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The term “blitzscaling” derives from the twentieth-century usage of “blitz” as a way of describing a sudden, all-out effort. The first usage of blitz in this way was to describe the “blitzkrieg” (“lightning war”) strategy that General Heinz Guderian devised for the initial military campaigns of Nazi Germany during World War II. Ironically enough, Guderian was heavily influenced by British military thinkers like Basil Liddell Hart and J. F. C. Fuller, and the term “blitzkrieg” was actually popularized by the British press; the German military never formally adopted it.
The advancing armies in these campaigns abandoned the traditional approach of moving at the slow pace at which they could establish secure lines of supply and retreat. Instead they fully committed to an offensive strategy that accepted the possibility of running out of fuel, provisions, and ammunition, risking potentially disastrous defeat in order to maximize speed and surprise. The speed of these armies’ advance shocked and overwhelmed their opponents, allowing the blitzkriegers to outmaneuver and outfight the defending forces.
The early success of the German army helped spread the lessons of blitzkrieg to all the forces in the war. For example, the American general George S. Patton later put these lessons to good use in leading the US Third Army’s advance from the beaches of Normandy all the way to Berlin. Since then, the term “blitz” has been used to describe everything from an American football play to the way in which large corporations roll out new products. Like the all-out blitz defense in football—which involves the risky move of sending every available defender to pursue the quarterback—or the proverbial marketing blitz of television, print, and online advertising that accompanies the release of a new blockbuster movie, blitzscaling strives for a relentless and dizzying speed that overwhelms the market.
While we are wary of the negative connotations of “blitz,” especially in those nations that felt the effects of blitzkrieg in World War II, we believe that the strength of the metaphor and the widespread and colloquial use of the term in nonmilitary contexts make it the best fit for the concepts discussed in this book.
A QUICK NOTE ON THE TERM “BLITZSCALING”
Blitzscaling isn’t simply a matter of rapid growth. Every company is obsessed with growth. In any industry, you live and die by the numbers—user acquisition, margins, growth rate, and so on. Yet growth alone is not blitzscaling. Rather, blitzscaling is prioritizing speed over efficiency in the face of uncertainty . We can better understand blitzscaling by comparing it to other forms of rapid growth.
Was this dumb luck on Twitter’s side? Perhaps. Luck always plays a larger role than founders, investors, and the media would like to admit. But a major difference was that Twitter could draw on numerous networks for advice and help that Tumblr could not. For example, Twitter was able to bring in Dick Costolo, a savvy executive with prior scaling experience at Google. In contrast, even though Tumblr was arguably the most prominent start-up in its New York City ecosystem, it couldn’t easily draw upon a pool of local talent who had experience dealing with rapid growth. According to Greylock’s John Lilly, for every executive role that Tumblr needed to fill, there were less than a handful of candidates in all of New York City. This paucity of talent made hiring difficult; the company was reluctant to replace existing employees due to a lack of better alternatives. Without the ability to hire an executive team that could blitzscale, Tumblr decided to sell the company.
lmao
These success stories are technology companies, sure. But as we’ve seen, technological innovation alone is insufficient—even when its impact on the future is huge. Services like Craigslist, Wikipedia, and IMDb (the Internet Movie Database) were early, influential Internet innovators, but they still never became massively (financially) valuable on their own.
umm they weren't trying to be tho (and imdb got bought by amazon at any rate)
When Brian Chesky was pitching venture capitalists to invest in Airbnb, one of the people he consulted was the entrepreneur and investor Sam Altman, who later became the president of the Y Combinator start-up accelerator. Altman saw Chesky’s pitch deck and told him it was perfect, except that he needed to change the market-size slide from a modest $30 million to $30 billion. “Investors want B’s, baby,” Altman told Chesky. Of course, Altman wasn’t telling Chesky to lie; rather, he argued that if the Airbnb team truly believed in their own assumptions, $30 million was a gross underestimate, and they should use a number that was true to their convictions. As it turns out, Airbnb’s market was indeed closer to $30 billion.
lol
High gross margins are a powerful growth factor because, as noted below, not all revenue is created equal. The key insight here is that even though gross margins matter a great deal to the seller, they are irrelevant to the buyer. How often do you consider the gross margin involved when you make a purchase? Would you ever choose Burger King over McDonald’s because Whoppers are lower margin than Big Macs? Typically, you focus solely on the cost to you, and the perceived benefits of the purchase. This means that it’s not necessarily any easier to sell a low-margin product than a high-margin product. If possible then, a company should design a high-gross-margin business model.
crazy to treat the topic of buying mcdonalds vs burger king [the most irrational, marketing-driven decision one can really imagine] as if it's this rational consumer choice thing. and margins kinda do matter insofar as they impact the [at least perceived] quality of the product
If a platform achieves scale and becomes the de facto standard for its industry, the network effects of compatibility and standards (combined with the ability to rapidly iterate and optimize the platform) create a significant and lasting competitive advantage that can be nearly unassailable. This dominance lets the market leader “tax” all the participants who want to use the platform, much as levies were imposed in the bygone Republic of Venice. For example, the iTunes store takes a 30 percent share of the proceeds whenever a song, a movie, a book, or an app is sold on that platform. These platform revenues tend to have very high gross margins, which generate cash that can be plowed back into making the platform even better. Amazon’s merchant platform, Facebook’s social graph, and, of course, Apple’s iOS ecosystem are great examples of the power of platforms.
they are just describing a parasitical monopolistic business model that should be tackled by antitrust legislation lol
[...] Broadcast television succeeded by providing the same thing to all its viewers—a model driven by the technological innovation of broadcasting content via wireless signals and later coaxial cable. Netflix succeeds by providing a carefully personalized experience to each of its many viewers, giving it a huge advantage over its traditional television competitors. Moreover, Netflix produces exactly what it knows its customers want based on their past viewing habits, eliminating the waste of all those pilots, and only loses customers when they make a proactive decision to cancel their subscription. The more a person uses Netflix, the better Netflix gets at providing exactly what that person wants. And increasingly, what people want is the original content that is exclusive to Netflix. The legendary screenwriter William Goldman famously wrote of Hollywood, “Nobody knows anything.” To which Reed Hastings replies, “Netflix does.” And all this came about because Hastings had the insight and persistence to wait nearly a decade for Moore’s Law to turn his long-term vision from an impossible pipe dream into one of the most successful media companies in history.
reading this paragraph gave me cancer
As we’ve already seen, most great ideas look dumb at first. Being contrarian doesn’t mean that dumb people disagree with you; it means that smart people disagree with you! Remember what happened when Brian Chesky, Joe Gebbia, and Nathan Blecharcyzk tried to pitch Airbnb? Investors like Paul Graham literally couldn’t imagine why people would ever use the service. This doesn’t happen because investors are dumb; most venture capitalists and angel investors are smart, and most smart, successful people would probably agree that investing in proven ideas is better than investing in unproven ones.
chuckled at this
On the infrastructure side, Amazon has deftly shifted from minimizing infrastructure spending, as it did during its early years by using techniques such as outsourcing logistics to book distributors like Ingram, to becoming one of the world’s great infrastructure companies. Amazon is so good at infrastructure that its fastest-growing and most profitable business (AWS) is all about allowing other companies to leverage Amazon’s computing infrastructure. Amazon also makes money by offering Fulfillment by Amazon to other merchants who envy its mastery of logistics, which ought to strike fear into the hearts of frenemies like UPS and FedEx. In addition to its eighty-six gigantic fulfillment centers, Amazon also has at least fifty-eight Prime Now hubs in major markets, allowing it to beat UPS and FedEx on performance by offering same-day delivery of purchases in less than two hours. Amazon has also built out “sortation” centers that let it beat UPS and FedEx on price by shipping small packages via the United States Postal Service for about $1 rather than paying FedEx or UPS around $4.50.
this is so cucked