Blitzscaling - Reid Hoffman and Chris Yeh | Nextbigwhat
source link: https://nextbigwhat.com/ideas/blitzscaling-reid-hoffman-and-chris-yeh/
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Exponential growth: The design
Blitzscaling’s first core technique involved designing a business model that is capable of exponential growth. The growth factors that should be utilized are:
1. Market size – You must appeal to a large market and have a plan for scaling up to this market. For example, Jeff Bezos saw bookselling, with Amazon book, as merely the start of Amazon
2. Distribution – You want your business to turn viral, in that your users bring in more users for you. Importantly, virality normally starts with a service that is free and then requires you to pay to upgrade. An example of this would be Dropbox.
3. High gross margins – This equates to sales minus the cost of goods. You want to maximize this with the optimum for Blitzscaling seemingly being a gross margin of roughly 60%.
4. Network effects – This is the most important factor for your business’ long-term vision. Network effects are fundamental to developing the positive feedback loop spoken about earlier in which superlative growth and value creation are produced.
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