Greylock Partner Reid Hoffman and Blitzscaling co-author Chris Yeh on defining and developing a competitive strategy.
Blitzscaling is how startups become enduring, category-defining businesses at lightning-fast speed. This strategy utilizes a set of techniques to grow, raise financing, and quickly scale to a dominant position in a global market. Greylock partner Reid Hoffman and entrepreneur Chris Yeh share their advice for clarifying goals to create a competitive strategy, how to develop an aptitude for strategy, and examples of actionable strategies from today’s leading tech leaders.
This episode of Greymatter is the first in a new series dedicated to blitzscaling. The podcast themes draw on the lessons from Reid and Chris’ new book Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies, and go deeper into the practical details of how entrepreneurs and leaders can blitzscale their organizations.
An accomplished entrepreneur and executive, Reid has played an integral role in building many of today’s leading consumer technology businesses, including LinkedIn and PayPal. As a Greylock investor, he currently serves on the boards of Airbnb, Apollo Fusion, Aurora, Coda, Convoy, Entrepreneur First, Gixo, Microsoft, Nauto, Xapo and a few early stage companies still in stealth. Reid is the co-author of Blitzscaling and two New York Times best-selling books: The Start-up of You and The Alliance.
A writer, investor, and entrepreneur, Chris has founded, advised, or invested in over 100 high-tech startups since 1995. His books help founders, venture capitalists, corporate leaders, policymakers, and everyday people better understand how the internet has changed the way we work together to build amazing organizations.
Below is an edited transcript of Reid and Chris’s discussion.
The ABZ Framework
“Determining a good strategy involves understanding which tactics can be combined to enable your company to meet the goals and outcomes. The ABZ framework is a strategic framework for creating a flexible set of plans and tactics within the strategy, against a goal. The ABZ framework helps assess risk and shows if you are on the right path. This framework is the lifeboat plan. Plan A isn’t working, plans B aren’t working, now the company needs to reset and try something else. Plan Z is that reset.
PayPal had pivots in the classic sense of entrepreneurship. We didn’t have it planned how we’d change and pivot. This was happening in real time as we were encountering challenges and moving fast while changing. That will always happen. It’s better to have a general framework so leadership can make decisions quicker, know when to pivot or try the next plan, and understand if the company needs a big pivot versus a smaller change.” — Reid Hoffman
Strategy Building Skills
“All of the strategy frameworks that I picked up, developed from a childhood of playing competitive games. In particular, the type of games that involve detailed and varied strategic thinking. There’s a deep tie between the ability to model what a strategy is, think through risks and potential, learn to be flexible, and develop a set of tactics that go into the game playing. You need to construct your own model of the game. That involves understanding the game you’re in to be able to plot a strategy within it and then determine the sub-components of the game.” — Reid Hoffman
Four Strategy Examples From Today’s Tech Companies
1) Listen And Quickly Learn What Your Customers Want | Zynga
“One strategy I admire was what my friend Mark Pincus did at Zynga. Mark understood that the key to building a successful company is realizing that you’re not a genius and that you may not always know the exact game. He instead learned how Zynga’s customers interact with the Zynga games. So he designed a system within the company where every new game built started with only 10 progression levels. Then Zynga would test the response from customers for interest in wanting more levels and the ability to move through the levels. It was inefficient to spend too much time on a game if the player could not or was not interested in achieving level 10.
Through this process, Zynga was able to consistently pick winning games. That speed of learning and creating time and capital efficient processes to find hits enabled Zynga to become a great game company.” — Reid Hoffman
2) The 10 Star Design Process | Airbnb
“A second strategy comes from Airbnb CEO Brian Chesky, the 10 Star design process that underlies the critical factors that lead to Airbnb’s success. From a design perspective, Airbnb decided to start with the perfect experience. Not a perfect webpage design. They wanted to understand and share the perfect experience of Airbnb from the moment you arrive to an Airbnb door and deconstruct that.
This design strategy challenged the normal understanding of vacation rentals. Airbnb is not about the listing, it’s about the experience behind that listing. This design and experience became a differentiator between Airbnb and its competitors.” — Reid Hoffman
3) Viral Loops | Facebook & Instagram
“Viral loops are growth and engagement. Myself and a few others were amongst the earliest people to consider how to mathematically model virality. The key to understanding viral loops is the speed of compounding. One speed of compounding is growth, where people invite others. But another speed of compounding is engagement. Engagement is key because users participate in the network of communication and connectivity.
Obviously the services that have used engagement to the biggest scale are Facebook and Instagram. Those services are deploying viral loops as a set of tactics.” — Reid Hoffman
4) Create Differential Edge | Google
“The last strategy I want to discuss comes from Marissa Mayer, while she was at Google. Marissa showed how to apply strategies to many different items and create a differential edge for your business, scale, acquisition of customers, product, or talent.
For example, Marissa developed the idea for Google’s APM (Associate Product Manager), a two-year rotation program that exposes new Computer Science grads to various Google tech projects and departments. The program developed from a necessity to grow Google’s talent pool to maintain development of new products and features.
This APM program became one of Google’s central programs to engage with and train top talent who would be responsible for Google’s next products. Google architected that strategy and succeeded, giving their company a massive competitive differentiation against a wide variety of other competitors.” — Reid Hoffman