This article is an excerpt from the Shortform book guide to "Blitzscaling" by Reid Hoffman and Chris Yeh. Shortform has the world's best summaries and analyses of books you should be reading.
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Are you looking for tips for business growth? What two growth limiters should you avoid?
If you’re trying to grow a company, then you should follow these two business growth tips. You must have a product that can satisfy the market and you must be able to scale your operations.
Keep reading for our top two tips for business growth.
Two Business Growth Limiters to Avoid
The best tips for business growth focus on designing your high-growth company around these two obstacles.
Lack of Product/Market Fit
Product/market fit is having a product that can satisfy the market. If you don’t build what the market wants, then you won’t succeed, no matter how much money you throw at it.
Ways to improve product/market fit:
- Get your product in the hands of users and iterate (Shortform note: see our summary of Lean Startup a comprehensive guide on this.)
- Use your network and talk to smart people with relevant knowledge
Inability to Scale Operations
This is a nice problem to have, since it means you’re growing faster than you can handle, but it can’t be ignored if you’re growing quickly.
Inability to scale includes two types of limitations:
Human Limitations of Scale
As your team grows, communication and coordination become exponentially more complicated, since the number of pairwise combinations grows rapidly (n choose 2). Where a team of 5 has just 10 such connections, a team of 20 has 190, and a team of 100 has 4,950. The team grows 20x, but the number of unique connections grows by 495x.
Team growth therefore requires significant overhauls of management methods (explored later in the book)
Mitigation: Design a business model with as few human beings as possible.
- WhatsApp supported 500 million users with 43 employees
Mitigation: Outsource work to contractors or automate it.
- Note: Per Michael Porter, do not outsource anything that is key to your competitive advantage.
Infrastructure Limitations of Scale
You must avoid degradation of service when you have more users. Otherwise, a better executing competitor will steal your users.
- Friendster was a social network phenomenon, but its servers couldn’t handle the growth. Profiles might take 40 seconds to load.
- Tesla has more demand than it can service now.
Mitigation: Outsource logistics to large providers.
- Outsource server hardware and management to AWS.
- Outsource hardware manufacturing to Chinese factories.
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Here's what you'll find in our full Blitzscaling summary :
- How to build a company that grows to a large size very quickly
- Why you have to ignore efficiency and profit for speed
- How companies like Facebook, Uber, and Airbnb were able to blitzscale
