Growth Loops: The Compound Interest of User Acquisition
Why Top Products Scale Faster by Turning Users into Channels
Growth That Feeds Itself
Exponential systems that compound over time
Opening Hook
Traditional marketing is linear:
Spend → Acquire → Repeat.
But growth loops? They're exponential. They turn every new user into a node that drives the next wave of users—creating momentum that compounds like interest.
What Is a Growth Loop?
A Growth Loop is a self-sustaining system where every action a user takes generates a new input to attract more users. Unlike funnels (which end), loops feed themselves.
Example: Dropbox's referral program
Invite a friend →
Friend joins →
Both get extra storage →
More invites.
The loop spins. CAC drops. LTV rises.
Why Loops Beat Funnels
Funnels:
One-and-done. Spend resets every time.
Loops:
Each output becomes the next input. The system compounds over time.
The Growth Loop Framework
Think of loops in three layers:
1. Acquisition Trigger
What action seeds the loop?
Example: A user shares a file in Notion.
2. Value Exchange
Why would they do it?
Incentive, network effect, or intrinsic value.
Example: Free extra credits for referring.
3. Viral Hook
What makes it natural to spread?
Built-in product behavior, not forced sharing.
Example: Canva's "Design with me" collaboration feature.
Types of Growth Loops
Viral Loops
Users invite users (e.g., Calendly links).
Content Loops
UGC brings SEO & discovery (e.g., Notion templates).
Network Loops
Value increases with each new user (e.g., Slack channels).
Paid Reinforcement Loops
Revenue funds more acquisition.
Metrics That Matter
K-Factor:
How many new users each user brings.
Loop Velocity:
Time to complete one loop cycle.
Retention:
Loops die without sticky users.
Architecting Your Loop
Start with one strong loop, not three weak ones.
Bake it into core product usage, not as a bolt-on.
Measure, iterate, accelerate.
Final Insight
Growth loops aren't magic. They're engineered systems. Build them into your product DNA, and your acquisition cost drops while your user base compounds—just like interest in the bank.