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Blitzscaling: Why burning money is key to rapid growth!

Blitzscaling is a term that is increasingly used in the world of startups and scale-ups. But what exactly is blitzscaling and how can you apply it to your company? In this blog we take a closer look at what blitzscaling is and share some interesting examples.

What is blitzscaling?

A strategy that enables companies to grow rapidly and increase their market share through aggressive and risky growth tactics. At the heart of it is putting normal growth first over efficiency, with great uncertainty about when the investments will pay off. The aim of this strategy is to achieve the first-scaler advantage and achieve a huge market capitalization.

Who successfully applied blitzscaling?

Here are some examples of companies that have successfully blitzscaled in the past.

Airbnb: Brand awareness was a critical success factor

The first example of a company that successfully applied Blitzscaling is Airbnb. Airbnb is an online platform for booking accommodations around the world. The company started in 2008 with a few hosts in San Francisco and now has more than 7 million properties in 220 countries. Airbnb has invested aggressively in marketing and partnered with major companies to increase brand awareness and grow rapidly.

Airbnb chose to adopt the “blitzscaling” strategy for several reasons. First, in the highly competitive accommodation rental market, it was necessary to quickly gain market share and get ahead of potential competitors. Furthermore, rapid growth allowed Airbnb to amplify network effects and be more valuable to the customer groups it serves. More hosts (accommodations) and more guests (bookers) make the platform more valuable to users and create a competitive advantage. Furthermore, Airbnb was able to take advantage of several other first-scaler benefits. What is further relevant to note is the fact that no other players had scaled up in this niche yet. So the timing was also important. Now Airbnb managed to raise a lot of capital to finance the aggressive growth. This would have been a lot more difficult if other competing parties had applied this strategy earlier.

Facebook: ”I have moved to Facebook”

Blitzscaling example

The second example of a company that successfully applied Blitzscaling is Facebook. Facebook is the world’s largest social networking platform, with over 2.8 billion active users. The company started as a small network of university students and quickly expanded to other schools and later to the general population. By aggressively investing in product development and attracting new users, Facebook has maintained its dominance in the market. By being the largest Facebook was able to lure users away from smaller competing platforms. For example, Hyves, a Dutch social media platform lost almost there complete user base when users who left put on their profile that they were moved to Facebook.

Do you want more business model inspiration like blitzscaling?

I hope this blog answers the question ”What is blitzscaling?”. Do you want more Business Model Inspiration? Buy the book Business Model Hacking. The book will help you to create better, more resilient business models. Outcome: less stress & competition, more profit & impact.

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