1. What is it?
Blitzscaling is the art and science of building out a company very speedily to serve a massive, typically global market. The underlying goal of blitzscaling is to reap the advantages of being the first mover at scale. Whether you’re a start-up or a legacy business looking to create a market-leading company, blitzscaling could be your answer as it lets you travel the road to high-impact entrepreneurship by managing growth amid the controlled chaos, which is the normal scenario for most businesses today.
Companies that blitzscale are often global leaders in their niche, and create a massive number of jobs and even industries of the future. Let’s consider the case of Amazon, which basically invented e-commerce. Today, it has more than 130.000 employees and has created numerous jobs for Amazon partners and sellers. Just imagine all the many transport companies.
2. Blitzscaling in 5 stages
- Stage 1 – Family (1-9 employees): At this stage, it’s the founder who initiates and directs the company’s hypergrowth.
- Stage 2 – Tribe (10-99 employees): Here, the founder manages the people, who’re pulling the levers of hypergrowth.
- Stage 3 – Village (100-999 employees): The founder builds a company that pulls the hypergrowth levers.
- Stage 4 – City (1K-9K employees): It’s the founder who makes high-level decisions about business objectives and strategies at this stage.
- Stage 5 – Tribe (10K+ employees): At this stage, the founder figures out how to pull his company back from blitzscaling and focus on blitzscaling business units copyright and newer product lines.
It’s at the Tribe stage when you start to have a real company. Blitzscaling at this stage isn’t common unless you’ve got a product that’s a runaway hit like Instagram or PayPal.
Usually, blitzscaling begins between the Tribe and Village stages. By the time you reach Tribe, you’ve hit upon the ideal product-market fit, ironed out the issues – if any, have some data, and know what your competition looks like. Thus, at this stage, you’ll have much better clarity about the logic of blitzscaling than in the earlier Family stage.
But as you start to make your presence felt in the market, you’ll be attracting a wide range of competition. While those at the lower end of the scale could be other start- ups launching their own adaptations of your product/service and trying to attain scale in the market before you can, the higher end will have established brands trying to find ways to leverage their own assets to own a section of your space or even all of it.
Thus, you’ll need to grow really quick and big to beat your competitors to scale because being the leader would mean getting hold of the ‘winner-takes-most’ spot.
For a start-up, being able to focus and accelerate work in its favor for blitzscaling. Established brands are usually not as focused or faster. When it comes to competing start-ups, they won’t probably have the requisite momentum for blitzscaling (though they may be just as fast and focused). For instance, you can consider Groupon, which reached its mid-growth stage, but then got hit by huge competition, from both the lower and higher ends. As a result, the company failed to scale fast and build a durable product. Thus, it failed to realize its full potential, which could have transformed the industry.
3. When to Start Blitzscaling
You should start blitzscaling when:
- The market is growing quickly, and no other company has scaled up to attain critical mass, thus giving you the opportunity to do so and enjoy a competitive advantage.
- There’s a big potential market with adequate gross margins to let you create value.
• There’s a steep learning curve and you’re willing to climb it quickly when others aren’t either doing it or doing it too slowly.
• Your business is facing a competitive threat and you need to move fast to get the first-mover’s advantage.
You can consider what Airbnb did in regards of blitzscaling. When the company noticed competition developing in Europe, it invested a lot of money in its business and made quick expansion a priority. This way, Airbnb was able to ensure it didn’t end up losing the European market.
4. When to Stop Blitzscaling
You already know it’s ideal to blitzscale when the market is either growing quickly or is substantially big. But when should you stop blitzscaling? Probably a good time is when the market reaches a limit or its growth stops. Perhaps you can make a small exception of some leading companies like Google or Facebook, that have basically never stopped blitzscaling. They had to of course, expand towards other scaling avenues, like maps, self driving cars, or buying new apps like Instagram or Whatsapp.
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