Lemon.io Revenue & Valuation (2023)

hello everyone my guest today is Alexander valari he is the founder of a company called lemon. coding ninjas in 2015 he built it with an idea for an Uber for web development you post a project and then the next available preed developer picks it up even though the model sounded good scaling was really tricky he pivoted and rebranded to lemon. to match startups with rigorously vetted Engineers prior to Lemon he had two failed attempts to build businesses AdSense for images and local classified in Ukraine and before that he was the head of an 100% sem agency Alexander you ready to take us to the top yeah let's go okay so just to be clear lemon. used to be called coding ninjas is that accurate yeah so I I started I didn't even want to start a a um a business so I was just testing so coding ninas was was a generic name that I picked and I didn't think about it so what is len. IO is it a SAS model or more of marketplace it it is a Marketplace what we do is every engineer that wants to work with us we test and vet them and put them in our database and whenever the client is looking for a developer we pick someone who's been Ved already and is available for the project so how many developers today do you have on your platform we have um available about 250 developers okay and each month how many new uh businesses comeing and hire at least one developer um around around 18 um 20 25 depends on the month last month's were the best one actually what for those numbers um in terms of new projects I'm not sure around 25 but in terms of uh GM we it was the best months we did around um 330 ,000 gmv 330,000 What gmv U gross margin value in in USD yes yes and and how do you make money off that what's the revenue model we uh make commission on everything what's happening and every hour that the developer is working for the client so what perc of GMB will you keep our take rate is around 25% uh it depends from the project to project depending on the on the rate but uh the the average is 25% okay got it so if you did 330,000 in gmv last month you would make about 80,000 from that yeah a little bit more actually but yeah okay that's incredible so so you're flirting with sort of a million dollar run rate and I assume getting here was not easy so take us back to the start when did you launch the company I launched in um 20 um 2015 uh I was living in Israel and uh you know every new stream of Revenue was good because it is very expensive and there was someone who came to me asked for to find a developer I helped them and they brought more more people to me and uh I didn't look into starting that business until it was at least I think 10 10 grand gmv per month and only then I quit the job and started doing this full-time so what I mean back in 2015 when you launched you say growing to 10K in gmv I mean why did people come to you and ask you for developer help did you have a background or network in that space um actually was just you know started from helping one person who had you know many friends um it was an agency they had a lot of um friends who were agencies and they were just you know coming to me I didn't ask for that I didn't choose to do that business and they knew that I'm from Ukraine and they were screwed by Freelancers in p and that's why they were looking for someone they know they can trust to find to to find you know someone they can trust to I've been a lot of listeners right now that are running SAS companies and they hear these stories about these amazingly talented Dev teams in Ukraine and cocow and Argentina and all and they go should we spin up a Dev shop in Ukraine what do you pay a senior engineer in Ukraine these days oh uh depends very much uh what does what does you pay um you know the Product Company would pay one amount the Outsourcing company would pay another amount uh the person who works through a Marketplace would pay you know a higher amount if you're Product Company you have someone something that um that developers want to work on you would you would you would have a high chance of of of paying less you would have a high chance of paying I don't know maybe three to four um to 5,000 dollars per per per month uh if you working if you're hiring as an Outsourcing company you would pay more because uh developers would be looking uh to do a job they you know are interested less but you know want to make more money now walk me through how you started recruiting I mean you have a Marketplace so in 2015 how did you get your first 10 sort of vetted developers on your platform through the network I I went through the network I knew few developers and I asked them to introduce me to few developers too I was not a developer so was not able to actually um do a proper vetting like we do right now we do a lot of technical interviews and you know um self skill interviews back then it was a network okay so so do you guarant if if someone joins lemon 10 developers do you guarantee them x amount of work every single month like what if they quit their job to join lemon then you don't give them any work so the majority it's a good question right now we're targeting developers who already looking for a job um and we are one of the solutions they're you know looking at uh they could look at another product comp or working Outsourcing company and we're one of the options they're looking at um we are we're trying to find them the type of job they're looking for meaning if they are looking to add just more um Revenue to to whatever they're earning right now just to do you know extra 10 hours per per week we can do that or if they're looking for a full-time job we can do that also we don't guarantee but um you know Marketplace is a is is a business of chicken and act problem where you have to you know balance between the demand and Supply so Supply is the hardest and we we we have to supply being talented Engineers yes yes um because um if if they don't if if we are Ving them and they're spending all this time sometimes they spend from 10 to 20 hours of their lives to you know for us to vet them um if we don't find them work within like first two weeks they they leave and find work elsewhere and so that means that they not going to come back because they you know pissed and also they'll tell all their friends and this you know very very much AFF reputation so we we better find them job what is that developer expecting from you in terms of the job size the total amount of money they can make from you in the first two weeks they're on your platform we we um we don't negotiate rates U if the developer comes and says I want to make you know $50 per hour we'll pay them $50 per hour we'll just add whatever you know is our commission to uh and we'll offer this to a client if the client is agre to the rate they're going to work together if not they're not so last month in December of the $330,000 of projects that you put through your system you kept 80 about 80,000 of that so 25% the rest I assume was paid out to developers how many developers made at least a dollar I cannot pull that that quickly if you have a minute yeah take your time what platform are you using to track all this oh several I I'm not sure I'll be able to answer how many Developers but uh we ran what's a guess yeah I'll tell you I'll tell you um the guess is at least 90 developers okay about 90 got it and and what de the developer that made the most on your platform last month how much did they make my my best gu uh guess is around $6,000 6,000 yeah that's pretty good and and so that was just in December of 2020 if you add up all the gmv through all 2020 how much did you do last year um 2.73 million in JY and what do you think you can do this year in 2021 um we aim for 10 million do you think you can hit it uh it's a pretty stretch goal but uh it's possible we did for X um two years ago last year we did a 2X in 2020 we didn't do well but a lot of clients churn because of the covid so in 2019 you did about 2.72 you were flat year-over-year uh it was something like 25% of growth very little from 2019 to 2020 you grew 25% no from from in 2019 we grew um twice and uh in U in 2020 from 20 20 beginning 2020 to 21 we grew like 25% yeah what I'm asking is growth between 2019 and 2020 yeah it's twox oh you were 2x there got it got it okay uh very cool and what's driving most of the growth how do you go from .7 and GMB to 10 million over the next 12 months so the step step number one um Step number zero we need a better systems um we have a lot of problems in the um in the like in the funnel we have to build better sales funnel and um uh we have to to build better analytics because right now we don't even know like our real turn and retention rates uh we have to spend more time on this um but this is Step number zero step number one is fixing Supply because we have more demand than Supply I think if we have uh enough Supply we could you know uh convert I think 20 20 30 maybe even more percent of of of projects uh than we do right now well what's the issue right now with Supply I mean why can't you go get new great developers what's the bottleneck the bottleneck is finding Supply finding Supply is very um is very underestimated it's it's very hard it's very expensive and it's um not as scalable as you know you could as marketing towards uh clients I mean can you just go on Fiverr and search by front end or python or Ruby and then just manually message all of them and try and get them off of Fiverr and on the lemon yeah you could do that and um you couldn't do that because Fiverr has uh you know policies that don't allow that to do that and it's legal but uh you know we could go to LinkedIn and do that but um you know every developer that comes into the platform there is 20 30 and sometimes 40 developers who get out and you know and we still still spend money on them and and still spend um you know time on them um and and also we cannot bring too much Supply at the same time because if we do and there's not enough demand they leave and they you know create the better reputation better reputation yep and um on that 330,000 in gmv you process last month how many businesses put at least a job to the platform um I'm sorry I'm not sure I'm yeah so there's $330,000 in gmv that went through your platform last month how many businesses put at least a dollar through the platform so we uh it is about um about 90 projects uh so each business usually has from one to to four to five projects but we we mostly target early stage startups so they have one or two developers so i' say around maybe uh 50 50 businesses 50 businesses yeah okay and you would consider for them really your customers 50 businesses yeah yeah now have you done all this bootst or did you raise uh we raised uh 60k early on on 6,000 6 6,000k 60 $67 67 60 6 Z yeah $60,000 okay and any plans to raise New Capital um you know it depends like right now we we don't need to meaning we don't know where with them um you know we want to be Capital um we want to grow um we don't want to throw you know um how to put that we don't want to raise too much money just for no reason um if we know if we would know that there is a scalable path and we could just throw you know a few million dollars into growth and it will work we would do that but until we find it we don't we don't feel like crazy how many people are full-time on the team right now um 15 people fulltime what one five yeah but we out everything we can I see how many full-time people uh 15 okay got it so 15 and then how many Engineers are there total uh we until until now there was only one CTO and that's it and we did all the development through the same Freelancers and uh and uh um actually what what also worked for us for for growth uh we started working not only with Freelancers but also with Dev shops um this way we could pull into a bigger pool of developers so you would give Dev shops business basically yeah yeah yeah we it's a little bit harder on the on the vetting side because you also have to vet before vetting a developer you have to vet a a a Dev shop because a lot of Dev shops are very shady you know you need to make sure that there's nothing going on inside what there that they can you know they could be facing a senior developer but actually doing uh doing job you know a junior developer you have to make make sure that it's not happening so back to my engineering question you have one CTO do you still only have one engineer on the team or is there more yeah we we're adding two Engineers right now okay so you have three total and do you have any do you have any uh sales people on the team yeah we have um we have we don't do outbound sales we you know we leave off marketing but yeah we have two salese who are processing but none of none of them have a quota um what is qua a target a sales Target uh not a the moment got it we're g we're gonna move towards that but not at the moment yeah very cool let's uh Alex let's wrap up here with the famous 5 number one what's your favorite Business book book um I'm reading right now the burn letters that is pretty amazing which letters Boron oh yeah number two is there a CEO you're following or studying CEO I'm following um I've been following uh Shan Puri um of of the um he was a founder of blab and uh CEO of blab number three what's your favorite online tool for building your business good question I use a lot of tools uh none of them is I don't know pick one um building online business okay I got one um I'm a part of course um the copy rting course by U uh Neville madora and it's amazing I think every entrepreneur should uh should do copyrighting and it's a basic skill that they have to have and I think it's amazing number four how many hours of sleep do you get every night uh right now seven eight and what's your situation married single kids I have two kids and married okay and how old are you I'm 34 34 last question Alexander what's something you wish you knew when you were 20 oh uh not to chase money guys there you have it back in 2015 he started helping his friends developers to do their projects after he was putting $10,000 in gmv basically per month he said you know what I'm going to build a business here now he's launched lemon. raised only $60,000 and last year alone processed 2.7 million in projects through his platform he keeps 80% of that or sorry 25% of that so about you know he's up to now doing about 330,000 in gmv per month keeping about 880,000 per month 90 developers made at least a dollar through his platform last month the biggest developer made $6,000 so healthy ecosystem Marketplace model growing nicely Alexander thanks for taking us to the top thank [Music] you one more thing before you go we have a brand new show every Thursday at 1 p.m Central it's called Shark Tank for 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