Lessons From One Company's "Near-Death Experience"

Want to learn how to be more creative? Try having to fight for your company’s life.

Reggie Aggarwal is the founder and CEO of Cvent, which he used to describe as something like “Evite for conferences.” (He doesn’t say that anymore, with Evite mostly obsolescent among young Facebook users.) It may sound esoteric, but the “meetings industry” is considered to be a $650 billion dollar industry--think of all those hotel expenses--and Cvent, which has 1100 employees and is profitable, has been doing a good job carving out its share of that cash. Before the fat times were extremely lean ones, though, as Aggarwal explains. And retaining habits learned in those lean times has made him all the more successful.

FAST COMPANY: You raised a lot of money around 2001, growing from six employees to 125.



REGGIE AGGARWAL: Then at the end of ’01, the world fell out from beneath us. Three things happened: September 11th, the dotcom meltdown, and reality hit us. We’d built up 1.5 million in revenue, but had spent 16.5 million. We were a classic dotcom company, burning through money.

What did you do to survive?

We cut down to 26 people. We had no money except for $400,000. My rent was $800,000 a year. For survival we had to be frugal. Companies in that situation either go bankrupt, or they learn to be frugal. We had a near-death experience. I went to the landlord and said I can’t make rent, we need to work something out. He asked me to personally guarantee the rent check, meaning that if the company went bankrupt, they could sue me personally. That’s the kind of belief you have to have in your company. The next three years we were the walking dead.

So frugality became a life-or-death thing for you.

Have you ever been to India? You go out and look at the people who live outside. They’ll take a tire, an old tire that an American would throw out or pay someone to take away. They’ll cut it up in strips, and put it on the roof, and it becomes rubber on the roof, so rain doesn’t sink in. They’re forced to be creative because they have no money. Frugality is important because it forces you to be creative.

You’re profitable now--and had a massive funding round last year--but still maintain a frugal culture. What are some examples of ways you cut up the tire?

We still share rooms when we travel. We go to 115 trade shows a year and send 20 people for four to five nights. We share rooms from the CEO down. We all fly economy. How often does a CEO fly economy internationally? We probably save a half million a year that way. I’d rather take that half million and invest in hiring more sales people, tech people, or customer service people.

When you’re flying economy and hand out a business card that says CEO, do people say, “Well then I guess your company can’t be that successful”?

Sometimes I call college students who apply to work at Cvent. I remember one cocky kid who said, “If you’re such a great company, why is the CEO calling me?” I said, “That’s exactly why we’re a great company.”

What other ways did you stay frugal over the years?

I had a desk that I bought for 70 bucks at Home Depot. Those desks are fine, right? I had that desk until 18 months ago. Finally someone said to me, “Frankly, Reggie, it hurts the brand of the company, when young people meet the CEO and he’s got a $70 desk.” We didn’t have assistants. I faxed my own stuff, until about three years ago. A lot of times when we were shipping things to trade show booths, we’d take them on the plane with us and carry them.

Were your Christmas parties catered by Subway?

We spend a fair amount of money on Christmas parties. Young people do appreciate good Christmas parties. It’s kind of a branding thing. You bring a date. My view is it’s good not to be super-frugal with Christmas parties--that’s an area I like to brand in.

When did the company first become profitable?

We became profitable in January of 2003. Not to be technical but that’s 117 months straight profitable.

2002 must have been a rough year.

I lived at home with my parents until I was 33. 2002 was the year of my 15-year high school reunion. I was president of my high school. I was not excited. I was the biggest loser in the class. I thought, “I owe everyone in town money, I raised $17 million from investors and friends.” I owed about $500,000 on credit cards. We were one of the companies that the local press covered a lot. The press had turned on me.

That sounds rough.

I just had my 25-year reunion two weeks ago, and I was one of the organizers. It was a little different this time.

This interview has been condensed and edited. For more from the Fast Talk interview series, click here. Know someone who'd be a good Fast Talk subject? Mention it to David Zax.

[Image: Flickr user Andrew Brannan]

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5 Comments

  • Jake

    Frugality is a MUST of a successful start-up. I do, however, find it kind of idiotic for a company like the transnational behemoth I currently work for to spend a lot of man-hours in enforcing some policies that only saves us pennies in the greater context of things. i.e. I absolutely have to buy the cheapest air fare available, even if it means a lay-over (yes, even if that means spending in an extra hotel night and meals). Common sense is often ignored.

  • drew

    What a great story.  It really teaches you that a company needs to create a culture of frugality... and it needs to start from the top.  

  • Kris

    You'll notice he doesn't say anything about rewarding the employees who stuck with him through the hard times, he just talks about himself and how successful he is now.

  • hmjjbe

    A) how do you know he didn't reward those employees? Since they didnt even have cash to pay rent I would imagine they were paid at least partially in equity.

    B) If the company failed he was personally liable and probably would have had to declare BK. The employees could presumably walk away and find another job. 

  • Fazal

    To be fair to him, it could be the editing from the longer interview that took those comments out