Reid Hoffman & Chris Yeh, Blitzscaling [Book Review]Brenda Jubin
In my wildest fantasies I never envisage creating the next Amazon or Facebook. But I’m intrigued by the people who set out to do just that, who they are and how they do it. Blitzscaling: The Lightning-Fast Path to Building Multibillion-Dollar Scaleups by Reid Hoffman and Chris Yeh (Currency / Crown, 2018) addresses the second question. And the answer is not for the faint of heart.
Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies by Reid Hoffman, Chris Yeh
Blitzscaling is “prioritizing speed over efficiency in the face of uncertainty.” It can be compared to three other forms of rapid growth: classic start-up growth, classic scale-up growth, and fastscaling. Start-up growth prioritizes efficiency in the face of uncertainty (e.g., does your product satisfy a strong market demand?). Scale-up growth focuses on growing efficiently once the company has some certainty about the environment. Fastscaling, where you sacrifice efficiency for the sake of increasing growth, takes place in an environment of certainty and “is a good strategy for gaining market share or trying to achieve revenue milestones.”
And then there’s blitzscaling, which “combines the gut-wrenching uncertainty of start-up growth with the potential for a much bigger, more embarrassing, more consequential failure.” It’s hard to raise capital to blitzscale and, “to make matters worse, you usually need more money to blitzscale than to fastscale, because you have to keep enough capital in reserve to recover from the many mistakes you’re likely to make along the way.”
Blitzscaling is most applicable to high tech, but its techniques can benefit a range of industries. Two examples are the Spanish clothing retailer Zara and the shale oil company Chesapeake Energy.
This book grew out of a course that authors Reid Hoffman, the founder of LinkedIn and currently a partner at the venture capital firm Greylock Partners, and Chris Yeh, a writer and entrepreneur, co-taught at Stanford in the fall of 2015. Perhaps because of this, the authors not only explain the many intricacies and manifestations of blitzscaling but also address how to blitzscale responsibly and build companies that improve society.
Blitzscaling is about as fast-paced a book as its subject matter. It is packed with sophisticated business advice and useful examples of success and failure. Entrepreneurs and would-be entrepreneurs as well as investors in break-through companies will learn a tremendous amount from reading it. They may even decide to take up the book’s final challenge: “Race you to the future.”
Article by Brenda Jubin, Reading The Markets