Blitzscaling - Deepstash
Blitzscaling

Blitzscaling

Reid Hoffman, Chris Yeh

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Blitzscaling

Blitzscaling

Blitzscaling is an aggressive growth strategy that prioritizes speed over efficiency amidst uncertainty. It thrives on positive feedback loops.

Blitzscaling involves designing a business model with exponential growth potential, building in growth factors like network effects, and innovating management approaches.

It originated in tech but works across sectors.

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Blitzscaling Companies

Blitzscaling Companies

Amazon epitomizes successful blitzscaling, growing from 150 to 7,600 employees and $5 million to $1.6 billion in revenue from 1996 to 1999.

Other tech companies like Facebook, Uber, Airbnb, Dropbox and Spotify have also effectively blitzscaled. Speed was imperative to beat rivals to scale and capture the market.

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Developing an Innovative Business Model

Developing an Innovative Business Model

Blitzscaling requires designing a model primed for exponential growth. Key factors include appealing to a massive market, building in virality, having high gross margins, and leveraging network effects to generate self-reinforcing growth cycles.

Avoid products without market fit or models that can't scale operationally.

Continually adapt and challenge the status quo.

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When You Should Blitzscale

When You Should Blitzscale

  • Only blitzscale when speed in capturing the market is critical to success.
  • Blitzscale when you must rapidly scale an innovation before rivals, not just beat them to market.
  • Avoid blitzscaling low-margin businesses.

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4 Underlying Principles for Business Model Innovations

4 Underlying Principles for Business Model Innovations

Moore’s Law – Computing power generally doubles every 18 months.

Automation – You want to automate your businesses; this is why Google’s server farms are running 24/7.

Adaptation – You must continually improve your company rather than just optimizing it.

Be contrarian – You need to challenge the status quo, sometimes, to be the leader in your field.

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6 Business Model Patterns

6 Business Model Patterns

Bits not atoms – Bits are easier to move than atoms.  

Platforms – Software-based platforms can be distributed globally with great ease.

Free – With a free basic account and a premium paid account service you can reach a huge number of users through virality.

Marketplaces – Marketplaces have always been important in the business world.  

Subscriptions – Software-as-a-service is the dominant model for enterprise software.

Digital Goods – In-app purchases are the intersection between bits and atoms.

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Innovative Management

Innovative Management

Blitzscaling management differs from traditional styles.

  • Accept uncertainty and take steps to mitigate risk.
  • Hire and fire for fit.
  • Be ready to reorganize teams chaotically.
  • Launch imperfect products and fix later.
  • Let some problems remain while tackling bigger ones.
  • Overinvest in funding.

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REID HOFFMAN

The real value creation comes when innovative technology enables innovative products and services with innovative business models.

REID HOFFMAN

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Defending Against Blitzscalers

Defending Against Blitzscalers

Incumbents struggling against blitzscaling rivals have three options: Beat them conventionally, blitzscale yourself, or avoid competing and shift to stable markets.

Many choose avoidance, like IBM pivoting from hardware to software consulting.

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The Five Stages of Growth and How to Transition between Them

The Five Stages of Growth and How to Transition between Them

Family to Tribe: Transitioning from family to tribe requires high levels of competence and/or a brilliant growth strategy.

Tribe to Village: At this stage, the founder transitions from doing everything to managing people in a more differentiated, specialized way.

Village to City: The founder still sets goals, strategies and high-level decisions as the company scales up.

City to National: Further growth requires pulling back from blitzscaling, with the founder focusing more on growing new product lines and business units.

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CURATED BY

aurora_aee

"The greatest of follies is to sacrifice health for any other kind of happiness." - Schopenhauer

CURATOR'S NOTE

Blitzscaling by LinkedIn and PayPal co-founder Reid Hoffman introduces readers to the revolutionary scaling process from the title, which turns business strategies on their head by prioritizing speed over efficiency even at the cost of uncertainty. The long-term goal is to blow competitors out of the water by creating a lasting competitive advantage via scaling itself.

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