Thread by @alexgarcia_atx

Ever wonder how the fast-growing companies in the world grow?

How did PayPal grow to 100M users?

Or DropBox to 4M users in 15 months?

And Harry's viral growth that led to a 100k email list in one week.

Here' how you can replicate it 🔍

The answer is growth loops.

Andrew Chen defines loops as "closed systems where the inputs through some process generates more of an output that can be reinvested in the input."

The growth loop framework combines product, channels, and monetization into one system.

This one system cohesively works together to generate compounding growth.

With this, what’s invested into the input drives an output that's reinvested back into the input.

But, how does this result in the fastest-growing companies?

Because we’re forced to answer how one group of users generates another group of users.

Companies like DropBox and Pinterest focus on reinvesting the output of one cycle of the loop into the next cycle a loop.

So, in theory, one group of 30 new users should generate another 30.

Another reason is that they are harder to replicate.

Because they're systems that combine your product, channels, and monetization, company specificity is built in.

That makes it's harder for a company to replicate company b's growth strategy.

And so, why not funnels?

Here’s the main problem: There is no compounding effect.

Funnels operate in one direction.

Put more in at the top and generate more at the bottom.

That’s it.

It ignores reinvesting the generated output back into the input to create more output.

Keyword here is: MORE.

This means MORE money, MORE channels, MORE people, MORE strategies etc

This equates to linear growth.

Linear growth is unreliable growth.

Okay, time for the growth ish.

Let's look at examples.

1. PayPal

PayPal was one of the pioneers when it came to growth loops.

Their growth loop resulted in 7-10% daily growth until reaching 100M users.

@elonmusk is quoted saying, "one user should generate another, maybe even two or three."

Here’s it in action:

2. Slack

Slack had 500,000 users after its first year in business.

In their second year, they implemented a growth loop that catapulted them to 1.7M users.

3. Harry's

For a pre-launch campaign, Harry’s generated 100k emails in one week through a viral acquisition loop.

Now, let's dig a little deeper and look at the flow.

Harry's growth loop continues to feed itself after every acquired user.

And the numbers proved it.

77% of the emails were collected via referrals.

For perspective, roughly 20K people referred about 65K friends.

And one last thing.

Imagine this...

You run ads and acquire users for $10.

But, because of your growth loop, on average, each user acquires one more.

That's you cutting your customer acquisition cost in HALF!

Follow me @alexgarcia_atx if you want to turn your marketing dollars into revenue.

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TL;DR

1. The fastest-growing companies don't grow via funnels
2. The fastest-growing companies use growth-loops
3. These are a system where the output is always re-invested back into the input
4. It answers how one group of users acquires another

5. Unlike funnels it combines product, monetization, and channels to surge growth.
6. With funnels they work individually.