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Big Deal for a Software CFO

With $136 million in new venture funding, meetings-technology vendor Cvent and finance chief Thomas Kramer are another big step further removed fro...
David McCannAugust 12, 2011

When Cvent, the largest supplier of automated tools for meeting and convention organizers, secured a $136 million round of funding in late July, it was another vindication of sorts for the company and its CFO, Thomas Kramer.

The venture financing, most of it from New Enterprise Associates and Insight Venture Partners, was the largest for a U.S. software company since 2007, according to Dow Jones VentureWire. It underscores how far the company has risen from the deep nadir it reached in 2001, two years after its founding. While Kramer says privately held Cvent has now been profitable for 34 quarters in a row, memories of that time lend color to the company’s successes to this day.

Cvent was among a plethora of small software companies that launched in the late 1990s, seeking to make a killing in the huge, though often unrecognized, meetings-spend market. (Total direct spending on meetings, conventions, and trade shows in the United States reached $263 billion in 2009, according to a report released this year by the Convention Industry Council, an umbrella organization of more than 31 meetings-industry-related professional associations that commissioned PricewaterhouseCoopers to perform the research.)

But the meetings profession was slow to adopt the new automated tools. Within a few years, after numerous business failures and consolidations, Cvent and another company, StarCite, emerged as the two major survivors in the meetings-software market. But in the interim, Cvent, at least, suffered nearly fatal wounds.

The company tried to grow too fast, acknowledges Kramer, one of 11 senior executives who have remained since its beginning. When the Internet bubble burst in 2000, Cvent fell hard. By April 2001, its workforce had plunged from 125 people to 26, and it had a mere $400,000 in the bank.

“Every penny had to be debated three times before it was spent,” says Kramer. “We had two floors in our building that were barely a quarter utilized. Luckily, our landlord decided it was better to get a continuing revenue stream from us than full rent for two months. We were rapidly running out of money.” For two years, employees couldn’t even change their voicemail, because no one knew how to operate the phone switch after a telephony engineer was laid off.

The solution was nothing magic. First, the focus narrowed. “We didn’t need a strategy for global domination. It was simply about survival,” says Kramer. Spending was slashed to the bone, and all of the executives accepted dramatic pay cuts. Kramer personally called delinquent clients about their bills. Perhaps most important, he notes, is that the company renewed its efforts to listen to its customers and innovate in accordance with their needs.

The executive-team members hung on because they were convinced that with the practical tools the company was selling, it would be successful over the long term. “Everybody knew there was gold to be found in the meetings and events industry,” says Kramer. “But instead of going out and digging for gold, we set out to sell shovels.”

It actually didn’t take the company all that long to become profitable, which happened in the first quarter of 2003 and has continued every month since. Growth has been steady for Cvent, which now counts more than 800 employees. “We are the type of company people like to invest in — large, fast-growing, and profitable,” says Kramer.

Much of the $136 million funding will be plowed into product development, as well as potential acquisitions, global expansion, and investments in client services. Among the 200 people Cvent expects to hire over the next year, many will be technology engineers. Right now the company’s core products are an event-management solution enabling attendee marketing, online registrations, venue selection, and back-end reporting; an ERP version of that product for large companies that provides additional strategic meetings-management capabilities; a massive database of meeting vendors worldwide; and a Web-based survey tool.

Growth requires great attention to recruiting and other human-resources matters. Kramer, to whom HR reports, estimates that he spends a quarter to a third of his time focused on that area. “We don’t have factories, but even if we did, the person operating the machine can sometimes be more important than the machine.”