Tuesday 28 July 2020 9:00 am

How Blitzscaling can strengthen your business during the global health crisis

In today’s volatile business environment, market share is up for grabs, the talent pool is wider than ever, and blitzscaling might just give you the edge over your competition.  

Let’s face it: Growing a business is challenging even in the best of times. Growing rapidly adds a whole new set of challenges. So what happens when you add a global health crisis into the mix? The pandemic’s untold economic disruption has altered consumer spending habits and convinced even some of the boldest entrepreneurs to second guess their strategy and growth initiatives. After all, why take on the risk of rapidly growing a business in the midst of severe economic headwinds? 

During this time, organizations that focus on maximizing growth can generate enduring momentum and create an outsized impact, both during the health crisis and–even more importantly–afterwards. For organizations with business models that can benefit from blitzscaling, now is the ideal time to prioritize growth.

  1. What is Blitzscaling? 

The most ambitious growth-oriented organizations use a technique called blitzscaling, introduced by LinkedIn co-founder Reid Hoffman, to dramatically increase their size and capabilities, prioritizing speed over efficiency to gain an edge over their competition. After all, in a competitive global marketplace, the first company to reach significant scale gets access to the lion’s share of customers and revenue, which then provides the runway needed to grow the company even further. 

In effect, blitzscaling follows a basic underlying assumption: In today’s business environment, markets are subjected to a winner-takes-all effect. By prioritizing speed as a means to drive growth, companies can generate a positive feedback loop that allows them to hyper-scale before their competition. The benefits of scale then confer long-term advantages that only generate more positive momentum. Ultimately, blitzscaling can help a company reach the “tipping point” ahead of other competitors.  

  1. Can my business benefit from blitzscaling? 

Companies like Amazon and Uber have used blitzscaling to great effect, dominating the market and creating hundreds of thousands of jobs in the process. Their success can be attributed to their business models, which are designed to leverage network effects in order to scale quickly. Take for example Amazon Prime. Each customer converted to Amazon Prime adds value to additional users, as Amazon creates more warehouses and distribution centers and hires more drivers to fulfill orders faster on more items at a lower cost, in turn attracting more potential customers. Or Uber; more ride-hailing customers means more drivers, which then reduces wait times and increases access and convenience for customers.  

Other companies looking to blitzscale seek opportunities to connect multiple networks. Our organization, a global blockchain platform and leading digital asset exchange, was able to achieve nearly $2 billion in revenue since launching in 2017 by blitzscaling. Starting as a spot crypto exchange, we quickly identified new networks to bridge, adding margins, options, and futures trading to provide a comprehensive suite of financial products, building key synergies while pivoting towards becoming an all-in-one financial services hub for crypto traders and investors. 

Overall, business owners need to evaluate whether they have a successful business model with a clear profitability path. This is a key prerequisite that needs to be met before companies can invest in growth. From there, it’s wise to evaluate the benefits of reaching scale first. For valuable, competitive markets with high margin products and services, the benefits of blitzscaling are obvious. 

  1. Should I blitzscale now? 

Of course, moving quickly does have its drawbacks. Blitzscaling is a calculated risk. By focusing on speed, you give up opportunities to optimize for efficiency. These missed opportunities can adversely affect organizations, and they appear in the form of ill-fitting hires, dysfunctional processes, internal communication challenges, and other side effects commonly seen in rapidly scaling organizations. 

If the issues above sound all too familiar, perhaps it’s because most companies are struggling to adjust to the new reality imposed by COVID-19, where old lines of communication are being redrawn and operational processes recast. It may seem counterintuitive to focus on growth during these uncertain times, but it’s important to also consider the opportunity costs of prioritizing efficiency: Focusing on increasing efficiency at this time may reduce costs in the short term, but any short term improvements to efficiency will quickly become obsolete as the economy begins to reopen in the coming months, leaving companies ill-positioned to adapt to the recovering business environment.

By choosing to move quickly and decisively at a time when your competitors are downsizing or waiting for the “perfect time” to make a move, you are effectively positioning your business to emerge from the global health crisis in a stronger position to outsprint your competition. As communities and businesses begin to assess the post-pandemic landscape, there may be no better time to apply a growth-oriented mindset or a technique like blitzscaling to seize opportunities in your market. 

CZ (Changpeng Zhao), Founder & CEO, Binance

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