Blitzscaling 03: Michael Dearing on Capitalism, Creativity, and Creative Destruction

This is my second blog on the notes and my interpretations on the Blitzscaling session. Session 1 notes are here.In the fall of 2015, Reid Hoffman began taking session called Technology-Enabled Blitzscaling at Stanford University.Blitzscaling is what you do when you need to grow really, really quickly. It’s the science and art of rapidly building out a company to serve a large and usually global market, with the goal of becoming the first mover at scale. And its also about why organization culture is important for blitzscaling. Because when you’re growing an organization very fast, you have to make people accountable to each other on a horizontal or peer-to-peer basis, and not just vertically and top-down through the hierarchy.

Session 03 has given inputs and insights which probably I have never seen in past 5 years of my start-up journey. One day I would love to meet Michael Dearing. Without taking much of your time, here are the notes from the session:-

  1. Entrepreneurship play an incredible role in growing industrial output and human wealth. But manager working for these entrepreneurs play’s an equally important role as they amplify the creative and execution genius of those entrepreneurs . These observations were first highlighted by  Alfred D. Chandler, who played an important part in founding and studying business history at Harvard.
  2. Money that comes to silicon valley that fuels innovation doesn’t largely comes from wealthy families. Most of it comes from first or second generation successful entrepreneurs who are able to scale & build profitable businesses. So if are trying to build a start-up and can or will be able to build a successful one, you will be helping future generations of entrepenures & will help in generating and enhancing human wealth.
  3. Michael shared the story about Daniel Macallum who was probably the first manager in the history of human mankind highlighted the problem of how to align people to organizational goals and priorities and how to make them more accountable for their work. It will be a complete injustice if  I write about the efforts of Daniel Macallum in few lines. I will be writing an entire post of this.I will be writing a full blog on this shortly.
  4. What is the right kind of idea that you can pick up for execution:- It’s the one which you cannot keep to yourself and share it with friends , colleagues and peers. And you are giving your irrational time , money and other resources to understand more about how you can make this idea work.  Another way to evaluate the idea is when your friends , colleagues and peers keep coming back to you and saying that your idea is awesome.
  5. To validate that your idea is worth anything is to find the smartest person who can act as the biggest critic of your idea. And then yu have to give him/her full rights to rip-off your idea apart.
  6.  Your competition will never be about what if the big companies create something similar to your product, but about what is the alternative of your product.
  7. Why big companies fail to innovate is because they become slaves to the product/services that are acting as the cash cow.
  8. To allocate resource on new product development or new feature development, the decision should be on the economic value of the new thing rather than on the ego of the founder or senior executives of your team. Net Present Value(NPV)  can be used here to evaluate the economic value. Along with this, held people accountable to the economic value of few features for better decision making
  9. Founder’s need to be the editor-in-chief of the product roadmap. They should listen to every idea, but take decisions on their own.
  10. Founders should have frequent discussion of why they are building what they are building.
  11. Having a contrarian view om your start-up help VC’s understand how entrepreneurs mind work.
  12. Turn your insights(either technical or functional) to product and business. You have to move very fast from insight state to product state to business state. Spending too much time on insights stage will turn your idea into science product.
  13. How good founding team looks like:- Its a combination of balck/white thinker with grey thinker. Black/white thinker have a very strong view on product,people and everything else in the word. Grey thinkers are rational thinkers who act as shock observers for balck/white thinkers.
  14. During the initial years of start-up, hire people who are aligned with the passion of what you want to do. And the one’s who can pick up multiple things to do. In the nutshell avoid doing shopping on hiring multiple people for single thing.
  15. First few people of your start-up comes from your network. So avoid hiring any recruitment agency initially.
  16. Once you have founded team and hired few people from your network, next challenge for the rest of your start-up life is to answer
  17. Things you should ignore in the first few years of start-up
    1. PR to show that you are a rockstar founder
    2. PR to hire people
    3. Board of advisors
  18. Respect the ownership you have in your company & bring those people or VC’s who can add value to that ownership & have skin in the game which is beyond money.