Event app platforms have been all the rage for quite some time now in the world of event tech, so it’s only natural that investments in event platforms come next. Hopin, the 2019 London-based start-up, is considered a unicorn among event apps. In such a short span of time, it has managed to attract enormous investments. But should we care?
Time and time again, Will and Brandt have proven to the Event Tech Podcast listeners that they are experts in all things tech. In this week’s episode, however, they demonstrate that they also have a sharp eye for business. They take a closer look at the news about Hopin’s staggering $5.65 billion valuation. Most readers take such news at face value and view the investment as a success, but Will and Brandt know what goes on behind the scenes. What exactly does this mean for Hopin and what does it say about other event platforms? Tune in and find out what the spicy duo has to say!
Investments Don’t Equal Quality
“We need to understand that investments are bets. Given enough money, this product is going to take off to the point where they not only make that money back, but make a lot more money off of it. And they know that they’re going to see a return on that investment. When you see a Goldman Sachs getting involved in the event industry through investments, they’re looking to see a financial return on that investment.” Unlike many tend to believe, investments in event platforms aren’t necessarily a reflection of quality. “A lot of it is name recognition,” says Brandt.
Money Is Not Everything!
Will puts his entrepreneur hat on. “We think to ourselves that they have so much money. They must have unlimited resources to make things happen. At a certain point, Hopin will start to scale, but you can only scale so fast. Because you get this flood of money, though, it actually might lead to worse changes in quality. Because when you don’t have any money, you have to make sure that you’re doing everything right. You can’t afford to lose a customer because if you lose a customer, you’re going to miss payroll, right?”
Will continues. “I think that you get so much more laser focused when you just have to bootstrap and make things work. For all the Hopins we hear about raising millions of dollars, there are platforms that haven’t raised any money in the last 12 months and might be healthier in the end.” He likens Hopin to the next Eventbrite. “They’re huge, even after they scaled back during the pandemic. Yet the biggest events in the world didn’t use it for the registration. What it did was it appealed to the mass market of people who needed something quick. For all of our FinTech companies listening right now, you don’t have to be worried about Hopin. I think they’re going to build this humongous company that will reach a huge market, but won’t tap into the big pie events that we would rather do. One gigantic Intel conference, for example.”
Brandt agrees with Will. Investments in event platforms are a double-edge sword. “When you’re trying to make every penny count and it’s your cash that’s on the line because you’re an owner of a company, there’s a very different mentality. If that money flows in and you’re not used to dealing with capital, then you’re not necessarily going to be good at managing that money. You’re going to be more strategic about how you spend your money and where you invest it when you’re a little limited.”
“More power to Hopin for attracting attention and getting that money. But now, we’re going to start to see the consolidation phase,” says Brandt. “Everything’s running on a much more condensed timeframe. The expansion of what was event apps over a decade and then the contraction over the last three years is all happening in one year for these platforms. There was a great expansion: the big bang of the pandemic. Now, we’re starting to see the contraction where things are consolidating and coming together. And part of that is going to be investment that if you’ve been gifted a significant chunk of money, you’re going to be much more available to start buying other companies as well.”
Will makes another important, yet a little bit disappointing, point. “Sometimes, we hear about money getting pummeled into event technology companies. We like to think it as that money coming into the events industry and people taking notice to the events industry. I don’t think that’s true. Investors see money and the growth of the company. They don’t even care. They don’t know what the events industry is. They’re interested in a technology company, high returns, fast-growing model. A lot of times when we’re sitting here thinking that the events industry is getting a lot of attention, it never trickles down to production companies or planners.”
Reading TechCrunch’s article about Sriram Krishnam joining the Andreessen Horowitz’s board, Will observes another trend in the world of investments in event platforms. “Investors are looking at these platforms not as event platforms, they’re looking at social platforms. I think that’s potentially what’s happening with Hopin is that they’re focusing really hard on the long-term. They’re a social platform, not an app you just use at one event.”
Will & Brandt As Investors in Event Platforms
To spice things up, Brandt asks Will what would he invest in if he had the chance. Once they started brainstorming, there was no stopping them. Will’s first idea was to invest in a company ” that can grow beyond just the events industry”. “I would invest in something like WebEx because they’re on every news station,” he says.
“You’d invest in the pipeline. You’d invest in the infrastructure that’s getting people online.” But Brandt has other ideas. “I would start looking at the event apps that pivoted and the ones that I thought had the best shot of pulling through as we come back to in-person. I’m going to be looking very closely at the event apps that added on an online video component, because I think those are the ones that are going to succeed in a hybrid environment. The ones that can provide Q&A, polling, all of the stuff that we were looking at for interactivity and engagement in our in-person events translated to an online event that can also be viewed remotely. That way, the in-person audience and the remote audience are using the same platform. It’s not going to be the incumbent online platforms. They’ll be just fine for fully online events. They will continue to be making money because that’s not going away anytime soon. But as we move into hybrid, it’s going to be the event app companies that bolted on a quality online experience.”
What Else Would They Invest In?
Will has another idea. “”As an investor, I want like resilience – a company that’s going to continue to grow and not just die out. In-person event apps that tacked on virtual and grew out of that are likely going to be more resilient to change. If you just came in as virtual-only, now you have to snap all these in-person features. That can create a lot of stress and friction while other companies are just racing back to doing what they’re doing. It’s so interesting to watch all these companies now race to say ‘We’re a platform, but we don’t do registration’. If you don’t have that, you’re going to get dropped. They’d just rather have an all in one platform all together.”
Brandt also has a second suggestion. “The other places I would be looking to invest are the companies that didn’t pivot and survived. For example, the registration platforms that didn’t feel the need to bolt on a video platform. They just did it with online events, as opposed to in-person events. They were still just a registration platform or an engagement app. Not only they survived, but thrived.”
“It will be really interesting to see what continues to happen in the event tech industry when it comes to investments. I think they are only going to continue to come in. There will be silent people getting money on their own, not saying anything,” says Will. “And I have a feeling that consolidation episode will be coming in the near future as well.”
Brandt’s main takeaway about investments in event platforms is that money doesn’t equal quality. “Just because someone’s getting a bunch of money doesn’t necessarily mean they’re good. It doesn’t mean they’re bad either, but just be wary of that. Watch what they do with it. What are they investing in? One of the biggest criticisms that I hear of the event technology companies, especially the online platforms, is not very great customer service. I would love to see a Hopin press release saying they’ve hired 300 new customer service representatives to help with technical support. You can do amazing things with that amount of money to increase the customer experience. I’ll be watching with great curiosity to see what will they use that money for and how do they improve the product as opposed to just improving their bank accounts or buying other companies.”