November 8, 2018

Blitzscaling by Reid Hoffman and Chris Yeh - Quick Review

I just finished the book, and thought I'd post a summary to help sway someone's mind if they're thinking of reading it or not. Overall I think the book had some unique insights from the early days of LinkedIn, and through Reid Hoffmans work with Greylock partners ( A VC firm), plenty of anecdotes from companies like Airbnb, Facebook, Uber, Tesla and SpaceX.

Pros: Great information to have when considering your next idea.

Cons: This could really be a concise essay of 40 pages instead of the 300. Too many times I found concepts being repeated, as if the reader had forgotten.

Summary:

What is Blitzscaling?

  • Blitzscaling is both the general framework and specific techniques that allow companies to achieve massive scale at incredible speed.

  • Blitzscaling is both offensive and defensive strategy

  • Thrives on positive feedback loops, company that grows to scale first reap significant competitive advantages

  • Comes with large risks.

Business Model Innovation

Of the three core techniques, the first and most foundational is to design an innovative business model capable of exponential growth.

Designing to maximise growth: The four growth factors:

  • Market Size

  • Distribution

  • Leverage existing networks

  • Virality ( Dropbox invitation example )

  • High gross margins

  • Network effects

    • Direct network effects
    • Indirect
    • Two sided
    • Local
    • Compatibility & Standards

Designing to maximise growth: The two growth limiters:

  • Lack of product market fit

  • Operational scalability ( Software over restaurants )

    • Humans
    • Infrastructure

Proven Business Model Patterns

  • Bits rather than atoms

  • Platforms

  • Marketplaces

  • Free or freemium

  • Subscriptions

  • Digital Goods

Underlying principles of business model innovation:

  • Moore’s law

  • Automation

  • Adaptation, not optimization

  • The contrarian principle

Strategy Innovation

When to blitzscale?

  • Big new opportunity

  • First scaler advantage

  • Learn more than competition

  • Competition ( when you have it )

When to stop blitzscaling?

  • Declining rate of growth

  • Worsening unit rate economics

  • Decreasing per employee productivity

  • Increasing management overhead

Management Innovation

Eight key transitions:

  • Small teams to large teams

  • Generalists to specialists

  • Contributors to managers to executives

  • Dialogue to broadcasting

  • Inspiration to data

  • Single focus to multithreading

  • Pirate to Navy

  • Captain to Admiral

  • Scaling yourself: Founder to leader

    • Delegation
    • Amplification
    • Making yourself better

Nine counterintuitive rules of blitzscaling:

  • Embrace chaos

  • Hire miss right now, not miss right

  • Tolerate bad management

  • Launch a product that embarasses you ( MVP, not shit)

  • Let fires burn

  • Do things that don’t scale ( Throwaway work )

  • Ignore your customers

  • Raise too much money ( instead of too little )

  • Evolve your culture (Build a ship of Theseus )