Episode 4

 
Matt: Hello, and welcome to Working on Something New the podcast for and about makers and founders. I'm your host, Matt Johnson and I'm myself a founder and product manager.

Thanks for joining us for another episode where we interview a maker about their journey, their project, and their vision for the future. 

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For this week's episode, we interviewed Chris Frantz. Chris is based in Maryland and is co-founder and CEO of Loops. Loops is a single email solution for your SaaS. In this episode, Chris and I discuss what it's like going through Y Combinator, what's harder fundraising or hiring, how to think about pricing for your startup, and why founders need to do the hard things to succeed. Let's dive on in.

Thanks Chris for joining me could you just give us a little bit of your background? So your name, you know, your title, what you're working on a little bit more about Loops.

Chris Frantz: Yeah, definitely. So my name is Chris Frantz. I'm the CEO and co-founder of Loops. 

Loops is making better email for SaaS companies. We started working on this last year. So it's June 2022 now. And we started working on it last year. We had sold our previous company to Unbalance. We stayed there for six months.

We got the itch to build something new. We left the company without really a plan applied to YC late with a couple ideas. Started building Loops around then and went off to the races ever since we closed our first round in March for a little over three mill led by Craft and some other great some other great investors, the founder of Dropbox and Dover and all kinds of other great people.

Now we're building heads down. We have our first couple employees starting soon, one starting next week. Others starting the week after. And yeah, it's going really well actually.

Matt: Awesome. Yeah. Well, congrats on all that. So is it a lot of the same team members from your, your former team? Is it the same co-founders or, or what's the sort of

Chris Frantz: Yeah. Same co-founder. Yeah, yeah. Same co-founder. We didn't have any team members, so yeah, I'd say just two of us since up till now. It's mostly just been the two of us. We've had some some help also from some very talented part-time contractors to help us fill in the blanks along the way. And we're excited to bring some full-time employees on.

Matt: So you've done YC. Could you talk a little bit about that experience? You know, you said you applied with a few ideas but you know, what was the process like from applying through to the interview, to, you know, through, to the actual program itself?

Chris Frantz: Sure. So people don't don't don't really realize this, but applications are pretty much always open at YC. So we applied late after the deadline and we applied with a very, very, very loose idea of something we wanted to work on. And then we pitched a couple, our ideas. Climate company, privacy company, also in the applications.

And we heard back pretty quickly. We had a, a great interview with Michael Seibel who I don't know if he officially runs it, but he certainly seems to be in charge of YC and, and a couple other visiting group partners and Brad Flora and yeah. Yeah, it went really well. We chatted about what we were working on.

We ended up there's usually like 15 or 20 minutes long. We ended up at 40 minutes and then we got a call later that night letting us know we were in. And I actually told him that I'd have to think about it cause we to talk to my wife first it, it was totally remote too. So there was no reason for me to do that.

It was just

Matt: Still still a huge, huge commitment.

Chris Frantz: Yeah. It was a big commitment,

yeah. Yeah. And, but I, I instinctively said that and I talked to her and she was like, yeah. The thing that you've been talking about for like, you know, five years, yeah. Go do the thing, Chris. And I was like, okay, cool. Yeah, but it went well. And yeah, it was a blast.

I highly recommend it. A great experience.

Matt: We did LAUNCH accelerator and in the middle of it, we had our third child. So I had a, a newborn baby while going through the accelerator in, in hindsight, that was a, that was a lot. And probably would've been a good idea to defer until after cuz

Chris Frantz: I'm I'm with

Matt: it's a huge, huge commitment. As you know.

Could you talk a bit, I mean, it's, it's interesting, you know various different accelerator programs are at good at different things. What would you say the primary sort of benefit of the YC program is, is it helping with the fundraise? Is it helping think about product or growth or what, what's the thing that you sort of got the most out of it?

Chris Frantz: Yeah, so. I'd say now it's kind of, the script has kind of flipped a little bit. Because during our batch was the first batch that went up from like the $125k typically offer to like 500 K. $500k the most understated part of it, people like to just kind of ignore that - like that's a lot of money. Right. So and, and, and VC's tend to just be like, oh, $500k it's just $500k. Right. I'm investing on a $12 billion fund. Like, what does that even mean? But if you're a hungry founder, $500k is like years of runway. And it completely changes the dynamic in the conversation with a venture capitalist because you no longer are at the mercy of like your company ending in like a month. If that person doesn't invest in you or somebody doesn't invest in you all of a sudden, if you're an early stage company and there's like one or two of you, you have years of runway or, or at least a year.

And the, the dynamic in the conversation changes a lot.

Because founders now have the power. Because they're coming in stacked, they're coming in with $500k in their bank account instead of usually a couple thousand dollars.

Matt: Mm-hmm so, so the new structure, is it it the $500k that comes all at once?

Chris Frantz: Yeah, I'm not sure how they're doing it for future batches. Ours was a little different because they announced it like part of the way through. So it was two payments two wires, but yeah, they're probably doing it all at once now.

Matt: Gotcha. Switching it up a bit, you, you did YC and then came outta that, raised some more money. And then they're now in the process of hiring what do you find harder? The fundraising side of things or the, or the hiring side side of things.

Chris Frantz: That's a good question. Wow. So I found out I was kind of good at fundraising which was, which was cool. It's, it's, it's a great superpower to have as a CEO because it means that hopefully you're able to keep the company afloat even in the worst of times. But hiring is, is a different ball of wax too, because you need to you, you wanna bring on people that you trust people that, you know, and people that.

Believe in and you also need to have that belief. You know, I I'm older, right? I mean, I'm old by the startup world. Right. I'm in my early thirties. So I'm practically a dinosaur. But like the people that I've worked with and the people that I know, like they're, they're in their early to late thirties or even early forties.

Right? So like, if you wanna convince these folks that are incredibly talented and skilled at what they do, that they need to quit their $500,000 a year job and come work at your dinky startup for a quarter of that, or half that It, you have to believe it. And you have to like, believe it to the point where you're like, yeah, like I know you have three kids that you're providing for and like, you're not totally torpedo in your career by joining our startup.

It's just, it's a different level of belief. You're coming of just outta college. You know, maybe you drank with a couple of these people and you were like, yes, Like, or maybe you're in a club and you're like, yes, I'll work with these people. And they have nothing going on. But like at, at our age, right, where people are starting to put down roots, they have things.

So you, you, you have to believe that you're gonna win at a level to the point where you're willing to like risk relationships transparently, because you're telling these people to quit their jobs and come work for you, cuz you're gonna win. And you have to believe that deep down. Because you're gonna have like some angry spouses, if you don't. Other people's angry spouses, right 

Matt: Yeah I I've just personally going through a fundraising process. It's like, man, this is really hard. And then immediately after that go right to a hiring process. And that's not a break from fundraising. It's, it's one thing for, to convince a VC whose job is to write checks.

Another thing to convince someone to uproot themselves, like you said, and go from maybe a cozy job to something where it's inevitably risky and, and. It could be around, it could be around for 10 years. It could be around for only six more months or a year or whatever it is. So yeah, that's, I find that to be extraordinarily tough to do.

Cool. So yeah, I guess going back to you know, being a second time founder with, with an exit, could you talk a little bit about your experience, how it's different being and, and, and, sorry. Forgive me. Are you, is this your second startup or did you do one before? The previous.

Chris Frantz: I I'd say I, I fell into like the frenetic maker energy category for a while. So like, if you cruise my Product Hunt profile, you might find like 20 different things that I've built . So I, I can't say I've really focused on any of 'em until my most recent project. And then this one focus is the real differentiator for me.

And. Yeah. So what was the question?

Speaking of focus

Matt: So thinking about being a first time founder where you were fully focused on your last startup versus being a second time founder, how is the experience different? What do you find harder? What do you find easier? How would you compare the two experiences.

Chris Frantz: So. Yeah, no, this is, this is great because it comes back to like my core thesis, which is that if you want this, anybody can do it. But you have to like really, really want that. And people are like, Chris, what do you mean? Like I'm willing to stay up till 3:00 AM coding and that's not the right answer.

The right answer is, if you really want it, then you can do it. And it's because you have to talk to every single one of your users and then you have to build what they want and, and anticipate what will give them value before they realize it. So like we usually one or two steps ahead. You have to ship it, then you have to tell the users, they shipped it, that you shipped it, and then you have to ask 'em for money.

And if you just do that, It any software business at all, you're gonna win to some level, but most people actually don't wanna do that. They don't wanna do the sales part. They don't want to do the building boring things part. They don't wanna do the 15th integration. They don't want to fix like this annoying bug in a table that users keep complaining about because it's, it's annoying and like who wants to mess with like CSVs?

So if you do the hard parts, then you can win. And the reason that that's the case is because so few people do the hard parts. It puts you in rarefied air just by committing to do the hard parts. So all of this is to say that as a second time, founder, I realized what the hard parts were. I realized that if I just kept doing them then I would win.

And now I know that on this second venture that I just need to only do the hard parts and do them over and over and over again. So we've had maybe 300 customer calls. We, we did our first hundred before we even launched the first version of our product. We signed up our first three users before you could even send email and we're an email sending product.

And we don't do free plans. During the alpha period, we make sure you pay the reason we do that is like, if you're committed to us and you have a real problem, then you should be willing to get outta your wallet. If you don't have a real problem, then, then you probably won't pay for it.

And you're not a great early customer for us. So we know the hard parts we're doing the hard parts and and that knowledge really gives us the power to continue to push it through when times are dark. Yeah.

Matt: Yeah. This is the second startup I've done. And the first one, wasn't necessarily successful. But that's I think a great point is. It's easy to just wanna do the fun stuff or the sexier stuff.

But really the thing that we're doing differently, I think with startup is, is that it's all those things that don't seem fun. You're not really attracted to it's you still got, you still have to do it. And it's talking to customers, it's doing uncomfortable things like asking them for money for a product that's not fully there yet.

On, on that point, I mean, do you think it's always a mistake for a founder or a startup to not start charging immediately? Does it, does it depend maybe on the startup? Like, is it because your B2B SAS that you, you sort of have to charge right away and maybe if your consumer not

Chris Frantz: Yeah, it's, it's interesting. I was actually thinking about this walking back from a coffee shop today because I'm part of like the, the alpha group or whatever for this company called The Browser Company, who's billing a browser called Arc and I was just trying to figure out like what the revenue method was gonna be because they don't charge for it to be part of their early group.

And Google, you know, makes Chrome and is able to get Chrome because, you know, they own the internet basically, and, and advertisings their space. So it makes a lot of sense for them to own the browser as well. But like what's, Arc's angle, how are they gonna, how are they gonna make it work? So, you know, they seem to be doing fine.

And they're not charging for it. So I guess it could work. I will say that we didn't charge for our previous product. Initially we went freemium and the noise to signal ratio was so crappy. So, so, so, so crappy. I mean our conversion rate. I could share now was 0.17% or something, because we had tens of thousands of users in the B2B space.

We had tens of thousands of users signing up every month. And so few of them were converting because it was just impossible. So like a fire hose of user volume

Matt: yeah.

Chris Frantz: We were like, what do we even build? There's people asking for like 800,000 things. And it was hard to tell who was gonna convert and pay us based on that.

So having to paywall initially forces you to build things that people are willing to pay for as opposed to whatever pops into somebody said.

Matt: Yeah, I think, and, and sort of correlated to that is like, how do you think about that pricing? I think for what, you know, just speaking from personal experience, it's, you know, I think one of the mistakes we made early on was being too timid to charge enough. And so we were giving customers into signing up for, you know, our $5 a month plan, but then that's not really.

Telling you much on, and also it's like really hard to, to generate meaningful revenue that way. So how did, how have you thought about pricing when you're, when you're pricing a product? And do you have any sort of advice or, or lessons learned on that front?

Chris Frantz: Yeah, it should make you uncomfortable to ask for it is probably the right answer if you feel comfortable. And you'll feel a little bit ashamed that it's probably too low.

Matt: Yeah. I think that's, that feels like a good 

Chris Frantz: idea

cringe literally every time I share pricing hundreds of calls and we onboard every user individually. Right. So I, I share pricing with 'em on every single call and I'm just like, oh my God, this is really about to ask this person. And, you know what, like our conversion rate keeps improving and people keep paying and they keep increasing the amount of money that they pay us cause we have usage based pricing and it just keeps working and yeah, so start uncomfortable. There's always somebody out there that will pay it..

Matt: Yeah, I found too for us when we started raising prices, it didn't meaningfully impact the conversion rate. If you're solving a problem, they already have their wallet out the difference between $5 and $15, you know, we're more of sort of a consumer facing product.

So it's gonna be a lot less than what, what y'all charge, but , they already have their wallet out. They're already, we're already solving a problem for them. To ask, you know, that difference isn't enough to, to sort of have that many people put, put their wallet away and say, this is too much.

And actually, and taking your advice. I think we, we're not, we're sort of I haven't felt uncomfortable in a while asking someone, so maybe it's time for us to, to bump that up a bit.

Chris Frantz: Yeah. The first thing that private equity purchasers, just to jump in real quick the first thing that they do, like when private equity is, has to buy business and like try to salvage it or flip it or whatever, the first thing they do, is raise prices and, and all of a sudden the company becomes more valuable.

And if that's what everyone does to make a company more valuable, you should probably consider doing it for your company before a private equity firm buys you and raises your prices against your will.

Matt: Yeah, definitely. Cool. So, diving a little bit more into Loops, you had a few different ideas when you were applying to YC. What sort of settled you on this particular problem space? You know, like why email? What was the problem you saw in the market that wasn't being solved?

Chris Frantz: So we realized that with every product that we were talking about we were going to have to use an email solution for it. Every single one, the climate product, the privacy product. We didn't really have a choice. We would've had to use an email tool and they were like, man, we just simply don't want to use any of the crap that's out there because it's just, it's all old.

It's all bloated. It's all so slow. They don't have dark mode. They don't have mobile support. They just don't work very well. So we're like, we just don't wanna live in that world with whatever tool we went with. So we're like, somebody's gotta do this and no one's gonna do, it's gonna be us.

And we're doing a great job.

Matt: You had those multiple ideas, is it there's sort of a, I don't know if it's like a you know, a true, it wouldn't be a truism, I suppose, but sort of this idea that shopping around for a startup idea is, is the wrong way around. And that you should sort of come from a, a place of passion. It shouldn't be that you just sort of stumble on an idea and you wanna work on a startup idea.

You should start with a problem first. How do you sort of respond to that? Or is that something that you you've come across yourself and how do you sort of think about that?

Chris Frantz: Yeah, I think identifying your motivation is really key. Like why are you building you know, the 19th Twitter thread tool? Why are, why are you building another fill in the blank? Like whatever, like, is it because you want to have fun in like learn new technology and like maybe make a little bit of side income.

Great. Like that's fantastic. Like do do it build your niche thing, have fun, you know, like you don't have to talk to users, like who cares? It's just for you just to have some fun and then, you know, five or six years, if you keep grinding at it, you might have a couple thousand dollars a month. That's great.

And there's a lot of folks that end up in that space. And I think you just have to make that mental switch from, from that mindset and that motivation to like, I want to provide for my family or I want to do this for the next five years, or I want to be the founder of this company and that's my identity.

And as soon as you make the mental switch to any of those or a combination of 'em. Then you realize that like there's only one path forward and it's that you have to win, you have to succeed. And there's no more not talking to users no more, not doing the hard parts. 

Matt: You're based in the DC area if I, if I have that correct.

Chris Frantz: Yes. Yes. The deep suburbs, so deep, it's actually another state Maryland.

Matt: Okay, Maryland. So, so on near Baltimore

Chris Frantz: yeah, it's just outside. Yeah,

Matt: So being based in sort of a non-traditional tech hub is that, is that where you're from originally and, have you ever sort of thought about moving out to San Francisco or New York, or I guess Miami and Austin now.

And, and do you think it matters anymore in this day and age?

Chris Frantz: Phew I don't know. It's a, it's a good question. I'd love to have a great answer for it. I, I did when I was younger. I mean, I have family here which is great when you are raising a family. So like that extra support system is key. And I, I think there's more folks that are just like, not in their early twenties that are actually in these areas that might be considered outside the norm.

I, I met with a, a very large venture capitalist the other day and not to disclose his location cuz he doesn't, but he's like 20 minutes away from me and he runs so like co-founder of one of the largest VC firms in the us. And it's just cuz he wants to be close to family cuz he's got kids now

Matt: Yeah. Yeah.

Chris Frantz: this is where he is from.

So I think there's a lot of folks like that. They're just a little bit later in their career. I think if you're earlier in your career, it's great. You probably should move somewhere. That makes a lot of sense. When I was early in my career just in, in Silver Spring, which is a burb of not even know, burb, it's like a, an urban outcropping of DC for the founder of Discovery Channel and he was starting a new business called Curiosity Stream. And I was the fifth employee there and I worked there for like five years. And like, that was a great experience for me. It was a startup. If I didn't have that experience I would've moved somewhere where I could've had it, but I got locked in early, the company is now publicly traded.

And I got to learn from, you know an incredibly talented individual that I didn't think I would've gotten the same experience anywhere else.

Matt: Gotcha. Anything I didn't ask you that I should've asked you? Any, any sort of glaring holes. Can you do my job for me a little bit?

Chris Frantz: Yeah, I mean folks usually wanna know how we raised money so quickly. So we did. We did it really, really quickly. And almost almost effortlessly is, is, is how it, it felt talking to some of the other folks. So we raised it like a month after we created our product. We turned down an additional three and a half mil in additional fundraising.

We turned down uncapped notes, double the valuation caps, all kinds of stuff. And, you know, just as recently as last week, I was still trying to help some of my other founders in the batch, like close their round that they've been working on for three or four months now. We ran through most of it in a week.

Yeah. And the reason I'd say so, so I have, I have a very long list of reasons why I think that's effective. I ended up being good at fundraising. And I think it's because I was able to answer all of the right questions that the VC's had before they had a chance to ask them. So if you're able to front run the next question that the VC's gonna ask and provide that right answer, then you end up guiding the conversation in a way that checks all the boxes that they have. And if you can end up at the finish line at the bottom of that spreadsheet with all check boxes, and you're the one that took them to the bottom, then, then you're gonna stand out among anyone else. And if you wanna know what those questions are, I mean, like I, I tweeted every one that every single one that I got and, and there's like large lists out there also that you can check out.

If you just have the answers to those and offer them up before the VCs even ask them you're gonna find the things work, work out your way.

Matt: Gotcha. And do you think that that's because it just shows your experience, it shows you're prepared or, you know, what's, what's the reason behind that, do you suppose?

Chris Frantz: Yeah, I mean, it's, it's a combination of all of those things. But the questions they're asking, they're like, you know, what's your, what's your go to market strategy? You know, where's your current revenue who are the competitors, stuff like that, that you should have answers to already. But if you front run that, if people ask, if somebody asks you what your go to market is, and then you end up talking about product-led growth, and then you end up talking about how terrible your competitors are at product-led growth you've touched on the competitor question that they're already gonna ask you. And you've managed to distinguish yourself from them by talking about how much better at product-led growth than they are. So they are like, oh wait, you already answered that question.

And then they have to jump to the next one. And that looks great for you because nobody else is doing this. Everyone is just like shivering in their boots and like answering like one question at a time and like being like, yeah, I'm really worried about Adobe or whoever their competitor happens to be. So just, if you just exude confidence and you should, you should have high confidence if, if you're raising funds and if you don't then work on it and, and you front run their questions, you'll, you'll find it works out.

Matt: Awesome. Yeah. That's that's great advice. I think especially for a first time founder a very nerve wracking process and yeah, I think the more confident you are with hiring with fundraising, with sales and the more, you know, the better you can answer those types of questions the better off

Chris Frantz: you're in the room, you're like 80% of the way there. And, and it, as your win to lose.

Matt: Yep. Cool. Well last, last question. How, how can people find you you know, handle on Twitter? How can they find Loops

Chris Frantz: yeah. So it's just loops.so and you could find me on Twitter at @frantzfries.

Matt: awesome. Final, final question. What kind of pizza are you making for, for the family tonight? 

Chris Frantz: we do a very healthy basil plant, so that's gonna end up on top. I, I like to put some olive oil in the crust with like a little bit of oregano. I find that really kind of jazzes it up a little bit. Makes the crust a little bit more exciting. Yeah.

Matt: Do you, do you have the Ooni or you just throwing in the oven?

Chris Frantz: Ah, man, I can't get the Ooni because a, we would, I would have to eat like, you know, five pizzas a week for me to justify that purchase and B I'm incredibly clumsy and there's a, a good chance that I would just like cook my entire arm at one point,

Matt: Yeah. Yeah. I think,

Chris Frantz: in or something.

Matt: yeah. That thing's too hot for me too. I'm just

Chris Frantz: yeah.

It's like, it goes like, you

Matt: already.

Chris Frantz: 600 degrees or whatever, like it's, I'm definitely gonna die if I use that thing.

Matt: Cool. Well, enjoy the pizza. Thank you very much for taking the time to chat and best of luck to you. We can't wait to see what you all do next.

Chris Frantz: Yeah, of course. I really appreciate the time as well. Thanks a lot.

Matt: That's it for this week's episode. Thanks Chris. For joining us. 

 if you enjoyed the episode, please be sure to give us a follow or review on your favorite podcasting app. You can also follow me on Twitter @mattcrail or @wosnpod. You can find all the episodes of the podcast at wosn.taskablehq.com. 

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