Building a Generative AI Startup to $10M+ with a Virtual Team: Chris Lu, CEO of Copy.ai (Part 3)

Sramana Mitra: What kind of conversion rates were you seeing from free to premium?

Chris Lu: We got a lot of people who are international and who aren’t able to pay $49 a month. If you filter it down to the core markets – US, Canada, Australia, UK – it looks like a normal SaaS conversion metric.

Sramana Mitra: Around what – 2%?

Chris Lu: Yes.

Sramana Mitra: Were you bootstrapping this? Did you raise money?

Chris Lu: We were bootstrapped initially. Then we raised a seed round so that we could quit our day jobs.

Sramana Mitra: What was the timeline and what were the metrics between starting this and raising your seed round and quitting?

Chris Lu: We got to a million in ARR pretty quickly. However, we raised the seed round in the very early days. We raised funding at a $6 million valuation. A year later, we raised our Series A. This was in 2021. We were at $1.6 million in ARR.

Sramana Mitra: How long did it take from zero to $100,000 ARR?

Chris Lu: Two months.

Sramana Mitra: That’s awesome! The $100,000 ARR was still bootstrapped. That’s when you raised the seed?

Chris Lu: Exactly.

Sramana Mitra: It was just you, Paul, and who else?

Chris Lu: That was it.

Sramana Mitra: Can you talk about how you leverage the precursor to ChatGPT to develop your Copy.ai tool?

Chris Lu: It was the backend system. We used it to do the generations. We would format the calls and they would return the responses. Then we would share it with our users. We would give them a nice UI.

Sramana Mitra: That’s it. It was basically UI.

Chris Lu: Exactly.

Sramana Mitra: That’s what gave you traction – the UI.

Chris Lu: Yes, at the beginning.

Sramana Mitra: Fantastic. You got your seed. What was the next step? We’re in mid-2020?

Chris Lu: January 2021.

Sramana Mitra: Seed is in already.

Chris Lu: Yes. Paul and I were still working by ourselves trying to grow it. We added multiple languages. We improved the interface. We kept tweeting about it. We hired our first employee in February or March of 2021.

Sramana Mitra: What function was that?

Chris Lu: It was an AI engineer and marketing. That helped us start our engineering process and have more people build out the products.

Sramana Mitra: What did you want to add to the engineering side to go from a pure UI product which has limited defensibility long term?

Chris Lu: I would say we tried to improve our metrics. How do you improve onboarding? How do you get people activated? How do you convert them faster? However, if I were to restart today, I think the early engineers need to be building the foundation that allows the entire company to move faster.

Ultimately, a company is a series of a lot of experiments. Anything that can help you speed up those experiments, the better. We made the mistake on focusing too much on the final metrics early on. Instead, we should have focused on infrastructure to be able to run quickly.

This segment is part 3 in the series : Building a Generative AI Startup to $10M+ with a Virtual Team: Chris Lu, CEO of Copy.ai
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