SaaS Interviews with CEOs, Startups, Founders
Lemon.io Did $2.73m Connecting Developers with Jobs, Keeps 25%
15 Jan 2021
Chapter 1: What is the main topic discussed in this episode?
And what do you think you can do this year in 2021?
We aim for 10 million.
Do you think you can hit it?
It's a pretty stretch goal, but it's possible. We did 4X two years ago. Last year, we did 2X. In 2020, we didn't do well, but a lot of clients churned because of the COVID.
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Now look, I never want money to be the reason you can't listen to episodes. On the checkout page, you'll see an option to request free access. I grant 100% of those requests, no questions asked. Hello, everyone. My guest today is Alexander 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-bedded 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 build businesses, AdSense for images and local classifieds in Ukraine.
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Chapter 2: What inspired the creation of Lemon.io and its unique business model?
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 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 $4,000 to $5,000 per month. If you're hiring as an outsourcing company, you would pay more because developers will be looking to do a job they are interested in less, but 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 vetted developers on your platform?
for the network. I went through the network. I knew a few developers and I asked them to introduce me to the developers too. I was not a developer, so I was not able to actually do a proper vetting like we do right now. We do a lot of technical interviews and soft skill interviews. Back then, it wasn't that work.
Okay, so if someone joins Lemon, 10 developers, do you guarantee them X amount of work every single month? What if they quit their job and joined Lemon, then you don't give them any work?
So in the majority, it's a good question.
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Chapter 3: How did the founder's previous experiences shape Lemon.io's development?
Right now, we're targeting developers who are already looking for jobs. Um, and we are one of the solutions they're looking at. Uh, they could look at another product company 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 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 hardest and we have to supply being talented engineers.
yes yes um because um if they don't if if we are vetting 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 also that means that they're not 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 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 don't negotiate rates. If the developer comes and says, I want to make $50 per hour, we'll pay them $50 per hour. We'll just add whatever is our commission to and we'll offer this to a client. If the client agrees to the rate, then we'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 quickly. If you have a minute.
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Chapter 4: What is the current scale of developer engagement on Lemon.io?
No. In 2019, we grew twice. And in 2020, from beginning 2020 to 2021, we grew like 25%. Yeah.
What I'm asking is growth between 2019 and 2020.
Yeah, it's 2x.
Oh, you were 2x there. Got it. Got it. Okay. Very cool. And what's driving most of the growth? How do you go from 2.7 in GMB to 10 million over the next 12 months?
So step number one, step number zero, we need better systems. We have a lot of problems 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 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 demand than supply.
I think if we have enough supply, we could convert, I think, 20, 30, maybe even more percent of projects 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 underestimated. It's very hard. It's very expensive. And it's not as scalable as marketing towards 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 onto Lemon?
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Chapter 5: How does Lemon.io generate revenue from its marketplace model?
How many businesses put at least a dollar through the platform?
So it is about 90 projects. So each business usually has from one to four to five projects. But we mostly target early stage startups. So they have one or two developers. So I'd say around maybe 50 businesses.
50 businesses. Yeah. Okay. And you would consider them really your customers? 50 businesses? Yeah. Yeah. Now, have you done all this bootstrap or did you raise?
We raised 60K early on. 6,000K? $67.
$67? $60.
$60. Yeah.
$60,000. Okay. And any plans to raise new capital?
Um, you know, it depends, like right now we don't need to, meaning we don't know where to put 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 would just throw, you know, a few million dollars into growth and it would work.
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Chapter 6: What challenges did Lemon.io face in its early growth stages?
And we did all the development through the same freelancers. Actually, what would also work for us 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.
So you would give dev shops business, basically?
It's a little bit harder on the vetting side because you also have to vet. Before vetting a developer, you have to vet a dev shop because a lot of dev shops are very shady. You need to make sure that there's nothing going on inside, that they could be facing a senior developer but actually doing a job for a junior developer. You have to 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're adding two engineers right now.
Okay, so you'll have three total. And do you have any sales people on the team?
Yeah, we don't do outbound sales. We leave off marketing. But yeah, we have two sales people who are processing.
But none of them have a quota?
What is quota?
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