G2 Gives Away the Number One Spot. That's How It Sells $20K Contracts
G2 lets vendors list for free and ranks them purely on reviews. The revenue comes from selling those vendors the buyer data underneath — at up to seven figures a year.
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Slack has been the number one rated product on G2 for years and has never paid the company a cent. Godard Abel says that on purpose, because it is the whole argument for how G2 makes money.
Slack has never paid us, but they’ve always been #1 rated on G2. We don’t change that.
Godard Abel, co-founder and CEO, G2
The thesis. G2 gives away the thing every software vendor wants — the ranking — and charges for everything that surrounds it. Listing is free and position is bought with reviews, not money. The revenue comes from vendors who want to know who is shopping in their category, which is a different product sold to the same people.
Who pays, and how much
Companies list for free. Reviewers write for free. What vendors buy is access to buyer insight: analytics, and information on who is shopping for products in their category.
The price scales with the size of the vendor rather than with the ranking.
- Small vendors — about $10,000 a year on average.
- Mid-market vendors — $30,000 to $100,000 a year, depending on how many products they have on the site.
- Enterprise — Abel says some of the largest, naming Salesforce, IBM and Oracle as the class, are now spending over seven figures.
Across more than 20,000 paying customers that averages out to average revenue per customer of $1,666, with an average annual contract value near $20,000 and lifetime value approaching $100,000 — the gap between the mean and the contract value being the long tail of small vendors sitting under a much heavier enterprise cohort.
G2 was never a scrappy startup
The founding team came out of BigMachines, the cloud CPQ company Abel spent thirteen years building and sold to Oracle for $400 million. Tim Handorf, Mark Myers, Matt Gorniak and Mike Wheeler had all worked there. G2 launched in 2012 with $2 million of Abel’s own money.
That pedigree did not make fundraising easy, because the company had no revenue model to point at.
At the time… Angels, yes. VCs? No.
Getting the first customers on board he remembers as “really painful,” and says the only reason it worked at all was that the founders were already successful entrepreneurs with a network to lean on.
The funding ladder
G2 raised four rounds between 2013 and 2016 and none of them hit double figures. The step change came later.
- 2013–2016 · Four small rounds None in double-digit millions.
- 2017 · Series B, $30M Accel and Pritzker Group Venture Capital among the investors. TechCrunch called G2 the “Glassdoor for software reviews.”
- October 2018 · Series C, $55M At a $450 million post-money valuation, on revenue of roughly $30–40 million, up from $11 million in 2017.
The two latest rounds account for $85 million of roughly $100 million raised in total. Abel says the company is not looking to raise again for now, and is not interested in being acquired.
The half-unicorn joke
After the October 2018 round, Abel says G2 was valued at what he calls a half-unicorn.
I want to be a full unicorn.
The number he thinks gets him there is not the valuation. It is net revenue retention, which he puts at 130%.
That figure is the one worth holding onto, because it is the same band the recent enterprise software IPOs were in: Smartsheet, Alteryx and Box all sat between 130% and 136% net revenue retention, and were valued at $990 million, $840 million and $1.7 billion respectively at IPO. A review site with the retention profile of a Box is not really a media business.
Where the revenue actually stands
The GetLatka profile records $40 million of revenue for the date of the October 2019 conversation. Abel’s own guidance is higher: with 2017 revenue at $11 million, he says the company is confident it will finish 2019 with $50 million or more on the books.
Both numbers describe the same company from different angles — one is the dated row, the other is where the year lands. On either, the growth from $11 million in two years is the part that makes the retention figure credible rather than the other way round.
Why the free tier is not generosity
It is tempting to read the Slack line as principle. It is closer to a moat. A ranking that can be bought is worth nothing to the buyer reading it, and G2’s paying customers are buying access to those buyers. Charging for position would destroy the asset the paid product is priced against.
So the ranking stays free, the reviews stay the ranking mechanism, and the vendors who want to know which of their competitors’ customers are shopping pay for that instead. IBM has hundreds of products, Abel points out, so IBM pays more — not for a better position, but for more surface to watch.
Epilogue: what happened after this post was published
Abel got his full unicorn. In 2021 G2 raised a $157 million Series D at a $1.1 billion valuation, on a run rate Latka pegged at around $55 million — a multiple Abel described as fair rather than crazy. By July 2022 he was willing to say the next number out loud.
This year we’ll definitely break through a 100,000,000 ARR.
He also said, on the same recording, that hitting $100 million felt like a bigger milestone than the unicorn round had, because “last year, becoming a unicorn was probably easier” and not many SaaS vendors reach nine figures of ARR.
The two revenue lines he was most excited about were not reviews at all. G2 had begun licensing its taxonomy — over 100,000 products across more than 2,000 categories, maintained by a research team of around fifty — to partners including ServiceNow, for use in IT asset management. And an investor data solutions business had roughly fifty of the world’s leading SaaS investors licensing G2 data to map competitors and adjacent markets. Both are the same trade as the free ranking, one layer up: the reviews produce a taxonomy, and the taxonomy turns out to be worth more to people who are not vendors at all.
Abel’s explanation for why the vendors keep the taxonomy honest is the 2019 argument, restated:
If you’re a software vendor, you want it to be right on G2 so that software buyers — and we have about 7,000,000 a month coming to G2 — if they discover you, because you don’t want to be missed.
Sources Godard Abel’s interview with Nathan Latka, recorded 15 October 2019, and GetLatka’s reporting of it; funding and revenue rows from the GetLatka G2 profile; round reporting from TechCrunch. Epilogue from Abel’s later Latka interviews of 10 March 2022 and 27 July 2022, both after this post was first published.
