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A Summary of

Magical growth loops

by
Lenny Rachitsky
Lenny's Newsletter
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Magical growth loops: positive feedback loops where most of your new users come directly from existing users. The result? Your users grow your business for you. There are 4 types:

Supply driving demand

  • DoorDash: recruits restaurant → restaurant recruits customers for DoorDash
  • Etsy: recruits sellers → sellers buy from other sellers
  • Cameo: recruits celebrities → celebrities bring customers to Cameo
  • Others: Faire, Instacart, Substack, EventBrite, Kickstarter

Demand driving supply

  • Uber/ Lyft: recruits rider → rider realizes they can drive → rider becomes driver
  • Airbnb: recruits guest → guest learns about hosting → guest becomes a host

Demand driving demand (known as virality)

  • Figma: recruits employee at a company → employee shares designs with coworkers → coworkers sign up to Figma
  • Snapchat/ social media: recruits user → user invites friends → friends join
  • Paypal: recruits user → user sends money to friend → friends makes Paypal account to accept money

Supply driving supply (supply invites new supply because of a referral incentive or ease of use)

  • Survey Monkey: creator sends survey → receiver sees website → receiver creates their own survey
  • Airbnb: recruits host → host earns points from referral program → friends join
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