Private Equity and the Death of Event Tech Innovation

[00:00:00] So Tess, today we're talking innovation. Oh, this is going to be good. Yeah, and how we're screwing it up.

[00:00:08] You're listening to The Event Tech Pull Up, the show that brings you the good, the bad, and the ugly of event technology, with your hosts, Tess Vismale of iSocialX and Keith Johnston of i3 Events.

[00:00:22] So today we're going to be talking about this innovation stuff. Oh, are they ready for this?

[00:00:28] I don't know. And you know, this one, we actually talked about that in this episode, right? Like, is this an episode we should actually dive into?

[00:00:36] Yeah, because they haven't seen us talk about things like that. They don't know about us in that way.

[00:00:43] Yeah, well, and especially with this one, because I think that the focus of this one is Event Tech Innovation, but it's also private equities influence on the Event Tech Innovation that's going on or should be going on.

[00:00:59] And the issues that might pop up because of private equity.

[00:01:03] And so what's the title of our show?

[00:01:06] The Event Tech Pull Up.

[00:01:09] You know, guys, you know how I used to introduce him and then he just kind of go, squirrel.

[00:01:17] That was that moment. I probably should have said, and what's the title of our episode?

[00:01:21] Oh, oh, oh, oh, oh, oh, what is the title of this episode?

[00:01:26] Event Tech Innovation.

[00:01:29] I actually don't remember.

[00:01:32] You know, what am I going to do with him?

[00:01:34] Oh, oh, I remember. It's how private equity is killing Event Tech Innovation.

[00:01:42] Squirrel.

[00:01:44] Yeah, that was bad on me.

[00:01:47] No problem, no problem.

[00:01:50] So we all know what private equity firms are, but we kind of have to look at their behavior and what they've done in other industries.

[00:02:01] Well, and some people may not know what private equity is, so I'll give the quick general overview.

[00:02:07] So private equity is just private firms that actively acquire and invest in companies because they can make money, right?

[00:02:20] So like private equity, for example, will invest in a restaurant chain.

[00:02:24] They will invest in tech companies.

[00:02:26] They'll invest private equity owned staples, the office supply store, right?

[00:02:32] They're just private companies that come or private entities that come in and buy up a whole lot of things.

[00:02:38] But in doing so, they can actually wreak havoc on the innovation that is required to keep anything moving forward at a good clip.

[00:02:48] Yeah.

[00:03:18] What we're saying is it can stifle innovation.

[00:03:20] So just in our industry alone, if you look at a private equity firm like Blackstone, right?

[00:03:26] They own Encore or PSAV, whichever you want to call them.

[00:03:30] They own Cvent.

[00:03:31] They even own venue spaces.

[00:03:34] Yeah, and then Eagle Tree bought PRA.

[00:03:37] Yep.

[00:03:38] Tell people what PRA is in case they don't really know.

[00:03:43] So PRA, they're a third-party event planning agency.

[00:03:46] Okay.

[00:03:47] Yeah.

[00:03:47] Okay.

[00:03:48] You know, so they're even seeing the benefit or the money-making potential of that side.

[00:03:54] And so they're investing in that.

[00:03:55] So it's not just Event Tech?

[00:03:57] No, not just Event Tech.

[00:03:58] But on the Event Tech side, you also have General Atlantic.

[00:04:00] I think they bought Triple C.

[00:04:03] Most people probably don't know who that is, but maybe you soon will.

[00:04:07] Hopefully it's all.

[00:04:08] Well, there you go.

[00:04:08] Okay, so I need some profitability and I would hope you do.

[00:04:12] Yeah, but private equity comes with some downsides, let's say.

[00:04:17] Dun-da-dun.

[00:04:18] You know, sometimes they are like the Death Star.

[00:04:23] You know, I always say moving through a solar system and gobbling things up.

[00:04:28] And so I'm actually going to jump down to number five on the list because I think that's one of the biggest challenges to innovation with private equity

[00:04:38] is the consolidation that you're going to see with private equity firms, right?

[00:04:43] Because they come in and they start buying up all of the competitors to whatever brand they're in to add more functionality to their technology

[00:04:51] or to kill off that other technology because it's a direct competitor to their existing technology.

[00:04:56] Yeah, and then when it's already a market that doesn't have so many companies like themselves in it,

[00:05:05] I mean, it really truly makes it worse.

[00:05:07] Oh.

[00:05:08] Because then innovation doesn't happen.

[00:05:10] We've seen that occur where companies will buy, buy, buy,

[00:05:13] and then that great, exciting event tech company that had like the latest thing in it,

[00:05:19] we got excited about it, and then all of a sudden they go dark.

[00:05:23] And then the innovation, you know, all the merrier.

[00:05:28] If you get your money, you sold off your tech, great.

[00:05:32] That's nice.

[00:05:33] But what about the creativity?

[00:05:35] What about the fact that that literally was pushing our industry forward?

[00:05:40] And there is one we can actually pick on, which is Hoppin, right?

[00:05:42] When Hoppin got all that money, you know, that was, I'm sure they had private equity, venture capital,

[00:05:48] all of the monies were flowing into them during COVID.

[00:05:52] And they were buying up things and they just killed them.

[00:05:55] They did.

[00:05:55] Like a Tendify.

[00:05:57] Yep.

[00:05:58] They got, what was a boom set?

[00:06:00] They got.

[00:06:01] A whole lot of things.

[00:06:02] Yeah.

[00:06:02] So, hey, Ring Central, if you're tuning in here, bring back some of those products

[00:06:06] because they were actually really great products that people needed and used.

[00:06:11] Yeah.

[00:06:11] Can I go ancient on you?

[00:06:12] The one that's the thorn in my side?

[00:06:15] Sure.

[00:06:15] Go for it.

[00:06:16] I mean, it's been many years, so I'm sure I'm not going to get too much trouble about this.

[00:06:20] But I remember in 1919, no, I'm just kidding.

[00:06:25] But when C-Vent bought one lobby, you know, that was my heart.

[00:06:31] I adored that company.

[00:06:34] It's a Canadian company.

[00:06:35] They were bringing dashboards before dashboards were dashboards for us.

[00:06:40] They were letting us look into the future of what event tech could look like.

[00:06:46] And it went zoop, gone.

[00:06:49] And I don't even see any remnants of what that is today.

[00:06:55] Maybe they're slowly getting into it and it's kind of hidden and or the like,

[00:07:00] or it's evolved into something else.

[00:07:02] But it just makes me mad when you just have no, in my mind, how it comes across is no respect

[00:07:12] for the innovative tech.

[00:07:14] Yeah.

[00:07:14] Well, and C-Vent did that.

[00:07:15] And I'm not picking on C-Vent.

[00:07:16] I think their product now.

[00:07:17] I think I have no problems with it.

[00:07:19] I have lots of clients that use it.

[00:07:21] But back in the old days, actually, and this is pre-private equity in C-Vent.

[00:07:27] Oh, yeah.

[00:07:28] Oh, yeah.

[00:07:29] Oh, yeah.

[00:07:29] They bought up.

[00:07:30] It was the concept.

[00:07:31] Well, they bought out SignUp123, too.

[00:07:34] Ooh.

[00:07:34] Which was a better registration platform than theirs.

[00:07:38] But then they only wanted it for the customers.

[00:07:40] So they literally killed off that tech.

[00:07:42] And that was great.

[00:07:43] It was good event tech.

[00:07:44] And just remember, I mean, think about what life would have been like then.

[00:07:47] But there's some, you know, when purchases happen, they keep the core of the business intact.

[00:07:56] For some companies that do a lot of acquisitions, that's not the case.

[00:08:01] But there are some.

[00:08:02] Yeah.

[00:08:03] But we should, getting back to our list.

[00:08:05] So the second thing, which is actually the first thing, is private equity is a little bit risk averse.

[00:08:13] Right?

[00:08:14] They are in this.

[00:08:15] They're investing in something because they know it's a moneymaker.

[00:08:18] So they don't want any risk in it because they want to get the biggest return they can as quickly as possible.

[00:08:23] Again, I am not faulting that.

[00:08:25] I am a capitalist.

[00:08:26] I get it.

[00:08:27] But risk aversion can actually stifle creativity because you can't get out there and you can't try new things.

[00:08:34] No.

[00:08:35] So that's an incremental thought about innovation.

[00:08:39] And innovation doesn't necessarily work that way all the time.

[00:08:42] For the best, right?

[00:08:43] Yeah.

[00:08:44] Exactly.

[00:08:44] Sometimes you need to go to market a little bit faster than what your pocketbook might say.

[00:08:50] Well, you might be able to go through innovation a little faster than what your pocketbook might say.

[00:08:56] Is it really the data and the numbers that drive it or is it really truly the other side of the brain?

[00:09:03] And now the next one, which kind of ties in with that, is short-term thinking limits long-term R&D.

[00:09:10] Hmm.

[00:09:11] Hmm.

[00:09:11] Which I don't think there's any truly long-term R&D on event tech.

[00:09:19] I mean, yes, there is some like with what Zenus is doing with the facial recognition and things like that.

[00:09:24] Which I think is beautiful.

[00:09:25] It is.

[00:09:26] They're doing an amazing job.

[00:09:27] You know, so there is some long-term thinking there.

[00:09:31] But that short-term need for profit and profitability hinders your ability to put money into a little black box program that's down in the basement where it's two folks that are noodling over a new AI registration system, right?

[00:09:49] That isn't really happening because you can't dump money into those departments that are trying to be creative.

[00:09:56] No.

[00:09:56] And I think that probably, I don't know the statistics around that, but I think there are a low number of companies that service our industry.

[00:10:09] So I don't, from a technology perspective, that literally have dedicated innovation departments that do that.

[00:10:18] Oh, I would probably get venture.

[00:10:21] There's probably, you can probably count them on one hand.

[00:10:23] Exactly.

[00:10:23] There are some.

[00:10:24] Some of the big boys, you know, definitely have it.

[00:10:28] And even some of the smaller players, like I thought it was interesting, you know, when you're thinking of, let's say, Shepherd Exhibition Services, right?

[00:10:38] They're out of Atlanta.

[00:10:39] They've been doing business in the Southeast.

[00:10:42] They do business all over there.

[00:10:43] I know Shepherd one.

[00:10:44] Right.

[00:10:44] So they have a department that people didn't even know.

[00:10:47] I can't remember the name of it right now, but I have a friend who works in there.

[00:10:50] And they have been pushing the envelope for a long time, looking at the tech, looking at different things.

[00:10:55] Right.

[00:10:56] And there's some other AV or event production companies that have that.

[00:11:02] But I'm wondering if a big boy comes in to acquire, will they keep that intact?

[00:11:08] Will they start re-orging around that?

[00:11:12] But, you know, I know that's for another episode.

[00:11:14] Oh, no.

[00:11:15] I totally get what you're saying, right?

[00:11:16] If private equity came into that company, are they going to kill that department just because it costs a little bit of money?

[00:11:23] Yeah.

[00:11:23] Like, you know, if you look at AV companies, you know, my buddy Marv owns Audiovisual Productions AVP down here in just south of Chicago.

[00:11:33] And they're always trying new things, right?

[00:11:37] And if private equity came in, that whole – it's not a department for him.

[00:11:43] It's a group of people.

[00:11:44] But those activities would probably have to cease because then they have to go into money-making mode.

[00:11:49] Right.

[00:11:50] And then what happens is it leads to number three, which is standardization over customization.

[00:11:57] Right.

[00:11:58] And now I will say in the event industry, one of the things that we have always lacked is a little bit of standardization, right?

[00:12:05] Standardization is not necessarily a bad word, right?

[00:12:07] And case in point is the RFP process, right?

[00:12:10] Wouldn't it be amazing if all RFPs to hotels were standardized so that you got back apples to apples?

[00:12:18] Yeah.

[00:12:19] Right.

[00:12:19] So I don't want to pick on standardization, but the rush to maximize efficiency and profitability can sometimes lead to no customization on products, which can be bad.

[00:12:34] Exactly.

[00:12:35] Exactly.

[00:12:36] So if I think about how life is, right, and what we were kind of – well, you know what?

[00:12:49] I'm going to take a step back.

[00:12:50] I'm going to pause on that part.

[00:12:51] I'm going to go back and think about marketing of event tech companies.

[00:12:56] What messages are they putting out there, right?

[00:13:00] They have a consistency – I call them their repeat offenders of saying that they're a one-size-fits-all or an all-in-one product.

[00:13:11] I know.

[00:13:12] I know.

[00:13:12] I know, right?

[00:13:15] That alone –

[00:13:15] Wait.

[00:13:16] We said we weren't going to swear on this episode and I'm going to go –

[00:13:18] No!

[00:13:19] Yeah, my ass.

[00:13:23] So doing that – so imagine a private equity company coming in and purchasing an event tech company.

[00:13:35] And then they kind of want to say, we do everything, right, because they wanted to capture this part of the market and events drive this amount of business.

[00:13:45] Then do they really still have that opportunity to develop the niche tools of what we need?

[00:13:53] Or are they always thinking about corporate planners or corporate business – or those private equity companies,

[00:14:01] when they're looking at our industry, only thinking about corporate business?

[00:14:05] Yeah, because they're usually hunting whales, right?

[00:14:08] They want the big ticket, the big – those types of clients and not the smaller association clients or small and medium –

[00:14:16] I always said small and medium-sized associations were the most underserved.

[00:14:20] Most underserved.

[00:14:21] Of all the events.

[00:14:22] You know, to me, I'd go to say even us as independent planners, which is even the lowest of the lowest of the low.

[00:14:32] Oh, yeah.

[00:14:32] We're dirt.

[00:14:33] Yep.

[00:14:34] We're dirt.

[00:14:35] We're smert.

[00:14:38] Well, but on the flip side, going to the last point on this one, is opportunities for scaling.

[00:14:44] And here's actually where private equity can be – there are two sides to this, but can be a force for good, right?

[00:14:51] If you have someone that comes up with a product – and we'll use my favorite event tech product of 2023, which was Stageheimer.

[00:15:01] Oh, gosh.

[00:15:01] Right?

[00:15:01] Lucas and –

[00:15:03] We love them.

[00:15:04] I know.

[00:15:04] They're amazing.

[00:15:05] And the same with the Rundown Studio, which is Lucas and John Barker from Here to Record.

[00:15:12] You know, scalability is when private equity can come in, give a company like that a bunch of money, and then they can scale up to serve all of the – because it's a product with a price point that isn't going to break the bank.

[00:15:25] So even smaller associations can use it, right?

[00:15:29] Right.

[00:15:29] So private equity does get a bad rap on that side of it, and I think that they can help these products really explode onto the market and become household names.

[00:15:40] Yeah.

[00:15:41] I'm all for that.

[00:15:42] And again, I'm not against private equity.

[00:15:45] It's just we have noticed through time how it's handicapped us.

[00:15:54] Well, and I think, you know, looking at the analogy, the Star Wars analogy, where private equity can be the death star, right, you need private equity firms that realize that they can bend the rules a little bit.

[00:16:07] Yeah.

[00:16:08] Right?

[00:16:08] It doesn't all have to be about profit.

[00:16:10] They can put a little money into innovation.

[00:16:12] They can, you know, work on tools that might be at a lower price point.

[00:16:17] They, you know, even Darth Vader, right, you know, turned on the emperor when it came to Luke.

[00:16:25] Yeah.

[00:16:25] You know?

[00:16:26] Exactly.

[00:16:28] So, Tess.

[00:16:30] Yes, Keith.

[00:16:31] Is private equity bad?

[00:16:34] For innovation, yes.

[00:16:36] Ooh, okay.

[00:16:37] I was going to go most of the time for innovation, yes.

[00:16:41] Sometimes.

[00:16:41] No, you cannot be in the middle.

[00:16:43] All right.

[00:16:43] Then I'm going, yeah, it's bad.

[00:16:46] Well, and I did, because, you know, again, we go back to that scalability one, right, where if you have a smaller tool, they can really help bring it out and bring it into the market.

[00:16:56] But where they start to, which actually increases innovation, but it's after that that they start to fall down.

[00:17:02] Absolutely.

[00:17:03] Right?

[00:17:03] They start to consolidate.

[00:17:05] They start to, like, they'll buy stage timer and Bob's timer and Cindy's timer, and all of a sudden we're only left with one timer.

[00:17:14] And then that one timer sucks.

[00:17:16] Exactly.

[00:17:18] Well, exactly.

[00:17:19] And we're stuck with a piss poor product.

[00:17:23] Twice I've sworn out we said we weren't going to swear on this one.

[00:17:26] You know, we get these piss poor products that are not served.

[00:17:32] I know our next episode is on tech support in the industry.

[00:17:38] And you end up with products that have 8,000 people in the support thing screaming because it doesn't work the way it's supposed to.

[00:17:44] Yeah.

[00:17:45] Well, this has been great.

[00:17:46] It really has.

[00:17:48] Thanks for joining us this week on the Event Tech Pull-Up.

[00:17:51] Make sure to visit our website, eventtechpullup.com, and find us on Facebook, Twitter, LinkedIn, and YouTube.

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[00:18:19] If you would like Tess, Keith, or both at your next event or in-house training, please email us at tech at eventtechpullup.com.