The Harder Funding Gets, the Less You Should Brake? Blitzscaling Has a Different Playbook in Bear Markets
Deep Thoughts on AI and Aspirations —— ByteDance Deep Thinking Circle
When funding gets tough, the startup world’s default response is contraction: slash budgets, freeze hiring, and make “survival” the only strategy. But Reid Hoffman, LinkedIn co-founder, offered a contrarian view during bear markets: blitzscaling still works in capital winters, you just need to change how you play. This judgment deserves careful examination, because it contains logic most people haven’t thought through.
Speed Is Relative Position, Burning Cash Is Just Surface
Blitzscaling is often misunderstood as “burning money for scale at any cost.” That’s a misreading. Its essence is prioritizing speed over efficiency, and the value of speed is relative—it measures the position gap between you and competitors. When capital becomes expensive, what changes is how much you’re willing to pay for speed, not the fundamental fact that “relative position determines survival.”
Bear markets even provide a special window: many companies are already short on cash and talent, some simply disappear. A startup’s real opponents were never the giants, but peers competing for the same users, the same talent pool, the same funding round. When they collectively lose momentum, your relative speed actually emerges. This is why great companies often emerge from market downturns. After the internet winter came LinkedIn, came the PayPal mafia’s serial entrepreneurship—none of it coincidence.
PayPal’s experience is worth expanding on. It went public in the coldest year of the internet bust, one of only two tech companies to IPO that year; to reach that point, it continued raising funds and taking risks through the winter. After weathering it, that group took their returns and successively built Yelp, YouTube, and a host of other companies. Capital didn’t vanish in the winter, it just concentrated in the hands of a few companies that could handle risk, then returned to them at much higher multiples.
The Price of Mistakes Has Changed, Risk Management Becomes the Primary Capability
The most substantial difference between bull and bear markets is the cost of error. In bull markets, mistakes can be fixed by raising another round; in bear markets, one mistake might be fatal. So bear markets aren’t about not expanding—they’re about calculating your risk structure before expanding, securing your defensive line first, then talking about speed.
Interestingly, the flip side of risk is opportunity. When everyone instinctively contracts, certain resource prices collapse: advertising gets cheaper, talent that normally wouldn’t consider startups starts looking at opportunities, customer acquisition costs drop overall. This is when offensive moves have the best cost-effectiveness. Defense is the entry move, offense is what delivers results—provided your baseline is already secured. My judgment: the correct sequence in bear markets is to first play defense and nail down your baseline, then counterattack by investing in one or two points while opponents are collectively defending. Offense doesn’t mean spreading everywhere either; with limited resources, concentrating to break through one or two positions opponents have abandoned is far more effective than casting a wide net.
The Funding Narrative Must Change, It’s Part of the Playbook
The “growth at all costs” story won’t sell in bear markets. What you need to demonstrate is capital efficiency and revenue capability. Bezos is a master of this playbook: Amazon switched between growth and profitability multiple times, each turn toward profitability proving its revenue generation ability to capital markets, then using that proof to secure resources for the next phase. Narrative isn’t PR, it’s a financing tool. Whatever the market is willing to pay for at each stage, prove that first. One thing to distinguish: talking about “surviving longer” is just a fallback; the primary narrative investors care about is still growth. Short-term, prove your survival capability first; long-term, you must always hold evidence of growth in your hand.
For risk management, Hoffman’s ABZ framework is worth borrowing. A is your current mainline—write clearly why there’s demand, how you’ll reach customers, what resources you need. B is often misunderstood as a backup plan; its real use is a series of continuous validations and adjustments. Treating B as a static blueprint is a major mistake; the correct approach is to execute while constantly asking “what if this step doesn’t hold,” using data and the smartest people around you as calibrators. Z is the final pivot, but the trigger time isn’t bankruptcy day—it’s when you realize the path is wrong and still have resources to pivot. That’s how Flickr and Slack emerged: when their gaming main business stalled, they switched to the photo-sharing and team communication tools that had grown organically, completing the pivot while still holding chips.
Writing Plan A as a written checklist is more practical: why you believe there’s demand, how the market will react, how you plan to reach customers, who the first customers might be, what people and resources completing it requires. This list isn’t for investors, it’s for self-calibration—pull it out periodically to check where reality differs from assumptions.
Contraction Can Also Be Offensive
Another misread move in bear markets: contraction. Many treat budget cuts and hiring freezes as the end of defense, but precise contraction is actually preparation for offense. The correct targets for contraction are directions that failed validation or remain unclear long-term; concentrate the saved cash and morale on one winning hand. The wrong targets are product core and market validation—cutting mainline investment too means surrendering early, handing over the offensive chips that were already scarce in bear markets.
The judgment criterion is simple: after this cut, does the company still have a core that customers will pay for? If yes, contraction means moving resources toward winning odds; if no, contraction is just layoff-style self-comfort. The former is repositioning, the latter is surrender. They look identical in execution; the difference lies only in what gets cut.
Down to Decision Sequence
If I were to sequence bear market decisions: first assess your chips, including risk appetite and ability to manage risk; then judge whether competition in your space is determined by relative speed. If so, don’t let the “survive” narrative drag you into pure defense. Nail down your baseline first, then find offensive points, while updating your financing narrative to the version the market will buy at this stage.
This playbook also has failure conditions. If competition in your industry doesn’t depend on relative position, if there’s no market share to capture in the bear market, or if you’re a first-time founder with neither accumulated resources nor financing channels, then waiting is reasonable. The prerequisite for blitzscaling is holding a winning hand. Speed has never been a luxury in bear markets—failing to get risk management right is.