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A comeback story: Cvent, once on the brink of bankruptcy, sells for $1.65 B

Executives and employees of Cvent, the maker of event planning software, cut a ribbon in the lobby of the company's new headquarters. Virginia Gov. Terry McAuliffe and Cvent CEO Reggie Aggarwal, center, were both in attendance. (Courtesy of Cvent)

It’s hard to believe now, he says, but 15 years ago, Reggie K. Aggar­wal was on the brink of bankruptcy. He was living with his parents and had little more to his name than a few hundred dollars and an old Jeep Cherokee.

He also had a dying company to shore up.

Cvent, the events-management software company he founded in 1999 during an era of high valuations and dot-com excess, had fallen from glory just as quickly as it had risen.

And here was Aggarwal, a 31-year-old former lawyer, trying to pick up the pieces. The company had burned through $16.6 million of the $17 million it had raised from big-name investors — the likes of former AOL chairman Steve Case and MicroStrategy co-founder Sanju K. Bansal — just a couple of years earlier. Then terrorists struck on Sept. 11, 2001, and the dot-com bubble burst, sending Internet start-ups reeling.

By late 2001, the country was in recession, and Aggarwal was almost out of money.

He and co-founder Charles V. Ghoorah spent their days laying off employees — their workforce of 125 dropped to 25 in less than six months — and nights fretting about what they had done.

“Those were very humbling days,” said Ghoorah, executive vice president of sales and marketing. “When you downsize three different times, as we did, you look at yourself in the mirror and say, ‘What have I done to people?’ ”

Slowly, Aggarwal, Ghoorah and two other co-founders turned around the company — and, in mid-April, sold it for $1.65 billion to private-
equity firm Vista Equity Partners.

Cvent’s executives got stocks worth millions just before major deal

“It’s taken us 15, 20 years to build a good company,” Aggarwal said. “When you start the way we did, with a punch to the gut, it crushes you. Most companies don’t recover from something like that.”

But somehow, he says, Cvent did. In 2002, Aggarwal signed a personal guarantee for the company’s lease in a Fairfax County office building and stopped talking to the press. He forgot about chasing investments and instead focused on adding customers and building revenue.

“I didn’t want to talk to anybody,” Aggarwal, 46, said. “I didn’t even want to put our name on the building. It was very much like, ‘Put your head down. Don’t talk about it. Just freakin’ do it.’ ”

When the Tysons Corner-based company reemerged in 2011, it was to announce that it had received $137 million in venture-capital financing from New Enterprise Associates and Insight Venture Partners. Aggarwal planned to use the money to pay back his investors, many of whom had waited 12 years to cash out.

The news took the media by surprise. The website Tech Crunch was the first with the announcement: "It's pretty amazing that we have seemingly never written about Cvent before," its story said.

The company was touted as one of the decade’s biggest comeback stories and heralded as an example of what a Northern Virginia tech firm could do.

But for Aggarwal, who had experienced good times before, there was an underlying sense of caution.

“We were, frankly, a beaten dog,” Aggarwal said. “We felt like we’d always been fighting the world.”

In the five years since, he has steadily built on that momentum, creating a 2,000-person company with nine offices around the world. The company went public in 2013, raising $117.6 million in the process.

Last year, Cvent’s annual revenue climbed 32 percent, to $187.7 million.

That growth is what attracted Vista, which is based in Austin, to Cvent. The firm is paying $36 per share for the company, a 69 percent premium over Cvent’s stock price on the trading day before the deal was announced.

“Reggie and the Cvent team have built a leading portfolio of products and are positioned for expansion in a large and underpenetrated market,” Brian Sheth, co-founder and president of Vista, said at the time.

Cvent executives stand to make tens of millions of dollars as a result of the deal. Just 12 days before the purchase was announced, the company handed out thousands of shares of stock and stock options to top executives, leading to even larger cash-outs.

Aggarwal, who owns about 2 million shares of the company, is poised to receive more than $75 million when Vista’s acquisition is finalized later this year.

“This is a really seasoned management team,” Ghoorah said. “We’ve been through two deep recessions. We’ve been the hero, we’ve been the goat. And now we’ve become the hero again.”

‘A better way’

Before Aggarwal founded Cvent, he created something called the Indian CEO Council. He was a young lawyer at Shaw Pittman (now part of the District law firm Pillsbury) who wanted to build a network of local executives.

The criteria were specific: Members had to be chief executives of Indian descent who either ran companies with more than 75 employees and $10 million in revenue or had raised at least $10 million in venture capital. Back then, even Aggarwal didn’t qualify to be a member of his club.

“It was a very exclusive group,” Aggarwal said. “But slowly we went from 20 members to 50 to 100.”

Eventually, it grew to include thousands. Aggarwal began inviting chief financial officers and chief investment officers, and later, non-Indians, too.

The group hosted several events a month — often dinner and drinks at the Ritz-Carlton Tysons Corner — and Aggarwal was the one planning them. He spent his evenings and weekends emailing executives, one by one.

“It was so painful. My tools were Outlook, yellow sticky notes and Excel,” he said. “Imagine if I was sending a thousand invitations by email. I would cut and paste, one at a time, each one. If you’re going to invite the CEO of the World Bank or the president of Nasdaq, you’re not going to send mass emails. I knew there had to be a better way.”

He came up with an idea for a software system that could automate emails and track responses. Soon after, Aggarwal quit his job and used all of his savings, about $100,000, to start Cvent. His parents, both engineers for the federal government, loaned him an additional $75,000.

It was a bare-bones operation. Aggarwal, with David Quattrone and Ghoorah, worked out of his parents’ basement.

“Reggie realized that, with technology, we could build something from the ground up to fix this,” Quattrone said.

Cvent has evolved through the years, from a sort of Evite for corporations to a full-service operation that helps meeting planners find the right venues and manage everything from booking rooms to printing badges.

Aggarwal’s role as chief executive has changed, too. Instead of calling customers and investors as he did in the early days, Aggarwal now spends most of his time vetting new hires.

“You can’t scale your business talking to customers,” Aggarwal said. “The reality is, you get me a good employee who sticks with me for a decade, and they’ll get us hundreds of customers over a five-, 10-year period. That’s the right way to do this.”

‘Unpolished diamonds’

Aggarwal likes to recruit what he calls “unpolished diamonds” — employees straight out of college, who he hires by the dozen and puts through an eight-week training called Cvent University.

“Take the typical person,” he said. “They went to Virginia Tech. They have a 3.3 GPA, maybe a 3.1 — if they’re a 3.8 they’re probably getting a job at a top consulting firm or a bank — so let’s take a 3.3. They’re a political science major. Who’s hiring that person? There are literally hundreds of thousands of people like that.”

Aggrawal travels to schools, including the University of Virginia and Penn State, several times a year to meet students. He says he likes to look beyond their college track records to find out what they were like in high school.

“When you go down there, you start finding out things like, ‘You know what, Mary was captain of the lacrosse team in high school, she was class vice president for two years. Mary was editor in chief of the yearbook,’” he said. “That’s a big deal. That means you’re a hardworker, you work late at night. That means you’ve had great DNA since you were young.”

He is partial, he said, to people like him, who were active in student government. He was class president of his high school, which he mentions no less than four times in a two-hour conversation. Co-founder Ghoorah was student-body president at Duke University, which the two bonded over when they first met.

Aggarwal also relies heavily on an 800-person office in India, where employees handle client services, marketing and human resources. Until recently, he used to spend two months a year in Gurgaon, a city near New Delhi, meeting with job applicants for the company’s call center.

“The India office is my secret weapon,” said Aggarwal, born to Indian immigrants who settled in Kansas. “You can’t get an American to work past 8 p.m.”

‘Big fish in a small pond’

The buyout offers came quickly and unexpectedly. Earlier this year, an unnamed software company came to Cvent with an unsolicited offer. A number of other firms followed suit, but Vista — which last month bought software firm Solera Holdings for $6.5 billion — had the highest bid.

“Were we looking to sell the company? Absolutely not,” Aggarwal said. “But when something like this comes along, you do what’s best for shareholders.”

The private-equity purchase is good, he said, because Cvent will remain in Tysons Corner and keep doing what it does: selling software to big-name companies such as Walmart, Marriott International and Hilton Worldwide.

Sometimes, Aggarwal said, he thinks back and wonders how things might have been if he had started Cvent in a different era or had gone about things in a different way. But he’s adamant about one thing: Being in Northern Virginia — an accident, really, because that’s where he grew up and where his parents lived — has helped the company become what it is, he said.

“Do you think Cvent would’ve survived in Silicon Valley? The answer is no,” Aggarwal said. “It is so Darwinistic there. Do you think my team would’ve stuck around? No, they would’ve gotten other offers. They would’ve left. The company would’ve been bankrupt.”

But being in Washington, he said, has allowed him unique access to customers — namely the hundreds of associations and government agencies headquartered here — and a growing group of engineers and tech-savvy workers in the area.

“You can find bright, hardworking people here,” he said.

“And,” he added, “it’s great to be the big fish in a small pond.”