Reid Hoffman Quotes

If you aren’t embarrassed by the first version of your product, you shipped too late.

Society flourishes when people think entrepreneurally.

The person passionate about what he or she is doing will outwork and outlast the guy motivated solely by making money.

for many people “twenty years of experience” is really one year of experience repeated twenty times.

An entrepreneur is someone who will jump off a cliff and assemble an airplane on the way down.

Everything in life has some risk, and what you have to actually learn to do is how to navigate it.

All humans are entrepreneurs not because they should start companies but because the will to create is encoded in human DNA, and creation is the essence of entrepreneurship.

For life in permanent beta, the trick is to never stop starting.

Start a personal blog and begin developing a public reputation and public portfolio of work that’s not tied to your employer.

you need to think and act like you’re running a start-up: your career.

All humans are entrepreneurs not because they should start companies but because the will to create is encoded in human DNA. —Reid Hoffman, cofounder of LinkedIn

If you are not embarrassed by the first version of your product, you’ve launched too late. —Reid Hoffman

Take intelligent and bold risks to accomplish something great. Build a network of alliances to help you with intelligence, resources, and collective action. Pivot to a breakout opportunity.

Throwing your heart into something is great, but when any one thing becomes all that you stand for, you're vulnerable to an identity crisis when you pivot to a Plan B.

When the Naysayers Are Loud, Turn Up the Music

The founders of start-ups as varied as YouTube, Palantir Technologies, and Yelp all worked at PayPal. Another set of people—including Reid Hoffman, Thiel, and Botha—emerged as some of the technology industry’s top investors. PayPal staff pioneered techniques in fighting online fraud that have formed the basis of software used by the CIA and FBI to track terrorists and of software used by the world’s largest banks to combat crime. This collection of super-bright employees has become known as the PayPal Mafia—more or less the current ruling class of Silicon Valley—and Musk is its most famous and successful member.

If you’re in permanent beta in your career, twenty years of experience actually is twenty years of experience because each year will be marked by new, enriching challenges and opportunities. Permanent beta is essentially a lifelong commitment to continuous personal growth. Get busy livin’, or get busy dyin’. If

A team in the business world will tend to perform at the level of the worst individual team member

Until you hear “No,” you haven’t been turned down.

Keeping your options open” is frequently more of a risk than committing to a plan of action.

Which plan offers the most learning potential?

Remember: If you don’t find risk, risk will find you.

All human beings are entrepreneurs.

Get busy livin’, or get busy dyin’. If you’re not growing, you’re contracting. If you’re not moving forward, you’re moving backward.

If you’re not embarrassed by the first version of your product, you’ve launched too late. —REID HOFFMAN, FOUNDER OF LINKEDIN

you are not embarrassed by the first version of your product, you’ve launched too late.” Reid Hoffman

Know the values, current projects, and aspirations of each person in your tribe.   Use Reid Hoffman’s “theory of small gifts” to build your relationship with people in your tribe as preparation for triading.   Form a triad by introducing two people to each other on the basis of current projects and shared values.

blitzscaling is prioritizing speed over efficiency in the face of uncertainty.

If you are not receiving or making at least one introduction a month, you are probably not fully engaging your extended professional network.

A lot of smart people are prone to over-analysis and tend to become paralyzed by indecision

Establish an identity independent of your employer, city, and industry.

In this sense, the world of tomorrow will be more like the Silicon Valley of today: constant change and chaos.

involve yourself in organizations that try to systemically improve society at a massive scale.

Finished ought to be an F-word for all of us. We are all works in progress. Each day presents an opportunity to learn more, do more, be more, grow more in our lives and careers.

Theodore Roosevelt’s famous dictum, “Far and away the best prize that life has to offer is the chance to work hard at work worth doing.

Ideally, most of the top executives of a company should be on Foundational tours.

Often it’s when you come in contact with challenges other people find hard but you find easy that you know you’re in possession of a valuable soft asset.3

Figure out how to get into the networks because they are what amplifies your learnings, give you access to opportunity, information and Intelligence to know what to do.

If you want to find out how resourceful you can be, shrink your budget. Move your deadlines up. See how you cope. This may make you more resilient to actual hardships that inevitably arise.

In a sentence, as you meet your friends and new people, shift from asking yourself the very natural question of “What’s in it for me?” and ask instead, “What’s in it for us?” All follows from that.

the fundamental paradox of the tour of duty: acknowledging that the employee might leave is actually the best way to build trust, and thus develop the kind of relationship that convinces great people to stay.

Mark Pincus smelled the social-game opportunity first. He was the guy who, with Reid Hoffman, had been part of the angel investment that, in his words, was like winning lotto. In late 2006, Matt Cohler tipped him off that Facebook was going to launch a platform and was looking for entrepreneurs to come up with apps. We don’t want any money from you, he told Pincus. Just build cool stuff and we’ll expose you to our traffic.

Your competitive advantage is formed by the interplay of three different, ever-changing forces: your assets, your aspirations/values, and the market realities, i.e., the supply and demand for what you offer the marketplace relative to the competition. The

Relationship builders, on the other hand, try to help other people first. They don’t keep score. They’re aware that many good deeds get reciprocated, but they’re not calculated about it. And they think about their relationships all the time, not just when they need something.

Blitzscaling is a strategy and set of techniques for driving and managing extremely rapid growth that prioritize speed over efficiency in an environment of uncertainty. Put another way, it’s an accelerant that allows your company to grow at a furious pace that knocks the competition out of the water.

To achieve massive success, you need to have a big new opportunity—one where the market size and gross margins intersect to create enormous potential value, and there isn’t a dominant market leader or oligopoly. A big new opportunity often arises because a technological innovation creates a new market or scrambles an existing one.

Unfortunately, for far too many, focused learning ends at college graduation. They read about stocks and bonds instead of reading books that improve their mind. They compare their cash salary to their peers' instead of comparing lessons learned. They invest in the stock market and neglect investing in themselves. They focus, in short, on hard assets instead of soft assets. This is a mistake.

Intelligent assistance involves leveraging artificial intelligence to enable the government, individual companies, and the nonprofit social sector to develop more sophisticated online and mobile platforms that can empower every worker to engage in lifelong learning on their own time, and to have their learning recognized and rewarded with advancement. Intelligent assistants arise when we use artificial intelligence to improve the interfaces between humans and their tools with software, so humans can not only learn faster but also act faster and act smarter. Lastly, we need to deploy AI to create more intelligent algorithms, or what Reid Hoffman calls “human networks”—so that we can much more efficiently connect people to all the job opportunities that exist, all the skills needed for each job, and all the educational opportunities to acquire those skills cheaply and easily.

But ignoring those details won’t work—not in the long run, says Y Combinator’s president from 2014 to 2019, Sam Altman. An acolyte of Paul Graham’s, Sam adhered to the core Y Combinator dictum: It’s better to have one hundred users who love you than a million users who just kind of like you. It’s counterintuitive. You may be thinking If a million people “kind of like” my product enough to buy it, isn’t that better for business than a hundred obsessive oddballs? To which Sam would say…definitely not.

People change. You change. Some relationships just aren’t meant to last beyond a certain point. It’s okay to simply let those friendships fade. This is a natural evolution of some relationships. Unlike romantic relationships, with friendships there’s rarely a reason to have a full-on breakup. Even if people go in different directions and the friendship slowly peters out, trust can endure. And unlike most exes, it is possible to rekindle/reactivate friendships later on when your lives are more aligned.

There’s a common misconception that Silicon Valley is the accelerator of the world. The real story is that the world keeps getting faster—Silicon Valley is just the first place to figure out how to keep pace. While Silicon Valley certainly has many key networks and resources that make it easier to apply the techniques we’re going to lay out for you, blitzscaling is made up of basic principles that do not depend on geography. We’re going to show you examples from overlooked parts of the United States, such as Detroit (Rocket Mortgage) and Connecticut (Priceline), as well as from international companies, such as WeChat and Spotify. In the process you’ll see how the lessons of blitzscaling can be adapted to help build great companies in nearly any ecosystem, albeit with differing degrees of difficulty. That’s the mission of this book. We want to share the secret weapon that has allowed Silicon Valley to punch so much (more than a hundred times) above its population index so that those lessons can be applied far beyond the sixty-mile stretch between the Golden Gate Bridge and San Jose. It is sorely needed.

My friend Peter Thiel has written eloquently about the power of being a contrarian in his book Zero to One. Whenever I interview someone for a job, I like to ask this question: “What important truth do very few people agree with you on?” This question sounds easy because it’s straightforward. Actually, it’s very hard to answer. It’s intellectually difficult because the knowledge that everyone is taught in school is by definition agreed upon. And it’s psychologically difficult because anyone trying to answer must say something she knows to be unpopular. Brilliant thinking is rare, but courage is in even shorter supply than genius.

What happened? Many things. But the overriding problem was this: The auto industry got too comfortable. As Intel cofounder Andy Grove once famously proclaimed, “Only the paranoid survive.” Success, he meant, is fragile—and perfection, fleeting. The moment you begin to take success for granted is the moment a competitor lunges for your jugular. Auto industry executives, to say the least, were not paranoid. Instead of listening to a customer base that wanted smaller, more fuel-efficient cars, the auto executives built bigger and bigger. Instead of taking seriously new competition from Japan, they staunchly insisted (both to themselves and to their customers) that MADE IN THE USA automatically meant “best in the world.” Instead of trying to learn from their competitors’ new methods of “lean manufacturing,” they clung stubbornly to their decades-old practices. Instead of rewarding the best people in the organization and firing the worst, they promoted on the basis of longevity and nepotism. Instead of moving quickly to keep up with the changing market, executives willingly embraced “death by committee.” Ross Perot once quipped that if a man saw a snake on the factory floor at GM, they’d form a committee to analyze whether they should kill it. Easy success had transformed the American auto

We tried a number of single-threaded efforts to meet the challenge. We rolled out features one after another, such as a recommendation engine for people that our users should meet and a professional Q&A service. None of them worked well enough to solve the problem. We concluded that the problem might require a Swiss Army knife approach with multiple use cases for multiple groups of users. After all, some people might want a news feed, some might want to track their career progress, and some might be keen on continuing education. Fortunately, LinkedIn had grown to the point where the organization could support multiple threads. We reorganized the product team so that each director of product could focus on a different approach to address engagement. Even though none of those efforts alone proved a silver bullet, the overall combination of them significantly improved user engagement.

The best entrepreneurs don’t just follow Moore’s Law; they anticipate it. Consider Reed Hastings, the cofounder and CEO of Netflix. When he started Netflix, his long-term vision was to provide television on demand, delivered via the Internet. But back in 1997, the technology simply wasn’t ready for his vision—remember, this was during the era of dial-up Internet access. One hour of high-definition video requires transmitting 40 GB of compressed data (over 400 GB without compression). A standard 28.8K modem from that era would have taken over four months to transmit a single episode of Stranger Things. However, there was a technological innovation that would allow Netflix to get partway to Hastings’s ultimate vision—the DVD. Hastings realized that movie DVDs, then selling for around $ 20, were both compact and durable. This made them perfect for running a movie-rental-by-mail business. Hastings has said that he got the idea from a computer science class in which one of the assignments was to calculate the bandwidth of a station wagon full of backup tapes driving across the country! This was truly a case of technological innovation enabling business model innovation. Blockbuster Video had built a successful business around buying VHS tapes for around $ 100 and renting them out from physical stores, but the bulky, expensive, fragile tapes would never have supported a rental-by-mail business.

The concept of product/ market fit originates in Marc Andreessen’s seminal blog post “The Only Thing That Matters.” In his essay, Andreessen argues that the most important factor in successful start-ups is the combination of market and product. His definition couldn’t be simpler: “Product/ market fit means being in a good market with a product that can satisfy that market.” Without product/ market fit, it’s impossible to grow a start-up into a successful business. As Andreessen notes, You see a surprising number of really well-run start-ups that have all aspects of operations completely buttoned down, HR policies in place, great sales model, thoroughly thought-through marketing plan, great interview processes, outstanding catered food, 30" monitors for all the programmers, top tier VCs on the board—heading straight off a cliff due to not ever finding product/ market fit. Unfortunately, it’s far easier to define product/ market fit than it is to establish it! When you start a new company, the key product/ market fit question you need to answer is whether you have discovered a nonobvious market opportunity where you have a unique advantage or approach, and one that competing players won’t see until you’ve had a chance to build a healthy lead. It’s usually difficult to find such an opportunity in a “hot” space; if an opportunity is obvious to everyone, the chance that you’ll be the one who succeeds is exceedingly low. Most nonobvious opportunities arise from a change in the market that the incumbents aren’t willing or able to adapt to.

In fact, the same basic ingredients can easily be found in numerous start-up clusters in the United States and around the world: Austin, Boston, New York, Seattle, Shanghai, Bangalore, Istanbul, Stockholm, Tel Aviv, and Dubai. To discover the secret to Silicon Valley’s success, you need to look beyond the standard origin story. When people think of Silicon Valley, the first things that spring to mind—after the HBO television show, of course—are the names of famous start-ups and their equally glamorized founders: Apple, Google, Facebook; Jobs/ Wozniak, Page/ Brin, Zuckerberg. The success narrative of these hallowed names has become so universally familiar that people from countries around the world can tell it just as well as Sand Hill Road venture capitalists. It goes something like this: A brilliant entrepreneur discovers an incredible opportunity. After dropping out of college, he or she gathers a small team who are happy to work for equity, sets up shop in a humble garage, plays foosball, raises money from sage venture capitalists, and proceeds to change the world—after which, of course, the founders and early employees live happily ever after, using the wealth they’ve amassed to fund both a new generation of entrepreneurs and a set of eponymous buildings for Stanford University’s Computer Science Department. It’s an exciting and inspiring story. We get the appeal. There’s only one problem. It’s incomplete and deceptive in several important ways. First, while “Silicon Valley” and “start-ups” are used almost synonymously these days, only a tiny fraction of the world’s start-ups actually originate in Silicon Valley, and this fraction has been getting smaller as start-up knowledge spreads around the globe. Thanks to the Internet, entrepreneurs everywhere have access to the same information. Moreover, as other markets have matured, smart founders from around the globe are electing to build companies in start-up hubs in their home countries rather than immigrating to Silicon Valley.

Think of a Foundational tour as a form of marriage—a long-term relationship that both parties anticipate will be permanent, in which both parties assume a moral obligation to try hard to make it work before ending the relationship.

Unlike John Lasseter’s bosses at Disney, Bezos was open to the entrepreneurial contributions of Amazon’s individual employees—even when those ideas were outside what Wall Street (and even his own board of directors) considered the company’s core business. AWS represents precisely the kind of value creation any CEO or shareholder would want from their employees. Want your employees to come up with multibillion-dollar ideas while on the job? You have to attract professionals with the founder mind-set and then harness their entrepreneurial impulses for your company. As Intuit CEO Brad Smith told us, “A leader’s job is not to put greatness into people, but rather to recognize that it already exists, and to create the environment where that greatness can emerge and grow.

Brian Chesky sends to all Airbnb employees is a powerful one. “You have to continue to repeat things” Brian told our class at Stanford. “Culture is about repeating, over and over again, the things that really matter for your company.” Airbnb reinforces these verbal messages with visual impact as well. Brian hired an artist from Pixar to create a storyboard of the entire experience of an Airbnb guest, from start to finish, emphasizing the customer-centered design thinking that is a hallmark of its culture. Even Airbnb conference rooms tell a story; each one is a replica of a room that’s available for rent on the service. Every time Airbnb team members hold a meeting in one of those rooms, they are reminded of how guests feel when they stay there. At Amazon, Jeff Bezos famously bans PowerPoint decks and insists on written memos, which are read in silence at the beginning of each meeting. This memo policy is one of the ways that Amazon encourages a culture of truth telling. Memos have to be specific and comprehensive, and those who read the memos have to respond in kind rather than simply sit through some broad bullet points on a PowerPoint deck and nod vague agreement. Bezos believes that memos encourage smarter questions and deeper thinking. Plus, because they’re self-contained (rather than requiring a person to present a deck), they are more easily distributed and consumed by a wider population within Amazon. The late Steve Jobs used architecture as a core part of his deliberate communications strategy at Pixar. He designed Pixar headquarters so that the front doors, main stairs, main theater, and screening rooms all led to the atrium, which contained the café and mailboxes, ensuring that employees from all departments and specialties would see people from other groups on a regular basis, thus reinforcing Pixar’s collaborative, inclusive culture.

On defense, blitzscaling lets you set a pace that keeps your competitors gasping simply to keep up, affording them little time and space to counterattack. Because they’re focused on responding to your moves, which can often take them by surprise and force them to play catch-up, they don’t have as much time available to develop and execute differentiated strategies that might threaten your position. Blitzscaling helps you determine the playing field to your great advantage.

Nor can companies afford to ignore technology innovation after they successfully blitzscale their way to City or Nation stage. Each and every one of the technology companies worth over $100 billion has used technology leadership to reinforce its competitive advantages.

In a 2004 working paper, “Schumpeterian Profits in the American Economy: Theory and Measurement,” Yale economist William Nordhaus examined the US economy from 1948 to 2001. Based on the data he collected, he concluded that only 2.2 percent of “profits that arise when firms are able to appropriate the returns from innovative activity” went to the disrupters. “Most of the benefits of technological change are passed on to consumers rather than captured by producers,” he concluded. Like it or not, change is inevitable—but it doesn’t have to be wholly unexpected.

In their book Future Shock, the futurists Alvin and Heidi Toffler wrote that “change is the only constant,” and “to survive, to avert what we have termed future shock, the individual must become infinitely more adaptable and capable than ever before.” Those words were originally published in 1970. The pace of change has only accelerated since then.

People should be part of building the future rather than feeling like the future is being forced upon them. Blitzscaling is what separates the start-ups that get disrupted and disappear as the world changes from the ones that scale up to become market leaders and shape the future. This book was born out of a class we taught at Stanford in which we dissected the process that went into growing the world’s largest technology companies and then codified a series of tactics and choices that made it work. The result was a specific set of principles that describes how to grow multibillion-dollar companies in a handful of years. While writing this book, we talked to hundreds of entrepreneurs and CEOs, including those of the world’s most valuable companies, such as Facebook, Alphabet (Google), Netflix, Dropbox, Twitter, and Airbnb. (You can hear a number of these conversations on my podcast, Masters of Scale.) Even though the stories of their companies’ rise were very different in many ways, the one thing they all had in common was an extreme, unwieldy, risky, inefficient, do-or-die approach to growth.

My friend Marc Andreessen has argued that “software is eating the world.” What he means is that even industries that focus on physical products (atoms) are integrating with software (bits). Tesla makes cars (atoms), but a software update (bits) can upgrade the acceleration of those cars and add an autopilot overnight. The spread of software and computing into every industry, along with the dense networks that connect us all, means that the lessons of blitzscaling are becoming more relevant and easier to implement, even in mature or low-tech industries. To use a computing metaphor, technology is accelerating the world’s “clock speed” (the rate at which Central Processing Units [CPUs] operate), making change occur faster than previously thought possible. Not only is the world moving faster, but the speed at which major new technology platforms are being created is reducing the downtime between the arrivals of each wave of innovation.

Today, multiple major waves seem to be arriving simultaneously—technologies like the cloud, AI, AR/ VR, not to mention more esoteric projects like supersonic planes and hyperloops. What’s more, rather than being concentrated narrowly in a personal computer industry that was essentially a niche market, today’s new technologies impact nearly every part of the economy, creating many new opportunities. This trend holds tremendous promise. Precision medicine will use computing power to revolutionize health care. Smart grids use software to dramatically improve power efficiency and enable the spread of renewable energy sources like solar roofs. And computational biology might allow us to improve life itself. Blitzscaling can help these advances spread and magnify their sorely needed impact.

Consider the case of two very similar companies, Twitter and Tumblr. Both had brilliant, product-oriented founders in Evan “Ev” Williams and David Karp. Both were hot social media start-ups. Both grew at a remarkable rate after establishing product/ market fit. Both had a major impact on popular culture. Yet Twitter went public and achieved a market capitalization that peaked at nearly $ 37 billion, while Tumblr was acquired by Yahoo!—another start-up that used blitzscaling to become a scale-up, only to decline and fade away—for “only” $ 1 billion. 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.

In the words of leadership guru Marshall Goldsmith, “What got you here won’t get you there.” Market share and revenue growth earn headlines, but you can’t achieve customer and revenue scale without scaling up your organization, in terms of the size and scope of your staff, as well as your financial, product, and technology strategy. If the organization doesn’t grow in lockstep with its revenues and customer base, things can quickly spiral out of control. For example, during a period of blitzscaling in the late 1980s and early 1990s, Oracle Corporation focused so single-mindedly on sales growth that its organization lagged badly on both technology (where it fell behind archrival Sybase’s) and finance and nearly went bankrupt as a result. It took the turnaround efforts of Ray Lane and Jeff Henley to stave off disaster and reposition Oracle for its later success.

This is what happened when I cofounded LinkedIn. The key business model innovations for LinkedIn, including the two-way nature of the relationships and filling professionals’ need for a business-oriented online identity, didn’t just happen organically. They were the result of much thought and reflection, and I drew on the experiences I had when founding SocialNet, one of the first online social networks, nearly a decade before the creation of LinkedIn. But life isn’t always so neat. Many companies, even famous and successful ones, have to develop their business model innovation after they have already commenced operations. PayPal didn’t have a business model when it began operations (I was a key member of the PayPal executive team). We were growing exponentially, at 5 percent per day, and we were losing money on every single transaction we processed. The funny thing is that some of our critics called us insane for paying customers bonuses to refer their friends. Those referral bonuses were actually brilliant, because their cost was so much lower than the standard cost of acquiring new financial services customers via advertising. (We’ll discuss the power and importance of this kind of viral marketing later on.) The insanity, in fact, was that we were allowing our users to accept credit card payments, sticking PayPal with the cost of paying 3 percent of each transaction to the credit card processors, while charging our users nothing. I remember once telling my old college friend and PayPal cofounder/ CEO Peter Thiel, “Peter, if you and I were standing on the roof of our office and throwing stacks of hundred-dollar bills off the edge as fast as our arms could go, we still wouldn’t be losing money as quickly as we are right now.” We ended up solving the problem by charging businesses to accept payments, much as the credit card processors did, but funding those payments using automated clearinghouse (ACH) bank transactions, which cost a fraction of the charges associated with the credit card networks. But if we had waited until we had solved this problem before blitzscaling, I suspect we wouldn’t have become the market leader.

This book is for anyone who wants to understand the techniques that allow a business to grow from zero to a multibillion-dollar market leader in a handful of years. These techniques should be of interest to entrepreneurs who want to build massive companies, venture capitalists who want to invest in them, employees who want to work for them, and governments and communities who wish to encourage the growth of these companies in their own regions. And even if you don’t want to build, invest in, or work for any of these companies, you’ll still need to navigate the world that they’re building. If you are a manager or a leader who is trying to rapidly scale a project or a business unit within a larger company, blitzscaling can help you too. And while we draw these lessons primarily from the world of high tech, many of the principles and frameworks the book lays out (especially regarding people management) are applicable to high-growth companies in most industries worldwide, from European fast-fashion retailers to Texan oil shale companies.

Even organizations outside the business world can use blitzscaling to their advantage. Upstart presidential campaigns and nonprofits serving the underprivileged have used the levers of blitzscaling to overturn conventional wisdom and achieve massive results. You’ll read all these stories, and many more, in the pages of this book. Whether you are a founder, a manager, a potential employee, or an investor, we believe that understanding blitzscaling will allow you to make better decisions in a world where speed is the critical competitive advantage. With the power of blitzscaling, the adopted son of a Syrian immigrant (Steve Jobs), the adopted son of a Cuban immigrant (Jeff Bezos), and a former English teacher and volunteer tour guide (Jack Ma) were all able to build businesses that changed—and are still changing—the world.

Nokia is a great example of the cost of caution. In 2007, Nokia was the world’s largest and most successful maker of mobile phones, with a market capitalization of just under $ 99 billion. Then Apple and Samsung came blazing into the market. In 2013, Nokia sold its money-losing handset operations to Microsoft for $ 7 billion, and in 2016 Microsoft sold its feature phone assets and the Nokia handset brand to Foxconn and HMD for just $ 350 million. That’s a drop in value for Nokia’s mobile phone business from somewhere in the neighborhood of $ 99 billion to $ 350 million in less than a decade—a decline of over 99 percent. At the time, Nokia’s decisions may have seemed to make sense. Nokia actually continued growing even after the launch of the iPhone and Google’s Android operating system. Nokia hit its peak in terms of unit volume when it shipped 104 million phones in 2010. But Nokia’s sales declined after that, and were surpassed by Android in 2011 and iPhone in 2012. By the time Nokia’s management realized the existential threat facing them, it was too late; even the desperation play of aligning themselves with Microsoft as its exclusive Windows Phone partner couldn’t reverse the decline.

I am fond of pointing out to entrepreneurs and executives that “in theory, you don’t need practice.” What I mean is that no matter how brilliant your business model and growth strategy, you won’t be able to build a real-world (i.e., non-theoretical) blockbuster company without a lot of practice. But that problem is magnified when you’re trying to blitzscale. The kind of growth involved in blitzscaling typically means major human resources challenges. Tripling the number of employees each year isn’t uncommon for a blitzscaling company. This requires a radically different approach to management than that of a typical growth company, which would be happy to grow 15 percent per year and can take time finding a few perfect hires and obsessing about corporate culture. As we will discuss in more detail later in the book, companies that blitzscale have to rapidly navigate a set of key transitions as their organizations grow, and have to embrace counterintuitive rules like hiring “good enough” people, launching flawed and imperfect products, letting fires burn, and ignoring angry customers. Over the course of this book, we’ll see how business model, growth strategy, and management innovation work together to form the high-risk, high-reward process of blitzscaling.

Harvard Business School professor and author Clay Christensen believes that you need to focus on the concept of the “job-to-be-done”; that is, when a customer buys a product, she is “hiring” it to do a particular job. Then there’s Brian Chesky of Airbnb, who said simply, “Build a product people love. Hire amazing people. What else is there to do? Everything else is fake work.” As Andrea Ovans aptly put it in her January 2015 Harvard Business Review article, “What Is a Business Model?”, it’s enough to make your head swim! For the purposes of this book, we’ll focus on the basic definition: a company’s business model describes how it generates financial returns by producing, selling, and supporting its products. What sets companies like Amazon, Google, and Facebook apart, even from other successful high-tech companies, is that they have consistently been able to design and execute business models with characteristics that allow them to quickly achieve massive scale and sustainable competitive advantage. Of course, there isn’t a single perfect business model that works for every company, and trying to find one is a waste of time. But most great business models have certain characteristics in common. If you want to find your best business model, you should try to design one that maximizes four key growth factors and minimizes two key growth limiters.

At the end of 1996, the five most valuable companies in the world were General Electric, Royal Dutch Shell, the Coca-Cola Company, NTT (Nippon Telegraph and Telephone), and ExxonMobil—traditional industrial and consumer companies that relied on massive economies of scale and decades of branding to drive their value. Just twenty-one years later, in the fourth quarter of 2017, the list looked very different: Apple, Google, Microsoft, Amazon, and Facebook. That’s a remarkable shift. Indeed, while Apple and Microsoft were already prominent companies at the end of 1996, Amazon was still a privately held start-up, Larry Page and Sergey Brin were still a pair of graduate students at Stanford who were two years away from founding Google, and Mark Zuckerberg was still looking forward to his bar mitzvah. So what happened? The Networked Age happened, that’s what. Technology now connects all of us in ways that were unthinkable to our ancestors. Over two billion people now carry smartphones (many of them made by Apple, or using Google’s Android operating system) that keep them constantly connected to the global network of everything. At any time, those people can find almost any information in the world (Google), buy almost any product in the world (Amazon/ Alibaba), or communicate with almost any other human in the world (Facebook/ WhatsApp/ Instagram/ WeChat). In this highly connected world, more companies than ever are able to tap into network effects to generate outsize growth and profits.

Craig Newmark simply started e-mailing his friends about local events in 1995; almost twenty-two years later, network effects have kept Craigslist a dominant player in online classifieds despite operating with a skeleton crew and making seemingly no changes to the website design during that entire period! This is where an emphasis on speed also plays an important role. Because Silicon Valley’s entrepreneurs focus on designing business models that can get big fast, they are more likely to incorporate network effects. And because the fierce local competition forces start-ups to grow so aggressively (i.e., blitzscale), Silicon Valley start-ups are more likely to reach the tipping point of network effects before start-ups from less aggressive geographies. One of the motivations for this book is to help entrepreneurs from around the world emulate these successes by teaching them how to systematically design their businesses for blitzscaling. When you design your business model to leverage network effects, you can succeed anywhere.

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.

Fortunately, Google found product/ market fit by refining Overture’s advertising auction model. Google’s AdWords product was so much better at monetizing search through its self-service, relevance-driven, auction system that by the time those competitors managed to play catch-up, Google had amassed the financial resources that allowed it to invest whatever was necessary to maintain product superiority. Google doesn’t always get product/ market fit right (and if it had run out of money before hitting upon AdWords, the search business might have died before ever achieving that fit). This is a reflection of its very intentional product management philosophy, which relies on bottom-up innovation and a high tolerance for failure. When it works, as in Gmail, which was a bottom-up project launched by Paul Buchheit, it can produce killer products. But when it fails, it results in killed products, as demonstrated by projects like Buzz, Wave, and Glass. To overcome this risk of failure, Google relies on both its financial strength (which comes from its high gross margins, among other things) and a willingness to decisively cut its losses. For example, when Google bought YouTube (which had clearly achieved product/ market fit), it was willing to abandon its own Google Video service, even though it had invested heavily in that product. Other massively successful companies take a very different approach. In contrast to Google, where new ideas can come from anywhere in the company and there are always many parallel projects going on at the same time, Apple takes a top-down approach that puts more wood behind fewer arrows. Apple keeps its product lines small and tends to work on a single major product at a time. One philosophy isn’t necessarily better than the other; the important thing is simply to find that product/ market fit quickly, before your competition does.

Facebook excelled at distribution. As noted earlier, Facebook’s early focus on college students, which caused some to dismiss it as a niche product, was actually part of an extremely successful distribution strategy. To achieve incredible virality, Facebook would deliberately delay launching at a college campus until over 50 percent of the students had requested it so that local critical mass was reached almost immediately. Facebook further benefited from leveraging existing friend networks to expand outward from its original college user base. As users experienced the benefits of staying connected via Facebook, they naturally wanted to add their off-line friends to the network.

While this new motto might seem self-contradictory, Mark explains that it focuses on a higher-level goal. “The goal is to move fast,” Mark told me. “When we were smaller, being willing to break things allowed us to move faster. But as we grew, the willingness to break things actually started slowing us down, because increasing complexity made it harder and harder to fix things once they broke. By taking the extra time to focus on stable infrastructure, we reduce the impact and time to recover from breaking things, so that we can actually move faster.

Slack had spent nearly five years and $ 17 million on development prior to its public launch in February 2014. Just two months later, before the end of April, it had raised another $ 43 million. Both of these investments took place before Slack had proven its revenue model and started generating significant sales. Slack’s freemium business model (offering a free service and encouraging users to upgrade later to becoming paying customers) meant that even after two months of rapid user growth, the company hadn’t proven its ability to make money. Fortunately for Slack and its investors, this aggressiveness paid off. As the initial wave of free users started converting to paid, Slack was able to raise an additional $ 120 million six months later to accelerate its growth even further.

Sadly, premature blitzscaling can sometimes kill a nascent market by “poisoning the well” so dramatically that investors and entrepreneurs avoid the space. For example, Webvan’s notorious failure kept most players out of the grocery delivery space for over a decade.

For example, in 2015, Payal Kadakia, the founder of ClassPass (a monthly subscription service for fitness classes) decided that she needed to double the size of her staff in just three months so that ClassPass would be able expand into more cities. To achieve this kind of speed, Kadakia and her team abandoned traditional hiring processes and followed two simple rules. First, they hired people from their personal networks, with an emphasis on “branded” talent. For example, if an employee had a friend, and that friend worked for the management consulting firm Bain & Company, that friend got hired because ClassPass could assume that the person was smart and would get along with people. Second, some of the time saved by not interviewing for skills allowed the team to interview for alignment with the company’s mission. Crazy? Perhaps. But ClassPass was in a crowded, emerging market, and being able to hire faster than the competition helped it maintain and increase its leadership position. Blitzscaling also requires a strong focus on risk management. While blitzscaling requires risk taking, it doesn’t require unnecessary risk taking. Indeed, the higher level of risk associated with blitzscaling makes risk management even more valuable and important. As Yahoo! cofounder Jerry Yang told us in an interview for Reid’s Masters of Scale podcast, “All bold strategies have a risk. If you don’t see it, you’re flying risk-blind.

Great companies and great businesses often seem to be bad ideas when they first appear because business model innovations—by their very definition—can’t point to a proven business model to demonstrate why they’ll work.

Start-ups can act quickly to capitalize on the new opportunities created by technological advances. If they dawdle and proceed at the same pace as a big company, they’re fighting on an even playing field, which means that the big company’s resources will likely confer massive advantage.

Your competitive advantage is formed by the interplay of three different, ever-changing forces: your assets, your aspirations/values, and the market realities, i.e., the supply and demand for what you offer the marketplace relative to the competition.

Teams win when their individual members trust each other enough to prioritize team success over individual glory; paradoxically, winning as a team is the best way for the team members to achieve individual success.

Brian Chesky of Airbnb defines culture in a simple and concise way: “a shared way of doing things.” Clearly defining the way an organization does things matters, because blitzscaling requires aggressive, focused action, and unclear, hazy cultures get in the way of actually implementing strategy. Netflix cofounder and CEO Reed Hastings told me, “Weak cultures are diffuse; people act differently, and don’t understand each other, and it becomes political.” Mark Zuckerberg and Sheryl Sandberg have done many wonderful things at Facebook, and one of them is building a unified culture that is devoted to aggressive experimentation and data-driven decision making, as summarized by Mark’s original motto “Move fast and break things.” Facebook’s culture helps employees understand that they shouldn’t be afraid to try things that might fail. This allows Facebook to move faster, and to move on from failed experiments quickly. Imagine if someone asked a random employee from your start-up the following questions: What is your organization trying to do? How are you trying to achieve those goals? What acceptable risks are you incurring to achieve those goals more quickly? When you have to trade off certain values, which ones take priority? What kind of behavior do you hire, promote, or fire for?

The David Dao incident is a classic example of how a poor articulation of company values can weaken the culture. The employees on the ground believed they needed to bump passengers from the flight so that United could get another flight crew to their plane (i.e., “flying right”) and that meeting metrics such as on-time departures and flight cancellations was more important than treating customers with “respect and dignity” (which most of us would agree does not include breaking their noses and knocking out their teeth). In contrast, Southwest Airlines is not only clear about its company values but makes them the emphasis of hiring and management. The mentality isn’t: “We’ll know it when we see it.” Instead, it is: “Does this person already live the way we do?” The company uses behavioral interview questions to determine whether candidates are a cultural fit. For example, to determine someone’s ability to be a selfless team player, they might ask her to describe a time when she went above and beyond to help a coworker succeed. The airline acknowledges that certain positions call for specific skill sets. As Southwest puts it, “We’re not going to hire a pilot who has a great attitude but can’t fly a plane!” But, when it comes down to two equally qualified candidates, the one who lives Southwest’s values receives the offer. And, even when Southwest finds a qualified candidate who doesn’t have the right values, it will keep looking until it finds someone who does—no matter how long the job has gone unfilled.

Having “extra” capital gives you a cushion for when outcomes do not in fact follow your plan. Moreover, it increases your optionality—if you need to invest in growth, you can do much more without having to go through the time-consuming process of raising another round. As Mariam Naficy, CEO of Minted, told me, “Act like you’ve got half the amount you have in the bank because you’ve got to factor in all the failures and all the optimizations that kill great entrepreneurs and businesses all the time. Both of us know so many people who had good ideas and were on the right track, but just ran out of money.” At both PayPal and LinkedIn, we raised large financing rounds right before a market meltdown (2000, 2008), and we sure were glad we did. In the case of PayPal, that money allowed us to keep growing during the dot-com bust; without it, we wouldn’t have made it to our IPO. In the case of LinkedIn, the situation wasn’t as dire, but I realized that the value of the optionality from additional funding far outweighed the potential negatives of equity dilution.

Culture is critical because it influences how people act in the absence of specific directives and rules, or when those rules reach their breaking point. In a notorious example from 2017, acting at the request of United Airlines, Chicago Department of Aviation employees forcibly dragged passenger David Dao off an overbooked flight, breaking his nose, knocking out two of his teeth, and giving him a significant concussion in the process. The next morning, United CEO Oscar Munoz sent a rather perplexing e-mail to United Airlines employees.

The scaling curve applies to every blitzscaler, regardless of industry or geography. The same multiple S-curve graph that describes Facebook or Apple also describes Tencent, which launched with QQ, then added a second curve for WeChat after QQ reached maturity in 2010. Just when you’ve finished blitzscaling one business line, you need to blitzscale the next to maintain your company’s upward trajectory. And as blitzscaling continues to spread, established companies with mature business lines should consider turning to intrapreneurs to blitzscale new business units.

First, you can take the market by surprise, bypassing heavily defended niches to exploit breakout opportunities.

Second, you can leverage your lead to build long-term competitive advantages before other players are able to respond.

Third, blitzscaling opens up access to capital, because investors generally prefer to back market leaders.

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.

In 2014, Aswath Damodaran, a professor of finance at NYU’s Stern School of Business, estimated that Uber was probably worth roughly $ 6 billion, based on its ability to ultimately win 10 percent of the global taxi market of $ 100 billion, or $ 10 billion. According to Uber’s own projections, in 2016 the company processed over $ 26 billion in payments. It’s safe to say that the $ 10 billion market was a serious underestimate, as the ease of use and lower cost of Uber and its competitors expanded the market for transportation-as-a-service.

As Aaron Levie, the founder of the online file storage company Box noted in a tweet in 2014, “Sizing the market for a disruptor based on an incumbent’s market is like sizing a car industry off how many horses there were in 1910.” The other factor that can lead to underestimating a market is neglecting to account for expanding into additional markets. Amazon began as Amazon Books, the “Earth’s Biggest Bookstore.” But Jeff Bezos always intended for bookselling to serve as a beachhead from which Amazon could expand outward to encompass his massive vision of “the everything store.” Today, Amazon dominates the bookselling industry, but thanks to relentless market expansion, book sales represent less than 7 percent of Amazon’s total sales. The same effect can be seen in the financial results of Apple. In the first quarter of 2017, Apple generated $ 7.2 billion from the sale of personal computers, a category the company pioneered and once dominated. That’s a great number to be sure, but, over that same financial quarter, Apple’s total revenue was a whopping $ 78.4 billion, which meant that Apple’s original market accounted for less than 10 percent of its total sales.

Airbnb’s strategy for photographing its hosts’ rooms offers an instructive example. Early on, Airbnb’s founders discovered that one of the key factors that increased the chances of renting a room on Airbnb was the quality of the photographs of that room. It turns out that most of us aren’t professional photographers, and our poorly composed, poorly shot cell phone pictures don’t do a good job of conveying the awesomeness of our living spaces. So the founders took to the road, visiting hosts and taking photographs for them. Obviously, personally visiting every host was hardly a scalable solution, so the the task was soon outsourced to freelance photographers. As Airbnb grew, the strategy shifted from the founders managing a short list of photographers, to an employee managing a large group of photographers, to an automated system managing a global network of photographers. Founder Brian Chesky describes this strategy succinctly: “Do everything by hand until it’s too painful, then automate it.