Review of “Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies” by Reid Hoffman and Chris Yeh
A book on how to engineer a company worth tens of billions of dollars in just a few years, written by the experts. I cannot doubt that the authors have the strategy right if the goal is to build such companies, but the book leaves it unsurprising that companies built in this manner often impose substantial externalities, both on their employees and on society at large.
A few pieces of advice from the book:
- Blitzscaling is about sacrificing efficiency in the name of speed. The goal is to scale and be the winner in a winner take all market, i.e., be the company that enjoys monopoly profits.
- In the process, you need to move nimbly, like a “pirate.” Such movement might mean that you ignore some laws and regulations. The authors caveat that one should never do anything unethical, but they claim that ignoring bad laws is ethical. Who gets to determine whether a law is bad is left unsaid.
- You must also “tolerate bad management” during this time. You don’t have time for anything else.
- You must only fight the urgent fires and ignore everything else. Explicitly, they advise that you can often ignore customer service as long as you are still growing exponentially and claim that that’s what they did at PayPal.
- In the interest of hiring quickly (without even wasting time to interview), they positively talk about a strategy employed by a partner company: only hire those within current employees’ networks and with top brand (college) names; don’t bother interviewing for skills.
- When discussing blitzscaling in China, the authors praise the common Chinese startup’s 9/9/6 model (work from 9am to 9pm, 6 days a week), as well as one startup’s moving all their employees to a hotel to remove “distractions of everyday life.”
The authors do have a section near the end on culture, and how one should hire a diverse set of candidates (e.g., adopting the Rooney rule, or making sure that a brogrammer culture doesn’t drive away minorities, people with families, those who don’t like drinking, etc).
However, there isn’t any serious grappling with how all the advice in the rest of the book — with myriad sacrifices in the name of speed — might be incompatible with supporting a diverse culture and employee base or in preventing external harm. In particular: one does not only sacrifice efficiency with speed; one probably also sacrifices the ability to detect and correct problems that affect people away from the money, whether customers or employees.
Similarly, there is a section near the end on proper, ethical behavior, as well as whether scale itself can be a bad thing. The argument in support of big companies is the standard one: that with scale comes efficiency, and with bigger data comes applications not possible at a smaller scale.
They further claim (tongue in cheek, I presume) that the current tech companies aren’t monopolies, citing people being able to shop at Best Buy instead of Amazon if they want, for example. This argument is less convincing in that it follows the rest of the book, where the assumption is that blitzscaling is necessary precisely because companies need to be the market winner in a winner-takes-all or winner-takes-most market.
Finally, in a bizarrely nationalistic argument, the authors argue that a government would be self-defeating to regulate or restrict companies based in the country. They gave the example of US Congress calling Mark Zuckerberg and him coming, vs European governments asking for testimony and him refusing. In other words, if there will be all powerful, global companies, better they be based in your country versus in other countries.
I know nothing about building big companies quickly and so will have to trust the authors on how to do so. However, if they are right both on (1) how to do it, and (2) that doing so is necessary in today’s markets, then I am pessimistic about our economic and cultural future. Their strategy seems wholly incompatible with building a positive company culture. Perhaps most damningly, it suggests that the various tech company scandals we have seen in the last 3 years are not a product of poor management; rather, they are accepted collateral damage — necessary sacrifices — made in the name of winning.