G2 is a peer-to-peer review site headquartered in Chicago. The company, which was previously known as G2 Labs, Inc and G2 Crowd, focuses on aggregating user reviews for business software.
- Net Revenue Retention 130%.
- 20,000+ paying customers
- Expansion revenue annually: 50%
Nathan Latka (00:00):
Hey folks. My guess it is Godard Abel. He’s the CEO of G2, which I’m sure many of you guys have seen. You’ve seen the badges flying around LinkedIn. Everyone wants to be top ranked on G2. That’s because it’s the leading business software review website and marketplace, which he co-founded in 2012. Godard, you ready to take us to the top?
G2 CEO Godard Abel (00:14):
Yes, let’s go, Nathan.
Nathan Latka (00:16):
So this is not your first rodeo. You gave a really great talk at our last founder event where you summarized some of the other companies you’ve built. Are you having as much fun building this one as the last three or four?
G2 CEO Godard Abel (00:26):
Yeah, but I love entrepreneurship. It’s always different. But I am enjoying the new challenges.
Nathan Latka (00:32):
I love that. So let’s talk a little bit about products because we had you on recently. Obviously most people think about G2 as a review site. How do you think about product expansion? What’s next?
G2 CEO Godard Abel (00:41):
Yeah, I think one of our exciting new products is G2 Track and G2 Track is all about helping CIOs, CFOs, track all of their SaaS and cloud spend. And we think it’s especially relevant now, a bit of an economic downturn. So everyone’s trying to also figure out, “Am I wasting money on some of my SaaS? Are there gaps in my tech stack?” And with G2 Track, we can help companies figure that out in real time.
Nathan Latka (01:05):
And so how should folks think about G2 Track relative to Vendrs of the world and other sort of expense management tools?
G2 CEO Godard Abel (01:13):
And we do partner with Vendr, and I think Vendr, they’re really good at negotiating SaaS contracts and they’re more full service. G2 Track is really about giving you data benchmarks and it works by API. We hook it up to your financial system. Let’s say you’re running NetSuite, Intact, QuickBooks. We parse all your spend data, look at your usage, if you’re using something like Okta, and then benchmark it against the whole G2 database to help you figure out are you have some duplicative apps? Are there areas you can save money? And on the other side, are there gaps in your stack where there’s new products we’d recommend? So I think we’re really excited about the potential of Track
Nathan Latka (01:49):
And I guess your ability to make smart recommendations there is directly dependent on your ability to convince founders and CFOs to actually connect the data. So you sort of have a bit of a marketplace problem there, but you are the marketplace king, you solved this with reviews. How do you think about figuring out that sort of connection equation and making sure you have a big database to make smart recommendations based off of?
G2 CEO Godard Abel (02:06):
Right. And the good thing for us, it’s the same database that powers G2.com because on G2.com, we have over a 100,000 SaaS software products listed. We categorize them in over 2000 categories, but it’s a very dynamic taxonomy. And frankly, that’s one of the key assets for Track. And that’s one of the challenges for CIOs, CFOs. A lot of companies are running hundreds, if not thousands of apps. And frankly, if you’re the CIO, CFO, you don’t even know what they do. Because marketing buys its own apps, sales buys its own apps, product buys its own apps and you just CEO their spend, but they have no idea what they do. So having that taxonomy, being able to match products and then even using the review data, seeing what businesses like yours are having success with on G2.com, based on that feedback, is actually essential, we think to making very data driven stack assessments.
G2 CEO Godard Abel (02:53):
And so that’s why we see the two very synergistic. And also going the other way, Track can also help inform insights we provide on G2.com because it gives us a deeper look into what companies are spending on, how that’s trending, where they’re actually having success. And so that’s why we see it being very synergistic to what we’re already building on G2.com.
Nathan Latka (03:14):
You mentioned over 100,000 software companies on G2, the value of the taxonomy, the dynamic taxonomy you’ve built and how that feeds into Track. How many people have connected realtime API feeds into Track today?
G2 CEO Godard Abel (03:27):
And I think we have, it’s a few hundred companies, and we have both a free and a paid version. We have about 100 on the paid version now, which is I think a big milestone. Because in some ways, Track is a SaaS startup within the greater G2, but obviously fully built into the data and the architecture, but we’re excited. And we do think second half of this year, we’ll see a lot momentum with that product because I think everyone is trying to figure out where to save a bit of money to also better weather the economic downturn.
Nathan Latka (03:56):
Oh, what’s going on there, YouTube. Good to see you, guys. Now imagine this. You love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 interviews I’ve done manually? Saves you a lot of time. Well, we’ve done this. We’ve built into the beautiful interface inside of Founderpath. Check this out. I’ll show you how you can access this in a second. But you log in, you connect to your Stripe account. You see your valuation real time. You can see what it changed over the past 88 days and even set goals for valuation this year. Now the secret to valuation is there’s many different ways to value a SaaS business. So the reason you’re going to see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who’s doing the buying of your SaaS company, you’re going to get a different valuation.
Nathan Latka (04:45):
A VC’s going to pay a different valuation. Private equity firm is different. If you’re going to do a minority sale, that’s different. And if you sell the whole business, that’s a different valuation. You can see all those when I hover over here. So the teal is what a VC would pay. Yellow is what private equity, and red is if you sold the whole thing outright. Now what’s cool about this is not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founders share with us on the show. So Traction, 1.2 million, seed round, 3.7 raise, they sold 22% of their business. Go in here and filter by the event. Maybe you only want to see companies that have sold the whole business. Well, here are a bunch that have been acquired, the valuation and the multiple.
Nathan Latka (05:31):
Maybe you’re going out right now and you’re raising your seed round. Well, go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at, and what percent that they sold. There’s never been a larger data set of SaaS valuations than what you can get now inside of Founderpath. And we’re thrilled to bring it to you.
Nathan Latka (05:51):
All right, we’re going to go back to the YouTube video here in a second, but if you want to check this tool out, if you want to jump in and sign up, you can check it out for free to get your valuation at this link, this link, founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform. I hope to see you there. All right, let’s jump back into the interview.
Nathan Latka (06:21):
You said 100 on the paid version of Track. What does paid mean? How do you make money on this product?
G2 CEO Godard Abel (06:26):
Well, I think it’s a SaaS subscription, like any product, but with paid there’s additional features. And especially, I think if you want APIs to the more enterprise systems like NetSuite, like Okta, that’s when you go to the paid version of Track. But if you’re running QuickBooks, if you’re a startup, you can try it for free.
Nathan Latka (06:42):
I see. So if there’s a large enterprise with 50 million bucks in revenue that wants to use Track to manage their spend and they also use Okta, when they click connect to Okta, you might say, “Wait, you need an enterprise plan. Here’s a $300 a month fee to sort of access that.”
G2 CEO Godard Abel (06:55):
True. And the other thing we do for the bigger companies is we have a contract concierge service because to really make Track work well, you also want to track the key contract terms such as renewal dates, whatever kind of price uplift there might be. And frankly, there isn’t a great way to get all that data into a system without doing some contract entry. So we have a contract concierge service. That’s also part of our paid solution. And that can really help companies be more proactive in managing their whole SaaS and cloud service stack.
Nathan Latka (07:31):
Some of the fastest growing SaaS companies say, “Well, just sign three year contracts and they build in,” you called it price uplift, but it’s effectively a natural accelerant each year where the value or the ACV increases whatever, 5%. You’re on the flip side, trying to prevent your customers from paying more for something like Salesforce, for example. What are seeing right now? Go ahead.
G2 CEO Godard Abel (07:50):
Yeah. I just say we’re on both sides of that. We just want people to be aware. I’m also an entrepreneur and I think that’s key for a SaaS seller. If you want to do that, you have to provide more value each year. And obviously I think some vendors do a great job of that, but if you’re not providing upgrades, more value each year, then, yes, then the buyers, your customers, will question that hard. And for the buyers, we just want them to be aware and have that visibility because sometimes they are surprises, right?
Nathan Latka (08:15):
G2 CEO Godard Abel (08:15):
And then nobody’s looked at the contract and turns out there’s like a 90 day opt out. And if you don’t, there’s whatever uplift there is. And I think that’s all fine as long as you’re aware of it, as long as you feel like you’re getting enough value. But obviously CIOs, CFOs don’t want to be surprised and Track make sure that they have full visibility and they can be proactive.
Nathan Latka (08:34):
Godard, when you look at the ecosystem of folks that are helping SaaS companies track their spend, who right now do you feel like has the most data, the most live connections to SaaS companies?
G2 CEO Godard Abel (08:43):
Yeah, and honestly I’m not sure. I do think in terms of the negotiating and really, I think Vendr obviously has great momentum. They just raised a bunch more money. But I think in terms of actually gathering data, we feel like we’re in a good position.
Nathan Latka (09:01):
Now, you’re also well capitalized. I believe your last round was 157 million Series D last year, right?
G2 CEO Godard Abel (09:06):
Nathan Latka (09:07):
And broke the 1.1 million, billion, sorry, evaluation mark?
G2 CEO Godard Abel (09:11):
Yes. That was very exciting.
Nathan Latka (09:13):
Any more capital raise since then or no?
G2 CEO Godard Abel (09:15):
No. And I don’t think now it would be a great time to raise capital. Yeah. Although I think we’re also lucky. I don’t think we raised at some crazy, crazy multiple.
Nathan Latka (09:26):
Well, you told us, I mean you told us right around there you’re breaking like a 55-ish million run rate. So that was a 19X-ish multiple if that’s accurate. I’d say that’s a fair multiple. Not crazy.
G2 CEO Godard Abel (09:36):
Yeah. No, and we are growing well. I think this year we’ll definitely break through a hundred million ARR.
Nathan Latka (09:42):
G2 CEO Godard Abel (09:43):
Nathan Latka (09:43):
Godard, that’s a big announcement. That’s exciting. Is that a stretch goal or you feel pretty good about that?
G2 CEO Godard Abel (09:50):
No, I think I feel good at definitely getting there by year end. And certainly when we do hit it, we’ll share that with you because it will be-
Nathan Latka (09:56):
G2 CEO Godard Abel (09:58):
And I think in a lot ways, and I probably agree in a lot of ways, it’s more exciting becoming a unicorn, at least last year, because last year becoming a unicorn was probably easier. And then breaking through hundred million ARR As you know not that many SaaS vendors hit that milestone.
Nathan Latka (10:12):
Yep. No, it’s rare
G2 CEO Godard Abel (10:13):
So we’re excited to get there.
Nathan Latka (10:15):
I mean, that means right now you’ve got to be somewhere between sort of 80, 85 million in ARR, right?
G2 CEO Godard Abel (10:20):
I’m not going to confirm that, but we will get through 100 this year.
Nathan Latka (10:24):
All right. Fair enough. Very cool. Last question I want to ask about before we wrap up. I would argue one of your biggest assets is your ability to accurately taxonomize hundreds of thousands of software companies. How on earth do you do this?
G2 CEO Godard Abel (10:36):
Well, and I think we have the advantage that vendors, software vendors, software sellers, they want it to be right on G2. And as you know our models, so if you’re SaaS entrepreneur, you can list on G2 for free. And then we also ask you what category you’re in. And then obviously as vendors grow like our friend Henry at ZoomInfo, obviously they grow well beyond one product, one category. So now ZoomInfo, somebody like that’s probably in 30 categories, but we actively work with their product marketing, their product teams to make sure they’re properly classified across all their products. And that’s never done because vendors like ZoomInfo are always innovating, entering new categories, launching new products. But I do think we’ve become an essential part now of our industry where if you’re a software vendor, you want it to be right on G2. So that software buyers and we have about 7 million a month coming to G2, that they discover you, because you don’t want to be missed.
G2 CEO Godard Abel (11:24):
And so that’s why there’s a nice synergy with our community of vendors. And also I think more entrepreneurs. I think the number of listings on G2’s grown 48% over the last year.
Nathan Latka (11:35):
G2 CEO Godard Abel (11:35):
And so that’s very exciting, but it’s very collaborative with our community of vendors and they’re always helping us update it. And we do have a research team and it’s a pretty big job. And we have about 50 people in our research team, always working with the vendors. Because not only do we categorize them, but then we come up with different questions to figure out what are the key features in each of those categories, for each of those products. So we also can ask the users the right questions about how well those products are working for them. But I agree it’s a big asset and that’s also spawned a new business for us where we do license our taxonomy to partners.
Nathan Latka (12:08):
G2 CEO Godard Abel (12:09):
One of them for example, is ServiceNow. And ServiceNow, I think as you know, leading IT platform cloud company, but they also have an IT asset management tool, and to help them categorize all their apps, they now use the G2 taxonomy. And it’s also something investors are now licensing. We have an investor data solutions business at G2, also very exciting. We have about 50 of the world’s leading SaaS investors now also using G2 data. And the taxonomy also helps them. And just to try to make sense, “Oh, who are the competitors for this deal? What are adjacent markets?” And so I think it is an exciting asset, very dynamic asset, that we keep building.
Nathan Latka (12:47):
Guys, exciting times at G2. Again, broke the unicorn mark last year and caught 55-ish million in revenue. Godard feels good about breaking the a hundred million dollar mark this year. Also breaking into new lines of business. He sounds like most excited about G2 Track, which helps you understand and manage your SaaS expenses, which is especially important in a downturn like we’re going through now where everyone wants to save cash flow, ideally get profitable, and back to break even, and increase runway. Godard, G2. Thanks for Taking Us To The Top.
G2 CEO Godard Abel (13:11):
Yeah. Thanks, Nathan. Great to see you.