Sketchplanations

Explaining one thing a week in a sketch

The "virtuous cycle" of Amazon and Uber illustration: closed loop flow diagrams demonstrate the effect of growth on factors like demand, price and service for Amazon and Uber.

The ‘Virtuous Cycles’ of Amazon and Uber

Networks effects can lead to massive, rapid growth especially if you manage to get a virtuous cycle turning.

Amazon leveraged this model by Jeff Bezos in 2001 for mega growth. Amazon calls it a virtuous cycle (and some call it a virtuous circle). And, more recently, the Uber variation, by David Sacks explains much of Uber’s wild ride. The virtuous cycle is a form of flywheel where once it gets going it keeps on spinning.

When you build a platform that leverages network effects in the right way it can enable growth way beyond what has historically been possible.

Also, see Metcalfe’s Law, the business flywheel, exercise and sleep

Keep exploring

Leading metrics and lagging metrics: illustrated by diet and exercise as a leading metric with weight loss as the lagging metric
Business without marketing is like winking at someone in the dark illustration: with three panels including someone winking in the dark, someone leaving, and then concluding that they weren't interested (from the Steuart Henderson Britt quote)
The Business Flywheel illustration: the model of The Business Funnel, where prospects are filtered to yield end customers is compared with The Business Flywheel, where customers are at the centre, acting as the driving force behind your business momentum.
For want of a nail poem: from the shoe, to the rider, the battle and the kingdom it's all lost because that fellow dropped the nail
The virtuous cycle of exercise and sleep showing the loop of a tennis player exercising better, then sleeping better, then exercising better...
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