SaaS Interviews with CEOs, Startups, Founders
1660 Has She Cracked The Code to Selling To Governments?
09 Feb 2020
Chapter 1: What is CityGrows and how does it serve local governments?
They won a competition back in 2015, 2016. Now City Grows is helping local governments process and streamline a lot of the stuff that used to be paper and kind of older technology, serving 20 customers, 500 bucks a month. So about 10 grand per month in revenue, up from a grand a month just a year ago. So nice growth. They're about to raise another 500,000 bucks.
So they're capitalized to the extent of about 600,000 bucks to date. Five people on the team, all remote as they look to scale. Hello, everybody. My guest today is Catherine Genaracus. She is the CEO and co-founder of Citigrows, the first self-service operating platform for local government and has extensive experience in startups, digital marketing, and civic technology.
Catherine, are you ready to take us to the top? Yeah, definitely. Thanks so much for having us. Yeah, selling to governments is not easy. So help us understand, what are you selling to them? Is it a pure play SaaS company? We're a SaaS product and we're bringing a freemium SaaS model to government for the first time.
So not just software as a service, but a traditional SaaS model where governments can get started, start using our platform, then find out if they like it, if they need it, and then grow their usage from there. And if we just look at kind of your paid folks, what are these governments paying you on average per month to access your technology?
So right now we have kind of a two-pronged revenue strategy where we have both a subscription plan, which for most small governments is about $500 a month. We have Larger governments paying $2,500 a month. And then they pay a percentage of all the permit, license fees processed through the platform. So that's 2% of any payments that we process through Citigroup.
And if you look at your revenue over the past 12 months, what percent of that pie was SaaS versus the 2% model? So right now it's mostly the SaaS revenue because we're still a pretty young company. And usually governments start with just a couple of processes per government. But what we're seeing is they're adding more and more workflows over time.
So say we start with business licenses in the finance department, then we move to transportation permits in the transportation departments, and then block parties in the arts and culture department. So we start kind of small with the payment processing, but then that grows over time. Right now, still, the bulk of our revenue is still the SaaS. And when did you launch the company? What year?
We incorporated in 2015, and we started with our first live process with the city of Santa Monica in the spring of 2016. It's a pretty hip city to start with. Yeah, we actually won a contest they did called Hack the Beach. It was a challenge to bring tech into local government. So my business partner, Stephen Corwin, he's a developer, and this is before I joined the team. He sort of submitted...
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Chapter 2: What challenges do you face when selling to government entities?
the very first version of City Grows to Santa Monica. They loved it. They've been our client ever since. They've been a huge supporter of our work, so.
Chapter 3: How does the freemium SaaS model work for government clients?
That's amazing. And who else have you added since then? So how many customers are you working with today? Governments all over the country now. Still primarily our kind of home base started here in Southern California, but now we have a base in Erie, Pennsylvania. We have some staff there as well. So we've got folks from Massachusetts, Pennsylvania, Colorado, California.
We're starting to get some interest from out of the US as well. Sorry, you cut out right when you said the number. So how many customers do you have today?
about 20 right now about 20 okay very good so 20 customers 500 bucks a month you guys are doing what north of 10 grand a month right now on revenue that's yeah that's great i like the scale and if i go back a year ago today were you doing nothing at that point because you just launched uh we had and we had just a couple of governments then so one or two probably two paying customers then okay maybe a thousand bucks a month that's that's nice scale and are you having to go in i mean what does the sales cycle look like on this because everything i've heard about government is it's a really long sales cycle
Yeah. So that's, we built our whole product and our business model to go around that sales cycle. So our fastest time to acquisition was two weeks. So, you know, the kind of classic knock on why people don't like to sell tech to government is because it can take a year or two, even just to make a sale. We built our whole product. So that's not required because there's no big upfront cost.
Governments don't have to go through a full RFP procurement process. They, you know, the thing I like to say is like, you know, they didn't procure Twitter. They shouldn't have to procure their other technologies, right? They should be able to just start using our platform, see if it works for them and then go from there. Yeah. And have you guys raised capital to do this or are you bootstrapped?
We raised a little bit of friends and family money and we're actually almost done raising just a very small seed round. But as you can imagine, most traditional VCs like kind of look down their nose at GovTech, which we think that makes it an incredible opportunity. There's very few um, competitors in the space really relative to the size of the market.
So how much, how much total raised, including when you're about to close? Oh, so we're raising just half a million dollars. Okay. And does that, so half a million into the company, including the first round you did? No. Uh, first round was, uh, just about a hundred thousand dollars in 2016. So 600 K total. That's pretty good. Yeah.
You know, people might look down on it, but the flip side is also true. Once you get the government as a customer, they're also very, very sticky. Typically. Tell me about your churn. We have 0% churn of our clients, which is kind of unheard of. No, we're too good. No, you're too cheap.
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Chapter 4: How has CityGrows scaled its revenue in the past year?
You should always have a little churn. In my opinion. What's the team size today? How many people? Yeah, you said 15 people? Oh gosh, no, five. Five. Five people all based in LA? Small and mighty. No, we're a remote first company. So LA, New York, DC and Erie, Pennsylvania. Okay, all remote. Very good. I love that. And are you operating? Obviously, you're about to raise some capital.
So you'll be burning cash again. But today, are you cash flow positive? We're like a little in the hole right now. But we've, we've had some good, we got some investment from an accelerator this year. And then I just won a The Women Founders Network, LA's fast pitch competition. So that came with a nice check too.
So I think technically right now, we've got some great cash in the bank and we're looking forward to getting some more in through our raise. That's great, Catherine. Okay, let's wrap up here with the famous five. Number one, what's your favorite business book? Oh gosh, I literally just met yesterday, Noam Wasserman. I'm gonna go Founders Dilemma because he gave it to me yesterday.
Number two, is there a CEO you're following or studying? I... I'm inspired by like some of the tech CEOs out in the world. So I've always followed Marissa Meyers work. Obviously, I've looked at, oh gosh, Robin Chase from Zipcar. Like there's a bunch of people I pay attention to. Number three, what's your favorite online tool? Slack. Number four, how many hours of sleep do you get every night?
Oh, I sleep a lot, like seven and a half, seven. That's good. And what's your situation? Married, single, kiddos? Uh, I have a nine year partner and two adorable dogs. One of whom has been in this interview the whole time. Oh, I love that. Okay. So partnered no kiddos. And do you mind me asking Catherine about how old you are? Uh, no, I'm going to turn 49 in January. Oh, congrats.
That's exciting. So last question, what do you wish your 20 year old self knew? Oh, my gosh. Do exactly what you're thinking about doing. Like go live in Latin America. Have fun in the San Francisco rave scene. There's plenty of time later in life to be an entrepreneur. Are you a raver, Catherine? Are we going out to rave tomorrow? Is that what's happening?
I mean, it's a long time ago, but we did go to this amazing festival in Marrakesh this year. So that's my other piece of advice. Like. don't think that stuff has to stop when you get older. I love that. Guys, there you have it from Catherine. Do exactly what you're thinking about. They won a competition back in 2015, 2016.
Now City Grows is helping local governments process and streamline a lot of the stuff that used to be paper and kind of older technology, serving 20 customers, 500 bucks a month, so about 10 grand per month in revenue, up from a grand a month just a year ago. So nice growth. They're about to raise another 500,000 bucks, so they're capitalized to the extent of about 600,000 bucks to date.
Five people on the team, all remote as they look to scale. Catherine, thanks for taking us to the top. Thanks so much for this. It was super fun. Have a good day.
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