Growth loops

Growth Loops

Loop vs Funnel

Funnel	Loop
Linear: A → B → C → D	Circular: output becomes next input
Each run is independent	Each cycle compounds previous
Growth requires constant new top-of-funnel	Growth accelerates with scale
Example: paid ad → landing → signup	Example: user invites → new user invites more

Core Loop Anatomy

[Input] → [Action] → [Output] → feeds back to [Input]

Types of Growth Loops

1. Viral / Referral Loop

User gets value → Shares with others → New users sign up → They share → ...

• Inherent virality: Product is better with others (Slack, Notion, Figma)
• Incentivized virality: Reward for sharing (Dropbox +500MB, Uber credits)
• Word of mouth: Delight → unprompted recommendation
• Embeds: Widget/badge on user's site links back to you

K-factor formula:

K = i × c
i = invitations sent per user
c = conversion rate of invites
K > 1 → exponential growth
K = 0.5 → viral assist (meaningful but not self-sustaining)

2. Content / SEO Loop

Users generate content → Content ranks in search → New users find it →
They create content → More rankings → ...

Examples: Quora, Reddit, TripAdvisor, Stack Overflow

3. Paid Loop

Revenue → Reinvest in ads → More customers → More revenue → ...

Sustainable only when: LTV > 3× CAC and payback period < 12 months

4. Product-Led Loop

Free users get value → Upgrade to paid → Fund product improvements →
Better product → More free users → ...

5. Sales-Assisted Loop

AE closes deal → Customer success → Expansion/upsell →
Champions move to new company → New deals → ...

6. Community Loop

Members join → Create content/connections → Value increases →
More members join → More content → ...

Flywheel Design

Amazon Flywheel (reference model)

Lower prices → More customers → More sellers → 
Wider selection → Better experience → Lower prices

How to Design Your Flywheel

1. List every value-creating activity in your business
2. Identify which outputs from one step become inputs to another
3. Find the highest-leverage entry point (where to push hardest)
4. Identify friction points that slow rotation
5. Measure cycle time: how long does one full rotation take?

Flywheel Template

[CORE VALUE] → [USER ACTION] → [NETWORK EFFECT] →
[PLATFORM IMPROVEMENT] → [BETTER CORE VALUE] → repeat

Loop Instrumentation

Metrics to Track Per Loop

Metric	Formula	Target
K-factor	invites_sent × invite_conversion	> 0.3 (assist), > 1.0 (viral)
Cycle time	time for one loop rotation	Minimize
Loop conversion	% who complete the loop action	Maximize
Amplification	new users per existing user per period	Track trend

Loop Health Dashboard

Weekly Loop Report:
- Users who triggered a loop action: [N]
- Downstream activations from loop: [N]
- Amplification rate: [ratio]
- Cycle time (median): [days]
- Loop-attributed revenue: [$]

Network Effects

Types

Type	Mechanism	Example
Direct	More users = more value for each user	WhatsApp
Indirect	More users → more 3rd party supply	iOS App Store
Data	More usage → better product	Google Search
Social	Status/identity tied to network	LinkedIn
Marketplace	Buyers attract sellers and vice versa	Airbnb

Network Effect Strength

Rate yours on 3 dimensions:

1. Breadth: How many users does each new user benefit?
2. Depth: How much does each additional user improve the experience?
3. Speed: How quickly does value compound?

Compounding Growth vs Linear Growth

Modeling the Difference (Python)

def project_growth(initial, periods, monthly_rate, loop_multiplier=1.0):
    linear = [initial + initial * monthly_rate * t for t in range(periods)]
    compound = [initial * (1 + monthly_rate * loop_multiplier) ** t for t in range(periods)]
    return linear, compound

# With 10% monthly growth:
# Month 12 linear:  initial × 2.2
# Month 12 compound: initial × 3.1 (at 1.0x multiplier)
# Month 12 compound: initial × 5.4 (at 1.5x multiplier — loop boost)

Loop Activation Strategies

Making the Loop Fire

1. Reduce friction at the sharing/invite moment
2. Increase perceived value of the shared artifact
3. Time the prompt at peak satisfaction moment
4. Make sharing native to the workflow (not an afterthought)
5. Reward completion of the full loop, not just initiation

Common Loop Killers

• Invite flow requires too many steps
• Shared content is not compelling to recipient
• Onboarding of referred users is worse than organic
• Reward feels underwhelming relative to effort
• Loop fires at wrong moment (before user has experienced value)

Prioritization: Which Loop to Build First

Score each candidate loop:

Criterion	Weight	Score (1–5)	Weighted
Cycle speed	30%
Conversion probability	25%
Strategic moat	25%
Implementation cost	20%

Build the highest weighted-score loop first.