---
title: what turns the flywheel
canonical_url: https://ensurance.app/guide/what-turns-the-flywheel
markdown_url: https://ensurance.app/guide/what-turns-the-flywheel.md
subtitle: one certificate sold in a real place pays the crew and deepens the market in the same transaction. activity does the rest
category: ensurance
---

# what turns the flywheel

*one certificate sold in a real place pays the crew and deepens the market in the same transaction. activity does the rest*

Jim Collins found that the companies in *Good to Great* had no single defining move. No one program, no one killer idea, no lucky break. What they had was a **flywheel**: a heavy wheel pushed in the same direction, turn after turn, until the turns built on each other and the wheel carried its own weight. Collins called it the **flywheel effect**. No single push is the cause. The compounding is.

Amazon is the version most people know. When Collins met Jeff Bezos and his team in the autumn of 2001, they drew their own loop, the one usually retold as a sketch on a napkin. Lower prices bring more customer visits. More visits bring more third-party sellers. More sellers spread the fixed costs, which allows lower prices. Then around again. Every part of the loop feeds the next, and the next feeds the first.

Hold that picture and go to Glenwood Canyon in Colorado. In August 2020 the Grizzly Creek Fire burned 32,631 acres of the canyon walls above the Colorado River. The next summer, rain on the burn scar sent debris flows down onto Interstate 70, and one closure of the interstate ran more than two weeks. The mud kept going downstream. Silt, a town of about 3,500 people and the first town west of the burn to draw its water straight from the river, had to backwash its filters far more often. Its operators reported replacing a filter bank every six to eight weeks at about $50,000 a time.

The slopes above the river are the living asset. Ground cover holds the soil, the soil holds the water, and the river runs clearer for every town that drinks it. Keeping those slopes is work: seeding, mulching, clearing the drainages, walking the channels after a storm. That work has a crew, whether or not anyone pays them on a schedule.

This post is about how one purchase can pay that crew and build the market around the place at the same time, and why doing that over and over is the whole flywheel. It is part of [the cavalry is not coming](/guide/the-cavalry-is-not-coming?from=guide), a series on forming capital for nature from inside.

:::johnson
**a flywheel is one transaction that does two jobs, repeated.**

One certificate sold in a real place pays the crew and deepens the market in the same transaction. That is the whole flywheel.

[see where the proceeds go →](/proceeds?from=guide)
:::

## what is the flywheel effect?

The flywheel effect is momentum that comes from compounding, not force. Each push is small, lands in the same direction, and makes the next one easier. A business with a flywheel does not need one giant check. It needs a loop in which every unit of activity leaves the system a little stronger.

### what makes a flywheel turn on its own?

Two things. Every step has to feed the next one, and the last step has to feed the first. If any link only takes and does not give back, the wheel is a treadmill: you push, it moves, you stop, it stops. The design question is never "how hard can we push?" It is "does each sale leave something behind that makes the next sale easier?"

For a natural asset the answer has usually been no. A grant pays for a season, and the next season still needs its own grant. A valuation report describes the slope and pays nobody. Each is a push. None is a loop.

## the loop, step by step

Here is the loop as it is designed on [*ensurance*](/specific?from=guide), using the burn scar above Silt as the picture. Each step says what exists and what is planned.

**1. A certificate sells in a named place.** A **certificate** is an instrument tied to a specific place and the work done there. The buyer's money goes to the split the certificate names, so the crew's account is paid at the moment of purchase, with no pool in between. This exists: certificates, their splits, and the accounts they pay are built. ([how a certificate purchase pays the agent it names](/manual/certificates?from=guide))

**2. The same mint funds the market.** The mint split is designed to carry a protocol share on the mint and a share that travels through [proceeds](/proceeds?from=guide) into coin pools across the protocol. A **coin pool** is a pool of two assets that anyone can trade against, priced automatically by the ratio between them. The share that lands there is real money from a real buyer, sitting on the other side of the market for anyone who wants to trade. The mint, the proceeds routing, the action that adds liquidity to a pool, and a program kind that adds a set percent of a held coin to an existing pool exist.

**3. Depth makes bigger trades clean.** The more money on both sides of a pool, the larger the trade it can take without the price lurching. A rule of thumb: the largest trade a pool takes at about 1% price impact is roughly its total depth divided by 200. A $100 trade wants about $20,000 spread across the full range. That is the size a place's market has to reach before someone can move real money through it, and every certificate sale in step 2 adds to it.

**4. A payor can hold a position instead of booking an expense.** The town, the utility, or the business downstream that buys a certificate is not only paying a bill. It holds an instrument it can exchange or sell. The exchange that converts one certificate into another at a published rate exists. A deeper market around the place adds the second exit: a sale.

**5. More places get priced.** Each new place with a certificate is a new node with its own crew, its own split, and its own market. A place agent that buys its steward's certificate on a set schedule from its own proceeds is planned. That cadence is what turns occasional purchases into something closer to payroll.

**6. Activity pays the accounts, and the loop starts again.** Every trade in a coin pool pays a pool fee to the account the coin names, and proceeds route those fees on to the agents they name. This exists. Agents can then buy certificates in the places they depend on, which is step 1. A related-certificate program kind exists for that; the scheduled version in step 5 is planned.

By design, the first purchases come from the protocol and its agents, in public. That is a pipe, not a payor: inside money doing the seeding. The loop becomes a payor loop when someone downstream, with a bill of their own, refills the account. Both are part of the design. Saying which one is which is part of it too.

## where the investor sits

### how does trading activity fund nature?

Trading pays a fee on every swap, the fee lands in the account the coin names, and that account funds the place. Nobody trading has to care about the canyon. That is the point of the design: self-interest goes in, and the architecture routes it toward the same place.

An investor can stand at three points on the wheel. Each turn throws off a different kind of return.

| where you sit | what you hold | what each turn can pay | read more |
|---|---|---|---|
| **beside the pool** | liquidity in a place's coin pool | a share of the fee on every trade through it | [getting paid to provide liquidity to a small market](/guide/getting-paid-to-provide-liquidity-to-a-small-market?from=guide) |
| **in the certificate** | a certificate in a named place | the coupon, when a dependent pays a premium to keep the work going | [a coupon that rises with the hazard](/guide/a-coupon-that-rises-with-the-hazard?from=guide) |
| **at the price** | a certificate bought at cost | the reprice toward value, as payors and the market read what the place does | [the value gap is where the money is](/guide/the-value-gap-is-where-the-money-is?from=guide) |

None of these is a guaranteed figure. A fee depends on trading. A coupon depends on a payor. A reprice depends on recognition. What the design does is put all three on the same loop, so that what pays one seat also feeds the others. The place is never sold to pay any of them, and a certificate holder holds no claim on the land.

**Worked arithmetic, as illustration only, not a forecast.** Suppose, hypothetically, a network of pools trades $1 million a day at a 1% fee. That is $3.65 million a year in fees. Suppose also that all of it reached the place's account and was spent as it arrived on stewardship work at $2,000 an acre. That funds about 1,825 acres a year. Now suppose investors are offered that same stream as a 10% yield in exchange for capital up front. A $3.65 million yearly stream supports $36.5 million today, about 18,250 acres of the same work in the first year instead of the tenth. Same fees. The difference is whether someone fronts the money against the stream. That is what a return does here: it moves capital forward in time, so the slope gets kept before the next storm and not after.

## each place makes the next one more useful

A flywheel in one place is a small wheel. The larger effect is a **network effect**: each place added makes the whole graph more useful to every other place in it.

Nature is already a network. The slopes above Glenwood Canyon send cleaner water to Silt and every town below it. A wetland downstream holds a flood that would otherwise reach a road. A meadow upstream keeps a creek running into August. Every parcel already provides for some parcels and depends on others. When each of them has an account, a certificate, and a market, the parcel that depends on another can buy from it, and the one that provides can be paid. Parcels pay parcels.

So the second place on the graph is worth more than the first, because it has someone to trade with. The tenth makes the first nine more useful, because there are more routes for money to move through and more dependents who can see what they rely on. That is how a funding model starts to behave like a watershed. ([projects that fund each other](/guide/projects-that-fund-each-other?from=guide) shows the routing; [how upstream land decides downstream water](/guide/how-upstream-land-decides-downstream-water?from=guide) and [what is a keystone parcel](/guide/what-is-a-keystone-parcel?from=guide) show why some places carry more of the graph than others.)

## what the flywheel is not

It is not a promise of growth or a claim about speed. It describes how the pieces connect. Anyone who wants the current numbers can read them on [pools](/pools?from=guide) and [proceeds](/proceeds?from=guide).

What the design does say is where the first push comes from. It does not wait for an outside funder to arrive. So the first certificate is bought from inside, in the open, and the market forms around a price that already exists. Every other participant arrives for their own reasons: the fee, the coupon, the price, or the bill.

## where to start

- If you keep a place, see [how the crew gets paid](/guide/how-conservation-fundraising-reaches-the-crew?from=guide) and what [ensurance offers land stewards](/solutions/land-stewards?from=guide&topic=the-cavalry-is-not-coming): a certificate on your place, a split that names your crew, and a market built from the same sale.
- If you bring capital, see what [ensurance offers capital providers](/solutions/capital-providers?from=guide&topic=the-cavalry-is-not-coming), and read [the permanent bid](/guide/the-permanent-bid?from=guide) for the standing buyer under it.
- If you want to put a named place on the wheel, [talk to someone who can help](/contact?from=guide&topic=the-cavalry-is-not-coming).

## sources

[The Flywheel Effect, Jim Collins](https://jimcollins.com/concepts/the-flywheel.html) — the concept from *Good to Great*: no single defining action, cumulative momentum

[Turning the Flywheel, Jim Collins](https://www.jimcollins.com/books/turningtheflywheel.html) — the 2019 monograph that opens with Amazon's 2001 adoption of the flywheel

[Grizzly Creek Fire](https://en.wikipedia.org/wiki/Grizzly_Creek_Fire) — 32,631 acres in Glenwood Canyon, 2020; the 2021 debris flows and Interstate 70 closures

[Colorado Sun, April 2022](https://coloradosun.com/2022/04/04/water-debris-silt-grizzly-fire-mudslide/) — Silt's water plant after the burn: filter replacement every six to eight weeks at about $50,000

## the series

[the cavalry is not coming](/guide/the-cavalry-is-not-coming?from=guide) (start here)

1. [every market starts empty](/guide/every-market-starts-empty?from=guide)
2. [the first check](/guide/the-first-check?from=guide)
3. [who stands on the other side](/guide/who-stands-on-the-other-side?from=guide)
4. [what turns the flywheel](/guide/what-turns-the-flywheel?from=guide)
5. [the first print](/guide/the-first-print?from=guide)
6. [why the second buyer pays more](/guide/why-the-second-buyer-pays-more?from=guide)