There were two announcements yesterday that most event directors probably ignored.
These two announcements mean that the history of vendor failure in event technology is likely to continue, and potentially accelerate.
This is bad news for event directors. They pick a technology partner hoping they will provide the technology they need today, evolve with them in the future, and most importantly not have to learn something new someday.
As many endurance events know, there has been massive turnover in vendors – from Do It Sports, Race Partner, SignMeUp, RaceIt, IMAthlete, Get Me Registered, RaceWire, Chronotrack Registration, etc.
Event Technology and Investors
The fundamental problem with all of these companies was the fact event technology does not meet the “Rule of 40“, especially at scale.
The Rule of 40 is the total of growth plus profitability. So if a company is growing 40% with no profit, or if a company grows 20% and have profitability of 20%, those are good.
The problem is that it is very difficult to grow 40% in the event technology business once scale is reached (it is easy to grow from 100 customers to 200 customers, but harder to grow from 10,000 to 20,000). All customers already have a vendor, and customers do not switch easily. Event Directors have way too many things to do, and learning a new system – even it is better and less expensive – is a tough hurdle.
This is also happening to the software space in general because AI is allowing customers to vibe code their own solutions, putting pressure on pricing and growth for even large and highly successful companies like Salesforce, Snowflake and Workday.
Bending Spoons and Thoma Bravo Playbook
Simple Playbook: Buy software business with a sticky installed base, cut expenses and raise prices. The Rule of 40 is met with 50%+ profitability and losing only 10% of customers each year.
Eventbrite had been trying to get back to growth for many years. They were actually in decline. And losing money. No where near the Rule of 40 even thought they had many rounds of layoffs and had hiked prices. Bending Spoons is much more ruthless as we covered when the acquisition was announced.
Thoma Bravo’s announcement that they were only going to fully acquire and control companies is a similar signal. Gone are the days when they would buy parts of companies and let them operate. The software space is going to see compressed growth and margins in the coming years from AI. But it will not go away – there is plenty of opportunity to run the playbook that Bending Spoons and countless other “vulture investors” have in the past.
RunSignup – Employee Owned
We are thankful we do not have outside investors. We are not a Rule of 40 company, more like a Rule of 20-30. Which is fine with us. Especially because we do not need to give a cut of that success to outside investors. It leaves plenty to invest in our employee-owners and customers for the long term.
We also feel a little guilty to benefit from our competitors going out of business as we help out those who get stranded. But only a little.