Tech unicorns blitzscale business niches for better scale economies from Uber and Lyft to Pinterest, Slack, and Zoom.

Dan Rochefort

2019-05-03 11:29:00 Fri ET

Key tech unicorns blitzscale business niches for better scale economies from Uber and Lyft to Pinterest, Slack, and Zoom. LinkedIn cofounder and serial entrepreneur Reid Hoffman explains in his recent book that tech unicorns rapidly scale up core functions to reap network effects despite substantial uncertainty. Network effects often manifest in the form of freemium users (Dropbox, Facebook, and LinkedIn), cloud services (Amazon and Zoom), and online subscriptions (Apple and Netflix). About 2 decades ago, the last IPO boom brought to the stock market a boatload of profitless dotcom companies. Many of these dotcom companies never had the opportunity to blitzscale their core operations with gargantuan losses.

In accordance with the Hoffman zeitgeist of Silicon Valley, the current IPO game focuses on how tech unicorns become big before substantial economic uncertainty strikes hard. Beyond the singularity point, these tech unicorns start to worry about net profits and other socioeconomic bottomline metrics. This competitive strategy works well for tech titans such as Facebook, Amazon, Microsoft, Google, Apple, Nvidia, and Twitter (FAMGANT). Nevertheless, the same strategy may turn out to be less effective for Airbnb, Uber, Lyft, Netflix, Slack, and Zoom as they experience competitive bottlenecks in lieu of both scale economies and network effects.

 


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