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Scaling Up: IPOs, Takeovers, SPACs, and all events in between. Hear from Reggie Aggarwal, Founder and CEO of Cvent
Podcasts
5 Dec 2022
Scaling Up Reggie Aggarwal Cvent (3)

Season 6, Episode 8 with Reggie Aggarwal.

 

Experiencing three recessions, an IPO and a SPAC, Reggie Aggarwal has seen it all. In this episode he discusses key lessons for business operators to maintain sustainable growth in these uncertain times.

 

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Podcast Transcript

Ed (02:31)
Reggie, welcome to the Scaling Up podcast. Absolutely a treat to have you on this show. Given the longevity of you as the leader of Cvent and the longevity of the Cvent story. I’m keen to lean into this and take a really wide lens over the last two- and a-bit decades, not many CEOs I can think of have seen three recessions, bull markets, capital market crashes, IPOs, SPACS, you name it, you’ve seen it. But let’s level set. Let’s go back to the very start and hear the founding story. I guess you were a successful corporate lawyer, you were running a CEO networking group and you were facing some pain points and the idea of Cvent was born.

Reggie (03:13)
Well, I appreciate the first of all, the introduction. So, yeah, there is a lot of lessons. So, maybe just quick on kind of starting Cvent, what I always recommend to entrepreneurs is when you start a business as simple, find a pain point and create the aspirin. And I was actually a corporate lawyer Ed as you know, and what happened was I was running a non-profit, which we were organizing events for CEOs it was just bringing kind of the community together. This is around 1996, I’m from the Washington DC area. Everyone’s kind of getting together just to get to know the community. So, I was organizing these events and I was doing it kind of myself, and I was basically the meeting planner, I was the secretary and the executive director at the same time. So, I very quickly figured out the pain point and created the aspirin, which was Cvent.

Once you have the idea, you kind of just go full bore in it and that’s what I did. I would always tell people when you believe in something you going to put everything into it. And that’s what I did. I quickly pivoted and started the company and few things. We had a rough start as you know we grew kind of organically, I funded it mostly myself. My parents gave me kind of a little bit of start-up capital. I lived at home with my parents. I actually ended up living at home until I was about, I’m embarrassed to admit this, but probably until about 33 or 34 years old I lived at home just because I was running the business saving money and started the business self-funded grew to about a half a dozen of us, found some like-minded folks that believed in the space and then we grew slowly that a billion dollars of venture capital went in our space.

And this is again now in 1999 when I started it. So, by 2000, the dot com boom was in full swing for some of your listeners. They might not have been around then, but it was truly the advent of the internet and technology really started to boom, in particular software. And so, I started the business. A billion dollars of venture capital went into our space, which at the time was called “online event registration” because we were doing organizing and managing and marketing events on behalf of organizations. So, that billion dollars went in and quickly we decided we had to raise money. So, I raised 17 million with about a hundred investors, which I don’t recommend because it’s not easy to get angel investors. I had some institutional money, some VC money, but a lot of them, a lot of CEOs from the top companies back then probably about 20 CEOs of public companies.

And so, we raised 17 million and then we kind of grew from six to 125 people in a year. And again, we’ve seen a lot of scaled up companies now, but back then that was pretty quick. Things went good, we were growing the business, getting customers, put out a product, getting a lot of press. Then the perfect storm hit and the dot com meltdown and September 11th which was certainly a tragedy across the globe and in particular in the US. And then the reality hit we had blown through 16.6 million of that 17 million and we are about on the verge of bankruptcy. So, I cut 80% of my staff. That was my first recession to experience as a professional. We cut 80% of our staff and it was an extraordinarily difficult time. But what I realized is, grow more on the way down than you do on the way up.

And that’s definitely a big lesson that I learned. Another lesson I learned is that the most important thing is your people. So, I always say the DNA of your company is your people. That’s really your differentiator because you can’t get through these kind of difficult times as an entrepreneur unless you have a team around you that supports you. So, anyways, we fortunately didn’t raise any more money, just said we’re going to hunker down and we’re going to focus on three things, which is hire the best people, build the best products and listen to our customers. And that culture, that kind of mantra is the same mantra that we still believe today. So, 21 years later we have the same mantra because we slowly started growing, we didn’t raise any more capital and then ultimately, we grew profitable cashflow positive. I remember then what ended up happening is that we slowly started build the business up and we really didn’t raise any outside capital until we went public.

And that was in 2011. And again, along those ways there were lots of lessons learned. If I had to pick a couple of them, I would say the DNA of your company is your people, try a pain point and create the aspirin. And then I would say focus. Too many people try to do too many things, become the best in one area, learn the lessons there, then go to the next and then go to the next. And I think too many people try to go too fast in too many areas instead of becoming the best in one thing. And then once you become the best in that, then that’s when you start doing other areas and then you can move faster later on because you have that foundation.

Ed (07:42)
You’ve touched on probably five or six of the topics that hopefully we can work through over the next half an hour. Maybe just to give people a sense of the size and scale of the business. As you say 22 years later, over $600 million of revenue making over a hundred million at the bottom line, have been profitable as you mentioned for a long time, which in this day and age is a rarity. Maybe we can touch on the product evolution over time and something you mentioned that we can maybe pull out is getting good at one thing and then layering in product over time to make sure that you’re servicing the market. You’ve always talked about customer centricity and that customer ultimately being the CMO, the chief marketing officer of the companies that you are dealing with. Cvent today if there’s a large-scale conference, the chances are that you are servicing that conference. It’s obviously taken a long time to get here.

Working through product evolution, how have you thought about layering in that utility for the customer over what has been a long journey?

Reggie (08:48)
When you’re looking at the evolution of your product, like I said, it literally starts again with the first thing, which is find a pain point, create the aspirin. And that’s what we did. So, we didn’t think so at the time, but we were a point solution, different times then than it is now because we are certainly one of the earliest SaaS companies because when I started the company in 99, we were a SaaS company at the time it was called ASP, it was certainly one of the early generations. So, what I would say is once you find that pain point, what we did is we were kind of a point solution. We solved a specific pain which was online event registration. And I’ll give you a couple thoughts on that. Again, it’s not just coming up with a product, it’s also looking your GTM your go to market strategy.

So, what we did is we are very focused, and we did online event registration domestic, we didn’t focus globally, we just said domestic we actually used to have a phrase which is it’s just as sexy to sell in Buffalo as it is Paris. And there’s a lot of people in Buffalo that still haven’t bought our product so, forget talking about Europe and so forth. My view is you don’t actually go international till you’re close to a hundred million, just a lesson, so many people go at 20 million I’m like you’re going to struggle, because it means your core business isn’t big enough. So, anyways, we started with the point solution and then once we became a market leader in that, then we started to evolve and then we started adding other solutions that our customers were telling you. It’s pretty simple, if you just listen to your customers over time, they’ll just tell you everything to do.

Now you have to add stuff to it because customers give you a good vision. Sometimes they don’t completely, but they certainly will give you 80/90% of your roadmap if you just listen to them and it becomes a low risk if you have a good mechanism to listen to them and build what they’re asking for because they’re the customers and they again know what their pain points are. Then what we did is we kind of eventually evolve from a point solution. We added more and more products till eventually we became a platform. That took us a long time though you don’t just build a platform out of the gate. If it’s a true platform, it takes in my view years to build, especially in our space. And then we’ve had a bunch of pivots as you know, then the pandemic hit. And so, 95% of our revenue was affiliated with in person events, live events in person.

We had to pivot and develop a virtual product and it took us about six months. We were able to pivot to add that as part of our platform. And again, when it goes to what your product strategy is for us, the platform was everything. So, it took us longer to develop our virtual than most other companies because we had to integrate it on top of our existing platform, which just complicates it. But it’s the right thing because it’s integrated built with the same technology and we continue to pivot, which I’m happy to discuss, but historically point solution evolved to a platform over time. It does take a while to do it again. What we did is focused our GTM strategy on kind of domestic and then we did mid-market, we didn’t go into the enterprise until about 10 years after I started the company because mid-market is different than enterprise features. When you pick that product and pick the right target segment, become really good in it, expand in those different segments, then start developing also other products to add. That was kind of what we did, and it worked really well for us.

Ed (11:57)
The two things to call out probably from my end are 2008, you’re talking about becoming a platform and one thing you did was layer on this two-sided network, which at the time was called the Cvent Supply Network is now called the Hospitality Cloud, which basically connects event planners with hotels and other venues. And over the last 15 years has been able to add 300,000 venues I think or close to, and it creates demand for these hotels. And so, layering on this platform utility has been really important in terms of developing this platform over time.

Reggie (12:33)
Look when you build a product and scale it, and one of the things I didn’t answer in your question by the way was scale, so, right now we’re about 4,800 employees around the globe. We have about 21,000 customers, corporate organizational customers. And so, again, we now operate at scale and we’re all over the world hop offices in many countries, but our two biggest offices are in New Delhi, India and then our headquarters is in McClain, Virginia which is right outside of DC. But having said that, one of the things we did to expand our point solution to become a platform as you mentioned was to create a marketplace. So, we connect meeting planners with venues. What I like to say to people, it’s kind of like bookings.com and when you’re looking for a venue, we’re that for meeting planners. Just to put a perspective, in 2019 we did about $18 billion worth of business. It’s called request for proposals. I won’t get into the detail, but $18 billion worth of volume went through our system. The first nine months of this year of 2022 we’re at about 75% of what we were in 2019, which was our historical high. So, we’re on a good track because every quarter’s getting better and better. It’s starting to grow.

But getting back to the main thesis, it was trying to not only solve a customer pain point, but again to create that platform because in the end we believe that the companies that truly are able to scale have a platform because customers want one throat to choke across their whole process in a particular sector, which is in our case event management.

Ed (14:04)
You touched on this very quick and necessary pivot to virtual as basically every in-person event got shut down and that took some know how and technological capability, and we’ll work through that maybe a bit later. But one thing I did want to call out was it allowed you to do something very hard and that is run hybrid events. And so, in this day and age where traditionally your competitors have been virtual only and you’ve been in person to merge those two experiences is not an easy thing to do. And to be able to come out of the pandemic, out of the necessity of having a virtual offering to now offer hybrid events really has become a core competitive advantage.

Reggie (14:46): Virtual obviously as everyone knows became king. It was very difficult since we didn’t have a product. So, it took us about six months to launch as I mentioned. And we were learning from it because we had not done virtual, and it is different than doing in-person. What we learned is in person is much more sophisticated and complicated than virtual. But that doesn’t mean virtual wasn’t tough. So, it took us some time to get it out. Luckily, we’re able to pivot and I think that’s a lot to do with the DNA of our company because my leadership team I have now seven of my original 10 from back 20 years ago that are still with me and we’ve gone through the ‘01, the ‘08 recession and then now the pandemic. So, this is our third kind of pivot if you will or difficult time. Then we were able to do that. It took us some time. We have great relationships with our customers but I’ll tell you, we also had what we call multi-year deals as a SaaS company, we signed a lot of multi-year deals, about half that gave us a little bit of time to be able to create our virtual product and it takes us a little bit time to get to become a market leader, but in the end we believe we became a market leader in that but what our benefit was, as you mentioned, is that we built virtual on top of our in-person. So, you could do in-person events, virtual events and hybrid events and pivot between that which in particular becomes important if there’s a recession that sometimes you want to go from an in-person event which is more costly because you going to pay for food and people flying in and so forth. If you want to do it virtually, it’s generally about 10 or 20% of the cost. So, let’s say you have an event for a hundred grand or a million, you could do it for probably less than a hundred if it’s virtual. Now there’s pros and cons, engagement’s not as good in virtual versus in person. But the point is the CFO can work with the CMO to kind of pivot events to either again virtual or hybrid or in person whatever they want.

And that’s now become an additional part of our platform to be able to call what we call three arrows in your quiver. When you target someone, you can say “hey, whatever way you want to meet and the way you want to engage with your customers or your employees or your partners, we believe we can provide that platform”. And so, again, moving to a platform has been a real help for us and a differentiator compared to our competitors. And by the way, I should mention there’s 1400 event technology companies around the world. By the way, if you look 10 years ago, there was probably 1200 or 1300. So, it’s always been a pretty busy space because about a trillion dollars a year, is spent on meetings and events globally. That’s business events. It’s a big space, lot of interesting things to digitize it. And the platform is why we think is the right way to go.

Ed (17:19)
For anyone that listens to your earnings calls, you call it the triple threat.

Reggie (17:23)
Yeah, the triple threat. I’m glad you’re listening there Ed

Ed (17:25):
Exactly. Listening with interest. But just to pick up on something that you just mentioned then it is something I want to cover a massive market, but you’ve over time really founded a durable and sustainable rate of growth and you’ve seen fly by night companies raise a huge amount of capital very quickly and spend it. And you had that experience right at the start of your business as you mentioned almost blew you up. These businesses have been blown up over time and so I’m keen to understand this tension of profitability and growth over time. As I said, you’ve taken a really long-term view here, knowing how big the market is and understanding how you can grow into it sustainably. To me that takes a lot of egoless decision making. I’m keen to work through this tension, what you’ve learned over time and how you’ve reconciled these two factors.

Reggie (18:17): It’s a great question. So, again, it’s been 22, 23 years. So, here’s what I’ve learned, and I wish you could visually see me because I like doing it with my hand, but this is what happens. Let’s just say a company’s worth a billion dollars. I’m holding my hand to the left and then I’m watching it kind of go up, the hand is moving and then it goes all of a sudden to 5 billion and then all of a sudden people realize it’s way over value and it gets reset to a billion and it just slowly goes back to five then resets. So, the reason I’m bringing this as an analogy is that investors sometimes do things where you, all of a sudden, just literally six months later, a company’s worth one third the value or one fifth the value that it was six months ago. Even though fundamentally nothing changed with that company.

That’s going to continue to happen right now we’re in the part where it’s worth a billion again, but trust me, it will once again go up in time once we work through the recession and then there’ll be probably a little overzealousness about it’s going to be worth this much and it’ll get reset. That’s what we see in every cycle. So, having lived through it now three times my view is you always have to have a balanced approach. And that balanced approach in my view is like you don’t go to the extremes, which is like right now some people are having knee jerk reactions and cutting everything and they’re going too deep because just a few months ago they were hiring like crazy. So, it’s all extremes and nothing in life is good when you do extremes, it’s always balance. Our view is we’ve always had a balanced approach to profitability, cashflow in particular. We’ve always been focused on cashflow as a company. Because I mentioned we didn’t raise outside capital since 2001. So, we went public. So, that created a DNA. Now on the other hand, during a difficult timeline now, my view, this is what I saw in ‘01, this is what we saw in ‘08, this is what we’ve seen now in the pandemic is that it’s a great time to take permanent market share, everyone’s cutting back and not that we have to be very thoughtful. We’re always a frugal company. And I’ll just give you an example, Ed, look, I’m the CEO of a public company and we still fly economy everywhere. That’s never changed. It’s not an urban legend until we went public in 13, we would share rooms including me when we travel, it’s the DNA of the company, which is I’d rather put those 300 bucks into product or customer service or sales and marketing.

It’s that frugal DNA because it’s when a founder led companies, there’s always pros and cons. One of the positives is we’re just built because we remember the difficult times. But having said all this, it’s that balance of not going too extreme. And what happens with a lot of investors, they’ll say you’ve got to become profitable in two quarters, which is very difficult to do if you’ve been negative 20%. So, I think people go to extremes and I think my advice to entrepreneurs is keep a balance. Don’t have to go to extremes because you never went to an extreme yourself, both in terms of running your business and in terms of what you think your value is because fundamentally those goes back to somewhere in the middle over time. So, that’s why I believe that my kind of recommendations to people is always find that balance.

Right now, the balance is EBITDA, so make sure you’re more focused on it. And I think that that is important. But for us it’s not a huge shift because we knew a recession eventually would come. It’s been a decade, more than a decade. So, it was just always thinking it’s going to happen. But we just went through a pandemic. And for us personally as a company, we just went through what I call a category five hurricane, earthquake, and flood all at the same time. It was not a hundred-year storm, it was a 200-year storm for our business since we were all in-person. But now we view the potential recession as a bad tropical storm. We’ve been through three bad things; this will be the fourth and we’re ready for it. And we believe it’s a good time to take permanent market share. And that’s kind of what we want to run our business frugally profitably but also keeping an eye on that, hey, this is a good time to take that market share where competitors are focusing on either survival or focusing on over indexing a little bit more than probably, they should in terms of not investing.

Ed (22:27)
How do you reconcile over time the emotional roller coaster? I imagine it would be to see some of these competitors that raise a huge amount of money very quickly and grow very quickly and acquire companies and all of a sudden here’s Cvent, the dominant player in the space. Not necessarily being attacked from a market share point of view but from a funding point of view, from a marketing budget point of view. And yet you’ve just managed to find your sustainable growth rate while these businesses are out. I don’t know, trying to grow at a 100/200% a year and eat Cvent’s lunch in the process and ultimately in many cases blow up. That must be hard as a founder to see.

Reggie (23:10)
You’re probably referring to as a company in our space that raised about a billion bucks on about an $8 billion valuation. And look, we have some great competitors they did some really interesting things. It was difficult when we were going public on our SPAC that came up in every conversation. Again, this is where you take back from your experience, which is be balanced and it just never makes sense to raise that kind of money. My mom taught me a lesson. I remember when I started Cvent, we were losing a lot of money again when we first started. I raised that 17 million and like I mentioned, almost went bankrupt. She would say to me, boy, you’re spending a lot of money. Shouldn’t you be building something that costs less than what you’re selling it for? And I said to her, mum, you don’t know what you’re talking about. “It’s all about market share. It’s all about market share.” This is during the dot com boom. Same lesson now, which is never for a mid to long term, build something more than what it costs for you to sell. So, what I will tell you is that we knew those fundamentals.

These are 5,000-year tenants of commerce. It doesn’t matter what industry, what sector over time they will correct. We were getting a lot of pressure from a lot of investors, from a lot of different people. And my view is it will balance again. Not that you don’t do some stuff that you have to react, but in the end the fundamental is it’ll all come back to the middle in the end, which is a balance between growth and profit. And it obviously depends on your space and where you are in your company. But my view is that we thought we were investing a good amount and it was the right balance because when you do that, there’s too many stories of people being burnt. And what happened to a lot of companies, not just in our space but in other sectors, you see these unicorns, they’re not really unicorns and they created bad fundamentals and now it’s really difficult when you have a culture of bad fundamentals and not appreciating free cash flow which gives you your own personal budget. It gives you discipline. So, look, having said that, fortunately we’ve been through it a bunch of times and our big view is just keep it balanced and don’t violate the fundamental rules of business for too long.

Ed (25:09)
That’s an excellent tip for any entrepreneur, founder, and executive listening to this podcast. We’ve touched on it briefly here, but your journey through the capital markets. As I said at the top, I can’t think of another CEO that’s been through venture capital growth capital at times and IPO been taken private as you were by Vista in 2016 and then came back to the public markets as a SPAC.

Reggie (25:34)
Oh, and Ed all with the same team.

Ed (25:36)
All with the same team and we will get onto that. I guess what I am interested in, this is a unique voice and a unique perspective, particularly around the IPO process and the SPAC process and SPACs have become a little bit of a dirty word in many regards, but they had their time and place for whatever reason. Maybe just a moment to compare and contrast your own experiences of things that caught you off guard that you didn’t know about either of those processes. Because not many people get to do it once, let alone compare either experience.

Reggie (26:04)
Since I’ve been through an IPO, and I know that it’s one of the greatest journeys that a businessman or woman can do is to go through that process and it’s extraordinary. I think anyone will tell you that whole process of going public is probably one of the most difficult things. Stressful especially for the CEO and for a CFO because you’re on the line, you’ve been working in our case when public in ‘13 the first time we’ve been working 13 years to this day and then all of a sudden, you’re meeting with investors over two weeks, they meet with you for an hour and they’re trying to make decisions to invest 10 or 20 million in an hour.

And it was always kind of fascinating that that’s all, that’s what it is. But when we went public again with the, I had thought that a SPAC is easier, that’s what people thought. And let me be clear with you, and I am a not 99% sure, I’m 101% sure that a SPAC is harder than going IPO, way harder. The easy thing with an IPO you, it’s difficult to prepare but in the end, you meet with investors over, it’s usually seven business days and they meet with you for an hour, a SPAC process, is a lot more difficult. You’re getting a sponsor, choose the right sponsor. In our case we picked Dragoneer, which was regarded as one of the best long-only hedge funds in the tech industry. But we had to talked to eight firms to pick that one. And then they do due diligence and then you talk to investors and then you go, I won’t go through all the details but it’s difficult to do. So, that’s number one is the biggest lesson is a SPAC is super hard, way harder than an IPO.

Why did we do a SPAC though? It’s simple. Look Ed, we had a negative growth rate, it was in July when we finished our SPAC July ‘21. But if you looked at our Q1 when we were on our road show, we had a negative growth rate because this is Q1 of ‘21. So, as an in-person meetings focused company, you can imagine how hard the pandemic hit is. So, we are negative growth in Q1, negative growth in Q2. Then we started to turn positive in Q3 and then we ended up growing 20% in Q4 of last year. And then this year the projections is about 21% for ‘22 or maybe a little higher. But the point is we chose a SPAC.

Because one, we can meet with investors multiple times because they had to get to know our story because the story didn’t look good. And I would ask Ed, have you ever heard of a SaaS company going public that had a negative growth rate the year before? No.

Number two, we can put our projections for multiple years out and you can’t really do that in an IPO process so they can kind of believe this is hey, what’s going to happen? Don’t just focus on the history, focus on the next few years.

And the third thing is we got some great partners. Dragoneer, Zoom became one of our biggest investors and you can’t get usually as strategic to invest a partnered investor during an IPO usually.

So, there was multiple reasons why we did it. We did it for the right reasons because a SPAC was created for a company like us, obviously they have a bad reputation because 90% of the SPACs were kind of companies that couldn’t go public their traditional way. Ours was of course a step back but that was more because of the pandemic, not because fundamentally we weren’t a strong business and a mature business and mature, not meaning high growth but mature meaning we’d been around for a long time in mid public before so that’s why we did the SPAC but in the end, an IPO’s a lot easier than a SPAC. I know people don’t realize that but we’re glad we did it because I think the results was good. Right now, we’re kind of trading in a pandemic potentially for a recession. So, it’s like sometimes we say when are we going to catch a break? Because it’s been a tough couple of years.

Ed (29:16): Was the plan always to come to market around 2021, be it as an IPO or a SPAC irrespective of the pandemic and then that’s what forced the hand around the SPAC?

Reggie (29:26): Yeah, I mean look, when Vista bought us and took us private at the end of 2016, we are building the business. We invested a lot; we built a whole new platform. Unlike a typical PE transaction where they try to extract EBITDA, ours was the opposite. We invested heavily because they had a good longer-term view on it. So, that’s number one. Whenever you do an IPO, if they’re a good partner, which Vista is a great partner, they ask us, hey do you want to keep running or there’s opportunity to do other things. My team was very excited to keep running. We think we have a huge opportunity. We worked hard to pivot obviously to go into virtual. We think our TAM has definitely expanded with the pandemic because just look at anyone’s interaction with events, it’s grown, the number of events has grown because now you can do a virtual a hundred-person event where people didn’t really do that that much before the pandemic. Now events have become more important, people appreciate them. So, our kind of view and going public was, it wasn’t necessarily that’s the way we are looking towards it, but has everything transpired and how things went? It made a lot of sense because the public markets were certainly valuing companies who were good, strong growth, high growth and certainly balance that with EBITDA. And again, there could have been other opportunities we did, but we thought this made the best bet because this was a great way for us to continue running and we thought it was the best way for shareholder value.

And I’ll be honest, on a personal level, like I said, I think we were excited about continuing to run and so we did it. And of course, you never wish for a recession after you go public because it’s more difficult to go through those things when you’re public than when you’re private because people can’t see your stock price including your employees every day. And that creates a different set of challenges.

Ed (31:04)
Indeed. The last capital markets question I’ve got is around this private transaction. You alluded to Vista who took Cvent off the public boards in 2016. A very famous technology investor wholly owned the business. They’re famous for these playbooks that they run, usually it doesn’t involve the CEO or founder that they’ve just bought but of course they were enamoured with you. I think you were voted the best CEO in their portfolio for a couple years running. So, you managed to keep your job. Over that time, you mentioned you re-platformed the entire technology stack, you merged with the largest competitor to create the beast that Cvent is today. That must have been not just an exciting time but a challenging time from a scaling systems and process. Not just the cultural merger but the systems as well. Can you give some colour as to what that looked like from the inside-out?

Reggie (31:57)
Yeah, look it’s difficult cause we went private. Our biggest competitor at the time was a company called Lanyon. We believe we were at the time the market leader, or a market leader and we viewed them as our biggest competitor, and they were at one point bigger than us but over time Vista bought them a few years prior and over time we believed we became the biggest player. And so, couple things, when Vista bought us, the good news is they knew our space well because they owned Lanyon. And I’ll tell you another thing, we had it a little easy, they saw us do really well and execute and most primarily organically they were more inorganic growth play. So, they saw us organically execute and kind of founder led. And when I say founder, not just me but I say founders because I have a lot of other folks that had been with me for a long time. I think going into it, they already had a healthy respect.

And look, Vista has a playbook. They invented it. They were definitely the first people in my view on scale to have an operating plan. And what they had is they have a huge group and now it’s about 300 people. And these range from McKinsey to BCG to Bain folks to Accenture to consulting all the way to operators to former bankers just like the whole ecosystem are part of the operating. And so, we were really excited about it because there was a lot we could learn and it’s not just calling up a friend who’s another CEO of another company and sharing things. I mean we were all 100% owned by Vista. So, think of us as divisions. So, what happened is we have these get togethers two, three times a year. For example, the CEOs, they bring the CFOs together, they bring the CXOs together so, a lot of interconnecting and best practice sharing. And I’ll tell you what’s helpful for me is when Vista says hey, we’ve owned 200 companies. Here are the four or five things that are really driving their growth or driving their operation efficiency that we think apply to Cvent. And then all of a sudden you get data, you get people who’ve taken people through it. So, we learned a lot and I’ll tell you my team, I hope we say we’re agile, we know that there’s tons of stuff we’re doing wrong and that we can learn and it’s like what better way than to have truly a partner that has scaled, that has seen this multiple times and is very open because we also did a lot of the lessons that they had.

We already were operating in a lot of them, look in ‘17 we won company the year after the first year. I think we were the first company ever win that because usually it takes a few years to operationalize the way Vista likes. We got it the first year because they saw that we ran this way and I think a lot of us, because of the lessons we learned and the almost going bankrupt in ‘01 and then going through the ‘08, same team and we did a lot of the best practices internally and some of them we’ve scaled more than they had seen in any other company. But having said that, there was a lot we could learn from them, and it’s been great as a partner with them because at the end they just are unemotional. They do things logically, which is what as a businessperson, you want a partner who’s unemotional just do what’s logical with information but also has a little bit of trust in the team they have. It lets you have leeway and Vista’s very good at that, which is why almost out of my top 50 executives, this is now six years later, I think I probably have 80 to 85% out of my top 50. And so, look, it’s been a good partnership and a lot of lessons learned and it’s never easy. But we’ve been super excited to have been partners with them and they really take into account the way we look at things on a long-term play.

Ed (35:08)
It’s a great call out. And I think the lessons for other executives is just understanding what those four or five very simple things that move the needle for your business are, and Vista as you say, have a knack of having the pattern recognition to understand that.

Let’s get onto people and culture. I know it’s something that you are very passionate about. Something you’ve touched on right throughout this, 7 of your 10 key executives have been over the entire journey. That is unheard of in the world of technology. There must be some light and shade to this though the tenure of the executive team, the light to me is clear as you know come from a sporting history and there was a great rugby player who’s done some fantastic studies and helps businesses around cohesion because that has been proven to move the dial largely for team out performance. And so, having people in the same seats over long periods of time, the ways of working are so cohesive that you very quickly understand how each and every one can add value to the business. So, I think the light of this tenure is clear. What’s the other side to that? What have you had to manage as the CEO to make sure that these seven people who have been there from the start have really continued to contribute to the Cvent journey?

Reggie (36:26)
The first thing is we all were aligned in where we wanted the company. We wanted to scale. We weren’t in this for not scaling. So, I’ll give you a quick story. When the business almost went bankrupt in 2001, we could have taken outside capital, but one of my investors and one of my board members said, hey Reggie, listen you got $17 million and you blew through it and we built a $1.6 million revenue company, that’s it. And we had 400,000 in the bank and $1.6 million of revenue. So, he said you could do a couple things, you could try to raise more money or what you could do is really make this thing work because you spent enough money and see if this thing really has legs to grow organically. And again, this is back in ‘01 where funding of that size was a lot. I asked my whole team; do you want to stick around and do this? Because I had to personally sign some debt and I won’t go through the details, but I had to personally sign on some stuff to keep it in order to get a little bit more capital just a little bit. They said you have to personally sign. And so, I asked my team and they had to really think, is this something I believe in? And they did. So, you start with that foundation they believe and what they want to do is scale. So, everything we did was geared towards candidly scaling the business. We had big, big ambitious goals. And I think at the end of the day, everyone’s the CEO of their own book of business. That’s what I said. They all run their businesses, we’re all entrepreneurs and I really mean this Ed, I really do allow them to be their CEO.

People think micromanaging, of course we all get into areas, but I think one thing Cvent’s done is the core thing is you basically get seven CEOs and it’s more than that now and they run their businesses. We obviously work together. But I think that’s number one is create an entrepreneurial culture and then let them be the CEO of their own book of business. So, my CTO Dave, who’s one of the co-founders, he runs technology and I let him do that. A lot of CEOs start micromanaging it. Now I’m not a technology background so it’s harder for me to do that because I never knew how to code. But as an example, Dave makes the calls. Now of course I get involved. But when you give people responsibility and I really believe that, tell them what you want and maybe a little bit how you want it but then get out of the way and let them do it.

Our mantra is always the same. Hire the best people, build the best products and listen to your customers. And we’ve always just done that. And I’d look through these journeys of going up and down. It’s embedded in our culture and our soul who Cvent is at least I feel comfortable certainly for me, but I think for my core management team, Cvent is their second family and I really mean that. And so, you just don’t give up. So, that’s why we went through difficult times. You don’t give up on your family, you don’t give up because it’s much more important to you than just creating wealth. It’s much deeper than that. And so, I think all those things aligned I got lucky finding these kinds of people that stuck with us. And look, steel is forged with fire, right? Steel is forged with fire. And I think that fire goes with the connections we have as a leadership team.

And I’ll tell you, I couldn’t have done it without them. It was difficult to oh one when we were about to go bankrupt, and it was some difficult times. And having the team around me really was helpful during the pandemic. I mean 95% of our business all of a sudden could have went away. So, all these things continued to forge us, which is why I think people stuck around. And the only lesson I say there is always align with your mid and long-term goals with the executives that you hire. That’s what we did.

Ed (39:45)
Speaking of hiring the best people, some of the secret sauce that you mentioned is this New Delhi office. And part of me thinks when you went long into India, and there’s obviously a background there for you culturally, but it was about how can we find cheap labour? But over the last 20 years, India has become such a talent hub for computer science and engineering that it’s actually become a deep competitive advantage. I’m keen to dig into that. I’m also keen to understand how you’ve instilled this Cvent values in an office that is not necessarily familiar with the US centric culture that Cvent had become.

Reggie (40:24)
I love talking about our India office because I think we’ve done something different that almost no company has done. I shouldn’t say none, but very few. So, let me first say we have a saying at Cvent, we went to India for cost, we stayed there for value and we’re investing in growing because of innovation because it takes a long time just like building a company culture, it takes a long time to build that. So, number one, we’re at a point where our India office is definitely not just for cost by any means. It really is for driving innovation and value. And let me just, I’ll talk about that in a second. So, how did we first of all do that? How did you take it from a cost centric thing to a value centric and an innovation centric? So, the first thing you invest in time.

Personally, I’m Indian and I was very fortunate that my wife was from Delhi. She moved to the US when she was seven, but she has family there, I have my family there. So, when we opened the office in 2002 for the first 13 years, I went for two straight months to India. How many CEOs go two months to India to build, not a trip every quarter for a week. It’s two months, boom, eight weeks I was there, my wife would come with me and made it a family event. My parents would come because they were semi-retired. On a personal level was great. And then I have such a great team in the US at the time I’d said you guys’ kind of run the business. Obviously, I’m involved a little bit but I’m going to focus on India. So, I took it under my wing if I had to say to grow the business.

But the first thing is the first 500-600 people I probably interviewed and hired 60 or 70% of them literally when I went there for eight weeks was just about hiring. Because my view is I can talk to 10 customers, 20 customers. That doesn’t scale a business. What scales a business is I hire a hundred people who could each talk to 50 customers, and you get the point. So, it was all about getting the tree trunk straight, hire the right people and then once that happens then they can hire the next set. And if you don’t do it right the first time, you can never figure it out. It’s just too difficult to see if you have a weak DNA in your team because you don’t know who’s strong and weak. So, on a personal level, I was very involved and of course the head of the divisions were interviewing their people, not just me.

So, that was kind of the first thing is bring that US culture by having that continuous kind of involvement. And it wasn’t just me by the way, over time as we scaled, we would send almost a hundred Americans to India every year to instil with them the culture. And as we opened our European office, the Europeans would go there and then we’d bring a hundred people from India to the US for eight weeks and instil that culture. Because it is different, and they were still evolving and not a lot of sophisticated processes. India was known for kind of consumer call centres, and they were known for technology and kind of commoditized technology. Then we did this kind of investment of bringing them and what the output was is we have a team now. We’ve had people with us for 15 years, 18 years, 12 years.

Look, it takes five years to build a really sophisticated office. And here’s the last thing we did. I hadn’t heard of people doing it because I’ve interviewed literally over 10,000 people probably in India, in New Delhi in particular in a place called Gurgaon. But the other thing we did is we replicated almost every division in India from the US. So, I’ll give you just the simplest example. My EA has an EA in India. Okay, why? Cause my EA costs X amount. I’m like, hey, I don’t need you to do my expense reports, I don’t need you to do that. We’ll get someone in India to do that. So, that’s where you get the cost. But then over time that EA evolves. And then now one of the first people that did that is now supporting our directors who normally don’t get an EA or a senior director at our company.

But now they do because we can do it cost effectively. But what it does is its strategic leverage because now they save four hours a week because again, very few directors or senior directors at a company get an EA. Even a lot of VPs don’t get EA at a lot of companies. Now that’s a tactical example, a strategic example is as human global, especially in Australia, India kind of runs the marketing. We have an office as Ed in Australia, but they support them in client services and so forth. So, every division has been replicated from technology to client services to finance, and we’re able to do things we just couldn’t do before because it was too expensive. But more importantly now, it doesn’t matter, they’re helping drive the strategic direction of the company. Now I would put them as one of our big secret sauces that we’ve taken a long time to build. But again, it takes a lot of investment and time to do it. And certainly, in these high inflation times it’s been helpful but more importantly strategic.

Ed (44:50)
Fascinating dissection. Thanks for sharing such depth and colour. My last question, and you’ll probably start to blush at this, but is about your own personal growth. The list is long as to awards you’ve won, be it best SaaS CEO or top five CEO in America. I know you don’t have the ego to necessarily talk about the awards, but I am keen to understand what in your mind makes a great CEO. What are the soft skills, what are the hard skills and what’s the growth required over time to have the tenure that allows for companies like yours to flourish how it has?

Reggie (45:25)
I think it’s really just one thing, which is first realizing that the CEO is the figurehead, maybe even the talking head, but it’s not the company. The company is the people. And I really mean that. And it’s your leadership team. And in order to scale you need 15, 20, 30 CEOs and that’s just on the C level. Then you need that next layer. It’s all about creating an intrapreneurial culture. And if you create an intrapreneurial culture where everyone thinks the business is their own, I should define an intrapreneur is an entrepreneur within a company. And so, that means that they have a value system that isn’t just rules based. They do things that are make not only common sense, but they treat, let’s say for example the money of a company like their own personal. So, their decision-making process is different because of that. But you also have to reward that to recognize if they’re that DNA that feel like this is their company and you want to encourage them so anyone can, for example, argue with me. I’m a debater by nature by the way Ed.

Ed (46:17)
You’re a lawyer.

Reggie (46:18)
I’m a former lawyer, but I really like to debate because I enjoy it. First of all, I don’t look at it as like, who are you to question me? When you allow that culture where anyone can question anyone, it really is about not just building a great team but letting them make mistakes and learn from it but also drive decisions. Because in the end, how do you beat a company that has hundreds of people who think that they’re the CEO of the company or a high-level executive at the company that can drive change? Because what we all want is impact. You ask anyone on a personal level, why does someone who’s made a billion dollars, which isn’t me by the way, but someone who’s made a billion dollars, why are they continuing to work? And they do it because they want to make impact, be appreciated of course, but make impact. And so, you let people make impact that and getting the right DNA and alignment and creating intrapreneurs, those are the things that I think have really been the reason we’ve been able to have this longevity, been able to pivot so much and have kind of saved pretty consistent in everything we do. Because if someone thinks that the business is their money though, they’re going to do a better job and they’re going to make better decisions.

Ed (47:22)
Ed (47:22)
Totally agree with that. Is there one specific call out about your own journey of something that you’ve had to change over 20 years to allow you to scale? Because it takes a rare founder to go from 12 people to 4,000 and still do the job that you are doing?

Reggie (47:38)
I appreciate the question. Look, here’s what I’ll tell you. Some entrepreneurs create a great product, and it scales quickly because they were first mover advantage and it scaled. Doesn’t mean they’re not great entrepreneurs, but sometimes it’s the product they built. They got out early. Look, we’ve had a difficult journey. We’ve had pivots, we’ve almost went bankrupt.

There’s three Proverbs I live by, fall down seven times, get up eight times, be persistent and consistent, and then the last one is hire the best people. And those are kind of all the final things that when I look back at my journey, things that I’ve personally grown to do and to recognize and as a CEO, I had lots of things I need to improve. I still have lots of things I need to improve. Surround yourself with some good mentors and coaches, and a lot of my changes happen with my own team because they have strengths and weaknesses. I have strengths and weaknesses and a few kind of evolve together. People know those strengths and weaknesses, and if they feel comfortable giving that feedback, that’s how you continue to personally grow.

Ed (48:33)
That’s great, colour. Reggie, you’re as pumped up today as I’ve seen you over the last decade, so there’s still some runway to go in not only you, but Cvent as a business, you’ve been so generous with your time. Thank you so much for joining us on Scaling Up.

 

*Disclaimer: This podcast is created and published for informational and entertainment purposes only. It is not financial advice. Transcripts may contain occasional errors in fact.

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