{"id":35365,"date":"2021-05-24T11:15:25","date_gmt":"2021-05-24T15:15:25","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=35365"},"modified":"2021-05-28T10:23:47","modified_gmt":"2021-05-28T14:23:47","slug":"blitzscaling-companies","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/blitzscaling-companies\/","title":{"rendered":"Blitzscaling Companies: Should You or Shouldn&#8217;t You"},"content":{"rendered":"\n<p>Are you thinking of blitzscaling your company? If you blitzscale, when is the right time to stop? How do you blitzscale?<\/p>\n\n\n\n<p>Blitzscaling companies isn&#8217;t always the answer, sometimes the conditions aren&#8217;t right. But when speed is the critical strategy, blitzscaling is the answer. However, you should only blitzscale your company for a limited amount of time because your company will eventually outgrow the strategy.<\/p>\n\n\n\n<p>Continue reading to learn more about blitzscaling companies.<\/p>\n\n\n\n<!--more-->\n\n\n\n<h2 class=\"wp-block-heading\">Is Blitzscaling Right for Your Company?<\/h2>\n\n\n\n<p><strong>The only time blitzscaling companies makes sense is when speed into the market is <em>the <\/em>critical strategy to achieve massive outcomes.<\/strong><\/p>\n\n\n\n<p>You should not blitzscale if you\u2019re not a product\/market fit, your business model doesn\u2019t work, or if the market conditions aren\u2019t right. If taking on cost, risk, and speed don\u2019t actually confer an advantage, it\u2019s better to follow traditional business rules and wait for the time that blitzscaling becomes appropriate.<\/p>\n\n\n\n<p>Blitzscaling also makes sense in a few other specific conditions:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Big new opportunity<\/strong><ul><li>Market size and gross margins create enormous potential value, and there isn\u2019t a dominant <a href=\"https:\/\/www.shortform.com\/blog\/market-leader-company\/\">market leader<\/a>.<\/li><li>Often, this is when a technological innovation upends existing markets, creating large opportunities that incumbents are not well-suited to capture.<\/li><\/ul><\/li><li>First-scaler advantage<ul><li>These opportunities often involve positive <a href=\"https:\/\/www.shortform.com\/blog\/feedback-loop-meaning\/\">feedback loops<\/a>. The mechanisms that confer the first-scaler advantage include <a href=\"https:\/\/www.shortform.com\/blog\/network-effect\/\">network effects<\/a>, returns to data, <a href=\"https:\/\/www.shortform.com\/blog\/advantages-of-economies-of-scale\/\">economies of scale<\/a>.<\/li><li>Blitzscaling often doesn\u2019t work if another company has a first-scaler advantage.<ul><li>Amazon and Yahoo! attacked eBay with their own auction marketplaces, but they failed due to eBay\u2019s strong network effects.<\/li><li>Amazon and Microsoft attacked Google\u2019s search engine, but they failed due to Google\u2019s strong advantage in aggregated data and user experience.<\/li><\/ul><\/li><li><strong>Don\u2019t confuse first to market or first to significance with first to scale.<\/strong> You could be the inventor of a product, but a rival can take the reins and scale to make you insignificant.<\/li><\/ul><\/li><li><strong>Competition<\/strong><ul><li>Can somebody else realize this opportunity earlier than me? If yes, moving faster reduces the risk of competition.<\/li><li>Note that your competitor might not be in the same country as you. Geographic boundaries have dissolved &#8211; your competition can now be global.<\/li><li>Startups who act quickly can evade incumbents who aren\u2019t focusing on the space.<\/li><\/ul><\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>When Should You Stop Blitzscaling?<\/strong><\/h3>\n\n\n\n<p>Blitzscaling is like fighter jet afterburners &#8211; you don\u2019t switch them on and never turn them off. Blitzscaling is used for a specific purpose for a limited time, after which you turn to fast scaling or another type of company growth.<\/p>\n\n\n\n<p>You stop blitzscaling when your business outgrows your current strategy. Warning signs of when this is:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The declining rate of growth (relative to market and competition)<\/li><li>Worsening unit economics<\/li><li>Decreasing per-employee productivity<\/li><li>Increasing management overhead<\/li><\/ul>\n\n\n\n<p>All of these tend to signal that you\u2019ve reached the ceiling of the market. When you\u2019re moving fast, it\u2019s easy to overshoot, as Groupon did when its daily deals model suffered, and as Twitter did when it overstaffed.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Do I <\/strong><strong><em>Have <\/em><\/strong><strong>to Blitzscale?<\/strong><\/h3>\n\n\n\n<p>No. The French Laundry is still a single restaurant. If it\u2019s antithetical to your mission, or you don\u2019t want to deal with the headaches of a larger size, you don\u2019t need to blitzscale. If you own the company, it\u2019s up to you to do what you want with it.&nbsp;<\/p>\n\n\n\n<p>Your industry may not have a winner-take-all dynamic. This can be true if the industry is very fragmented, has low margins, or little economy of scale. In this case, there is no purpose in blitzscaling, since there are fewer advantages to getting big.<\/p>\n\n\n\n<p>Likewise, your business model may not be permissive of massive scale.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>How Blitzscaling Works<\/strong><\/h3>\n\n\n\n<p>Blitzscaling is not a strict sequence of steps:<\/p>\n\n\n\n<ol class=\"wp-block-list\"><li>Do things that don\u2019t scale.<\/li><li>Achieve scale.<\/li><li>Stop doing things that don\u2019t scale, and do things that scale.<\/li><\/ol>\n\n\n\n<p>Rather, blitzscaling is iterative. It requires finding new things that don\u2019t scale while you capture the value of existing things. The sequence of steps looks more like:<\/p>\n\n\n\n<ol class=\"wp-block-list\"><li>Do things that don\u2019t scale.<\/li><li>Reach the next stage of blitzscaling.<\/li><li>Figure out how to do one set of things that scale, while somehow also finding a way to do a completely different set of things that don\u2019t scale.<\/li><li>Reach the next stage of blitzscaling.<\/li><li>Repeat until you dominate the market.<\/li><li>[Repeat 1-5 for the next market you want to take.]<\/li><\/ol>\n\n\n\n<p>Examples<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Apple did this first with iPod, then iTunes, then the iPhone, then the iPad.<\/li><li>Facebook did this first with desktop, then mobile.<\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Are you thinking of blitzscaling your company? If you blitzscale, when is the right time to stop? How do you blitzscale? Blitzscaling companies isn&#8217;t always the answer, sometimes the conditions aren&#8217;t right. But when speed is the critical strategy, blitzscaling is the answer. However, you should only blitzscale your company for a limited amount of time because your company will eventually outgrow the strategy. Continue reading to learn more about blitzscaling companies.<\/p>\n","protected":false},"author":8,"featured_media":35413,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[45,79,31],"tags":[289],"class_list":["post-35365","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-entrepreneurship","category-money","tag-blitzscaling","","tg-column-two"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.3 (Yoast SEO v24.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Blitzscaling Companies: Should You or Shouldn&#039;t You - Shortform Books<\/title>\n<meta name=\"description\" content=\"When is the right time to blitzscale a company? When speed is crucial for success. 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