EventMB sat down with Cvent CEO Reggie Aggarwal for an exclusive interview -- the first he's accepted since the Covid-19 crisis hit. We discussed what the past six months has been like for the event industry's largest tech company, Cvent's pivot to virtual for its flagship event and for its product, and of course, the future.
It’s not easy to get to talk to Reggie Aggarwal. Since the pandemic hit the world, catching the event industry in the middle of the storm, he has been very cautious of talking to the media.
The opportunity to talk to him is even more significant as he is preparing to welcome over 35,000 attendees to the company's flagship event, Cvent Connect.
As usual, Aggarwal is a straight talker with a deep understanding of the role technology plays in the event industry. His business journey is also an interesting one. After the company found itself on the brink of collapse in the early 2000’s and Aggarwal found himself with a big personal credit card bill, Aggarwal managed to make Cvent the most successful technology company in the industry.
Despite many event companies laying off thousands of workers or shutting down altogether, Cvent has navigated through the worst storm of the century with minimal damage. After laying off 10% of its own workforce in May, the company bounced back with a new virtual-driven product and a revived spirit that is very clear in Aggarwal's words.
What have the past five or six months looked like for you?
It's been difficult, like all businesses. But it's obviously hit our industry disproportionately.
Our company went through this back in 2001. Everyone knows the story, and what we went through is in our DNA. I think that better prepares us mentally, because this is mentally and physically exhausting. We're working harder than we did before, not less.
In terms of what we've been up to, the first step was to digest what happened, and then basically make the appropriate pivot while balancing our short and long-term objectives. It's been busy, and on a personal level, it's been difficult. But you have to look at the silver lining: on a personal level, not traveling so much, and then on a business level, this is an exciting time. Having been in business for 20 years, it's interesting when you have a whole different thing you have to think about.
What data are you looking at to predict a potential comeback for events, whether virtual, hybrid, or in person?
In the first half of 2020, we did $6.5 billion in sourcing, $2 billion of which was in second quarter sourcing. Those tend to be longer term events — a year out, for example. The shorter term events obviously went away because of the pandemic, but sourcing continues (albeit at a lower level).
It makes sense for the attendee. It makes sense for the organizer. We can expect the pandemic to remain a constraint in 2021, but there will also be budget constraints including for business travel. As things pick up in the latter half of 2021, or certainly in 2022, you're going to see more people traveling when health concerns as well as budgets become a little less of an obstacle.
And the trend will only continue as you get real believers and bigger stakeholders on board with virtual. Some will return to live events, but a lot of people won't attend. That's where the industry becomes stronger because you're getting a whole different audience.
I'll use our conference as an example. We had 4,500 physically in Vegas last year at Cvent Connect, which is the highest we had ever had. Now we have 35,000 — an eightfold increase.
Some of those will come to our next physical event once they experience our virtual event in 2020 and hybrid event in 2021, and find that they enjoyed the experience. That's why we're very positive on the mid-to-long term of the industry.
Is that the comeback timeline you're thinking of? 2020 virtual, 2021 hybrid, and 2022 live? Or are you waiting for a vaccine before you make any plans?
Going forward, you'll need to do hybrid for any large conference because you get a large audience that won't come otherwise, whether because of convenience, travel budget, overall costs, etc. Hybrid gives you an audience that you never could have gotten before.
Starting next year, some organizations will have events in the first quarter (for example EIBTM is holding firm that they're going forward in December). As events happen without incidence, others will start jumping in — depending on their different dynamics, who their attendees are, where they're coming from, and so forth.
This is where you'll start seeing smaller, local events that attract people within a three or four hour drive becoming hybrid events to accommodate people who don't feel comfortable. From that point, hybrid will become a permanent part of the landscape. We'll just continue to grow because virtual feeds into our live events.
How do you transition such a complex product that has years of legacy into a virtual platform? What does the new product look like, and how did you manage to make the transition happen in just five or six months?
The first thing is sheer horsepower. We have 1400 engineers, so we're probably bigger than all our competitors combined.
The second thing is that we were actually in the middle of our next generation products — called Flex — which were built on the newest software. You have to essentially redo your product every 10 years, and we were in that cycle. It was very fortunate because, if we were still using our old suite, our old stack would have been very hard to work with.
Having said that, the product we're releasing is going to have iterations. Nothing's perfect. The core thing people want right now is to be able to do the fundamentals. As we go on, the industry will expect more and more, and we're going to keep iterating. We're excited to get our product out, but it takes time to do things right. We've all been very focused on this.
The revenue coming from virtual and potentially also for the virtual components of hybrid events is not going to compare to a live experience in terms of tickets, in terms of sponsor activations. Obviously, the margins are much higher, the costs are lower — we all realize that, but how do you see revenue potential for virtual events and event components?
As far as whether it's worth it to organize the event, you have to consider the event's goals and the type of event you're looking at. If you're a corporation doing a customer conference, your goal is frankly to build relationships with your customers and get them exposed to your products. With virtual, you don't have the depth that comes with spending three days talking to them, grabbing a drink after the conference is over, and just building that in person relationship.
There are definitely some disadvantages to virtual events in that sense, but then you get more people. So I think I would still rather be in person, but when you get eight times the audience, that serves the goal of trying to sell products better in some ways.
When it comes to nonprofits and associations where the revenue stream comes from exhibitor booths and they're not selling a product per se, that is a little more challenging. It's not going to be the same opportunity — we know that — but there are certainly ways to engage your membership or your donors to bridge the gap until hybrid events take off. Once that happens, virtual will give those organizers access to a whole new [revenue] stream.
That's why I'm bullish on the long term opportunity. Let's say that Cvent Connect in 2021 gets 4,000 in-person attendees and an additional 30,000 virtual. It's what I call a double punch. Then in 2022, [when some of that virtual audience converts to in-person,] we'll get a spike in our in-person and virtual will continue.
First for corporate events in general. For associations and nonprofits, it will be a little bit tough, but when hybrid comes and they can go to their sponsors and exhibitors and offer them more exposure, not just to the 500 people in physical attendance, but to another 1500 virtual attendees as well, they will actually be able to charge more.
How are you battling the issue of Zoom burnout, both with Cvent Connect and with your platform?
Zoom burnout is real. It's actually more tiring for some reason. There is an intensity there, even though you have the flexibility of being at home. But fatigue is actually a good thing. Going to the grocery store has become like the most exciting thing of the month.
That's what is going to drive people. It makes us yearn to meet again. We’ll see an uptick particularly in employee events as companies offer a more flexible work-from-home policy. In the end, it's going to make people feel starved for interaction. We're going to help the industry get back on its feet because people are just tired of missing out on what I call the "texture of life," and events is a critical part of that — more than people realized.
That is very true. Is there anything else you would like to add as we wrap up?
Organizations will also have to reimagine their goals. At the end of the day, ROI is what matters most. For revenue-driven events, it’s a little tougher in this environment. The ones that aren't revenue driven as much as ROI-driven — I mentioned corporate as an example — they are being given tools for achieving their goals. Technology is obviously more important in the landscape of events now.
We just have to be patient, hang in there. Our industry has a history of bouncing back. People think it's down and it just comes back because the human connection drives everything.