SaaS Interviews with CEOs, Startups, Founders
Mini PE firm grow new acquisition to $2m ARR for gov contracting SaaS
29 Aug 2022
Chapter 1: What is the main topic discussed in this episode?
So can I take 7,000 times 250? You're doing about 2 million revenue today.
Yeah, we'll cross the 2 million mark in November. That's the projection. 2 million mark in November. Okay.
You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Hey folks, my guest today is Ron Jones.
He's building G2 Exchange, which is actual insights for government contractors. Ron, you ready to take us to the top?
Yes, thanks for having me, Nathan.
All right, do you come from the government sector?
Yeah, man. So my entire career has been in government contracting. Funny enough, started my career as a software engineer, moved into solution architecture, technical sales, and then finally went over into software and services sales. And it's been federal contracting with a mix of global public sector.
Um, but the vast majority has been North American public sector, which you have your federal contracting, you have defense contracting, but you also have, um, uh, state and local law enforcement, public safety, um, even some work for the Canadian government too.
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Chapter 2: What is G2 Exchange and how does it serve government contractors?
So we have articles that basically focus on the award itself. Give some supporting data. But also the crux of it really is the additional data, which is like, you know, the the information about, for example, their senior leadership team, where else they've worked in the government. So what other contracts they performed on, what their capabilities are. Right.
And also, you know, some of their recent wins, if applicable. The way that this is actionable for a BD sales or capture person, I'll explain capture in a second for those that are unfamiliar, but the way this is actionable is that, hey, if you're looking for partners to get your technology into a specific government agency,
And you see that they're delivering or they want an award that includes implementation of that technology in the scope, right? That's something that you might be able to reach out to them and say, hey, you know. Got it.
What would the fork manufacturer or AWS on average, what do customers pay you to use the technology?
Yeah, so we have a couple of tiers of membership, but we have an individual membership that's $500 a year. We don't do monthly subscriptions. It's all annual. So $500 a year. And we also have business memberships, corporate memberships, which it's a per seat discount, right? So our ARPU is kind of sitting in like the $250 range across 7,000 users or so.
And so we got a good mix of corporate- That's monthly ARPU or annual? Annual.
Got it. Got it. So can I take 7,000 times 250? You're doing about 2 million revenue today?
Yeah, we'll cross the 2 million mark in November. That's the projection. 2 million mark in November. And we're launching a new product line, new business line to focus on defense specifically. So right now, we've just got health, federal health, which is the big health care agencies and federal government. We've got federal civilian, which is just about everything else.
That's not defense related. And then next month, I'm sorry, month after next, we're scheduled to launch G2X defense, which will focus on everything defense contracting.
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Chapter 3: What insights does G2 Exchange provide for government contracting?
I was brought in, as a matter of fact, as an executive as part of the former parent company in June 2021. And so through some, you know, it was an acquisition, two brands, right? One focused on events, one focused on providing this intel.
Working with the ownership team and leadership team that was there kind of advised, hey, we could transform this product, this service into a SaaS business, right? It's a tech-enabled market intelligence service today. But on our roadmap, we're building a SaaS product to introduce to the market, probably Q2 of next year.
Okay. Interesting. And so 800,000 in 2020, did you like double to do like a million, a million six in 2021, something like that?
Yeah. Uh, yep. As opposed to, as opposed to a million seven. Okay. Very cool. Yeah. Yeah.
Well, so why, why have you been flat then? Right. So you're at like one seven right now in terms of run rate. So you haven't grown over the past 12 months.
Yeah, so we've grown a little bit. So a few of the things that we've realized, and we're kind of growing really slowly, but some of the things that we've realized is that we needed to broaden the categories of content that we produce insights on. So if you're familiar with the North American industry classification system, it's NAICS code referred to. We've only reported on...
maybe 15 of those right now. There's tons of them. And there's all types of government contractors. And historically, we've been focused on just IT and general management consulting. We're trying to broaden that to construction, facilities management, R&D, so on and so forth. So that's one thing that we've started to put into play.
The other thing is that, again, the vertical, all of our customers have been asking for, hey, when are you going to get into defense, which is But by far and wide, the largest market, government contracting.
But Ron, all customers are always going to ask you for new products, right? But there are still companies that do that and they still grow 200%, 30% every year. Now, look, you don't have to grow really fast if you haven't raised a bunch of money.
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Chapter 4: How does G2 Exchange help businesses identify government opportunities?
So have they raised a bunch of capital, VC capital, or are you bootstrapped?
No, bootstrapped. We have not raised.
So you joined in 2021 and you didn't buy 100%, right? You're effectively working for a private equity firm running the business.
Yes.
Yeah. Private investor. Yes.
Yep. Okay. Okay. Okay. Got it. So it's a private wealthy individual who bought the company, not like a traditional big PE shop.
That's right. That's right.
And why do that as a young guy, you can do whatever you want. Why not start your own thing and own a hundred percent? Why work for some other guy and get not as much upside?
That's a great question. As a matter of fact, when I was at IBM, I was in the process of trying to start my own consulting firm to sell products. Not products, but sell services to the government. Just the same thing I was doing before. But this is a long-term mentor and friend that said, hey, I need someone to come in and help with this. And I thought it was a good idea for me.
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Chapter 5: What is the pricing structure for G2 Exchange services?
So any government employee gets a free account, right? Because the government also uses this as market research in a way.
Yeah. Makes sense. Very cool. We love the funnel. We hope you double it over the next 12 months. We'll see what happens. In the meantime, though, Ron, let's wrap up with the famous five. Number one, favorite book.
Yeah, it's got to be a tie. Hard Thing About Hard Things, Ben Horowitz, and Working Backwards. It's an Amazon story by Colin Breyer and Bill Carr. Yeah, not much else to say about that.
Number two, is there a CEO you're following or studying?
I'd have to say Satya Nadella. He's a really humble guy. And I like the kind of story around him kind of more or less refounding Microsoft, right, in a way.
Number three, what's your favorite online tool for building the business?
slack can't live without it number four how many hours of sleep to get every night about six okay and what's your situation married single kids married kids how many kids two two and how old are you 34. last question something you wish you knew when you were 20. oh man uh fortune favors the bowl right wish i'd taken more risk earlier on right
More risk, guys. G2change.com did about $800,000 in revenue in 2020, now up to about $2 million run rate in November. What they do is they help people that make forks for military bases, basically source new contracts, or AWS who source hosting contracts with the government. That's how they make money. 7,000 folks paying $250 per year. That's what the platform looks like today.
Flat growth last 12 months, but Ron has come in and is trying to change that with landing pages, new funnels, and new products with six new engineering hires. We'll see what happens. Again, team today of 19 full-time. Ron, thanks for taking us to the top.
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