Cs183c Essay Assignment #1
Write about the principles of blitzscaling at the Family stage that:
a) resonated the most with you and
b) surprised you.
A)
Michael Dearing put economic growth into a historical perspective, and showed that around the year 1700 the principles of invention were for the first time combined with new insights in the fields of financing and management. This led to a sharp upward change in direction GDP per capital, from being flat to strong growth, which has persisted up until today. This resonates with me, since it does a great job explaining some of the phenomenal growth stories we’ve seen in silicon valley. While a strong initial concept /product is a necessary element of a successful company, it’s not sufficient. The real success kicks in when the right leadership teams are being formed to scale a promising concept to a huge global business and when financing is applied to create additional leverage. When you study Silicon Valley success stories through this lense, the process of turning a tech/product innovation into a huge, highly profitable business through management and financing is visible in many cases, including Facebook, Google and Uber to name a few.
Being a product guy, it has taken me quite a few years (and I’m still making the transition) to embrace that “best product always wins” is only partially true. My key insight from Michael’s talk is that “best product” + “best financing” (ie equity but definitely not convertible debt according to Michael ;)) + “best management who knows how to grow and scale” is the winning formula. This is not only visible in recent Silicon Valley success stories, but also when you study the historic development of innovation, management and finance.
B)
Michael’s talk also included the biggest surprise of the first 2 weeks for me, when he posited that entrepreneurial success can solve the world’s terrible problems like slavery, poverty and war. I’m not necessarily disagreeing and positing the opposite, but the notion that there is a strong causal effect and therefore it is on our generation to make the world an even better place seems a bit presumptuous. You could easily argue that while there may (or may not) be correlation between entrepeneurship and reduction of problems, there isn’t a cause and effect relationship between the two, but rather a shared cause, eg a set of societal advances that similtaneously reduce problems and lay the foundation for entrepreneurship. I would need to see more data and study the topic more deeply before I can make up my mind. It was certainly a thought provoking topic, and I found it the most surprising element of our first 2 weeks of this class.
