G2Xchange Revenue (2022)

[00:00] Hey guys, recording this here on what is it? Friday the nineteenth. Maybe you're seeing this on Monday at the latest, but wanna let you know we are almost sold out for Foundercomp Sorry, Founder500 in Austin, Texas here in about a week. It's gonna be an amazing event. 500 B2B SaaS founders. I'm looking at the attendee list. There's almost 60 founders with more than six or seven million dollars in ARR. It's an incredible group of group. There's over one and fifty [00:27] with more than 1,000,000, more than a million revenue. It's an incredible group. You don't wanna miss it. Grab your hotel, grab your flight, grab a ticket right now. I'll put the link in the bio, in the description here on YouTube. And I think there's only about three tickets left. Okay, about three tickets left. I'd love to see you guys there. Don't be bashful. Grab your ticket now. Hey, folks. My guest today is Ron Jones. He's building [00:49] G2Xchange, which is actual insights for government contractors. Ron, ready to take us to the top? [00:54] >> Yes, thanks for having me Nathan. [00:56] All right, do you come from the government sector? [00:58] >> 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, but the vast majority has been North American public sector, which you have your federal contracting, you have defense contracting, you also have state and local law enforcement, public safety, even some [01:29] >> work for the Canadian government too. [01:31] Very cool. Okay. So give me an example. What are one of these governments paying G2Xchange for? What's the product? [01:37] >> Yeah. So it's actually we actually don't serve, well, we do serve government, right? We do have lots of government users, but this is a product for sales, business development and capture professionals that serve the government. So whether you're a software company that sells products or sells services, right? That's what we do. We have actionable insights, which is basically just bits of relevant data from multiple disparate public data sources, right? To help speed up your business development [02:05] >> efforts. [02:05] Okay. What might be something I'm selling to the government that I'd use G2Xchange to get data on? [02:11] >> Yeah, so anything like for example, like AWS is one of our customers. They sell lots of cloud services as you know, to the government. Deloitte, another customer of ours, management consulting, technology implementation. Like a lot of folks may not know this but the government is the largest buyer of goods and services in the world. So everything from down to like plastic forks and knives in a cafeteria on a military base to rockets, right? [02:37] Alright. So what what are you selling the person that makes plastic forks for military bases? What are you showing them on G2Xchange? [02:43] >> Yeah. So we focus on a couple of major categories around things that will help you have an impact on your business development efforts. So for example, when contract awards are released, we write tidbits about that. 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 the information about, for example, their senior leadership team, where else they've worked in [03:12] >> the government. So what other contracts they performed on, what their capabilities are, right? And also, some of their recent wins, if applicable. And the way that this is actionable, right? For a BD sales or capture person, I'll explain capture in a second for those that aren't familiar. But the way this is actionable is that, hey, if you're looking for partners, right? To get your technology into a specific government agency and you see that they're delivering or [03:37] >> they won an award that is a response 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, know, you see [03:49] Got it. What would the fork manufacturer or AWS on average, what do customers pay you to use the technology? [03:56] >> 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, you know, that's you know, so we got a good mix of [04:25] That's monthly ARPU or annual? [04:27] >> Annual. Yeah. [04:28] Got it. Got it. So can I take 7,000 times two fifty? You're doing about 2,000,000 revenue today? [04:33] >> Yeah, we'll cross the 2,000,000 mark in November as the projection, 2,000,000 mark in November, you know, 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, [05:01] >> which will focus on everything defense contracting. [05:05] 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 it 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 [05:28] your Stripe account, you see your valuation real time. You can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna 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 gonna [05:53] get a different valuation. A VC is gonna pay a different valuation, Private equity firm is different. If you're gonna 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, right? 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 this is [06:14] not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founder share with us on the show. So traction 1,200,000 seed round 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired the valuation and the multiple. Maybe you're [06:40] going out right now and you're raising your seed round. We'll 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 dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. All right, we're gonna go back to the YouTube video here in a second, but [07:02] if you wanna check this tool out, if you wanna 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. Alright. Let's jump back into [07:28] the interview. Ron, help us understand growth. Right? So if you're doing a one point, you know, eight run rate right now, which is about $150,000 per month, what were you doing exactly one year ago? Do you remember? [07:39] >> Yeah, a little bit of backstory, I was brought on as an operator, right? I did not found the company. However, about a year ago, well, let's just talk exit 2020. Exit 2020 was about 800 ks. So coming into [07:54] do mean exit twenty? You finished 2020 with that? [07:56] >> Yeah, yeah. Recurring revenue from subscriptions. And in that year, we had launched FedCiv, that vertical. So that kind of helped accelerate and it accelerated through 2021. I was brought in as a matter of fact, as an executive as part of the former parent company in June 2021, right? And so through some, it was an exact acquisition, two brands, right? One focused on events, one focused on providing this Intel, working with the ownership team and leadership team [08:27] >> that was there kind of advise, 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. [08:42] Okay, interesting. And so 800,000 in 2020, did you like double to do like a million, a million 6 in 2021, something like that? [08:50] >> Yeah, yep. That's close to a million 7. [08:54] Okay, very cool. Yeah. Well, 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 twelve months? [09:01] >> Yeah, so we've grown a little bit. So a few of the things that we've realized and we're starting to, 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 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, right? There's tons of them, right? [09:29] >> 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 and D, so on and so forth. So that's one thing that we've started to put into play. The other thing is that, you know, again, the vertical, all of our customers have been asking for, hey, when are you gonna get into defense? Which is by far and wide the [09:56] >> largest market, you know, government contracting. [09:58] But Ron, all customers are always gonna ask you for new products, Right? But there are still companies that do that and they still grow 200%, 3% every year. Now look, you don't have to grow really fast if you haven't raised a bunch of money. So are you guys are you boot have you guys have they raised a bunch of capital, VC capital, or you bootstrapped? [10:10] >> No. No. Bootstrapped. We have [10:12] not raised [10:13] So you joined in 2020 then 2021, and and you're you didn't buy a 100%. Right? You're effectively working for a private equity firm running the business? [10:21] >> Yeah. Private investor. Yes. Yep. [10:23] Okay. Okay. Okay. Got it. So it's a private wealthy individual who bought the company, not like traditional big PE shop. [10:28] >> That that's right. That's right. [10:29] And why do that? As a young guy, you can do whatever you want, why not start your own thing and own a 100%? Why work for some other guy and get not as much upside? [10:36] >> 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, right? 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 it's it it was a good idea [11:00] >> for me. [11:00] And he bought it in 2020? Yeah. Was it is there a press release? Did how much did he pay for it? [11:08] >> I I don't know exactly how much he paid for it. I know it's some multiple of of earnings, right? But yeah. That but that that that closed about q four twenty twenty. [11:18] Before you joined. Okay. And then, I mean, how much are we talking like you own like 5% equity today or 10% do you have any equity? [11:24] >> So it's shadow equity. Yeah. You have someone on recently that had the same setup. It seems to be, you know, pretty common in like a private investor, private equity kind of situation, but it's shadow equity, 20%. [11:35] 20%. Okay. What that means, if you sell the business a year from now for $10,000,000, you you don't own equity on the cap table, but you'll get effectively equity at the exit, which is, you know, $2,000,000 on a 10,000,000 sale. [11:46] >> Right. Liquidity event triggers it and and and that's how, you know, that's how shadow equity will work. Right? [11:51] Yeah. Yeah. Cool. Very cool. I guess last thing here before we wrap up, how many folks are full time on the team today? [11:59] >> Yeah, 19 full time, about six product engineering and those are all brought on in 2021 to help build everything that we're about to release, right? And then the rest of the seven content, so there's also researchers, analysts, writers, right? So they focus on building the actual insights, producing that. The rest of us wear multiple hats across different growth functions. So customer success, marketing, support and another important distinction is that there's no salespeople, right? I mean, I [12:31] >> would hate to venture into like the, hey, we were product led before it was cool kind of thing, but it's grown organically from the start, right? So we've just now started experimenting with paid advertising, jury's still out. [12:47] How much did you spend last month on paid? [12:49] >> Just about $1,500 just to try, just to see what kind of things happen. But interestingly enough though, for the very first time, our primary acquisition channel flipped to Google search or just organic search, you know, broadly. Primarily, it has been direct. [13:06] How many clicks did you get last month from Google search? [13:10] >> I don't know how many clicks, but I think last month we had about, I think like three or three or 400,000 sessions or something like that. If I'm not well, not sessions, [13:22] not Impressions. [13:24] >> Impressions, yeah, yeah. [13:25] So it's Yeah. So when people so when people searched on Google, your results for your content were showed in Google results 400,000 times, but like that's a vanity metric, like the trick is [13:34] >> how many of actually clicked through to your website. Exactly, exactly. What matters most to us right now is like conversions, right? And so that's why, here's another interesting fact, when I came on board, there were no landing pages. [13:44] Yeah. [13:44] >> Right? And so one of the first things we did when I joined as well, I took over as CEO in May, we launched new landing pages, right? And we have pricing page, everything out there in the open, introduced the fourteen day free trial, which we have since, it kicked off towards the end of May, we've done about 30% trial conversion rate, which is pretty good. [14:05] Wait, Ron, hold on, let me break this down, okay? So last month, last full month, which was July, right? How many new signups to just email signups did you have? [14:15] >> I think as as far as trials or as far as, you know [14:19] However you define it, what's your top of funnel, Yeah. [14:22] >> So we had about 300 different signups. And the other thing too to note is that how [14:28] many of the three yeah. Yeah. Let me just stay focused here for a second. How many of the 300 are actually do you require credit card for the free trial? [14:35] >> No. No. It's it's a no credit card, no obligation free trial. [14:38] Okay. So of the 300 that sign up for the fourteen day free trial, how many converted to pay? They're paying customers today. [14:44] >> There's between seventy and eighty. [14:46] Okay. So that's where the [14:48] 30% conversion comes Yeah. Okay. And the other thing [14:50] >> too is we have a free account. So any government employee gets a free account, right? Because the government also uses this as market research in a way. [15:00] Yep, makes sense. Very cool, we love the funnel. We hope you doubled over the next twelve months. We'll see what happens. In the meantime though, Ron, let's wrap up with the famous five. Number one, favorite book. [15:09] >> Yeah, and it's gonna be a tie. Hard Thing About Hard Things, Ben Horowitz and Working Backwards, it's an Amazon story by Colin Bryar and Bill Carr. Yeah. Not much else to say about that. [15:20] Number two, is there a CEO you're following or studying? [15:24] >> I'd have to say Satya Nadella, he's a really humble guy and and I like the kind of story around him kind of more more or less refounding Microsoft, right, in a Number [15:36] three, what's your favorite online tool for building the business? [15:40] >> Slack. Can't live without it. [15:42] Number four, how many hours of sleep do you get every night? [15:44] >> About six. [15:46] Okay. And what's your situation? Married, single, kids? [15:49] >> Married, kids. [15:50] How many kids? [15:51] >> Two. [15:52] Two. And how old are you? [15:54] >> 34. [15:55] Last question. Something you wishing you when you were 20. [15:58] >> Oh, man. Fortune favors the bold. Right? Wish I had taken more risk earlier on. Right? [16:05] More risk, guys. G2Xchange did about $800,000 in revenue in 2020, now up to about, you know, the book 2,000,000 run rate in November. What they do is they help people that make, like, 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 twelve months, but Ron has come in and [16:25] 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. [16:34] >> Thanks, Nathan. [16:37] One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday 1PM [17:02] Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's an acquisition, a big [17:24] fundraise, a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you wanna take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You want to get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people are saying. Sign up [17:46] for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode and if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people. We [18:05] got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. See you.