First, a quick reset: what we mean by a flywheel

A flywheel isn’t just “a thing that helps growth.”

A real flywheel has three properties:

• Each new user makes the product more valuable for the next user
• The system reinforces itself without proportional effort
• The advantage gets harder to copy as it scales

If growth requires the same input every cycle, you don’t have a flywheel. You have momentum. (Momentum is great of course, but flywheels are better.) ;)

Flywheel #1: Network effects (the gold standard)

What it is​
This is the cleanest flywheel to understand, and the hardest to fake.

A real network effect means that when someone new joins, existing users get more value without you having to do anything extra.

Think about a marketplace. More buyers attract more sellers. More sellers improve selection. Better selection attracts more buyers. Each loop makes the product more useful than it was before.

Common examples

• Social networks
• Marketplaces
• Collaboration tools with cross-user interaction

How it actually works

• More users → more value for everyone
• Leaving means giving something up
• Growth improves retention, not just acquisition

This is why companies like Facebook, Airbnb, and Slack compound so powerfully.

The most common mistake​
Founders think they have network effects because:

• They collect a lot of data
• They have multiple user types
• Users can technically interact

None of those guarantee a network effect.

For it to be real, each additional user must directly increase the core value for other users.

If growth just gives you more data, but doesn’t change the user experience in a meaningful way, it’s not a flywheel.

Flywheel #2: Scale flywheels

What it is​
Scale flywheels show up when growth lowers your costs or improves your economics in a way that reinforces your core promise.

The obvious version is pricing. As volume increases, unit costs drop. That lets you lower prices, invest more, or spend more to acquire customers than anyone else.

Classic example​
Amazon

More buyers → lower costs → lower prices → more buyers
And every cycle reinforces their promise.

Where this shows up

• Price leadership
• Margin advantages that can be reinvested
• The ability to outspend competitors on acquisition

Ask yourself:

“Does getting bigger make us meaningfully better for customers, or just cheaper for us to operate?”

If the cost savings don’t translate into a stronger customer-facing advantage, the flywheel is weak.

Important reality check​
Scale flywheels only matter if you have the biggest one.
If your main competitor scales at the same rate, the advantage cancels out.

Flywheel #3: Embedded flywheels (the most overestimated)

What it is​
Embedded flywheels show up when a product "embeds" itself into someone’s workflow, habits, or daily life. The more they use it, the more work, data, or muscle memory gets wrapped around it.

This can show up as:

• Workflow dependency
• Data accumulation
• Integrations
• Habit

A common example​
Salesforce
Every workflow, report, and integration makes it harder to leave.

Why founders love this one​
It feels very real when you’re close to the product.

Why it’s often weaker than people think

• Switching costs in software keep dropping
• Migration tools keep improving
• Habits are fragile without real value reinforcement

Embedded flywheels usually help retention, not acquisition or monetization. That makes them supportive, but rarely decisive on their own.

So this one only counts as a true flywheel if the embedding deepens with use and actually changes behavior over time. If it just creates mild inconvenience, it’s not much of a moat.

They’re strongest in complex B2B environments where multiple teams and systems are involved.

Flywheel #4: Brand flywheels (the most underrated)

What it is​
This is the most misunderstood flywheel, and the one founders tend to wave away too quickly.

A brand flywheel doesn’t mean “we’re well-known.” It means that usage itself changes perception in a way that lowers friction for future customers.

There are a few distinct patterns here.

1. Breaking taboos or norms

Some companies grow by making something feel normal that once felt awkward or risky.

Hims is a good example. Early on, men weren't talking openly about hair loss or ED. They were avoiding the problem altogether. Every successful customer made the idea feel less embarrassing and more acceptable. Over time, the social friction dropped.

More users → more openness → less friction → more users.

Airbnb followed a similar pattern.

In the beginning, staying in a stranger’s home felt risky and weird.
Each good experience made the next person more comfortable. Growth itself softened the barrier.

More bookings → more trust → more hosts → more guests → more bookings.

2. Reinforcing a clear association

Some brands compound by owning one idea so consistently that decision-making friction disappears.

The obvious example here is Amazon. They didn't get known for convenience, it got known for defaultness. (Is that a word?)

When people repeatedly experience:

• Fast shipping
• Easy returns
• Massive selection

The brain stops evaluating alternatives.

The flywheel becomes:
More customers → stronger association (“this plain works”) → less deliberation → more customers.

3. Community as the product

In some businesses, the community is the value. The product just organizes it.

There's a classic joke that illustrates this well.

How do you know if somebody does CrossFit?

Don't worry, they'll tell you.

The workouts aren’t proprietary. You could find any of them online for free and do them on your own. That's not why people join.
​
The flywheel lives in:

• Shared identity
• Local gyms
• Group suffering and progress

Every new member strengthens the culture, which makes the next member more likely to join (and more likely to stay.)

Other examples:

• Peloton using live classes and leaderboards
• Duolingo reinforcing streaks, norms, and shared rituals
• Notion where templates, sharing, and public workflows turn users into evangelists

Ask this question:

“If you removed the community, would the product feel materially weaker?”

If yes, you may have a brand flywheel.
If no, you probably just have a user base.

Does every company need a flywheel?

The short answer is "No."

Plenty of strong businesses grow with:

• Good fundamentals
• Clear positioning
• Solid execution

They just grow linearly, not exponentially.

If you don’t have one, you have three real options:

1. Accept it​
   Build a durable, efficient business. Optimize fundamentals. Don’t chase mythical compounding.
2. Support it​
   Use boosters (pricing, channels, partnerships) to accelerate growth, knowing they won’t last forever.
3. Engineer toward one​
   This is slower and harder, but possible:
   • Redesign product loops
   • Shift brand strategy toward behavior change
   • Introduce community or interaction where it actually adds value

The mistake is pretending a flywheel exists when it doesn’t. That’s how teams over-invest, misread signals, and burn time and money.

(If you want to learn more about how to engineer flywheels in your own business, we go much deeper in the Growth Program 2.0.)

​Devon Reynolds​
Demand Curve Creative Strategist