Blitzscaling: Why startups reject efficiency & embrace speed.
What happens when a company gets more customers than it can serve? Does it turn away customers? Or does it grow? Or does it start Blitzscaling? …more about that later.
Naturally, that company wants to grow. But how? In the past, companies had two options for scaling:
- Scale efficiently
- Scale fast
There’s just one problem. Both of these strategies assume a stable environment (costs remain predictable, the competition’s known, etc.). Of course, rarely does the world tend to be stable just the way we thought it would. (Hello Bitcoin, Airbnb, Amazon, Facebook, etc.)
That’s where blitzscaling comes in.
The word “blitz,” which we know from “blitzkrieg” and football plays, actually means “lightning” in German. Lightning-fast scaling. Blitzscaling prioritizes speed over efficiency. When blitzscaling, the standard rules of business do not apply:
- Careful planning
- Cautious investing
- Diligently solving all problems
Instead, blitzscale companies do the following:
- Make rapid guesstimates
- Make inefficient investments
- Let small fires burn
Build it now. Fix it later.
According to Reid Hoffman and Chris Yeh, authors of Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies, a common analogy for starting a business is this:
It’s like jumping off a cliff and assembling a plane on the way down.
It’s like jumping off a cliff and assembling a plane FASTER, then strapping on and igniting a set of engine jets while still building the wings.
It sounds bizarre, right? So, why would anyone apply a blitzscaling strategy to their business? Hoffman and Yeh argue that if the prize is big enough and the competition is intense enough, blitzscaling becomes the optimal strategy.
If Uber can beat out Lyft, Ola, Careem, Didi, Taxify and Yandex – so thoroughly cornering the market that no other company dares even try – then Uber can completely own the personal transportation market. This gives them added leverage to establish dominance in other sectors of the transportation market: freight, last-mile delivery, personal mobility, etc.
Google is another great example. When was the last time you heard of a new startup search engine? You don’t. Google has established such dominance that you’d have to be extremely brave to even try to compete.
Takl, an Anthem Republic client, is another great example of blitzscaling. The startup, which provides a platform for home services on demand, used blitzscaling to attain market share dominance in just a few short years. The company now operates in 130 metro areas across 42 states. Learn more by reading the Takl Case Study.
Speed and uncertainty are the new normal for blitzscaling organizations.
Blitzscale startups prioritize speed over efficiency in the face of uncertainty. As Hoffman and Yeh would argue, speed and uncertainty are the new normal of today’s world. The greatest risk is not moving too fast; it’s moving too slowly.
The world is changing at an increasingly rapid rate, and the only way to thrive is to accept the inevitability of change. The winners of tomorrow are the businesses that can accept the risks that others can’t, navigate them responsibly, and move faster than their competition. Blitzscale companies:
- Ignite and Manage Growth
- Create the Most Value
- Prioritize Speed Over Efficiency
“Take it slow. Manage your risk. Test it out first.”
Is the traditional advice outdated or irrelevant? Certainly not. Though it offers advantages for certain companies, blitzscaling isn’t the only way to grow. Nor is it replacing more conventional growth practices.
Those who win through blitzscaling will reap unfathomable fortunes. But those who lose will be left holding the bag.