Thriving in Crisis
How does a travel management company not just survive, but thrive, in a global pandemic?
I see many founders and investors freaking out right now. As the CEO of a VC-backed business travel start-up that just went through 2 years of crisis and thrived, now doing 10x revenue vs. pre-covid ($100m ARR) with a much stronger company, here are some tips to thriving in crisis.
First, just acknowledge that your world has completely changed. Go to WAR MODE.
In March 2020 we were still growing 3x year-on-year. 3 weeks later we had a negative revenue day. Negative. Revenue. We needed to return more money than what we had collected that day.
What did we do? The Leadership Team and I met on a Sunday afternoon and simply deleted the doc with our yearly goals. We stood up by the whiteboard and wrote down 3 new priorities:
- Emerge strong
- Turn lemons into lemonade
We needed to make sure we had enough cash to outlive the crisis. All easy-to-replace/luxury expenses were immediately cut to zero: rent, swag, fruits & coffee, etc. Be brutal with these, get rid of literally everything that you can buy/rent again in the future.
The one thing that we didn't cut was people, we fought hard to save every job we could, and avoided layoffs. People are not interchangeable, each of us is unique. We worked hard to build our amazing team, and I wasn't going to let it all go to waste.
We had 300 sales reps and travel agents who had no work to do: no one was traveling in April 2020. We did a very aggressive performance review across the organisation (all roles) and made sure we cut cost this way, while keeping the best people even in roles that had no work to do.
(Side effect: my team now knows that I fought like hell to keep their jobs, and that our values are not mere virtue signalling, we stick to them even when things get tough. Just imagine how strong it makes us as a team now).
In addition to cutting cost by over 40%, we also raised a convertible note from existing investors. I didn't negotiate the terms too hard, we needed cash and I wasn't going to be dumb and fight for paper valuation at the expense of cash in the bank.
Summary of point 1:
- Cut ALL costs that are easy to bring back later, get rid of everything except what is core, for us it was our team
- Now is the time to make your organisation stronger by cutting the bottom 20% performers
- Raise cash if you can, valuation doesn't matter
2. Emerge strong
We always knew that the meetings that matter happen in person, and that people will go back to wanting to connect IRL. So, we decided to focus on emerging strong from the pandemic by not stopping sales. We kept adding customers as fast as we could, even though no one was traveling. We set up their accounts, did demos, and prayed that one day they will use the product.
I used to tell my team that we're like a real estate company buying buildings to rent in the future. We know that tenants will want to live there, but right now we can't rent the assets. Future Revenue was our north star metric (we called it Travel Budget Under Management).
In addition to adding customers, Emerge Strong also meant that we used the time to double down on our product. We hired more people in product and engineering and increased our product velocity. Quiet times have their advantages, use the time to build for the future.
As a result of our Emerge Strong effort, we have tripled our margins, kept building an amazing product, added more customers than ever, and increased future revenue.
3. Turn lemons into lemonade
Crisis means lower valuations? We bought 4 great companies at a discount. Traveling during Covid is a mess? We built a Travel Restrictions API and sold it to third parties. Everyone is working from home? We built an offsite planning tool for them.
Crisis means opportunity. Once we took care of survival and emerging strong, we lifted our eyes from the immediate, and looked for these strategic and rare options that the crisis has opened for us. Our revenue is now 10x vs. pre-covid, our margins are 3x, the team is stronger than ever, and the product is on a category of its own.
The recipe is simple:
- Survive (CASH!)
- Emerge strong
- Turn lemons into lemonade
BTW, if you're a founder and feeling the pressure / stress of this crisis, I'm happy to speak 1:1 - email me.
I'm fortunate to have a great team and fantastic investors but can imagine how lonely it could get if you're in a different place.