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Blitzscaling
ENTREPRENEURSHIP
Blitzscaling
Tim Sullivan

FROM THE APRIL 2016 ISSUE

Let’s start with the basics. What is blitzscaling?
Hoffman: Blitzscaling is what you do when you need to grow really, really quickly. It’s the science and art of rapidly building out a company to serve a large and usually global market, with the goal of becoming the first mover at scale.

This is high-impact entrepreneurship. These kinds of companies always create a lot of the jobs and industries of the future. For example, Amazon essentially invented e-commerce. Today, it has over 150,000 employees and has created countless jobs at Amazon sellers and partners. Google revolutionized how we find information—it has over 60,000 employees and has created many more jobs at its AdWords and AdSense partners.

Why this focus on fast growth?
We’re in a networked age. And I don’t mean only the internet. Globalization is a form of network. It adds networks of transport, commerce, payment, and information flows around the world. In such an environment, you have to move faster, because competition from anywhere on the globe may beat you to scale.

Software has a natural affinity with blitzscaling, because the marginal costs of serving any size market are virtually zero. The more that software becomes integral to all industries, the faster things will move. Throw in AI machine learning, and the loops get even faster. So we’re going to see more blitzscaling. Not just a little more, but a lot more.
blitzscaling  economies_of_scale  scaling  HBR  high-growth  high-impact  Silicon_Valley  LinkedIn  Reid_Hoffman  networks  first_movers  large_markets  market_sizing  accelerated_lifecycles 
may 2016 by jerryking
Expertise in scaling up is the visible secret of Silicon Valley - FT.com
September 15, 2015 |FT| Reid Hoffman.

Most observers instinctively conclude that Silicon Valley is great because it has a unique ability to create start-ups. Most observers are wrong....Why does Silicon Valley continue to produce a disproportionate share of industry-transforming companies like Google, Facebook and LinkedIn? Or the next generation of companies like Airbnb, Dropbox, and Uber? The answer, which has been hiding in plain sight, is Silicon Valley’s ability to support scale-ups....Most of the impact and value creation in Silicon Valley actually occurs after the start-up phase ends and the scale-up phase begins.
Building great, world-changing companies requires more than just building a cool app and raising money. Entrepreneurs need to build massive organisations, user bases and businesses, at a dizzyingly rapid pace.....So what makes Silicon Valley so good at scale-ups? The obvious answers are talent and capital. Both offer a scale-up positive feedback loops. The competitor that gets to scale first nearly always wins. First-scaler advantage beats first-mover advantage. Once a scale-up occupies the high ground in its ecosystem, the networks around it recognise its leadership, and talent and capital flood in....talent and capital are necessary but not sufficient. The key success factor is actually a comprehensive and adaptable approach to scale. A scale-up grows so fast that conventional management approaches are doomed to fail. ...Change, not stability, is the default state at every stage and in every facet of the company. Continually reinventing yourself, your product and your organisation won’t be easy, but it will allow you to use rapid scaling as a strategic weapon to attain and retain market leadership.
blitzscaling  capital  change  constant_change  disproportionality  entrepreneur  expertise  first_movers  ksfs  networks  Reid_Hoffman  reinvention  scaling  Silicon_Valley  special_sauce  start_ups  talent  user_bases 
september 2015 by jerryking
Uber’s Real Challenge: Leveraging the Network Effect - NYTimes.com
JUNE 13, 2014
Continue reading the main story
Neil Irwin

The question for Uber as a business boils down to two words: network effects. That’s the concept in which users of a service benefit from the fact that everybody else uses the service as well. It isn’t much use being the only person to own a fax machine, or the only person to show up at a stock exchange. Things like these become more valuable the more widely they are embraced. Network effects are the key to the wild profitability of a firm like Microsoft; Windows and Office are hard to displace, even if a competitor offers a better, cheaper product, because Microsoft products are entrenched as an industry standard....The billion-dollar question is whether Uber’s model for offering transportation services has some of the same network effects as those of great information industry monopolies (Microsoft, Google), or is more like, say, the travel website business, a brutally competitive industry of middlemen.

Uber is itself a middleman, of course. On one side, it recruits drivers, who typically own or lease their cars. On the other side, it markets to consumers who may want a ride. Then it matches them up; the consumer orders a car, a driver accepts the request, the service is provided, and Uber charges the consumer’s credit card. It keeps a 20 percent commission for itself and pays the rest to the driver....The task facing Uber is not just to overcome the hurdles and make ride-sharing a multibillion dollar industry. It’s to try to entrench the advantages it has from being first: continually refining its offerings to have the best possible user experience, the best data analytics to ensure that people can get a car when they need one, and not to be greedy with regard to its commission, lest it be all the more inviting a target for rivals. It’s no easy job, but nobody said building a company worth $18 billion is.
Uber  network_effects  sharing_economy  middlemen  ride-sharing  platforms  first_movers  transportation  two-sided_markets  match-making 
june 2014 by jerryking
Divide and Conquer: Competing with Free Technology under Network Effects - Academic Article - Harvard Business School
Summer 2008 | HBR |by Deishin Lee and Haim Mendelson

Abstract

We study how a commercial firm competes with a free open source product. The market consists of two customer segments with different preferences and is characterized by positive network effects. The commercial firm makes product and pricing decisions to maximize its profit. The open source developers make product decisions to maximize the weighted sum of the segments' consumer surplus, in addition to their intrinsic motivation. The more importance open source developers attach to consumer surplus, the more effort they put into developing software features. Even if consumers do not end up adopting the open source product, it can act as a credible threat to the commercial firm, forcing the firm to lower its prices. If the open source developers' intrinsic motivation is high enough, they will develop software regardless of eventual market dynamics. If the open source product is available first, all participants are better off when the commercial and open source products are compatible. However, if the commercial firm can enter the market first, it can increase its profits and gain market share by being incompatible with its open source competitor, even if customers can later switch at zero cost. This first-mover advantage does not arise because users are locked in, but because the commercial firm deploys a divide and conquer strategy to attract early adopters and exploit late adopters. To capitalize on its first-mover advantage, the commercial firm must increase its development investment to improve its product features.
early_adopters  late_adopters  networks  network_effects  free  competitive_advantage  product_launches  open_source  competitive_strategy  customer_adoption  first_movers  locked_in 
january 2013 by jerryking
Note From the Edge: Sometimes You Can't Control Your Success - WSJ.com
September 2, 1997 | WSJ | By HAL LANCASTER.

An Ex-Manager Says You Can't Always Control Your Success

Mr. Curnutt says. He speaks for a large populace of middle managers who aren't golden boys being groomed for senior management, who will likely rise only so far and then stay there.

But there is more these managers can do to bust out of their confining boxes. Mr. Curnutt always wanted to be a manager and he says now he would have been better off majoring in business or accounting from the start. I think he also could have been more aggressive in promoting himself, particularly after getting his M.B.A. Perhaps he could have created a new position, using some of the skills he learned in his M.B.A. program, instead of waiting for the company to identify an opportunity for him.

Even then, of course, things might not work out. Not everyone is meant to ride the gravy train. But you have everything to gain and nothing to lose. Remember, those who stand in place the longest are the most vulnerable. Ask Mr. Curnutt.
action-oriented  beyond_one's_control  contingency_planning  crisis  crisis_management  first_movers  Hal_Lancaster  immobilize  middle_management  paralyze  self-promotion  stress_response  Sue_Shellenbarger  uncertainty 
december 2012 by jerryking
Learn 'Languages' And You'll Always Land on Your Feet - WSJ.com
October 21, 1997|WSJ | By HAL LANCASTER.

Lesson 1: Learn as many "languages" as possible. Through all this, he learned the value of being a business linguist. He spoke fluent finance, law, investor relations, marketing and brand management.

"It helps your credibility when you can speak the language of other functions," he says.

Lesson 2: Build bridges to other functions.

During his six years at Allied, Mr. Simon had to deal with issues involving the company's toxic-waste cleanups. "We had all these Superfund sites and I had to learn about every one of them," he says.

So he sought out experts in other departments. "I worked a lot with people in strategic planning," he says.

He believed all areas of corporate communications -- media, investor, employee, community -- should be unified, so he spurned job offers that would pigeonhole him and sought training that would broaden him.

Lesson 3: Sometimes you've got to go down to move up.

In 1987, Mr. Simon joined Inspiration Resources, a mining company looking to create a combined media and investor-relations department. "I traded way down in size, but it was a chance to develop more broadly," he says. "It's easier to be a Goliath, but you learn a lot more with the Davids."

Lesson 4: Differentiate yourself by articulating your own philosophy.

When headhunters called, Mr. Simon would discuss the needs of the job, and often recommend someone for the post, even if he wasn't interested himself.

Lesson 5: Don't freeze in the midst of chaos -- act.

Within a year, the banking company was acquired by Fleet Bank and many Natwest people "gave up," Mr. Simon says. But he prepared a three-page summary on public-relations issues confronting the combined banks and requested a meeting with Fleet's vice chairman. The result: He was invited to join the integration team and his employment was extended a year.
next_play  Hal_Lancaster  Managing_Your_Career  indispensable  lessons_learned  mergers_&_acquisitions  M&A  rules_of_the_game  advice  crisis_management  contingency_planning  first_movers  crisis  chaos  stress_response  immobilize  paralyze  bridge-builders  action-oriented  post-deal_integration  creating_valuable_content 
december 2012 by jerryking
When Being First Doesn't Make You No. 1 - WSJ.com
AUG.12, 2004|WSJ|CRIS PRYSTAY.In Jan. 2000--almost 2 yrs.
before Apple.'s iPod hit the mkt.--Singapore-based Creative Tech.
unveiled a similar prod.: an MP3 player w. a tiny hard drive that stored
hundreds of hrs. of music. In biz., though, being 1st doesn't always
make you No. 1. Creative is best-known for its Sound Blaster audio cards
for PCs, a product category it pioneered & dominates. But it's
still a niche player; annual sales are a tenth of Apple's. Apple ran
mktg. rings around Creative even in its own backyard. For iPod's
Singapore launch in late 2001, Apple plastered the CBD with funky
posters & ran a hip ad blitz in movie theaters.Creative's response
finally came last month, when it began sponsoring a children's TV show
& running its 1st-ever TV ad campaign--but only in Singapore.
"There's been a big shift in our biz, & right now, our biggest
challenge is mktg.," concedes founder/CEO, Sim Wong Hoo. "But I'm
stingy. I don't want to waste $ unless I know it's going to work."
branding  Xerox  Ricoh  image_advertising  Apple  iPODs  competitive_landscape  product_launches  Singapore  first_movers  fast_followers  consumer_electronics  marketing  new_products  new_categories  category_killers 
october 2010 by jerryking
reportonbusiness.com: Disaster relief
November 28, 2008 at 2:46 PM EST G&M article by DOUG STEINER
Rules for post-disaster investing.
Step 1: Cope and gather new data. Smart people in hurricane-prone areas build defences into their homes and businesses, then watch the weather. Do you do that with your investments?.... Don't invest aimlessly assuming that you'll be able to avoid a crash, then buy at the bottom. I don't know when the next market plunge will happen or how deep it will be, but I'm fortifying my investment castle against disaster by spending less and saving more....Look for new sources of information.
Step 2: Analyze the data. I'm not smart, but I looked at historic data and made a connection-what happens in the U.S. usually happens here, too. We worried enough to sell our house in 2007, but I wasn't disaster-hardened enough to rent, so we bought a smaller house.
Step 3: Consider what country you're in
Step 4: Identify the worst thing that could happen right now. You think Canada's economy is grim? How about the city of Detroit, where the median price of a house or condo dropped to $9,250 (U.S.) in September from $21,250 (U.S.) just a year earlier? Could things get that bad here? Almost certainly not.
Step 5: Act when things stop getting worse (there's an element of "next play" here). Don't wait till they start getting better. If you wait for positive signs, it will be too late. I like hotpads.com, the U.S. real estate search engine with information on foreclosures from RealtyTrac. It lets you swoop across a map of the country like a vulture, looking for distressed properties. I'm not looking in Detroit, but I am interested in Longboat Key, Florida. I'm also combining the online information on foreclosures with updates from a local real estate agent who's desperate for buyers, and who forwards me every property listed in the area.
Step 6: Find out who's ahead of the curve and learn from them. The most interesting financial analysis these days isn't in stock and bond markets-it's in the markets for things like natural disaster insurance. A 2007 study, led by Laurens Bouwer from the Institute of Environmental Studies at Vrije University in Amsterdam (remember that Dutch people living below sea level are keenly interested in floods), includes estimates of the costs of future weather-related disasters. By 2015, potential financial losses from disasters in the world's 10 largest cities will likely climb by up to 88%. Three recommendations: 1) Get more and better data. 2) When adapting to surroundings, take precautions to reduce disaster risk. 3) Find new financial instruments or innovations to spread risks among investors.
Step 7: Invest where the potential returns are highest relative to the risks. Even though stock markets have plunged due to panic, they may not be the most profitable place to put your money in the future. The worst mispricing of assets will almost certainly be in the real estate market, so that's where you may find some of the best bargains. Detroit might turn into a mecca for artists, where $9,000 buys you a house in a neighbourhood that may rebound and thrive. You just have to have the courage to look at the disaster data and act.
ahead_of_the_curve  crisis  dark_side  de-risking  defensive_tactics  disasters  Doug_Steiner  extreme_weather_events  financial_instruments  financial_innovation  first_movers  hacks  historical_data  information_sources  instrumentation_monitoring  investing  lessons_learned  measurements  mispricing  next_play  precaution  risk-sharing  rules_of_the_game  smart_people  thinking_tragically  tips  worst-case 
february 2009 by jerryking

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