The rise of startup companies in the modern world can be noticed in every country. However, it does not happen overnight, as it takes multiple layers of development to fully establish a startup company. During this gradual phase, a lot of business owners might think their startup is stuck in growth, but in reality, it could be just transitioning through the loops. These loops are also addressed as startup loops based on different cycles of product, growth, and monetization that help establish progress. If you are also a startup owner, it is time for you to explore the loops.
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What is a Startup Loop?
A startup loop can be considered a repeated cycle that comes with compound returns. There are different kinds of loops, such as product loops, growth loops, and monetization loops, which allow turning user value into revenue and funds into better products. These loops are fluid and natural, and also help to establish seamless progress in the market.
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The Illusion of Being Stuck
The early stage of a startup is mainly comprised of multiple phases of “between loops”. It might appear as a failure to many, but it is actually a transitional period. You can have great products, but the growth module might not be okay, or you might have gained much growth and still have issues with proper monetization. These situations can appear as they are full-on, not pivot, but that is what helps to create a buzz in the later years. Stripe is a fine example in this case that did not make money in the initial years but gained a lot of popularity when monetization kicked in.
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The First Loop: Product
The real challenge of a startup is whether customers will come back again or not. Building the first loop of a startup begins here, as product loops can be formed with improved user interaction. The loop of product experience includes content, data, and network value. This initial is highly important as the success of the product loop leads to growth and offers early validation. This phase can also reflect whether the startup idea is a hit or a flop, as you will get customer feedback and find the potential areas of improvement.
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The Growth Loop
The growth loop might come later, but it is crucial to turn engaged users into loyal customers who can also bring new users. For example, Dropbox did an amazing job with their growth loop, where they increased their storage based on people inviting new users to the platform. The main difference between the campaign and loops is sustainability, as loops do not rely on continuous investment. They are more likely to feed themselves and grow on their own. However, it takes a lot of deliberate approaches, such as easy sharing, reduction of onboard friction, tracking, and user invites, which improved reach and visibility.
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The Final Loop: Monetization
Even after going through the product and growth loop, a lot of startups struggle with the monetization loop, where the revenue kicks in and paves the way for better products. Better products lead to more users and generate more revenue, and the loop stays ongoing.
A lot of startup owners confuse “slow growth” with the idea of “broken model,” but you need to confirm whether your business model is truly broken or not. Remember, loops are deliberately created and they are not discovered. You need to focus on smart experiments, feedback cycles, and value creation to make sure your startup can find success in the competitive market. Instead of feeling stuck, keep trying till you can!
