By: Reid Hoffman & Chris Yeh
Context:
When you have ...
(1) a killer product
(2) a clear and sizable market
(3) a robust distribution channel
You must ...
prioritize speed over efficiency, even in an environment of uncertainty
Introduction
The first software company to achieve a critical mass can dominate its industry for a long time.
The Internet = zero-marginal-cost distribution.
The ability to reach millions (or billions) of users and service their needs with software, at nearly no marginal cost, creates situations where a powerful company becomes ever more powerful through positive feedback loops. These second-order effects include network effects, virality.
While similar positive feedback loops have led to massive organizations for millenia – see the Roman Empire, Rockefeller’s Standard Oil, and Microsoft – the Internet has dramatically shortened the feedback loop iteration time and enabled unprecedented global scale.
Thus, for companies vying for market dominance, it’s imperative to move fast and take on large risk, or forever lose the fight. Blitzscaling covers important questions:
1: What is Blitzscaling?
Traditional business strategy involves gathering information and making decisions with a certain degree of confidence. Take calculated risks that you can measure and afford. Prioritize correctness and efficiency over speed.
But in certain markets today, this is too slow. The risk isn’t inefficiency – the risk is playing it too safe. If you win, efficiency isn’t important; if you lose, efficiency is irrelevant. “Second prize is steak knives. Third prize is you’re fired.”
Blitzscaling drives fast growth by prioritizing speed over efficiency, even in an environment of uncertainty. When you blitzscale, you make decisions before knowing exactly how things will play out. You accept the risk of making mistakes and operating inefficiently, in exchange for moving faster.