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The new doctrine of Silicon Valley entrepreneurs promises to grow hard - but at a high risk

The new doctrine of Silicon Valley entrepreneurs promises to grow hard - but at a high risk

by Perttu Pitkänen |

COMPANIES

Could the Finnish company grow into a market in the footsteps of Google and Amazon?

IF YOUR BUSINESS has already survived the start-up phase, and your customer and turnover may seem to be good after a stressful start-up phase, then a new aggressive growth strategy called blitzscaling will bring back the thrill of life. 

Blitzscaling, or freely translated, flash-capture or growth promises market leadership when successful. The cost of failure can be a downfall for your business. 

"I don't recommend this to everyone," says Jeff Abbott , Business Consultant and Investor . 

- The pursuit of such growth depends on careful evaluation of your own business, the size of the market, the technical advantages of the company, the competitive situation, enough capital and the ability to grow much faster than you feel comfortable.

At the heart of LIGHTNING growth is the idea that a company invests in growth rates at the expense of corporate profits, even if the outcome is uncertain. If blitzscaling succeeds, the company may grow into a market leader in its field. 

- But blitzscaling can quickly become blitzfailing ("flash failure") if you try to reach too much, Abbott explains. 

- For example, if you own a restaurant, and fast-start restaurants in ten new locations, you won't get enough customers. Then you fail. 

Flash-heroing heroes include Silica Valley growth kits like Google, Über, Facebook and Amazon. Abbott, who lectured on Monday in Helsinki, showed some twenty entrepreneurs a model of the history of Amazon.

In 1996, Amazon was an online bookstore with 151 employees and a turnover of over $ 5 million. Three years later, the company had 7,600 employees. With a 50-fold increase in the number of employees, net sales increased more than 300-fold to over $ 1.6 billion. 

The name Blitzscaling comes from a book about growth companies that was launched last autumn by Reid Hoffman , founder and investor of LinkedIn, and Chris Yeh , investor writer . 

Yeh is also Abbott's partner in Global Scaling Academy, which specializes in consulting and training growth-oriented entrepreneurs.

There were entrepreneurs in Abbott's audience who made a million-year international business. Several seem to think about the next step, whether the company should grow, and if so, how. 

BUT HOW DO THE Silicon Valley growth studs fit into a small Finland? Hard growth, for example, requires more capital than traditional, more peaceful growth rates. Unlike Finland, Silicon Valley has a reputation as a place where risk financiers are flourishing. 

"More money is available to businesses than ever before," Abbott says.

According to Abbott, the amount of money or top experts is not the factor that separates Silicon Valley from the rest of the world, as they are found elsewhere. Instead, Silicon Valley has accumulated experience in growing companies internationally. 

This experience is intended to be shared by Abbott with Nordic companies in consultation with these companies. 

One of the leading companies in the Blitzscaling model is Facebook, which, especially since 2007, has grown to become the current global online community and billions of dollars in online advertising. 

THE ASTONISHING Despite the turnover, last year the company was wrestling from one scandal to another, mainly due to mistakes made in the years behind. Users' data was leaked via Facebook as voter service to Cambridge Analytica, a company manipulating voters, and other suspicious companies and advertisers. Nor did Facebook prevent the spread of the hate speech that fueled the genocide of the Rohingya Muslims in their service. 

“I don't think they fully realized all the ways the service could affect the world,” Abbott says.

- Perhaps it is the effects of rapid growth, there was no time to look at everything from every perspective. But from a management point of view, it is acceptable at this stage that some things go wrong. A company can have a lot of problems and just focus on those who can kill. It may be more profitable to continue growing than to stop repairing these things. 

According to Abbott, stopping could be a failure or at least a loss of opportunity, so the company may not even be able to afford to fix their mistakes.

According to Abbott, Blitzscaling means turning many traditional company lessons on its head. The entrepreneur must tolerate chaos and weak administration. Products can be published unfinished because there is no time to finalize them. Time may not be enough to extinguish all fires, as it is best to invest in raising your business. Probably the company also makes mistakes.

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