🔍 How To Manufacture Compounding Growth

The Astros threw a no-hitter yesterday.

Me, I'm hitting a home run today with this issue all on growth loops.

We're going to cover four growth loops and examples:

1. Viral Loops
2. Content Loops 
3. Paid Loops 
4. Retention Loops 

Let's get into the weeds.

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Growth loops are systems that feed themselves.

Where the end connects back to the beginning.

And that beginning is defined as an input. Then, through a process or action, it generates an output that is reinvested back into the input.

Meaning the end of one loop is the beginning of another.

And different growth loops serve different reasons.

But at the heart of each one is specific value creation.

For example, acquisition, viral, or retention, to name a few.

They're Two Main Benefits To Building Loops Into Your Company

1. They Compound

The more you put in. The more you get out.

2. They're Defensible

Growth loops are unique to each business. And designed with specificity in mind.

So, what works for Company A will likely not work for Company B.

Let's Take Mailchimp For Example

In 2009, Mailchimp:

• Grew from 85k users to 450k users
• Paying customers grew by 150%
• Profit grew 650% in one year

How?

A viral acquisition loop.

First, they introduced their free forever plan, which fueled the effectiveness of their "digital billboard."

And each time an individual using the free-forever plan sent an email, the Mailchimp badge was at the bottom, inherently creating a viral acquisition loop.

Here's what it looked like:

Types Of Growth Loops

Now, onto the magic that is growth loops.

There are four types of loops we're going to cover:

1. Viral Loops - Where one cohort of users acquires another cohort of users.
2. Content Loops - Where your content drives users, which fuels more content.
3. Paid Loops - Where paid marketing drives users/customers resulting in more paid marketing.
4. Retention Loops - Where value from your product drives engagement and then more engagement later.

Within these macro loops, there are different types of micro loops.

1. Viral Loops

Through viral loops, your existing users are responsible for the majority of your new users. Where one cohort of users brings in another cohort of users.

We're going to look at two different kinds of viral loops:

1. Acquisition Loops

2. Referral Loops

Acquisition Loops

Hypefury

Every time a Hypefury user sends a tweet, each impression the tweet gets is also an impression for Hypefury.

Referral-Loops

Superhuman

After Superhuman's acquisition loop, the user enters its referral loop, incentivizing users to refer friends for a free month.

2. Content Loops

We're going to cover two types of content loops:

1. User-Generated Content Loops

2. Creator-Generated Content Loops

User-Generated Content Loops

With user-generated content loops, the users are responsible for creating content that attracts and converts more users.

Imagine where every user is a recruiter, recruiting more users.

Substack

Creator-Generated Content Loops

With creator-generated content loops, the creator/company creates shareable content or content that ranks on Google and uses a high-converting action to drive sign-ups/leads.

AppSumo

App Sumo, created a content loop where its blog content brings in ample traffic that converts into leads.

3. Paid Loops

Paid loops are relatively simple. This same model has been used by companies like Uber, Blue Casper, Superhuman, and Morning Brew.

A few other ways to do this outside of Facebook and Instagram ads are by purchasing ads in podcasts, newsletters, or working with influencers.

And then taking the budget and reinvesting it back into more ads.

Morning Brew

4. Retention Loops

You acquired users, but now it's time to get them to engage with your product, over and over again.

Hence, a retention loop.

Grammarly

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