Lesson 2： The Flywheel Effect in Entrepreneurship

One of our entrepreneurship professors introduced us to the concept of the "Flywheel Effect." It’s like trying to get a heavy wheel to start turning—getting it to move on the first rotation is tough, but once it’s set in motion, gravity and momentum help it accelerate. After the initial push, keeping the wheel turning becomes much easier, requiring only a small amount of effort, and soon it spins faster and faster.

This immediately reminded me of a common saying: making money is about getting the right “feel.” This refers to the same idea: once you get things moving, the energy propels you forward, and you start earning more and more. (If you haven’t felt this yet in your entrepreneurial journey, congratulations—you haven’t quite hit your stride yet.)

In the education industry, especially among my former colleagues, I rarely see this Flywheel Effect, this "feel," or the sense of momentum. Their business model often hits a ceiling when they reach an income of 50,000 to 70,000 RMB a month, at which point they become exhausted and depleted, unable to scale further. I used to wonder: are teachers destined to a life of hard work and modest earnings? It wasn’t until I studied at a business school in London that I understood the fundamental flaw in this business model.

The issue isn’t with the teaching profession itself; it’s with the nature of the business model. Any business with similar characteristics will struggle to make big money. Why? Because the product isn’t scalable.

This might sound abstract, so let me give you a concrete example. Take Teacher A: a top-tier educator with near-perfect language test scores and a rate of 1,000 RMB per hour. However, they have to deliver each lesson individually to each client. Their income cap is 100,000 RMB per month. As they age, maintaining this income becomes harder, and by the time they hit 30, they encounter an income ceiling and even a decline.

Why does A’s earning potential have a limit? Because there’s only so much time a person can stay mentally sharp and work efficiently each month. Let’s assume A can work six hours a day for 20 days a month, excluding illness or other commitments. That’s 120 hours of work per month, bringing in 120,000 RMB. After taxes, it falls below 100,000 RMB. So, this type of time-based, one-on-one service has a clear upper limit. The problem is that the product cannot be delivered to large numbers of people simultaneously without significantly increasing costs. To avoid this income trap, you must consider the pitfalls of time-based delivery when designing your business model. That’s why I shifted away from teaching large amounts of classes.

From my perspective, switching to written content may bring in less income initially, but this is the first rotation of my flywheel—one that I need to go through. Once I deliver my first course, I can seek out publishers, promote it on platforms like Xiaohongshu (where even my casual posts receive hundreds of likes and saves, proving my strong communication skills), and explore marketing on UK campuses.

At the moment, writing doesn’t seem very profitable. These articles don’t immediately translate into large sums of money, but they are a visible and tangible accumulation of business value and personal branding. In fortune-telling terms, this is called accumulating "印" (supporting documents or reputation). The more I accumulate, the more wealth will chase after me. When I have more customers without needing to work significantly harder, the flywheel will spin faster and faster.

So, if any teachers or former colleagues are reading this, I urge you to beware of the comfort that high salaries may bring. Time-based business models have inherent income caps, even without considering the costs of your education and skill development (e.g., 2 million RMB for a U.S. master's degree, 2 million for an undergraduate degree, 50,000 for a UK master’s, 30,000 for exams). Relying on a time-based delivery model means it’s nearly impossible to surpass an income ceiling of 1 million RMB. Even if you manage to make 1.2 million RMB a year, your energy will deplete, and this earning model won’t be sustainable.

How to Solve This Problem

How do we fix this? Start by addressing the root of the issue. What does that mean? We need to reassess our business model. Does it rely on increasing costs in proportion to an increase in customers? If so, no matter how much you enjoy this business or how much more you earn than your peers, I still suggest you remain vigilant and consider redesigning your model.

If I were in this situation, I’d revamp my business from the ground up to ensure that a large increase in customers doesn’t require a proportionate increase in my labor. My business should reduce my future workload and allow me to work more effortlessly, while increasing the scope of influence. (For example, moving from platforms like Knowledge Planet to publishing increases the dimension of reach.)

A successful case study worth mentioning here is ChatGPT 4 (by OpenAI). You’re all probably familiar with this AI chatbot, right? Let’s imagine that training this model (skipping over the technical jargon) cost around $3 million. But with each user paying $20 annually, they only needed 120,000 users to break even. Every additional user is pure profit. And this doesn’t stop users from signing up every second across the globe.

Do you know how many paying users GPT had by 2023? The number reached 180 million. If each user pays $20, calculate how much profit they’ve made after covering costs. Now, think about the founders’ workload—did they have to work a million times harder as the user base grew from 180 to 180 million? No. This is a prime example of a successful business model built with scalability in mind.

Think about what other business models align with the Flywheel Effect and scalability. Here are a few examples that come to mind: publishing, software development, gaming. Even if you have to deliver time-based services, make sure you’re the boss.

This brings me to the current economic landscape: the most lucrative fields are media, tech, and the internet. Trends aren’t passive—they arise from understanding core principles and validating our insights. With a deep enough business perspective, we won’t chase after past opportunities but instead position ourselves to be among the first to capitalize on the next wave.

To sum up, there are two types of entrepreneurial flywheels:

1. One that accelerates through gravity and momentum—the first turn is tough, but it gains speed as it keeps turning.

2. Another that starts with electric power (our youthful energy, enthusiasm, and short-term market trends) but depletes over time, eventually wearing out and stopping.

Before I finish, let me explain why I chose to use plain language today instead of bombarding you with jargon. If we had to put a label on the two key concepts I discussed, they would be "business model" and "scalability." Our professor took 12 models to explain these concepts and made sure we understood them deeply. But since I’ve been both a teacher and a student, I understand that what sounds sophisticated and what’s practically useful are two different things. Learning a skill or business mindset shouldn’t be blocked by jargon. The goal of learning is application—if it’s disconnected from reality, it’s just self-indulgence. That’s why I aim to convey these business insights in the clearest, most accessible way, ensuring that they resonate and stick with my audience.

And that’s what makes business and entrepreneurship so fascinating: through practice, you come to understand the world on a deeper level, gaining insights into both macroeconomics and individual lives. Business sits at the intersection of the sciences and the humanities, requiring a broad understanding of both and, most importantly, the ability to apply and connect ideas across disciplines and people.

Lastly, I asked my paying users why they subscribed to my content. Their reasons fall into three categories:

1. Curiosity about business and how to make money through entrepreneurship.

2. Curiosity about studying abroad and my personal growth overseas.

3. Trust in my personal brand—knowing that when I produce something, it’s valuable and of high quality.

User A: "I love hearing your unique perspectives. I think that kind of spark is valuable!" This user added, "If you switched to providing more objective business concepts, I might stop reading as frequently." This user, who graduated from a U.S. university and works at a top global tech company, likely has a better academic and business background than I do. Yet, they still choose to pay for my content because they value the inspiration that different perspectives bring.

User B: "I prefer systematic learning. Although you share a lot of great content on your social media for free, I believe systematic learning will offer more benefits." I couldn’t agree more. Coming to London for business school wasn’t my first encounter with business studies. In my previous jobs, I frequently interacted with entrepreneurs and their children, and this exposure motivated me to pursue a more structured education. I wanted to build a new network, and I succeeded—my classmates are all company owners or heirs to family businesses. What does systematic learning offer compared to piecemeal knowledge? It’s not just the knowledge itself. Systematic learning gives you confidence and insight because it allows you to fully understand how things work and how they’re connected. It also helps build a supportive network, ensuring stronger execution and mental resilience—this, in my view, is the true wealth that systematic learning brings, far beyond fragmented knowledge.