DUSTIN POH


Silicon Valley can frequently be too provincial in its views of entrepreneurship, strategy, and markets. Part of why I’m on this trip with Wences Casares (founder and CEO of Xapo) is to learn (and share) a broader view of entrepreneurship, where the strategies of Blitzscaling can be applied outside of Silicon Valley and China, and participate in Endeavor’s critical global mission for building the industries, companies, and jobs of the future.

In my previous podcast with my friend and entrepreneur Wences Casares, we talked about the ability of entrepreneurs down here to see global markets that Silicon Valley entrepreneurs might miss. In our second conversation, we now turn to the topic of how blitzscaling works when you’re not in Silicon Valley or China.

Some of the discussions I’ve had with Marcos Galperin, the founder and CEO of Mercado Libre, have helped me understand how the lessons of entrepreneurship differ in developing economies. When you see a weakness or challenge, try to convert it into a strength. In the case of Mercado Libre, if you’re faced with serious gaps in the reliability of the existing logistics infrastructure, build your own, and make your reliability a competitive advantage. The same holds true for payments. And by doing so, you build a vertically integrated marketplace with a much deeper value stack.

And while, of course, one of the rules for enduring technology companies is to achieve significant scale, one of the key strategies to achieve this goal for companies outside Silicon Valley is to address problems where a fragmented network is actually part of the value proposition.

For example, Skype would never have launched in the US because domestic long-distance was cheap and available in the late 1990s, whereas international calling was so expensive and challenging that the cost savings made it worth the hassle to force your correspondents to buy a headset and install Skype, especially for price-sensitive users like international students. The small domestic market in Estonia and the fragmented nature of the market in Europe changed from a disadvantage to an advantage for launching Skype.

Similarly, Spotify took advantage of its ability to launch in a smaller, constrained market like Scandinavia, which made the music labels more willing to experiment with different royalty systems. Spotify then used the data and insights from operating in Scandinavia to learn how to build the successful business globally.

Among the interesting new techniques that Wences and Xapo are using to build a global business is his approach to creating and growing a completely distributed company. Xapo has 275 employees scattered across 62 different countries. While this poses some coordination challenges, it also allows him to recruit the best talent from anywhere in the world. On the podcast, he and I talk about some of the learnings and tools he’s found that help him make remote work at Xapo more effective. You’ll hear why he thinks working in an office is like living with your parents, while working remotely is like living on your own for the first time. Wences explains how he uses always-on Zoom videoconferencing to implement a virtual “open door” policy that generates serendipitous meetings between employees on different continents, and why hiring employees without ever seeing their face or hearing their voice is actually a competitive advantage.

 

You can listen to our discussion on Greylock Partners’ Greymatter podcast HERE, and I encourage you to subscribe for these and other insights on Apple Podcasts, Stitcher, and wherever you listen to podcasts.

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