The Chaos Race: Is “Blitzscaling” Reshaping the Startup World?

What possible connection could a German military tactic from World War II and a practice for startup growth have in common?

Surprisingly, more than you may think.

One of the latest buzzwords to gain traction in the startup world is “blitzscale.”

Haven’t heard of blitzscaling? Well, judging by the squiggly red lines under each reference to the word that I type, you’re not alone.

It’s a concept coined by an individual who is well-known in Silicon Valley.

That individual is Reid Hoffman. Hoffman co-founded LinkedIn in 2003 and currently sits on the boards of Airbnb, Convoy, Edmodo, and Microsoft and once served as an executive at PayPal. He’s also a partner at Greylock Partners and has even been dubbed “the startup whisperer.”

So, he’s got a little bit of credibility.

In the recently released book Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies, Hoffman and co-author Chris Yeh explain how companies must grow at chaotic speeds and assume risks to become modern and large-scale enterprises like Amazon or Facebook.

According to the co-authors, the secret to startup success doesn’t lie with “superhuman founders,” but rather with a company’s ability and readiness to put other business priorities aside in favor of growing quickly.

What is Blitzscaling?

So, what exactly is blitzscaling?

According to the short explanation, it’s a concept that prioritizes speed over efficiency.

The slightly longer explanation is that blitzscaling is a set of practices that are implemented to make a company “scale up” in size extremely quickly to serve a large and often global market.

Okay, so what does that have to do with a German military tactic? Hoffman has likened the strategy to the blitzkrieg campaigns of World War II, which had soldiers carry only the items that they absolutely needed so that they could move very fast, surprise their enemies, and come out victorious.

When it comes to blitzscaling, a somewhat similar ideological approach is used (at least according to Hoffman) by helping entrepreneurs move quickly to corner a niche market and gain dominance before the competition has had a chance to react.

That might sound simple enough, but considering the level of risk involved, Hoffman doesn’t suggest that blitzscaling a startup is easy, since “if it were, everyone would do it.”

“Like most things of value in this world, blitzscaling is contrarian,” Hoffman explained in a blog post. “To succeed, you’ll have to violate many of the management ‘rules’ that are designed for efficiency and risk minimization.”

What are those so-called rules that will need to be broken? To start with, blitzscaling promotes embracing chaos and tolerating “bad” management.

“When blitzscaling, speed is more important than having a ‘well-run’ organization,” wrote Hoffman. “When your organization is growing 300 percent per year, you might have to promote people before they’re ready and then swap them out if they sink rather than swim. You don’t have to be patient and wait for things to work out; you have to act quickly and decisively.”

Among the other unconventional principles that blitzscaling encourages is launching an embarrassing product, letting fires burn, and ignoring customers.

It’s the freedom from conventional business principles that supposedly gives blitzscaling startups an upper-hand. By prioritizing rapid growth, a company can quickly generate buzz to entice interest from talented professionals, future investors, and, of course, customers.

Does Blitzscaling Work?

The premise of blitzscaling can sound a bit surprising at first. Because how in the world could bad management and ignoring customers help a company thrive long-term?

But the numbers from companies that have successfully blitzscaled give a different perspective.

Take LinkedIn as an example. The company grew by blitzscaling and released an initial product they knew still required some work. In 2008, LinkedIn had 370 employees and brought in $79 million in revenue. By 2012, it was up to 3,458 employees and $972 million in revenue.

Or PayPal, where Hoffman has said ignoring customer complaints in favor of focusing on product development was commonplace for a time. In the third quarter of 2018, the company had $3.68 billion in revenue and 254 million active accounts.

And Facebook went so far with embracing blitzscaling that its old motto used to be “Move fast and break things.” Use of the blitzscale principles in its early days made Facebook a social media giant, with 2.6 billion people now using the company’s suite of apps every month.

But there’s a difference between letting some things slide to focus on growth and completely alienating your talent and customers. Likewise when it comes to launching a product that still requires some fine-tuning. Being embarrassed by a first release is one thing, being completely ashamed or facing lawsuits is another.

A prime example of a blitzscale endeavor gone awry is the case of Theranos, which claimed to have invented a new way to test blood. The company expanded at exponential speed, making its CEO, Elizabeth Holmes, the world’s youngest female billionaire, that is until a Wall Street Journal investigation revealed Theranos’ tests to be unreliable. Holmes and former Theranos President Ramesh “Sunny” Balwani are now facing criminal fraud charges.

In an essay on LinkedIn, Hoffman explained the allegations against Theranos provide a valuable lesson about responsible blitzscaling and “sheds important light on the broader question of what risks are and are not ethical while blitzscaling.”

What Critics of Blitzscaling Say

Like with most new concepts, blitzscaling isn’t without its critics.

Blitzscaling defies nearly all of the logic taught at business schools. (That is, aside from the Stanford University course that Hoffman teaches on blitzscaling.)

While some people argue that comes with the territory of adjusting to change in today’s fast-paced, globalized business market, for others it’s a concept that can take well-meaning entrepreneurs down a dangerous rabbit hole of neglect for forethought and planning.

“Hardly a template to revere and reproduce,” stated Julia Powles, a research fellow at New York University’s Information Law Institute, in a tweet regarding blitzscaling. “What blitzscaling dismisses, alarmingly, is any capacity for discernment or contemplation. In short, it rejects wisdom.”

In an article, Edward Tenner, a scholar at the Smithsonian’s Lemelson Center and visiting researcher at Rutgers and Princeton, questioned the ramifications that blitzscaling companies have on society and whether younger generations “really need more encouragement to get rich quickly.”

“We should think twice before following our blitz,” wrote Tenner.

It’s not a stretch to imagine how a business strategy that readily embraces chaos could cause frustration for employees at companies where it’s implemented. In an interview with the Harvard Business Review, Hoffman acknowledged organizational unhappiness can become an issue with blitzscaling.

“Almost every blitzscaling org that I have seen up close has a lot of internal unhappiness,” he said.

That workplace unhappiness raises questions about what sort of effect blitzscaling has on the well-being of employees. Numerous studies have found workplace pressure to be the leading source of stress among adults in the US, and it’s a trend that’s escalated progressively in the past few decades.

In fact, worker burnout is on the rise across the US. A recent study by Gallup, which called the current situation a “burnout crisis,” found that two-thirds of all full-time workers experience burnout on the job. But the effects of burnout extend far outside the office. According to the Harvard Business Review, burnout accounts for an estimated $125 billion to $190 billion in health care spending each year.

Hoffman has previously claimed that what keeps employees at a blitzscaling company motivated throughout the chaos is the excitement that they are part of something big that has the potential to be hugely successful. However, research from Deloitte found 87% of professionals surveyed claimed to have a passion for their job, but 64% reported being frequently stressed. The research report’s authors noted the finding dispels “the myth that passionate employees are immune to stress or burnout.”

In today’s competitive business world, there are multitudes of opinions about the “proper” way to grow a business.

Regardless of the strategy used to help grow a company, we can all agree that things move fast in today’s business world. And businesses have to be ready to adapt to that change with strategies that suit their goals and vision.

What works for one company won’t necessarily work for another. And there’s nothing wrong with that.

Erin is a writer and blogger based in Ottawa, Canada. A former journalist and communications professional, she is now a content writer at Veem where she covers the world of small businesses and startups.