We live in a global, hyperconnected world. There is incredible value to companies that operate at massive scale. But those companies have responsibilities that go with that scale, and one of those responsibilities is to provide an environment in which other, smaller companies and individuals can thrive. Whether they got there by blitzscaling or other means, many of the internet giants are platforms, something for others to build on top of. Bill Gates put it well in a conversation with Chamath Palihapitiya when Palihapitiya was the head of platform at Facebook:
A platform is when the economic value of everybody that uses it exceeds the value of the company that creates it.The problem with the blitzscaling mentality is that a corporate DNA of perpetual, rivalrous, winner-takes-all growth is fundamentally incompatible with the responsibilities of a platform. Too often, once its hyper-growth period slows, the platform begins to compete with its suppliers and its customers. Gates himself faced (and failed) this moral crisis when Microsoft became the dominant platform of the personal computer era. Google is now facing this same moral crisis, and also failing.
Tim O’Reilly
Great article about the issues with Silicon Valley’s insistence of focusing on fast growth and scale above anything else. While Google is discussed in more detail, Facebook also fits the bill of a platform competing with its content suppliers – and it doesn’t even do that in a consistent manner. As for Uber and Lyft, both highlighted as examples of scaling gone wrong, the poor performance of their recent IPOs should serve as a warning for future companies to avoid these sort of tactics and focus on more sustainable growth strategies.
I would say Facebook’s latest initiatives, Calibra and the plan to merge their messaging products into a single encrypted system, are other prime examples of blitzscaling, trying to capture new markets as quickly as possible and deny entry to further competitors.
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