SaaStr Podcast 445: Loom CEO Joe Thomas On How Speed & Simplicity Can Fuel Your Flywheel

If you’re struggling to develop a flywheel for your SaaS startup, it can seem overwhelming. No need to fret –– flywheels commonly require several revisions before settling to the version that works best. Loom Co-Founder and CEO Joe Thomas explains the flywheel’s importance and how it improves organizational alignment, increases customer satisfaction and drives business results.

What is a Flywheel?

The SaaS flywheel is a metaphor based on the physical flywheel used in machinery. It’s a heavy gear that takes a considerable effort to push. However, once the wheel is pushed, it builds momentum until it begins to turn itself, generating its own movement.

Joe Thomas describes the SaaS flywheel as a similar momentum-building force. It takes commitment, observation and experimentation to accelerate your flywheel, but once you gain momentum, you’ll begin driving positive business outcomes. Says Thomas, “One of the most critical elements of a flywheel is momentum, and momentum is both like the energy you are using to push it, but also [you must ask yourself] what is the friction? How do you remove as much friction from your user experience as possible?”

Creating your flywheel will show you where your user experience shines and where you could be causing difficulties that impede business growth.

Early Flywheel Development

When developing your flywheel, you will need to be open to constant flexibility. Thomas shared Loom’s earliest flywheel example as inspiration for new startups, and explains how they kept building on the basics until they perfected their framework. 

Loom is a video messaging app designed for the workplace. As Thomas states, “The flywheel for Loom was that we are creating a new behavior in the workplace. We wanted to…enable people to communicate via video messaging at work, and the way to do that was not just by building a tool and offering [that tool], but by also normalizing the behavior at work.”

They came up with a very basic flywheel that also closely correlates with a viral loop. The early Loom flywheel had four major components:

Sign-Ups → Record a Video → Share →Viewers → Sign-Ups (Repeat the Cycle)

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Input and Output Metrics

Once you have your major flywheel elements in place, you can start considering what input and output metrics to associate with each. Thomas recommends experimentation with resource allocation to improve these metrics. On inputs and outputs, Thomas says, “As long as we drove this flywheel, we would increase and create this [customer] behavior at scale which unlocks more value for individuals that compounds and keeps accelerating itself.”

Consider what specific outcomes you’d like to see from each portion of the flywheel, and all the small little inputs that create the desired result. When you are able to determine these factors, you will understand where your team must allocate their resources and focus. This is why Thomas advocates for inviting all departments to understand the common goal of the flywheel and own their piece of it to optimize impact.

Loom Example: Consider Loom’s “Record a Video” piece of their flywheel. Here is how they break down their inputs and outputs beneath it:

Record a Video

  • Output: Recording Complete. This is a defining part of the UX. If you cannot record, you cannot continue using the product.
  • Key Inputs: 
    • Extension Click
    • Choose Settings
    • Recording Start
    • Recording Stop
    • Recording Success

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Key Takeaways and Gotcha’s to Remember

  1. Be patient and persistent. Creating your flywheel is not a “single meeting” event.
  2. Get the whole company involved. Every department should own part of the flywheel.
  3. Create a cadence around it. Consider monthly or bi-weekly meetings.
  4. Don’t forget about non-technical elements (i.e. high NPS can drive virality).
  5. Don’t be afraid to admit you don’t yet have a flywheel. It’s okay to be a work in progress.
  6. Don’t prematurely optimize. Keep the big picture in mind.

Published on April 18, 2021

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