Write about the principles of blitzscaling at the Family stage that:
a) resonated the most with you and
b) surprised you.
Explain how you plan to apply these principles in your own life/business.The principles of blitzscaling that resonated most with me were Sam Altman’s consistent qualities of good founders — clarity of vision, determination and passion, raw intelligence, efficiency in making decisions and executing, and an ability to solve problems quickly. This idea resonates with me because it tells us that there are foundational traits we can improve in ourselves before we attempt to change the world for other folks.
While I would like to apply these principles to my own life/business, I am curious what methods successful founders might use to purposefully develop these traits in themselves — I imagine there may be aspects specific or more pertinent to a startup founder as opposed to those that can be found in a generic self-development book. Alternatively, do startup founders simply take these natural characteristics for granted, and do we assume they must be innately born with these skills? I am skeptical that there are skills or traits that cannot be improved, but would love to hear anyone else’s thoughts.
Additionally, hearing about the importance of these ideals makes we wonder if i.) startup success increases proportionately with this quality in founders/teams or ii.) if there simply needs to be a minimum threshold that the teams should possess. In other words, does a startup team’s chance of success improve as its collective level of clarity of vision (and mental clarity in general), conviction, intelligence, efficiency, and problem-solving ability increases? My assumption is that it does — so long as the idea is aimed at a sufficiently attractive market, of course.
Something surprising and insightful I heard repeated was the idea that it is a red flag when cofounders “want different things for the company or the same things for themselves.” Sam brought this up and I believe Ann alluded to it briefly. It is important to remind ourselves to be humble and mindful of where we can add the most value in a company. Additionally, being humble — without losing conviction — helps us to accept the ideas of other people and to integrate them into our own thinking. Specifically, I am referring to diverging visions and founders who are interested in the same role. In my own life, I constantly remind myself to curb my own ego, but I suspect there is a more efficient way to develop humility. Thoughts?
Write about how the principles of blitzscaling change from the Family stage to the Tribal stage. Focus on things which:
a) resonated the most with you and
b) surprised you.
Moving from the Family stage to the Tribal stage involves increasing the scale of the organization to somewhere between 10 and 100 employees, having 100k+ users or up to 10 corporate customers, and bringing in annual revenues above $100k.
For me, the aspect of this stage that resonated most with me was the focus on communication and alignment as a company gets bigger. According to John Lilly, the CEO learns new things everyday that changes his thinking in incremental ways. However, the CEO may not realize this himself, and people on the team may not understand that the leadership’s perspective is changing either. John’s approach was to continue repeating short simple messages until he decides it is time to announce one big change.
Although communication is key at every stage in a company, it is most important in an early-stage startup. With limited resources, few product lines, and non-existent brand recognition, miscommunication may cause unnecessary confusion that can lead to wasting critically needed time and money. Additionally, momentum is incredibly important for the startup team. It would be incredibly difficult to maintain without crystal clear direction from the company’s leadership. While these issues may be wasteful and frustrating in a large company, they can be fatal for a startup in the tribal stage.
The most surprising insight I received from founders during this stage was Mariam Naficy’s observation that most of her best designers are self-trained. While it intuitively makes sense that some non-professional designers may be naturally-talented, I find myself incredulous at the idea that MOST of the best designers are amateurs. I would think that a classical grounding in aesthetic concepts would make some already-talented artists much more competitive. My guess is that the highly-talented artists may have self-selected out of minted.com’s supplier market.
One surprising-but-not-so-surprising thing was Mariam’s comment about focusing solely on revenue growth. While “sales solves everything,” it is often noted that companies who do not focus will have difficulty sustaining a competitive advantage. Although I took her to mean that startups should try to find ways to keep selling the same product, she had thrown in a caveat to avoid damaging the brand. In reflection, I would like to check and clarify exactly what she meant during our session. Additionally, Mariam’s concern about turning away artists was an interesting problem to have. However, discouraging too many of her “suppliers” would have had a negative impact on the company’s reputation. This was a great insight to keep.
Moving from the Family stage to the Tribal one involved many unique challenges. Although setting up processes for scaling up the organization is not yet a factor, culture and communication are still critical since we are moving from a small founding team to a larger group giving the entrepreneur less control. At this stage, the company may still be grappling with product-market fit and likely not yet ready to “step on the gas.” However, this is nonetheless an exciting time during the startup’s lifecycle and one that is critical to its success.
Now that we’ve heard from speakers like Shishir Mehrotra, Elizabeth Holmes, and Reed Hastings, you have a sense of managing a company at a much larger scale.
Write about how the principles of blitzscaling change as you achieve real scale (e.g. Village, City). Focus on things which:
a) resonated the most with you and
b) surprised you.
Explain how you plan to apply these principles in your own life/business.
For this 3rd essay, our prompt is to explore the 3rd stage of blitzscaling: the Village/City stage. In this phase of a business, the number of employees grows to the 1,000’s, and the number of users also increases by an order of magnitude. In this stage, the salient themes seemed to be hiring — along with attendant issues such as maintaining culture and alignment — and firing. As both the most resonant and surprising things for me revolve around these two topics, this is where I will focus my essay.
Having moved into the Village/City stage of blitzscaling, there seemed to be an ever-greater emphasis on culture. Although firm culture is not any less important in any of the previous stages, I suspect that this is due to the difficulty of maintaining a company’s culture as the amount of hiring grew beyond the founders’ ability to interview. A lot of founders clearly grappled with ensuring that a systemized process was put in place to ensure that company culture remained intact despite the rapid growth. Shishir Mehrotra and Elizabeth Holmes both preached that purpose matters — that companies should hire employees who were driven by the greater picture of what they are building.
Beyond the initial hiring of new employees, the struggle to maintain alignment continued. Holmes implemented weekly town halls to both maintain the culture as well as encourage alignment and transparency at Theranos. Meanwhile, Reed suggested that teams should be given context but not control. By this, he meant that employees should have a purpose and target, but should not be micro-managed. Beyond a few overarching constraints, they should be given the intellectual and creative freedom to accomplish their mission in the context of the organization’s.
Something that surprised me was the amount of turnover that should be expected during this stage. As the number of employees expands, many of the managerial positions will require new hires with very different skillsets than the current employees. As a result, many employees who were great in the previous two stages may struggle to grow at the Village/City stage. Additionally, managers may be hired into roles above individuals who were part of the founding team. This obviously creates friction among some employees, and founders such as Mehotra and Hastings advised freely firing individuals who are not a great fit. In the end, both founders claim that this approach is much kinder than letting unproductive employees fester. To avoid legal issues, Hastings suggested offering generous 4-month severance packages attached to legal waivers.
Over the course of the Village/City phases, I was most intrigued by the continued importance of how to hire the right people, as well as how to let go of those who are no longer a good fit for the company. Although it is unfortunate that some individuals will inevitably need to leave the company, it is not only kinder for the employee, but for the entire organization. While this will undoubtedly be a painful phase, I am grateful to have an opportunity to brace myself thanks to this class.
Throughout this course, we have focused on why and how companies in Silicon Valley are able to achieve “blitzscaling.” Specifically, we examined the importance of network effects and how they contribute to accelerated growth. Here are several of the key takeaways from our talks:
1. What are the three most important factors you think should trigger the decision to commit to blitzscaling?
The three most important things that would trigger my decision to blitzscale are i.) finding product-market fit, ii.) having an executive team that is prepared for the experience, and iii.) factors of the external environment.
Once a startup finds product-market fit, this is often a cue that they should consider “injecting rocket fuel.” If a company does this too early, they risk needlessly tacking on pressure to perform from investors. This is likely to result in flailing and thus increasing the company’s burn rate. Alternatively, if a company waits too long to take capital, they may be unable to perform to meet the demands of the market.
The second critical requirement for a company to blitzscale would be the capability of the management team. Because blitzscaling is a uniquely challenging and stressful period, the management team must be prepared to grow with the company. Leadership failures are catastrophic for a startup at any point in its growth, but the increased speed during this phase will only amplify any mistakes that are made.
Finally, a key trigger to blitzscale would be the external environment. For example, the funding environment may dictate whether a startup can even obtain the capital required for blitzscaling. Other external factors would include the entry of a new competitor or the achievement of a critical mass of customers.
2. What are the three techniques you’ve learned in the class that you’re most likely to use when you blitzscale?
The three most likely techniques I imagine I will be using would be to i.) do things that don’t scale, ii.) prioritize the company’s culture, and iii.) clear communication of what defines success.
Perhaps the most important thing that every startup must focus on is to understand the unique needs of its niche. One of the only ways to do this is to do things that don’t scale. By relentlessly meeting with your customers and delivering them unparalleled satisfaction, the idea is to develop a fanatically loyal base of users from which to grow.
Another thing that we heard repeatedly throughout the last several months was the importance of culture for a startup company. Because having a culture where every member is driven to accomplish the company’s mission is so important to success, many founders will painstakingly hire employees themselves until it is physically impossible to do so.
Finally, maintaining ways to communicate the goals of the company is a technique I will likely use. Having a well-known metric of success helps guide every member of the company’s actions. This is obviously critical if a startup company is to operate efficiently and compete effectively.
3. Which stories, either from the class or from elsewhere, most struck you as example of the blitzscaling principle of “What got you here won’t get you there”?
Among the most striking stories from class was both Reid Hoffman and Reed Hasting’s view of hiring and firing during growth. Because the type of skills required to grow a startup at the early stages differ tremendously from later-stage companies, employees often become dysfunctional. Early-stage companies often require generalists while later-stage ones suit specialists better. As companies grow in complexity, professional management often must be hired above earlier employees. Obviously, this can cause quite a bit of conflict. As a result, Reed suggested a generous severance package with legal waivers for ex-employees.
4. What blitzscaling lesson that you learned in this class do you think is least likely to work and why?
The blitzscaling lesson I heard in this class that is least likely to work for me would probably be any of the techniques related to a unique cutting-edge technology. With a non-technical background, I am unlikely to found a biotechnology company.