View all notes
Consider the example of PayPal. While PayPal was a great success, the company was badly managed—and I write that statement as one of its senior managers. We did a few good things, such as making sure that every employee had a clear primary job and staying focused when working on certain important projects, but for the most part PayPal’s management was a lack of management. There were no one-on-one career development conversations with employees. There was no work done to form teams beyond simply picking who was going to belong to them. The few rules we had were more about individual incentives rather than team management. For example, when people were late to a meeting, the last person to arrive was fined $100 to enforce discipline. Yet while we knew meetings were important, we didn’t designate a note taker to capture key points and action items, a common and basic practice in Silicon Valley.
wow
We were also fortunate in our timing. One thing that holds teams together in the absence of management is an opportunity to win. After the dot-com bust began, a lot of tech companies were failing, but PayPal still had a chance to succeed. All you had to do was to look at the chart showing the continuing rise in daily transaction volume! So our people put up with more than they would normally put up with because they wanted to win and liked being part of a team of high-powered, high-IQ players.
At the time, potential Series A investors wanted to see a business model that showed how LinkedIn would get to profitability. I told potential investors that we weren’t going to generate revenue until after the next round of funding, and that therefore it shouldn’t matter to them. They insisted anyway, so the team and I generated a financial model that included revenue sources. I don’t even remember what we put in it! Rather than waste weeks on it, we simply set aside a single evening, drank a couple of glasses of wine, and put together the model (I might have been a little miffed at having to spend even a single evening, but it was pretty good wine, so it wasn’t a total waste).
banal story but i like the idea of someone dropping acid or ayahuasca or shrooms and putting together a totally nonsensical [and yet successful] pitch deck or something
A strong commitment to a culture will sometimes mean passing on hiring “A players” who don’t fit that culture. At PayPal, for example, Max Levchin instituted a problem-solving test as part of the hiring process for joining our engineering group. He wanted a culture that was focused on solving big-picture problems, not simply writing good code. If a person was a great programmer but didn’t have a problem-solving orientation, we didn’t hire him or her. At LinkedIn, we tried to recruit people who were hardworking but also family-oriented. Our founding team members had families, and we wanted to establish the norm that employees could go home to have dinner with their families (and then work remotely later in the evening). Candidates who believed that a start-up needed everyone at the office until ten o’clock every night would inevitably frustrate colleagues and themselves, so they were screened out. Conversely, candidates who wanted to work a nine-to-five job would also be screened out, no matter how talented.
lmao
In Lewis Carroll’s classic book Through the Looking-Glass, the Red Queen tells Alice, “Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!” Sometimes blitzscaling a company might feel a bit like running as hard as you can simply to end up in the same place. But the difference between our world and the Red Queen’s is that blitzscaling is a race to build things that make the world a better place. Whether your new market will be machine learning, or a new kind of wireless computing, or something that hasn’t been invented yet, there’s a word for the by-product of blitzscaling: “progress.”
ah yes
For example, China’s speed demonstrates the value of intense competition as a motivator. On one occasion, Xiaomi’s Lei Jun told me, “You American entrepreneurs are lazy. The vast majority of my company is still working at nine o’clock on a Saturday night.” In some ways, he’s right. Chinese blitzscalers work with an intensity that few in Silicon Valley can match. Rather than staying open during the standard American business hours of 9 a.m. to 5 p.m., Xiaomi operates on a “996” model—get in at 9 a.m., leave the office at 9 p.m., and work six days a week. I saw the same thing at LinkedIn China. To make a tight deadline for our “Red Horse” project, our China team leader Derek Shen simply moved the entire development team to a hotel for two weeks so that its members could work around the clock without any of the distractions of normal life.
oh boy
In an ideal world, blitzscaling organizations would embody all the virtues that society might desire from its businesses—a diverse and inclusive workforce, a strong sense of responsibility to shareholders and stakeholders, an ample supply of well-paying jobs, and executives who serve as moral role models and leaders of society. The unfortunate truth is that for all the good that blitzscaling produces, blitzscaling organizations can be guilty of the same sins committed by other types of companies, and face some inherent challenges even when trying to behave responsibly.
hahahaha
Skeptics might argue that the kind of scale that blitzscaling produces is inherently bad, and that society should simply prevent companies from growing too big. Testifying before Congress in 1911, future Supreme Court justice Louis Brandeis argued, “I think we are in a position, after the experience of the last twenty years, to state two things: In the first place, that a corporation may well be too large to be the most efficient instrument of production and of distribution, and, in the second place, whether it has exceeded the point of greatest economic efficiency or not, it may be too large to be tolerated among the people who desire to be free.”
We disagree with this position on the harmfulness of scale in today’s world. First, Brandeis was speaking during the era of “trusts,” when figures like J. P. Morgan consolidated American industry into powerful, giant companies like U.S. Steel. But we believe that today’s blitzscalers are qualitatively different than Gilded Age trusts. Those trusts held virtual monopolies over the supply of key physical resources like steel and oil. Consumers had no alternatives and were forced to do business with them. In contrast, companies like Apple and Amazon have to win their customers every day, and if they fail to do so, those consumers can simply buy Dell laptops and order books from Barnes & Noble.
Second, we believe that while big can sometimes be bad, big can also be great. Scale creates dominant companies, but scale also creates enormous value. The smartphones we love, for example, are mass-market consumer electronics that depend on economies of scale. While Brandeis is right that society needs to prevent monopolies that block technology or business innovation in the way that the old AT&T monopoly suppressed the progress of telecommunications, today’s largest companies have actually enabled innovation and the creation of even more value by providing a platform for everything from business productivity software (Slack) to entertainment (Netflix). Even the concentration of capital that scale has produced isn’t all bad; it has allowed blitzscalers to tackle “moonshots” like space travel (SpaceX) and autonomous vehicles (Google’s Waymo) that may dramatically improve our lives.
idk about that chief
Responsible blitzscaling matters because successful blitzscalers often reach a point where they are more than just a business; they actually affect the fabric of the society in which they operate. Social media like Facebook and Twitter have changed how we consume information and how we communicate. Marketplaces like Alibaba and eBay provide economic opportunity—some dedicated sellers even rely on them for their livelihoods. Sharing economy services like Airbnb can bring more tourism and diversity into the cities in which they operate. And Amazon is changing the entire retail industry, which affects everyone. As Spider-Man teaches us, with great power comes great responsibility.
i just
Applying this analysis shows that a number of common fears about blitzscaling are actually nonsystemic risks. For example, one common fear is that blitzscaling will produce an oligarchy of powerful technology executives with too much power over our government and our society. But even today, with technology firms dominating the ranks of the world’s most valuable companies, traditional business moguls such as Rupert Murdoch and the Koch brothers have had a far greater influence over public policy than tech leaders such as Jeff Bezos, Larry Page, or Mark Zuckerberg.
just you wait brother