Notes on Blitzscaling
So.. there is this class at Stanford GSB — CS183C: Blitzscaling that has been sitting in my backlog for the longest time. Instead of my regular television binges, I’m determined to sit down and learn something valuable. Or at least feel more accomplished on things I have learned.
I’ve chosen this class, as its supposedly light, and I am genuinely keen on learning to scale a business. Most people are deluded about entrepreneurship. No doubt it’s hard, but I do want to continue to educate myself about it. The fastest way? Learn directly from the awesome people speaking in this class, without the usual credit pressure that comes from my Tepper MBA workload.
Students in this class are required to take notes on Medium. I think this is a great idea! My continual attempts to blog about what I do here is my commitment in the long term to write more, start discussions and help others see my perspectives as I see my theirs. Carol Dweck talks about the Growth Mindset, and I believe that in a similar fashion we all can learn by writing more about what we learn, what we see and what we feel we are passionate about.
As I continue to go through the class, I’ll take some simple notes along the way, and see if I have the time to do the assignments. But this will be consolidated into this one long article, to convince you that this class is worth the time otherwise, and track my own progress. I would love to discuss these topics with anyone, so feel free to comment about it in the sections below as I update this piece.
What makes silicon valley different: it is not starting up, it is the ability to scale up very quickly compared to other parts of the world
Unique advantage of SV — the networks of (capital, talent, users..etc)
Common Themes: Networks, Positive Feedback Loop, Distribution Advantage, Customer Scale
About hiring right: CEO and founder personally interviewed the first 500 people to make sure culture is correct
Startups: only real competitors are other startups
Stages of company: Family, Tribe, Village, City, Nation (OS 1 -> 5)
Organizational Scale and functions (functions list, positive and negative): people, product, GTM, Tech, Strategy, Operations, Finance, Hiring, Management, New Funds.
When do you get from Single threaded -> Multi threaded product lines
Dunbar’s number: 150 is the number of individuals with whom any one person can maintain stable relationships
As companies scale: Companies need to progress from hiring generalists to specialists
It is ok to have wastage: Operational Excellence vs Adaptability
Linkedin Case Study
5 tracks to balance operational excellence with adaptability: Linkedin — The Village (one vertical to pursue growth, revenue, explore other PMFs, one to pursue R&D, one to pursue operational excellence.
change of tech strat and financial strat.
OS1 : Key Functions
- Role of founders
- Hiring & company culture/values
- Staying solvent/financed
What problems do you solve and what do you not solve at what stage. (trianging): letting fires burn
Not so important: Board of directors, analytics & dashboard, strategy, everything else
Paul Graham: do things that don’t scale (Y-Combinator)
Startup advice, briefly — Sam Altman
Why Silicon Valley Works — Sam Altman
Speed is differential — relative to competition
How much of the Market Opportunity Do you actually own?
compounded growth, when will it explode?
How fast should you be moving? are you doing something to compound an asset that will win the market down the line?
Blitzscaling 02: Guest — Sam Altman
2500+ accelerators all over the world and 8 billion plus companies are all from YC.
Network effect of YC alumni — like HBS alumni
stronger bond between investors and earlier stage VCs because they believe in you when no one else did.
what consistent qualities do you see thats important in founders
- Clarity of vision — explain what you do and why? Need a clear thinker. Know what you’re doing for the next few weeks, and know why they were doing it.
- Founders are very determined and very passionate. Mission oriented.
- Raw intelligence
- Ability to get things done quickly
- speed + quality of decisions are correlated
- your ability to be presented with a problem you’ve never seen before and solve it very quickly
Solo founding vs team founding.
diversity of background and diversity of perspective is really good.
The only bad kind of diversity is the diversity of vision: founders have a different believe of the company you are going to build. e.g. culture. how to hire, how to handle disagreements.
Biggest conflict is: want different things for company and same things for themselves
Complementary: Skill sets different but same vision
Hiring is always hard. Best startups hire the least. Employees = high burn-rate and more organizational inertia. need all this before company scales.
Y-Combinator likes founders who: How long can you wait to hire your non-founder employees?
Peter Thiel — great ideas that look bad are great opportunities. Investors are also judged. You don’t want to be an investor as a derivative of a next big thing. Facebook and Google.. then Uber looks very different! Should ignore and find the next 100 billion dollar company.
What is the shift in the world. It’s going to look bad and you need to have conviction that it is good. Because you understand something that others don’t.
Once users start to adopt and like your product, can get over the haters. Launch quickly to get conviction. If you can rationalize your conviction because something in this world has changed, would be great.
Only listen to users.
How to decide when to pivot? We should tolerate failure and not celebrate it.
Two kinds of pivot that work
- it’s what the founder wanted to build all along anyway (Instagram)
- it’s what the founder discovered while building the first thing that didn’t work. (Stripe, Slack)
- Learn from success, join a successful company to learn
What does focus on product mean to you?
focus on love and not like, spend time writing code and talking to users.
For enterprise customers, YC work with YC for enterprise sales.
take 10% off to solve technical debt, cultural debt as focus on growth. Growth solves all problems. fund raising is fun but not essential.
Get the big things really right..
founders that fall in love with public image, networking events, conferences.
On firing people.. no.1 mistake that all founders make is to take too long to fire bad people. Found them a new job before firing them. A) super generous with severance, B) help them find a job. C) tell them they can stay till they found something else. Must be firm on your decision. Severance happens not just on the companies term but also in their terms.
On machine learning..how to direct machine learning?companies with vertical machine learning.
On Bitcoin.. People don’t love bitcoin the way it should be loved. Hence don’t invest.
Help poor people 1) AI superhuman, 2) Cheap, safe clean energy — Quality of life correlates with the costs of energy. Eventually the world will come to 80% nuclear and 20% solar, no one is working on nuclear.
On life — The days are long but the year is short as you age. Life is not 100 years long. 20–30 year period to put in your time to have 80% of contribution to your professional career.
The best founders are generalists all the way through despite companies transiting from generalists to specialists.
How much is a startup worth? Only valuable in two situations, how concentrated is the equity? Only two times this matter, when you are joining as an employee or when you are investing in the company.
How much do I believe that the startup will be worth in five years? and not what is it worth today.
How to decide to join a startup or start one? Don’t start a startup for the sake of starting a startup. If you have an idea that will make an impact to the world, then do it. Joining a company that you really believe in, has high expected value. Dustin Mokowitz has a great framework for thinking about this — in Sam Altman’s class.