How Avocode CEO Anh Vu grew Avocode to $115.5K revenue and 3.8K customers in 2023.

hello everyone my guest today is vood he's helping designers and developers collaborate faster originally a designer he founded two companies so far with the first company he built 13 products for designers and developers and generated around a million in revenue with his current company avocado they're at around 1.2 million bucks in ar right now and back in 2016 went through 500 startups accelerator in mountain view vood you ready to take us to the top yeah love to all right so you're doing about what 100 a month right now in revenue yeah we're about 110 actually at the moment so a little bit both then uh and you just mentioned across how many customers uh we have about uh three thousand hearing customers three thousand eight hundred yeah 3 800. that's great okay and so i obviously you've been on the show before i think it was like two or three years ago but for people that are not familiar with what you do tell everyone what you do sure so uh we built a collaboration platform that helps designers and developers collaborate so they can build mobile apps or websites or any digital products significantly faster and we're doing that by basically solving a problem that designers no longer have to manually prepare design assets for developers and all they have to do is basically just upload the design and developers can easily grab whatever they need from the design automatically you know image assets code types um fonts colors these kind of stuff so that's what we do and help us understand growth so you're doing 110 grand a month today in revenue what were we doing a year ago uh i think uh last year we were at around uh 80 something like that 80 yeah yeah that's great and where's the growth coming from how are you adding new customers secondly all of that is coming from inbound organic growth we do content lot and um you know basically customers are coming to us not uh doing we don't have any sales team anything like that uh not doing any um sales and basically just creating content we do uh we have a blog post we have a free tool that generates about eight thousand leads every month what's the link what's the link to the free tool uh it's basically appcode.com design converter something like that yeah it basically is a conveyor that converts uh design different design uh files to to to to the one that you want so basically that's a free tool uh yeah you call your design your design converter this converts your psd design to a sketch file that is that is right that's what it does interesting um and then you have up why do you have um the upvote on user voice button on the website uh so basically uh currently we only have like a ps4 sketch and obviously there are other formats as well and um the upvote basically helps us to see what kind of like formats uh users would be interested in for us to build so it's like to um uh for us to know what to do so like adobe xd to sketch converter has 1082 upvotes you're essentially using this to drive your product roadmap you're letting your users use your support system user voice to tell you what to build yes that is correct yeah uh and we do that uh not only on user voice we talk a lot to our users because i think it's very important to understand uh what your users want yeah now if i search convert pds or sorry psd to sketch in google i'm doing this right now ah you come up number one okay so you've optimized for these kinds of search terms i'm looking at the site i land on have you done anything to this from an seo perspective to make sure you rank number one uh we well we focus on those keywords convert psd or phd to sketch and uh basically uh did a lot of seo optimization on the page uh because you know we've done content before and we know what it is about so uh yeah we did a lot of optimization name two things you did on this page that i'm looking at that is not your typical search engine optimization playbook um so what what what did you mean by that or um exactly like people know seo the basics yeah you know have your h1 headers with a good title and blah blah blah name two things you did on this page your convert psd to sketch page that people wouldn't usually expect when they think of seo optimization oh got it so uh interesting stuff is that when we launched this uh sort of converter uh we've decided to put it on the avocado.com um sort of domain because uh that domain was already very well ranked and had a good reputation already so also the url that we've put behind also represents our bike the seo optimization with it so this is the the the fastest uh thing that came into my mind what we did uh when we decided about the optimization so you're saying instead of launching this on its own kind of free website put it under your own to keep driving your own value and then the url it specifically says avacode.com forward slash convert psd to sketch which is the search term people put in google yes that is right and we even bought uh different kind of domains like sketch to psd.com or all bunch of like uh domains like this that would redirect this sort of page so that's what we did as well very interesting okay team size today how many people currently 27. okay 27 people and where's everyone based everyone is based in procter public right now okay so czech republic that's great and then um talk to me a little bit about funding have you bootstrapped or raised capital so we initially bootstrapped to about 30k in mrr and then we've raised uh went also went through the 500 startup accelerator program and that's uh during that time you also raise a little capital so in total we raised about seven hundred thousand dollars from six different investors okay seven hundred thousand bucks and today are you burning capital are you profitable uh so what we're doing is that we are keeping our burn rate very low or close to break even and sort of what we're doing is that we use the uh the growth money that we add every month to hiring to uh are off to like growing the company basically that's what we're doing right so when you say cross the brick even you're saying like you'll burn five thousand bucks a month or ten thousand or what yeah that would be the amount five or closest zero depends on the month okay that's that's not horrible and now are you looking at raising additional capital no uh we are uh quite confident but uh currently uh we're not raising actively at the moment but we of course uh are aiming for the series a but would like to do is uh raise a really strong series that means um not something that we would need money to raise uh the cattle but uh because even if you race at the moment the the capital that we use uh doesn't mean that it will grow exponentially so what we're doing right now is like figuring out uh how to grow faster we're now growing at about five percent month over month and like to get about ten percent to to raise that series a yeah so you want to be adding like 10 grand a new monthly recurring revenue every month basically yeah yeah um when you do raise i mean how much would you want to raise yeah i think uh we'll be looking at uh some somewhere between five to ten okay so let's say you raised five million dollars like what what what in the ideal world what valuation would you raise that out you think um yeah i think would be willing to give up to about 15 percent of the company at that point okay so so multiply that by eight so you're that's like a 40 million dollar pre-money evaluation something like that [Music] you said you give up 15 or five fifteen one five oh fifteen okay so yeah more sorry more like thirty pre something like that yeah um great interesting uh which would be about you're doing 1.4 ish right now maybe you do upgrade to 2 million by the time you race so you're looking at like a 15x something like that is there a lot of voodoo is there a lot of is there a lot of money in the czech republic or do you think you'll come back and raise from the states uh we'll definitely come uh to the state's race uh we already have us investors so uh that's when we initially start and then uh there are a lot of cattle also in uh cities like berlin or london i don't think that czech republic has uh that many investors maybe one or two but they still want to kind of invest with uh stronger investors from london or the silicon valley yeah when did you launch company what year uh 2014 2014. okay and then fast forward today so churn what's your churn rate uh so net revenue journeys are at one point six percent and uh the user trained about five percent net revenue retention uh net revenue retention uh networking nutrient is 1.6 so um okay that's monthly or annually uh that's monthly okay monthly so that means that means you're losing about 25-30 percent of your user base each year yeah yeah um and that's logo churn or revenue churn oh you said revenue yeah that's right yeah revenue term per year now and you said that's also net so you're adding back expansion do you have a lot of expansion revenue or no yeah we have a lot of expansion as well so uh uses upgrades within our product from which plan to which plan is most popular so basically we can leave per user pricing so how the upgrade is working is that by adding users uh to your team okay so over the past 12 months what percent uh what percent expansion have you had on historical accounts no i i can't really uh i don't know that number...