The course of Raidy Hoffman, John Lilly, Chris Yeh and Allen Blue CS183C "Blitzscaling" Lecture 1
From the translator:
Chris McCann on medium.com publishes a lecture notes on Blitzscaling technology that Reidy Hoffman, John Lilley, Krya Yeh and Allen Blue read at Stanford University. We decided to translate this material and share it with the readers of Megamind. Since the lectures are quite lengthy, and time is not always enough, some lectures will be published in parts. Links to other parts will appear as they are published.
Lecture 1: Introduction
Lecture 2.1: Stages of growth of a startup, "family stage"
Lecture 2.2: Stages of growth startup, "family stage"
Lecture 3.1. Michael Dearing. A bit of the history of entrepreneurship and management
Lecture 3.2. Michael Dearing. Questions and Answers with Reid Hoffman
Lecture 3.3. Michael Dearing. Questions and Answers with Reid Hoffman
Lecture 4.1. Ann Mura-Ko: The Thunder Lizard Theory. Author value
Lecture 4.2. Ann Mura-Ko: The Thunder Lizard Theory. Product, corporate and categorical value.
Lecture 4.3. Ann Mura-Ko: Questions and Answers with John Lilly
')
For impatient there is a video .
The presentation that was used during the lecture:
The classic myth of Silicon Valley is that startups make it special.
The classic story of Silicon Valley is:
This story is partly true. It is very important to choose the right team of founders, choose the right product and find the right investment; however, this story omits many crucial aspects of building a stable company.
The main problem of this story is that today there are more than enough startups in Silicon Valley, in the USA and in the rest of the world - in Europe, Latin America, Asia, etc. Today it is quite possible to assemble a team, find means and create a product anywhere in the world .
At the same time, there are quite a few qualitatively new companies in Silicon Valley today. Why is that?
If you look at companies that cost more than $ 10 billion, all but two of them are located in Silicon Valley (Alibaba and Tencent are exceptions).
If you look at the first 10% of unicorns (companies that cost more than $ 1 billion on paper) - 50% of them come from the San Francisco Bay Area. If you look at the first 60% of unicorn companies - 47% of them are from the Bay Area.
Given that there are only 7 million people in the Bay Area - why is there such a concentration of transformation companies in this region? Something very strange is happening in the San Francisco Bay Area compared to other places where startups are created.
The theory and the basis of this lecture lies in the fact that Silicon Valley is special, because we have extensive experience and sufficient operational knowledge regarding the development of companies - Reid Hoffman and Chris Ye called this “Blitzscaling” (lightning-fast scaling).
The purpose of the lecture is to document and share knowledge about Blitzscaling with the participants of the lecture and the whole world (these lectures are recorded and laid out online).
There is no step-by-step scenario on how to expand the company, but strategies are presented that were developed and used by those who were already able to expand their companies. The lecture will be drawn to the main figures from different levels of scaling, so that they share their experiences.
Another major topic to be addressed is the concept of networks. It includes networks of people, talents, skills, universities, companies, investors, and all the relationships between these networks.
For example, in Silicon Valley, and in particular at Stanford University, there are a huge number of people who have built and developed many stable companies. Examples include: Frederick Terman, Hewlett and Packard, Andy Bechtolsheim, Aneel Bhusri, Sergey Brin, etc.
This is how Reid, John and Allen shared different levels of scaling.
A start-up of 3-4 people is very different from a company consisting of 15 employees, and together they, in turn, are very different from organizations per 100 employees. At every level of scaling, the company's experience changes.
Some key issues at various zoom levels include:
Some issues we will discuss this quarter.
For example, at Workday, one of the founders, Anil Bhusri, personally conducted interviews with all new employees from 0 to 500 people, since culture was especially important to him. However, when the number of employees exceeds 500-1000, it becomes difficult, and at this level it is necessary to look for a new approach in terms of staffing and culture.
The second example is when your company is small, your competitors are mostly other startups. However, as you increase your profits and customer base, your competition shifts from other startups to industry leaders.
One universal approach does not exist; instead, the purpose of the lecture is to provide you with a chessboard for thinking about how to move from one level of scaling to the next, as well as, first of all, when to expand.
Almost all information about startups here is focused on the first level of scaling - building a product with minimal functionality, performing iterations, searching for product compliance with the market, etc. Most of these points will not be revealed in this lecture.
1. When to make lightning fast scaling? The speed you have to work at is a controversial decision that you have to take on your own. For example, it does not make sense to undertake an extension, having only an idea. If you accelerate too much when you are not ready yet, your company will most likely die.
2. As soon as you grow, you will begin to move from universal workers to specialists. Initially, the first 5 people do everything, especially if in the early stages of development you need people who learn quickly and can do everything. As you expand, you will be hiring more and more professionals who will help you achieve operational effectiveness in specific areas.
3. As you expand, you move from:
4. The need to maintain innovation in the expansion process. Innovations do not appear immediately at the startup stage, and when you begin to expand, organizations need to constantly innovate. For example, to create new product lines, ways to more efficiently store data, new infrastructure, etc.
5. Saving either adaptation or excellence - Rapid development means operational losses. Example: Paypal increased the base of users and operations by 2-5% per day, and at one moment the number of letters to technical support exceeded 20 thousand and increased every day. Customers were angry and called 24 hours a day. For 2 months they had to increase the staff of technical support workers from 0 to 200, who were trained along the way, and as a result they had to weed out most of these workers. Such a negative effect was necessary with increasing speed to the detriment of professionalism.
6. Global reach - LinkedIn started with 12 countries, and subsequently added countries only when people wrote and asked to add their country.
7. Capital requirements - you need to either have a good income model that you can reinvest in operations, or raise funds through investments. At this point in this environment, there is a strong tension as to how much it should be expanded and how to keep monthly expenses at a stable level. How much money you lose on each transaction and how much you are willing to spend to win the market.
Allen Blu shared his personal opinion about LinkedIn's different growth stages and how things changed at each stage. In particular, I liked the photos that he posted regarding the number of users and employees of LinkedIn.
The family stage is the stage at which small teams create a product to achieve product compliance with the market.
The following points are most important at this stage:
In a startup, something is always burning. The main thing at this stage is to understand which flame to extinguish, and which to support. You need to focus on what is most important at the moment.
For example, analytics, tables of indicators and data management are irrelevant if no one is interested in your product. Making people interested in your product is much more important than various indicators (at this stage).
The key point here is that trying to get people to use the new product and be interested in it is really difficult. As soon as you find a product that basically starts working, then you can start taking care of the systems to manage this product.
One of the favorite articles of John Lilly at this stage is the Paul Graham article. Do things that don't scale
When you start, your entire team should do the following:
These actions will not expand your business, but they are essential for getting the first 100 users.
For example, the lecture told the story of Airbnb. When they first started, the founders found potential customers on Craigslist. They literally walked door to door in New York, talking to every potential customer, showing them how to place their rooms, and even taking pictures of houses for their clients.
By forcing the founders and the original team to do this, you will be able to understand for yourself what your customers look like and who your customers are.
Xi. Materials for reading at the stage of growth “Stage of the family”
1. Do things that don't scale
2. Startup Advice, Briefly
3. Why Silicon Valley Works
Lecture 2.1: Stages of growth of a startup, "family stage"
Chris McCann on medium.com publishes a lecture notes on Blitzscaling technology that Reidy Hoffman, John Lilley, Krya Yeh and Allen Blue read at Stanford University. We decided to translate this material and share it with the readers of Megamind. Since the lectures are quite lengthy, and time is not always enough, some lectures will be published in parts. Links to other parts will appear as they are published.
Lecture 1: Introduction
Lecture 2.1: Stages of growth of a startup, "family stage"
Lecture 2.2: Stages of growth startup, "family stage"
Lecture 3.1. Michael Dearing. A bit of the history of entrepreneurship and management
Lecture 3.2. Michael Dearing. Questions and Answers with Reid Hoffman
Lecture 3.3. Michael Dearing. Questions and Answers with Reid Hoffman
Lecture 4.1. Ann Mura-Ko: The Thunder Lizard Theory. Author value
Lecture 4.2. Ann Mura-Ko: The Thunder Lizard Theory. Product, corporate and categorical value.
Lecture 4.3. Ann Mura-Ko: Questions and Answers with John Lilly
')
For impatient there is a video .
The presentation that was used during the lecture:
I. Classic Silicon Valley Myth
The classic myth of Silicon Valley is that startups make it special.
The classic story of Silicon Valley is:
- You start working on your idea in your garage (or in the dorm room)
- Your team is a group of technical founders.
- You are creating a new product (application)
- You find investments for your new product.
- You are reaching the market for the product, and already in anticipation
This story is partly true. It is very important to choose the right team of founders, choose the right product and find the right investment; however, this story omits many crucial aspects of building a stable company.
Ii. The problem of the classical myth
The main problem of this story is that today there are more than enough startups in Silicon Valley, in the USA and in the rest of the world - in Europe, Latin America, Asia, etc. Today it is quite possible to assemble a team, find means and create a product anywhere in the world .
At the same time, there are quite a few qualitatively new companies in Silicon Valley today. Why is that?
If you look at companies that cost more than $ 10 billion, all but two of them are located in Silicon Valley (Alibaba and Tencent are exceptions).
If you look at the first 10% of unicorns (companies that cost more than $ 1 billion on paper) - 50% of them come from the San Francisco Bay Area. If you look at the first 60% of unicorn companies - 47% of them are from the Bay Area.
Given that there are only 7 million people in the Bay Area - why is there such a concentration of transformation companies in this region? Something very strange is happening in the San Francisco Bay Area compared to other places where startups are created.
The theory and the basis of this lecture lies in the fact that Silicon Valley is special, because we have extensive experience and sufficient operational knowledge regarding the development of companies - Reid Hoffman and Chris Ye called this “Blitzscaling” (lightning-fast scaling).
Iii. Purpose of the lecture
The purpose of the lecture is to document and share knowledge about Blitzscaling with the participants of the lecture and the whole world (these lectures are recorded and laid out online).
There is no step-by-step scenario on how to expand the company, but strategies are presented that were developed and used by those who were already able to expand their companies. The lecture will be drawn to the main figures from different levels of scaling, so that they share their experiences.
Iv. Network
Another major topic to be addressed is the concept of networks. It includes networks of people, talents, skills, universities, companies, investors, and all the relationships between these networks.
For example, in Silicon Valley, and in particular at Stanford University, there are a huge number of people who have built and developed many stable companies. Examples include: Frederick Terman, Hewlett and Packard, Andy Bechtolsheim, Aneel Bhusri, Sergey Brin, etc.
V. Scale Levels
This is how Reid, John and Allen shared different levels of scaling.
A start-up of 3-4 people is very different from a company consisting of 15 employees, and together they, in turn, are very different from organizations per 100 employees. At every level of scaling, the company's experience changes.
Vi. Key issues at various zoom levels
Some key issues at various zoom levels include:
Some issues we will discuss this quarter.
- What is the role of the founder? CEO? Teams? Board of directors?
- How does the hiring process change as the company scales? Who! How? What is an introduction to the post?
- What do you think about product conformity to the market? How do you know that? How is it evolving?
- What should you know about competition? Other threats?
- What are the main decisions and questions you should ask yourself? When?
- What do you need to know about partners and business development?
- How does your strategy change as you grow?
- What do you think of global concepts such as markets, competition, scale?
- And much more…
For example, at Workday, one of the founders, Anil Bhusri, personally conducted interviews with all new employees from 0 to 500 people, since culture was especially important to him. However, when the number of employees exceeds 500-1000, it becomes difficult, and at this level it is necessary to look for a new approach in terms of staffing and culture.
The second example is when your company is small, your competitors are mostly other startups. However, as you increase your profits and customer base, your competition shifts from other startups to industry leaders.
VII. How scaling affects your company's functions
One universal approach does not exist; instead, the purpose of the lecture is to provide you with a chessboard for thinking about how to move from one level of scaling to the next, as well as, first of all, when to expand.
Almost all information about startups here is focused on the first level of scaling - building a product with minimal functionality, performing iterations, searching for product compliance with the market, etc. Most of these points will not be revealed in this lecture.
VII. Key considerations for Blitzscaling
1. When to make lightning fast scaling? The speed you have to work at is a controversial decision that you have to take on your own. For example, it does not make sense to undertake an extension, having only an idea. If you accelerate too much when you are not ready yet, your company will most likely die.
2. As soon as you grow, you will begin to move from universal workers to specialists. Initially, the first 5 people do everything, especially if in the early stages of development you need people who learn quickly and can do everything. As you expand, you will be hiring more and more professionals who will help you achieve operational effectiveness in specific areas.
3. As you expand, you move from:
- People sitting in the same room and performing all the tasks.
- People who manage other people and those who do everything.
- Performers who focus on expanding the organization, managers and people who do everything.
4. The need to maintain innovation in the expansion process. Innovations do not appear immediately at the startup stage, and when you begin to expand, organizations need to constantly innovate. For example, to create new product lines, ways to more efficiently store data, new infrastructure, etc.
5. Saving either adaptation or excellence - Rapid development means operational losses. Example: Paypal increased the base of users and operations by 2-5% per day, and at one moment the number of letters to technical support exceeded 20 thousand and increased every day. Customers were angry and called 24 hours a day. For 2 months they had to increase the staff of technical support workers from 0 to 200, who were trained along the way, and as a result they had to weed out most of these workers. Such a negative effect was necessary with increasing speed to the detriment of professionalism.
6. Global reach - LinkedIn started with 12 countries, and subsequently added countries only when people wrote and asked to add their country.
7. Capital requirements - you need to either have a good income model that you can reinvest in operations, or raise funds through investments. At this point in this environment, there is a strong tension as to how much it should be expanded and how to keep monthly expenses at a stable level. How much money you lose on each transaction and how much you are willing to spend to win the market.
Ix. LinkedIn Lightning Scale Example
Allen Blu shared his personal opinion about LinkedIn's different growth stages and how things changed at each stage. In particular, I liked the photos that he posted regarding the number of users and employees of LinkedIn.
X. “Family Stage”
The family stage is the stage at which small teams create a product to achieve product compliance with the market.
The following points are most important at this stage:
- How good is your product?
- Is your product interesting to anyone?
- Can you hire workers? How do you convince anyone to join you on Facebook / Uber / Airbnb / etc? How do you interest employees?
- How will you pay employees at the slightest loss of management?
- Many letters: product, product, people, people, and how you will pay people.
- Moments that are not important at this stage:
- Board of Directors
- Analytics, indicators and indicators table - Just follow the main elements.
- Strategy (better to act)
- All the rest
In a startup, something is always burning. The main thing at this stage is to understand which flame to extinguish, and which to support. You need to focus on what is most important at the moment.
For example, analytics, tables of indicators and data management are irrelevant if no one is interested in your product. Making people interested in your product is much more important than various indicators (at this stage).
The key point here is that trying to get people to use the new product and be interested in it is really difficult. As soon as you find a product that basically starts working, then you can start taking care of the systems to manage this product.
One of the favorite articles of John Lilly at this stage is the Paul Graham article. Do things that don't scale
When you start, your entire team should do the following:
- Talk to each user
- Literally take their phones
- Download the app for them
- Show them how to register and how to use it.
- Do it for the first 100 users.
These actions will not expand your business, but they are essential for getting the first 100 users.
For example, the lecture told the story of Airbnb. When they first started, the founders found potential customers on Craigslist. They literally walked door to door in New York, talking to every potential customer, showing them how to place their rooms, and even taking pictures of houses for their clients.
By forcing the founders and the original team to do this, you will be able to understand for yourself what your customers look like and who your customers are.
Xi. Materials for reading at the stage of growth “Stage of the family”
1. Do things that don't scale
2. Startup Advice, Briefly
3. Why Silicon Valley Works
Lecture 2.1: Stages of growth of a startup, "family stage"
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Source: https://habr.com/ru/post/296840/
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