“Blitzscaling” by Reid Hoffman, is a book for entrepreneur, venture capital industry, and investors.
Author
This book is written by Reid Hoffman, the former VP of PayPal and the founder of LinkedIn. After Reid Hoffman sold LinkedIn, which he founded, to Microsoft, he founded a well-known artificial intelligence startup, Inflection.ai, and is currently focusing on running this company.
After PayPal was acquired by EBay, Hoffman became one of the most prolific and successful angel investors in Silicon Valley; it is no exaggeration to say that he is the most successful angel investor in the past 10 years. He has participated in the venture capital investment of at least 80 high-tech companies, and has an extremely precise vision. He has participated in the establishment of many new companies that have led important trends in the technology industry in the past two decades.
In 2010, Hoffman joined Greylock Partners and was responsible for managing the company’s US$20 million fund. He is currently the most important venture investor in Silicon Valley and the venture capital industry, and assists many Silicon Valley companies in their operations. He is a heavyweight in the technology industry.
The central idea of this book
After reading this book, I really felt that it was the same as another well-known book written by Silicon Valley entrepreneur Peter Thiel. There is a sense of déjà vu in “Zero to One“, the most famous book written by Thiel and one that has far-reaching influence in the entrepreneurial and investment circles.
The difference
The entire book “Zero to One” emphasizes that new ventures must have the originality to disrupt industries and markets, but “Blitzscaling” emphasizes that the rapid expansion ability and speed of an enterprise determine its fate. Success is more important than corporate performance or other indicators. The author made an analogy in the book, what we want is a breakthrough from 1 to 100 million, not just a disruptive breakthrough from 0 to 1.
If you can’t formulate a strategy at the beginning of the company’s establishment, defeat competitors at lightning speed, and seize market share, no matter how great the method is, how powerful the product is, or how excellent the entrepreneurial team is, it will be in vain.
Similarities
Both books emphasize that the only criterion for judging the success of a company is whether the company can have an astonishing growth rate in the future. Only an astonishing growth rate can bring about exponential growth. It would be great if it can bring about power growth. This is also the reason for the book “The Power Law“, the spirit of the book, and the book also lists all the successful entrepreneurial stories in Silicon Valley, the secret that later became the well-known enterprise today is the amazing growth rate.
Only companies with an astonishing growth rate, that is, “Exponential growth can produce excess returns” can bring a considerable rate of return to early investors who are discerning of heroes in its early stage, which is different from ordinary companies.
My opinion
“Zero to One” focuses on the “strategies” for new companies to succeed, that is, the idea of disrupting industries; but “Blitzscaling” emphasizes how new companies should do it , can ensure successful “tactics”.
Of course, it would be great if a new startup could do both.
Note: A strategy is a plan of action that gets you where you want to go, and tactics are the individual steps and actions that get you there.
What kind of startups are more likely to exponential growth?
Market
- Companies with good, and preferably innovative, business models are better choices: for example, a subscription model is much better than a one-time buyout business model.
- The total addressable market (TAM) must be large enough: venture capitalists will not be interested in companies with a market size of less than one billion US dollars.
Sales and Marketing
- Companies with successful and strong marketing capabilities have historically proven to be able to defeat companies that focus on product features. For example, virality is a great marketing tool.
- Companies with a strong moat like network effects can not only grow exponentially, but also achieve business expansion almost without spending a lot of money.
Company fundamentals
The gross profit margin must be high enough: Companies, like people, are not inherently equal. Companies engaged in industries with slim profit margins cannot bring amazing returns to investors. A 60% or 70% gross profit margin is usually one of the necessary conditions for a top-notch new venture. 30-20% or less, no one will waste time on it.
Common misunderstandings
- Being first in the market does not necessarily have an advantage.
- Things other than products are sometimes more valuable and more futuristic than the product itself: Netscape made this mistake at the time, thinking that the browser would be the company’s main source of income, and actually spent 5 million yuan to reduce the functionality of the Internet search engine. The sale to Excite also allowed Google and Yahoo to see huge business opportunities.
- If revenue growth fails to bring profits in the long term, don’t be reluctant to give up; don’t be reluctant to part with the hard work you have invested.
- Good core talents are very valuable and can only be found but not sought; start-up companies do not need too many people, so don’t be superstitious about how many people can get things done.
Related articles
- ““Blitzscaling” expansion speed decide if startup success eventually“
- “Traitorous Eight, the origin of the semiconductor and venture capital industries“
- “Angel is an excellent venture capital book for ordinary people“
- “Two famous essays by Marc Anderson on software and artificial intelligence“
- “Don Valentine, founder of Sequoia Capital, father of Silicon Valley Venture Capital“
- “The Power Law“
- “Zero to One“
- “Venture capital and unicorns introduction“
- “Global Venture Capital and Unicorn Report“
- “Exponential growth can produce excess returns“
- “The Compound Effect“
- “The power of compound interest“
Related books
If you want to know more about and Peter Thiel, his companies and startups, you can refer to the following three other books by PayPal Mafia members that are influential in Silicon Valley and the venture capital community:
- “Zero to One“
- “The Hard Thing About Hard Things” by A16Z co-founder Ben Horowitz.
- “PayPal Wars” by former PayPal executive Eric Jackson
- “The Alliance” by former deputy general manager of PayPal and founder of LinkedIn Reid Hoffman
Note:
After Reid Hoffman sold LinkedIn, which he founded, to Microsoft, he founded a well-known artificial intelligence startup, Inflection.ai, and is currently focusing on running this company.
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