Blitzscaling — Part 1 (Summary of the book)

Hello everyone!!

First of all, I would like to wish you and yours a Happy New Year! 🎉, from me and mine!

Second of all, I am working on a series of posts in parts where I will be talking about each section of the book mentioned in the title. Blitzscaling!
If you would like to read the awesome stories of various companies? then I would suggest you to read it. You can buy from here.

No time to read entire book? But also want the key points and knowledge out of it? then read on, you are at the right place!

Let’s begin!

We will talk about the following key points and concepts:

1. Types of Scaling
2. Three Basics of Blitzscaling
3. Five Stages of Blitzscaling
4. Three key techniques of Blitzscaling

Blitzscaling is what the author calls both the general framework and the specific techniques that allow companies to achieve massive scale at incredible speed. If a startup is growing at a rate that is so much faster than its competitors that it makes the founders feel uncomfortable, then hold on tight, they might be blitzscaling!

When founders deliberatley make decisions and commit to them even though their confidence level is substantially lower than 100%. They accept the risk of making the wrong decision for the ability to move faster. These risks and costs are acceptable because the risk and cost of being too slow is even greater.

Blitzscaling is more than just plunging ahead blindly in an effort to ‘Get Big Fast’ to win the market. You would have to line up with a small number of hypotheses about how your business will develop. One needs to be prepared to execute more than 100 percent effort to compensate for the bets that don’t go your way.

Here’s an analogy that the author says:

Blitzscaling requires more than just courage and skill on part of the entrepreneur. It also requires an environment that is willing to finance intelligent risks with both financial and human capital, which are essential for blitzscaling. They act as fuel and oxygen to propel the rocket forward.
Meanwhile, the organisation is the actual rocket which the founders are building on the fly as they rise. The job of the founder as a leader is to make sure there is enough fuel and oxygen to propel the growth.

Types of Scaling

+-------------+------------------------+--------------+
|             |       Efficiency       |    Speed     |
+-------------+------------------------+--------------+
| Uncertainty | Classic Startup growth | Blitzscaling |
| Certainty   | Classis Scaleup growth | Fastscaling  |
+-------------+------------------------+--------------+

Let’s talk about the table above.

1. Classic Startup growth is kind of controlled, efficient growth, efficient use of resources available which reduces uncertainity and it a good strategy to follow while the startups try to establish certainty, which is, the product market fit. A product market fit is finding something that satisfies the strong market demand for the solution to a specific problem or need.
2. Class Scaleup growth is focusing on growing efficiently once the product market fit is established. This approach is a classic corporate management techniques which focuses on maximising returns in an established, stable market.
3. Fastscaling is that you are willing to sacrifice efficiency for the sake of increasing the growth rate. It takes place in a certain, controlled environment, the costs are well understood and predictable. Fastscaling is good to achieven revenue milestones.
4. Blitzscaling means that you are willing to sacrifice efficiency for speed, but without waiting to achieve certainty on whether this sacrifice will pay off. It’s do or die kinda growth, with either success or death occurring in a remarkably short time.

Three basics of Blitzscaling

1. Blitzscaling is both an offensive strategy and a defensive strategy.
   Agghh, too much jargon, 😂, let me explain.
   On offense, it allows you to take market by surprise, bypassing heavily defended strategies by other players. It also opens up access to capital as investors like to back market leaders.
   On defensive side, blitzscaling lets you set a pace that keeps your competitors gasping simply to keep up, affording very little time and space to counterattack. Why? Because they are focused on responding to your moves, blitzscaling helps you determine the playing field to your great advantage.
2. Blitzscaling thrives on positive feedback loops. In that the company that grows to scale first reaps significant competitive advantage.
   As mentioned previously, Blitzscaling allows to have the first mover advantage. You tend to benefit in every way, first product to solve the problem in a better way, first company to offer jobs to solve interesting problems to top talent in the market. Top professionals tend to work for a market leader, anytime. It’s extremely difficult for later entrants to compete directly with blitzscaling company that has first-scaler advantage.
3. Despite its incredible advantages and potential payoffs. It comes with massive risks.
   Sometimes, the blitzscaling activities tend to leave a lot of things broken when you are at the speed which the product is iterated. It is risky from a management prespective as well. Reinventing your leadership style, your product and your organization at every new phase of scale, won’t be easy, but it is necessary. It requires your organisation to make hard choices and sacrifices.

Five Stages of Blitzscaling

Companies are classified in the following stages based on the organisation size.

1. Family (1–9 employees)
2. Tribe (10s of employees)
3. Village (100s of employees)
4. City (1000s of employees)
5. Nation (10000s of employees)

Three key techniques of Blitzscaling

If you are wanting to go big or go home, you need innovations in place to get to that level and execute your business thesis. What got you here, won’t get you there. Author talks about three key techniques that can help any organisation blitzscale.

1. Business Model Innovation
   As a founder you would need to design an innovative business model that can truly grow. First time founders often make mistakes and get busy in building tech, product design, etc. but forget to work or neglect to work on the way to make money. Business is all about making money and not doing a charity. Ofcourse, to figure out what works best for your potential customers is all about experimentation but eventually, you need to figure out a way to make money. This innovation is how you will be able to out-compete established competitors.
2. Strategy Innovation
   The most obvious element of blitzscaling is the pursuit of extreme growth, which, combined with an innovative business model can generate massive value and long-term competitive advantage.
   For successful blitzscaling, the competitive advantage comes from the growth factors built into the business model (way to make money), such as network effects, whereby the first company to achieve critical scale trigger a feedback loop that allows it to dominate a winner-take-all or winner-take-most market and achieve a large first-scaler advantage.
3. Management Innovation
   This is necessary because of extreme strains placed on the organisation and its employees by hypergrowth. The kind of growth involved in blitzscaling typically means major human resources challenges. When the size of the org increases, it requires a typically different approach to management than that of typical growth company. Management has to embrace launching flawed and imperfect products, letting fires burn and ignoring angry customers.

So, folks, this is the part 1 of the book, the rest of the parts (coming soon) we will talk details about the 3 techniques mentioned above. That is what rest of the book talks about too.

For the first part, author mentions various stories for each of these techniques which are an interesting read about the companies like Dropbox, LinkedIN, Google, Uber, Tesla, etc. But mentioning them is out of scope of this blog.

So, thats about it. Hope you like it.

Peace ☮️