Startups Are a Race to Get to Scale

David Sacks: I don’t want people to interpret “Blitzfail” as a criticism of blitzscaling, which is often necessary and desirable for startups. This is meant to be a companion piece to that concept.

The idea behind blitzscaling is that you want to be the first to scale. The startup that wins the market isn’t necessarily the first mover; it’s the one that achieves scale first. That’s when a network effect or some other economy of scale kicks in.

Commoditization is the reason startups must blitzscale

It’s better to risk a blitzfail than to never blitz at all. The reason you have to blitz is to avoid commoditization. That’s what happens when the rest of the tech ecosystem catches up to your innovation.

As you’re getting commoditized, you’ll find your pricing power is undercut or—even worse—a larger player has simply assimilated the functionality of your product. You discover that what you’ve been working on is not a product but a feature of someone else’s product.

Commoditization is unlike all the other blitzfail problems, because the company isn’t the one causing it. Rather, commoditization happens to the startup when it’s not moving fast enough. 

Commoditization is the one item on my list that argues for moving faster, not slower. It’s incumbent upon a startup to stay ahead of the competition by developing a network effect or some other advantage of scale before it happens to them.

Pressure to scale causes all the other blitzfail problems

For many startups, the pressure to be the first to scale causes all their other blitzfail problems. A founder who internalizes the pressure may attempt to scale prematurely or blitz at the expense of a lot of other things.

I compare it to a high-performance sports car that dangerously redlines. Blitzfail is an attempt to identify the governors on growth, the things that are going to cause the engine to overheat. A startup should go as fast as possible—just not faster.