Wow, what a wild ride for Cvent. Today it announced that it will be acquired and taken private by Vista Equity for $1.65 billion and a whopping 70% premium over the stock price of the last 30 days. This price is a multiple of about 7.2x expected 2016 revenue and about 57x expected EBITDA.
Classic B2B Marketplace Strategies By Cvent
Cvent has a great story you can read about here and here, so I won’t repeat it. I will simply reiterate that Cvent built a fascinating two-sided market in the meetings and events space employing a number of techniques others can learn from:
- Cvent first built a simple event registration application that needed no network to help those hosting meetings keep track of RSVPs. That’s called the “Single Player Mode” strategy or the moniker I prefer, the “Come for the tool, stay for the network” strategy.
- As the registration business became commoditized, Cvent built a more robust tool for large enterprises to manage other aspects of their meetings and to book hotel space–competing in what became the “strategic meetings management” (SMM) space. In other words, Cvent migrated up the value chain of disruptive innovation just as Clayton Christensen would tell you to do.
- Cvent created a marketplace for buyers and suppliers to book hotel space. From the start, Cvent made the marketplace free for buyers to post RFQs and charged the suppliers to advertise on the platform. Over time, the marketplace became a big success, generating more than 30% of sales.
A Lesson in Patience
Like Ariba, Fieldglass, Concur and many others there were huge bumps along the way. Cvent almost went bankrupt in the 2001 meltdown. Eventually the company went public and the stock soared until it recently swooned, which must have seemed like an opportunity to Vista. All the while the company was building value and a two-sided marketplace. Congrats to the Cvent team, probably time to get a little well-deserved rest.