This post explores my key takeaways from CS183C. I noticed several similarities chemical reactions and blitzscaling. Enjoy!
Hydrogen + Oxygen →Blitzscaling → Water
Blitzscaling is like a chemical reaction: it rarely just happens. Hydrogen and oxygen do not just combine to form water. Circumstances have to be just right for them to react and form water. And even when that reaction does take place, there is a definable end when water is produced. Just like chemical reactions, blitzscaling does not occur without the proper setup, and is not a sustainable state for a company. At some point, your ingredients are used up and you reach a stable state like water. You may be able to chain another reaction using the water to produce new results, but each of these steps takes conscious effort to setup the reaction. So how do startups make those reactions take place? When do they know it’s time to blitzscale?
A startup is not ready to reach a new level of scale unless they have proven product-market fit. Reactions consume a lot of energy, so only sacrifice that energy if you’re sure of good results. Is water really the product you want, or could it be salt? The ingredients are vastly different depending on the results you want.
Your employees need to scale just as much as your company does. Consider the ingredients your critical leaders need to reach scale. Maybe they need coaching, more responsibility, or a place to fail. More than likely, your company will be looking to form another reaction once you complete your current one. Always consider the results on the right side of the equation that serve as the ingredients for the next reaction. Leadership is a critical component to triggering successful blitzscaling.
Why This Reaction?
Reactions are exciting, just as blitzscaling is. Companies dream of reaching the scale Airbnb, Uber, Facebook, Google have. But it’s critical to stop and think: why am I triggering this reaction now? Will producing water from hydrogen and oxyzen really benefit me now, or do I just want to see a reaction take place? Blitzscaling consumes a lot of resources. If the economy isn’t right (as was the case when Minted was young) then you may not have the resources to support a company that has undergone blitzscaling. Timing is critical.
Tools of the Trade
You’ve decided you like the idea of playing with chemicals to see what you can produce. Now what tools should you use to maximize the chance of producing valuable results?
Love, not Like
Paul Graham advised Brian Chesky to get 100 users to love, not like Airbnb. In pursuit of this goal, Brian learned it’s actually quite hard to get 100 users to love your product. Why is it important to love, not like? Users that love your product will be your best missionaries. They will share their love of your product with their best friends that will then give it a try. Soon enough, you’ve triggered a blitzscaling reaction. When users love your product, this also implies you’ve found product-market fit, meaning you found the right ingredients for the reaction.
Mariam Naficy, CEO of Minted, shared her opinion on when a company should grow leaders from within, or hire externally. If a company needs a leader in a position related to the company’s secret sauce, then it should grow leaders from within. If, however, a company needs a leader in an area they are looking to move into or is not critical to the core business, hire the best person possible, who will likely be an external candidate. In Minted’s case, Mariam tried to grow leaders from within who understood Minted’s crowdsourcing platform. That platform was uniquely Minted. When they reached a scale where they needed an HR leader, however, they looked externally. A company needs to understand its core competency not only so it can scale that insight, but also so it can work to scale employees for leadership positions. Strategic hiring is a tool by which a company can ensure it has the correct ingredients for the blitzscaling reaction.
Active, not Passive Culture
Brian Chesky knew he wanted to make the Airbnb office be remarkable. The meeting rooms are modeled after real residences available on Airbnb. These meeting rooms remind everyone what product and mission they are working for. When a company is a few people, it’s easier for founders to enforce a culture. As a company scales, however, culture will ultimately reside with the employees. It’s the leadership’s responsibility to actively promote the culture they want to scale. Promote your culture by focusing on culture fit in the hiring process, designing your office space to reflect your company, and by hiring leaders who live the culture you want to see grow. You must actively think about culture.
If you let the culture grow “organically”, you are unlikely to end up with the culture you envisioned.
Airbnb: the “do things that don’t scale” Poster Child
When you hear Brian Chesky speak about Airbnb’s origin, there is no doubt he is passionate about the product. He did everything in his power to see his baby scale to the amazing product it is today. But some of those ingredients that led to a reaction won’t help the company with its next reaction.
It may seem odd when you see it as one of Airbnb’s core values, but cereal is the way the cofounders convinced Y-Combinator to accept them in the “nuclear winter”. They founded the company by designing their own “limited edition” cereal (Obama-Ohs and Cap’n McCains) that they sold and raised $30,000. Paul Graham hit the nail on the head when he called the founders cockroaches: they did anything to see Airbnb live to the next day.
When you reach the scale and awareness that Airbnb has, it makes sense that users are excited to meet Brian Chesky. Given the company’s scale, however, it’s unlikely that just Brian’s presence will lead to a reaction that takes the company to the next level. When the company is small, however, a cofounder’s presence can serve as the catalyst to help a company scale. Brian personally met all of the early hosts: an exciting event for people that don’t live in Silicon Valley. These users then share their excitement from meeting a cofounder with their friends, who then learn about Airbnb. Before you know it, the product is viral.
Boots on the Ground
In the early days, NYC was Airbnb’s largest location. The founders flew out to NYC and knocked on each host’s door. They saw the rooms and discovered that the apartments were much nicer in person than they looked on the site. Brian then volunteered to take professional photographs that could be used on the site. Today, it wouldn’t be feasible for anyone, let alone the cofounders, to stay in every Airbnb. But in the early days, these few homes were the only products Airbnb had. Leaving the office and living the product is an important way for founders to gain insight on how to move more uses from liking to loving the product.
Why Are You Founding, Let Alone Blitzscaling?
We heard a lot of success stories this quarter. For the 16 success stories we heard, there were 144 failed startups that we never heard about. It’s out of the scope of this class to speak about why startups fail (I recommend looking at Noam Wasserman’s and Lindred Greer’s research if you’re interested), but it’s important to acknowledge that a successful reaction is definitely not a sure thing. We heard it from Sam Altman and many others: only start a company if you absolutely cannot think about anything else. If you have any doubts, don’t do it. In this class, we heard from the only story I know of where someone just decided to do a startup without an idea in place: Airbnb. That story worked out, likely because the cofounders obsessed over the product. Are you really ready to spend the next 10 years or more of your life expending all your energy to help your company survive?