The Flywheel Effect | Hacker News Reader

The Flywheel Effect

jimcollins.com

61 pointsmooreds38 comments

Everyone seems to be hating on this, but I think this passage is particularly insightful: “We’ve allowed the way transitions look from the outside to drive our perception of what they must feel like to those going through them on the inside.”

We often make this category error, in relation to anything (not just business): "wow, what did you do to get so in shape?" or "how did you get so good at programming?" and so on. The answer often being along the lines of "I dunno, just did it a bunch? A lot of work, boring little stupid stuff, over and over and over again."

It works for a negative trajectory too. The ‘Nazi bar’ story/urban myth comes to mind.

https://www.reddit.com/r/punk/comments/1ama4ld/the_nazi_bar_...

Isn’t that another version of the slippery slope argument?

You give ‘em an inch and they take a mile?

Sometimes it’s a fallacy, but mostly not.

Some people will see the situation "appease a person slightly; they will expect you to appease them more," as different from "permit one bad actor; you will find yourself surrounded by more". Specifically because one involves the dynamic with a static counterparty, and the other is the dynamic of being outnumbered by a growing counterparty.

I agree they are related, but sometimes one will have more resonance as a metaphor than the other.

I was enthusiastic about the theories and practices touted in his subsequent book "Built to Last", but then watched nearly every company profiled either utterly fail or completely drop the ball a few years later.

Mr. Collins cherry-picks examples from very disparate enterprises and markets to attempt to arrive at a general set of market-spanning, culture-spanning, and era-spanning operational principles. It's bad advice and worse--bad data science.

In my personal business experience there were also several instances of "one killer innovation" or "one lucky break" that, we realized both at the time and in retrospect, really did "make" the business.

> In my personal business experience there were also several instances of "one killer innovation" or "one lucky break" that, we realized both at the time and in retrospect, really did "make" the business.

My experience as well. This is why Taleb's writing appeals to me most for "business advice": structure everything to benefit from chaos, and build an environment conducive to tinkering and breakthroughs. Highly recommend his article, "Understanding is a Poor Substitute for Convexity"[1].

[1]: https://www.edge.org/conversation/nassim_nicholas_taleb-unde...

Agreed. His entire Incerto series (as well as all of the background mathematics (and corrections/revisions)) provided gratis at his site are one of my absolute favorite examples of 'modern open scholarship'.

Also along a similar vein but with less rigor is Patio11's ongoing "Bits About Money".

I think the analogy works well but you must understand the reason for flywheels, at least in cars. A flywheel in a manual transmission car acts as an energy storage and output smoothing device. An internal combustion engine delivers non-continuous power impulses, as explosion happens in the cylinder, the force pushes the piston down, which in turn pushes on the crankshaft which results in rotational power impulse. But these impulses happen separately which results in gaps where there is no force applied to the crankshaft. Without a flywheel, your car would vibrate badly, flywheel captures these impulses and delivers continuous output.

Diesel manual transmission cars have heavier flywheels because higher compression in the cylinder results in higher torque applied to the crankshaft, therefore you need more mass to store more energy. Heavier flywheel has more rotational inertia, thus this makes revving a diesel engine seem lethargic compared to a petrol car, the heavier flywheel takes more time to reach desired RPM, thus revving a car with a heavy flywheel results in slow RPM pick up.

A fairly recent trend is putting a bit heavier flywheel to even small petrol cars, this makes them harder to stall at the expense of driver's engagement, this combined with custom fuelling maps make new petrol cars really easy to drive but not really engaging. It is common to put a lighter flywheel to cars being raced, you get faster revs and better engine response at the expense of the engine being easier to stall.

Automatic transmission cars, at least those with a torque converter, also have a flywheel, but since the design of torque converter allows for non-direct engine-transmission coupling, most of the smoothing can happen inside the torque converter itself, thus the flywheel is extremely light.

The thing about business principles is that they are either overfitted and not generalizable or they're over generalized and sound like, "just hire the right people"

Using words like "overfitted" and "generalizable" dress business philosophy in the language of math and tech, which it does not deserve (I do understand you were using them metaphorically). In reality, business philosophy is almost entirely devoid of formal rigor. IIRC, in Good to Great, Collins profiles 11 companies and attempts to conceptually "regress" (now I'm doing it) the factors that made them great. i.e. n=10. And their "greatness" was point in time. We're more than 20 years on from its publication and we can see that some of those companies weren't so great (looking at Circuit City). But I digress. My point is, its basically all just a narrative fallacy [1]. I'm inclined to believe that it was probably one person or a small handful of people within those companies that compelled them to greatness, and the MBA historian types come in afterward to try to distill processes, philosophies, etc. that explain away the individual bc an individual is not very repeatable. You can't teach "be Elon Musk" at business school. You can't sell consultancy engagements when the answer is, "oh, you basically need to have Jack Welch at the top". You can, however, sell and teach the Conjoined Triangles of Success!

[1] https://www.lesswrong.com/tag/narrative-fallacy

Add in two other counfounding factors:

1) There is no reason to believe that the causes of a company's success are entirely in control of the company. Take Nvidia - they are making absurd amounts of money out of the AI boom. It is clear they are doing it on purpose. But the only opportunity to do that is in a fairly small window from 2010 -> 2040. A company doing the same thing in 2000 would have failed to make insane profit, a company doing the same thing in 2050 will be hit by commodity economics and also make more limited profits. And if other companies had foreseen a market for linear algebra opening up a large chunk of the profits could well have evaporated before the market even started.

2) A company is complex and quite possibly nobody knows what is going on inside them. That undermines the ability of anyone - especially an outsider - in distilling how and why things work.

> I'm inclined to believe that it was probably one person or a small handful of people within those companies that compelled them to greatness

Very likely indeed. If it requires more than a handful of people, it is in fact hard to see how it would happen. Most companies are drawing from the same pool of employees so statistically they have to be fairly similar on average. Differences are driven by processes which are typically set up by a few key people.

https://fs.blog/small-steps-giant-leaps/

https://fs.blog/five-percent-better/

I think the Flywheel analogy is great. One of the big differences between working a regular job and running your own product/content business is that it's a flywheel - it works even you don't. Your creative/productive output might be very sporadic and jerky, but the output tends to be smooth and compounded over years.

One of my "revelations" when I founded my own SaaS project a while ago is when I realized there are a bunch of abandoned, yes, completely abandoned, apps on various App Stores and marketplaces that still make a few thousand $ per month, years later, even though they don't even even work. The founder clearly put in a bunch of effort to build it initially, and then didn't carry on for whatever reason, yet it still gets a steady trickling stream of actual customers paying real money.

It's also one of the reasons it is counterproductive to burn out or over-hire or over-raise when building a bootstrapped SaaS. Just don't die, keep pushing the flywheel occasionally when you have some creative inspiration, and eventually you may build something truly great. Or maybe you won't, but at least it will keep you going. But have a flywheel, something that stores your energy and continues output, don't just waste energy trying a bunch of different unreleased projects.

> still make a few thousand $ per month, years later

How did you find out? Apple doesn't reveal anything about how many are paying to an app, do they?

You can guess from the number of reviews and downloads as they change over time. Everyone says it "doesn't work" yet people still download and try it, which means they paid for it. Granted some might chargeback and refund, but not all. Also my personal experience as the owner of such listings is that you get about 1 review per hundred customers (unless you have a very pushy review process). I've made thousands of sales with only a dozen reviews. Also I'll admit to once having an app on a marketplace that was never updated and barely worked still making hundreds of dollars a month almost a decade later.

Given how easy it is to get a refund for an app purchase, I would be really surprised if this results in a significant revenue stream, but I don't actually know, of course.

You'll be surprised at how many people don't know or don't bother to refund.

Do you have concrete numbers for that, then?

Warren Buffett has a term for this, it's called "float". At my current (active, not abandoned) startup, my guess is somewhere around 30% of active paying customers are also non-users. Lots of industries have this. The majority of gym membership sales (50%+) and even a significant number of airline tickets are unused.

No, I agree that "float" exists, I just don't see any numbers backed by anything. Gut feeling isn't data, unfortunately.

After reading this, I was reminded of one of those "survive in the wilderness" shows I saw a couple of weeks ago that had a great quote at the beginning (a Tanzanian proverb):

> Little by little, a little becomes a lot

I think this might be a better real-world representation of the concept described in the post. I get the impression that the flywheel metaphor implies something positive, whereas the proverb strikes me as much more ambiguous (and a little more menacing). Technical debt is the first thing that comes to mind.

That being said, one of my favorite bosses of all time used the flywheel metaphor to encourage the engineers at our consulting company to build cool things to put out in the world when we were on the bench. He wanted us to be seen as a really cool organization with talented people. Unfortunately, the company ended up going out of business.

As a developer, it always blows my mind when I look at something large I (or others) have built and wonder how it was able to get done. It's a culmination of small efforts spread out over time, until you wake up one day and realize the result is something impressive in scope. I think that might be my favorite part of being a programmer.

Flywheels as a business term is funny. It’s an energy storage device that smooths out energy delivery…

There's a sense in which it makes sense:

Step 1: Invent a bunch of tech, however you can, but don't publish yet.

Step 2: Dribble out upgrades on a regular cadence, to keep the customers buying.

Once in a startup the top management board got this book from investors, later we were kind of asked about the content to make sure we have read it. I heard this "Flywheel effect" phrase so often in that time. The Flywheel! Analysis of the companies cited in the book as good examples, some years later, aren't.

That darn flywheel is just too heavy to start with so I’m going to start spinning a smaller flywheel and then add weight to it once it’s moving. That’ll be way easier. See, there? That’s flywheels already spinning and now I can just take this extra piece and drop it on there and now it’s moving around too. And let’s drop a couple more on just to prove a point. Wait, what? The fly wheel is slowing down? Push it harder! That’s better, now it’s spinning again. Now let’s get some speed — push harder! Great. Now just… ouch! damn! Why are parts flying off?

Etc. etc.

My above post was an attempt at humor, mashing-up the flywheel concept with dubious shortcuts companies take to try to “outsmart” inertia. Yes, that non-sequitur was another one.

The site guidelines specifically discourage humorous posts.

Also you can look at Growth Loops, which is a similar concept.

So ... "inertia". This book attempts to re-invent the word "inertia".

I'm allergic to business books, but I think a flywheel is a better metaphor by a mile. A flywheel is a tangible object that everyone has interacted with at some point. They're fun and satisfying to spin up to high speed. They are associated with engines and electricity. In contrast, inertia is an abstract concept. It's popularly associated with dead weight. It makes you think of heavy rocks and ships that are too large to maneuver quickly. It's not at all fun.

I agree. There is an additional quality here as well: Inertia doesn't care whether there is one big push or many little pushes. With the flywheel analogy, it's clear that it's not just one big push. That's what they are trying to convey in the business context. There is no one moment of transformation.

"Turn the Ship Around!" is another good book I hear (but did not read): https://www.goodreads.com/book/show/16158601-turn-the-ship-a...

Flywheels are only high speed when they are not doing any work.

As soon as they start doing work, they slow down.

Flywheels are different from positive feedback loops, which is what people usually mean when they talk about flywheels.

A flywheel is just a rotational store of energy. It's not. Usefully different from lifting a heavy weight via a pulley, and then releasing it a bit when you need to use it lift something else. It performs the same function as a chargeable electric battery.

I'm sure there are intelligent business books, as there are intelligent people in business, but most of the books I see are awful.

Inertia is not a concept, it's a name for the reason cars have seat belts, for why your blood goes into your fingers when you spin around with your arms outstretched. We don't really know what/why it is, but there's nothing abstract about it and it's not conceptual. Flywheels are inertia.

See my earlier comment on my feelings on Mr. Collins' general approach, but I do think "flywheel" is a better analog than "inertia".

Aside from being more relatable to more people, it also implies some agency in its design.

Two flywheels can have the same inertia, but have very different performance characteristics and be either an excellent or poor fit depending on the application.

a.k.a Compound Effect, Tipping Point, Kaizen, Aggregation of Marginal Gains, Virtuous Cycle, Positive Feedback Loop, Self-Reinforcing System, Cumulative Advantage, Network Effect, Snowball Effect, Momentum/Traction.

Flywheels in engineering terms are short-term stores of energy to smooth out power delivery. It's not all that off the mark when used in the business sense unless it is presented by gurus as a free energy system and a symbol of envious easygoing.

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