Portfolio | Michael Patton, Pothos

Michael Patton’s hospitality career spans more than three decades and includes time spent on both the supplier and planner side. During that career, he also served in the U.S. military. About 10 years ago, he started Pothos, a full-service strategic meeting management company based in San Diego. His clients include investment banks, retail chains, IT companies and engineering firms. After a successful 2011, Inc. magazine put Pothos at No. 465 on its list of the 500 Fastest Growing Small Businesses, coming in at No. 2 in the travel category. Despite the company’s growth, Patton says he’s had to deal with industry setbacks like everyone else, from slow government contracts to bad press. Patton talked to Collaborate about tough lessons learned starting his business, the importance of reporting and proving ROI, and his belief that people in the meetings industry are inherently fair and honest. How did you get into the world of corporate events? Like everybody else, I think I dropped in by mistake. When I was young, I started in hotels, and while I was in the service, I continued to work part-time in the hotel industry. When I got out of the military, I went back to the industry and started a private event planning and management company and taught college. In the mid-’90s, I was a jack-of-all-trades, doing everything. I then applied for a corporate meetings position and moved from San Diego to L.A. After five years, I was laid off and went through a series of hirings and layoffs before I decided to start my own company. That was 10 years ago. My company started with just me, and now we have nine full-time people on the payroll and, at any given time, up to 22 on part-time status depending on how busy we are. What drew you to the corporate meetings industry? When you’re in hospitality, initially you have to have a spirit of service. I liked the corporate meetings side because there are so many working pieces. In the hotel business, I was in operations. Whatever hat you’re wearing—front desk, reservations, managing a housekeeping staff—you’re in operations. You put information into P&Ls and so on. But when you’re in the meetings industry, you’re dealing with so many other variables, such as airlines, hotels, off-site venues, restaurants and entertainment options. What corporate meeting planning did for me was give me stimulating input from separate areas that are all still related to hospitality or taking care of people but not confined to one building or one task. What kind of challenges did you face starting your own business? I think with any startup, you have to realize you need enough capital to survive. Starting a business is not something you do with only half of your heart in it. You eat, sleep and live that company. And unless you’re talking about a company with an angel investment, capital comes from within. In my case, I used savings that paid for my existence and the startup of the company for three years before it started making a profit. Starting a company means working alone and working long hours, and it’s knowing the right steps to take. A lot of people are willing to tell you what you need to make it successful. They say, “I’m going to sell this to you.” You have to sit back and ask, “Is that snake oil, or do I need that? Is there ROI in that? Or are they just good at selling to entrepreneurs?” I got burned a couple of times—I bought into the Kool-Aid. You learn from those things. What are some of the trends you’re seeing in corporate meetings? I hate to say the government sets the standard, but it’s the largest company in the U.S. The corporate world has seen its share of knocks. Corporate bailouts sent the pendulum swinging far left and far right. In our company, in everything we do, we have to have ROI, whether that’s soft or hard. We have to answer: Why are we meeting? If it’s training, we have to say: Here’s the objective, and here’s what we want to be accomplished. The industry now requires that we set best practices for purchasing and procurement to send out RFPs and find the best value—but not necessarily lowest cost. Companies are on board for that. In the past, companies may have had an admin find the hotel closest for a meeting, and it didn’t matter what the price was or room rate was. You just paid whatever they said. When the hotel sent the contract, the admin or the executive signed it, and it never got a thorough read. When someone writes a contract, they write it in their best interest. But I want everyone to win. I want to get a good deal, but I also want the hotel to make a reasonable profit, because otherwise they’re not going to be there for me next year. Has the corporate meetings and incentives industry finally emerged from the recession? What’s the indicator? People are still doing business. They need face-to-face meetings. They need training. I think companies are not avoiding what they know is necessary, but they’re looking closely at the cost/value proposition—the value of the hotel, F&B, the function and the value internally. Twenty years ago, a company would have an incentive trip every year, and I don’t think anybody was on the back end, counting increased sales produced from the trip. It was an expected bonus of work and employment, but did it really drive exponential new sales? Now companies are being more specific and more inclusive. They’re asking those questions: Why are we spending the money? Should it be spent in training sessions, or do we want the training to incentivize the person? What’s one thing you wish you could change about the industry? In recent years, the media has done a good job of opening Pandora’s box and making it seem like there’s waste, fraud and abuse in the meetings industry. And in fact, there could be waste in certain areas. I’m one to agree that a big executive bonus when a person departs a company looks unusual. But in the world of meetings, incentives and doing business, the public is often misled. There’s not waste and abuse. Is there a one-off? Yes. But in 10 years in this industry, I have never had an executive say, “Do this off the record,” or, “Give me this perk or benefit.” I think the general public is getting whipped up into a media frenzy that is a dramatization and not a good, accurate picture of the industry. Take Muffingate, where they said it cost $18 for a muffin. The reality is that’s how much catering charged for a continental breakfast. The inspector general later retracted his statement, but nobody saw that. That’s what we’re suffering from in the corporate meetings world. The news might be accurate as reported, but it doesn’t tell the whole story.