How Lemon.io Processed $2.73M in GMV in 2020 at a 25% Take Rate (Interview with CEO Aleksandr Volodarsky)

Introduction and Company Background

Nathan Latka

00:00Hello, everyone. My guest today is Aleksandr Volodarsky. He is the founder of a company called lemon.io, 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 pre vetted developer picks it up. Even though the model sounded good, scaling was really tricky. He pivoted and rebranded to lemon.io to match startups with rigorously vetted engineers. Prior to Lemon, he had two failed attempts to

00:25build businesses, AdSense for images and low classifieds in Ukraine and before that, he was the head of sales and a 100% SEM agency. Aleksandr, are you ready to take us to the top?

Aleksandr Volodarsky

00:34>> Yeah, let's go.

Nathan Latka

00:35Okay. So just to be clear, lemon.io used to be called Coding Ninjas. Is that accurate?

Aleksandr Volodarsky

00:40>> Yeah. So I started... I didn't even wanna start a business, so I was just testing. So Coding Ninjas was was a generic name that I picked and I didn't think about it.

What Lemon.io Does: Marketplace Model Explained

Nathan Latka

00:49Mhmm. So what is lemon.io? Is it a SaaS model or more of a marketplace?

Aleksandr Volodarsky

00:53>> 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 in our database. And whenever the client is looking for a developer, we pick someone who's been vetted already and is available for the project.

Developer Supply and New Customer Volume

Nathan Latka

01:07So how many developers today do you have on your platform?

Aleksandr Volodarsky

01:10>> We have available about 250 developers.

Nathan Latka

01:14Okay. And each month, how many new businesses come in and hire at least one developer?

Aleksandr Volodarsky

01:22>> Around around eighteen, twenty, 25, depends on the month. Mhmm. Last month was the best one, actually.

Best Month: December 2020 GMV

Nathan Latka

01:29What were those numbers?

Aleksandr Volodarsky

01:32>> In terms of new projects on the short, around 25, but in terms of, GMV, it was the best month. We did around, 330, thousand GMV.

Nathan Latka

01:42330,000 what?

Aleksandr Volodarsky

01:43>> GMV, gross margin value.

Nathan Latka

01:46And u... And USD?

Aleksandr Volodarsky

01:47>> Yes. Yes.

Take Rate and Revenue Model

Nathan Latka

01:48And and how do you make money off that? What's the revenue model?

Aleksandr Volodarsky

01:51>> We make commission on everything what's happening. In every hour that the developer is working for the client.

Nathan Latka

01:59So what percent of GMV will you keep?

Aleksandr Volodarsky

02:02>> Our take rate is around 25%. It depends from the project to project, depending on the on the rate, but the the average is 25%.

Nathan Latka

02:11Okay. Got it. So if you did 330,000 GMV last month, you would make about $80,000 from that?

Aleksandr Volodarsky

02:18>> Yeah. That's a little bit more actually, but yeah.

Nathan Latka

02:21Okay. That's incredible. So so you're floating 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?

Company Origins: From 2015 to Full-Time

Aleksandr Volodarsky

02:30>> I launched in, 2000, 2015. I was living in Israel and, you know, every new stream of revenue was good because Israel 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, I didn't look into starting that business until it was at least I think $10,000 GMV per month. And only then I quit the job and started doing this

02:59>> full time.

Nathan Latka

03:00So what... I mean, back in 2015 when you launched, you say growing 10 k and GMV. I mean, why did people come to you and ask you for developer help? Do you have a background or network in that space?

Aleksandr Volodarsky

03:11>> Actually, it was just, you know, started from helping one person who had, you know, many friends. It was an agency that had a lot of friends who were agencies and they were just, know, coming to me, didn't ask for that. And I didn't choose to do that business. And they knew that I'm from Ukraine and they were screwed by freelancers in the past. And that's why they were looking for someone they know, they can trust, to

03:33>> find someone they can trust.

Developer Pay Rates in Ukraine

Nathan Latka

03:37I've got a lot of listeners right now that are running SaaS companies and they hear these stories about these amazingly talented dev teams in Ukraine and Krakow 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?

Aleksandr Volodarsky

03:52>> Oh, depends very much. What is what is you pay? You know, the product company would pay one amount, the outsourcing company would pay another amount, the person who works through a marketplace would pay, you know, a higher amount. If you're a product company, you have someone, something that developers want to work on, you would have a high chance of paying less. You would have a high chance of paying, I don't know, maybe 3,000 to 4 to

04:22>> $5,000 per month. If you're working, if you're hiring as an outsourcing company, would pay more because, developers will be looking, to do a job they, you know, are interested less, but you know, wanna make more money.

Nathan Latka

04:37Now 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?

Aleksandr Volodarsky

04:46>> Through the network. I went through the network, I knew a few developers, and I asked them to introduce me to a few developers too. I was not a developer, so I was not able to actually do it proper with vetting like we do right now. We do a lot of technical interviews and, you know, soft skill and interviews. Back then, it was a network.

Nathan Latka

05:05Mhmm. Okay. So so do you guarantee... If if someone joins Lemon and 10 developers, do you guarantee them x amount of work every single month? Like, what if they quit their job and join Lemon, then you don't give them any work?

Aleksandr Volodarsky

05:18>> So the majority... It's a good question. Right now, we're targeting developers who are already looking for a job, and we are one of the solutions they're looking at. They could look at another product company or working outsourcing company, and we're one of the options they're looking at.

05:37>> We're trying to find the type of job they're looking for, meaning if they are looking to add just more revenue to whatever they're earning right now just to do extra ten hours 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 marketplace is a business of chicken and egg problem where you have to balance between the demand and supply. So supply is the

06:04>> hardest and have to Why being talented engineers?

Nathan Latka

06:08Yes. Yes.

Aleksandr Volodarsky

06:10>> Because if they don't, if

06:14>> we are vetting them and they're spending all this time, sometimes they spend from ten to twenty hours of their lives to, you know, for us to vet them. If we don't find them work within like first two weeks, they leave and find work elsewhere. And also that means that they're gonna come back because they, you know, pissed and also they'll tell all their friends and this, you know, very much affects reputation. So we better find a

Nathan Latka

06:38>> job.

06:38What 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?

06:46We

Aleksandr Volodarsky

06:49>> we don't negotiate rates. If the developer comes and says, wanna make $50 per hour, we'll pay them $50 per hour. We'll just add whatever, you know, is our commission to, and we'll offer this to a client. If the client agrees agrees to the rate, then we're gonna work together. If not, they're not.

Developer Earnings and Platform Payouts

Nathan Latka

07:05So 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?

Aleksandr Volodarsky

07:17>> I cannot pull that quickly if you have a minute.

Nathan Latka

07:21Yeah. Take your time. What platform are you using to track all this?

Aleksandr Volodarsky

07:25>> Several. I... I'm I'm not sure I'll be able to answer how many developers, but, we ran What's

Nathan Latka

07:30a what's a guess?

Aleksandr Volodarsky

07:31>> I'll tell you. I'll tell you. The the guess is at least 90 developers.

Nathan Latka

07:37Okay. About 90. Got it. And and what... The developer that made the most on your platform last month, how much did they make?

Aleksandr Volodarsky

07:45>> My my best guess guess is around $6,000.

Full Year 2020 GMV and Growth History

Nathan Latka

07:486,000? Yeah. That's pretty good. And and so that was just in December 2020. If you add up all the GMV through all 2020, how much did you do last year?

Aleksandr Volodarsky

07:59>> 2,730,000 in GMV.

Nathan Latka

08:02And what do you think you can do this year in 2021?

Aleksandr Volodarsky

08:06>> We aim for 10,000,000.

Nathan Latka

08:08Do you think you can hit it?

Aleksandr Volodarsky

08:10>> It's a pretty stretch goal, but, it's possible. We did four x, two years ago. Last year, we did two x. In 2020, we didn't do well, but a lot of clients churned because of the COVID.

Nathan Latka

08:22So in 2019, you did about 2.72. You were flat year over year?

Aleksandr Volodarsky

08:28>> It was something like 25%, of growth. Very little.

Nathan Latka

08:32From 2019 to 2020, you grew 25%?

Aleksandr Volodarsky

08:35>> No. From from... In 2019, we grew, twice. And, in, in 2020, from 2020... Beginning 2020 to '21, we grew like 25%.

Nathan Latka

08:49Yeah. What I'm asking is growth between 2019 and 2020.

Aleksandr Volodarsky

08:52>> Yeah. It's two x.

Nathan Latka

08:54Oh, you were two x there. Got it. Got it. Okay. Very cool. And what's driving most of growth? How do you go from 2.7 in GMV to 10,000,000 over the next 12

Growth Strategy: Systems, Supply, and Funnel

Aleksandr Volodarsky

09:02>> So the step step number one, step number zero, we need better systems. We have a lot of problems in the in the, like, in the funnel. We have to build a better sales funnel and we have to build better analytics. Because right now, we don't even know, like, our real churn and retention rates. We have to spend more time on this. But this is step number zero. Step number one is fixing supply because we have more

09:30>> demand than supply. Think if we have, enough supply, we could, you know, convert, I think, 20, twenty, thirty, maybe even more percent of of projects, than we do right now.

Nathan Latka

09:42Well, what's the issue right now with supply? I mean, why can't you go get new great developers? What's the bottleneck?

Aleksandr Volodarsky

09:48>> The bottleneck is finding supply. Finding supply is very underestimated. It's very hard, it's very expensive, and it's not as scalable as, you know, you could, as marketing towards clients.

Nathan Latka

10:01I 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 onto Lemon?

Aleksandr Volodarsky

10:10>> Yeah. You could do that. And, you couldn't do that because, Fiverr has, you know, policies that don't allow that to do that, and it's illegal. But, you know, we could go to LinkedIn and do that. But, you know, in every developer that comes into the platform, there's twenty, thirty, and sometimes 40 developers who get out and, you know, and we still spend money on them and still spend time on them. And also, we cannot bring too

10:37>> much supply at the same time because if we do and there's not enough demand, they leave and they, you know, create a better reputation... Bet... Better reputation.

Nathan Latka

10:45Yep. And on that 330,000 in GMV you processed last month, how many businesses put at least a job to the platform?

Aleksandr Volodarsky

10:56>> I'm sorry. I'm not sure I understand.

Nathan Latka

10:58Yeah. So there was $330,000 in GMV that went through your platform last month. How many businesses put at least a dollar through the platform?

Aleksandr Volodarsky

11:07>> So we, it is about, about, 90 projects. 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'd say around maybe, fifty fifty businesses.

11:27>> 50 businesses. Yeah.

Nathan Latka

11:28Okay. And you would consider them really your customers, 50 businesses?

Aleksandr Volodarsky

11:31>> Yeah. Yeah. Now have you done all this bootstrap or did you raise?

Funding: $60K Raised

Aleksandr Volodarsky

11:35>> We raised, 60 k early on on 26

Nathan Latka

11:40$66,000 k?

Aleksandr Volodarsky

11:41>> 60.

Nathan Latka

11:42$67.

11:43$6.07?

Aleksandr Volodarsky

11:45>> 60.

11:45>> $6.00. Yeah. $60,000.

Nathan Latka

11:47Okay. And any plans to raise new capital?

Aleksandr Volodarsky

11:52>> You know, it depends. Like right now, we need to, meaning we don't know where to... With them, you know, we wanna be capital... We wanna grow, we don't wanna throw, you know, how to put that, we don't wanna raise too much money just for no reason. If we know, if we would know that there is a scalable path and we would just throw, you know, a few million dollars into growth and it will work, we will

12:20>> do that. But until we find it, we don't we don't feel like crazy.

Team Size and Engineering Headcount

Nathan Latka

12:23How many people are full time on the team right now?

Aleksandr Volodarsky

12:27>> 15 people full time.

Nathan Latka

12:28One five? One five.

Aleksandr Volodarsky

12:30>> Yeah. But we outsource everything we can.

Nathan Latka

12:33I see. How many full time people?

Aleksandr Volodarsky

12:36>> 15.

Nathan Latka

12:37Okay. Got it. So 15. And then how many engineers are there total?

Aleksandr Volodarsky

12:41>> We... Until until now, there was only one CTO and that's it. And we did all the development through the same freelancers and and actually what would also work for us for for growth, we started working not only with freelancers but also with dev shops. This way we could pull into a bigger pool of developers.

Nathan Latka

13:04So you would give dev shops business basically?

Aleksandr Volodarsky

13:07>> 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, know, you need to make sure that there's nothing going on inside or that they can, you know, they could be facing a senior developer but actually doing job or, know, a junior developer, you have to

13:29>> make sure that it's not happening.

Nathan Latka

13:30So back to my engineering question. You have one CTO. Do you still only have one engineer on the team or is there more?

Aleksandr Volodarsky

13:34>> Yeah. We... We're adding two engineers right now.

Sales Team and Quota Structure

Nathan Latka

13:37Okay. So you'll have three total. And do you have any do you have any, salespeople on the team?

Aleksandr Volodarsky

13:42>> Yeah. We have we have... We don't do outbound sales. We're... You know, we live off marketing, but, yeah, we have two salespeople who are processing... But none of none of them have a quota.

Nathan Latka

13:55>> What is quota?

13:55A target. A sales target.

Aleksandr Volodarsky

13:58>> Not not at the moment. Got it. We're gonna move towards that, but not at the moment.

Famous Five Rapid Fire

Nathan Latka

14:03Yep. Very cool. Let's... Aleksandr, let's wrap up here with the famous five. Number one, what's your favorite business book?

Aleksandr Volodarsky

14:08>> Book.

14:11>> I'm reading right now the Born Letters. That is pretty amazing.

Nathan Latka

14:15Which letters?

Aleksandr Volodarsky

14:16>> Born.

14:17>> Oh, yeah.

Nathan Latka

14:18Number two, is there a CEO you're following or studying?

Aleksandr Volodarsky

14:23>> CEO I'm following. I've been following Sean Puri of of the...

14:31>> He was a founder of Lab and CEO of Lab.

Nathan Latka

14:35Number three, what's your favorite online tool for building your business?

Aleksandr Volodarsky

14:40>> Good question. I use a lot of tools. None of them is, I don't know.

Nathan Latka

14:44Pick one.

Aleksandr Volodarsky

14:47>> Building online business. Okay, I got one. I'm a part of course, the copywriting course by Neville Medora, and it's amazing. I think every entrepreneur should should do copywriting, and it's a basic skill that they have to have, and I think it's amazing.

Nathan Latka

15:04Number four. How many hours of sleep do get every night?

Aleksandr Volodarsky

15:07>> Right now, seven, eight.

Nathan Latka

15:09And what's your situation? Married, single, kids?

Aleksandr Volodarsky

15:11>> I have two kids and married.

Nathan Latka

15:13Okay. And how old are you?

Aleksandr Volodarsky

15:14>> I'm, 34.

15:16>> 34. Last question, Aleksandr.

Nathan Latka

15:17What's something you wish you knew when you were 20?

Aleksandr Volodarsky

15:21>> Oh, not to chase money.

Nathan Latka

15:24I see. There

15:26we have it back in 2015, he started helping his friends find developers to do their projects after he was putting $10,000 in GMV basically per month. He said, you know what, I'm gonna build a business here. Now he's launched lemon.io, raised only $60,000 and last year alone processed 2,700,000 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

15:49month, keeping about 80,000 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. Aleksandr, thanks for taking us to the top.

Aleksandr Volodarsky

16:01>> Thank you.

Nathan Latka

16:04One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers. They try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it. And the buyers try and make a deal live. It is fun to watch every Thursday, 1PM

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