Blitzscaling 101 with Reid Hoffman, Sarah Guo & Chris Yeh | Greymatter

Hi listeners. I'm Reid Hoffman. This next episode of Gray Matter dives into sections of my new book, Blitzscaling the Lightning Fast Path to Building Massively Valuable Companies. We share stories and advice from entrepreneurs who've grown companies from zero to a gazillion. To learn even more about how to scale at a dizzying pace and blow competitors out of the water, you can pick up my book on blitzscaling.com, amazon or at a US bookstore near you. Enjoy Greylock Partners Podcast Grey Matter thank you.

Hi everyone. Welcome to Grey Matter. I'm Sarah Guo, a partner at Greylock Partners. This episode is the first in a five part series where we host several investment partners from Greylock to discuss their experience building building tech companies from startup to scale up. The episodes are in partnership with my greylock partner and LinkedIn founder Reid Hoffman and entrepreneur Chris Yeh to dissect the stories and learning lessons from their new book, Blitzscaling the Lightning Fast Path to Building Massively Valuable Companies. Today I'm excited to welcome the authors to our program. Reid and Chris, great to have you with us.

Great to be here as always.

Always a pleasure, Sarah.

In this episode we are going to dive into the different stages of Blitzscaling, key techniques and how these can apply not just in Silicon Valley, but also China and the rest of the world. But first, how about you explain exactly what Blitzscaling is and means to you in regards to business.

Blitzscaling is the secret by which Silicon Valley and China have built globally massively relevant businesses at extremely fast, at lightning fast rates. And what it does is it takes a set of techniques in growing a company size, of organization, growing a customer base, growing revenue, growing financing, and to essentially create a dominant global position in a market at speeds which were not possible before.

And the key to understand with Blitzscaling is as Reid put it, it's all about speed. And when we distill it down to a single sentence, we say that blitzscaling is the pursuit of rapid growth by prioritizing speed over efficiency in an environment of uncertainty. And that's what's so challenging about Blitzscaling. It takes a lot of courage to take on that risk, to risk the potential for failure in order to achieve that massive success.

Yeah, it's really interesting you talk about in the book how Silicon Valley is the envy of the rest of the world because of our talent pool around technology. But but then make the point that it's really risk appetite and the ability to make these decisions quickly. That is a key driver as well, tell me a little bit about the origin story for the book. In 2016, you and our partner John Lilly taught a course at Stanford around Blitzscaling. How did that happen?

So it started with I was listening to a bunch of Silicon Valley people around the world talk about what the magic of Silicon Valley is. And the story they were giving was the same story that was given in the 90s, which is we get these young, bright technologists who immigrate here from all over the place. We have venture capital, we have tech universities, we have tech companies. And we take enough shots on goal that some of them emerge because we have this culture that rewards risk taking, that doesn't have a fear of failure. That risk can be simply a path to learning and succeeding. And that's absolutely true, but radically incomplete. The story is no longer unique to Silicon Valley. There's at least 100 places around the world that I can personally name outside of China, like not including China. China also does its split scaling that also have that entrepreneurial culture now that have technological talent, venture capital, tech companies, sometimes Google, LinkedIn, Microsoft, et cetera, as branches in all these places and all of the necessary ingredients that exist here and they've begun. Maybe their culture isn't quite as advanced as taking the raw risk at huge bets that we have here in Silicon Valley, but it's there and it's knowledgeable because all of the content spreads out all over the world. And I was like, well, we're telling this old story and yet we are still managing to accomplish in short number of years, going from a garage to a globally dominant company, transforming an industry. And, and it's happening here in this place where the Overall population is 4 million. That's not the tech industry, that's the entire population of the area. So why is that? And what I realized was actually, in fact, it wasn't a startup story, it was a scale up story. It was a how do we get to scale and how do we do it absolutely as lightning fast as possible and what things do we not do in order to focus on how to do that effectively? And that was one of the things that was becoming a living knowledge base around how entrepreneurs talk to each other, how executives and talent talk to each other, how investors talk to each other, and how we learned from each other in terms of what the companies were. And I realized that the old story was doing a disservice to all of these other entrepreneurial cultures and efforts because it was simply saying, well, no, I know you have talent and I know you have Venture capital. I know you have tech companies, I know you have tech universities, and I know you support entrepreneurship. You probably just still have too much fear of failure. That's really the thing you have. And it's like, that's not it, right? You just go, okay, we got a little bit less fear of failure. Now we're going to have a Silicon Valley. That's not it. It's actually, in fact, focusing on how you make scale happen. Because there was this old adage that came from the 90s, which is, well, you had a first mover advantage. And as I was thinking about it, it's like, well, actually, frequently the first mover doesn't actually be the one that succeeds. It's the first mover to scale that matters. And everyone in Silicon Valley knows that. Even though when they're saying first mover advantage, that's what they mean, because they understand it. Because we live in this network that shares expertise and talent and learnings and insights. And I was like, all right, how do we help upgrade and help entrepreneurs and people all around the world with this? And so I was like, well, maybe we should teach a class at Stanford. And so I went and talked to John and I said, hey, look, you've done this at Mozilla. You're working on this with your portfolio companies, just as I'm working on it with my portfolio companies. And I've done this with LinkedIn. You've done a Stanford class before. Why don't we do this Stanford class? We'll get Chris involved, we'll get Alan Blue, my co founder at LinkedIn involved, and we'll pull in a bunch of these people who have done it. And the way we'll create the corpus of knowledge is we'll have people like Brian Chesky of Airbnb, we'll have Marissa Meyer, we'll have Eric Schmidt, we'll have Jeff Weiner, we'll have all of these folks come in and talk about what their scaling stories are in order to begin to generate that information and having a cohesive spot. And that was the origin story of the class.

You talk in the book about some really amazing examples, and now Airbnb and their competitors in Europe, famously Facebook and MySpace and Friendster and other social networks lost to the annals of Silicon Valley history. Was there one story that really stood out from the class that you guys did?

I think that if you open the book Blitzscaling, you'll find that the very first thing we do is we tell the Airbnb story. Because when Brian came to class and told the story of how he started the company and the challenge that he faced off with wimdu, which is the story that you're referring to. It just struck us as this is the way to begin this book because it encapsulates the core ideas of blitzscaling into a single story. Why is blitzscaling so important and, and how does it let you win?

And the interesting parts of the conversation I had with Brian was that this is part of why entrepreneurs who come to Silicon Valley learn the set of techniques to kind of speed past the competition and establish a global marketplace. If Brian hadn't been working with me, the other folks in Silicon Valley here, about how do you respond at speed? How do you respond to a competitor that's raised a bunch of money that threatens you in one of your core markets that you go, okay, this is a race to who establishes the market ecosystem around the world at scale first? And then that's the thing, and what are the ways that you do that? Then the Airbnb story might be very different than it is today, right? I mean, Airbnb today is known and beloved as a way to get a unique way of belonging to local cultures. And it's present in almost any country that you'd want to go to. There's an ability to use an Airbnb to go there. And so that path of getting that scale in response to competition, to establish the market and the way to do that and the resources and the way to not just raise money, but deploy talent and gain market traction, that was the kind of one of the key microcosmic lessons that is the reason why we open the book that way.

One way I think of the learnings from the book is a framework for business strategy, right? Because smart people will make very different decisions even with very fast scaling companies in the face of this uncertainty. And you guys talk about Brian, the different choices they actually made, and it's a reminder as an investor how not deterministic any of these markets are, right? And how a single chess move, even when a company seems rapidly ahead or well funded, can allow you to leverage the network effects and other advantages that will get you to scale, if not get you to start.

One of the places that I really learned this stuff from was the very earliest days in PayPal that we had this problem that we if in a payment system, if you don't get to a billion or two in GMS gross merchandise sales, you're just hemorrhaging money. And so you have to get to that level of scale very fast. When PayPal started, Max and Peter recruited me to the board, and a little later, I stepped off to be an executive in the company. And one of the key tempos of the lessons that I think PayPal was also a microcosm of, what's going on in Silicon Valley that I've learned to reflect to other people is you make every decision within the timeframe that you do not let your foot up from full acceleration. So if you're gonna make a decision to turn, you have to make that decision within the turn up. You. You don't slow down the car at all.

That's a terrifying analogy.

Yes, precisely. And then you learn how to make decisions at that tempo, both as an individual and as an organization. Terrifying is exactly right. It's this sense of, oh, God, I don't feel certain about this decision. Right. But if you're going to make the decisions in a fast enough basis in order to clear the hurdles to be the organization that's scaling much quicker than your competitors or quickly enough to get to the scale on the limited amount of capital you have, you need to make decisions both as individuals and as an organization that fast.

One of the things that really resonated with me was it is terrifying to be making decisions at that speed. But the risk and cost of potentially losing the market or running out of money with all the burn the company has and what your competitors are doing is just as dangerous, right? And that's something that Silicon Valley, and at least in the companies that are scaling up like this, really recognize.

One thing that's a good way of understanding how Silicon Valley learns is you have the first Internet boom, and then you have the bust. And the rest of the world looks at the bus saying, see, we knew you Silicon Valley people were totally crazy, right? You like building these businesses that weren't businesses, and you were raising capital from them. And look at all these houses of cards going down. And of course, we looked at it and went, okay, Webvan, that was a mistake, right? However, instead of saying, oh, scaling really fast early, that was a mistake. That was not a lesson. Silicon Valley took away. What they took away was, okay, when you play this blitzscaling game, you need to do it in places where you ideally have more capital efficiency, which tends to be software, although there's always relative speed, so you can still do it with hardware and other kinds of businesses. You want to do it in places where being the first mover to scale really is a big win. Network effects, you know, businesses with scale, competitive moats or network Competitive modes.

Yeah, you talk about platforms, marketplaces, some of the models that match this exactly.

And you learn that. But what you don't learn is kind of classic things that are taught in MBA school, which is, oh, you have to know your exact customer acquisition cost, you have to know your exact long term value, you have to know your unit economics. You have to have your business model completely set. You have to have revenue already. You have to have revenue model completely set. Like, no, no, if we have an idea about those, we can figure out the details of those later, but scale first. And so Silicon Valley learned that and the rest of the world said, oh, that was all crazy. It was like, no, no. That's the reason why in the next decade on a variety of Internet companies and other companies, major companies continue to come out of Silicon Valley and it's not all Internet. Tesla is an example.

So I want to go back to PayPal just because it's a fascinating story. You talked about how you need to reach this billion dollar GMS number or the float's not enough to matter. How did you guys decide to make a move? What about your cash position or growth said, it's time to not rely on that as the business model.

Well, so one of the funny things about the first iterations about PayPal was that it took very long to actually get to a business model where the numbers actually worked. And you could tell in advance. Like anyone with a brain and a spreadsheet could tell you the business model didn't work for the first multiple iterations. So, for example, the classic one was, well, we know we can make money on the float. And, and so if the money's in the system, we're making money on the float. And so that's a way of making money. But if you're charging credit cards, then your initial cost is in 3 or 4%, which means that the money has to sit with no credit card transaction in your system for 18 months just to break even on the money. That doesn't get to tech costs, operational costs, customer acquisition costs. That's just on the pure money in the system, nothing else. Which is ridiculous, right? There's no way that that works. And so the company knew that it didn't have a functional business model and.

It operated that way for a significant period of time.

Yes, for a significant period of time. Part of the merger between PayPal and X.com was, well, maybe we could merge this with a business model of banks and we could do loans and we could say, well, loans actually, in fact, you can Make a higher spread on than you do on a deposit. And in doing that we could make money. And after the merger we discovered that in order to do a loan portfolio, there's a whole bunch of tech and knowledge and stuff. We didn't have that the loan portfolio that already existed, we ended up charging off 92 cents on the dollar. So that's an additional whole set of massive losses of capital.

Also not a working business model.

Also not a working business model. And what happened is Peter and Max and I went off to an off site and we kind of said okay, well we got one shot to pull this out. Literally we can chart the hour at which this non business model is going to eat through hundreds of millions of dollars capital raised and we're going to just be a big mushroom cloud in the middle of Silicon Valley. And so he said, well, what we know is what people like us for accepting payments. And, and we know that we have this kind of what is in the payments terminology is master merchant. And we gotta make the master merchant business work. We can't fudge it with this is a user acquisition model and this other thing is the business model because we just don't have time to build out any of those things enough substance. And the attach rate between these other things and this key business, we don't know what that's going to look like. Is it going to work, is it going to take time, what percentage, et cetera and how does it all work. So we just have to make the payments business model work and we can't.

Change the product fast enough.

No, well, we don't have time. The part of the time clock was one of the things I told Peter in that August. We did this off site in early September of 2000. In August I said look Peter, I've kind of done the back of the envelope math. And if you and I were standing on the roof of the building throwing wads of hundred dollar bills off the roof as fast as we possibly could, we'd spend money less fast than we are now. And, and as Peter o' new we're on an exponential curve. So next month that's even worse, right? And so like you're on an exponential curve where your expenses are going up exponentially and you have no revenue. You know, you can kind of predict the hour the minute that you're going to simply explode. And so we're like, okay, we have to have a business model that aligns to the exponential cost curve, which was primarily credit card processing people thought was the bonuses PayPal was giving away. That was linear, that was fine. People thought that it might have been fraud. That was a function of the overall credit percentage, but it was actually free credit card processing. So you had to have a business model that offset that cost structure.

Where do we get the 3 or 4% back?

Yes.

Right.

If we could just get it so it's neutral, then we have time. We can figure it out. And maybe that was the way we're going to make money. And we ultimately came up with the fact that there was a balance of credit card payments and PayPal balance payments. And that blend of that is what turned into a profitable business model.

Reid, I know you're a master of scale, but you're also a master of terrifying analogies. I'm going to picture that for my companies now. Just throwing money off the roof as fast as you possibly can.

Yep.

Okay, so let's go back to the book for a second. Blitz. And blitz scaling is an unconventional choice for a way to describe a company. Tell me about that.

So when it comes to the term blitz, obviously the original origin of the word blitz is in World War II and the concept of blitzkrieg or lightning war. And one of the reasons we decided to stick with it, despite the fact that there's some problematic nature to the term itself, is that the word blitz has taken on its own meaning as a result of that. So in American football, blitz means you send everyone after the quarterback. If you're marketing a company, you say, we're going to have a marketing blitz. And and so when it came to that all out effort, blitz was really the best term that we could find.

One of the key reasons we decided blitzscaling was the right thing was that it has this parallel with move as fast as possible and do an all out effort. This came to the attention with blitzkrieg In Germany. The term blitzkrieg was coined by JFC Fuller, a British military historian. But the idea was fairly simple. We, which is most army military strategy was build to your supply chain. And even if you had no enemy in front of you, when you get to the end of your supply chain, you stop and you rebuild your supply chain so you always have enough supply. And there's a lot of business parallels to this. Make sure you understand your exact cac, make sure you understand your exact unit economic costs, make sure that you understand your customer pipeline, your customer support costs. You're able to support all the customers you're gonna acquire and, and do this in operational efficiency. Well, blitzkrieg offset this. Traditional military strategy was to say that the first person to take this key strategic objective is the one who wins the war. So this town, this hill, and so go all out to get to that place and carry just enough ammunition for one battle. And the challenge this got you in Blitzkrieg was at a halfway point you had this really key decision, turn around, go back or go. And if you go, you either win or lose big. Right? It's either way. But scaling the way that these modern companies, I think it's going to get to all companies, but certainly tech companies over the last decade or two operate is they have to do the same thing and say, well, how do we acquire tons of customers even though we don't have the exact support model out? How do we be provisioning all this, even though we don't understand our exact unit economics? How do we essentially get this market position there, even though our product may start as very thin or just enough in order to get out there in order to do that. And all of those are the techniques that actually in fact, allow these companies to establish these transformations of industries in the world. And so those are the things that are really important for executing on this. And the parallels between what you really focus on doing and what you simply don't do in order to move fast, in order to establish your position by the speed at which you can operate, is one of the things that's really key to blitzscaling, and that's why we use the term.

So you wrote the book to be relevant to organizations of different scales. Family, tribe, village, city, nation. Talk a little bit about what the different scales mean for your blitzailing strategy.

So when people most think about what is massive growth, they think in terms of massive customer acquisition and massive revenue. Because you get to very valuable businesses. Where they're valued is based on customers and revenue and margin and these elements. And so those are the scales that people most often focus on. And of course, it's really interesting to think about how do you get with low number of employees, huge number of customers, and huge amount of revenue. But whatever ratio you can manage, you actually need to scale your organization along with customers and along with revenue after you've figured out here's a path for acquiring customers, here's a path for acquiring revenue to realize that the most challenging thing is how you scale the organization in order to realize that revenue in order to acquire the customers, in order to support the customers, in order to keep them engaged, in order to create your whole business. And so the scales of organizational growth are really key. And what we did is we said, really, the whole way an organization operates changes as it gets between each of these levels of scale. So the first order magnitude ones, you have seven employees, you have 12 employees, you're all in a room. Very easy to coordinate. A meeting is someone pipes up and says something. As you're working, you get to tens, right? So here it's a tribe. And again, coordination is pretty easy, although you might have subgroups working on things. And then you start getting into corporate organizational structure. A company of 300 or 500, a company of 1,000 or 2,000, or even as we get to the nation, a company of 10,000, 20,000. And as you're blitzscaling, you're changing the entire nature of how your corporation operates as you move between these different levels of scale of organization and number of people. And so one of the central things that we're doing in the book is to say, look, here are some of the techniques and hacks to do that. Because, by the way, it's always challenging to change the structure, the skeleton, the blood system of your company and how you operate. And you move from, well, we're all doers to, well, we have a manager doer to, we have managers of managers, right? Like, as you change all of this, your recruiting practices change, your communications practices change, your strategic decisioning changes, your ability to assess changes in the marketplace changes. And how do you do that while you're also riding this rocket ship of blitzscaling? And that's why we focus the core element of the book on this architecture of changing sizes of organizational scale, because that's the fundamental foundation for how you deliver the key business value.

And that's something that's important not just for the founder, who is obviously going to need to evolve and adjust and adapt as the company goes through these stages, but also for the employees. I think it's fairly common for employees who are at a company during the family or tried stage to think after the company's grown to village, city, or nation, hey, I liked it better than the old days. Why can't we do it the same way? But the answer is, you can't govern a nation the same way you govern a family, and vice versa. And so understanding that these stages are something that every company is going to hit as it grows helps both the founders and the employees and everyone else who's dealing with the company to adjust to that growth.

I think of that as an important part of our role as board members and investors at Greylock. Right. In terms of seeing the context of should we Be lucky enough to be on that path to blitzscaling. Then giving the founders and early employees visibility into. Here are some things that we've seen effectively change in, as you describe in the book, communication patterns, execution patterns, hiring patterns. And if it feels like it is very risky, it should. Right, because we're trying to execute a strategy for winning. So obviously rapid growth is attractive to many companies, not just Silicon Valley tech startups. But you point out that there's a difference between aggressive growth at all costs and blitzscaling. So how do you make that decision about when to lose sight of your supply line? Tell me about the different types of scaling.

So when we looked at scaling, we tried to divide it into a very simple two by two matrix, and we focused on speed versus efficiency and we focused on certainty versus uncertainty. In the typical startup situation, you have a lot of uncertainty. And so generally what people do is they focus on efficiency because they want to extend their Runway out as long as possible. Maybe they're bootstrapping or working as a consultant or something like that in order to make that happen. And we call that classic startup growth. Assuming that you get out into the marketplace, you may reduce that uncertainty, you may discover that there are customers and that there's a market that's ready for you, and then you can move into traditional scaling. So you have certainty, but you're still doing it in an efficient way. In Silicon Valley especially, it's possible to go to outside investors and get them to finance even faster growth, especially if you can say, well, we have a lifetime value of $1,000 and our customer acquisition cost is $10, so it's a great deal. And when people do that, they're focused on growth rather than efficiency, but they're doing an environment of certainty, which we call fast scaling. But that leaves that magical other quadrant, which is focusing on speed at the expense of efficiency in a state of uncertainty. And that's what sets blitzscaling apart. It's having the courage to be that aggressive, to go all out at that halfway point without being certain of the outcome.

So the key thing to understand about how blitzscaling fits in this matrix of uncertainty and speed is it's not just a question of courage, which is obviously important, but also of wisdom and judgment that it's the right thing to do naturally. You'd never like to spend resources wastefully, because you will when you're in an environment of uncertainty. You'd never like to go all out in a way that you know that you're making mistakes as you're going because you'd like to correct as many of those mistakes you get driven to that by the circumstances that you judge your business to be in. The first is competition, which is if you think a current competitor or a competitor you're not aware of or a new competitor that's going to enter, can enter and go that way, you will want to do that preemptively. The second is your market may need like the PayPal market, to get to scale sufficiently. And if you don't get to scale and you don't get to scale quickly, it just won't work. So you need to get to scale in order for it to work. And those are what drive you to say, I choose blitzscaling over fast scaling or just regular growth. Because what I need to do is I need to get there and I know that even though I have uncertainty about how to do it, that's still the wise path to do. And then once you know that, then dealing with the fact that it's extremely uncomfortable because you know you're making mistakes, you know you're going to create a lot of organizational mayhem as you're going. That is still the right strategy in order to establish your company as the one that creates the market.

Are there any signals that you feel like a company or an organizational leader needs to look for in order to step on the gas in an environment of competition? There are enterprise companies that Greylock invests in that end up in a very competitive market where they can see the network effects of the future, but they need to get to scale of data and customers to get there. The one thing that I look for, and I think we as a team look for, is some signal of customer demand and acceptance before we step on the gas. On go to market and say you just acquire customers as quickly as you possibly can because being the first to scale in this market in terms of mindshare data integration, all of that really matters. Is there a similar signal you look for in marketplace platforms, social companies?

The primary thing you're looking for as a signal, but this could also be an area where you accept some uncertainty and risk. Is product market fit you look for? Is there a broad breadth of people who naturally resonate with your product and not just would try it, but would stick with it would be engaged. And if you have that, that's usually a sign that you've got the thing that if pouring on the gas will still likely be valuable. Now you also look at will the likely business model have network effects or scale defensible effects Will there be something that's really valuable to put in all the energy and resources in order to get there. Usually you believe that, otherwise you wouldn't have started the business. One of the advantages that strong entrepreneurial centers have, like Silicon Valley, like China, is that you can see what the competition looks like, and so you can make judgments more easily about what the rate of speed needs to be, what you need to get to in order to succeed as a company. One of the problems being an entrepreneurial company somewhere else in the world is you don't see that competition. You don't see the speed they're moving at. It's not just the techniques in which you're using. It's not just the resources they have access to. Those are very important. But you also know what the benchmark is. Order to succeed. And part of the way that I make this point to people across the US about what helps entrepreneurs in Silicon Valley is that they look around and they see what the aggression and the speed and the competition looks like. So once a company starts emerging from the Darwinian melee of Silicon Valley, they're actually pretty strong. And that's actually very helpful for this effort of making these judgments about, well, should I take that risk, should I accelerate? Even though I'm not quite sure that I have the right thing. But, oh, gosh, I need to, because this is the benchmark.

Now, Reid, one of the places in the world that we also describe in the book is China. And you've told me some of the stories of your time in China and what you've observed of the entrepreneurs and entrepreneurial culture there. Maybe you can share a little bit about that and how that relates to what you just talked about.

So we have a whole chapter detailing some of the learnings between China and Silicon Valley, because they actually both blitzscale, although in some similar patterns and some dissimilar patterns. But one of the things that's certainly true of China that causes Silicon Valley people to learn and be very attentive to is the speed at which China operates. Because as fast as Silicon Valley is, China is the one place I've gone to in. In the world where I go, oh, gosh, we're slow. And we need to adjust to the fact that either we gotta get faster or we need to figure out ways that we're continuing to succeed without having to move as fast, because the Chinese move very fast. And a very visceral example of that was LinkedIn China experience I had because I was responsible for launching LinkedIn China. The then head of LinkedIn China. Derek Shen and I were working on launching an additional product in China called Chitu, which is Red Horse, although you may tell me I'm mispronouncing it terribly. And they showed me a bunch of wireframes and said, we'll have this launched in eight weeks. And having known a bunch of companies in Silicon Valley was like, oh, there's no way they're going to launch this in eight weeks. This looks more like 12 to 16 weeks somewhere in that timeframe. He's like, no, no, we'll launch it in eight weeks. We'd like you to come back in four weeks and check in about halfway. And I'm like, okay, fine, you know, because in my mind I'm thinking, oh, I'll go back and I'll give them a rally about why missing the eight week deadline's fine and 12 to 16 weeks will work out just fine. And I get back and they've accomplished so much. I could see that they were halfway to finished. And the reason is, is because at the LinkedIn China subsidiary, even that in terms of moving at Chinese speeds, they had taken all their product managers, all their designers and all their engineers and they had taken them on a two weeks on, two days off, two weeks on, two days off to all check into a hotel and basically work. They basically worked, ate, exercised and slept and that was it, right? They took little small breaks and everything else, but it was like, we're all in the room, we're working, working, working, working. This is what the path is, that speed you see in 10 person companies and startups and so forth, but beginning to see that as you even get to a 500 person company, a thousand person company, a 2000 person company.

So we can talk about Xiaomi, but in the book you tell this amazing story about Tencent and what is now one could argue the most powerful application in the world, or at least one of the top three. Right in the middle of the night in Tencent, you have one of the leaders of the company make a decision to embark on this magical eight week process as well, to come up with the first version of, of WeChat. What do you think that American companies can learn large and small from the speed of decision making that's happening in China?

So the first and most macro thing is speed matters. In a network, globalized age, you don't have the privilege to sit around and just think about it. And the Chinese entrepreneurs and the Chinese business people know this very well because they have so many people and so many competition efforts that they see how fast and how aggressive everything moves. So, for example, there wasn't five clones of Groupon in China, there were 10,000 clones. That's what the competition looks like. And so part of it is, if this is an important decision to make, make it move, because other people are going to be making it and moving it as well. And now in a networked age, in a global age, your competition isn't just what you look around the room and see, it's everyone around the world. So everyone around the world is your competition. And so that's the importance of learning that in order to know speed.

So Pony Ma made a decision that I feel like could be really challenging for many incumbents. If you're tencent, you have qq, it's incredibly popular. You have to make a cannibalization decision. How did he make that decision? And how can entrepreneurs and leaders around the world make that decision?

So what Pony did was to decisively make the choice to start the WeChat project, even though it could cannibalize the QQ product, which was their primary business. And the reason he did this, and he explained this later in public, is that he felt that mobile was the future and that a company that did not figure out how to make the shift to this new platform was going to die. So he viewed it as a life or death decision for the company. And this really illustrates one of the principles around blitzscaling, which is that sometimes the greatest risk is not taking enough risk. The market dynamics of blitzscaling are such that if you are not the first to scale, if you don't achieve that dominant position, you're likely to ultimately lose out and become irrelevant. And Pony Ma was unwilling to become irrelevant. He was willing to risk his existing business in order to make sure his company would remain relevant in the future.

And the other thing to go about, some of the key lessons from China is the founder of Xiaomi Lejun, who is a world class entrepreneur, someone all of us can learn from, myself included. One of the things he likes teasing me about when I talk to him comparing Silicon Valley and Chinese entrepreneurship, he says, well, you Silicon Valley people, you're lazy. And I was like, okay, Lejeune, what are you saying? He's like, well, at Xiaomi, we have this policy996. This is true when there were 40,000 employees, 9am to 9pm, six days a week. You're discoverable at your desk. So when you come visit me in China, come by on Saturday afternoon because I'd love to show you My entire company operating. And one of the things to understand about what the nature of global competition is, there are people who are operating like that. And so to be globally competitive, you have to be able to operate in kind of similar all in basis for the key battlefields that matter.

And it's not just Xiaomi now. Right. Because as you said, people can see where the benchmark is. And so we talk to Chinese entrepreneurs all the time that say, of course, JoJo Liu. Like that's how we operate because that's how the winners here operate.

Exactly.

It's well recognized that Silicon Valley and China are very special ecosystems. But one of your goals for this, Chris and Reid, was to democratize this idea of blitzscaling. Talk about how you think that this should apply to hubs outside of China and Silicon Valley.

So one of the things that we believe is that the ideas of blitzscaling are ultimately universal. Yes, it is easier to apply them in Silicon Valley thanks to the density of talent and the networks that exist. It is easier to apply them in China thanks to the culture that exists there and the various resources. But ultimately, let's remember that blitzscaling is a relative endeavor. And so the goal is for people around the world to understand this framework and begin the process of accelerating their ecosystems. Even if their ecosystem hasn't accelerated to the point of Silicon Valley or China, just moving faster is going to help bring progress to the world.

One of the things about being in a new network, connected age is learning spread around the world. You can read blogs, you can listen to podcasts like this one. You can listen to masters of scale. There's a set of different things that you can do already to get that information. Part of the effort that Chris and I are doing in terms of writing this book and the set of materials around it is to have entrepreneurs and have companies that are working on staying relevant and making innovative products and revising the products they have is to realize what the benchmarks look like, what the techniques, tool set look like. So here is a focus set of things. Now go learn more, go talk to more people. Listen to podcasts, read things, incorporate this within your practice. The act of writing a book on this is to say, this is doable. If you're in Austin, this is doable. If you're in Boulder, this is doable. If you're in Seattle, Boston, Berlin, London, Paris, Stockholm, Dubai, Johannesburg, this is doable. But you have to know what you need to do. And so here's the focus of it now. Start learning it, start practicing it, start trying to get talented advisors, investors, other resources that can help you stay relevant on a global stage.

Because people know that, that Reid and I write books together. The number one request that I get, seemingly on a daily basis is people say, how do I talk to Reid? How do I talk to Reid? Because they know that Reid Hoffman is probably the greatest mentor that any entrepreneur who is looking to Blitzscale could possibly have. And obviously there's only so much of Reid to go around and there's only so many companies that can work directly with Reid. But in the form of this book, people can get access to, again, the greatest mentor they could ever have. The book is the way that we clone and scale Reid and make it possible for other people to learn some of the things that you and I get to learn simply by being around him.

Reid and Chris, it's been so much fun to have you on this podcast. I look forward to meeting entrepreneurs in the Silicon Valley ecosystem, in the Chinese ecosystem, and globally who have this framework for business strategy around how to make decisions with speed in the face of massive uncertainty, and who have this framework for making decisions with speed in the face of uncertainty to win in globally competitive markets. It's been so much fun. Thank you and I look forward to the rest of the podcast.

Thanks, Sarah.

The pleasure is ours.