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From Death's Door To $1.5B: Cvent

This article is more than 10 years old.

This story appears in the January 19, 2014 issue of Forbes. Subscribe

His 15th high school reunion should have been a boastfest. Reggie Aggarwal had been class president and had gone on to become a lawyer and a hotshot entrepreneur. Instead, he had to admit to old acquaintances that his company was a joke in the industry--and that he was broke, owed money to investors and had moved back in with his parents. "I was kind of the Indian George Costanza," he says.

Eleven years on it's a different story. Cvent, the McLean, Va. event registration and management company Aggarwal launched in 1999, has roared back from the dead. Last August it went public on the NYSE, raising $117 million; its recent market cap was nearly $1.6 billion. Over the most recent four quarters the company lost $1.3 million on $104 million in revenue. Customers like Wal-Mart, Siemens and WellPoint use the cloud-based platform to search, field bids, book reservations and register attendees for more than 200,000 venues in 90 countries. The platform is free; registration costs a small fee. Cvent's mobile app for managing and navigating conferences runs from $6,000 to $10,000. It also charges venues to advertise on the platform's search pages.

Second chances are the stuff of Steve Jobs and Michael Dell. But Rajeev K. Aggarwal? As an entrepreneur, he says, "you just don't know how to give up." By all rights he probably should have.

Born in Kansas and raised in northern Virginia by parents who'd emigrated from India, Aggarwal majored in finance at the University of Virginia and got a law degree from Georgetown. Cvent grew out of his frustration trying to organize gatherings for the Indian CEO High Tech Council, his networking group. He was sending hundreds of individual e-mails, managing replies and organizing food preferences for meals--while trying to practice law at Coopers & Lybrand.

Aggarwal raised $700,000-plus in seed funding from angels and friends, his own pocket and multiple credit cards. Linking up with Chuck Ghoorah, David Quattrone and Dwayne Sye--Cvent's executive vice president of sales and marketing, CTO and CIO, a team still in place--he launched a simple event-registration company to help businesses send digital invites to conferences and meetings.

It was late 1999, and the tech boom was nearing its peak. Competitors like Evite.com and Mambo.com were getting funded big-time. "We decided to jump in," says Aggarwal, now 44. Cvent raised $17 million within a year, mostly from Aggarwal's Indian CEO contacts. He thought he'd take the industry by storm.

Within eight months Cvent grew from 5 employees to 125. "We blew through that $17 million and were down to $400,000 in the bank--and then that perfect storm hit: Sept. 11, the dot-com meltdown and reality," says Aggarwal. "We'd only built a $1.5 million revenue company."

Business stalled. Clients began canceling events, and new prospects felt solicitation in the wake of such a tragedy was in poor taste. The company was burning through $1.1 million a month. Cutting 100 staffers, along with all nonessential spending, served as a makeshift tourniquet. Sanju Bansal, the company's first investor and a director, says the board wondered whether Aggarwal was fit to lead. His passion helped him keep his job. "The people that were left, they weren't loyal to just the idea--they were loyal to Reggie," Bansal recalls.

Ghoorah was constantly cold-calling, while CFO Thomas Kramer chased down invoices. Aggarwal took no salary and personally signed for Cvent's office lease for a lower rent--shackling his own credit rating to the survival of the company. "It was the toughest time in my life because I'd never been knocked off my horse like that," says Aggarwal, a prolific hand-talker. He was ashamed of letting down his investors, most of whom were friends and close associates.

Worse, he says, was having to jettison his dream of fast growth and market dominance. Cvent had to refocus on scoring clients in the midmarket range, while remaining cash-flow-positive. "We knew we had something here; we just went about it the wrong way," says Ghoorah.

Cheap became the new religion--still widely practiced today. All employees fly coach and share hotel rooms. The IT staff is skeletal. Aggarwal finally got around to hiring an assistant two years ago--about when he took on a company lawyer. The on-site coffee barista came aboard only after a test run in Cvent's New Delhi office reduced employees' going out for java by over 80%. "It's in our culture," says Aggarwal.

Cvent planted a flag in India back in 2002, largely to cut costs and handle support services. It's done much more than that, growing from fewer than 10 employees to 800; it now oversees sales, client services and product development. An exchange program lets American employees spend six weeks in Delhi and Indian workers hang out in McLean.

Another comeback lesson was learning to focus more on its hires. After Cvent started turning a corner in 2003, it began recruiting new college grads--kids who are hungry, energetic, tech-savvy, cheap and relative blank slates. "What you tell them they'll believe and think that's the only way to do it," Aggarwal explains. New employees--like the 100 brought on last year from the likes of the University of Virginia, Virginia Tech, James Madison University, Penn State and Duke--attend an eight-week boot camp at Cvent University.

With the business stabilized, Aggarwal started thinking big again. He bulked up the sales and marketing team--600 of his current 1,400 employees--and pivoted beyond the middle market, nabbing clients like Yahoo, Marriott, Visa and AARP. Between 2008 and 2012, Cvent claims, its revenue compounded at an annual rate of 34%; $5 billion in transactions took place via its system last year. Its closest (and larger) competitor? Active Network of San Diego, which lost $39 million on $450 million in revenue over the latest four quarters--and recently agreed to be acquired by a private equity firm.

In 2011 Aggarwal went to investors again, raising $136 million mostly to pay off his long-suffering original backers. Insight Venture Partners provided half the capital in the round and declined to cash out in last summer's IPO. "You had a big category, it was early in the category, and they were the dominant player," says Jeff Lieberman, a managing director at Insight. "It's like a sales and marketing machine."

With a lot of elbow room. "We estimate that $103 billion is spent at hotels from meetings and events," says analyst Debbie Wong at Frost & Sullivan. Cvent hopes to scoop up more business by acquiring mobile app developers Seed Labs and CrowdCompass, as well as ticketing company TicketMob. It opened a London office last July; a Frankfurt location is on the way.

Expansion is certainly squeezing margins. "This is the first time in a very long time that we're taking our profitability down to go after market share," says Aggarwal. That's okay; his investors expect bigger things. First investor Sanju Bansal has put in a total $2.3 million over the years and estimates he has seen a 30 times return. He's letting his money ride.