In today’s highly networked world, a key secret to building startups into massively successful companies is blitzscaling: Rapid, relentless growth that allows you to become the first player to achieve scale and develop a daunting competitive advantage. Blitzscaling has allowed companies like Google and Facebook to grow from garage to global dominance in less than a decade.
You can learn how to blitzscale by analyzing the growth of these important companies as my fellow instructors and I did in our recent class at Stanford, CS183C: Technology-Enabled Blitzscaling. Another way to learn, however, is to draw inspiration from earlier eras, such as those from a long time ago in a galaxy far, far away….
In honor of the release of “Star Wars: The Force Awakens”, here are five blitzscaling lessons from Yoda, Grand Master of the Jedi Order:
1. Judge me by my size, do you? Hmm? No. And well you should not. For my ally is the Force, and a powerful ally it is.
Blitzscaling is a powerful tool which can enable smaller companies to outmaneuver and defeat their larger competitors. Facebook didn’t seem like much of a threat to bigger competitors like MySpace; it was a small social network that focused on a handful of college campuses. But this focus allowed Facebook to build a product that truly tapped into people’s desire to connect with each other and share life’s moments, rather than just hear from their favorite bands. By the time its competitors realized what Facebook had done, Facebook’s blistering growth allowed it to catch and surpass them on a compounding curve.
2. You must unlearn what you have learned.
Most companies are built for growth, but few are built for continuous hypergrowth. As Google’s Eric Schmidt told our class, “It’s easy to double, but it’s very hard to quadruple every year.” As a company scales, the practices and processes that worked for a single office with tens of employees don’t scale up to handle multiple offices with hundreds of employees. For example, Patrick Collison of Stripe noted that as his company grew, he had to shift his style from informal, one-on-one communications to formal, explicit, broadcast communication. Said Patrick, “A startup is not a natural environment. The optimal things to do don’t always feel natural. The social groups you belong to don’t typically grow 100% per year.” This pattern is true of all blitzscaling companies.
3. Always in motion is the future.
The world around us is constantly changing. It can seem unfair—as soon as you think you’ve got your market figured out, everything shifts on you. But the great entrepreneurs and their companies understand that you can’t rest on your laurels. Facebook was the dominant social network on the Web, but the rapid rise of iOS and Android meant that its position was far from secure in the new world of mobile. Mark Zuckerberg acted quickly and decisively, purchasing Instagram and WhatsApp, and building out a suite of mobile apps. Three years after Facebook started running mobile ads, mobile advertising accounted for 76% of its ad revenue.
4. Do or do not. There is no try.
Blitzscaling is risky. It’s expensive and uncomfortable to grow at such a rapid rate. But winner-take-all markets seldom reward half-measures. In 2002, Larry Page was convinced that Google’s new AdWords product was a gold mine. What they needed was more search traffic, and Larry knew how to get it—by winning the deal to provide the search engine for AOL. When he was warned that bidding on the deal would mean betting the company, Page responded, “We should be able to monetize the pages. If not, we deserve to go out of business.” Google offered AOL 85% of ad revenues and agreed to an annual minimum payment of $150 million. At the time, Google had just $10 million in the bank. The deal ended up making both Google and AOL a huge amount of money. Do or do not, indeed.
All blitzscaling involves taking key risks – capital, talent, company organization – in order to achieve a market position quickly. And, often, these key risks are to establish a network effect or sufficient scale.
5. Fear is the path to the Dark Side
As with learning the ways of the Force, learning how to use blitzscaling effectively can be an arduous journey. In the struggle for control of the galaxy (or your market), it can be tempting to take shortcuts, whether by turning to the Dark Side, or by relying on easy capital to buy growth that doesn’t actually confer lasting competitive advantage. Do not let your fear of the competition drive you to rash action. A true Jedi of blitzscaling chooses the right moment to act. And, allies well with other Jedi on missions in support of the Force.
Study well the lessons of Master Yoda, and may the Force be with you.
This article was originally published here on December 18, 2015
Photo by Getty Images