How Loops Fixes Email for Developers with Co-founder and CEO Chris Frantz

20:32Turner Novak:Yeah, that's right. There's like two lenses. It's like sales led versus product led. Well, there's also like hype led, which we'll see how long you can go. Is that real? Like, is that even like, can you make a company with HypeLand? I think Mischief did that for a little bit. I don't know if it's sustainable long term, is what I would say. Maybe like Red Bull is potentially the closest. Like right now, there's like the world's like largest skateboard drop-in happening right now. And it's like up on a skyscraper. It's currently being live streamed, millions of viewers. And like, they've just been doing this for like a decade, maybe longer.

21:07Turner Novak:Yeah, I mean, like 20, 30, 40 years. Yeah, it's been a long time, right? So maybe hype-led is possible, but it's hard. Yeah, I mean, if you even think about it, a lot of things kind of are hype-led. When I even think about sports leagues, like the NFL, each week it's like, oh, this big matchup between the Chiefs and the Bills. The first opening game of the season is like a Super Bowl rematch, or it's the two undefeated teams are playing this week, or this guy's trying to break the record for the new all-time passing leader in week 15 or 16 or 17. And then in the off-season, it's like a draft. And there's always these almost big hype-able moments.

21:52Turner Novak:And if you kind of relate it back to startups, it's like launching a new feature, new product, new employee joining. We hit a milestone. There's always these new things that are kind of happening and that are all kind of their own hype moments, really, at the end of the day. Yeah, there's good corollaries between sports teams and startups, especially right now when salaries are very similar for star players, I would say. Yeah, fair. Yeah. I mean, with football or basketball, the core product there has been refined over a long period of time, over a lot of scrutiny against audiences, literally tested against audiences.

22:31Teams have been drafted, just the best of the best. So the hype cycle supports it, but no one's going to watch a multi-hour game if it's like littered with commercials, if it's actually a terrible product.

22:42Turner Novak:That's the thing I think is incredible about the NFL. It's like if you think about it, it's like a three-hour TV segment with like four minutes of actual gameplay with just, it's like the perfect vehicle for delivering ads to the average American. Like just an incredible business product in that sense. So just you've been able to shove so much, so many sponsorships into it. Yeah. ChatTPT will be a better ad model. Oh yeah. Fair. In the sense of you can weave monetization of that a lot better than like traditional Google search. Absolutely. Yeah. All they need is a different number at the bottom and where it says information may be inaccurate.

23:22Information may be inaccurate and contain promotional material. And boom, that's it. And you can put ads in. You don't even need to disclose them past that point, especially with their currently like D-fang at DC.

23:33Turner Novak:Interesting. So what's your opinion on how valuable ChatGPT could be? Like how much revenue could that product do at scale? Like more than Google? I don't know that I have the answer for you there. I mean, it probably could. Yeah, potentially. Potentially. I mean, the outside bet though, right, is like AGI swoops in and then why do we have ChatGPT? true it's just all we pipe into our brains we don't even need an interface then the rate of progress happens exponentially at that point so you know brain inference becomes something that is no longer sci-fi and very fast right so like in a very real way like why does chat gpt exist if knowledge multiplies every second yeah that's true we're gonna hit we're gonna hit post knowledge post-AGI, post-knowledge economy.

24:24Yes, but there will be email.

24:27Turner Novak:That's true. A good way to tie it back. So how did you initially kind of like come up with the idea for Loops? I'm assuming you came across this problem over years, but like how did it kind of all evolve? A couple of companies ago, we were paying one of the aforementioned publicly traded companies like a couple hundred thousand dollars a year. And it was part of like a three-year annual contract, right? It was no longer just like annual, almost like three years. It's very common in these publicly traded previously listed companies. Is that a pay upfront model? Like you pay upfront for the three years too?

24:58It depends. It can be structured in lots of different ways. Yeah. They have legal teams that are the size of their sales teams and the engineering teams are a fraction of both. So I wasn't happy with that model at all. And then at our previous company that we sold, we were using Mailchimp and SendGrid. We were paying SunGrid like$100 a month and we were paying MailChimp$1 ,500 a month. So$1 ,600 a month total and the services didn't speak to each other at all. So we had no idea if somebody got an email in one place, not the other, if the customer synced in one place, not the other, what the design looked like in one versus the other, if that design rendered the same everywhere.

25:39And it was just MailChimp. So I remember when we went to cancel the account after selling the company, the popup ad that I got and stuck in my head was like, try our new postcard delivery. I was like, what is this is not where I should be spending my money. This is clearly not being built for me. This might be great if I was traveling. I did not understand who this ad was for at the time. So anyways, that was annoying to me. Then I banked out. I was like, this doesn't integrate with any of the tools that I need. It doesn't fit into any of the flows. The templates are all about creating matcha lattes or something and sending out to your coffee store customers.

26:14like it's not built for software companies. And at the time, nothing was. So that's kind of how it happened.

26:21Turner Novak:Yeah, I think you get, and it's sad when I look back at my email or my DMs, like you had DMed me at some point when you were around when you started the company, like, hey, we're raising a little bit of money if you want to chat. I think I saw like a year or two later, I remember responding. It's in there in our DMs. I'm like, ah, I think I'm going to regret missing this, but I hope it went well. Hopefully not. Hopefully that guy fails. then I'll be right. Yeah. Yeah, that's always my mindset as a VC. Like, I hope these guys fucking lose. I hope they fail. Yeah. You need the heuristic, right? Like, you need some reinforcement of the negative belief.

26:55Otherwise, you're just giving money to any schmuck that walks through the door.

26:58Turner Novak:My anti-portfolio on email news, or email providers in general, apparently. When I meet them, I just need to invest, obviously. Potentially, yeah. The heuristics are hard there, for sure. I've invested in six companies and three of them have actually had Series A's. That means successful. Yeah, that's all that matters, right? Right, yeah. It's hard to know. Of course not, but yeah. Wildly different degrees of valuations too. Fair, yeah. Which can and can't, you know, doesn't and doesn't mean things. Like sometimes that's a good thing, sometimes that's the bad thing. The best companies are sometimes always overvalued.

27:35Turner Novak:But that's also something you'd say in 2021 or 2025. It's very hard to know. The only thing I'm happy about being very right on is NFTs were garbage. Yeah. I feel like I got a lot of internet views and followers from commentating on the NFT mania, which was an interesting time in the world. Yeah, I have a mental log of everyone that took a bite with Crazy Bill and lost their minds. I remember. We all remember. We know what you did. We know what your avatar looked like. I think my favorite thing, though, is I'm probably one of the only people on Twitter that still has an NFT as their profile picture.

28:19Turner Novak:Because someone made this fake NFT generator where you could have a normal profile picture that wasn't actually an NFT, but it had that, like, I don't know, hectagon, octagon. I don't even remember. I think it was six sides. And it would make you like a six-sided NFT profile picture without actually being an NFT. And I did this like four years ago, and I've never switched it. and they made it so that you can't do that anymore. So the only people that still have these NFT profile pictures are people that have had them for the last four years. And I mean, I haven't seen one in, I don't know, a year.

28:51Turner Novak:So I might be one of the only people remaining on Twitter with an NFT picture and it's fake. So one of the things I'm proud of. Well, I think Stripe's doing some like pivot back to blockchain or something. I don't know. So maybe it's coming into vogue, I guess is what I'm saying. Yeah. Can you make an email in NFT? Was that ever a thing? Ah, man. I bet you could. Anything can be an NFT. You might be an NFT. That's true. This whole podcast might be listening to an NFT. Yeah. Yeah. Don't meet me, bro. So getting back on when you were starting Loops, I think you had just come off selling snazzy AI, was it in the company?

29:34Turner Novak:And then, so yeah, what's kind of the story there? We got really lucky in that nobody really seemed to care about ChatGPT. Or sorry, it wasn't ChatGPT at the time. It was OpenAI. It was GPT 3.5 at the time. We had played with GPT 2, but GPT 3.5 hadn't quite come out yet, but there was like whispers of it. And I had seen like a couple of demos. And then I shot Gregory Brockman in email, just randomly, never spoken to him before. I was like, hey, could I get access to this? And he was like, yeah, sure. We're doing a batch of like 10 companies to get first access to it. What are you working on? I told him and he was like, all right, yeah, we'll give it a try.

30:20Turner Novak:What was it for people who don't know that you were making? Oh, yeah. Oh, sorry. Yeah, so we were making Snazzy. It was Snazzy.ai and it's currently owned by Unbounce. I actually haven't visited the site, maybe it redirects now. but it was AI marketing copy. I never felt very strongly about it. It was a problem that we were really solving. It was more of like, ooh, cool technology. Let's come up with a way to position it. So we were one of the first GPT wrappers, which is cool. It was in the same batch with us was Copy.ai, Jasper, and there was a couple others. several others fizzled out. I think Jasper is maybe still going.

31:06They've pivoted like three or four times since then.

31:09Turner Novak:Yeah, I think I actually remembered, I think someone said some really kind of mean things about them on the internet. And I saw the founder, I forget his name, but I think he actually replied and he like shared some of their metrics. And it seemed like they had, I don't know, they were doing relatively well, all things considered. It was like a really long reply too on Twitter. So I was like, oh, it's kind of cool. They've navigated it to the best as they could. Yeah, yeah. We didn't have any real desire to continue in the market. But the business was growing like gangbusters. We were one of the first B2B companies to spend money on TikTok.

31:47What I noticed is that at the time, right, I was like, okay, so we plugged this model in and there was no guardrails, right? It was awful. None of the tooling built that we have today. That makes it so easy. but like once you like one in 10 responses we got back was usable and so but once you plug that in and once you get it in then the core product itself is just maturing on the model side um all you're doing is you're just rebuilding the tooling around it and making things nicer and once we realized that the dev stuff was mostly done aside from like the normal ask people want like reset password and invite your team members and all the normal SaaS strappings.

32:30So then we had a ton of revenue coming in very rapidly, literally within a couple days. And then I just started piping it all directly into TikTok creators. And this is pretty early. So this is like 2020 or something, 2021 maybe.

32:45Turner Novak:Was this like kind of like influencer marketing or was it TikTok's programmatic? No, it was all, this was before that existed. But yeah, there was no ads on TikTok and there was no programmatic ad buying platform or any of that stuff. So you're just like DMing or like emailing creators? Well, I found one person to run the account. I paid her$1 ,500 a month and she ran our account and we got tens of millions of views very rapidly in like a couple of weeks. And then she started finding other creators and then she would find them and then we would pay them. And that was it. And I would just pay her$1 ,500 a month and I paid these various creators directly however much per video.

33:25And it did gangbusters. Literally, there was nobody else out there that was doing anything like this. We could have scaled it and I should probably be on a yacht right now. But it wasn't a good product per se. We're trying to build a very good product right now with what we're currently doing. It was a good way to make money, to make some person happy, I think, on the user side, and to rapidly scale. But it was never anything else we were proud about. We sold it in under a year for a seven-figure sum to Unbounce, who glued it into the core of their platform. And now they're very AI forward, all that good stuff.

34:01I hope it's going well. I meant to look Unbounce up before this, but for me and also people who don't know,

34:09Turner Novak:it looks like a marketing landing page builder and looks like they've probably evolved from there over time. Yeah. Unbounce back in the day was the premier landing page builder on the internet, actually. So if you were a marketing team, you were building them with Unbounce. And there's supposedly kind of a big post out there. I've heard you mention it in another podcast, but I couldn't find the post. I think you kind of talked about just the process of selling it. Was there anything big that you kind of learned through the process? It came inbound and it closed very rapidly. if I was to do it again, and I don't know that I ever will with our current company, but if I was to do it again, I don't think I would have tranches of any kind.

34:54Turner Novak:Tranches in the sale process? Like in the way proceeds are received? Yeah. So we got the proceeds up front, but then we had like tranches based on like revenue goals internally for also running the company aside, the main one. And I don't think I would ever agree to something that impacted my compensation in any way in a way that I wouldn't have 100 % control over. So I mean, that very high level. Yeah. Yeah. Yeah. I've run into that before with acquisitions where a company is acquired, it becomes kind of tucked into a part of another entity. And then the acquired company inside the other one has a specific target that they need to hit.

35:37Turner Novak:But then let's say the founders are not involved in it. So you have no control over actually hitting those targets. And in all reality, if I'm the acquiring company, I'm probably going to make sure you just barely don't hit them so they don't have to pay you anything. The incentives are not aligned for you to actually get those targets, especially if people are not involved who are being compensated by them. So that's something I ran into personally with one of those, with a portfolio company that was acquired. I mean, I can imagine that that could go a lot of different ways. Yeah, I think it depends on the relationship that you have, the company, the goals that are created, and all of that stuff.

36:18But high level, never let anybody take your own compensation out of your control if you can avoid it. Yeah, that's fair.

36:27Turner Novak:And you completely kind of bootstrapped that, right? Like you didn't raise any outside capital for it? That was bootstrapped. We had investors, but there was no real... Or we had investor interest, but there was no reason to take that. And then after selling, we didn't know what to do after we left Unbounce. And I stayed with the same co-founder. We applied to YC. We had applied once prior, the two of us, four years prior. And we didn't get in. So this was the second application. And like I said, we had a number of different ideas from privacy to climate to loops for email. And we got in. They were mainly interested in loops.

37:02That was our biggest pain point and where we had the most experience as well. We built something rapidly and saw some early adoption and decided that was the way to head.

37:10Turner Novak:Nice. And what was your application like? I know there's kind of a... You put a ton of work and tons of research into it, right? and spent tons of time? No, we spent very little time. Yeah, I recommend... I didn't even know you could ask for referrals or recommendations or that people prepped really hard for this. I guess I was maybe a little naive. The first time we applied, I guess now like 12 years ago or something, we drove to a place and we found a sequestered quiet room and blah, blah, blah. We tried hard. We did a couple of takes. This time, Adam texted me like 20 minutes before it was due.

37:46Hey, should we try and do like YC this year? And I was like, oh, I don't know. And then we just like knocked out a very quick application. We did a quick Zoom call because it was like 11 p.m. or 11.30 or something. And we just like told jokes at the end of it for like a couple of minutes, way over the amount of time that it was supposed to run when we uploaded it. And then, yeah, we got an email shortly after. We did that. We did the interview process. It went on for like 40 or 50 minutes. It was Michael Seibel, Brad Flora, and somebody else. And then that night, we got a phone call, and they said we got in, and I said, I'll have to think about it.

38:26Turner Novak:Was that like a negotiation tactic almost? No, I was like, I got to ask my wife. I was like, I don't know, guys. This seems like a big commitment. Let me chat with my wife and make sure she's cool with me having a three-month sprint right now. We have a newborn. There's a lot going on. and he was like i think brad who called he was like i don't think anyone said that this year uh we usually just get a yes and i was like okay sorry about that let me call you back though and then yeah so then i did and my wife was like yeah of course you've wanted to do this for a while you should do it and that was it so why did you do it because you've kind of been historically you're always kind of bootstrapped.

39:07We, you know, YC is a pretty big commitment.

39:10Turner Novak:Sounds like it would be almost like inconvenient to go out there. Like, why do it? Well, we didn't go out there. It was COVID. So it was a COVID patch. And I did it. That was one of the reasons that we decided to apply as well is because my co-friend Adam is in upstate New York with his family. And I am in a small town in Maryland outside of D.C. with my family. We both have very nice lives that we've built. And they are not inside of San Francisco. So we saw an opportunity there for maybe attending remotely and decided to take that. Yeah, for you to describe it as kind of, it's like a no-brainer if you want to build a big company.

39:46Turner Novak:Like why, why is that? Oh, because honestly, sometimes I wonder if like if it's an IQ thing or if I just see things very simply or, you know, like I wonder which side of the bell curve I'm on, you know. because there's like arguments. You see people arguing extreme on both ends of the spectrum so why you should or shouldn't do YC or the value of it. Yeah, I think you can just look like statistically YC tends to make good bets. So if you want to be considered a good bet and statistically have a good chance of succeeding, like maybe then you should do YC. It seems pretty clear to me, right? People go to Ivy League schools for a chance of success.

40:29It's barred for entry in various ways. But all of these things are good indicators. If you pile on more good indicators, does it mean that you're going to be a success? Absolutely not. But do other successful people have those similar indicators? Sure. So why not pattern match yourself?

40:45Turner Novak:And you, I think, raised a little bit of money around demo day or before demo day. I think that's probably when you DM'd me. Yeah, we raised, we closed around before demo day. I think we can have two weeks before. Yeah, I'm raised from a number of different angels and investors and generally been very happy. We made it very clear, hopefully to our investors early on that the best investor for us was one that just let us build our business. We didn't have to engage with too much. We don't think an investor is going to save or build or do anything meaningful to the company. And if they do, then that's nice, but it's not something that we should spend any time trying to make happen because that's not repeatable and it's not something that like I'm going to get any real value of at this stage.

41:32Post-product market fit, maybe when we're like readying for IPO or we're like collecting funds and doing all that good stuff and we actually need a serious bankroll, sure. But like no investors like flying to customers' offices all across the country off like a$500 ,000 pre-seed or something, you know, like there's varying amounts of commitment and stuff and what you should expect. And I think at the precedency stage. Your investor commitment and expectations should be very low. And it's up to you to build a good company. And then you guys can reconnect and see what that looks like in the future.

42:05Turner Novak:So then how did you kind of suss out or determine who you wanted on board? Like, was there a certain way you thought about who you should bring on? It sounds like it wasn't necessarily based on, you know, like a value add per se. No, it was 100 % of who I spoke with and who I enjoy speaking with. We talked to 40 investors, around 32 or so were interested in investing in us. So we turned on the majority of them. It was who I enjoy getting along with, who understood the expectations. We had a couple of investors who thought that they were doing these really big evaluators. They were like, we'll be in the office every day.

42:40We'll be the first person you talk to in the morning. We will text you on the weekends. I'm like, I will literally pay you to do none of those things. Please, please, I'm not a child. Please, no. So it was just people who I understood. What it ended up being was a bunch of very successful founders. That was one of the qualifications. It's like, ideally, you founded a company in the past. And then folks that kind of understood that it wasn't their job to make our company. It was our job to make this company. And as a result of that, I sent an investor update. I get some emojis and some LFGs. And that's about it.

43:16Turner Novak:Some rocket emojis, yeah. Yeah. Yeah, if I need funds or something, I'm confident I could hit up any of them and get any amount that I needed to bridge any period of time. But we've been cashflow positive for a while. We're growing. We don't need any additional funding. And I think they would more be confused as to why I was asking anything else. Yeah, I think a lot of people don't realize that the VC high touch and always being in front of the portfolio companies, it's really more for them than it is for you as a founder. Because as an investor myself, like I kind of need things to talk about to my investors.

43:52Turner Novak:Like I mean, you're so removed from everything that's going on. Like really what you do is you give money to some founders and then you just, it's like Jesus take the wheel. Like you just wait. They either die within like one or two or three years or it's like 10 years later and it's like, hey, this might maybe be worth something, but like you don't actually know. So I mean, as an investor, you get data points. It's like, oh, these loops guys. like, oh, Chris is just an animal. He's always shipping. They're always in front of customers. And you need data points to go back to your investors that they think you're good as an investor.

44:25Turner Novak:Like, oh, they're spending all this time with Loops. They're adding all this value to Chris and the team. And they know how valuable this company is. We know we're going to get a lot. So, I mean, to your point, it's really annoying. So I think it's as an investor, it's like finding that balance of just like, how can you get that from the portfolio? Like, oh, loops is, they're tracking really well. Like these guys are on a good course, they're doing well, but I'm not being annoying to the founders and texting them every morning and trying to go to the office and help them write code or something or introduce them to worthless customers or candidates or.

44:59Yeah. I mean, look, I'm sure that's helpful for some founders and maybe I don't speak for the majority of them. I think if we're going to like VC side talk for a second, I think what standard Dalton and and Co are doing with standard capital is interesting. And that's probably as close to perfect from a venture fundraising vehicle that I've seen so far. So standard capital is offering like just the form that you fill out similar to like a Y Combinator application. And then they grant you some amount of like series A funding if it is accepted. That's pretty much it. I think that's great for series A.

45:34I actually think that you could go even further with it. If I ever clear loops or have any amount of free time, I've always wanted to do a separate fund where I just do my best to mirror Y Combinator's investments because historically they have fantastic returns. So I think you should probably just make a form on your page that just grants safes to any Y Combinator alumni up to a certain amount of money until the fund exhausts. and that should be the extent of it.

46:05Turner Novak:That's a use case for NFTs. You get your YC safe as an NFT and you submit the NFT. It's like, oh, proof of stake, proof of whatever they call it. Jesus Christ, a legal contract is proof of stake. Yeah. Proof of safe is probably what they call it. Proof of safe. Oh yeah, sure. Yeah. There's something there. Yeah, if YC ever launches like an auth with YC OAuth function, I'll spin that up. I'll raise a couple of million dollars And then I will throw out basically like a self-funding fund that only invests in YC companies. Everyone gets like a percentage of the fund and it's done as safe. It's a single click.

46:42You get a DocuSign in your email. Nothing further besides the YC OAuth. I don't want to even hear your company name, what your idea is, any of that stuff.

46:51Turner Novak:Yeah. And so one thing interesting that you said, maybe you mentioned this to me earlier. Maybe we were recording, but you skipped a Series A. Like you had an opportunity. I think maybe you said you got a term sheet. I can't remember if this is what you said, but can you just explain that to me, the whole process and why you chose to do that? Sure. So typically, I say typically as in like maybe five years ago or so, folks looked at term sheets for Earth. Folks looked into raising a series A when they hit a million dollars in ARR. That was the usual benchmark. So we cleared that a while ago and we did look at fundraising, But I've never felt that we had product market fit.

47:33I think we're probably, I mean, we're obviously the closest we've ever been, but I still don't think we're quite there yet. On the flip side, I can think of maybe like maybe five or six companies that do that I've seen. Besides maybe like a local bodega or something, that's probably a pretty good product market fit. But we didn't get there with where I thought we should be from product market fit side of it. So we chose not to raise funds, cash flow positive, and we're growing a rate that allows us to continue to hire and continue to build products and acquire customers without having to do any marketing or sales.

48:07When we hit that product market fit stage, we might look into it or we just might keep skipping until we end up at IPO acquisition or I retire.

48:17Turner Novak:And you mentioned the million dollar Series A benchmark. Is that still true today? What do you think the current market looks like? I don't know what the current market looks like. It seems insane. I talked to folks and it seems like borderline NFT crypto levels of insanity out there right now. Why do you say that? Just because people are raising Series A's in like 90 days. That kind of stuff. 90 days from like company inception. That kind of thing. And if you can build something, even if it's a model and it takes you three months to do it, then other people can build something similar in three months.

48:59And we spent a year and a half on the product before we launched it. Now, that's not to say that we built a better business or that we've allocated our time well or any of those things. But if you want to build something like very good, very defensible and something that has the foundations to be a decade, multi-decade long business, it's unlikely that you're going to get to that defensible state in three months. OpenAI had been around for like six, seven years or something before they launch ChatGPT, it takes a while to build a good thing. So if you see college freshmen building something in three months and then knocking down like 40, 50, 60, 80 million dollars Series A, you know, maybe the market's a little frothy.

49:45Turner Novak:Yeah, what would you recommend then to that college freshman? Like, should they not go through that process of, you know, launch video, some hype, raise a bunch of money? What advice would you give to that person or to yourself if you're back in that moment? I think it's a great way to potentially build wealth very early on in your life. It's not clear if the goal is experience, if the goal is to build a good business, or if the goal is to make a bunch of money. And I'm sure if you're 22 years old, maybe you don't know the answer either. You're just doing what feels right and what makes sense in the moment and what investors are willing to give you money for.

50:23And investors are so scared of missing out on the next scale or the next OpenAI. They're chasing everything that has AI at the end of the name.

50:32Turner Novak:And it's interesting because I think you said you have a lot of customers that are AI companies. Email is still pretty important even in this era of post-AGI. Absolutely. Yeah, we have lots of... We want to build email for modern software companies. Most modern software companies today are building with AI at the core. So we have companies like Replicate that build on us. Then we also have companies that are a little bit newer like Granola. Just the other day I saw Orchids, who's the top of the web design benchmarks. It's funny, I saw them because Dylan from Figma tweeted a stat that they were number two in and Orchids was number one.

51:11Turner Novak:I saw Orchids was number one. Yeah, I saw that. I was like, what's this Orchids? Then I was like, wait, isn't that familiar? Then I checked my inbox and I was like, oh yeah, look at that. They're using loops. So, yeah. So the best modern companies today are choosing to use us as well. We have no AI features. We're not built especially for AI. But we have built a very robust, very stable, very nice to use platform fielded entirely by a technical team. How did you first get people to start using it back in 2022? Right. Well, we did spend a year and a half building this thing. So was this 23? three yeah well so yc kind of requires you to get revenue while you're gonna um i don't know it's a requirement it certainly felt like it michael seibel is a scary dude if you don't get revenue yeah well i don't know what's the threat what's the threat that they give you do they just like just make you feel so disappointed that you didn't get revenue and you just feel like you're pressured into it there's some level of competition right like you might be like oh i'm better than take a while to like build blah blah blah but like maybe somebody's next to you and they just hit ten thousand dollars you know and a couple days ago they felt the same as you and now they have ten thousand dollars and every week we would meet up and we would compare revenue like and michael seibel would oversee it in our small batch and we would put it on a spreadsheet and everyone would look at the spreadsheet and you did not want to be last on the spreadsheet and he'd be like, so why?

52:43Why do you have no revenue this week? And I'd be like, well, reasons. And he'd be like, okay, fine. And then you'd go on to the next person and then they wouldn't have those reasons and they would have revenue. And you were like, well, why was my reason good enough? And you start self-questioning. And then eventually we just built something that users could use. It was very small. And again, we stayed in like building stealth, waitlist, whatever mode for a year and a half. We had users paying us, but it was a very small amount. We handpicked them off of the waitlist. And it was just to make sure that numbers continued to go up and that we had users using our software so we were not building in silence.

53:19Turner Novak:Then how did you get people to start using the waitlist? How did you first get people on the waitlist? Yeah. If you don't have a product, you do need something in order to get people interested. So we tried a number of different stunts. So some of that hype stuff. I think it's a great way to kickstart an audience if you don't have one already. So we purchased a billboard in Times Square, and then we let Y Combinator startups put their ads on it throughout the day. We had a photographer post it up, and we hired off a Thumbtack who took pictures throughout the day and posted it through our company Twitter account and tagged the companies.

53:56That worked really well. We sent a bunch of swag out. one of the more fun things that we did was we did a cereal box called a cereal called loops like in the old airbnb style airbnb released uh like mccain uh obama cereal boxes when they were trying to like generate some interest and hype so we did that for us but it was just for the company loops and inside of it we put a 3d printed decoder ring so then when you solve the decoder ring combination it takes you to a private url and when you figure out the puzzle on the private url you get airdropped a hoodie So that was really absurd. And it was professionally manufactured boxes.

54:34I hired a great designer. We didn't have a product to sell right, so I just spent my time at energy on something.

54:40Turner Novak:There's a box of loop cereal that had a decoder ring, and then you had to decode the URL. When you went to the URL, you were sent a hoodie to your house or to your location. Yeah, it was way overbuilt. We did a couple of hundred of these. And it worked. A bunch of early customers were just like, this is a cool nerdy thing. I get a box of cereal with a decoder ring in it. I don't know what the decoder ring is going to do. And a lot of them just kept it as memorabilia. And they haven't even opened it. We actually have a surprising amount of hoodies for the amount of boxes that we sent out. So we still have a surplus of hoodies, but I think all the cereal is gone.

55:17Turner Novak:Interesting. Well, there's the one strategy. I mean, there were some startups in 2021 that would sell the hoodies, like they'd sell merch. It was like software companies that had more merch revenue than product revenue, I think. I don't remember those days. No, no. Fast? Oh, yeah. There's one called Fast. They were doing$1 hoodies. I mean, they did a very good job at generating hype back in 2021. And where are they now? Yeah, so I guess it's like hype can be good. You got to have the product, though. You got to back with products. I think it's a little different nowadays because hype gets you to a place where your product is in front of users.

56:01And if those users haven't used anything like that solution before, and if it's essentially a wrapper of a foundation model, then you can do some very interesting things. And then I think if you just only focus on hype and you have a very thin UI and you let the model providers focus on improving their model, then you act as this hype forward middleman that is maybe an effective go-to-market. I don't think we've ever been in a place quite like that before where the product itself continues to improve and it's entirely out of your hands. Because as it gets better, your product is better and you don't have to do anything but continue to pay them.

56:37I don't know that there's ever been a technology equivalent of where we are now. So you really could, if you are an AI forward company, devote all of your time entirely to marketing, hype, sales, and probably still have a decent business model until AGI wipes us all out. Yeah, true.

56:54Turner Novak:We've got about two years. I feel like we've had about two years for about two years now, but we probably have about two years until AGI wipes us all out. Maybe it's a year and a half. I think the timeline updates depending on Anthropics funding cycles. Yeah, I mean, that's another unknown or sorry, another in my sense. And I think it's like an unspoken secret of like, you just look at the language that comes out from a lot of these guys of like, you know, what are their incentives around the claims that they're making? like I think there's the classic anthropic Dario's has like some clips have gone viral about like you know six months from now 90 % of all coding will be done by AI and it'll be like exactly six months later someone will repost it and it's like you know but yeah lines up with the funding cycle so do you think is it easier to get attention or build a product then yeah it's much easier to get attention you can buy attention If you have money, you can just pay somebody with influence and then you have attention.

58:00It's a very simple transaction. There's the largest companies in the world are built around that Facebook ads, which is called Instagram as well. And then of course, Google ads, which is digital oil, if you will. So yeah, it's definitely much harder. It's very difficult to build a good product for a specific audience that continues to improve and satisfy that audience. If you want to play in hard mode, do it for a combination of user demographics. So we build for designers, for engineers, for customer success, and for marketers. And pleasing all four of those types is pretty difficult.

58:36Turner Novak:So how do you describe the cadence of building loops? I think it might be your pinned tweet on Twitter, or maybe you just tweeted it the other day. But how do you just think about the general flow of just what building the company and building a good product like that looks like? Yeah. So I think it comes from the organization level. So we have entirely technical staff. There's nine of us who are remote. And what that means is that everyone is familiar in communicating in like a purely digital way, which means that our paper trail for any feature, for support, for any of that stuff is immaculate.

59:17It's never like somebody tapped me on the shoulder and said this. It's always written down and there's a challenge line. So anytime that there's something that is resolved, it resolves very quickly. It also means that we have 24 seven global coverage, global technical coverage, which is fantastic because it means that we're able to speak to like corporations that are in international places that would otherwise be difficult to support. And probably the best part is, is if you have engineers do support, you have fewer bugs, because if there is anything that an engineer hates, it's being told by 10 different people that this one thing doesn't work and they are the person that can fix it.

59:53And if they fix it, then those 10 people will stop talking to them. And it's been a very effective way. It does, I'd say it's probably not a fit for all people on our team, but it is part of how we run the company and it is important. So we think all you really need to do is talk to your users, build the product, talk to your users, build the product, and then share any updates to the products and repeat forever. Until AGI.

1:00:24Turner Novak:Until AGI. Or heat death of the universe. Yeah, yeah, heat death, IPO, yeah. Yeah, I want you IPO. That's when you stop talking to them and you can buy the yacht. That's when we start talking to shareholders, not customers, it's shareholders now. Oh, yeah, true, true. Yeah, I thought that was kind of interesting when I heard you say that you have all, the customer support team is engineers. You also mentioned you don't use any AI customer service or customer support things. Is that still true or was that true? Yeah, it's... Well, we don't have like an AI chatbot. What we do use now is a tool called Zeus by Atlas.

1:00:58It's good. I think it's pretty under the radar. So we use Atlas. They were one of our batchmates in YC. They were maybe our first customer actually. And we've used them since they started and vice versa.

1:01:12Turner Novak:What's the URL? Do you remember? Atlas.so. Oh, you guys got your SO Mafia going. Yeah. It's Somalia as a domain name, right? Yeah, for sure. So Zeus is cool because it doesn't surface as a chatbot in the app. It's just a live chat on our site. And if you ask me a question, it will actually suggest things to me as an answer. and then I can choose to revise my answer based on the suggestions, send it as if it was sending from me, all of that. So they never interface directly with an AI and anytime that I use anything, it's always human in the loop. It's something that I see, approve and send out.

1:01:55Turner Novak:And I know you mentioned before, you personally onboarded the first, I don't know, 300 customers for the first year. I know maybe it's even longer than that, but why did you do that? Yeah, the entire year and a half, I did 100 % of all boardings for every new user. I think it's important to understand what you're building towards and what the market is. If you don't like talking to lawyers, you shouldn't build a legal company. If you don't like talking to people building software companies, you shouldn't build tool that caters to them. So I do like this audience. I find the aggregate level of TISM to be similar to my own.

1:02:37And it makes for easy conversations, usually. And I find that we're still working off of the early figment designs and early conversations that I had three and a half, four years ago. Because we fully understand this market, what needs to be done, what needs to be built.

1:02:53Turner Novak:Yeah, you probably learn a lot from your customers because it's all similar. you're all building kind of like similar things, at least more similar than someone who has like a CPG brand or like an NFT thing, like it's software. And like you're also building a software company. Like just talking to those people, you'll learn a lot. Yeah, you do. What I've learned also is just how incredibly talented our team is internally. What I will typically find, because we do the support and we build the product, we've gone toe to toe with many various engineering departments and 95, 96 % of the time, our engineering team comes on top with the solution of how our data model is constructed and why it's a better solution.

1:03:36And these teams retain and they're happy to build it and they tell the people about it. So we think it works.

1:03:43Turner Novak:Yeah, one of my portfolio companies, he describes it as you want to compete against competitors where they think of their engineering teams as the IT department. They don't have engineering teams, they have IT. where it's like that's that's what you want to be competing against. Absolutely. In the software space, 100%. Yeah. And you speaking of like things like 996, I feel like it's kind of the discourse like, well, I don't want to whatever that means. I had to say you work seven days a week at Loops. So that's like 997. So explain that. That sounds like that sounds even more intense. So I have two kids, a two year old and a four year old, actually just turned five.

1:04:21with. And I'm very plugged in. The first thing I check in the morning is inbox and slack to make sure that customers aren't being held up. There's not an issue in another way. I still do probably 60 to 70 % of all the support myself. I do all the onboarding still myself. We don't force onboarding, but I do it all myself. And I am the point person for a lot of our larger customers as well. And that's all something that I've chosen. And I'd like to do and it's a place that I put myself in on purpose but as a result of that like you know I do find myself working probably more than most founders at my at our current revenue level or team size or whatever it happens to be a lot of that stuff can be unblocked on my phone which is cool now but I still for better or worse try to keep up with the engineering team and it's just it results in a lot of work.

1:05:21I am not like 996, though. I am like, I am up when I'm up and I'm looking at my phone and I am on my computer often. And then between that is family. And then there is pretty much nothing else.

1:05:35Turner Novak:That's right. I mean, I feel like I'm in the same boat where it'll be like, like you went to Disney World with the kids a couple of weekends ago. It's like a four day trip over a long weekend. Super fun. But you're definitely, you're like in a ride about to get on the Guardian of the Galaxy. ride or whatever and like an email and you're like oh i gotta quick read this or something like you're kind of working but you're also on vacation it's like one of those fluid things where i don't think i could ever actually fully disconnect from anything but also i don't work 24 hours a day even though i kind of do if that makes sense yeah definitely like absolutely like i might not be strapped in front of the laptop but yeah i mean like when i'm in the shower right I'm like actively thinking about what the next thing is for us, what I need to discuss with people that day, like what customer is this?

1:06:24And like, it's always on my mind. If it's not on my mind, then my wife or my kids are and or other members of my family. And like, that's what I have bandwidth for. It's one of the reasons I can never move to San Francisco and build this company. I just don't, I don't have the bandwidth for it. There's not a world where I go to coffee shops, period. People are always like, oh, the people you meet at coffee shop. When are you going to like, why do you have the time to do that? What are you doing? Yeah. Michael Seibel described it as like increasing your luck surface area by living in a densely populated place with many talented people.

1:06:58But that only works if you actually go somewhere. If you are just like only building your company, and it's happening remotely, and you're talking, and you're spending time with your family, and you're above the age of 30, then you do not have that time. However, if you're under the age of 30, and you're in your 20s, then I think it's a great place to build a company.

1:07:16Turner Novak:yeah i mean it's it's it's like in one in one side it's like i always was i don't want to say hated but i did not enjoy the sort of like political yeah small talk bureaucracy of like the workplace of like you got to go hang out in the kitchen and talk for 20 minutes but it's like i got i got work to do and like i got home 20 minutes later because of this but then at the In the other side, it's like, you know, it is useful to just like combine work and your social life in the same. Like I go to San Francisco a couple days a month, maybe like a week a month. And we'll have like a hosting event. And it's like kind of fun.

1:07:54Turner Novak:And you see some friends. But it's also like it's kind of work related, I guess. Like it all you kind of hit it all in one shot to kill multiple birds with one stone. So it's like, yeah, I get it. Yeah, it's reasonable. It's good. i should probably do more of it i just but people talk about being locked in and then they like also drink matchas they don't make i just don't understand like how those two things coincide like bro you're not locked in like i my fucking coffee makes itself in the morning i go downstairs i drink it and i've already replied to like three different things before i've gotten out of bed like that's locked in.

1:08:33You know what I mean? I am prematurely gray. I have wild bags. If you are lifting weights, you are not locked in. You are lifting weights.

1:08:43Turner Novak:Have you seen that one video? It's the one guy who talks about how he does three days in one day. He's like, when I wake up, I wake up at 6am and I'm doing all this stuff by 12pm. I'm on my second day. By 4pm, I start my third day. I do three days. You give me a month, I'll compete. You give me a year, I've lived a life time that's probably one of my favorite videos if you don't look like you're dying of like some type of like fatal illness then you're probably not as locked in like you need to like honestly you should look this is like the worst i've looked in my life really i was gonna say like yeah you've got like the like the silver gray almost like it looks good thank you i appreciate that yeah like genetically though that probably shouldn't be happening like stress like lack of sleep children throwing things at me that's fair like is it a bag or is it just a bruise like is it a bag under the eye did you get hit with a like a block it's it's it could be either either or depending on the day but you know like you see like sam like sam's not looking so good nowadays right like he's feeling it you know he's doing it that's fair yeah yeah i want to see show me those podcasts where they don't look super refined show me i'm like but they look puffy they look like crap but elon always looks like shit do you know what i mean like you know that guy's doing things he looks terrible like 100 of the time in like different ways you know like some days he's bloated some days it's like got like crazy bags and all his hair is like like clearly that guy has got some other stuff going on that he just does it's like the least important thing you need to look terrible to be successful so that's that's the thing it's like if you're if you're a found or you're doing your first CNBC interview, like, do you wear a suit?

1:10:26Turner Novak:Do you get a haircut? Do you get like a manicure, like a face puffing, like some kind of treatment before? Or do you go on just looking like you got hit by a truck? Like, what's the strategy? I think you got to get a body double. I'm not really sure there's any other option. You need to like clone a twin, have them trot out, like for all the PR, all the fundraising around the IPO. CNBC twin. It's the only solution. So this is somebody who looks really good. Yes, in your place, in your stead. Absolutely. Interesting. Okay. I'll keep that in my back pocket for when I IPO the Banana Capital and the Peel Podcast conglomerate in the future.

1:11:04Sure. Yeah. I mean, why wouldn't you? You should probably start working on it now, to be honest.

1:11:08Turner Novak:Probably. Yeah. One thing you mentioned I wanted to ask you about before we signed off. You mentioned you recently cleaned out a wasp nest with a shop vac. I'm deathly afraid of bees and wasps. It's probably the one thing. It's my irrational fear. I just don't like them. I just avoid putting myself in those situations. How do you do that? How do you clear out a wasp mess with a shop vac? Yeah, you probably shouldn't. One of the benefits of living in a small town is that you start to feel invigorated by some of your neighbors doing things that they shouldn't do on their exterior and stuff like that.

1:11:42Now I think I can do pretty much anything. These hands are made for typing and that's just what they do. but like every once in a while, like somebody will send me text messages of something on Reddit with like some homeowner thing, which is a friend of mine did. And I was like, I'm doing this. So we had like a couple hundred wasps that built a nest in one of our walls.

1:12:02Turner Novak:Oh, geez. Inside the house or more exterior? We have like a secondary mudroom area. So it's like borderline exterior interior. But, you know, they had breached the interior. So they made it into the secondary area and we had about a dozen of them flying around inside there. and then hundreds in the walls. So my friend sent me a Reddit post and I have a shop bag. I filled it up with some soap and water, taped it to a rake and shoved it up into the hole. And I like vacuumed up maybe like a couple hundred wasps just in a period of like eight hours. Totally cleared it out. Found another one on the other house the other day.

1:12:37Did the same thing. Super effective. Yeah, and this weekend I'm like chiseling a bunch of bricks in our driveway just because it seems like something that I feel like I should be able to do. You should be able to chisel bricks.

1:12:49Turner Novak:Yeah, you got some confidence from the shop back? Yeah, yeah, yeah. Apparently, you can use a screwdriver and a large hammer, and I have both of those things. What, are you trying to even out the driveway or something? Why do you chisel bricks in the driveway? We have a nice historic home. It's like 120 years old or something. The bricks are just as old as that, and they've been pulverized in the front of our driveway, like these little pavers. They're basically dust. so they need to be like taken out and then either flipped if they're not totally pulverized or replaced and i mean i also need to figure out how to cut brick which is something i will figure out also are you allowed to do this like don't they make laws like you can't change a historic home like you got to get permits to do the smallest thing you can just do things yeah fair it applies to startups and historic homes yeah yeah yeah yeah ideally you do things with your car parked in front of you so like the neighbors don't see.

1:13:46But yeah, you can definitely do things.

1:13:47Turner Novak:Yeah, hopefully you don't have an HOA, one of those Karens who's like reporting everything. No HOA, no HOA. We do have a neighborhood newsletter list who I've tried to convince to use loops unsuccessfully. Okay. I'm like somewhat on like the wrong side of the fence there in terms of like my early entrance into the community, but I'm working on it. We'll see what happens. Well, yeah, I mean, I think that's probably a good way to end it. It sounds like you have a lot to do this weekend with the driveway, with the chiseling, following up on the bees and the wasps, making sure you got them all. But yeah, this is a lot of fun.

1:14:19Is there any way

1:14:20Turner Novak:people can find you? Like Twitter, is that probably best? Yeah, I'm FranceFrize on Twitter. I'm probably something on Threads in Blue Sky, but I haven't checked in a year. LinkedIn, are you a LinkedIn guy? I am not, but I am on there as Chris France, I think. And if you don't get me, you're going to get the drum over the talking heads. So really, it's a win no matter what. Yeah, didn't you say that someone emails you all the time thinking that that's who you are. Yeah, Moby. A couple others. People email me thinking I'm the German of the Talking Heads because I own ChrisFrance.com. And yeah, it's cool.

1:14:54I mean, I almost went to a desert with Moby. I just had to bail and tell him at the last moment that I'm not Chris France. But I really want to meet Moby. Do you know what I mean? I feel like he's like...

1:15:05Turner Novak:Just figure out a way, yeah. Just go through with it one of these times and be like, yeah, no, I'm not actually the drummer from the Talking Heads. I'm just the email software guy. Absolutely. Yeah, if you had used Loops, this confusion never would have happened. Yeah, that's where that's a really good marketing pitch. Maybe you should try that for one of your marketing stunts. If we ever do a commercial, I'm going to reply to that email and be like, Hey, Moby, I need a soundtrack. Here's$50 ,000. See, I told you I was a good dude. We'll be on the lookout for it. Maybe we'll do a follow-up episode when you put out that first commercial.

1:15:39Perfect. Maybe I'll have Moby next to me.

1:15:41Turner Novak:That'd be cool, right? Yeah, that'd be awesome. Well, cool. This is a lot of fun. Thanks for doing it. Yeah, for sure, Turner. And thank you for listening. And thanks to Hanover Park and Ramp for supporting this episode. Head to ramp.com slash The Peel for$250 on your first cards and hanoverpark.com slash Turner for the modern fund admin provider for institutional grade investment firms. If you like this conversation, check out the back catalog of over 100 episodes, including last week's with Dan Gray, where we talk through untold lessons from dozens of academic research papers covering 40 years of startups and venture capital.

1:16:15Turner Novak:If you want to help me out, please like, comment, subscribe, and include me in the subject line of your next customer email. If you want to miss a future episode, subscribe to my newsletter, The Split, linked at the bottom of the description to get each episode plus a transcript emailed directly to your inbox every week. Thanks again for listening. See you in the next episode.

1:16:38Bye.