(2018-11-30) Hobart Blitzscaling Read It Before Your Competitors Do

Byrne Hobart: Blitzscaling: Read It Before Your Competitors Do. A good bullet point for your bucket list is to write something that will change a lot of lives. There are a couple ways you could theoretically pull this off: you could come up with an amazing new idea, or at least a compelling sales pitch for an old one. But a good way to get a tactical advantage is to choose your audience well: write for a reader who is on the cusp of greatness, and nudge them in the right direction

What is “blitzscaling”? Hoffman defines it as when companies “prioritize speed over efficiency in an environment of uncertainty.”

Blitzscaling is more like a phase change — a higher-energy state where the old rules don’t apply. There are particular circumstances where it works, and in those circumstances it’s necessary. That’s the core insight from the book: when you reach a point where your company can scale fast, you’ve also reached a point where a competitor could potentially do it, too, and if they outraise you and outspend you, they’ll win even if their product is worse.

Hoffman draws a useful 2x2 matrix of different kinds of scaling: slow/fast and certain/uncertain. Slow scaling is easy to understand and easy to model, but the difference between “fastscaling” and “blitzscaling” is worth dwelling on. “Fastscaling” is his term for growth in the face of certainty. The best prototypical example is probably franchise businesses in the last half of the twentieth century

But if your business appeals to 0.01% of the population of global Internet users, there’s no good way to know whether you’ve found a set of early adopters or merely a nice niche. No way, that is, other than to spend money on marketing and closely watch your incremental ROI.

What makes a company blitzscalable? The main thing Hoffman cites is network effects, especially two-sided network effects.

The difference between a good book and a life-changing book is that a life-changing book doesn’t just tell you what you could do to improve; it tells you you’re doing something wrong, right now. It puts a pebble in your shoe and irritates you to no end.

I’ve omitted some of the good points from this review. (If the distinction between ethical pirates and sociopaths saves you from one bad hire, that’s well worth the price of the book; the line about vanity metrics is also an instant antidote to a bad shibboleth.)