Black Loops and Blue Loops
Diagram your growth as loops, not funnels — then remove the friction on the sharing edge.
- Difficulty
- Moderate
- Time to result
- ~months to results
- Steps
- 6
- Confidence
- 90%
Coda maps its growth as two distinct loops: the black loop (create → share with a team → a recipient creates their own), and the blue loop (create → publish publicly → strangers discover the idea and adopt the tool). Naming the loops separately forces different product, pricing and team decisions for each, because each loop has a different owner of the user's first conversation and a wildly different activation rate.
Origin
Attributed by Mehrotra to Matt Hudson, who runs data and finance at Coda and drew the diagram three or four years into the company. The 'loops not funnels' framing is credited to Casey Winters. The two loops are internally nicknamed the 'Microsoft loop' (black, document sharing) and the 'YouTube loop' (blue, publishing), after the two archetypes Mehrotra worked inside.
Core principles
- 01Products don't grow through funnels; almost every product has some form of loop, and understanding it is fundamental.
- 02You probably already have a loop — it may be hiding in plain sight, or it may require invention.
- 03Some loops are table stakes for your category (every doc product has share-create-share); the interesting loop is the one your category doesn't have.
- 04Whoever owns the sharing edge owns the new user's first conversation about your product — and it often isn't you.
- 05Most people are problem-solvers, not building-block thinkers. They start from a problem, not from a blank cursor.
- 06Put no dollar signs on the sharing edge.
- 07Loops have very different activation rates; entry via a colleague's shared doc activates far better than a cold blank cursor.
How to run it
- 1
Draw the ecosystem diagram
Sketch how your product actually spreads: the entry points, the actions taken, and how each action produces a new user. Anyone can draw it — Coda's came from the data/finance lead; Uber's came from a board member or founder on a napkin.
Pro tip Mine your own pitches: go look at what you told the last few candidates you talked to. Candidates are the most discerning investors you have — they're investing their time, not just money, and they aren't easily fooled by temporary metrics.
- 2
Separate the obvious loop from the invented one
One loop is usually inherent to the category (for documents: build → share button → recipient builds). Naming it is still useful, but the strategic work is finding or inventing the second loop that your competitors' products don't have — Coda's blue loop is 'halfway between Medium and an App Store', which Google Docs and Office simply don't attempt.
Watch out Don't stop at the obvious loop and declare the exercise done. That loop is table stakes and confers no advantage.
- 3
Count the entry points and measure activation per loop separately
Coda has three: cold entry at the top of the funnel, the black loop (shared doc), and the blue loop (published doc). Black-loop entrants activate best — someone hands you the doc the staff meeting runs on, so you just use it. Blue loop is second. Cold entry is hardest: only about one in five reach activation. Roughly a third of Coda's users come through the blue loop.
- 4
Ask who owns the first conversation in each loop — and staff accordingly
At cold entry you own the narrative: you decide the minimal set of things a user must know and how to gradually reveal the rest. In the black loop, the colleague who shared the doc owns it — and if they mis-position it or make a bad doc, you inherit the damage. In the blue loop, the publisher owns it, and they have no interest in teaching anyone about your product. Each requires a genuinely different team mindset.
Pro tip Building a platform means accepting that your connection to the eventual user runs through someone else. Steve Jobs' instinct — control every element the user sees — is the opposite posture and it doesn't scale to loops.
Watch out You cannot control the ecosystem's narrative forever. Airbnb photographing apartments themselves worked only until it didn't; eventually you have to teach the ecosystem to market itself.
- 5
Strip friction — especially price — off the sharing edge
Coda charges only for makers, not editors or viewers, breaking the industry norm where every doc product charges for anyone who can change a document. The reason is loop mechanics: the share moment is the growth moment. Imagine if YouTube charged you per person you shared a video with — nobody would ever share anything.
Pro tip Say the rule out loud to your team: no dollar signs on the share dialogue.
Watch out Almost every productivity product charges precisely at the moment you share. That is a monetisation decision quietly strangling a growth loop.
- 6
Serve the problem-solvers, not just the builders
A minority of users are building-block thinkers who love a blank surface. Most people start with a problem — 'we don't make decisions well', 'my family can't figure out what to do at the weekend' — find a solution, and only then pick a tool. The blue loop exists to meet them at the problem.
In the wild
Coda users publish docs publicly — picking a URL, deciding whether Google can index it, listing in the gallery. They then market the doc to the community that cares: an Orange Theory workout tracker to the Orange Theory subculture on Reddit, a Ticket to Ride scoring calculator to board gamers, a bundling-theory essay to a small niche of strategy nerds. Coda's top docs are not Coda's own, exactly like YouTube's top videos are not YouTube's.
→ Roughly a third of Coda's users arrive through the blue loop. They're not exposed to Coda — they're exposed to a great idea (how to run an offsite, how to win Ticket to Ride) and learn about the product as a byproduct.
Every document product distinguishes viewers, editors and makers, and essentially all of them charge for both editors and makers. Coda charges only for makers, so a whole team can collaborate on a paid doc with a single paid licence.
→ The share edge carries zero price friction, which is exactly the moment the black loop turns. The pricing model is a direct output of the loop diagram, not a separate monetisation exercise.
Common mistakes
Modelling growth as a linear funnel
Sign-up → onboarding → first magic moment → second magic moment is a comforting story, but growth actually happens through loops. Optimising a funnel misses where the compounding is.
Charging at the sharing moment
It's the industry default and it's a growth-loop tax. The share is the moment of 'look at this cool thing I made' — putting a dollar sign there kills the loop that spreads the product.
Assuming you own the new user's first conversation
In loop-driven products most users arrive via someone else's doc, video or post. If your onboarding assumes you set the framing, you'll misjudge activation for the majority of your users.
Is it for you?
Best for
Founders and growth leads at horizontal or platform products who can describe their funnel but have never drawn how the product actually propagates.
Not ideal for
Enterprise products sold top-down through a sales motion where adoption is mandated rather than spread, and no organic sharing edge exists.
From the transcript
“the black loop is someone comes in they make a dock they share with a group of people some subset of those people turn around…”
“so the first piece of advice i'd give is you probably do have a loop whatever the product is there's probably something about it that…”
“but if you want to mine for your own loops go look at what you told the last few candidates you talked to”
“and the reason we do that in terms of that diagram is i wanted no friction on the share end”
“going back to youtube imagine you had to pay for people you shared with like nobody would ever share anything”
From the episode
The rituals of great teams
Shishir Mehrotra of Coda, YouTube, Microsoft