Slack grew with an invite loop. Dropbox with a referral loop. But you'll fail(northstardispatch.substack.com)
northstardispatch.substack.com
Slack grew with an invite loop. Dropbox with a referral loop. But you'll fail
https://northstardispatch.substack.com/p/the-viral-loop-illusion
We’ve all drooled over stories like GroupMe, which sold for $85M just 370 days after launch. But they leave out nuance and make viral loops sound like magical cheat codes. Plug one in & boom - hockey stick. That’s rarely how it works.
These stories are half-baked.
(For those who don’t know: A viral growth loop is like a flywheel. One user brings in more users → those users bring more → and so on.)
• The reason companies like Slack, Figma, etc., saw such massive success is that their viral loop was deeply embedded in how their product worked.
It came from their product’s native usage. You can’t use Slack without your team. You can’t collaborate on Figma alone. The loop was the UX. Every new user made the product more valuable.
That’s what made it viral, not the other way around.
• A viral growth loop analysis of TikTok, for example, will dig into its discovery algorithm, viral challenges, & how great the app is.
But if that analysis ignores the fact that ByteDance spent $1B on paid advertising to promote TikTok solely in the US in 2018, then it is incomplete.
Actual attribution is crucial for understanding the success of viral loops.
Most breakdowns do not account for the money spent on PR, ads, partnerships, conferences, and other linear growth channels that contribute to the viral loops.
• Acquiring new users through incentivizing your existing users is easy (people love free stuff), but retaining them is extremely hard.
A professional networking company, BranchOut, hit 14M MAUs in 5 months using incentives. Then it tanked to 2M - no clear value prop, users churned.
And since there's no PMF, you won’t be able to incentivize their users effectively.
• Not all growth is good growth. You don’t just want more users. You want the right ones. Loops should bring in qualified users who resemble your ICP. Otherwise, you’ll inflate signups, tank retention, and poison your funnel.
Say you built a tool & threw a $100 BTC referral. Now, college kids & hobbyists start flooding in for the reward.
Your signups spike, activation drops. And worst of all, your real users start getting lost in the clutter. You waste resources chasing growth that was never going to convert.
• Every channel decays. That’s the Law of Shitty Clickthroughs. No loop gives exponential growth forever.
The truth is: great companies treat every growth loop as a temporary advantage.
-- That’s why these loops worked for them.
Every loop that worked sat on top of a product that actually delivered. The loop just got people in, and the product made them stay.
It multiplies what’s already flowing; they don’t start the engine - they just spin the flywheel.
You can’t slap a viral loop onto a weak product & expect magic. If users don’t love it, no amount of invites, incentives, or clever loop design will save you.