SaaS Interviews with CEOs, Startups, Founders
Today G2 Is Worth $1b. What happened 24 months ago?
08 Jul 2021
Chapter 1: What led to G2's current valuation of $1 billion?
What price point did you sell, the stock price did you sell most of yours at? Do you remember?
It was, I mean, the good news was all at a significant premium to the deal price, you know, but it was, yeah, I mean, so it turned out probably I got a 50% premium even on average.
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. Found a G2 crowd in 2012 with nothing.
Basically put in two million bucks of his own capital. Raised 100 million to date, 55 million in the company about a year ago. I call it a 400, 500 million dollar pre, post-ish money valuation. 30 million in ARR at the beginning of this year, scaling to about 50 million bucks in ARR by the end of this year. Not raising, not selling, adding about 10 million dollars in new ARR per quarter.
Over 20, over... Are you trying to attract investors? Over 20... You're doing a good job. Over 20,000 customers paying north of 10,000 dollars per year for the platform. So really excited to have the founder of G2. Obviously, I just heard from Godard. Got it right, correct?
Godard, yes. Thank you, Nathan.
Excited for you to be here. So I want to first capture history before G2, get a snapshot of G2 today, and then kind of talk about growth because you've been in and out of the business since you founded it. Yes. So take us back. So first company you were building, which one was it? Steelbrick or Big Machines?
That was the first.
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Chapter 2: How did the founder initially finance G2's launch?
Not that young.
That's the year I graduated high school. So I'm older and wiser.
You'll age yourself. You'll age yourself. So that exit was 2013, big machines, $400 million to Oracle. You then had Steelbrick after that. So when did you launch Steelbrick?
Really beginning of 2014.
Okay, so you were still basically building big machines?
It was right after. And I did partner with an entrepreneur, Max Rudman, who'd been building a product called Quote Quickly, which then became the foundation for what became Steelbrick CPQ. So he'd been working on the product for a couple years, had some initial customers, and then we said together, hey, let's turn this into the next generation CPQ app.
Yep.
And so that's what helped accelerate it. Because there in seven quarters, we achieved $360 million exit to Salesforce. Really, it was better because we got stock, which has since doubled. But we kind of got that in seven quarters, which took 13 years the first time.
So how much did you raise at that company, Steelbrick? About $70 million. Okay. And the last round valuation was what?
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Chapter 3: What were the challenges faced in early customer acquisition?
What price point did you sell the stock price you sell most of yours at? Do you remember?
It was, I mean, the good news was all at a significant premium to the deal price. But it was, yeah, I mean, so it turned out probably I got a 50% premium even on average.
A lot of you guys will ping me out of the blue and asking for help selling your software companies, but I'm not a broker and I'm really focused on founder path right now, not helping folks sell their company. So I'm always looking for great tools to recommend for you guys to quickly figure out what you could potentially sell your company for and how much cash you could get.
That's where Flippa comes in. Now, here's my thing about brokerages, especially for selling your company. You guys should not have to pay a 10% brokerage fee when you put your blood, sweat, and tears into building your company for years out of a sale. All smart founders know, though, that the best way to maximize price is to have multiple options.
So how do you get multiple options, multiple bids on your company without paying a broker 10% or more? Well, I recommend Flippa because they have the largest list of buyers for these sorts of digital assets, which almost always guarantees a bidding war. I tell my founder friends all the time to try Flippa's valuation calculator to see what their company is worth.
And I encourage you guys to do it today. Go to NathanLacke.com forward slash Flippa right now to test out the valuation calculator for free. That's NathanLacke.com forward slash F-L-I-P-P-A. Okay, so you're doing that, and then I want to get into G2 Crowd, right? Pick up there. Now, first off, those of you listening right now, just raise your hands real quick. How many of you guys have used G2?
You've bought a product from there, you've left a review. Okay.
Not all of you yet. Not all of you. Go there, especially to buy software. It's free. There you go. I mean, it's like going to TripAdvisor, Yelp, free advice.
Well, here, this will make people want it.
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Chapter 4: How has G2's revenue model evolved over time?
Yeah, but it's not the idea. It's you, right? David canceled a drift. You talked to Charles River Ventures in Boston. I mean, Ishvar gave him a $10 million check and said, whatever the hell you build, I'm $10 million in. Take the check. And then he obviously built drift.
I mean, if they're betting on the person, not the idea, I don't understand how you would have trouble raising capital if that's what you wanted to do.
Yeah, and I think, though, at the time, like I said, VCs, like, yes, angels, VCs, no. Hmm, interesting.
Okay, so first customer was back in 2012. Now, how many vendors do you have paying today? How many total customers? About 2,000. Okay, about 2,000. And is most of the growth coming today from expanding accounts or adding new customers altogether?
And it's both. I mean, obviously, the enterprise now, most of them have, we have some kind of a foothold, right? Because it can be just one of their products. Like at Salesforce, if just Salesforce CPU, that's one. So, you know, the enterprises, we tend to have a foothold. So those are more growth now. But I think, but that's why we're here at Sastok.
Every day, there's hundreds of new vendors, new products. So there's also a lot of new logos, especially SMB mid-market.
Yep. So 2017, you broke $11 million in revenue. If you look at the past 12 months, you said you're moving to more pure play SaaS. So if you look at the past 12 months total revenue, what percent would you say is SaaS versus something else?
It's almost 100 now. Because we used to also have like a per lead adder, and now we just said, hey, let's just bundle it in, be API, all you can drink.
Okay. Anyone pay for G2 Crowd? Any customers? Oh, there we go. We have one. Very good. Manoj, sales trip. It's actually a great app. I'm starting to get great reviews. I feel like for some mysterious reason, after this talk, your average rating is going to go up by a couple of points. He logged into his personal dashboard and said, give this guy some love.
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Chapter 5: What strategies are used to retain and expand customer accounts?
What valuation was that at? You know, we're approaching. We didn't disclose the exact, but we're starting to approach sort of half a unicorn.
That's a hell of a way to say what your valuation is. Half a unicorn.
Not quite half. Less than half.
Do you guys like him more for that or like him less for that? Who knows? Half a unicorn.
I want to be a full unicorn someday.
What does half a unicorn look like? It's less than $500 million. Okay, yeah.
I don't know what you call it. What do you call a half unicorn?
Okay, so you started the year at $30 million run rate. Last round raised with $55 million on call at $500 million pre-money or post-money?
The post was below that. Post was below. So now I'm guiding you further.
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Chapter 6: How does G2 handle customer churn and retention rates?
How much runway do you have in the bank, though?
Two million into your total cash. A lot. I mean, we raised 55 million. We have more than that in the bank. We have plenty in the bank.
You have more than 55 million in the bank from last month.
Well, not quite. But we also have big lines of credit from SVB, right? So capital is very plentiful right now.
Don't you love this little, like, intimate little thing? I feel like... You are kind of cross-examining me. Well, CEOs will be more open, right? Because, like, no one else can hear us.
Well, it's probably recorded.
Oh, yeah, and I will publish it, because this was great. Shake your heads yes, isn't this good information?
I am being authentic.
Yeah, no, I know you are. You gave a lot of information. Most people don't. They say, Nathan, what the hell, I'm not giving you information.
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Chapter 7: What insights can be gained from G2's growth trajectory?
So I'm like, and then the other one was like somebody that seemed just crazy. You always get those too. Everyone has some crazy customers. I'm like, yeah, this one's crazy. So there's one crazy, one mad about HDMI inputs. Neither is going to affect me, so I bought right away.
But one just got divorced and just wanted to be nasty to somebody.
There are some, and if you have, and that's why nobody, and actually a vendor with all 5.0 reviews, I would never believe it. It's bullshit. The world isn't that way. Even if you're perfect, which maybe you are, Nathan. Thank you very much. But even if you are, some people will perceive you as imperfect.
You know what I mean? I have a lot of imperfections. I'm the most sued podcaster.
There's no way I'm perfect. But even though you're a perfect podcaster, some people are having a bad day. Like you said, they want to be angry at someone. They're like, F Nathan. Yeah, and I would love that. That's not me today. I love you today. I would love it. But tomorrow, maybe I'll wake up angry.
Well, good. Wake up angry at me. Guys, I give Godard five-star reviews. Found a G2 crowd in 2012 with nothing. Basically put in $2 million of his own capital. Raised $100 million to date. $55 million in the company about a year ago. I call it a $400-$500 million pre-post-ish money valuation.
$30 million in ARR at the beginning of this year, scaling to about $50 million in ARR by the end of this year. Not raising, not selling, adding about $10 million in new ARR per quarter. Are you trying to attract investors? You're doing a good job. Over 20,000 customers paying north of $10,000 per year for the platform. Goddard, thank you so much. Thank you.
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Chapter 8: What are the future plans for G2's expansion and funding?
Appreciate it.