How to Master Scale

In the pre-machine learning days of the internet, a mere eight or ten years ago, I was obsessed with an idea in our company, HealthCentral.com. No one Googled “health” but very specific, very personal questions about our, or our loved one’s, health needs. What if we could connect anyone with the very content and people that understood those specific needs and experiences on our individual terms, at scale?

For me, at the time, scale was important but no longer everything. Gone were the days where having massive reach whose lazy “targeting” meant reaching a handful of broad “demographics.” Now, better to have a few million you knew a lot more about the individual and could serve with higher quality engagements. We could enter an era of “mass customization” where any information, even advertising, would be valued when in front of the right person at the right time. No doubt, the more quantity the better. But the quality of quantity mattered more. 

Today, of course, we have watched three remarkable phenomenon that have surpassed if even trumped my thesis: 1) massive scale due to ubiquitous access to smart devices and network effects which led to ; 2) the ability through machine learning to leap right to better and better mass customization and targeting the more audience and data one acquired and; 3) unprecedented competition from around the world — especially China — addressing mass new and all but untapped markets, with new data, and unprecedented speed of disruption.

Size, data science, speed, and a world of unprecedented well capitalized competition is revolutionizing how we think of business. Size matters more than ever, speed, however matters equally, and counter intuitively strategy of speed matters a ton. This is not merely about speed and “get big fast” for the sake of it, but smart strategy and tactics about how to balance very big decisions in very fast time frames in a sea of people trying to do the same in order to disrupt -- read destroy -- us.

It’s not “in” these days — for reasons I cannot fathom — to salute the lessons of Silicon Valley. Maybe a half dozen times in world history has one geographic network effect of talent rendered so much impact to people around the world, and thrown off more lessons of what to do (or not do). To put it perspective, 150 companies there alone make up 50 percent of the NASDAQ and over 5 percent of the entire world’s market capitalization. Silicon Valley may not do everything right, but perhaps no where on earth has the unprecedented shifts in the competitive environment been more clearly seen — and first. There are some lessons to be learned here for sure.

Enter the play book Blitzscaling by LinkedIn co-founder and legendary tech investor, Reid Hoffman, and remarkable entrepreneur and writer Chris Yeh. This book is really a third leg of a stool of books Reid has written to prepare us for a very new century in business. Startup of You with leading entrepreneur and investor Ben Casnocha delves deeply into how we as individuals should think of ourselves and our careers in very new times; The Alliance defines a new contract that is being created among the best organizations and their employees in a new and hyperly competitive world. 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. In the author’s words: “What separates the startups that get disrupted and disappear as the world changes from the ones that scale up to become market leaders and shape the future.”

The book delves into some of the known and less known successes in technology — Drop Box, AirBNB, Facebook, Apple, Stripe, Google, Netflix and wonderful insights from their own experiences in LinkedIn — but the lessons are not about Silicon Valley exceptions. The book is a framework for any company that needs both an offense and defensive strategy; has massive amount of data and resources that can be harnessed on feedback loops of what is working and is not; but also forced to navigate incredible risks to leaving tried and true aspects of business. What great or aspiring enterprise in today’s competitive worlds doesn’t face this? What great or aspiring company, at its essence now, isn’t in fact a tech company in any event?

The authors take us by the hands in leading while navigating speed and adaptability across different stages of an enterprise, and how innovation in business model, strategy and management are at the foundation of competitive success. We get so thrilled by the remarkable changes technologically, that we forget the best scaled enterprises' greatest innovation is in how they do business in these three areas. 

We forget, for instance, that when Google launched there were many search engines, and tried and true models of paying for software. They entered not only with better technology but with a model to “sell” software for free, monetizing through ads. Hard to imagine there was a time when this wasn’t obvious — but it was utterly unobvious then.

Much has been written about the power of network affects — the more who come make the product or service better the more who come — but sometimes we pay less attention to the power high gross margins. This all but guarantees competitively high amounts of cash available to fund growth and expansion. As an investor in my own right, gross margins and future unit economics is probably where I spend most of my time on a company’s business models and projects. And the examples throughout the book compound.

The book is a call to action and a great caution. As it’s conclusion reminds us, we are in the earliest days of unprecedented disruption. CRISPR, crypto currencies, blockchain capabilities, revolutions in robotics and ubiquitous AI, genomics and more will reshape our physical infrastructure and who we are as people. And we are not alone. Today China has risen in a matter of years to be toe-to-toe with American business in many areas of technology and progressively across new, rapidly rising markets of billions with new consuming middle classes. I’ve not met a scaling tech enterprise, in fact, in Brazil, Egypt, Indonesia and beyond who are not finding leap frog opportunities by the same, now universal, access to new technologies.

How to navigate rapid scale and the achievement in scaling in hyper competitive global markets may seem like more art or luck than science in hindsight. But this book proves this is not the case. It guides us on what we will likely experience, battle (often among our selves and our internal cultures), and trade-off to be stronger. Mantras like “move fast and break things” sound cool, but can be a catch all and excuse for sloppiness. Blitzscaling is, among many things, and extremely well and clear written book of focus. I read an earlier draft of it, and the book is now packed with insight and examples on the subsequent must-listen podcasts of Reid, Master of Scale.

And as so, and as one who has been a part of, and victim to, fast growth and global competitive forces, the book leaves me with only one pain: I wish to the heavens I had had this book when I started my last company. It will be my largest holiday gift to entrepreneurs I support this season.