is Market Size: Eliminate ideas that serve too small of a market.

  5. 2 Obstacles that can limit the company’s growth: lack of product/market fit and operational scalability. Are you able to scale without major failures, such as overloaded servers or routinely malfunctioning products?

  6. Next, the 7 Business Model Patterns. If you want to scale at warp speed, consider about a digital business. Think software as a service, or a social network, or some other kind of digital good.

  7. There are 4 Principles that power the technological and business innovation: Moore’s Law, Automation, Adaptation, and Contrarianism. Of these, Contrarianism is perhaps the most difficult.

  8. The only time to blitzscale is when you have determined that speed is THE critical strategy to achieve massive outcomes. This means tolerating greater uncertainty or less efficiency than competing companies do.

  9. If your market stops growing or reaches its upper limit, it’s time to stop blitzscaling.

  10. As you Blitzscale, you will encounter 5 Stages: Family, Tribe, Village, City, and Nation. At the Family stage, the founder pulls all the levers of growth.

  11. At the Tribe and Village levels, the founder manages the people who are pulling the levers. The founder also designs an organization that pulls the levers.

  12. At the City stage, the founder makes high-level decisions about goals and strategies. And at the National stage, the founder pulls he organization back from blitzscaling and starts growing new product lines and business units.

  13. There are 8 Transitions through blitzscaling. The most important are transitioning from Small to Large teams, from Inspiration to Data, and Single-focus to Multithreading.

  14. Next come 9 Counterintuitive Rules. Of these, we think the most interesting are Let Fires Burn and Ignore the Customer.

  15. “Let Fires Burn” means to focus on the really big fires that, if left unchecked, could destroy the company. If anything can wait, let it wait.

  16. “Ignore the Customer” means “Provide whatever customer service you can as long as it doesn’t slow you down.”

  17. Established companies can also blitzscale, even when slowed by caution and processes. They can overcome these barriers by leveraging the people and businesses that have prior blitzscaling experience.

  18. China may become an even better landscape for blitzscaling than Silicon Valley. It has an entrepreneurial culture that encourages risk taking, a highly developed financial sector that is willing to fund aggressive growth.

  19. If competitors are trying to out-blitzscale your business, you can either beat them, join them, or avoid them.

  20. The speed of technological change is increasing the speed of change for every business. All of this means that speed and uncertainty are the new stability. To thrive, you need to be an infinite learner and a first responder.

 

SUMMARY

Blitzscaling is a strategy of prioritizing speed over efficiency in the face of uncertainty. It is an offensive strategy that thrives on positive feedback loops. It is based on three key techniques. First, design an innovative business model that can truly grow—ideally, before starting the company. Second, implement an innovative strategy—build growth factors into the model through network effects and implement a financial strategy that supports aggressive spending. Third, use an innovative approach to management, recognizing that the rapid growth of blitzscaling brings significant human resources challenges. This means acknowledging key transitions and following some counterintuitive rules. Although blitzscaling was developed in Silicon Valley it can—and, increasingly, does—apply to industries and regions throughout the world. It is the key business development approach to use in a rapidly-changing world.

 

Definition of blitzscaling

Blitzscaling is an aggressive, all-out program of growth that prioritizes speed over efficiency, even in an environment of uncertainty. It is both a general framework and a set of specific strategies and tactics to use in any business where scale really matters and getting in early and fast can make all the difference. Classic business strategy emphasizes correctness and efficiency over speed, but when a market is up for grabs the risk isn’t inefficiency, it’s playing it too safe.

For startups, there comes a point where the company has the opportunity to scale-up; and the fastest and most direct way to do it is through blitzscaling. Amazon’s phenomenal growth in the late 1990s is a prime example: in 1996 Amazon Books had 151 employees and $5.1 million in revenues; by 1999 the company had jumped to 7,600 employees and $1.64 billion in revenues, renaming itself Amazon.com along the way.

Most of the prominent examples of successful blitzscaling come from Silicon Valley—not just because of its concentration of talent, capital, and entrepreneurs, but because this was where the secret of blitzscaling was first put into practice. However, blitzscaling can actually be done anywhere.

Not just growth

A classic start-up prioritizes controlled, efficient growth as it tries to establish certainty. Classic scale-up growth means growing efficiently as the company tries to maximize returns in an established market. Fast-scaling happens when a company sacrifices efficiency for the sake of growth, but is doing so in an environment of certainty, for example where a company is trying to gain market share.

Blitzscaling is different. It’s not just about rapid growth, but rather is a strategy of prioritizing speed over efficiency in the face of uncertainty. Blitzscaling means waiting to achieve certainty on whether the sacrifice will pay off. It combines the frightening uncertainty of start-up growth with the potential for an even bigger failure. It means convincing investors to give you money for a calculated gamble rather than a sure thing.

The basics

Blitzscaling is an offensive strategy: you take the market by surprise; build a long-term competitive advantage before anyone else; and get the attention of investors as the new market leader. It is also a defensive strategy in that you set a pace that leaves competitors gasping to keep up.

Blitzscaling thrives on positive feedback loops. Once a company occupies the high ground, the networks around it recognize its leadership, and talent and capital flood in. It also comes with massive risks.

A company will employ different types of scaling at different stages in its lifecycle. What works for a Family-size company (1-9 employees) will not work for a Tribe (10-90 employees), a Village (hundreds of employees), a City (thousands of employees), or a Nation (tens of thousands).

Blitzscaling is based on three key techniques. The first is to design an innovative business model that can truly grow—ideally, before starting the company. Uber and Airbnb are examples of companies that grew rapidly based on novel business models. The second key technique is strategy innovation—build the growth factors into the model through network effects and implement a financial strategy that supports aggressive spending. Third is management innovation; bearing in mind that the rapid growth of blitzscaling brings significant human resources challenges.

 

Innovative business model

The first core technique of blitzscaling is to design an innovative business model that is capable of exponential growth. There are plenty of start-ups that relied on technology innovation without any real business model innovation, and most of them went bust—Netscape’s IPO kicked off the dotcom boom, but the company followed a tried-and-true business model and was soon beaten by Microsoft, an established company that knew how to use its economic might.

Growth factors

No one model will work for every business, but to blitzscale successfully your model should maximize four key growth factors.

Market size

Eliminate ideas that serve too small of a market. A large market has more potential customers and a variety of channels for reaching those customers. Amazon began as Amazon Books, but Jeff Bezos saw bookselling as a beachhead from which Amazon could expand to “the everything store.”

Distribution

Find creative ways to tap into existing networks to distribute your products. Think, too, in terms of ‘virality,’ getting users of the product to bring in more users, who in turn bring in more, and so on. Virality usually starts with something that is free or freemium—i.e., free up to a certain point, after which the user has to pay to upgrade, like Dropbox.

High gross margins

Gross margins represent sales minus the cost of goods sold. Successful blitzscalers tend to have gross margins over 60%. However, for a company such as Amazon, which deliberately prices its products to maximize market share, the gross margin is potential rather than realized.

Network effects

This factor plays the key role in sustaining growth long enough to build a valuable and lasting franchise; and, thanks to the rise of the internet, network effects can reach levels never before seen. Network effects generate a positive feedback loop that generates superlative growth and value creation.

There are direct network effects, where increases in usage lead to direct increases in value (e.g., Facebook and WhatsApp); and indirect effects, where increases in usage prompt consumption of complementary products that in turn increase the value of the original product (e.g., iOS encouraging third-party app developers whose products boost the value of the operating system). Marketplaces such as eBay are two-sided networks where increased use by one set of users boosts the value to a complementary set.

You cannot start small and hope to grow slowly; the network effect won’t kick in until your product is widely adopted in a particular market.

Growth limiters

In addition to the four growth factors, there are two obstacles that can limit the company’s growth. The first is a lack of product/market fit; have you really discovered a nonobvious market opportunity where you have a unique advantage or approach? The second is operational scalability. For example, Friendster was the first online social network that grew to millions of users within months; but its servers couldn’t handle the volume and it was soon over-taken by MySpace (which in turn lost out to Facebook). Tesla Motors’ growth has been held back by infrastructure limitations.

Seven business model patterns

The following are good patterns for an innovative business model:

Bits not atoms

Bits-based businesses like Google and Facebook have an easier time serving a global market. Bits are easier to move around than atoms and can iterate more quickly.

Platforms

A software-based platform like Amazon or iOS can achieve global distribution almost-immediately.

Free or fremium

At LinkedIn, the free basic account is a tool for discovery and gaining a critical mass of users. It encourages distribution and virality, with a percentage of users upgrading to a paid version.

Marketplaces

Think eBay, Google, and Airbnb—even local marketplaces have long been a valuable business model, but the internet age allows online marketplaces to go global.

Subscriptions

Software-as-a-service (SaaS) has become the dominant model for enterprise software and for streaming entertainment such as Netflix or Spotify. Once a subscription business achieves scale it can be more aggressive with long-term investments.

Digital goods

These are intangible products that have no intrinsic value but sit at the intersection of bits and atoms—such as in-app purchases, or the messaging service LINE that gets revenue from selling “stickers” (images incorporated into smartphone messages).

Feeds

A news feed with sponsored updates is the most effective way to monetize internet ‘eyeballs.’

Underlying business model principles

There are four underlying principles that power the technological innovation that enables business model innovation. The first is Moore’s Law, which predicts that computing power tends to double every eighteen months. The second is automation, the principle that increases the productivity of Amazon’s warehouses and keeps Google’s server farms running 24/7. The third principle is adaptation, not optimization, with companies that practice continuous improvement. Finally, being contrarian is often critical to the process of creating a massively valuable technology company—Amazon pursued e-commerce when most people believed that consumers would never feel comfortable using credit cards online.

 

Innovative strategy

Once you have a business model that can support massive growth and value creation, the next step is to decide your strategy; and the first strategic choice is whether or not to blitzscale.

When to blitzscale

The only time when it makes sense to blitzscale is when you have determined that speed into the market is THE critical strategy to achieve massive outcomes.

Perhaps a big new opportunity has arisen because a technological innovation has created a new market or scrambled an existing one. The most frequent offensive reason for blitzscaling is to achieve a critical mass that confers a lasting competitive advantage. This is not the same as first-mover advantage—unless you are first to scale, being first to launch will not leave you as the dominant player.

Blitzscaling can also be used to create a lasting competitive advantage if you are the first to climb a steep learning curve. Netflix climbed a series of steep curves, first by developing a subscription video service, then by building out a massive streaming infrastructure and refining its consumer recommendation engine, and now by developing original content. The most common driver of blitzscaling is the threat of competition; the more intense it is, the faster you should try to move.

Once you decide to blitzscale, the key question to answer is, “How can we move faster?” This means tolerating greater uncertainty or less efficiency than competing companies do.

Just because you can blitzscale doesn’t mean you should. If taking on additional cost and uncertainty doesn’t confer an advantage, follow the traditional rules of business—at least, for now. Don’t blitzscale if you’re pursuing a relatively-low margin business model, like a fine dining restaurant.

When to stop

If your market stops growing or reaches its upper limit, it’s time to stop blitzscaling. Blitzscaling is, by definition, an inefficient use of capital, so it only makes sense to do it when speed and momentum are important.

Pay attention to early-warning signs like a declining rate of growth relative to the competition; worsening unit economics; decreasing per-employee productivity; and increasing management overhead. These are all signs that your current strategy won’t scale further.

The five stages

Blitzscaling is an exercise in serial problem solving; and, what helps you to move onto the next stage, say from Family to Tribe, won’t help you to move on from Tribe to Village.

At the Family stage, the founder pulls all the levers of growth. Moving faster than the speed of the average startup is a challenge, requiring high levels of competence and/or a brilliant growth strategy. At the Tribe level, the founder manages the people who are pulling the levers. At the Village level, the founder designs an organization that pulls the levers. At this stage, blitzscaling is less about raw aggression and more about pursuing a differentiated (but still aggressive) strategy.

At the City stage, the founder makes high-level decisions about goals and strategies. At the National stage, when there are tens of thousands of employees, the strategy shifts again; as the company becomes mature and mainstream, the founder has to pull the organization back from blitzscaling and start incubating and growing new product lines and business units.

Innovative management

Eight key transitions

Successful global giants like Amazon and PayPal are companies that were able to evolve and optimize their management practices at each stage of growth. There are eight key transitions involved in guiding a company through the stages of blitzscaling.

Small teams to large

Common at the Family and Tribe stages, small teams can operate spontaneously and informally, which makes it easier to execute hard pivots as needed. At the Village stage and beyond teams are larger and coordinating everyone’s efforts requires planning and formal processes. For a blitzscaling organization, this transition can have a major psychological effect on early employees and founders, who are no longer involved in every decision. The key is to create systems to help them feel connected to the company’s mission.

Career expectations also shift at this point, so it’s important that people understand that not everyone can be a VP. Focus on responsibility instead of the specific title; encourage employees to focus on how their experiences prepare them for greater responsibilities in the future.

Generalists to specialists

In the early stages of blitzscaling, smart generalists are needed for speed and adaptability; they are the stem cells of the organization. As the company grows, hiring shifts to specialists—just be sure not to make this shift too soon. And, work to retain the generalists; they have cultural and institutional knowledge and are able to tackle new problems.

Hire only generalists at the Family stage; at the Tribe stage have employees with flexible skill sets who can pivot with the company. At the City or Nation stage, most executive hires should be specialists.

Contributors to managers to executives

Managers are the frontline leaders who worry about day-to-day tactics. Executives lead managers. Both are necessary for successful blitzscaling, but they play different roles at different stages. At the Family stage, formal managers may not be needed; but, once the company grows to the Tribe stage, they will need to run the various functional departments. At the Village stage, the company needs executives.

Very few can transition from manager to executive without a hitch; so, hiring outside executives can make sense. Ideally, hire someone with past experience at a blitzscaling start-up.

Dialogue to broadcasting

The internal communication process shifts dramatically during blitzscaling, from informal and in-person to formal electronic “push” broadcasting and online “pull” resources. You also have to shift from sharing everything to deciding what is shareable. As early as the Tribe stage you will need processes to supplement one-on-one dialogues, like a weekly company meeting.

At the Village stage holding a weekly company meeting is logistically more difficult. Shift to monthly or quarterly meetings and use videoconferencing to connect offices. This can work even as you scale through the City and Nation stages. At these later stages the founder/CEO needs to make a conscious effort to develop broadcast channels that reach every employee. Regular emails or short videos are one way to do this.

Inspiration to data

At the Family and Tribe stage, organizations have very little in the way of analytics, relying more on inspiration or improvisation. As the company scales, data becomes crucial. Start by tracking a few key stats like users, downloads, buyers, etc. Make sure the information is easy to access and provide clear context. Avoid ‘vanity metrics’—numbers that paint a rosy picture but don’t reflect the key drivers of growth.

At the Village stage have a dashboard that allows you to see how the various threads interlock and to coordinate the work of different groups. At the City and Nation stage you will need a dedicated team to ensure that the necessary data is getting to the people who need it.

Single focus to multithreading

Early stage start-ups are usually single-product companies that focus on doing one thing very well; that focus is necessary to beat larger competitors. As the company scales it needs to manage multiple product lines or even business units but being able to focus is still important.

The shift to multithreading usually occurs at the City stage. With over 1,000 employees the organization can support the creation of multiple divisions or units. This decentralized organization can be harder to coordinate, but the shift allows each group to focus on its particular thread and also allows the company to tackle problems that may not respond to a single-thread approach.

Be careful about making this shift; don’t do it too soon. Only add threads when it’s strategically necessary and be fully aware of the negative impact on organizational focus. Consider the magnitude of the opportunity as well as its potential for gain. Think of each thread as a different company with a leadership team and an incentive structure—the equivalent of apps running on the main thread’s platform.

Pirate to navy

This is the shift from playing offense to playing offense and defense at the same time. It requires an evolution in strategy and in company culture. Many start-ups are like pirates, willing to break the rules and waging guerrilla warfare against bigger competitors. Once you get to the Village stage or larger, you need to trade in the chaos of the pirate for the discipline of the navy. Early employees and founders often resist this shift, but it is critical to the survival of the company. A navy needs established techniques and a unified executive team.

At the Village stage, start thinking about playing defense; at the City stage, defense becomes the primary focus. At the Nation stage, the shift to navy should be complete. The biggest offensive and defensive plays in the Nation playbook are acquisitions.

Founder to leader

Founders need to take bold risks and learn quickly. They also need to scale along with the company, and speed has to take precedence over ego. In a blitzscaling company the founder must delegate to talented people. S/he must become a learning machine, talking often to other smart people, and having a personal ‘board of directors’ to offer advice and fill in knowledge gaps.

Nine counterintuitive rules

In order to cope with the frenzied pace of blitzscaling, there are nine counterintuitive rules to follow that turn the conventional wisdom of traditional management on its head.

Embrace chaos

Explicitly choose speed over efficiency. Don’t passively accept chaos but, rather, embrace it. Accept uncertainty and take steps to manage it.

Hire Ms. Right Now

Look for executives who are just right for the current stage of growth. Someone who can stretch to the next stage, too, would be ideal but in the fierce competition of blitzscaling that is a secondary concern. Hiring “Ms. Right Now” also means being willing to let someone go when the moment passes.

Tolerate “bad” management

Blitzscaling may mean reorganizing the company three times in one year, or repeatedly churning through members of the management team. You don’t have time to wait for things to work out. This chaotic management leaves everyone with undefined roles that are in flux, allowing for pivots and fast transitions without being derailed by titles.

Tolerate imperfect

If you need to choose between getting to market quickly with an imperfect product and getting there slowly with a perfect one, choose the imperfect product nearly every time. Getting to market fast gets you the valuable feedback you need to make improvements. This is not an excuse to cut dangerous corners—you don’t want to be ashamed or indicted, but embarrassed is O.K. Just make sure you learn the right lessons from the market feedback.

Let fires burn

Every stage of blitzscaling will bring more problems than you can address. Focus on the really big fires that, if left unchecked, could destroy the company. Let some fires burn, recognizing that they may eventually require attention but not right now.

Accept throwaway work

The code or process that works at one stage of blitzscaling may break down at the next one. Accept that inefficiency is the rule and that many things will be thrown away at later stages.

Ignore the customer

For many blitzscaling companies the rule is not “The customer is always right,” but “Provide whatever customer service you can as long as it doesn’t slow you down.” Note that this is a temporary solution—you can’t ignore them forever.

Raise too much money

Excess cash allows you to deal with the unexpected—and the only sure thing in blitzscaling is that the unexpected will happen. It’s like jumping off a cliff and assembling the airplane on the way down—don’t run out of money for the fuel and parts you need to get airborne. Blitzscaling start-ups burn cash in order to grow, but it is important to make this investment with long-term profitability in mind. It is tempting to fix every problem that arises with money, but you should only spend the cash on fixing things that are crucial to reach the next stage as you scale.

Evolve the culture

You can ignore inefficiencies and some fires, but don’t ignore your culture; it influences how people act in the absence of specific directives and rules. Most of the Silicon Valley companies that have defined the tech industry—HP, Intel, Apple, Google, Facebook—are known for their distinctive cultures. The company’s primary culture likely originates in whichever area is most critical to its success, and its development is intimately intertwined with branding. Culture is the story we tell ourselves and others about who we are.

In blitzscaling companies culture is increasingly important, and increasingly difficult to maintain, as the organization grows. During the Family and Tribe stages it is transmitted personally, but this won’t work at the Village stage; now, the culture has to be deliberately transmitted through communications and people management. One way to do this is to hire for cultural fit but be aware that a strong culture can be narrowing. Hiring teams of young, Caucasian men who went to a handful of elite schools will hinder the organization’s ability to innovate or serve a wider market. A successful organization needs a combination of conformity and diversity. Too much sameness leads to bias and stagnation.

Build an inclusive culture right from the beginning. Make diversity a priority in hiring the first ten employees and put this commitment in writing. At the Village stage have a systematic approach to diversity.

 

Beyond high tech

The principles of blitzscaling can apply far beyond Silicon Valley. Take the example of Spanish clothing retailer Zara, which uses the techniques of blitzscaling to run its business. Its focus is fast fashion—get customers what they want, quicker than anyone else. Zara takes only two weeks to develop a new product and get it into stores, compared with the industry average of six months. It fulfills apparel orders from its stores in less than 48 hours, even as it still manufacturers most of its clothing in Spain.

Zara gets daily feedback from its store managers; this is analyzed by sales specialists who present to designers, who then send the designs to the factories for manufacturing. The business model focuses on responsiveness over efficiency. Products are shipped in small batches, which costs more logistically but allows Zara to get its clothes into stores in less than 24 hours in Europe and America, less than 48 in Asia and Latin America. Despite its inefficiencies Zara’s gross margins exceed those of its competitors.

Within a larger organization

The lessons of blitzscaling can help you to achieve rapid growth and first-scaler advantage in any organization. An established company can take advantage of its scale, and its ability to be patient, in order to make multiple, iterative blitzscaling attempts. It can also use acquisitions to drive blitzscaling.

On the other hand, the incentives at work within established players tend to favor caution over aggression; the potential rewards have to be significant to make the risk worthwhile. Public market pressure can also make it harder to blitzscale, given the impact of sacrificing short-term efficiency on quarterly financial results.

One way to overcome these barriers within an established company is to leverage the people and businesses that have prior blitzscaling experience. Another is to treat the new initiative as a company within a company.

Beyond the world of business

In the non-profit world it only makes sense to blitzscale when there is a large market—for example, the Gates Foundation’s decision to tackle malaria prevention and treatment, which is an enormous ‘market.’ It’s also important for the non-profit to have an effective distribution strategy. Consider, too, the impact of the ‘product.’ Sometimes there are network effects that can be tapped into, such as the Khan Academy’s ability to leverage the YouTube platform.

As in the world of business, product/market fit is also important for successful blitzscaling for non-profits; in this case, the better an organization serves its clients, the better it will be able to raise money from its customers (i.e., donors). Operational scalability is likely to be a big challenge, but not an insurmountable one.

Beyond Silicon Valley

Stockholm actually produces the second highest number of billion-dollar ‘unicorn’ start-ups after Silicon Valley—Spotify is a prime example. Blitzscaling in an emerging economy, however, presents a different set of challenges and opportunities. Payment platforms, shipping vendors, and professional service providers are unlikely to be as well established. On the other hand, building your own platforms makes for a significant competitive advantage.

China may actually become an even better landscape for blitzscaling than Silicon Valley. It has an entrepreneurial culture that encourages risk taking, a highly developed financial sector that is willing to fund aggressive growth, and plenty of high-tech talent. Its economy, one of the world’s fastest-growing for decades, is both massive and open to disruption. China’s recent rise as an industrial power also means that more of its industries are nascent and up for grabs.

Companies in China grow, break apart, and recombine with incredible speed. Smartphone maker Xiaomi is a prime example. It was founded in 2010; by 2015 it was the third-largest smartphone maker in the world; but in 2016 its sales dropped 40% year-over-year. The company responded by attacking its distribution problems with a rapid, massive effort to build up its off-line sales channel—in 2017 its sales had rebounded 59% from the previous year.

On the other hand, Silicon Valley’s pace is less-frenetic than China’s, allowing the Valley to pursue deeper tech and longer time horizons. The culture encourages more collaboration and it is several decades ahead of China in terms of concentrated experience and institutional knowledge. China also suffers from more insular management and hiring practices with a strong tendency to hire from within.

Defending against blitzscaling

If competitors are trying to blitzscale your existing business out of existence you can either beat them, join them, or avoid them. Beat them by not over-reacting but sticking to your traditional game—wait for your opponent to exhaust himself, then counter-attack. Alternatively, join them and launch your own blitzscaling effort.

The most successful option is to avoid them—cede the current market to the blitzscalers and use your current assets to migrate to a new, less vulnerable market. This was essentially IBM’s response. Having been one of the original computer blitzscalers, when faced with competition from the likes of Dell IBM repositioned itself as a system integrator and technology consultant.

 

Blitzscaling responsibly

Blitzscaling companies can try to get fast by any means necessary; it is important to blitzscale responsibly. A big company can create enormous value, but it can also be tempted to abuse its power. Rather than campaign to break up large companies, however, we should focus on responsible behavior and be aware of how the actions of the business impact the larger society.

Blitzscaling involves risk, but all risks are not equal. When deciding what constitutes responsible behavior, it is important to differentiate between localized non-systemic risk and systemic risk, which can impact or even destroy the entire system. For example, some people fear that social media is a uniquely dangerous technology—but the arguments used to support this view are the same as the ones that were used in the time of Socrates to protest the use of the written word rather than memory; or at the time of the development of the printing press and the rise of newspapers. On the other hand, there are technologies emerging from blitzscaling companies, such as biotechnology techniques driven by CRISPR-Cas9 targeted genome editing, that may raise new and potentially-systemic risks to society.

A truly systemic risk at the corporate or societal level requires an immediate response; a potentially systemic risk can be tackled with a near-term response and a commitment to later action. A non-systemic risk may be a small fire that you can just let burn.

At the Family and Tribe stages, responsible blitzscaling means clearly defining the company’s mission and laying the foundation for a culture that values being a responsible part of a larger society. At the Village level it is time to ask, what things, if you don’t fix them now, will be functionally impossible to fix at scale. Once you get to the City or Nation stage, it is time to take on the responsibilities of an incumbent—which means everything you put off earlier must now be fixed.

The blitzscaling era

Although blitzscaling is concentrated in software and the internet, it is likely to shape our physical world in the future. New technologies are emerging rapidly and promise to change everything—again. Markets and investors are increasingly willing to fund blitzscaling bets. The speed of technological change is increasing the speed of change for every business.

All of this means that speed and uncertainty are the new stability. To thrive, you need to be an infinite learner and a first responder.