Quitting My $200K Job to Start a Profitable Self-funded SaaS Business

Candace Wu

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Published: September 18th, 2022

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Candace Wu

Founder, Letterloop

Founders

Employees

Letterloop

letterloop.co

from Boston

started August 2020

Founders

Employees

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I’m Candace Wu and I’m one of the founders of Letterloop, a private group newsletter app for friends, family, and coworkers.

Letterloop makes it easy to automatically have your private newsletter with the people you care about.

Every few weeks, your group picks interesting questions for everyone to answer. Letterloop does the work of collecting the responses, compiling them together, and sending out a beautiful newsletter. The whole thing happens over email, no apps are needed.

Our users are friends and families who live in separate geographies and want a consistent way to connect. They’re also coworkers (remote or in-person) that want to get to know each other better, share about their personal lives, and celebrate workplace wins.

What's your backstory and how did you come up with the idea?

I’ve always been intrigued by the question of how to create an authentic connection. Before starting Letterloop, I worked as a Product Manager at WW (Weight Watchers) on their mobile app and focused on designing app experiences to help members on their wellness journey.

I also created Parents are Human, a bilingual card game designed to spark meaningful conversation and connection between you and your family.

The idea for Letterloop came from my desire to connect better with the people in my life. I would talk to my family and close friends over chat, sometimes over the phone or via video. But I often ended up playing phone tag, and couldn’t seem to catch up consistently. Calls were erratic and hard to get the timing right.

SMS and WhatsApp were convenient, but didn’t offer a way for everyone to be seen. It was easy for important life updates to get drowned out in an endless stream of messages.

My coworkers, I would interact with them every day but found that as the months and years went by, I often didn’t know anything more about their personal lives or experience at work. Workplace functions weren’t intimate enough, but we also weren’t close enough to hang out outside the office.

So I made Letterloop with my co-founders, Jonathan and Bharat. It’s a fun and easy way to hear from the people you care about in your life! You invite your group, we help you ask thoughtful questions and viola! a beautiful newsletter is delivered to everyone’s inbox!

Why a newsletter: Newsletters are an easy and thoughtful way for me to digest information on things I care about. I subscribe to newsletters covering topics across the board. I realized I wanted that same experience from the close people in my life. How can I easily, and regularly know what’s going on and what matters most in their lives?

I knew that if I wanted this product, others would too. I didn’t know the details of how it worked, but I knew that the desire for human connection was universal and that enough people out there would resonate with the problem.

Learn to sit with your emotions and fall in love with the journey. There will be days where you feel on top of the world and other days where you feel like everything’s leading to a dead end.

At the time, I was still working at WW. I’d been wanting to start my own company for a while, so I took the leap and left my job to work on Letterloop and other ideas full-time. It was a tough process and I learned a lot about myself — enough to write an (actual) book on my learnings from the experience. It’s called the Art of Alignment.

Take us through the process of designing, prototyping, and manufacturing your first product.

The Letterloop team consists of 3 co-founders: myself, Jonathan Weinstein, and Bharat Kilaru. I lean towards product and marketing, Jonathan focuses on product design and customer experience, and Bharat leads all our engineering.

We designed our initial concept entirely in Figma. This took several weeks. To validate the concept, we built an initial MVP connecting existing tools like Webflow, Typeform, and MailChimp. At first, there was still quite a bit of manual work involved in running the app. Our low-code MVP was great for product testing but not for efficiency or scale.

To test the concept, we shared the app with close friends and families. The signal we were looking for was sustained usage over time followed by paid conversion. Could a group email newsletter provide a valuable and consistent enough connection?

Our product testing gave us a thumbs-up signal, so we spent the next several months building a completely custom app with full automation.

Describe the process of launching the business.

Our startup costs were minimal. There was a $500 Stripe Atlas fee to incorporate our LLC, and just a couple of SaaS services. We designed, built, and marketed Letterloop ourselves, so there was zero contract development or design fees, and no agencies. Because users paid for Letterloop, we were profitable from the start.

Our initial launch was a soft launch on social media from our accounts (Facebook, Instagram, Twitter, LinkedIn, etc.). That drove hundreds of signups to our landing page.

Our marketing site was built on Webflow and prioritized a clear organization of information and clean design. Our above-the-fold CTA looked like this:

Followed by a clear explanation of how the app works:

Up next were examples of potential use cases:

Followed by some customer testimonials from our initial users:

And finally a showcasing of core features and value points:

Our social media soft launch brought in a lot of users, which meant more usage and more feedback. Once we felt we’d addressed the feedback and improved the product sufficiently, we did a Product Hunt launch:

Chris Messina hunted us (thanks, Chris!) and the launch did pretty well, generating hundreds of additional signups.

Since launch, what has worked to attract and retain customers?

Fundamentally, our app is about repeat usage. If the product is working, we’ll retain our customers and attract new ones. This means we focus on product-led growth. 90% of our efforts have gone into listening to our customers and building the core product experience. As a result, our average monthly subscriber churn is in the low single digits:

Letterloop also has intrinsic viral mechanics. In general, every group has a leader that creates the Letterloop and spearheads adoption. Once group members experience Letterloop, they think of other non-overlapping circles of friends, family, and coworkers who want to use Letterloop.

Additionally, admins are often serial admins, starting multiple Letterloops with the various groups of important people in their life.

We don’t currently do any paid marketing spending. CACs are extremely high right now in the world of direct response marketing. Our strategy is to instead invest in increasing our product’s value to further improve retention and our viral coefficient.

How are you doing today and what does the future look like?

We’re a profitable business with 80% gross margins. We have no marketing spend and minimal overhead, so profit margins are 60%. Our 3-person team works remotely with 1 weekly meeting.

To date, we’ve delivered over 10,000 newsletters containing more than 40,000 submissions of friends, families, and coworkers sharing about their lives.

Looking ahead, we’re focusing on the workplace use case where we can bring additional features relevant to enterprises. This will allow us to create a new Letterloop offering a higher monthly price point.

For the foreseeable future, we plan to keep Letterloop a self-funded and profitable business, using our current strategy of product-let growth with zero marketing spending.

Through starting the business, have you learned anything particularly helpful or advantageous?

One of the biggest decisions we’ve made to date is to stay self-funded. We’ve kept Letterloop an independent business and maintained complete control over its trajectory. Taking outside funding is a big decision that means you now need to be optimizing for venture-scale returns.

We thought about this carefully from the beginning, and so far have been glad to take the self-funded path. It allows us to flexibly invest time in the business, as well as focus on sustainable profitability (a more guaranteed outcome) over top-line growth (a more uncertain outcome).

In SaaS, the default assumption is often that a venture-backed path is a goal. I think we’ve done a good of asking the question: What is our goal in building this business, and do we need venture funding to accomplish that goal? This question has helped steer us down the right path for this specific business and this current time.

What platform/tools do you use for your business?

In terms of the product tech stack, we use Firebase as our backend, React for our frontend, and we process our transactional emails through Postmark.

For our workflow, we do all our messaging over Slack and use a combination of Zoomand Meets for our video calls. We’ve jumped around between many task management tools, but currently, use Linear for its software-specific application.

What have been the most influential books, podcasts, or other resources?

When I was at the crossroads and deciding whether or not to leave tech for entrepreneurship, a book that heavily influenced my decision-making was Reboot by Jerry Colonna. One question that he poses in the book is: “Why have I allowed myself to be so exhausted?” This simple question invited me to deeply reflect on where my career was headed and address my burnout head-on.

Another book I highly recommend for founders who care about being a compassionate and impactful leaders is 15 Commitments of Conscious Leadership: A New Paradigm for Sustainable Success by Chapman, Jim Dethmer, and Kaley Klemp.

Advice for other entrepreneurs who want to get started or are just starting out?

Learn to sit with your emotions and fall in love with the journey. Entrepreneurship is a rollercoaster. There will be days where you feel on top of the world and other days where you feel like everything’s leading to a dead end. What’s the point if you aren’t having fun along the way?