The Flywheel Effect

Source: FutureBlind Published: August 2019

Source: FutureBlind
Published: August 2019

The Flywheel Effect

Circulated: August 22, 2019

Technical definition: Positive feedback loops that build momentum, increasing the payoff of incremental effort.

Layman’s definition: When good things you do lead to more good things “just happening”.

Examples:

  • Direct network effect: more users -> more value for existing users

  • Economies of scale: more sales volume -> lower fixed cost per unit -> lower prices

  • 2-sided network effect: better value prop -> more users -> more developers