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Blitzscaling Summary Review & Audiobook | Reid Hoffman and Chris Yeh

The Lightning-Fast Path to Building Massively Valuable Companies

Life gets busy. Has Blitzscaling been on your reading list? Learn the key insights now.

We’re scratching the surface here. If you don’t already have Reid Hoffman and Chris Yeh’s popular book on business, management and leadership, order it here or get the audiobook for free on Amazon to learn the juicy details.

About Reid Hoffman and Chris Yeh

Two Stanford University graduates, Reid Hoffman and Chris Yeh are the co-authors of this book. 

Reid Hoffman was a co-founder of LinkedIn and he is currently a partner at the venture capital firm Greylock Partners. As of last year, Hoffman was ranked the 1,349th richest person in the world with his net worth estimated by Forbes to be 1.8 billion dollars. 

Chris Yeh excelled while at university, earning two Bachelor’s degrees with distinction from Stanford University before being named a Baker Scholar at Harvard Business School. Since then, he has been helping people in the business and tech world live more productive and happy lives. Chris’ mission statement is that he helps “interesting people do interesting things”. He consistently writes for outlets like TechCrunch and VentureBeat, now sitting with over 2,000 posts to his name that cover a wider range of topics, from happiness in Silicon Valley to psychology in entrepreneurship.

Blitzscaling book summary review pdf free audiobook Reid Hoffman and Chris Yeh
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Introduction

This book, Blitzscaling, argues that it holds the secret to starting and scaling massively valuable companies. This secret is called “Blitzscaling”. Composed of multiple techniques, the authors of this book believe that utilizing these techniques will place you head and shoulders above the competition. The techniques covered within the book are all related to scaling up on a business or product that you already have, or is only in idea form. These same techniques have been used by Google, LinkedIn and Facebook to allow them to rapidly double in size. Examples like this and case studies of entrepreneurs are provided throughout the book. 

StoryShot #1: The Fundamentals

What is Blitzscaling?

Consisting of both a general framework and specific strategies, Blitzscaling is perfect for companies where scale is the most important thing. It is an aggressive approach and it ultimately prioritizes speed over efficiency in the face of uncertainty.

This is in contrast to the usual business approach which focuses on efficiency over speed. However, sometimes speed is more important as without scaling up fast you might lose your chance and, thus, lose your efficiency. Blitzscaling started out in Silicon Valley but it can work anywhere.

An offensive strategy, Blitzscaling thrives off of feedback loops. In its simplest form, Blitzscaling is based on three techniques:

  1. Design an innovative business model with growth potential
  2. Build growth factors into your business model through network effects and implement aggressive spending
  3. Innovate within your management team. Rapid growth requires top-quality HR

Each of these will be considered in greater detail later in this book summary.

Examples of Companies That Have Succeeded Because of Blitzscaling

There are multiple companies, especially within the tech realm, who have benefited hugely from Blitzscaling. The most obvious example is Amazon. They grew from 151 employees and $5.1 million in 1996 to 7,600 employees and $1.64 billion in 1999.

StoryShot #2: Developing an Innovative Business Model

Blitzscaling’s first core technique involved designing a business model that is capable of exponential growth. The growth factors that should be utilized, according to this book, are:

1. Market size – You must appeal to a large market and have a plan for scaling up to this market. For example, Jeff Bezos saw bookselling, with Amazon book, as merely the start of Amazon

2. Distribution – You want your business to turn viral, in that your users bring in more users for you. Importantly, virality normally starts with a service that is free and then requires you to pay to upgrade. An example of this would be Dropbox.

3. High gross margins – This equates to sales minus the cost of goods. You want to maximize this with the optimum for Blitzscaling seemingly being a gross margin of roughly 60%.

4. Network effects – This is the most important factor for your business’ long-term vision. Network effects are fundamental to developing the positive feedback loop spoken about earlier in which superlative growth and value creation are produced. These network effects can directly increase value, such as in the case of Facebook, or it can have indirect effects e.g. iOS encouraging third-party app developers who then boost the value of iOS. It is important to note, though, that network effects won’t work until your product is being widely adopted in your market. 

Things That Can Limit Your Company’s Rapid Growth

The book identifies two main factors that can stunt your company’s growth:

  1. Your product not fitting a market
  2. Operational scalability

Ultimately, it might be that your unique advantage in the market isn’t so unique. Plus, although your company may be growing exponentially, if your infrastructure cannot keep up with this you could be taken over by another company. The perfect example of this is Friendster, who did exceptionally well for a few months but then their servers overloaded; they were then overtaken by a better equipped MySpace. Finally, they were taken over by a better equipped Facebook. 

7 Business Model Patterns and 4 Business Model Principles

This book provides 7 clear and concise patterns that can be adopted by companies as their business model, depending on their individual needs:

  1. Bits not atoms – Bits are easier to move than atoms. This is why Google and Facebook were able to grow so rapidly
  2. Platforms – Software-based platforms can be distributed globally with great ease e.g. iOS
  3. Free – With a free basic account and a premium paid account service you can reach a huge number of users through virality
  4. Marketplaces – Marketplaces have always been important in the business world. Now marketplaces have moved online, like Airbnb, growth can be global and exponential
  5. Subscriptions – Software-as-a-service is the dominant model for enterprise software, including streaming companies like Netflix and Spotify
  6. Digital Goods – In-app purchases are the intersection between bits and atoms
  7. Feeds – Facebook and Instagram provide personal feeds for their users but they make their money through sponsored updates

Additionally, there are 4 underlying principles for business model innovations:

  1. Moore’s Law – Computing power generally doubles every 18 months
  2. Automation – You want to automate your businesses; this is why Google’s server farms are running 24/7
  3. Adaptation – You must continually improve your company rather than just optimizing it
  4. Be contrarian – You need to challenge the status quo, sometimes, to be the leader in your field

StoryShot #3: How to Use Blitzscale as an Effective Growth Tool

“Data is the lifeblood of decision making for any company, but it is particularly fundamental if it informs the design of your product, or if acquisition marketing is your key distribution strategy.” Reid Hoffman, Blitzscaling

When You Should Blitzscale

You should only Blitzscale when being speedy in the market is the critical thing to achieving massive growth. This is not the same as being the first to provide a product. Instead, you need to be the first to scale a product. If the latter is important to your success, then Blitzscaling should be used. You shouldn’t pursue Blitzscaling if you have a low-margin business model. 

When Your Business Should Stop Blitzscaling

Your business should stop when Blitzscaling stops having an impact. For example, if your market stops growing or it reaches an upper limit. There are a few telltale signs that you should stop:

  • A declining rate of growth relative to the competition
  • Worsening unit economics
  • Decreasing per-employee productivity
  • Increasing management overhead

The Five Stages of Growth and How to Transition between Them

The book describes five sizes of business: Family, Tribe, Village, City, and National. Each transition requires different ways of scaling up. 

  • Family–>Tribe = High levels of competence and/or a brilliant growth strategy
  • Tribe–>Village = The founder now manages the people who are doing the first step but in a more differentiated way
  • Village–>City = Goals and strategies are still made by the founder and high-level decisions
  • City–>National = The strategy has to be pulled back from Blitzscaling and growth of new product lines and business units is required

Rating

We rate this book 4/5.

Our Score

PDF, Free Audiobook, Infographic, and Animated Book Summary

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