I spoke to founder and CEO Reggie Aggarwal about the round yesterday, and he told me such an inspiring story about his experiences as a startup founder and dot-com era survivor that I asked him to pen a guest post on the subject.)
Back in the late 1990s, in addition to working 60 hours a week as an attorney, I started the Indian CEO High Tech Council and organized networking events for local tech CEOs in Washington, DC, that had at least $10 million in revenue and 75 employees, or had raised $10 million or more in capital.
I used to joke that it was a good thing I was the president of the group, because I’d never qualify for membership. Marketing to these CEOs, getting them to RSVP to the event invitations and securing their attendance was painful. I knew there had to be a way to streamline the process.
Enter Cvent. I founded what is now the world’s largest event management software company in September of 1999. I was 30 years old, living at home and borrowing money from my parents to fund my dream — I was like the Indian George Costanza. Those were wild times. I wasn’t taking any salary and quickly ran up $250,000 in credit card debt; but lucky for me, as a Law grad, credit card companies practically begged me to open lines of credit with them.
So, just before quitting law, I signed up for 10 cards to bankroll my idea. Everyone had a start-up back then. I thought it would be easy. It wasn’t.
I assembled an initial six-person team that filled the roles of technology, business and marketing. We all took massive pay cuts and worked out of broken-down offices — complete with the start-up lore of mismatched furniture and Wonder Bread sandwiches. Cue the dot-com explosion. Over the next year, we quickly raised $17 million in venture capital from the D.C. “tech glitterati” such as the CEOs of AOL, Nextel, Bell Atlantic and Nortel. We grew from 6 to 125 employees, and Forbes, the Washington Post, and USA Today wrote great articles about how we were going to transform the event industry.
We were feeling good. Then, the dot-com bubble burst, September 11th happened and reality hit.
Our world turned upside down, and we quickly fell from being a hot start-up to being the walking dead.
We had less than $400,000 in the bank. Our revenue was $1.5 million and we were burning through a million dollars a month. The press completely turned on us and wrote articles that Cvent was going to wither like all the other dot-com companies. We had to cut expenses fast.
We had originally planned to expand our headcount and had signed a five-year lease for space, but by 2001, we were just one payroll away from running out of money and were forced to cut 80% of our staff. We were left with an office for 250, but only 26 employees, and our landlord wouldn’t reduce our rent unless I personally signed the renegotiated lease.
I weighed signing a $1.5 million office lease and the prospect that if the company failed, I’d have to file for personal bankruptcy and would never be able to practice law again at a big firm.
I had hit rock bottom.
Not ready to give up, I asked my management team if they were ALL IN — needing to know that before I signed the lease — and with their support, I doubled down and essentially signed my life away. I personally guaranteed every loan and fought for Cvent’s success.
Over the next three years, life was a grind. We rolled up our sleeves to make the company work. Our CFO, a Harvard Business School grad and former BCG consultant, was collecting bills. We raised no
additional money, nor did we try to. We focused on the basics: building a good product, servicing our customers and hiring great people. We relied on our guts and instincts, but also made sure that we had the data to back up our decisions. I always say, “In God we trust … everyone else give me data.”
In 2003, we turned the corner of profitability and the first rays of hope began to show themselves again. Today, Cvent is a highly profitable 800-person start-up. Yes, I mean start-up, because we will never forget where we came from and we never again take anything we have for granted. We’ve fought too hard to get to where we are and tremendous sacrifices were made.
What follows are a few things I’ve learned along the way:
1. Do what you understand. I understand events. I can’t build a Cisco router, but I can plan and market one hell of an event.
2. Build a solid team. In my darkest moment, I asked my management team if they’d stand by me. I worked for two and a half years without pay, and they took major cuts—but they stuck it out. Eleven of our 12 senior executives have been with Cvent since our inception.
Building a team of great people is one of the most important things an entrepreneur can do. I have personally interviewed most of our 800 employees, because I believe the basis of a successful company is good DNA. We look for intrapreneurs – ambitious people with big ideas who are looking to bring those ideas to life in a more established environment.
3. Listen to the marketplace and create a culture of customer obsession. It is all about the customers. If you listen to them and deliver, they will stay loyal. Investment capital is important to businesses, but do not lose sight of the fact that your long-term staying power in a business is determined by your customers, not by your investors.
Listening to your clients is what turns them from current clients to long-term customers. For example, through market research, we knew that our customers were facing a challenge when it came to finding the right venue for their event, determining if it was available, and getting pricing information. So, we created a tool that allowed them to do just that. We invested $25 million in solving that problem, and this year planners will book over $4 billion in meetings and events at hotels and special event venues using our system.
4. Know that it’s a grind. To the outside world, a start-up seems glamorous. In actuality, it’s a bunch of unglamorous days strung together to make a seemingly glamorous job. What’s behind the scene is a lot of hope, determination and sleepless nights. In the two years that we were struggling to get Cvent back on its feet, I rarely slept, took no pay and traveled the country doing 150+ prospect presentations. It was less than glamorous, to say the least.
5. Be frugal. Learn how to grow without spending unnecessary money. Until just four months ago, our management team was using pop-up tables rather than executive desks. And even though Cvent is now at 800 employees, I still, to this day, share a room when I travel — and my colleagues are expected to do the same. We’ve learned to become conservative with how we use our money.
6. Invest when the competition pulls back. The last few years of the great recession were tough for U.S. businesses. Having been extremely frugal leading up to that point, we were in a unique position to advance by investing in our products and building the tools that our customers were requesting. Not many companies hired 150 people in 2009.
That investment is paying off tremendously right now.
7. Find the right investors and stand by them. During the dot-com implosion, our investors stood by us. They didn’t kick us out of the company because they believed we could turn things around. It was during that time that we were approached by other VCs and told to “wash out” our current investors by taking new money. Even though we were in a desperate spot, we held out and stood by our investors—as they had stood by us. In the end, what we ended up with was a self-sufficient company that created solid returns for our initial investors.
In the end, the most important lesson that I’ve learned of them all is that you need to stand by your company and believe in yourself. As the old Chinese proverb says, if you fall down seven times, get up eight times. When I founded Cvent, I didn’t think it would take 12 years to get to this point. Nothing is ever quite as easy as it seems. And in 2001, when we were about to go bankrupt, the public and press had written us off. But we stuck with it, and today I had the pleasure of announcing that we’ve received $136 million in funding from two of the world’s largest investment firms.
Perseverance and dedication pay off.