How this growth loop worked
A user signs up and syncs files across their devices. As the folder fills, they hit the free storage cap. Dropbox let them earn more space by inviting friends: send an invite, the friend installs, both accounts get bonus gigabytes. That friend stores their own files, hits the same ceiling, and sends invites of their own. Every signup became a new inviter.
The reward was storage itself, the one thing a user near their limit wanted, so the incentive landed exactly when it mattered. The invite carried the product, not a discount code. A K-factor below 1 can't sustain growth alone; without fresh signups the loop stalls. But it multiplied every paid and organic signup, pulling in extra users for free and cutting blended acquisition cost.
Tie the reward to your core value, not a cash bribe, and place the ask at a point of real friction where sharing solves the user's own problem. Then measure honestly: track your K-factor and how long one cycle runs. Don't hold out for a K above 1. A loop that lowers acquisition cost and shortens payback earns its place, even with a K well below 1.