Decoding blitz and sustainable scaling for startups, and why founders should pick one over the other

Startup scaling is hard work. So, be careful how you choose to scale your startup. While blitz scaling focuses on speed over efficiency, sustainable scaling prioritises efficiency in the face of uncertainty. It’s up to you, which way you want to go.

The is an excerpt from article originally published in The Economic Times on Sep 22, 2020

….as entrepreneurs, we are in a hurry to prove our ‘killer product’. We believe we have a better mousetrap. We think we have a huge TAM (total addressable market) and we can scale faster than the rest. There are two ways to scale — the classical, old-fashioned way or via blitzscaling.

Blitz scaling and duopolies

…the duopolies in India such as Uber vs. Ola, Zomato vs. Swiggy, Bounce vs. Vogo, Zoomcar vs. Drivezy, and so on. To attract users, companies offer huge incentives (unit economics be damned), consequently incur massive losses quarter after quarter, and year after year. Investors keep pumping money at breathtaking valuations to cover these losses. An arms race between well-funded startups is set up. This is the story of many unicorns today…
…There are many notable blitzscaling failures in the transportation sector — including startups such as Bounce, Vogo, Drivezy, Uber, Lyft, and even Ola Cabs. After raising USD200 million for scooter sharing, Bounce pivoted to manufacturing electric scooters. After raising USD200 million, Vogo was recently acquired by Chalo for an undisclosed equity (read fire-sale). After raising USD150 million, Drivezy shut its operations last year. Lyft raised a total of USD7.2 billion in funding and yet remains unprofitable. Operating losses are still at 30% of revenue and investors just don’t see a path to profitability.

Read the complete article on this link on The Economic Times.

Author: Rahm Shastry, Co-founder and Executive Chairman, DriveU

Decoding blitz and sustainable scaling for startups, and why founders should pick one over the… was originally published in DriveU Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.