g2 godard abel million dollar staircase 2x1g2 godard abel million dollar staircase 2x1

Godard Abel’s company G2 built a $1 million staircase, similar to the one pictured here, in the months before it laid off 10% of its staff and applied for a PPP loan.

Walker Sands Inc.; Suzanne Kreiter/The Boston Globe via Getty Images; Samantha Lee/Business Insider


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  • Chicago-based software review company G2 raised $100 million in venture capital and had big growth ambitions. It spent like a well-funded company, undergoing a $6 million office renovation and purchasing a domain name reportedly once valued at $1 million.
  • But its ambitions surpassed its revenue growth, and in December 2019 the company laid off 10% of its workforce. The company applied for a Paycheck Protection Program loan to cover its payroll expenses during the coronavirus shutdown. 
  • The company received a loan between $5 million and $10 million, according to the US. Treasury. In June, the company said, it returned the loan. On June 30, it laid off another 5% of its employees.
  • Business Insider spoke with 11 current and former employees who said the company appeared to be spending like it would double or triple its revenue in 2019. Instead, its revenue grew just 50%, putting the tech startup in a financial squeeze which continues to this day.
  • Visit Business Insider’s homepage for more stories.

Connecting the fifth and sixth floors of G2’s new office, situated in the Chicago Loop, is a giant wooden staircase with stadium-esque platforms designed to seat the quickly-growing company during its increasingly populated all-hands meetings. Bright red cushions and safety tape accent the large structure, matching the color scheme of the company’s new logo, reimagined and truncated from its clunkier, original name, G2 Crowd.

The stairwell, elegant but formidable, was built in 2019 and signaled that G2’s scrappier early days were past. It cost $1 million of a $6 million renovation budget to build.

The structure had only been in use for a few months in December, when G2 staffers climbed to the second floor and learned that 10% of the 400-person company would be laid off and disinvited from the annual holiday party the next evening. 

“Optically, looking back, it does not look good,” one former employee told Business Insider. The company would later dispute the amount paid for the stairway from its own pockets.

G2, a software review website and one of the most successful startups on the Chicago tech scene, made another decision not long afterwards whose optics also looked questionable in hindsight. 

As the coronavirus was tanking the US economy, the company applied for and received a small business loan as part of the federal Paycheck Protection Program to cover some of its payroll costs. The PPP money was earmarked to help cash-strapped businesses keep their workers on staff; and if they could avoid layoffs, the loans would be forgiven.

G2 is one of roughly 10,000 companies backed by venture capital and public-equity firms that participated in the government’s emergency loan program. The startups that received money are at the center of a debate about whether venture-backed businesses, which are partially owned by their VC investors and which are designed to pursue inherently risky business models, have taken away money intended to help mom-and-pop employers, like restaurants and dental offices, stay afloat during the coronavirus pandemic.

As the case of G2 shows, the answer is not always black and white.

G2, which has raised more than $100 million from top-tier venture capital firms like IVP, Accel, and Pritzker Group, was already struggling by the time the coronavirus began to spread across the US. With its free-spending history and missed growth targets, G2 had all the signs of a company that leaned on the PPP program to support an unsustainable growth model.

As it turns out, G2 returned the government money — which totaled between $5 million and $10 million according to the government’s database — in June, following Business Insider inquiries into the loan. Later that month, G2 laid off another 5% of its staff, even as it said its business was showing signs of resilience and better-than-expected performance amid the pandemic.

Business Insider spoke with 11 current and former G2 employees to get a first-hand look at the financial decisions made at the company leading up to the coronavirus crisis. Their comments, shared on condition of anonymity because they feared retribution, reveal a pattern of high-risk, low-payoff spending and leadership missteps that left the company ill-prepared for the coronavirus curveball — a situation that describes many other venture-funded startups whose workers are increasingly adding to the country’s unemployment rolls.

A photoshopped image of the CEO ringing the NYSE bell 

G2 was founded in 2013, but its hyper-growth drive began in May 2018 when cofounder Godard Abel took over as CEO with a mission to take the company public. The IPO goal was emphasized to G2’s staff at every all-hands meeting, where Abel would display a photoshopped image of himself ringing the bell at the New York Stock Exchange.

During Abel’s first year in the CEO job, G2 made two acquisitions followed by bumpy integrations. It also opened two international offices. It was all in line with the growth-first obsession that defined many startups at the time.

“Everything was based on vanity metrics: over-hiring to hit milestones, getting to five cities,” one former employee said. “They really pushed and bragged that we had 400 employees in multiple countries.”

G2 is a review site for enterprise software products, where chief technology officers choose expensive software based on customer-generated feedback, like a restaurant gets on Yelp.

Revenue comes from customers like IBM and Salesforce, who pay for click-throughs to their websites. G2 also sells research reports similar to those of industry data firms. IBM, G2’s largest client, pays millions of dollars a year for the startup’s various services.

But G2’s big dream is to become a proper digital marketplace for business software, as Amazon did for books. To get there, the company invested heavily in hiring and marketing in 2018 and 2019 before hitting a financial squeeze. 

A new URL with a 7-figure price tag sunk G2’s traffic

When G2 outgrew its long-time home at Chicago’s Civic Opera House, it signed an 8-year lease on a 66,000 square-foot space down the street. Crain’s Chicago described the move as a “drastic expansion” in response to a “hiring binge.”

That was when the million dollar staircase began. 

G2′ new marketing chief, Ryan Bonnici, who joined the company in December 2017, pushed for the construction of the voguish staircase, touting it as a draw for Chicago tech talent, several sources said.  

With its showpiece steps, G2 had something to match other buzzy Silicon Valley firms like Square and Asana, and the company could lay claim to young Chicago tech workers who might otherwise be drawn to jobs at out-of-town tech companies with big local offices, like Google or LinkedIn.

A G2 spokesperson, who declined to give their name, said part of a renovation allowance from the new landlord paid for the staircase, which also helped G2 avoid additional construction to integrate its two floors.

One of the marketing team’s other big purchases was a new domain name. Having changed its name from G2 Crowd to G2, the company wanted a URL to match,  and purchased the G2.com domain name. The URL was originally priced at seven-figures, two former employees said, though it may have been lowered during the negotiation process. 

But, as is common when you switch domain names, the company’s visitor numbers temporarily tanked when it launched the new url in April 2019. The company lost 35% of its traffic overnight, one former marketer said, although it eventually returned.

Lauren Decker, Vice President of Brand and Product Marketing at G2, defends the purchase. 

“It was a pretty critical investment for us to have a domain that’s easy to search and to find, and having a 2-digit domain makes it easier to remember,” she said, describing the cost of the G2 domain name as “below market price.”

Revenue declined with employee morale

The exuberant spending might have gone unremarked, but revenue growth slipped in 2019 following what insiders described as a leadership change that sank the sales team’s morale and sent some of its leaders packing.

In the four years before 2019, the sales team had doubled or tripled its revenues from the year before, according to former team members. But in 2019, G2’s revenue grew just 50%.

Former members of the sales team pointed fingers at cofounder Matt Gorniak, who rejoined G2 as chief revenue officer in May 2018 and served until May 2020. As with the marketing team, leadership set ambitious hiring and performance goals that many team members found untenable. 

The company admits some missteps.

“While we won’t discuss our sales targets or achievements externally, we will say that while the percent growth rate did not meet our stated goals, we are incredibly proud of our team’s performance,” the G2 spokesperson said. 

“Things are going great at G2. Stoked that the momentum is strong and now accelerating with Mike Weir joining as my successor CRO,” Gorniak said in an email to Business Insider when asked to discuss his tenure at the company. 

Venture capital changed its tune on PPP

Without the setbacks of 2019, G2 might have been well-fixed financially to continue on a strong growth path with no need for government help.

The company raised $55 million in a Series C led by IVP in October 2018, bringing its total funding to $100 million. That round valued G2 at nearly $500 million, according to TechCrunch.

But by March 2020, with its last fundraising more than 15 months in the rear-view mirror, the coronavirus pandemic came barreling down to test G2’s resiliency — and put its recent management moves under scrutiny.

When G2’s PPP loan was approved, Abel told staffers it would keep everyone’s jobs safe for around six weeks, two recent employees told Business Insider.

“We were pretty uncertain and fearful of how that was going to affect our business,” Decker said on June 10, about the decision to apply for the loan. 

Despite its initial relief, G2 returned the loan in early June. The business performed better than it had expected, Decker said, and new government guidance led it to reconsider its eligibility for the funds. 

In its further cost-cutting in response to the virus, it pared vice president and senior leadership’s pay by 15% to 20%, Decker said. Senior leaders will also forgo their bonuses, the G2 spokesperson said.  

Then on June 30, the company laid off 17 people, or 5% of its remaining staff.

“The largest firms in venture were very scared that the optics would look bad for them”

Had G2 kept its PPP loan, it could have potentially averted the layoffs for some weeks. But would that only have delayed an inevitable need to cut staff going forward? In that case, G2 may have had to repay the loan.

The very nature of a PPP loan, with its restrictions on layoffs, is in some ways contrary to the belt-tightening that many VCs have advised their portfolio companies to undertake in order to conserve cash and survive the downturn caused by the pandemic.

G2 investors Jules Maltz from IVP, Arun Matthew from Accel, Tim Kopp from Hyde Park Venture Partners and Adam Koopersmith from Pritzker Group did not respond to requests for comment about G2’s PPP loan filing or return. 

Krishna Gupta, founding partner at venture firm Romulus Capital, said all of the companies in his portfolio applied for the program initially, and believes the program did save jobs, but some of the companies gave the money back once they realized they could get more capital from their late stage investors. 

“The largest firms in venture were very scared that the optics would look bad for them in taking a loan — that it was, in the public discourse, for Main Street and not for tech or Wall Street,” Gupta said.

As of June 30, the PPP program has distributed around $522 billion to more than 4.9 million businesses, the Treasury said. Many venture-backed companies received a portion of those funds, but many also gave the money back.

Like many businesses, venture-backed companies faced a lack of clarity on whether they qualified. Companies like G2,with fewer than 500 employees, technically qualified as a small business, but new guidance issued by the US Treasury in late April stipulated that companies with access to outside capital, such as deep-pocketed investors, should not take the loan.

“Every startup we heard of sent it back,” said Jarrett Streebin, CEO at EasyPost, which received and returned its loan. “It would have helped, but the guidance on it was so weak, we were opening ourselves up to a lot of liability in the future, and liability that would be tough to measure because of how loosely some of the stuff was written.”

Meanwhile G2, now seasoned in the art of making do with less money than expected, has a new strategy for weathering the coronavirus: taking things slow. 

“Right now in this particular climate, especially with the recession and the pandemic still leaving a lot of uncertainty, we have slowed our hiring,” Decker said. “Going into 2020, our focus has been on smart growth and how we ensure we get the most return on investment out of every program we run.”

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