The Product Person #40 — A lesson from GameStop
hi, Anthony here! Every week, I find articles and posts around the web about product development and how to build great products. Then I summarize and share them here.
Let’s get to it!
GameStop went up 100x in the past year.
It’s an example of an underestimated feedback loop.
One event rapidly fueled the next; which led to a small trend growing into a big trend with unforeseen momentum.
🔁 Stock price rose → It caught attention → People bought GameStop → Stock price rose → It caught attention → Repeat.
🔁 Every investor is paying attention to GameStop because it’s stock rose → It’s stock is rising because every investor is paying attention to it → Repeat.
A feedback loop that compounded into a ~10,000% stock price increase in 12 months.
A Lesson from GameStop
The lesson here is the power of feedback loops over time.
Marc Andreessen says 80% of employee culture is just “winning.”
It’s a feedback loop that compounds to success.
The best employees want to work at winning companies. And when a company attracts the best employees it tends to win.
🔁 Company wins → It attracts best employees → Company wins → Repeat.
This “A leads to B” concept is intuitive.
But, realizing how quickly A → B can go from linear to exponential results is not.
It’s easy to understand “winning companies attract the best employees.”
It’s harder to understand that, given 10-15 years, that “winning company” feedback loop leads to the Apples, Amazons, and Teslas of the world.
Like GameStop, the trend starts small. Then it picks up momentum, and the 2nd order effects have more magnitude than you’d expect.
Apply It To Your Team
Understand the power of feedback loops and you can make your team and product better and stronger.
A simple feedback loop you can implement:
🔁 Set (small) goals → Team achieves them → Team is confident → Set (bigger) goals → Team achieves them → Team gets (more) confident → Repeat.
It’s a simple concept, but it’s impactful.
“A little momentum early on can grow into something enormous, well beyond what may have been predicted in the beginning.” - Morgan Housel
🔗 This post was inspired by this blog post by Morgan Housel (a great read).
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