When the pandemic shut down global travel, this young travel tech company that hadn’t yet hit its first anniversary sat at a crossroads. Remain bootstrapped or get VC support? Vervotech Co-founder and CEO Sanjay Ghare wisely chose the former.
Now, fresh off an acquisition by the Constellation Group, the savvy CEO sat down with the GetLatka team to discuss his journey. Find out why Ghare chose to sell specifically to Constellation, how he structures his profit-sharing for employees, and what problem he solves that many (including Latka) didn’t know existed.
- Launched in 2018
- $240,000 MRR, up 70% from YAG
- 200+ customers, powering 1000 websites globally
- 5 co-founders on leadership team
- August 2023 acquisition by Juniper Group, part of Constellation Software
Vervotech launches 9 months pre-pandemic to solve accommodation standardization
According to Ghare, Vervotech launched in late 2018 to solve a common problem for travel agencies: “When a travel agency sells hotel inventory, they buy from multiple hotel suppliers to get the best rate for their customers. We standardize hotel data, so travel agents can show a unique listing of hotels and rooms and rates on their website.”
A perplexed Latka asked for clarification, “Why not just use Expedia?” The CEO responded, “This is not as much of an issue for big chains. But there are 3m hotel properties globally,” he explained.
He added, “It’s a very common problem to have address confusion with a 1-star vs. 5-star property on the same street. Expedia may go to 100 suppliers with no industry standardization. So we assign a unique ID to each hotel, so Expedia can see that this is the exact same hotel coming from multiple suppliers.”
$16,000 ACV across 200+ customers
Ghare revealed that his average customer spends $16,000 per year, or $1200 in MRR, on his global accommodations data mapping software. Customer ARR ranges from a low of $12,000 to a high of $100,000+, depending on the number of users.
“This is an old problem. Over 100 companies have been trying to solve this problem for years, but inefficiently,” noted the CEO. Ghare identified the three known competitors in the space as:
“Our first customer is great, and they’re still with us,” Ghare shared, adding, “When we started, our pricing was ad hoc. We agreed to do a 7-year contract with them, valued at $30,000 per year, to secure the revenue. Now, we change our prices annually, and it’s public information.”
70% YoY growth for last 2 years
According to Ghare, Vervotech has grown an impressive 70% YoY for the last two years, making up for the slowdown caused by the pandemic. When asked what levers he’s pulled to drive that growth, the co-founder responded, “All of them. We do events, Google Ads, SEO, and we have an inside sales team.”
When the pandemic hit, Ghare and his team had to decide how to proceed. They decided to lean in and build during the pandemic instead of raising capital. “As a result, we are good operationally once we got out of that,” clarified the co-founder.
Ghare revealed that Vervotech was acquired by Juniper Group, one of 7 groups within Constellation Software, in August. “I love (CEO) Mark Leonard. We study all his letters, but he doesn’t do many interviews. So, it’s hard to quantify, but why do founders like you love the Constellation model?”
Latka asked. Ghare, who noted that Constellation is valued as the 8th largest software company globally, gave 2 main reasons for choosing Constellation. “One, they already have 14 travel-related companies in their portfolio. There’s a lot of synergy there. We can leverage the customer base and best practices. And 2, they give you best practices support, but they let you run things independently, without change to your culture, how you operate, your brand, anything.”
He concluded, “Practically, it just accelerates things without changing anything or limiting what we want to achieve.”
Portfolio of 1000 companies: ROI Driven, dashboards, playbooks
As Latka and Ghare discussed the inner workings of Constellation, the CEO admitted that he hasn’t yet seen the full picture, as their deal only closed a month ago. “There’s huge transparency. You get access to reporting and playbooks, making it easy to quickly learn and decide how to proceed. I’m still getting access to dashboards and things.”
He continued, “We did the financial integration first. Next, it’s product, sales, and marketing.” The CEO added that Constellation is very ROI driven, noting that they don’t invest a single dollar where there’s no ROI. Plus, they put their revenue back into the companies they acquire to stimulate growth further.
A couple of days on valuation, much longer on strategic alignment
Naturally, Latka pressed Ghare for details of the sale, but he insisted that he’s under NDA and the sales information must be kept confidential: “I cannot disclose terms. But the founders and I are happy.”
He shared that they agreed on valuation in a couple of days, adding, “Constellation acquires businesses to retain. So their offer process was fair and methodical.” The CEO noted they took much more time to confirm how they would strategically align for growth.
Summing up the acquisition, the co-founder reflected, “Honestly, I never considered selling the company. I met the Juniper and Constellation guys and saw the synergies for growth in Europe and South America, where they have a presence. With Juniper, we will get 3–4 years faster growth. That’s why we did the acquisition.”
25% employee profit-sharing
Latka asked Ghare about Constellation’s profit sharing: “Mark talks about how they empower the leadership group and the subgroups with real profit-sharing to keep them excited. So, as the CEO, how does the funnel down to you?”
Ghare responded, “Vervotech always shares profit with employees. It’s usually 25%, depending on annual cash flow on top of salary and compensation. Constellation does the same thing.”
He clarified that their profit-sharing is performance-based, noting that each team has different KPIs to target: “For the marketing team, it’s how many new deals and the CAC. For sales, it includes conversions and deal size. CTOs is attrition because if customers leave, there’s a problem with the tech.”
Favorite Book: CEO and Co-founder Sanjay Ghare selected Good to Great by Jim Collins as his favorite business book.
CEO he’s following: “I learned so much from Mahendra Yadav of Tavisca, who was my boss there,” replied Ghare, who spent a decade at this division of JPMorgan Chase.
Favorite online tool: Without hesitation, Ghare selected Zoho as his favorite online tool.
Balance: Ghare gets 6–7 hours of sleep per night. He’s 37, married, with one child.
What does he wish he had known at 20? “I wish I had known more about the financial system and the way business works back then,” replied Ghare.