Any scaling system that delivers a power law curve growth must have a compounding positive feedback loop. It is that loop that compounds and concentrates the results.
Let me share the story of an extraordinary positive feedback loop you benefit from.
In 2001, Jeff Bezos sketched out this diagram on a napkin:
This simple model created a trillion-dollar enterprise.
In this case, growth was driven by a loop involving selection, customer experience, traffic, seller attraction, and increased selection.
Amazon’s competitive edge would be a lower cost structure, which would drive lower prices and further improve customer experience—juicing the feedback loop.
This drawing drove the creation of the Kindle Marketplace. It’s brilliant in its simplicity.
Too bad they broke the feedback loop. The collapse in customer experience will eventually send Amazon the way of Sears and other past retail innovators. This email isn’t about the future of Amazon or how to fix their positive feedback loop but its aim is to help you create your own.
Let’s begin with the formula for success. Yes, there is a formula.
Success = (((talent + capacity) x reach) ^ luck) x launches
Let me break down my pseudo-math. The components of success are:
- Talent and the capacity to turn your ideas into a product. A bad storyteller who can format and upload a book can get to market and flop. A good storyteller that can’t master getting a story on paper and into the market will never succeed either. You must have that mix of talent and capacity.
- The product you create through talent and capacity is multiplied by your reach. Reach is the audience you have at the time of release. The bigger your reach, the more product you sell.
- Luck is the exponential factor. This can go either way (good or bad) and can be the difference between a career-changing launch and the flop of a series. Luck is always a factor.
- Each launch represents another round of play. Yes, your business sells books daily from your backlist, but it’s at a launch where the marketing and sales algorithms can further amplify things.
I have a diagram for you to help you visualize how the loops compound in the model.
In the standard product launch cycle of investing your cash and creativity into making a product, the next step is the launch to your current reach.
Like in Jeff’s model, I’ve identified sub-loops that will supercharge the bigger loop.
Let’s begin with the sub-loop between launch and reach. A launch allows us to improve visibility. While it’s great for getting visibility and catching the eye of that one-click buyer, what do you do for the larger population of prospects who see what you offer but aren’t ready to buy? Our way at the Academy is to have a system that helps those slower to adopt readers find us, nurture themselves, and then be easier to retain for future cycles.
The essential loop for your business is the cash component of the main loop. Initially, you need to inject cash as a starting investment to start the engine. Later, when your business crosses breakeven, you begin a disciplined approach of extracting profits (ARK) to keep your investor happy. This sets the right growth rate for the company.
The other supercharger is what you do around talent and capacity. The most obvious is the continuous improvement of your craft. The other is brand inception—getting your reader to identify with your characters and story world.
The act of reading your book is what sells the next book to your reader. What are you doing to train that salesperson?
I’m not talking about gimmicks in your back matter but about improving quality so that your reader feels like your brand defines who they want to be.
As we move on to design the future business for your future self, everything I’ll suggest supports amplifying the loops and formula. Can you see these loops in your business?
Thank you for your attention,