Blitzscaling - The lightning-fast path to building massively valuable business
How much do I want to read more? 7/10
I didn't know about this Berlin's Airbnb clone competitor story. That was interesting.
It was a gift in disguise. An ultimatum that turned out to be an fulgurant growth turning point for Airbnb.
FOREWORD BY BILL GATES
Of all the things I’ve discussed with Reid, the most thought-provoking might be blitzscaling.
prioritizing speed over efficiency—even in the face of uncertainty—is especially important when your business model depends on having lots of members and getting feedback from them.
If you get in early and start getting that feedback and your competitors don’t, then you’re on the path to success.
Reid and Chris’s ideas are more practical than ever, because it is now possible to get big fast in a way that simply wasn’t feasible a few decades ago.
When the Airbnb founders first met, Paul Graham, he told them flat out that their idea was terrible. “People are actually doing this?!” “What’s wrong with them?”
Still, Graham had accepted the Airbnb guys. Not because he was inspired by their Airbnb business, but because he was impressed by the hustle of the founders. He loved the (now famous) story about how Chesky and his cofounders managed to pay the bills while trying to get Airbnb off the ground.
hey created and sold special-edition cereals called “Obama O’s” and “Cap’n McCains”—a sugary parody of that year’s candidates Barack Obama and John McCain.
The creativity and persistence displayed by the Airbnb founders as “cereal entrepreneurs” got them in the door at YC.
Airbnb success made fierce competitors. In Europe, a copycat grew up to take the market, then asked Airbnb to take 25% of their share.
Airbnb founder, Brian, didn't want to buy his competitors in his guts.
Mark Zuckerberg counseled him to fight. “Don’t buy them,” he said. “The best product will win.”
YC’s Paul Graham gave similar feedback. “They’re mercenaries. You’re missionaries,” he told Brian. “They’re like people raising a baby they don’t actually want.”
When Brian reached out to me for my advice on the situation, I too advised him not to buy Wimdu. The key issue wasn’t the price and dilution, but the way a merger could pose impediments to speed and success.
"Merging company cultures and company management could create potentially fatal risks, especially if it slows us down. With Airbnb, we have a business that is already benefiting from network effects. We can win."
In the end, Airbnb’s founders realized that they wanted to take on the Samwers—and they wanted to win. But how?
The key was an aggressive, all-out program of growth that we call blitzscaling. Blitzscaling drives “lightning” growth by prioritizing speed over efficiency, even in an environment of uncertainty. It’s a set of specific strategies and tactics that allowed Airbnb to beat the Samwer brothers at their own game.
Just a few months later, determined to acquire the resources needed to outscale the Samwers, Brian raised $112 million in additional venture capital. Airbnb then embarked on an aggressive international expansion plan, including the acquisition of Accoleo, a smaller and more affordable German Airbnb clone, that allowed Airbnb to compete directly with Wimdu in its home market.
By the spring of 2012, Airbnb had opened nine international offices, setting up shop in London, Hamburg, Berlin, Paris, Milan, Barcelona, Copenhagen, Moscow, and São Paulo. Bookings had grown ten times since that previous February, and in June 2012 Airbnb announced its ten millionth booking.
“The Samwers gave us a gift,” Brian admitted many years later.
“They forced us to scale faster than we ever would have.”
By choosing to grow at a breakneck pace, Airbnb had achieved a dominant position in its market. Despite the initial advantages that the Berlin-based Wimdu had in human resources, financial capital, and European market knowledge, the techniques that Brian and his cofounders implemented allowed Airbnb to meet and ultimately defeat its challenger.