Summary of the Book "Masters of Scale" - By Reid Hoffman

Key Concepts in this book:

1. Consider every investor's "no" as an opportunity to learn something new.
2. When it comes to scaling your business, having the correct company culture is crucial.
3. Scaling up too quickly might be dangerous while scaling down too slowly can suffocate your business.
4. Respond to what your customers do rather than what they say when scaling up.
5. If scaling up becomes tough, shift to a more promising idea.
6. To scale a business successfully, you'll need good leadership.
7. The larger your company grows, the greater the impact it can have on society.

Who can benefit the most from this book:

• Serial entrepreneurs.
• Investors looking to scale a startup.
• Executives seeking to grow their companies.

 What am I getting out of it? Get motivational advice on growing your business from world-renowned inventors.

You've come up with your one-in-a-million concept. Now all you need to do is locate some investors to help you transform your little business into a household name. You're about to discover how the founders of PayPal, Airbnb, Facebook, and Netflix achieved just that, and it all starts with seeing "no" as an opportunity.

This summary looks at real-life success stories to show how timing, leadership, culture, and the ability to adapt are all important. Scaling a firm can be one of the most thrilling experiences an entrepreneur can have, and understanding how to make the best of unforeseeable circumstances can lead to tremendous growth and fulfilment.

• You'll learn why having a wild idea could signify you're onto something big.
• Why not having a 9-to-5 brings out the best in Netflix employees.
• And how Twitter arose from the ashes of a podcast-publishing site in this summary.

1. Consider every investor's "no" as an opportunity to learn something new.

When Kathryn Minshew was looking for investors for the online career platform she was trying to launch, she heard the word "no" a total of 138 times.

Minshew secured $28 million for The Muse, which today employs 200 people and serves 100 million customers, with only one "yes."

What is the story's moral? At least 99 per cent of the time, don't let a "no" hold you back.

The main point here is to see every investor's "no" as an opportunity for learning.

A "no" might sometimes point you in the direction of a solution. Let's imagine you're looking for money to develop a franchise of kickboxing gyms across Florida. "No, there are too many old people here for this to work," says the first investor you contact.

This can reveal a variety of information. Maybe your presentation needs to be tweaked; next time, including statistics that show a rise in interest in gym membership among people aged 60 and up. Alternatively, you might want to consider a different place. Or perhaps you decide to part ways with this investor because you don't agree with their ageist attitude. Regardless, that "no" is an opportunity to collect feedback and make adjustments to your strategy.

Pay attention to the people who tell you "no." Is it a concerned parent who does not want you to suffer? Or a spouse who doesn't want to upset the financial stability of your family? Those rejections have less to do with your idea and more to do with your relationships.

It's also crucial to dismiss "lazy no" responses from investors who are unwilling to commit time, study, or ingenuity. However, think about the “honest no” from someone whose judgment and wisdom you value.

The best sort of "no" is the "squirmy no" — a reaction that divides a room between folks who say, "That's the most absurd idea I've ever heard!" and those who respond, "That's the most ludicrous notion I've ever heard!" "That's so insane it just might work!" say some, while others say, "That's so crazy it just might work!"

This scenario indicates that you've hit on something so unique that no one knows what to make of it. While getting buy-in for an uncommon idea can be difficult, it also means you'll likely be the first to try it out. And being the first to scale something no one has ever seen is a fantastic and thrilling position to be in!

2. When it comes to scaling your business, having the correct company culture is crucial.

So you can start scaling up as soon as the finance is in place, right?

That's not the case. Instead, take advantage of the early stages, when you have a small but devoted – even passionate – set of users. Find your early superfans and hyper critics, and pay attention to what they have to say. Determine your boundaries, what you'll tolerate, and who you'll schmooze, including business heavyweights and government organizations. It will be difficult to dig this deep or change course as you scale up.

Honest, comprehensive feedback can help you get to the heart of who you are as a company. And staying in touch with that core will aid you in your next responsibility, which is to establish your company's culture.

The takeaway here is that fostering the correct company culture is important to your startup's growth.

Netflix employees appear to have a dream job. They don't have established working hours or vacation policies because Netflix believes that the employees they hire don't require a 9-to-5 schedule. Vacations are encouraged in the hopes of inspiring creative minds to return even more motivated. The corporation emphasizes that it is a team – albeit a competitive and determined one.

Clearly, this mindset is paying off for the streaming behemoth, but that is no coincidence. The surroundings, as well as its creative outcomes, are the culmination of a highly meticulous culture-creation process that spanned over 100 slides. Anyone with an internet connection can see Netflix's Culture Deck; have a peek for yourself!

It's critical to establish this clarity right away. It's tough to change or undo a culture once it's established. Determine your basic beliefs and the manner in which you will handle your employees and customers. If necessary, draft a manifesto. Then, hire individuals who believe in the culture you've created, since it will have a cascading effect: when you hire one person, you're also hiring their network.

This isn't to say that you should hire a homogeneous bunch; rather, you should commit to real diversity. Your early investors, like a diverse group of people, can respect the same set of essential beliefs. As a result, choose investors in the same way you would cofounders! That is the magnitude of their influence.

When done well, culture may bring a startup's surroundings together. It has the potential to boost employee morale and create a feedback loop in which people work even harder, causing the company to perform better and attract more customers.

3. Scaling up too quickly might be dangerous while scaling down too slowly can suffocate your business.

Tory Burch planned to open her retail store during Fashion Week in New York City. Customers, friends and family, the media, and a brand-new assortment of thrilling garments were all waiting for her. There was only one issue. She couldn't open any doors because she didn't have any. Her custom-designed bright orange door was yet to arrive.

She needed to make a decision. Should she wait until everything was perfect before opening the door, or should she let the crowds in through the open doorway?

The second option was chosen by Burch. The day was a huge success, and it foreshadowed the plaudits her brand would receive in the future.

The takeaway here is that scaling up too quickly can be harmful while scaling down too slowly might deplete your business.

One of the most difficult decisions an entrepreneur must make is when to launch. If you launch a product too soon, you risk alienating potential buyers by releasing an unfinished, uninteresting product that hasn't had time to blossom into its full potential. However, if you wait too long, momentum will stagnate, causing potential clients to look elsewhere and competitors to gain an advantage.

Business is not conducted in a static setting. Every minute, things change. A good leader keeps track of these developments to know when to wait and when to act. True masters of the game can strike so quickly that they achieve "escape velocity," leaving their opponents in the dust.

Peter Thiel, the founder of PayPal, grew his company quickly by paying his first customers $10 for referring others. Thiel's strategy worked, but such rapid expansion generally comes at a high cost and with ugly aftermath.

You rarely consider the morning after your first accomplishment when you're in the throes of it. You might wake up to some large fires, but leave them to burn. You can be nimble when your organization is young and lean. Your momentum will be stifled if you pause.

However, not all flames are created equal. You'll have to select which ones receive your attention: any issues with the main product or company culture should take precedence over, say, that nice office renovation.

If you're scaling up and run into a huge difficulty straight away, consider whether the problem has the potential to kill your company. Stop and take care of it if there's a good chance it could happen.

4. Respond to what your customers do rather than what they say when scaling up.

Remember how your English instructor used to say, "show, don't tell?" Following that well-worn piece of advice will help you get a leg up on the competition when it comes to scaling a startup.

Facebook was founded by Mark Zuckerberg specifically for Harvard students. The original users were disappointed when he stated that he would expand it to Yale, Princeton, and other colleges, but that didn't stop them from utilizing and increasing the service.

Users were more likely to stay on Facebook when the network expanded, despite their claims that they sought exclusivity.

The takeaway here is to respond to what your consumers do rather than what they say while scaling up.

After Michelle Obama wore designer Jason Wu's outfits, fashionistas declared their adoration for him. When choosing designer clothing from her site, Rent the Runway, Jennifer Hyman observed that her consumers weren't gravitating toward Wu's ensembles. Wu's designs, it turned out, did not meet their everyday requirements. Hyman told Wu about his discovery, and the two collaborated on a more profitable – and more wearable – Rent the Runway collection named "Jason Wu Grey."

Hyman didn't leave it at that. She noted that her customers would rent an outfit for a Saturday night cocktail party but keep it until Monday morning when they'd wear it to work with a jacket. Hyman was incurring significant repair and cleaning expenditures as a result of this, but it was also an opportunity. Hyman shifted to a subscription service that allowed clients to rent multiple clothes at a time and rotate them, and her business exploded.

What is the best way to find out what your consumers are up to? Many entrepreneurs run their own focus groups, which lead to some interesting and profitable findings. When Mariam Naficy, owner of a bespoke stationery business, Minted began to add less blatantly feminine designs into her offerings after learning that males are more involved in the wedding planning process today.

Observing and reacting to the actions of your clients might provide fascinating results. But what if you come upon an overwhelming obstacle? In this next concept, we will talk about it.

5. If scaling up becomes tough, shift to a more promising idea.

Ev Williams was working on Odeo, a podcast publishing platform, when he received some bad news: Apple, their mammoth competition, had the same idea. This was the final nail in his product's coffin.

Williams went back to the drawing board after realizing his odds of scaling his firm to compete with Apple were little to none. He gathered his team for a hackathon, which is a one-day event in which participants brainstorm and develop a new product or service.

And, lo and behold, something new came out of this meeting: a group-texting platform centred on status updates. Twitter, hello there.

The essential takeaway here is to pivot to a better idea if you run into problems scaling up.

In general, being able to pivot when things get difficult is a valuable life skill. It can give failing goods a fresh lease on life in the world of scaling startups. The global coronavirus epidemic provided the ultimate impetus for businesses of all kinds to acquire this knowledge. It turns out that moments of crisis can help a corporation become more adaptable and agile.

When the epidemic arrived, Airbnb needed to come up with quick solutions to stay afloat. As people moved from office buildings to home offices, the company shifted its focus to providing long-term accommodations for those who wanted to relocate and work remotely. Virtual salsa classes and tours of local attractions were also included in Airbnb stays, with one New Zealand Airbnb offering a virtual tour of a local sheep farm as an option.

When you're working on a solution for a company idea, it might sometimes turn into its own business idea. Tobi Lütke, a snowboarder, was seeking for a means to sell snowboards online, but he couldn't find any good software to help him get started. As a result, Lütke, who has been playing with code since he was a child, decided to build his own platform. Shopify was born as a result of this.

An opportunity to pivot can eventually move a firm forward, whether you're switching, swerving, or entirely rebooting. However, in order to properly harness that success, or to drive any achievement to its full potential, you'll need a special ingredient: leadership.

6. To scale a business successfully, you'll need good leadership.

It was a difficult transition for Angela Ahrendts to join Apple following a meteoric career as the CEO of Burberry. Everything was out of the ordinary. She'd gone from fashion to technology, from England to America, and now she was in charge of 70,000 employees.

Ahrendts realized she needed to share her vision with all of her new hires. She recognized, however, as the mother of three teenagers, that young Apple employees were unlikely to read lengthy communications. So she recorded a three-minute iPhone video that was both genuine and authentic, including a phone conversation from her kid, which she didn't edit out.

It was a fantastic start. The video was so popular that she made one every week for four years, no matter where she was in the world.

The takeaway here is that effective leadership is required to scale a business successfully.

When your company grows rapidly, it's almost as if you've transferred to a new, larger company, similar to Ahrendts's move to Apple. Everything is subject to change. It's critical to maintain a steady drumbeat of purpose and motivation to keep employees inspired.

Compassion, wisdom, and clarity of vision are required to achieve this properly. This necessitates a willingness to listen, learn, and accept advice - even from those in lower positions. It also entails the ability to take constructive criticism in stride. This can sometimes imply promoting opposing perspectives. Startups are like pirate ships, according to Mailchimp founder Ben Chestnut, but when they expand up, the mentality must change. It progresses from pirate to the Navy, with a slew of new laws, accountability, and good manners.

Marissa Mayer, Google's 20th employee, didn't hire MBAs with a lot of experience when she was employing new employees. Instead, she'd recruit a bright 23-year-old and give them a massive portfolio — including the entirety of Gmail. She'd have them move divisions just as they were feeling comfortable with their current one, challenging them to learn something new. This daring leadership move not only provided Mayer with an agile, cross-trained management team but also sparked a flood of new ideas as a result of the synergy of a group of clever individuals being exposed to diverse ways of doing things.

Mayer's leadership was extremely beneficial to Google – and the rest of the world – as many of these employees moved on to found their own businesses. Great leadership, in the best of circumstances, leads seamlessly into the final aspect of scaling big: doing good.

7. The larger your company grows, the greater the impact it can have on society.

Howard Schultz was seven years old when he returned home from school to find his father in bed, his hip to ankle in a cast. The World War II veteran had been in a work-related injury and was now physically and financially incapacitated — he had no medical coverage, perks, or protection.

Schultz made a deliberate decision when he became the owner of a small coffee shop called Starbucks decades later: he'd develop a firm that cared about its people even before it earned a substantial profit. Starbucks was the first firm in the United States to provide complete health insurance to all employees, including part-time workers.

A company's role can sometimes be that of a Trojan horse. To put it another way, a firm can carry on an embedded mission — and that mission may be about much more than just producing money.

The main point here is that the bigger your company gets, the more of an impact it may have on society.

The larger your company, the greater the influence you can have. You have the power to alter entire towns and regions, and the good you do can come back to bite you. When Schultz tried to expand in China, he had trouble keeping employees. He discovered that it was largely due to the low social position of baristas in society. As a result, he planned parent weekends, bringing in parents from far-flung cities and villages to observe the business and its advantages. Not only did it make for happy families, but the goodwill also helped to reduce employee turnover.

Scaling up can sometimes help you meet a societal need. Franklin Leonard's role at Leonardo DiCaprio's production firm, Appian Way, was to read scripts. Frustrated that only a few scripts were moving forward in the process, he made an anonymous call for good scripts that weren't being converted into movies — and then released the results. Leonard lost his job, but his now-official "Black List" has aided a number of indie filmmakers in completing their projects.

Scaling up allows successful businesses to do the kind of good that has an exponential impact. The CEO of Vista Equity Partners, Robert D. Smith, can trace his good fortune all the way back to his youth. Denver was recently desegregated at the time, and his busing system allowed him to attend a superior school across town. Smith decided to pay it forward in 2019. Following his commencement speech at Morehouse College, a historically Black college, he promised that he would pay off everyone's school debt. He was able to effectively scale up the lives of hundreds of graduates by scaling up his firm.

The essential takeaway from this summary is that scaling up can be an exciting and adventurous time in the life of a fledgling firm, but it can also be tough. A startup can move from promising to household recognition by actively developing a great culture under stellar leadership.

Here's some additional advice that you can put into practice:

Consider the eleven-star treatment.

Consider what an eleven-star version of your product or service might be – that is, something above and beyond the best – while brainstorming the ultimate finest iteration of your product or service. For example, a hotelier may see guests being picked up in antique cars or being greeted by a string quartet. Working backwards from there, discover the sweet spot between impossible and better than you could have imagined.