Zachary Bookman on OpenGov, Venture Capital and a $1.8 Billion Sale

OpenGov co-founder and CEO Zachary Bookman joins Harry Stebbings to discuss selling software to governments, fundraising, board relationships and the company's sale to Cox Enterprises. Bookman retains a substantial stake and continues to lead OpenGov; both speakers also invest in private companies.

Bookman describes a long early 'wilderness' period. OpenGov started selling transparency and reporting software around a year in, but deals of $5,000–$10,000 were too small to support an expensive enterprise sales process. He says it took roughly five years for the business to begin working properly.

Selling enterprise software requires aligning many people inside a customer organization, which takes sales, marketing and implementation effort. Bookman argues that prices must support those costs unless a company can achieve an unusually efficient product-led motion.

He believes major enterprise software vendors increasingly need to pursue large contracts and charge according to customer pain and value delivered. He recounts a purported Palantir negotiation as an illustration but acknowledges it may be apocryphal; the interview does not verify the deal.

Government can be a slow and unfashionable market, but Bookman sees durable customer relationships as an advantage. He says OpenGov's gross retention was in the mid-to-high 90% range. That is a company-reported metric, not proof that every government software company has the same economics.

He distinguishes gross retention, which excludes expansion, from net retention, which includes upsells and cross-sells. He says some government-software providers achieve very high gross retention, while accepting that their growth may be slower than the hottest software businesses.

Bookman argues that durable growth can compound into a large company even without extreme early growth. He points to competitor Tyler Technologies as an example, citing revenue and market value figures from his recollection; those are observations at the time, not current audited figures.

He warns that founders and venture funds can have different objectives. A multibillion-dollar exit may be meaningful for a founder and customers but not move the returns of a very large fund seeking a power-law outlier. His investors include large venture firms, and his account reflects his experience with those incentives.

He advises investors to be honest about the attention they can give rather than promise every founder extensive mentoring. Bookman says brief moral support from investors mattered to him more than some lengthy strategy meetings, though he also valued advice from co-founder and chairman Joe Lonsdale.

Brand-name investors can help recruit talent, attract press and reassure early customers, he says. At the same time, he admires founders able to bootstrap because they can retain more ownership and avoid some financing conflicts. He later says OpenGov itself probably could not have bootstrapped its intended acquisition strategy.

By 2019 OpenGov had overspent and struggled to raise; Bookman recalls receiving one term sheet after about 30 rejections. He says he changed course toward spending less and owning more, and the company began cutting before the pandemic.

The financing was at approximately $210 million pre-money, he recalls, with revenue in the $20 million range and heavy cash burn. He contrasts that valuation with the later $1.8 billion transaction; the former was a financing valuation and the latter a sale price, not a calculation of investor return.

Around that period OpenGov acquired a permitting and licensing company and broadened its product suite. Bookman says selling more products through the existing sales and deployment infrastructure improved average selling prices and economics. He reports roughly $90 million of transactions over about 45 days, without detailing every transaction.

He regards acquisitions as a way to buy product expertise and accelerate innovation, not only revenue or customers. Government finance, procurement, permitting and public works have complicated rules; finding a team that has already spent years learning those needs can save time, after which OpenGov invests in the product.

An early disagreement with the board concerned his ambition to build a network of governments. Marc Andreessen pushed him to prioritize revenue rather than just the number of customer logos. Bookman now believes a useful tool must come before a network effect can sustain the business.

In 2015–16, growth slowed while spending remained high, and he felt the board's confidence weaken. He recalls revenue growing from $200,000 to $2 million, then $4.5 million, $8.5 million and around $14.5 million. Stebbings notes those growth rates were still significant; Bookman says they did not justify his spending or meet expectations.

They discuss high startup valuations and the dilution that later financing and employee compensation can cause. Bookman says a headline valuation does not by itself determine an investor's multiple and admits the challenge of judging expensive, fast-moving opportunities.

For Bookman, product-market fit means making a customer successful repeatably and profitably. OpenGov's first 100 small customers appeared promising, but he says the economics were upside down. In its vertical, he believes a suite of products can justify a higher average sale than a single small tool.

Building that suite while continuing to sell the existing product is hard: a company needs revenue and momentum while developing the next offering. Bookman advises founders to sell energetically, get in front of customers and iterate with them repeatedly rather than assuming they know the answer.

He also advises narrowing the ideal customer profile. He recalls wasting time pursuing the UK and Australia before recognizing OpenGov's focus was US state and local government. As the team narrowed its target further by customer characteristics, he says growth improved.

Adding products creates internal resistance as well as opportunity. Bookman says leaders must keep the existing business operating while making deliberate bets on adjacent products. He regards the timing and execution as management choices, not something automatically solved by more funding.

Maintaining morale requires energy, he says, even when leaders face personal hardship. His mother died during a difficult period for the company; he recalls grieving while reassuring employees. He also says he repeatedly doubted whether OpenGov would work after leaving a legal and foreign-policy career.

The earliest rounds were comparatively easy, helped by Lonsdale's network, but Bookman sees that as both blessing and curse: the company overspent on sales and marketing before the product was ready. He credits investors who backed OpenGov during difficult years.

As the company matured, he became less interested in raising capital. He argues that fundraising and valuations do not themselves return money, and that overcapitalization can create a larger preference stack ahead of employees and common shareholders. He says tighter spending helped the company reach positive cash flow and EBITDA.

Looking back, he would move faster on product decisions, hiring and removing people who were not working out. His view is that enterprise software rewards intensity and focus, though he recognizes that early learning took time.

Bookman says a board's central function is governance, including representing stockholders and hiring or firing the CEO. Founders should listen to directors but form their own judgment: he recalls equally experienced directors giving opposite advice, leaving him responsible for the decision.

He admires bootstrapping but doubts OpenGov could have financed its longer-term acquisition plans that way. If raising again, he would choose a strong investor and have a candid conversation about who runs the company. He praises existing investors for supporting OpenGov through difficult periods.

In February, OpenGov was sold to Cox Enterprises at a $1.8 billion valuation. Bookman describes Cox as a long-term family-owned business familiar with regulated markets and customer acquisition. He viewed its backing as a way to pursue the company's mission and future acquisitions.

The first proposal was $1.5 billion after he had suggested a higher figure. Bookman says he initially opposed selling at that price and feared the board might differ. The company studied alternatives, hired advisers and negotiated for about five months before reaching a deal and management incentive arrangements.

He estimates revenue was around $110–115 million during price negotiations and says it soon exceeded $150 million. The approximately 15-times multiple he mentions refers to the transaction price relative to revenue at that time; it is not a profit multiple or an investor's realized return.

The deal cashed out existing investors and employees' vested equity, while management reinvested alongside Cox. Bookman says equity plans continued, a new restricted-stock pool was established and employees had defined future liquidity options. Cox also received a later call right; the exact exercise terms are governed by the transaction documents, not this summary.

Bookman says he sold 49% of his vested equity and retained a majority, without disclosing the dollar proceeds. The liquidity reduced his personal anxiety after much of his net worth had been tied to OpenGov, but he says he remains committed to the company and shares in its future outcomes.

He disagrees with the idea that founders must stay financially insecure to remain motivated. He recalls a director opposing a relatively small personal secondary sale. In his view, some security can allow an entrepreneur to take a longer-term perspective; Stebbings suggests possible dollar thresholds, but both acknowledge circumstances differ.

The sale process took much of six months and was exhausting. Bookman recalls becoming ill during negotiations, a delayed closing and spending much of a planned holiday on the phone. He says the closing felt like intense execution rather than an immediately celebratory moment, and he spent months processing it.

Stebbings worries about weak venture returns from the 2021 vintage. Bookman, himself a limited partner, shares concern about long waits for distributions and argues that companies and funds can take much longer than people expect. His 15–20-year characterization is a personal generalization, not a verified timeline for every fund.

Bookman says some of his own early investments performed well, leading him to write larger checks that sometimes went nowhere; he alleges he encountered instances of false company numbers without identifying them. He now places more weight on actual distributions and capital returned than on marks alone.

After the transaction, he says he put money into money-market funds, paid down his mortgage and considered whether he was too exposed to private investments. He observes that broad public indexes can be hard to beat over long periods. This is a description of his choices and opinion, not individualized financial advice.

Asked about difficult investor meetings, he recalls an early pitch to Peter Thiel and a later meeting with Michael Moritz that left him feeling dismissed. These are his recollections of interpersonal encounters, not independently established accounts of the others' intent.

He declines to state the dollar amount of his personal cash proceeds, choosing a charitable donation in the interview's question round. He describes Andreessen as a demanding director focused on governance and investors' interests, and recounts a board meeting where Andreessen left at its scheduled end.

In quick-fire questions, Bookman values instinctive judgments but says larger organizations also require thought and balance. Becoming a parent has changed his life more than advice prepared him for, and he has had to accept new limits on travel and time.

He sometimes wonders what pursuing an IPO instead of selling would have been like, though he remains convinced the sale was a good decision. Asked why large private companies do not go public, he predicts that liquidity needs will eventually drive listings, perhaps in 2026; the timing is speculative.

He has changed his mind about relying only on executives who have done the job before. He now sees more value in developing internal talent and hiring motivated people who want to learn, while recognizing that experienced leaders can also contribute.

Asked to choose an AI investment at hypothetical valuations, Bookman leans toward xAI and recounts another investor's scenario for OpenAI. The probabilities and future acquisition outcomes are personal speculation, not established facts or investment recommendations. He discloses that he is an LP in a fund investing in some such companies.

Bookman says he was prepared to speak about a difficult childhood and a mother with severe alcoholism. He reflects on how insecurity and a desire to prove himself may have shaped his drive. Financial security has helped him feel safer, he says, without automatically producing happiness.

Despite that security, he still works intensely and feels responsible to employees and customers. Stebbings describes his own ambition as doing work he is proud of with people he loves. They discuss the stimulation and social connection that can come from work as personal reflections, not medical findings.

Bookman says he made a mistake in making OpenGov fully remote and distributed in 2020 and is bringing people back to offices. He believes in-person collaboration helps his company and says he told employees he had been wrong. His assessment is specific to his experience, not proof that remote work is inferior everywhere.

Stebbings thanks Bookman for the conversation and their new friendship; Bookman says the feeling is mutual.