![]() You also have to be prepared to execute with more than 100 percent effort to compensate for the bets that don’t go your way.įor example, anyone who knows Jeff Bezos knows that he didn’t simply mash his foot down on the gas pedal Amazon has intentionally invested aggressively in the future, and, despite its accounting losses, generates a ton of cash. To mitigate the downside of the risks you take, you should try to focus them - line them up with a small number of hypotheses about how your business will develop so that you can more easily understand and monitor what drives your success or failure. But blitzscaling is more than just plunging ahead blindly in an effort to “get big fast” to win the market. ![]() These risks and costs are acceptable because the risk and cost of being too slow is even greater. You accept the risk of making the wrong decision and willingly pay the cost of significant operating inefficiencies in exchange for the ability to move faster. When you blitzscale, you deliberately make decisions and commit to them even though your confidence level is substantially lower than 100 percent. Over the years, many have criticized Amazon for its risky strategy of consuming capital without delivering consistent profits, but Amazon is probably glad that its “inefficiency” helped it win several key markets - online retail, e-books, and cloud computing, to name just a few. If you win, efficiency isn’t that important if you lose, efficiency is completely irrelevant. ![]() When a market is up for grabs, the risk isn’t inefficiency - the risk is playing it too safe. Efficiency and certainty, while innately appealing, and very important in the context of a stable, established market, offer little guidance to the disruptors, inventors, and innovators of the world. Unfortunately, this cautious and measured approach falls apart when new technologies enable a new market or scramble an existing one. Implicitly, this technique prioritizes correctness and efficiency over speed. Take risks, conventional wisdom says, but take calculated ones that you can both measure and afford. The classic approach to business strategy involves gathering information and making decisions when you can be reasonably confident of the results. Blitzscaling is just about as counterintuitive as it comes. While blitzscaling may seem desirable, it is also fraught with challenges. And the bad news is, you’ve harpooned a whale!” The good news is, you’ve harpooned a whale. In 2017, Amazon had 541,900 employees and was forecast to generate revenues of $177 billion (up from $136 billion in 2016).ĭropbox cofounder Drew Houston described the feeling produced by this kind of growth when he said, “It’s like harpooning a whale. That’s a 50-fold rise in staff and a 322-fold rise in revenue in just three years. By 1999, the now-public had grown to 7,600 employees and generated revenues of $1.64 billion. In 1996, a pre-IPO Amazon Books had 151 employees and generated revenues of US$5.1 million. You can contribute through PayPal, Patreon, Venmo and Crypto.Amazon’s incredible growth in the late 1990s (and up through today) is a prime example of blitzscaling. It’s hard to rely 100% on ads, and your contributions will help us continue providing the best free cultural and educational materials to learners everywhere. If you would like to support the mission of Open Culture, consider making a donation to our site. If you would like to sign up for Open Culture’s free email newsletter, please find it here. You can also find class notes for the course on Medium.īlitzscaling will be added to our list of Free Online Business Courses, a subset of our collection, 1,700 Free Online Courses from Top Universities. You can stream the 20 lectures from start to finish above, or find the playlist on Greylock Partner’s YouTube channel. Eric Schmidt on Structuring Teams and Scaling Google, Netflix’s Reed Hastings on Building a Streaming Empire, Airbnb’s Brian Chesky on Launching Airbnb and the Challenges of Scale–they’re among the experts featured in the course. The course focuses on Blitzscaling–or what Hoffman described in the Harvard Business Review as “ the science and art of rapidly building out a company to serve a large and usually global market, with the goal of becoming the first mover at scale.” And to help demystify that process, Hoffman invited guest speakers to class to break things down. Many of the concepts discussed in Masters of Scale expand on a 2015 course taught at Stanford by Hoffman and his colleagues– John Lilly from Greylock Partners, LinkedIn co-founder Allen Blue, and author Chris Yeh. A quick postscript to yesterday’s mention of Reid Hoffman’s new podcast, Masters of Scale.
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