Table of Content
- What is Blitzscaling?
- Blitzscaling Book
- Five Stages of Blitzscaling
- Three Techniques of Blitzscaling
- Business Model Innovation
- Strategy Innovation
- When to Blitzscale?
- When Should I Stop Blitzscaling?
- How Does The Role of The Founder Change?
- Stage #1 (Family): The Founder Personally Pulls the Levers of Hypergrowth
- Stage #2 (Tribe): The Founder Manages the People Who Are Pulling the Levers
- Stage 3 (Village): The Founder Designs an Organization That Pulls the Levers
- Stage 4 (City): The Founder Makes High-Level Decisions About Goals and Strategies
- Stage 5 (Nation): The Founder Figures Out How to Pull the Organization Back from Blitzscaling
- Management Innovation
- Eight Key Managerial Transitions
- Nine Counterintuitive Rules of Blitzscaling
- I Want to Blitzscale My Business
What is Blitzscaling?
“Blitzscaling is prioritizing speed over efficiency in an environment of uncertainty.”
So what does this mean in reality?
Essentially, it’s all about scaling a business as fast as possible. Climbing to the top of the ladder before any of your market competitors. This could mean hiring faster than ever before, investing unprecedented budgets into marketing and customer acquisition, product infrastructure, etc.
Now, this rapid growth process takes place in the face of extreme levels of uncertainty.
For example, you may not fully understand your business model (yet), be sure of the competitive landscape you operate in, what the long-term value is, your unit economics, or what the cost of customer acquisition is (so basically, everything traditional business schools teach you is, well, thrown out the window…)
All this uncertainty in exchange for lightning-fast growth.
The concept of Blitzscaling was first introduced to us in September 2015 by Reid Hoffman – the co-founder of LinkedIn – at a Stanford University course.
He coined the term from the German blitzkrieg (lightning war), a reference to the Wehrmacht’s prioritization of speed over all else as they rampaged across Europe in World War Two.
Blitzscaling gained increased popularity after the publication of the book Blitzscaling – The Lightning-Fast Path to Building Massively Valuable Companies in 2018, written by Hoffman and co-author Chris Yeh.
It provides a solid framework for companies wanting to scale harder and faster than the competition, backed by examples from tech incumbents such as Amazon, LinkedIn, Airbnb, and Google.
Five Stages of Blitzscaling
Typically, startups go through a five-stage process of growth as they blitzscale their way to the top of the market:
- Stage #1 – Family
- Stage #2 – Tribe
- Stage #3 – Village
- Stage #4 – City
- Stage #5 – Nation
Seeing as the most obvious change a business undertakes when scaling up is the number of employees, this is the determining factor of a company’s growth “stage”.
Now, transitioning between stages is much like a game of strategy…
“The chessboard keeps adding new pieces and new dimensions over time.” – Drew Houston, Dropbox
The game changes as you progress to each new stage – how management works, how recruiting works, what kind of structure the organization needs, etc.
And what may have worked for you before to progress from stage #1 – #2 isn’t going to be the best practice for jumping from stage #2 to stage #3, for example.
Stage #1 – Family
This is when there are just a handful of employees at the company (between 1-9). Everyone knows each other, everyone’s intimately involved within the project and talking, just as you might expect at a family dinner table.
It’s the typical “romance phase” of a start-up.
It’s also where you’ve been learning about the market, coming up with a set of hypotheses, and testing them with an MVP (minimum viable product) using lean startup methodology.
Stage #2 – Tribe
A tribe is still very much like a family, right?
People are still familiar with one another, you’re likely bumping into colleagues at the office (or on Zoom calls), just perhaps not on a daily basis.
Things are also starting to become a little more formal. Hierarchy is introduced as managers come in to organize different departments.
Stage #3 – Village
Now things are starting to get more serious. Your company has over 100 employees and it becomes almost impossible to know everyone on a first-name basis.
There’s a definite shift from informal culture to formal culture followed by the implementation of procedures and processes.
It’s also one of the most difficult transitions for leaders to make as they are forced to abandon the ad-hoc, informal nature that defined the Family and Tribe stages of growth.
Stage #4 – City
The major difference between a village and a city?
Several product lines, divisions, and R&D teams begin to emerge as the company grows and serves the needs of different buyer personas.
We’re looking at a business with over 1000 employees at this stage.
Stage #5 – Nation
The final growth stage is Nation.
At this point, you are presiding over a company with over 10,000+ employees, addressing them at monthly or yearly conferences, just as a President or Prime Minister would.
Your foreign policy skills are also sharpened, as you coordinate with other nation-level companies, government, and other key industry players.
Three Techniques of Blitzscaling
Hoffman and Yeh identified three key techniques applied by entrepreneurs and investors to build dominant companies and transition through the five stages of blitzscaling:
- Business Model Innovation
- Strategy Innovation
- Management Innovation
Business Model Innovation
As the name suggests, the first step is to design an innovative business model that can grow exponentially.
Many entrepreneurs make the common mistake of focusing solely on the technology, software, and product design, but never really figuring out the business side of things.
Essentially, how will the company make money?
Take Google, for example.
Larry Page and Sergey Brin weren’t just technological gurus. They also knew a thing or two about business.
While the development of their search algorithm software was a remarkable technological feat in itself, it was their innovation and foresight into performance advertising as a business model that underlined their success.
A combination of both new technology, effective distribution to potential customers, and a scalable high-margin revenue model that allows you to reach Nation stage growth.
When creating a business model, entrepreneurs must be able to tap into growth factors, while simultaneously addressing growth limiters.
First, let’s go through the four primary growth factors in a little more detail.
With the rise in global internet usage, more and more people are connected together via networks.
We can use networks to search for information (Google), buy products (Amazon), or communicate with anyone across the world (WhatsApp).
The more networks that exist, the higher chance of Network Effects occurring.
A Network effect takes place when:
“A product or service is subject to positive network effects when increased usage by any user increases the value of the product or service for other users.”
The best example of this would be social media.
Each new user to Facebook, Instagram, or a sports fitness platform such as Strava exponentially increases the platform’s value.
If entrepreneurs can tap into Network Effects, they can generate a positive feedback loop that results in superlinear growth and value creation.
This superlinear effect makes it very difficult for new entrants to match the value of plugging into the existing network.
Why would customers jump to their new platform when everyone’s using the market leader? What’s the incentive?
There isn’t really one, often resulting in a single product or company dominating the market.
Founders and executives often overlook the power of the second growth factor, distribution.
They get so caught up in the product (and rightly so) that they neglect to think about how they’re going to get it in customers’ hands.
If a product is never used by customers, then you can’t generate Network Effects, product hype, and most importantly, revenue.
The good news is there are two distribution techniques entrepreneurs can use:
- Leverage existing networks
Seeing as most startups don’t have thousands of dollars to invest in advertising, they have to creatively find ways to leverage existing networks.
For example, PayPal tapped into eBay’s 10m+ network by developing an easy-to-use option for users to “pay with PayPal” on a checkout screen.
Alternatively, entrepreneurs can pursue product virality.
Viral distribution occurs when current users recommend a product to their friends, who in turn sign up. They love the product so much that they decide to bring their friends on board, who bring in more users, and on it goes…
The combined use of these techniques will allow you to cost-effectively distribute your product.
This is perhaps the most obvious factor, but there has to be a big enough market for you to grow into.
That doesn’t just mean the market as it is today, written up in some industry analysis report, but what the market will look like in the future.
For example, when Airbnb launched, what was the market for peer-to-peer home sharing? Almost zero, right? There were no existing products dominating that space.
But when you think about it in terms of the number of rentable properties and travelers (perhaps using a tool such as TAM, SAM, SOM) it’s almost incalculably big.
That’s why we recommend that instead of sizing up the market, try sizing up the problem instead. Is it something many people are having issues with? Is it something they care about? And finally, is your product compelling enough for them to take action?
The final growth factor we’re going to look at is something equally as “obvious” as market size, and that’s the ability to charge high-gross margins for your product.
This is extremely important as you’re going to require a lot of capital to fuel your growth.
If you don’t have those high-gross margins, blitzscaling simply isn’t going to be an option for you. You won’t be able to generate enough capital or attract investors.
Limiters to Growth
Now, with the factors of growth covered in detail, let’s take a look at some of the potential hurdles entrepreneurs face when trying to grow their businesses.
No Product-Market Fit
The first growth limiter we’ll look at is a lack of product-market fit. Without it, no company can be sustainable over the long term.
A good example here would be the epic rise and fall of the e-commerce coupon marketplace, Groupon.
They experienced extreme growth at the beginning of their journey. Things looked good, their market valuation was through the roof ($1.35 bn), and everybody was very, very happy.
However, ultimately, the product failed. It was neither good for the consumer nor the merchant.
For consumers, the experience was a hassle, and complaints of poor customer service led to record churn rates.
For merchants, it was even worse. They found themselves competing against each other, forced to offer product discounts of over 70% (plus tax…) to attract customers meaning their profit margins were abysmal.
So it didn’t matter how much Groupon grew, their business model was never sustainable as they failed to achieve product-market fit.
This is why we’re such big fans of Eric Ries’ Lean Startup Methodology, and it forms a core segment of our online business program.
His MVP cycle is a fantastic tool for minimizing risk and establishing a product-market fit. But the fact is that most start-ups don’t follow that process…
The second growth limiter we’re going to look at is operational scalability.
Operational scalability is:
A business’s ability to scale its organization and business model to cope with increased demand for their product or service.
Typically, it’s split into two categories:
- Human limitations
- Infrastructure limitations
This isn’t going to be an issue when starting your venture when managing just a handful of people and really focusing on finding your product-market fit.
However, once you begin to move from Village to City stages of growth, operational scalability will certainly need addressing.
Human Limitations (staff)
As dedicated and hard-working as you and your founding team are, there are only a certain number of hours in a day, and you do still need to find time to sleep…
This is why growth is often limited by a simple lack of manpower.
Now, one tactic for dealing with this is to design a business model that requires as few people as possible for it to scale.
For example, WhatsApp was able to leverage an existing network and distribution channel in customer’s address books for growth, while implementing a freemium model.
This drastically reduced the number of sales, marketing, and customer service personnel needed to manage their over 10m active user base.
Another tactic is to outsource work where possible.
For example, Airbnb realized that photo quality was an extremely important purchase factor for customers.
So, they decided to employ a network of freelance photographers. As the business scaled, a shortlist of photographers managed by a founder was increased to a large network managed by a single employee.
The other operational scalability issue that limits growth is infrastructure. It doesn’t matter how hard and fast you grow if your infrastructure can’t bear the load.
A good example of this is Tesla.
Despite the company’s success (which we broke down in our Tesla Value Chain analysis) complexities within its manufacturing process mean its struggling to meet demand.
Production rates are low, and backorders on its waiting list are measured in months and years, rather than weeks.
Therefore, demand generation isn’t the problem for Tesla; operational scalability is.
Business Model Patterns
The business models of some of the most successful and rapidly growing companies tend to follow a series of proven patterns.
These allow them to frequently tap into certain growth factors while bypassing the limiters we just went through.
Now, for a pattern to be considered “proven”, multiple high-value businesses must have used it to achieve exponential growth.
Based on that criterion, Hoffman and Yeh assembled the following list of patterns to assist you with your business model innovation.
Bits Rather Than Atoms
A bits-based business model deals with data (think Google and Facebook) rather than physical material atoms (like a bike shop).
Bits-based businesses are easily able to navigate around growth limiters. Their software can be improved, updated, and released much faster than a physical product can, making it much easier to achieve product-market fit.
They are also much more likely to achieve Network Effects, tap into distribution techniques like virality, and be high-gross-margin businesses.
Platforms are any technology upon which other products and businesses services are built.
If a platform is able to become the “go-to” for a given industry, the potential network effects could propel it into an unassailable lead.
Also, modern APIs (application programming interfaces) allow people to “plug-n-play” into the platform from almost anywhere in the world, increasing the model’s ability to scale exponentially.
Microsoft Windows, Amazon, and Apple’s iOS ecosystem are all good examples of successful platform-based businesses.
Free or Freemium
Let’s face it, we’re all drawn to the word “FREE” whenever we see it highlighted in any marketing promo material we receive.
We are all inclined to investigate a product a little further, maybe try out a new tool if there’s no risk assumed on our part.
This is what makes Freemium models so powerful. They’re great for achieving distribution and virality and can help kick-start network effects by helping products reach a large volume of users.
Sometimes, you can offer a product for free and still be profitable.
Facebook’s advertising-driven business model reaches such a large audience that users have never paid a penny for its service.
Marketplaces have existed for centuries, as one of the oldest and most traditional business models. It is a place (or more often than not, tool) that connects buyers and sellers.
The Age of the Internet has exponentially increased the growth potential of the model. A traditional marketplace, say a farmer’s market in a local town, is severely limited by geography.
An online marketplace such as Airbnb, on the other hand, isn’t. The company is able to run a global homestay marketplace while avoiding both human and infrastructural limiters.
While it’s challenging to create a marketplace from scratch:
“The first marketplace that does manage to achieve liquidity—the ability for buyers and sellers to quickly and efficiently find a counterparty to conduct a transaction—becomes very attractive to both sides of the market.”
As more and more people begin to enter the marketplace, it becomes increasingly attractive to both buyers and sellers. This creates a Network Effect, positive feedback loop, and potentially unassailable lead at the head of the market.
A subscription-based model is when a business charges customers a recurring fee – typically monthly or yearly – for access to a service.
It’s most commonly employed by SaaS (software as a service) companies such as Netflix, HBO, and Salesforce.
The cost and overheads of traditional on-premise software meant licenses had to be sold for long, set periods of time (5 years or more) and at a premium price to make the model financially viable.
This forced software companies to focus solely on the largest consumers in the industry, leaving midmarket and SMEs (small to medium enterprises) open to the more flexible, subscription-operated SaaS companies.
A relatively new business pattern that’s emerging between “bits rather than atoms” and “platforms” is digital goods.
These are essentially digital up-sells over the top of an existing product.
For example, League Of Legends is a popular multiple online video game. It’s completely free of charge and players can simply download the game, install it to their PC, and start playing immediately.
However, once inside the game players can also access the online store. Here they can buy different locked champions, different skins, and a variety of other in-game purchases.
It’s an effective, profitable tactic that seriously helps businesses to scale.
That’s right! The last proven business pattern we’re going to look at is Feeds.
As bizarre as it might sound, a digital feed can be an extremely powerful model used under the right conditions.
Its effectiveness lies in its ability to drive user engagement, which in turn attracts advertising dollars and long-term retention.
Like Facebook, Twitter, and Instagram have proved over the years, a rolling news feed with carefully placed sponsored updates is an efficient way to turn proverbial “eyeballs” into revenue.
The crazy thing is that the majority of people enter these feeds to catch up with what their friends and family are doing.
I mean, when was the last time you logged into Instagram with the intention of actually buying something?
The second stage of the blitzscaling framework is to implement an innovative strategy.
The question of whether to blitzscale (or not to blitzscale) is a strategic choice. Therefore, entrepreneurs must understand the impact that decision has, how to approach it correctly, and be aware of how their role changes throughout the process.
When to Blitzscale?
Blitzscaling is a high-risk strategy that requires serious investment and a large amount of cash in an all-or-nothing bid for complete market domination.
It should only be considered once you determine that SPEED to market is the critical strategy to achieve success at your company.
This could be the case if:
- The prize is big enough – huge market potential with substantial gross margins.
- First-scaler advantage – no competitor is yet to dominate the market.
- Competitive market – fierce competition between market rivals.
- Learning curve – opportunity to become the first to scale a “steep learning curve”.
If you find yourself in either of the aforementioned scenarios, then blitzscaling is DEFINITELY an option worth considering.
However, just because you can blitzscale doesn’t necessarily mean you should.
This is especially true if you’re following a relatively low-margin business model, such as a fine-dining restaurant.
As Hoffman and Yeh put it:
“Scale is critical to e-commerce and cloud computing; scale is antithetical to world-class fine dining.”
In other words, if assuming additional cost, risk, and uncertainty aren’t likely to convert into a competitive advantage, you may be better served following traditional business doctrine.
When Should I Stop Blitzscaling?
While blitzscaling is a powerful growth strategy, it was not designed to be permanent. No business can sustain that level of growth indefinitely.
Remember, to achieve such exponential growth you’re inherently investing capital inefficiently. Continuing down that path for too long is a surefire way to bankrupt your business.
As Hoffman and Yeh put it in the book:
“Blitzscaling is like the afterburners on a fighter jet that allow you to fly at double or triple normal speed but consume fuel at a shockingly high rate. You don’t just switch on the afterburners and never turn them off…”
So, the question becomes WHEN should you turn off those afterburners?
You should keep a keen eye out for any of the early-warning indicators that your blitzscaling strategy has effectively run its course:
- A declining relative market growth relative
- Worsening unit economics
- Decreasing per-employee productivity
- Increasing management overhead
If (or when) these begin to appear, it’s highly likely the brakes need applying and other strategies considered for further growth, like blitzscaling new product lines or business units.
How Does The Role of The Founder Change?
As the business continues to grow and scale through the five stages of blitzscaling, so does the role of its founder.
Learning the specific skills, gaining the required knowledge, and embracing the right temperament are all part of this entrepreneurial journey.
Stage #1 (Family): The Founder Personally Pulls the Levers of Hypergrowth
As we mentioned earlier, at this stage there are only a handful of employees. Founders are heavily involved in all aspects of blitzscaling, whether that’s knocking on doors, writing email copy, and monitoring conversion rates.
Stage #2 (Tribe): The Founder Manages the People Who Are Pulling the Levers
With the company starting to grow a little, founders will now be responsible for managing a team. While still contributing individually, they’ll need to learn how to maximize that team’s efficiency.
If new to this managerial position, the 5 P’s of Leadership offers a well-established framework to guiding a team to success.
Stage 3 (Village): The Founder Designs an Organization That Pulls the Levers
This is typically the hardest stage of adaptation for founders.
While they might interact with frontline employees, it’s unlikely they’re on a first-name basis with them all.
It’s time to start thinking about the big-picture and structural organization of the business.
Stage 4 (City): The Founder Makes High-Level Decisions About Goals and Strategies
If you’ve made it this far, you’re no longer redshirting or sitting warming the bench. You’re a starter, finally embracing your position in the big leagues.
Consequently, your role drastically shifts towards making big strategic decisions that determine the company’s future.
Yes, these decisions will have specific tactical implications, but that’s not the founder’s problem to figure out.
Stage 5 (Nation): The Founder Figures Out How to Pull the Organization Back from Blitzscaling
By this stage, it’s time to think about how to transition into more traditional managerial practices.
For example, you might want to look at:
- Streamlining your logistics process
- Increasing operational efficiency
- Improving customer service
- Tightening financial management
However, that doesn’t mean you stop blitzscaling!
It’s also time to think about how to develop new product lines, business units, and reach new target audiences.
The third and final technique in the blitzscaling framework is developing an innovative approach to management.
This new managerial approach is split into two categories:
- Key managerial transitions
- Counterintuitive rules of management
Learn to adapt to this new style of management and there’s no reason why you can’t be leading a trillion-dollar company in the future!
Eight Key Managerial Transitions
All of the successful companies mentioned within the blitzscaling book (Amazon, PayPal, Facebook, LinkedIn, Airbnb, etc.) optimized their management practices to evolve through each of the five growth stages.
This adaptation can be broken down into eight key transitions, which we’ll now analyze in greater detail.
#1 – Small Teams to Large Teams
While operating at the Family and Tribe stages of growth, smaller, informal, more flexible teams can operate and pivot as they adapt their MVP.
However, once transitioning into the Village stage and beyond things start to get more complex. Formal processes need to be introduced, more people brought in, and teams coordinated around specific goals.
This period of rapid expansion can leave early members of the “original cast” alienated and no longer involved in the decision-making process.
Therefore, systems must be implemented to ensure staff feels connected to the company’s long-term mission.
#2 – Generalists to Specialists
During the early stages of a company, smart generalists are needed for their all-around speed and adaptability.
They help drive the organization by wearing all the necessary hats required to get the job done.
However, as the company grows, so do its hiring needs.
Specialists with expertise in areas critical to scaling the business are needed. This could be in customer acquisition, engineering, customer service – whatever is needed to achieve exponential growth at that time.
This doesn’t mean booting the generalists off the team though.
In fact, far from it.
The hiring of specialists allows you to redeploy your best generalists to address pressing issues elsewhere within the organization.
They are, after all, the cultural foundation of your business!
#3 – Contributors to Managers to Executives
How do we differentiate between managers and executives?
- Managers – frontline leaders responsible for the everyday tactics.
- Executives – coordinators of the managerial team, responsible for long-term strategy.
Both are equally important and necessary in a successful blitzscaling strategy, despite playing different roles at different stages of company growth.
During the Family stage, formal managers may not be needed. The smaller team of generalists are able to successfully achieve their primary goal of finding that product-market fit.
However, as the organization grows and becomes increasingly complex, so does the need for hierarchy.
Managers are required to lead the growing number of teams within the company, with executives above them to direct the organization’s long-term mission.
#4 – Dialogue to Broadcasting
A company’s internal communication process changes dramatically as it scales through the blitzscaling process.
At the Family stage, meetings are informal. You and your founding team are likely all in the same room. If you have a question, you literally pop your head up, turn to your nearest colleague, and ask.
However, as early as the Tribe stage you’ll have to start thinking about what is shareable and what is not. Do you have time to organize weekly meetings with your key managerial staff? And how are you going to communicate with the rest of the company, and how frequently?
Thankfully, there’s a myriad of videoconferencing and digital communication tools such as Slack, Google Meets, and Zoom that help to connect offices all over the world.
Throughout the later stages, as you scale into City and Nation, the founder or CEO needs to make a conscious effort to keep broadcast channels open.
Regular emails or short videos are a great way to achieve this.
#5 – Inspiration to Data
During the early stages of growth, it’s unlikely a start-up has much in the way of analytics or data – relying more on inspiration or improvisation.
However, as you begin to scale data becomes crucial.
As Jeff Bezos puts it:
“If this is a decision based on opinions, then my opinion wins. However, data beats opinion, so bring data.”
It’s crucial in the decision-making process. It informs executives and:
- Guides product design
- Acquisition marketing strategy
- Identifies key distribution channels
- User uptake
- Churn rate
If you’re relatively new to gathering data, try tracking a few key stats like users, downloads, buyers, while steering clear of “vanity metrics” – the stuff that makes you look good but adds no real bottom-line value.
As you scale into the City and Nation stages it’s highly recommended you bring a specialist data team on board.
#6 – Single to Focus to Multithreading
Throughout the scaling process, an organization’s product focus will shift from a single-threading to a multithreading approach.
What do we mean by this?
Generally, in the early stages of growth, a start-up focuses on doing one thing and doing it well – producing a single product.
However, as they progress and continue to pursue lightning-fast growth it becomes necessary to introduce multiple product lines or even business units.
This is known as multithreading.
It typically occurs around the City stage when the organization has enough people to support these new product lines.
It will also mean a shift towards a more decentralized organizational structure. While it may seem oddly disconnected at first, it’s vital that each product group has enough space to focus on the task at hand.
Try to think of each thread as a separate company and leadership team within the same organization.
As strange as it may sound, most early-phase start-ups are like pirates.
There are few formal processes in places, rules are frequently broken, there are no large committees or overseers, and they act quickly and decisively when an opportunity presents itself – waging guerilla warfare against the large corporations.
However, as Hoffman so eloquently puts it:
“Eventually Captain Jack Sparrow has to grow up and start acting more like the sober and responsible Captain Picard.”
What he’s referring to is when a start-up blitzes its way into a Village it’s necessary to trade in the Jolly Roger for that of the structured, disciplined, Royal Navy.
An established organization with a hierarchical and unified executive team.
#8 – Founder to Leader
The last of the eight transitions to run through is the personal transition founders must go through to “scale themselves”
Now, Hoffman and Yeh highlight three areas to scale yourself:
I can guarantee that every founder and entrepreneur has asked themselves this one question as they build their team…
“Can this person really do a better job than me?”
The answer is an unequivocal, yes. They certainly can, and the sooner founders embrace that fact the better.
While it was the founders’ individual talent, hard work, and foresight that got the company off the ground, it’s their ability to delegate and hire the right people that transform their ventures into trillion-dollar companies.
As opposed to delegating work to others, are there specialists you could hire who amplify the work you do?
This isn’t about freeing up more time for you to focus on different goals, but more about making you better at what you do.
A great example Hoffman uses in the book is his hiring of a “Chief of Staff” – borrowed from the world of politics.
As he puts it:
“Your chief of staff should amplify your business impact: he or she should be a businessperson who can not only make certain decisions for you but also triage the important decisions that you have to make yourself.”
Of course, it doesn’t always mean hiring a personal assistant or Chief of Staff.
It could be someone who helps you keep up to date with industry trends, internal and external communication, managing your personal social media accounts, etc.
Finally, as a founder, you need to be constantly, learning, improving, and adapting as you lead your company to success.
This means surrounding yourself with a network of other entrepreneurs and mentors who have walked the path before you.
Learn from them. Absorb what they have to say like a sponge. Applying this knowledge could be the difference between scaling up or blowing up (figuratively of course!)
Nine Counterintuitive Rules of Blitzscaling
As I’ve mentioned several times throughout this guide, blitzscaling runs contrary to almost every piece of advice taught at traditional business schools.
So if you’re going to undertake this aggressive growth strategy, you need to follow another set of rules. Rules, that on the face of things, look completely counterintuitive…
#1 – Embrace Chaos
Blitzscaling, by its very definition, is:
“Prioritizing speed over efficiency in an environment of uncertainty.”
In this pursuit of speed, you’re sacrificing transitional stability, order, and efficiency that defines traditional best practices. It’s going to be chaotic and extremely uncomfortable!
Because you don’t know yet if your hypotheses are correct, or how many times you’ll have to pivot before you find product-market fit.
So embrace the chaos, be adaptable, and enjoy the ride.
#2 – Hire Ms. Right Now, Not Ms. Right
Here’s a common misconception amongst entrepreneurs that they have to hire the best “overall” person for a role with half an eye on the future.
While that might work in traditional business, it’s not going to help you blitzscale.
You need to be able to hire the right person, for the right role, at the right time. Someone who’s going to help you jump to that next stage of growth as quickly as possible.
For example, the person who’s great at operating at the Nation growth stage could be completely ill-equipped to deal with the flexibility and adaptation required during the Family phase – even though they’re seen as “objectively” better.
#3 – Practice “Bad” Management
This doesn’t sound very good, does it?!
Now, don’t worry, it doesn’t mean being a bad manager – mistreating colleagues or being verbally abusive. That’s not going to help you grow at all.
It just means throwing out good management principles such as organizational coherence and stability for something more chaotic.
To achieve this growth you may need to make colleagues feel uncomfortable and the structure of the organization might change four to five times in a single year.
Again, remember to embrace the chaos.
#4 – Launch a Product That Embarrasses You
One of our favorite all-time quotes here at ThePowerMBA:
“Launch a product that embarrasses you”
Again, it sounds counterintuitive, right? Why would you launch something that embarrasses you?
Well, the name of the game is speed. The best way to test your hypothesis is to get an MVP in customer’s hands, get them using it, and then on board their feedback.
However, because of the speed you’ve delivered the MVP at, there are GOING to be errors. This is not the finished article, it’s going to be buggy, and downright embarrassing!
But it’s all part of it.
If you try to be a perfectionist when launching your product, you’re going to slow. Someone else will beat you to the top.
#5 – Let Fires Burn
This is all about understanding what the key strategic areas are you need to focus on, right now, that is going to make your business scale.
Forget everything else.
There could be issues in marketing your product, bottlenecks within the engineering process of your mobile app, or speed issues with your website.
At the rate you’re moving at, it’s impossible to deal with them all. Some of these fires must be left to burn while you focus solely on the key strategic areas in that particular moment.
#6 – Do Things That Don’t Scale
This is a principle that comes from Paul Graham, the founder of Y Combinator.
What he means by this is that the most important thing is to get the things that matter done, and done quickly. This means by any means possible – regardless of whether that means is scalable.
A great example from the book (and that we touched upon earlier) is Airbnb and their “photograph problem”.
They realized that homeowners were pretty bad at taking photos, and it was affecting their ability to rent out properties.
So, the founders of Airbnb literally went door-to-door to take photos themselves. Of course, this process isn’t scalable at all. However, it was exactly what was needed at that moment to help the business grow.
#7 – Ignore Your Customers
“The customer is always right…” right?”
Well, yes and no!
There is a huge difference between your early adopters and mainstream customers. While they’re the ones using your products right now, they’re not the same people who are going to turn your company into a trillion-dollar machine.
At some point, you have to appeal to a wider audience.
So while you have to onboard their feedback and use it to improve your product, it’s important to understand what the long-term mission is, and who those users are going to be.
#8 – Raise Too Much Money
While this is certainly a defensive tactic designed to offset the inefficiency of capital spending that defines blitzscaling, it can also be used offensively.
You see, when you’re scaling at such speed opportunities are going to present themselves. If you have to stop what you’re doing and raise capital in their pursuit, you could miss them altogether.
That’s why having significant cash flow is so important to blitzscaling.
#9 – Evolve Your Culture
Another common misconception about start-up culture is that it’s set in stone. The early team gets together like the Founding Fathers and draws up the Constitution of Company X.
An irreplaceable document that must never be changed.
However, while founders are certainly the drivers behind creating a culture and are responsible for its enforcement, a company is a living organism.
It’s constantly changing and adapting as more and more people are hired. A company’s culture should reflect that change.
I Want to Blitzscale My Business
First of all, congratulations if you made it to the end of the guide!
It’s surely a sign that blitzscaling is of interest to you and perhaps something you’re looking to implement at your own company.
The online business program is specifically designed to guide entrepreneurs and founders through the rigors of building a start-up.
It can be a rough journey, especially if it’s your first time turning an idea into a scalable business!