Blitzscaling. This book will teach us how small startups can expand to become large companies valued at hundreds of billions of dollars in a very short period. Speaking of this, in the past, it was truly impossible. To become a company worth billions of dollars, it would take hundreds of years. But now, a small tech company that was founded just a few years ago can be valued at billions of dollars on the stock market. On our mobile phones, there are many applications.
Behind these small, thumb-sized buttons are tens of thousands of people and giant corporations. For example, social media apps, online shopping apps, food ordering apps, and so on. For instance, let's look at bike rental apps, which we call sharing bikes. China is the largest and fastest-growing market. In 2017, this sector received a total investment of over 40 billion dollars in less than a year. The number of users grew to over 200 million people. In this sector, there were two big players ranked number one and number two: OFO and Mobike. Although some large companies among them led the way and achieved success, after all this competition, which resulted in billions of dollars being wasted and hundreds of millions of old bikes becoming scrap, who is responsible? No matter the sector, after a market explodes, many new companies enter to compete for market share.
Those with the most money to spend and more resources will likely have a chance to reach the final stage and become the big player in that sector. But after the war, we see a lot of waste and squandered resources left behind. So how can we create a better competitive environment without causing chaos in the market? Some heavyweight companies in Asia, such as Grab and Foodpanda, for instance, did not spend money to teach customers how to use their services. They only have a presence in markets where conditions are favorable and users already have an understanding. But we see some local companies, like PassApp and Nham24, working hard to create these apps to facilitate the daily lives of local people. But those large foreign companies, once a local company has paved the way and taught people how to use these apps, they start to penetrate the market, spend millions of dollars on marketing, dominate the space, and offer unbelievable discounts.
These strategies make it very difficult for local companies to compete with them. In the end, they will lose to these foreign companies and disappear from the market tragically. We really want to ask a question: where do these large foreign companies get the money to lose millions of dollars a year? After reading to this book, we will understand its meaning, and we will understand why these companies are willing to lose such a huge amount of money. Is it a strategy? The author of this book is named Reid Hoffman, a tech entrepreneur and a top investor in Silicon Valley. He is the co-founder of the online payment company PayPal and the CEO of LinkedIn. He is also an investor in Airbnb. And recently, he also co-founded a leading investment firm in America, Greylock. He is an author with both knowledge and practical experience, and he is the one who coined the term 'Blitzscaling', which refers to the lightning-fast growth momentum of startups in today's market. Below, we will summarize the key contents of this book in three parts. Part one: What is Blitzscaling? Part two: How to expand a business as fast as lightning. And part three: How to expand responsibly. We come to part one: What is Blitzscaling?
Mr. Hoffman defines Blitzscaling as a method to grow big at the fastest possible speed. Its special characteristic is that a company can grow big and fast in a situation of uncertainty. What does that mean? Hoffman uses Amazon as a fitting example to explain this definition. In 1997, Amazon had its IPO on Nasdaq. At that time, they had only over 100 employees and revenue of just over 5 million dollars. 20 years later, in 2018, Amazon's net revenue was 23.29 billion dollars. The number of employees grew to over 560,000. This kind of thousand-fold growth in a short period is the use of the Blitzscaling strategy. Hoffman says that in the last 20 years, Silicon Valley has created so many Unicorns, mostly using this method. But before a business or a startup can expand as fast as lightning, it must meet certain conditions as follows. First, it must have a product or service that can serve the market's demand. Second, it must be in a market with high growth potential. And third, it must have a large and extensive sales network. For example, Jeff Bezos founded Amazon in 1994. When he first started, he sold books all over the world. First, their product was books.
Books have a very broad market. Everyone needs to read. Second, they are easy to transport because they are small and standardized. They don't break easily. Third, they were sold online. You could buy books from Amazon from anywhere. Starting from an online bookstore, Amazon has now become the world's largest online retail platform, achieving sales of $44,300 every second. Mr. Hoffman states that for a startup to succeed, it must be lucky to encounter a big opportunity that no one else has yet done well. And behind the growth of any sector, there is always a new opportunity. For instance, the growth of the smartphone industry allows people to take clearer pictures than before. 4G technology allows us to use the internet faster than before. These favorable conditions caused some applications like YouTube and Facebook to start growing as well. In the internet era, anyone can do amazing things.
It doesn't matter if it's a small or a large company. But because it's so easy for anyone to do it, the market is highly competitive. Therefore, if we are a small company and want to grow fast and quickly capture market share, we must apply the Blitzscaling strategy. Next, let's look a bit further at what conditions are needed to expand as fast as lightning. Hoffman has a famous quote that says: 'Starting a startup is like jumping off a cliff and assembling a plane on the way down.' The first part of the phrase, 'starting a startup is like jumping off a cliff,' means that entrepreneurship itself is already a risk. Entrepreneurs must dare to make wrong decisions, dare to face risks, and use the fastest and most effective strategies to reach their set goals. As for the last part, 'assembling a plane on the way down,' it means that after being brave, an entrepreneur should not just stubbornly move forward without a clear goal. They must have techniques and methods for self-protection.
Danger can be present at all times, but we must know how to prepare ourselves to face impending dangers, understand the factors that lead to failure, and prioritize them, knowing what comes first and what comes later, and prepare to deal with them. This is a special ability of an entrepreneur. Furthermore, the assembled airplane will surely need fuel and oxygen. This represents capital and human resources. Entrepreneurs must have the ability to persuade investors and venture capital firms to invest in their company, and also have strategies to attract talented people to join them on their journey. This includes both employees and co-founders. When an entrepreneur can gather all the above conditions, their goal should be to start the journey from zero to one, and from one to a billion, in the fastest possible time. But to do this, the startup must be in the highest and most visible position. This means that in this sector, you have to find a way to become number one.
First, make everyone recognize that you are the best in this sector. Then, money from good investors, as well as talented human resources, will come to join and work with you. When you have talented people who can create quality and highly efficient work, under the condition that you also have sufficient capital, it will definitely lead to strong growth. From the above, or in previous books, we always talk about Silicon Valley. This region is a place where it's easy to create unicorns, which are companies valued at over a billion dollars, more than anywhere else. This is because it is a hub for human resources and venture capital firms. Therefore, if a good company is founded here or passes through this place, it is more likely to succeed. A case in point is Uber. This ride-hailing company was founded in 2009. Before its IPO, it raised investment capital up to 15 times, totaling up to 15 billion dollars. But the author reminds us that even if a business has the above conditions, it doesn't mean it should blitzscale in all cases. If the capital spent on operations and wasted on your uncertainty doesn't create your value and doesn't give you an advantage over your competitors, you should just expand at a normal, steady pace. There is only one case where you should expand this fast, and that is when your speed signifies your growth. You must be clear in your mind that being the fastest can indeed help you capture market share first. But if you are the fastest to reach the market you want, but you lack sufficient resources and capabilities, you still won't be able to succeed.
From the beginning, we mentioned that for a startup to succeed, it needs a big opportunity. When a market is highly competitive, the problem they face is not low work efficiency. Instead, it is a lack of agility. Before the tech era, being steady, making meticulous decisions, and having high work efficiency were strengths of a business. But in the tech era, in the context of the 4.0 Industrial Revolution, for modern entrepreneurs, this is not an advantage. So what special conditions does a startup need to be able to expand as fast as lightning? The author mentions three types of innovation: business model innovation, strategy innovation, and management innovation. The explanation for these three innovations is completely different from what you may have understood before. Now, let's explore these three principles together. Principle one: The company must pay high attention to products with a high profit margin. Profit equals revenue minus expenses. As for the profit margin, it is equal to profit divided by sales revenue. So the result is a percentage.
If the profit percentage is high, it means the profit from sales is correspondingly high. For example, you sell a product for $100. The cost is $30, and operational expenses like utilities and staff are on average $10. You profit $60, so the sales margin is 60%. This figure can be considered quite high. Large tech companies like Google and Apple have very high profit margins. Because the capital they spend compared to their revenue is very low. It's almost zero. Think about it, if they create a system for users and spend one million dollars on R&D and development. If they sell it to one million people, it means each person costs one dollar in capital. But if they sell it to 10 million people while the capital to create it is still one million dollars, it means each person costs only $0.10. Their capital cost doesn't increase with the number of sales. The more they sell, the lower the capital cost becomes. Investors love this kind of business model with high profit margins. And this type of business also receives a high valuation from investment firms. Therefore, entrepreneurs should strive to generate revenue to drive their business forward faster, not immediately give away shares and seek investors when they themselves don't yet clearly understand their own business model. Because what can get you to the final destination is the revenue you earn, not the capital investors put in. In short, you start a business to make money. And if you don't have the ability to make money, no matter how much money they give you, you won't be able to make it work. Principle two: Don't worry about user complaints. This statement is completely different from what we have heard before. People always say that when entrepreneurs create new products or services for the market, they must listen to customers a lot, right? So why does it now say not to worry about their opinions? Usually, when users are not satisfied with your products and services, they will always find every way to criticize you and complain about you. They will show their dissatisfaction with you, which can affect the reputation and honor of your business in the market. Therefore, most business owners believe they must listen to user complaints and put the customer first. But as for Mr. Hoffman, he doesn't see it that way. He says that an entrepreneur leading a startup should not be sensitive to these opinions.
These words are just useless complaints. It cannot make our business collapse. What you need to do now is move forward quickly, find a foothold, and not pay attention to those useless words. Hoffman used PayPal as an example. In 2000, when PayPal was just two years old, they received thousands of complaint emails from users every day. At that time, the PayPal team had only over 40 people. They were busy working with VCs and preparing to merge with their competitor, Elon Musk's x.com, so they had no time to respond to emails. Users were very angry, calling almost every minute, but the PayPal team did not respond. But it was just a problem to be solved sooner or later. When PayPal received investment and merged with its competitor, within 30 days, they created a customer service team of 100 professionally trained people to solve customer problems. Principle three: Allow yourself to make mistakes. It's not a problem when you make mistakes when you first start out. If you do it wrong, you can start over. Many people want perfection when they first start, waiting until their product is perfect before launching it to the market. Thinking this way is not wrong. But if you're busy sitting and perfecting your product until there are no flaws before letting people use it, you might lose a rare opportunity. Even if what you create is perfect and pleases the first generation of users, if you ultimately fail, you will still abandon it anyway.
We've also seen that the billion-dollar apps of today, like Facebook and Amazon, were not as polished when they were first created as they are now. They updated it little by little until it became beautiful and easy to use like it is today. All of this didn't come from the design team sitting around and thinking it up. It came from the feedback and usage habits of the users. But if you don't take the first step into the market and just sit and think by yourself about how to design it and what features to create, that's not the right way. We've used the example where Airbnb created a service to hire photographers for hosts, which we mentioned in a previous book that I have already summarized for you, titled 'Air Bed and Breakfast'. You can find and listen to it by just going to the search box and searching for the word 'Airbnb'. When it was first created, hosts who listed their houses for rent on the Airbnb website had to take their own photos and upload them to the website. Doing it this way, the image quality was very poor. Because the hosts used their phones to take pictures and had no photography skills. The solution from the Airbnb founders was to bring a couple of cameramen directly to the hosts' houses to help them take beautiful pictures. They could photograph at least 10 houses a day.
Later, because the number of rental listings grew too much, they couldn't keep up, so they looked for friends or part-time photographers to help take photos. Later, Airbnb created a team and a system to manage this work, which allowed it to run smoothly and with high efficiency. So why didn't Airbnb do this from the beginning? The reason is that when it was small, the Airbnb team was limited. There was only one engineer on the team. If they were to pull him to do this work, it would surely affect the more important work that they needed to focus on. This is a problem that new startups often face: limited resources. The author shows the way: do the thing that uses the least resources to get the biggest result. What you think is important now may not necessarily be important later. So, just do enough for now, to save resources and money. What you need to focus on right now is moving forward as fast as possible. Next, we come to the third key point: how to expand responsibly. Companies that expand quickly generally lack sufficient strength and maturity to establish a firm footing in the market. We also understand that things that grow fast often lack sufficient stability. For example, Facebook and Uber have all faced this problem. Uber is a very young company and the most valuable in Silicon Valley. Its rapid growth has brought many problems. They have faced attacks over gender discrimination in the workplace. They received countless lawsuits from taxi drivers and many other minor issues that they had to resolve. It reached a point where Uber's founder, Travis Kalanick, was under too much pressure and was forced to resign from his position, replaced by Dara Khosrowshahi, a person with a completely different character from Travis Kalanick.
Under Dara's leadership, Uber's culture changed a lot. In the six months before taking office, he traveled to Europe, Asia, Africa, etc., to make public apologies for the mistakes Uber had made in the past. Since he took office, he has revamped the structure and reformed many things. With this goal, Uber had to slow down and come back to fill the gaps it had created in the past due to growing too fast. It sounds like every blitzscaling growth story faces problems like Uber, right? Does expanding fast always lead to problems? Not necessarily. This is why the author raises another important point, which is to expand responsibly. To achieve this goal, entrepreneurs must have one ability: the ability to clearly assess risk. The author provides another rule for everyone, where he shows the method for dealing with those risks by recommending three types of reactions. First reaction: Act immediately. In 2011, an Airbnb host had her property stolen and her house severely damaged by a guest. At that time, Airbnb's solution was to report it to the police and compensate the host for the damage. But solving the problem this way was not enough. The host had already lost trust in Airbnb. Their reputation in the market was also not good. To regain trust, Airbnb took full responsibility and created an insurance program that could compensate for damages and emotional distress to hosts up to $50,000 in case of such problems. Second reaction: Act immediately to deal with short-term problems, and then find a long-term solution later. For example, the case of data theft and user fraud that occurred on the online payment platform PayPal. When the problem occurred, they couldn't immediately find the best solution.
They could only compensate the victims and give themselves time to find the technological loopholes in their system to prevent this problem from happening again in the future. Third reaction: When you face a problem now, you don't solve it immediately, but promise to solve it later. If you encounter a problem that you think can be solved later, you can ignore it for now and think about it later. Still talking about the PayPal case, besides the case of user data theft for fraud, there was another case: people used PayPal for illegal money laundering. At that time, PayPal did not have sufficient resources and legal knowledge to deal with this matter. So the leaders of PayPal at that time decided that this matter could be set aside for a while, until we have enough resources, then we can think about this problem and take measures later, it won't be too late. The above are the key contents that I have summarized from the book 'Blitzscaling'.
Behind these small, thumb-sized buttons are tens of thousands of people and giant corporations. For example, social media apps, online shopping apps, food ordering apps, and so on. For instance, let's look at bike rental apps, which we call sharing bikes. China is the largest and fastest-growing market. In 2017, this sector received a total investment of over 40 billion dollars in less than a year. The number of users grew to over 200 million people. In this sector, there were two big players ranked number one and number two: OFO and Mobike. Although some large companies among them led the way and achieved success, after all this competition, which resulted in billions of dollars being wasted and hundreds of millions of old bikes becoming scrap, who is responsible? No matter the sector, after a market explodes, many new companies enter to compete for market share.
Those with the most money to spend and more resources will likely have a chance to reach the final stage and become the big player in that sector. But after the war, we see a lot of waste and squandered resources left behind. So how can we create a better competitive environment without causing chaos in the market? Some heavyweight companies in Asia, such as Grab and Foodpanda, for instance, did not spend money to teach customers how to use their services. They only have a presence in markets where conditions are favorable and users already have an understanding. But we see some local companies, like PassApp and Nham24, working hard to create these apps to facilitate the daily lives of local people. But those large foreign companies, once a local company has paved the way and taught people how to use these apps, they start to penetrate the market, spend millions of dollars on marketing, dominate the space, and offer unbelievable discounts.
These strategies make it very difficult for local companies to compete with them. In the end, they will lose to these foreign companies and disappear from the market tragically. We really want to ask a question: where do these large foreign companies get the money to lose millions of dollars a year? After reading to this book, we will understand its meaning, and we will understand why these companies are willing to lose such a huge amount of money. Is it a strategy? The author of this book is named Reid Hoffman, a tech entrepreneur and a top investor in Silicon Valley. He is the co-founder of the online payment company PayPal and the CEO of LinkedIn. He is also an investor in Airbnb. And recently, he also co-founded a leading investment firm in America, Greylock. He is an author with both knowledge and practical experience, and he is the one who coined the term 'Blitzscaling', which refers to the lightning-fast growth momentum of startups in today's market. Below, we will summarize the key contents of this book in three parts. Part one: What is Blitzscaling? Part two: How to expand a business as fast as lightning. And part three: How to expand responsibly. We come to part one: What is Blitzscaling?
Mr. Hoffman defines Blitzscaling as a method to grow big at the fastest possible speed. Its special characteristic is that a company can grow big and fast in a situation of uncertainty. What does that mean? Hoffman uses Amazon as a fitting example to explain this definition. In 1997, Amazon had its IPO on Nasdaq. At that time, they had only over 100 employees and revenue of just over 5 million dollars. 20 years later, in 2018, Amazon's net revenue was 23.29 billion dollars. The number of employees grew to over 560,000. This kind of thousand-fold growth in a short period is the use of the Blitzscaling strategy. Hoffman says that in the last 20 years, Silicon Valley has created so many Unicorns, mostly using this method. But before a business or a startup can expand as fast as lightning, it must meet certain conditions as follows. First, it must have a product or service that can serve the market's demand. Second, it must be in a market with high growth potential. And third, it must have a large and extensive sales network. For example, Jeff Bezos founded Amazon in 1994. When he first started, he sold books all over the world. First, their product was books.
Books have a very broad market. Everyone needs to read. Second, they are easy to transport because they are small and standardized. They don't break easily. Third, they were sold online. You could buy books from Amazon from anywhere. Starting from an online bookstore, Amazon has now become the world's largest online retail platform, achieving sales of $44,300 every second. Mr. Hoffman states that for a startup to succeed, it must be lucky to encounter a big opportunity that no one else has yet done well. And behind the growth of any sector, there is always a new opportunity. For instance, the growth of the smartphone industry allows people to take clearer pictures than before. 4G technology allows us to use the internet faster than before. These favorable conditions caused some applications like YouTube and Facebook to start growing as well. In the internet era, anyone can do amazing things.
It doesn't matter if it's a small or a large company. But because it's so easy for anyone to do it, the market is highly competitive. Therefore, if we are a small company and want to grow fast and quickly capture market share, we must apply the Blitzscaling strategy. Next, let's look a bit further at what conditions are needed to expand as fast as lightning. Hoffman has a famous quote that says: 'Starting a startup is like jumping off a cliff and assembling a plane on the way down.' The first part of the phrase, 'starting a startup is like jumping off a cliff,' means that entrepreneurship itself is already a risk. Entrepreneurs must dare to make wrong decisions, dare to face risks, and use the fastest and most effective strategies to reach their set goals. As for the last part, 'assembling a plane on the way down,' it means that after being brave, an entrepreneur should not just stubbornly move forward without a clear goal. They must have techniques and methods for self-protection.
Danger can be present at all times, but we must know how to prepare ourselves to face impending dangers, understand the factors that lead to failure, and prioritize them, knowing what comes first and what comes later, and prepare to deal with them. This is a special ability of an entrepreneur. Furthermore, the assembled airplane will surely need fuel and oxygen. This represents capital and human resources. Entrepreneurs must have the ability to persuade investors and venture capital firms to invest in their company, and also have strategies to attract talented people to join them on their journey. This includes both employees and co-founders. When an entrepreneur can gather all the above conditions, their goal should be to start the journey from zero to one, and from one to a billion, in the fastest possible time. But to do this, the startup must be in the highest and most visible position. This means that in this sector, you have to find a way to become number one.
First, make everyone recognize that you are the best in this sector. Then, money from good investors, as well as talented human resources, will come to join and work with you. When you have talented people who can create quality and highly efficient work, under the condition that you also have sufficient capital, it will definitely lead to strong growth. From the above, or in previous books, we always talk about Silicon Valley. This region is a place where it's easy to create unicorns, which are companies valued at over a billion dollars, more than anywhere else. This is because it is a hub for human resources and venture capital firms. Therefore, if a good company is founded here or passes through this place, it is more likely to succeed. A case in point is Uber. This ride-hailing company was founded in 2009. Before its IPO, it raised investment capital up to 15 times, totaling up to 15 billion dollars. But the author reminds us that even if a business has the above conditions, it doesn't mean it should blitzscale in all cases. If the capital spent on operations and wasted on your uncertainty doesn't create your value and doesn't give you an advantage over your competitors, you should just expand at a normal, steady pace. There is only one case where you should expand this fast, and that is when your speed signifies your growth. You must be clear in your mind that being the fastest can indeed help you capture market share first. But if you are the fastest to reach the market you want, but you lack sufficient resources and capabilities, you still won't be able to succeed.
From the beginning, we mentioned that for a startup to succeed, it needs a big opportunity. When a market is highly competitive, the problem they face is not low work efficiency. Instead, it is a lack of agility. Before the tech era, being steady, making meticulous decisions, and having high work efficiency were strengths of a business. But in the tech era, in the context of the 4.0 Industrial Revolution, for modern entrepreneurs, this is not an advantage. So what special conditions does a startup need to be able to expand as fast as lightning? The author mentions three types of innovation: business model innovation, strategy innovation, and management innovation. The explanation for these three innovations is completely different from what you may have understood before. Now, let's explore these three principles together. Principle one: The company must pay high attention to products with a high profit margin. Profit equals revenue minus expenses. As for the profit margin, it is equal to profit divided by sales revenue. So the result is a percentage.
If the profit percentage is high, it means the profit from sales is correspondingly high. For example, you sell a product for $100. The cost is $30, and operational expenses like utilities and staff are on average $10. You profit $60, so the sales margin is 60%. This figure can be considered quite high. Large tech companies like Google and Apple have very high profit margins. Because the capital they spend compared to their revenue is very low. It's almost zero. Think about it, if they create a system for users and spend one million dollars on R&D and development. If they sell it to one million people, it means each person costs one dollar in capital. But if they sell it to 10 million people while the capital to create it is still one million dollars, it means each person costs only $0.10. Their capital cost doesn't increase with the number of sales. The more they sell, the lower the capital cost becomes. Investors love this kind of business model with high profit margins. And this type of business also receives a high valuation from investment firms. Therefore, entrepreneurs should strive to generate revenue to drive their business forward faster, not immediately give away shares and seek investors when they themselves don't yet clearly understand their own business model. Because what can get you to the final destination is the revenue you earn, not the capital investors put in. In short, you start a business to make money. And if you don't have the ability to make money, no matter how much money they give you, you won't be able to make it work. Principle two: Don't worry about user complaints. This statement is completely different from what we have heard before. People always say that when entrepreneurs create new products or services for the market, they must listen to customers a lot, right? So why does it now say not to worry about their opinions? Usually, when users are not satisfied with your products and services, they will always find every way to criticize you and complain about you. They will show their dissatisfaction with you, which can affect the reputation and honor of your business in the market. Therefore, most business owners believe they must listen to user complaints and put the customer first. But as for Mr. Hoffman, he doesn't see it that way. He says that an entrepreneur leading a startup should not be sensitive to these opinions.
These words are just useless complaints. It cannot make our business collapse. What you need to do now is move forward quickly, find a foothold, and not pay attention to those useless words. Hoffman used PayPal as an example. In 2000, when PayPal was just two years old, they received thousands of complaint emails from users every day. At that time, the PayPal team had only over 40 people. They were busy working with VCs and preparing to merge with their competitor, Elon Musk's x.com, so they had no time to respond to emails. Users were very angry, calling almost every minute, but the PayPal team did not respond. But it was just a problem to be solved sooner or later. When PayPal received investment and merged with its competitor, within 30 days, they created a customer service team of 100 professionally trained people to solve customer problems. Principle three: Allow yourself to make mistakes. It's not a problem when you make mistakes when you first start out. If you do it wrong, you can start over. Many people want perfection when they first start, waiting until their product is perfect before launching it to the market. Thinking this way is not wrong. But if you're busy sitting and perfecting your product until there are no flaws before letting people use it, you might lose a rare opportunity. Even if what you create is perfect and pleases the first generation of users, if you ultimately fail, you will still abandon it anyway.
We've also seen that the billion-dollar apps of today, like Facebook and Amazon, were not as polished when they were first created as they are now. They updated it little by little until it became beautiful and easy to use like it is today. All of this didn't come from the design team sitting around and thinking it up. It came from the feedback and usage habits of the users. But if you don't take the first step into the market and just sit and think by yourself about how to design it and what features to create, that's not the right way. We've used the example where Airbnb created a service to hire photographers for hosts, which we mentioned in a previous book that I have already summarized for you, titled 'Air Bed and Breakfast'. You can find and listen to it by just going to the search box and searching for the word 'Airbnb'. When it was first created, hosts who listed their houses for rent on the Airbnb website had to take their own photos and upload them to the website. Doing it this way, the image quality was very poor. Because the hosts used their phones to take pictures and had no photography skills. The solution from the Airbnb founders was to bring a couple of cameramen directly to the hosts' houses to help them take beautiful pictures. They could photograph at least 10 houses a day.
Later, because the number of rental listings grew too much, they couldn't keep up, so they looked for friends or part-time photographers to help take photos. Later, Airbnb created a team and a system to manage this work, which allowed it to run smoothly and with high efficiency. So why didn't Airbnb do this from the beginning? The reason is that when it was small, the Airbnb team was limited. There was only one engineer on the team. If they were to pull him to do this work, it would surely affect the more important work that they needed to focus on. This is a problem that new startups often face: limited resources. The author shows the way: do the thing that uses the least resources to get the biggest result. What you think is important now may not necessarily be important later. So, just do enough for now, to save resources and money. What you need to focus on right now is moving forward as fast as possible. Next, we come to the third key point: how to expand responsibly. Companies that expand quickly generally lack sufficient strength and maturity to establish a firm footing in the market. We also understand that things that grow fast often lack sufficient stability. For example, Facebook and Uber have all faced this problem. Uber is a very young company and the most valuable in Silicon Valley. Its rapid growth has brought many problems. They have faced attacks over gender discrimination in the workplace. They received countless lawsuits from taxi drivers and many other minor issues that they had to resolve. It reached a point where Uber's founder, Travis Kalanick, was under too much pressure and was forced to resign from his position, replaced by Dara Khosrowshahi, a person with a completely different character from Travis Kalanick.
Under Dara's leadership, Uber's culture changed a lot. In the six months before taking office, he traveled to Europe, Asia, Africa, etc., to make public apologies for the mistakes Uber had made in the past. Since he took office, he has revamped the structure and reformed many things. With this goal, Uber had to slow down and come back to fill the gaps it had created in the past due to growing too fast. It sounds like every blitzscaling growth story faces problems like Uber, right? Does expanding fast always lead to problems? Not necessarily. This is why the author raises another important point, which is to expand responsibly. To achieve this goal, entrepreneurs must have one ability: the ability to clearly assess risk. The author provides another rule for everyone, where he shows the method for dealing with those risks by recommending three types of reactions. First reaction: Act immediately. In 2011, an Airbnb host had her property stolen and her house severely damaged by a guest. At that time, Airbnb's solution was to report it to the police and compensate the host for the damage. But solving the problem this way was not enough. The host had already lost trust in Airbnb. Their reputation in the market was also not good. To regain trust, Airbnb took full responsibility and created an insurance program that could compensate for damages and emotional distress to hosts up to $50,000 in case of such problems. Second reaction: Act immediately to deal with short-term problems, and then find a long-term solution later. For example, the case of data theft and user fraud that occurred on the online payment platform PayPal. When the problem occurred, they couldn't immediately find the best solution.
They could only compensate the victims and give themselves time to find the technological loopholes in their system to prevent this problem from happening again in the future. Third reaction: When you face a problem now, you don't solve it immediately, but promise to solve it later. If you encounter a problem that you think can be solved later, you can ignore it for now and think about it later. Still talking about the PayPal case, besides the case of user data theft for fraud, there was another case: people used PayPal for illegal money laundering. At that time, PayPal did not have sufficient resources and legal knowledge to deal with this matter. So the leaders of PayPal at that time decided that this matter could be set aside for a while, until we have enough resources, then we can think about this problem and take measures later, it won't be too late. The above are the key contents that I have summarized from the book 'Blitzscaling'.
Finally, let's do a brief review. First, we talked about its definition: what is Blitzscaling. It's a method to grow a business big in a short period. Its special feature is that when the market is in a state of uncertainty, entrepreneurs must find a way to grow fast and must have some important conditions, such as having a product that can scale quickly with the market, having a broad market, and having an extensive sales network.
When they have courage and a special technique, and at the same time they can raise capital and human resources, then they will be able to grow as fast as lightning. Next, we mentioned three methods for blitzscaling, which are business model innovation, strategy innovation, and management innovation. Within that, we mentioned three principles: choose high-margin products, don't worry about user complaints, and know how to allow yourself to make mistakes.
When they have courage and a special technique, and at the same time they can raise capital and human resources, then they will be able to grow as fast as lightning. Next, we mentioned three methods for blitzscaling, which are business model innovation, strategy innovation, and management innovation. Within that, we mentioned three principles: choose high-margin products, don't worry about user complaints, and know how to allow yourself to make mistakes.