S2 Episode 1: Perseverance and Passion: The Keys to Scaling with Godard Abel of G2

Don: Good afternoon. I'm joined here with Godard Abel, CEO and co-founder of G2, the world's largest and most trusted software marketplace. More than 60 million people annually, including employees of the Fortune 500 companies, use G2 to make smarter software decisions based on authentic peer reviews. - For those who don't know, Godard is a serial entrepreneur. He led multiple companies through exit, including Big Machines that was just acquired by Oracle, and SteelBrick which was acquired by Salesforce. Thanks for coming on the podcast, Godard. Our team are huge fans of the G2 platform and the ecosystem you've built. I can't imagine a world in which you do not exist. Welcome. - Godard: Thank you for the kind welcome, Don. ➢ Don: Awesome. Let's dive right in. Jumping into it, in three words or fewer, who is Godard Abel? - Godard: A conscious entrepreneur. ➢ Don: And who's your biggest inspiration? - Godard: Marc Benioff. - Don: Why is that? - Godard: I've now built five companies, somewhat in the greater Salesforce ecosystem. Mark also acquired a second company called SteelBrick. I spent a little bit over a year working at Salesforce in Yohana as he calls it. - I just admired his ability to build companies of such impact, also his philanthropy 111 model, and everything he does. And if you're in San Francisco, the UCSF Benioff Children's Hospitals and the Oceans Initiatives. All of that, plus he's built one of the biggest software companies in the world with a very positive culture. I aspire to have more impact like Mark has. - Don: Amazing. I imagine you know him pretty well as well, personally. - Godard: I've certainly studied him. I've met him a few times. I don't know him super well, but I certainly admire his work. Whenever I have met him, I've found it to be fascinating and inspiring. ➢ Don: Awesome. Thanks for sharing that. Normally at this point, we get right into the founding story. This is, after all, Startup Growth Stories, where we interview successful founders on the trials and tribulations of building their business. - But before we get to G2, there's a lot more I just want to dive into, starting with your original dive into the world of entrepreneurship. My understanding is your grandfather and father started a manufacturing business out of World War II. Is that right? - Godard: Yes, and I've always admired my grandfather, Wilhelm. Although he passed away when I was five years old, I still remember him and also his story. He started his company in 1947. Germany was rubble. They were from the Northeast in a town called Essen. There was this steel industrial heartland. It just gotten bombed and flattened. - I remember my father also. He was lucky, and my grandmother was sent to a farm out in the countryside, which he did with most women during the war. He was born there. I remember he said he only ate potatoes for the first time in his life. During that time, my grandfather also didn't have a job, but he'd been a very hands-on engineer and a merchant marine. - Before World War II, he worked in the waterworks and Dusseldorf during the war, keeping the water system running. He was a very hands-on pump engineer, and he just had a vision for a better pump design to pump slurries out of the coal mines in Aurora Valley, but he had no capital. - His brother was a sales guy, he was an engineer. They just bootstrap the company. They came up with a better pump design for piston membrane pumps. Then they would just go sell deals and then outsource all the manufacturing until after many years, again, to scale to build their own manufacturing. ➢ Don: How did that experience, if at all, influence your perspective on how business in the world works? - Godard: One, growing up with my father, he and I would actually talk about business a lot. Even when I was a kid, he took me to his office on weekends. A couple of summers, I worked in his pump manufacturing plant. - We were always talking about business. It inspired me. That's actually why I wanted to be an entrepreneur or build my own company, but it's also daunting. I remember, to me, my father always seemed like a larger than life figure. Now it's called a small company, about 100 people. - But to me, it seemed giant and I'm like, wow, I want to be like my dad, but I'm not sure I ever could. It was very much inspired and formed me. - I remember my father also had this expression. He's like, entrepreneurship is always scary. He's like, hey, if I go to business, that's okay. He's like, I'm okay sleeping under a bridge in Paris. I still remember that. - I probably also got the risk-seeking nature, that if you fail, that's okay. What he taught me and my sister was as long as you have an education, you can take risks. Because worst case, your business goes under, spend a night under a bridge in Paris, and find a new job. ➢ Don: You have to unpack this ‘bridge in Paris’ reference for us. - Godard: My father also loved France. My grandmother was from [...], from Metz. I also grew up speaking a lot of French. That was his thing. If I've got no money, I'll just go sleep under a bridge in Paris in the place I love, but I'll still be okay, I think was his point. Like, I'll be okay even if my business fails. ➢ Don: That's super, super interesting. Your first entrepreneurial endeavor was coming out of Stanford when you launched Big Machines. You were capitalized by the former president of Heinz and former CEO of Apple, is that right? - Godard: Yes. Longtime students of Silicon Valley might remember John Sculley. He was actually originally the CEO of Pepsi, like a rising star. This is way back in the 80s. When Steve Jobs, the founder, CEO of Apple was on his first tour of duty at Apple and they'd gotten a public company, Steve Jobs was in his 20s, so he and his board felt like they needed a more senior CEO to lead Apple's mass public companies. - You had that famous story where we went and recruited John Sculley. He used a line—as I mentioned, John was CEO of Pepsi—hey, do you want to be selling colored sugar water for the rest of your life or do you want to change the world? I guess Jobs was an amazing recruiter, so John joined them. But then the story turned bittersweet, where then John Sculley and the board, a couple years later, actually removed Steve Jobs from the company, which a decade later led to this great comeback. - John was a very famous person in the valley. Also in the 80s, at some point, he was named CEO of the Year. I was lucky to have him as an angel investor because he was viewed as a tech visionary and having his name. That was the dot-com era. When I was graduating from Stanford, everyone was starting internet companies. But once I had John Sculley, I could very quickly raise $6 million seed funding just based on PowerPoint and a few smart kids. ➢ Don: Makes sense. How did you actually get in touch with him for the first time? And how did you convince him to cut you that first check? - Godard: It was a connection back to my father because his brother, David Sculley, was the president of Heinz ketchup. My father had moved my family to Pittsburgh, Pennsylvania. I mentioned that he's a German pump manufacturer, but my father wanted to start a US subsidiary. He was struggling to do it from Germany, so he decided to move the family, because he thought the US could be a huge market for his pumps. - I remember he picked Pittsburgh, one of that German community. His rationale is within a 500-mile radius of two-thirds of the US population at that time, not too far from New York and Chicago, so we wound up in Pittsburgh. My father was a golfer. His golf club, one of the members was David Sculley, who happened to be the president Heinz ketchup, but also the brother of John. - I remember I first had this idea for Big Machines' Thanksgiving 99. I was living in what was called the reality distortion zone at the time in Silicon Valley, where the Internet was going to change everything overnight, and there were billions being poured into it. Then I went back to Pittsburgh and it's sobering. - I talked to my dad about the Internet. I said, dad, how's it going to affect your pump business? He was just like, well, it's not. I said, what do you mean, dad? Everyone's going to get Amazon. Amazon had already launched and people already had that fear. I think 20-some years later, people were still afraid to get Amazon. - At the time, Amazon was only selling books and CDs. People probably don't remember what CDs were, but they're only in two categories and very simple products, just skews you could easily sell. My dad explained to me, no, my pumps are very configured. For every customer application based on pressure, flow rate, viscosity, fluid content, we configure different pumps, different motors, couplings, housings, materials, and there's no way you could sell that kind of a product online. You need a German pump engineer. - I was inspired. I saw what Dell was doing. Michael Dell, another great entrepreneur of the 90s, and obviously, Dell is still a huge company today, but he was one of the first to sell PCs online with a configurator. Back then, PCs were more configurable. I want a Dell Latitude, I want the 15-inch screen, I want this memory, this hard drive, this operating system. - Behind the scene, there's a rules engine to make sure all those choices, those components, fit together. You could see the price and delivery change in real time. What inspired me then is like, oh, I want to help my dad sell pumps, like Michael Dell sells PCs. ➢ Don: Was he right? Was your dad right about the pump business being insulated from the pressures from Amazon? What ultimately happened there? - Godard: Sadly, he was more right than wrong. What I underestimated, in 30 years, 40 years, I was right. But certainly in three or four years, he was right. Because what happened then, by 2001, the dot-com boom went to the dot-bomb bust. It was also a very hard time. - I remember in San Francisco. Actually, I started my company, Big Machines, in the Bay Area. I remember back in 2001, there was never any traffic from San Francisco to Palo Alto, like never. Everyone was leaving the area. You could Priceline a hotel room. Remember the Hyatt SF for $29 at night? - The area was really suffering because all these dot-coms are going bust. So Big Machines, we also had a really hard time because we're calling on these pump manufacturers. In the first year, there was still like, oh, internet hype, I should learn. By the second year, they're like, well, no, the Internet was a fad. - We like sending our customers CD ROMs to configure our pumps, paper catalogs, and the Internet was a fad. Thank you for visiting us, but there's no way we're buying your software, because you're probably also going bankrupt next year. It turned into a really tough struggle, because we are way ahead of product/market fit. ➢ Don: Spoiler alert for the listeners on the podcast, you ultimately led that business to tens of millions in revenue and sold to Oracle, but it sounds like along the way, there were some road bumps. It sounds like the market environment then wasn't too dissimilar from some of the turmoil we're experiencing in the tech markets today. - For the benefit of the founders who are listening in, what are some of the key learnings you can share on overcoming those obstacles during that time with this first endeavor? - Godard: The biggest lesson learned was just perseverance. For an entrepreneur, I would say you need to commit to a peak, some vision on how your companies are going to change the world that you're really committed to and really willing to suffer for, because more entrepreneurial journeys have long periods of struggle before a breakout success. - I've been involved in starting five SaaS businesses. At least what I've read about Facebook where Mark Zuckerberg spent one whole night and all of Harvard was using Facebook. Within a year, every university was using it. ➢ Don: I thought that's how it worked, too. - Godard: Yeah. I've never had that experience. I haven't been smart or lucky enough as an entrepreneur. Usually, there's a period of struggle. For us, it was frankly the first three or four years, where we were able to sell very few deals. We had to cut down the team. First year, we'll raise money just on hype and dot-com, but then we had to cut from 70 down to 20 people just to survive. - We also realized in 2000–2003 we weren't going to be able to raise any more money. Also, venture capital was pulling way back, and our metrics were terrible, so we had to go into organic growth mode. But then by 2007 is when it started to take off, so we did persevere, and ultimately where we turned the corner. - I also mentioned Marc Benioff earlier where we partnered with Salesforce. We partnered with Siebel Oracle on demand. All of a sudden, the cloud and cloud CRM started taking off. We found a different application for big machines, which was sales configuration and sales quoting. As Salesforce moved up market to big companies like GE, they needed a partner like Big Machines that could handle complex coding, complex configurations integrated into a CRM solution. A very different than our original figuring out selling pumps online, but related because both of them require this configuration engine and pricing engine. Eventually, we did find that product/market fit. - My main thing is, most entrepreneurial journeys are probably going to take longer than you think. Having that emotional commitment, and obviously, staying leaner if you could, that's one mistake I made. I wish I hadn’t hired up to 70 people. I wish I just stayed at 20 until I found product/market fit. - The longer you can stay lean and really make sure you do have initial product/market fit, it does work for those initial customers. You're really seeing the demand before you scale up, but it's also easy to say in hindsight. I also think if I hadn't made those mistakes, I would have never learned. Those were some of the lessons we learned. ➢ Don: Definitely. Hindsight is always 20/20. There's a lot to unpack there. One of the most transferable takeaways is, you raise a lot of money during the peak of the market, like we experienced in 2020–2021, you hire a big team, and then you realize after the fact and the market corrects, you need to lean out a little bit. A lot of the founders who are listening to the call today can relate to that. - It's obviously a really challenging position to be in. Perseverance is incredibly important. What other advice would you have for founders who are potentially short on funding or realize that their backs might be a little bit bloated? They're not yet positive-free cash flow, and they're having a hard time making the numbers foot in terms of runway. Is there anything that you would have potentially done differently in hindsight or maybe any advice for these founders who are going through something very similar in today's market in 2022? - Godard: I would say at Big Machines, I wish I'd done it sooner, because it was like I went from 70 to 20 in 2 or 3 steps. It was painful. It's always painful because all the employees were my friends, and they were good employees. It wasn't their fault that I just invested too early, so it's painful. - I'd say adapt, get efficient even quicker if you can. This economic cycle is probably going to last at least a few quarters. Getting efficient faster is one thing. - Probably the other thing I really learned, I'm actually talking about G2, because G2 just brings you up to speed. Somewhat similar last year, we raised $157 million. In total, now we've raised $257 million, and we're able to do great growth round last year. It became a unicorn. - Obviously also, with that, putting a plan to grow ARR even faster. Frankly, the reality for us also this year, we're not able to achieve that. We're not able to achieve our accelerated growth plan, so we are also working to get more efficient. So far, we've been able to do that by just essentially pausing hiring. Still some critical roles, but net net, keeping headcount, keeping spend flat, and not increasing our team like we'd planned at the beginning of the year. - The other one I'd like to talk about is flucht nach vorne. It's a German expression, flee to the front. Kind of an old Prussian military term, but the idea is when the bombs are dropping when there's chaos, the best thing is to do is flee to the front. the way you do that in business and what I'm doing now is you go out and see as many customers as possible. - That's also the other thing I learned at Big Machines. I became the head of sales. I said, hey, at the end of the day, if we can't sell—literally, it went beyond Stanford Business School Strategy theory. It's just like, I can't raise money—$100,000 in deals this month, we're going bankrupt, then we sell $100,000 deals this month. - I really learned to focus on customers and sales. That's something I'm doing in G2 to try to set an example. Last week, I went to the Dreamforce Conference in SF. We have 3000 software vendor customers. Many of them were there, and I met as many of them as possible. - Salesforce important customer partner, I met them. The week before that, it's Sastre. The week before that, it's HubSpot Inbound. This week, I'm going to Silicon Slopes. I'm going to Dublin, SaaStock, India. I visited our team there doing the G2 live events. - I think also really being the evangelist and not losing that positive spirit, going out, meeting the customers or prospect, evangelizing, because that's our job as founders. It's hard because on the one hand, you are depressed. You're not able to grow as fast as you want. Maybe you have to make some hard changes in your company. That's hard, so you feel sad, and that's natural. - You want to feel that, but then still have that positive energy to go out there, sell the next deal, evangelize. That's critical. It's that combination, and it's hard. It's emotionally hard to both be able to get efficient faster, and at the same time, go sell the market with more energy and passion than ever. That's what you have to do to succeed in a tough time. ➢ Don: Absolutely and very well said. In fact, one of the segments we like to cover on this podcast with all the founders we bring on is this point around being vulnerable in order to actually help other founders who are listening in, cope with some of the challenges with founding, scaling, and operating a business, particularly in trying times. - Just on that, as a segue, how do you maintain that level of optimism, go forward with a positive attitude, and look glass half full for your team? Do you have any tips or advice on how to maintain that level of positivity? - Godard: What naturally does it for me is just going into meetings with customers and going to industry events. When you're talking to customers—this might be the same for you, Don—it's just you're natural, your belief, your energy comes out about how you can help them. Getting out in the market, I naturally get energy from that. Just feeling and seeing customers, prospects, partners helps me derive energy. - Probably the other big thing I've learned is just taking care of myself. I wasn't so good at my first company. Honestly, for a while, I was eating too much, drinking too much to deal with all the stress and anxiety. I remember if you're in Big Machines, you're in a [...]. My wife and I had twins. They were born premature. This was in 2004, and my life honestly just felt overwhelming. - Like I said, I didn't necessarily deal with it well. The good thing I kept doing, I would at least go for a run every day. I found (for me) having a physical outlet. But then, I eventually also met a conscious leadership coach, Jim Dethmer, who started a whole movement around conscious leadership. I just learned so much from him. I found him very inspiring. - Also, I started working on meditation, breathing, and becoming more self-aware. I've worked with a coach ever since, a personal/leadership coach. Over the years, my self-awareness has grown. I'm more willing to accept the negative and the positive emotions. - Entrepreneurship is the ultimate roller coaster, the highs and lows. I'm sure you're feeling it. [...] fortitude. I think even more and the intellect and most entrepreneurs are smart. But at the end of the day, it's where the emotional fortitude that makes a difference. Having that ability to persevere, to energize your teams, your customers, can also be very rewarding. - There can be (for me) a lot of overwhelming anxiety and fear of failure—that's all real—and learning how to deal with that. It’s really important for me to be better at the journey, but hopefully also make it more enjoyable. ➢ Don: Just to distill that down for our listeners, physical exercise is important. Bringing on a coach to focus on conscious leadership. Would you mind just defining what that is? - Godard: It's like self-aware leadership. It starts with breathing and presence-ing. Once you're self-aware, they talk about being above the line when you're open to connection, open to creativity with your teams, or being below line. For me, that shows up as being angry, righteous, just freaking do this, I told you, and you can get that with your team. You can get mad at your customers, like, why don't they just buy and why are they being so difficult? - When you're in that below line state, I find I'm not very receptive to new ideas, I'm not very creative. The idea is by breathing, becoming self-aware, feeling your physical emotions, strains, you can shift back to being above the line, being open and creative, and being the leader we all want to be. That's the journey I've been on. I would recommend any entrepreneur. - Also, there's a website conscious.is. You can check it out. They have a great book on conscious leadership, and great online thought leadership. But also, if you can get a coach. In a lot of ways a coach to me is also more like a therapist, and just helps you better deal with your own emotion, because it will make your journey more enjoyable. I think you'll be more successful at it. I wish I had started doing that work earlier. ➢ Don: When do you think the right point is to bring someone on as a founder, CEO of a startup? Is there a particular inflection point in the business where that becomes most relevant? Is it relevant for pre-seed founders listening in, Series C? Can you pinpoint when the right time in your career was to have a coach actually help you develop and help you develop this muscle around self-awareness and conscious leadership? - Godard: I'd say the sooner the better. The reality is a lot of these coaches are also expensive. I also think a lot of board members and investors are also getting smarter about this. Investing in the health of their CEO and leadership team is worthwhile. But I would say, the sooner you can do it, the better. - I didn't do it until Big Machine's just having some success. We're probably up to $20 million revenue and maybe 100 people or so, but I wish I'd done it sooner. What I also did at that point, I joined YPO (Young Presidents Organization), which I also found to be an amazing experience. There's also a sister organization called EO (Entrepreneurships Organization). - Partly with YPO, EO, they have the pure forums where you meet with pure entrepreneurs, pure CEOs. YPO starts, obviously, for younger ones, EO is the same thing. If you get a pure forum like that, which in a lot of ways becomes like pure therapy. - Being an entrepreneur is a unique, lonely experience. I make the analogy. It's a lot like being a parent. Until you've been one, you can't relate. You know what I mean? I also find a natural bond to other entrepreneurs like you, Don, because we just have a common unique experience. If you can be in a forum through YPO, EO, there are other organizations that do this and get that peer support, peer mentorship. For me, it's been invaluable. ➢ Don: Definitely. That makes a ton of sense. That's something that we're trying to build. That sense of community, that's something we're trying to build here at Arc and candidly why we launched Startup Growth Stories to talk to more experienced startup founders and CEOs who have been through the pain and the roller coaster ride of building and scaling enterprise. That's ultimately why we're on this podcast with you today, so I really appreciate you sharing this with us. - Maybe double clicking on your time now at G2. Obviously, you've had a lot of success. It sounds like you're dealing with the macro like everyone else is. You've touched on a few different elements as we read up on your background and listened to some of your other podcasts around trust, authenticity, sales, team and culture, management framework. - I wanted to double click on a couple of those items, specifically on the first point here. Can you talk a little bit about the importance of trust? - Godard: Trust is absolutely essential and also what G2 is all about, because we want to help software buyers make trusted decisions, like gain trust through peer reviews on the right apps to buy. But I'll also say for your own company culture. - When we started G2 as a second company, we were probably lucky we had some success. We first sold the majority of Big Machines to growth equity firms and then sold to Oracle. We're in a bit of a luxurious position. When we were starting our second up, we were able to do the initial funding ourselves and felt a little bit less desperate. We had time to be more thoughtful about the culture we want to build. - The first five team members, my co-founders, we all worked together at Big Machines and we're like, hey, why do this? We thought a lot about culture. At that time, I met an entrepreneur, Chip Conley, also another Stanford alum. He'd written a whole book called Peak on how you build really trusted but also really inspiring cultures. He'd built a hotel chain in San Francisco called Joie De Vivre, really cool boutique hotels. Then he went on to become the head of hospitality for Airbnb. - Chip's a great entrepreneur in his own right, but he was very thoughtful about culture. He applied Maslow's Hierarchy of Needs to cultures and came up with this peak culture. He said, really, it's all heart-centered cultures, where the center of a great culture is heart and authentic caring and feeling, where your employees really feel like you care about them. - Your customers really feel that, your investors feel it. Then ultimately, you can end up with a culture where your employees are inspired. They find meaning in their work. It gives them a why, it gives them a purpose. That's really what we set out to do at G2. ➢ Don: That's really great. It ties back to your earlier point around management style, staying above the line, as opposed to below the line and motivating your team. - You actually made a really interesting point, and I didn't want to skate past. You talked around funding source and how that can impact motivations of the founding team and how you're setting up the business. Can you just unpack that a little bit? - Can you talk about the source of capital and fundraising? Obviously, you've raised a lot of capital from a variety of stakeholders across your three businesses or three-plus businesses, it sounds like. How does the source of capital impact your motivations, your incentives, how you're actually structuring the business? - For those listening today, how should they think about venture financing versus bootstrapping versus other forms of financing? How's that going to set them up for success and maybe for work-life balance, for stress, and for other other factors that are driving the business today? - Godard: The nice thing about bootstrapping, or in our case, we're able to sell finance for a while, is you can be more thoughtful about culture, really the product, and have more time to find that product/market fit. ➢ Don: Why is that? - Godard: Once you take on investors, rightfully so, there's a healthy pressure to deliver returns for them. Most investors, for their fund to be successful, they want returns three, five, seven years, so a clock starts. You do have pressure to grow faster. It can be wonderful like we've had great investors, but you have to be ready for it. If you do too soon, which in hindsight, I did with Big Machines, we over-invested, it leads to more pain, more dilution for the founders. - Frankly, vehicles like yours also weren't available 20 years ago, but there are other options now. If you can bootstrap for a while or even people are talking about Figma now, it has such an incredible success, $20 billion, but they didn't really raise a venture for four years and sweated for a long time just on getting the product right. - Sometimes, you just need the money. That's also the reality as an entrepreneur. We're all pragmatic, but if you can generate enough revenue, bootstrap for a while, keep full control, you have more ability to shape the culture, find true product/market fit, and decide when you take that venture fuel, which can be great. - If you look at most of the tech giants—Amazon, Google—they did all take the venture drug at some point. It's a steroid. If used properly, it's great. But a lot of times, we get that steroid, yet all that muscle and bones aren't ready for it. You break, so it’s a good thing to be conscious of. Absolutely. I like to draw analogies to jet fuel. It's expensive. When you put it in and you ignite, you can burn a ton of it really quickly and grow really quickly. But if the infrastructure is not there, it might not be the right time for your business or the right source of capital. - Godard: Also, it makes me think of Elon and SpaceX, Elon and another entrepreneur I admire. His first 3–4 rockets did blow up. In that case, literally, he almost went bankrupt. SpaceX and Tesla would have never been created if he wasn't able to self-fund it. That is one nice thing, and hopefully all the entrepreneurs get there. The second and third companies are a lot easier, I will say. ➢ Don: Is that purely because you can sell finance or there are other major learnings from your first endeavor that are just a no-brainer your second time around, thinking, I'm not going to make that mistake again? - Godard: I'd say both. One, you do have the ability to sell-finance. I highly recommend it. Get your product to product/market fit, shape the culture first before you take that money if you can do that. But secondly, yes, certainly lessons learned. Third, I would say the biggest one is people just believe you more. It's also somewhat perplexing, because your first company, everyone's like, I don't know if you can do it. - Once you have one successful exit, all of a sudden, it's much easier to recruit, find customers, find investors because you have this aura of success. Particularly in the valley, they say you accept failure, but people worship success. Once you've had one win, it's a lot easier to do the second, third, fourth, fifth. - Obviously, most people stop at some point. I'm still going, but to me, it's gotten more fun and easier every time. You're also just more aware of the dynamics and all these lessons learned the first time. It's also more fun the first time in a way. The first time for me was just adrenaline, survival, and learning on the fly, but I didn't know what I was doing in hindsight. ➢ Don: I can relate to that. Your first endeavor going into the second, it sounds like you bought your co-founders along for the ride. They came the second time around. Are these individuals still with you today? What inspired your decision to work with the same founding team the second time around? If you don't mind sharing, how do those relationships evolve? - Godard: It's actually different founders, but we're also working together. My Big Machines co-founder, Chris Shutts, actually wound up staying in Oracle after the acquisition. He and I are now building another company called Logic IO. He's really building it. He's a CEO, but I'm on his board, chairman. - He's building another one now. That's probably become the theme in our entrepreneurial family. We keep building new companies. Now I'm also in a position where I can help fund them and advise them. The four co-founders at G2 were my head of sales, Matt, and he was the most brilliant salesman I had. He was doing Big Machines. - Our head of product from Big Machines is Tim. Our head of design is Mark. A young engineer, Mike Wheeler, a young brilliant engineer became our CTO. I took the best people for the job to build the next company from the team at Big Machines. Tim Handorf, my co-founder, is still with me building G2. He's now at G2 Labs, our innovation lab, and doing a great job with that. - Mike Wheeler, the CTO, is also with Tim on wheels. They're doing the new innovations and new products at G2. Matt Gorniak, my co-founder, he's now a CEO of another startup, ThreeKit, where I'm the chairman investor. He became the CEO of his own startup. Mark Myers is the co-founder of another startup CarrierSource, where I'm also an investor and adviser. - Because we have found some people, a lot of founding types, once you get up to 700 employees and you need process and a lot of "boring big company" stuff from the perspective of an entrepreneur. Some men prefer to go do their own thing. Also I love that now and probably have to be a part of my next chapter, helping our "entrepreneurial family," our alumni, build their own businesses. ➢ Don: It seems like you've built quite the network of founders across your entrepreneurial journey. That's got to be really rewarding to be able to ultimately give back to folks who have been major contributors throughout your career. - Godard: It's fun and natural. ➢ Don: Absolutely. Can you talk a little bit about that scale up? We discussed setting the rails and getting started. I'd like to understand, you mentioned scaling up to hundreds of employees. Now you're at the point where you're pausing, hiring for the time being as you monitor the macro. - Getting to that point, just talk about, what are some of the fundamental changes? Maybe as a founder, as an operator, how are you viewing the business differently from this initial tribe, this initial family on your founding team to scaling up to hundreds of employees? What are some of the major changes for you as the founder of the business that are most notable? - Godard: Reid Hoffman, the LinkedIn founder, in Blitzscaling, he creates a really nice model where how a company changes. At the beginning, it's more like a family or a tribe, probably 1–50 people. That's actually a fun time to be the founder, CEO, because you know every person on the team. Frankly, you can almost make every significant decision yourself. You're involved in everything. - Those first 15 employees, also at some point, you hire managers, but they're only managing one team each. You have one head of sales, one head of marketing, one head of product engineering, but still, frankly, pretty easy to manage, and you know everything. - For a lot of entrepreneurs, that's maybe the most fun part. What gets hard, what I've been learning, still learning how to let go and make less and less of decisions, and then it becomes all about building a leadership team. - I just went through the last couple of years of G2, where I brought in all new leaders. Our CRO, Mike Wheeler, came from LinkedIn. He was leading the enterprise marketing solutions and running a multi-hundred million dollar business already. - Our chief product officer, Sara Rossio, came from PowerReviews, but she builds large scale product teams. I brought a new CMO, Amanda Malko. She'd also been at that next scale. She joined us from MailChimp. We just brought in leaders that had been leading scale teams. That's also hard, but also fun as an entrepreneur. - What I found really helpful there was the No Rules Rules book by the Netflix founder, Reed. He talks about this idea of having informed captains for decisions. Really, that's hard for you as a founder. That means you let go of a lot of decisions and rather just determine who's the informed captain. You make less and less decisions yourself, and you give more and more power to your leaders to run the business more and more. - What's hard and frustrating as a founder sometimes, we think we know how to do everything best, and maybe we do. At the beginning, you're determining the font on the website, the color on the logo, the pricing in each package, the discount on every deal. Actually, you're really good at it because your brain has all the context. - You're probably better at all of those decisions than anyone else, but obviously at some point, you just can't make them anymore. You break, it breaks. That's what's been hard. That's where the coaching, the conscious leadership, is helpful and just totally changing your style. Really, where it just becomes about is you putting the right leaders in place, aligning them, and still being the evangelist to spirit leader, but making less and less of the actual decisions yourself. ➢ Don: How do you know when the time is right to cede control, to delegate out that responsibility to your team, to bring on that seasoned operator? When do you start feeling that you have too much on your plate and you need to create a more scalable, delegated approach? - Godard: I think around 50 employees you probably need your first more senior leader that is good at managing multiple teams and being a manager of managers, which is even a whole other game than just managing one team and somebody that can really help you lead the company. - Certainly once you get to hundreds of employees, then it becomes absolutely essential. Your direct reports are all leaders first and doers second, because starting at the beginning, you hire generalists or are super motivated. You want all doers, and then at some point, your leaders have to be leaders, not doers. - Certainly, by the time you get to 500 employees, that's probably where it broke for G2. It's around 300–400. We haven't been really conscious about scaling leadership, and things alignment just started breaking. That's typical. Like I said, in Reed's book, he talks about from tribe to village, to city, to nation state, and just like the government, it has to scale. ➢ Don: Absolutely. Thanks for sharing that incredibly insightful looking across the full spectrum. Thanks for sharing all of the insights across your full career from your first endeavor out of Stanford through present day. A lot of incredible learnings for our listeners who are in their first or second startup to learn from someone like you. - Just maybe reflecting back across the full entrepreneurial journey, if you could share with us, in your mind, what makes someone a successful entrepreneur? What sets them up for outperformance in the market? - Godard: It's passion and perseverance, and that emotional fortitude. I've heard somebody say this. Entrepreneurship, the successful ones, it's yes in the brain, but it's more in the gut and the heart. Really having that emotional strength and fortitude, so you can persevere and you can keep bringing that passion even in tough times. - It starts with having a vision you really believe in. I mentioned Elon earlier. He really wants to make man a multiplanetary species. He almost went bankrupt. I don't know if you all know that part of his story. But in 2008, that was the last big financial crisis. All the mortgage industry, finance crisis, everything was blowing up. - Tesla was almost bankrupt. SpaceX was almost bankrupt. Elon was bankrupt. He's sleeping out on his friend's couches, but he persevered because he had so much passion and belief in the mission of his businesses. That's what's important with starting a company, that we really believe in it and we're going to do whatever it takes to ultimately make it succeed. We find a way. - The great entrepreneurs do that. They manage to keep a positive emotion. They manage to keep their passion and keep inspiring their teams and employees even in tough times. This environment right now, Don, is challenging for all of us entrepreneurs, but also it is a great time for us to prove our mettle. We all came through and to that success. - What I've also always seen, these downturns always end. The sun always returns. You got to persevere and you got to be there. You can be there and be stronger, and then you can really come out of it even better. - Don: Inspiring. I'm reading Power Play by Tim Higgins. I don't know if you've read this book, but reading about Elon's story, you hit the nail on the head around perseverance. Now, hearing it from you and your entrepreneurial journey, is inspiring. - I really appreciate you taking the time to join Startup Growth Stories today and share that story back with our listeners. Thanks very much for your time, and I'm looking forward to sharing your story with the world. - Godard: Thank you, Don.