Start-Ups

Startup G2 Crowd is Yelp for business software

Chicago's G2 Crowd is lifting the veil on enterprise software, creating an online review platform for business software and services.

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An example graph comparing CRM software.
Image: G2 Crowd

Choosing a software for an enterprise deployment can be one of the most stressful projects that an IT decision maker can undertake. Whether you are looking for a customer relationship management (CRM) software, accounting software, collaboration suite, or enterprise resource planning (ERP) software, information on user experience is difficult to come by.

G2 Crowd, a Chicago based startup, is looking to solve this problem by offering an online platform to compare and review software based on their experience with it. Daniel Honigman, a PR manager and marketer at G2 Crowd, said that it's a way to get information to business buyers the same way that many consumers vet their purchases.

"It's to the point where you can get more information on a $100 dinner than you can on a $100,000 piece of software," said. "So, with a longer purchase cycle, with a more expensive purchase, the fact is that people weren't able to necessarily hear from other real users. Versus, if you look at a restaurant page on Yelp, you can see all sorts of reviews from people that ate there."

Honigman acknowledges that there is obviously a lower barrier to entry with a restaurant review than there is to a software review, but the point remains the same — there is power in honest customer feedback. And, with flagship customers such as Hubspot and Salesforce.com, the company is starting to make some waves.

Leveling the playing field

G2 Crowd offers tools for both the software buyer and the software vendor, and both are essential to its revenue model. President and co-founder Tim Handorf, said that this is a part of the company's goals and values.

"One of our core values is that we believe both the buyer and vendor can win in a situation like this," Handorf said.

The site is free of charge for buyers to use. Most of the reviews are available to buyers without even logging in, but buyers will need to log in if they want to access in-depth reviews or want to personally contribute a review. Upon creating an account, users are required to authenticate with LinkedIn to prove they work for the company they claim to work for. Honigman said that the team goes through and verifies each review to make sure that they are genuine and that an employee from a vendor isn't writing a review on their company's products. According to customer Ian Moyse, sales director of cloud CRM vendor Workbooks, the vendors cannot change or alter any part of the reviews.

"With G2 Crowd, the customer can proactively go and find out the good, bad, and the ugly from real users that are not filtered by the vendor," Moyse said. "G2 Crowd also importantly is not influenced by the vendor, who cannot sponsor or take part in funding anything that could influence G2 to change the vendor's position."

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G2 Crowd allows users to compare business software, such as CRM suites.
Image: G2 Crowd

Prospective software buyers can also purchase reports done by G2 Crowd. There is a one time fee of $599 per report, which includes the report and the data behind it. Right now there are 12 reports, and the company is expecting to have 35 reports in the next six months. Vendors can purchase the reports as well, but if they are purchasing to republish it, they have to pay more than $599, as they would be making it freely available to their users.

Handorf said that 90% of use cases are people who want to make a buying decision. He also mentioned that users requested functionality to contact vendors for follow up information, and the vendors pay for that functionality of lead generation. In order to remain transparent, Handorf said that G2 Crowd is "very upfront" about letting buyers know that they are passing them along to the vendor if they want to follow up.

Vendors can claim their pages for free and add basic information such as screenshots, updated logos, and contact emails. But, to enhance your page, you have to pay for a premium account for the ability to add videos and specialized information. The price varies and the company is currently changing the pricing model for premium profiles.

"As a vendor G2 Crowd gives you a level playing field for your customers to share their feedback with the world in a consistent centralised manner and allows you as a smaller vendor to compete fairly with the biggest brands out there," Moyse said.

Building the vision

G2 Crowd founders Tim Handorf, Mark Myers, Mike Wheeler, Godard Abel, and Matt Gorniak previously founded BigMachines which was subsequently acquired by Oracle. In working at BigMachines, Handorf routinely dealt with analysts who would write opinions on enterprise software.

"One of the things that I realized, when I was dealing with analysts, is I would give them all the data on our software, they would listen to our information, and they would report out similar data," Handorf said. "Then, they would talk to a couple of our customers and then, after that, they would write an opinion that had tremendous influence in the market; and they never really used or knew the details of our software."

The founders initially bootstrapped G2 Crowd with money from their exit with BigMachines. They put out an minimum viable product in about six weeks and it seemed to generate excitement from the people they showed it to. That encouraged the team to keep building the product.

The company just celebrated its two year code anniversary, with the first beta being released last year. While they are not yet in the black, G2 Crowd saw its first revenue in April 2013 from selling reports to users. Shortly after that they started offering other vendor offerings.

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The G2 Crowd team.
Image: G2 Crowd

In addition to the support of large flagship customers, organic SEO search was a big player in the initial growth. Once the company reached a certain number of reviews, the team noticed that they would rank high in the result for searches such as "Hubspot reviews" or "Workday reviews."

The founders initially invested $2 million, and they just recently raised a second seed round a few months ago with more of their own money, in addition to money from Chicago Ventures, and Hyde Park Venture Partners, among others. At this point, Handorf said that the majority of the company is still owned by the founders.

"Our focus right now is really just scaling the number of reviews and the number of vendors and the number of categories that we are focusing on, because or revenue definitely scales and our traffic scales by the number of categories that we cover," Handorf said.

G2 Crowd is a Ruby shop with a Heroku backend. There is no QA team and everything is test driven. The company does releases on an "as needed" basis. So, once a release is built, it goes through automated test cases and is pushed live. Handorf said that they follow the mantra: "Do it live."

While Handorf couldn't divulge specifics on what the company is working on for the future, he did mention that the development team uses multiple A/B testing tools and analytics tools to determine what users like the best and what works the best and they are constantly pushing new features.

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About Conner Forrest

Conner Forrest is a Senior Editor for TechRepublic. He covers enterprise technology and is interested in the convergence of tech and culture.

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