Blitzscaling | Competitive Strategy

This episode in our Greymatter Blitzscaling capsule series, with Reid Hoffman and Chris Yeh, focuses on the topic of competitive strategy. In an ideal world, you won’t have any competition. But the world is far from ideal. How should a blitzscaling company think about and respond to the competition?

Below is an edited transcript of Reid and Chris’s discussion.

You’ll hear about how Reid, Peter Thiel, and Elon Musk used speed to lead PayPal to victory in a contest with eBay’s own payments system (you can also hear Reid and Peter discuss competition and many other topics on the Masters of Scale podcast, hosted by Reid).

“We were all in and committed to making it work. We knew this was life or death for us, and we knew what were the key elements of the game to work, what were the strategies you need to make that happen, which combinations and tactics would play into that, and so therefore, we massively out-placed Billpoint on eBay’s own platform.”

You’ll learn why the most important factor in a blitzscaling business model isn’t a traditional business school metric like gross margin, but rather the speed at which the model allows the business to grow and adapt. And you’ll get specific advice on how to find, test, and hone your competitive edge.

“Go ask customers the directed question, which is what’s wrong with my product, or if I had this, would you buy it today, what price would you buy it at, why wouldn’t you pay a higher price? Because then you get the directed answer. If you go to ask someone, “Do you like my product?” they’ll think, well, I’d rather be friendly with you. “Sure, I like your product” doesn’t help you. Ask the directed question.”

Finally, you’ll hear why the ideal competition isn’t the small or weak. Small and weak competitors are often the result of a small and unappealing market. Rather, the ideal competition is strong but inflexible.

“The last point is that, which kind of competitors do you want? Well, your ideal competitors are ones that are really locked into their business model, that are kind of traditional. It’s very hard for them to change; they want to keep doing the thing they’re doing […]. If you have a competitor that’s essentially locked into their thing, where your thing gives you a unique edge, you just need to get it going fast enough and big enough.”

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