As Convene recently celebrated its tenth anniversary, I was inspired to reflect on what we’ve done to get to 32 locations and nearly 800 employees. There’s no single path to success, and no one plan has gotten us here. Through both strategy and necessity, we charted a path that may have seemed boring to some by focusing on continual improvement of our offering and growing within the available means.
As our success grew, and it became clear that it was repeatable, our growth accelerated. However, we’ve never lost sight of the scrappiness that got us here or prioritized growth over the quality of our product or the livelihoods of our team members. Most importantly, CEO Ryan Simonetti and I have always known that a successful business needs to consistently make money.
Recent market events have affected investor sentiment and created a renewed focus on building businesses profitably and sustainably. Although the winds have shifted quickly, we’re happy that they have, because Convene has been built with three simple goals:
1) Give our clients a fantastic and memorable experience that will bring them back again and again;
2) Provide our team members with an amazing career opportunity and
3) Build a business that will thrive long after our founders are gone.
Our first two goals are tightly linked, because happy team members that enjoy their work are going to be much more likely to deliver a special experience. We’re proud that Convene has been named one of Fortune’s Best Workplaces in New York for the past three years, and our team’s hard work has resulted in industry best Net Promoter Scores. To be sure, having happy customers and team members goes a long way towards achieving our third goal.
Convene has opened 32 locations across six markets with more to come. While each location is unique, there are key similarities that are the cornerstones to our continued sustainable and profitable growth:
- A disciplined approach to finding locations: We have an excellent real estate team and group of partners that allow us to target markets (and sub-markets) that make the most sense for our client base, which has always been enterprise in nature. There has not been any shortage of opportunities, but we choose to wait for the opportunities that are going to be best for both us and our landlord partners. While this has forced us to walk away from deals that would have made sense under other circumstances, it has allowed us to maintain a portfolio IRR of close to 40% while still growing at more than 60% a year.
- Client retention and growth: The experience that we deliver and our consistently satisfied customers also contribute to our profitable growth. We have customers that do business with us in each of the markets where we operate, and they continue to grow with us. In addition to 45%+ annual client retention, we see those same clients growing their annual spend by as much as 20%. We also continue to add new clients, which bolster and diversify our already strong customer base.
- Unit economics: At its core, Convene is a unit economic business. It doesn’t matter how magical the experience is if we can’t make money at the unit level. That’s why the focus in our early years on delivering the best offering in the most efficient way has paid dividends. Our scrappiness and core value of doing 1% better every day still persist, and have allowed us to consistently maintain unit economic margins in the low-mid 30% range. Are we perfect? By no means, but we constantly push one another to find ways to do things smarter, faster and more efficiently.
For almost every year that Convene has operated, it carried that unit level profitability through on a consolidated level. Over the past couple of years, we have made leverageable investments in our corporate infrastructure to support our continued growth. With the bulk of those investments made, we will return to profitability at a corporate level in 2020, while growing more than 60% again.
Being the CFO for a high growth business can be exhilarating, stimulating and frustrating (sometimes all at once). Rarely does anyone refer to it as boring. Over the past few years, profitability may have been considered boring relative to rocketship growth. That sentiment seems to be shifting, but in the meantime, we are happy to be boring in the best possible way.