February 2020 is a time that is forever etched in my memory. Our CRO JC Taunay-Bucalo kept sending me cancellation memos due to the ‘new virus’. Like most companies, especially those experiencing rapid growth like ours, I remain optimistic.
I have handled crises in the past; A major personal data breach at a tech company, and the aftermath of a terrorist attack Yet neither the most experienced companies nor political leaders predicted in the early stages of the pandemic the enormous challenges that lie ahead.
View from a travel startup
As travel began, the negative impact on our business was more prolonged and threatening than most, as the environment surrounding travel was uncertain, complex and unclear for many, many months. But we didn’t just survive. TravelPerk has become stronger, more global, dynamic and relevant than ever.
As businesses and the economy bounce back, there is much reflection on, and lessons to be learned from, the strategies that helped them make it. The acceleration of digitization, a phenomenon that was underway pre-pandemic, has proved key. ‘Business agility’ and ‘business resilience’ are two new concepts that have emerged in these challenging times, and business schools are already creating new paradigms to help companies navigate their way sustainably through uncharted waters.
Taking ownership, and not walking away from a difficult situation has always been part of my management approach. We responded quickly and effectively to the Covid-19 crisis by putting our greatest asset – our people – first. Instead of downsizing, we’ve hired new hires in our product and engineering department – growing it by over 250%! They develop outstanding new products that give travelers greater flexibility and certainty in an uncertain environment.
The mood of TravelPerk today is very different from what it was in February 2020. Pre-lockdown we employed less than 500 people. Today, it has close to 1000, operating in hubs spread across the globe We received several large funding rounds, and are back to doing what we love; Ensuring that millions of travelers can connect to real life every day in an enjoyable and sustainable way.
OUR ROADMAP TO OVERCOME CRISIS IN 6 STEPS
Here’s a road map of how we did it. And while COVID-19, as many predicted, is something we’ve now ‘learned to live with’, I’ve also learned that change is constant, so we too have to live with it and accept the challenges it brings.
In the business world, it’s all too easy to look back on 2020 as a disastrous year. But I see it as a blueprint for a new situation. Economic recession, inflation, and declining share prices of tech companies are currently on the table. The refrain ‘If we can survive Covid, we can survive anything’ may have more truth than we first thought. The exciting part will be to apply and adapt the strategies we developed during the COVID-19 challenge to newbies.
Map our situation (especially the worst case scenario)
The first step we took at the onset of the crisis was to map out three scenarios to predict the impact of the situation on our cash flow. We used a simple 3×3 matrix that took into account the reduced revenue stream and how long the lockdown might last – which of course was a huge unknown at the time. Either way, the numbers were grim. Within the framework we used, we came to the alarming prediction that the vast majority of our future revenue would disappear if we did not take immediate action.
Framework your decision making
Obviously costs have to be cut. The urgency was clear, but how much and where were questions. For this decision, we developed a 2×2 model. On the one hand, we include reduced costs. On the other hand, we have included the impact on our strong emerging. All our concepts were mapped against these two criteria. The baseline of our strategy emerges from this – identifying substantial cost-cuts that will have minimal impact on our ability to emerge strong post-crisis. We will cease most of our recruitment efforts and reduce operational costs but remain agile in our management. Given the volatility of the situation and our optimism that there will be a rapid global recovery, no decision should be irreversible. And most importantly, we should be aware of the risks, but not to discount the opportunities.
Care for your people
Today remote and hybrid work has become normal. So much so that we’ve easily forgotten how foreign a fully remote workday appeared when most of the world’s workers had to stay home with their laptops.
I don’t know anyone who had it easy. On top of that, the real risk of an epidemic has unsettled nerves. It was an incredibly steep learning curve that forever affected the way we work and also highlighted the need for mental health in the workplace.
TravelPerk’s risk mitigation strategy was to focus on the safety and well-being of our employees. Furloughs were inevitable, but we mitigated some of the injuries with a share swap, where they were able to exchange part of their salary for company shares or equity. The leadership team will also take a significant pay cut, and anyone wishing to terminate their contract with us was offered double the agreed severance. Incredibly, very few did. We saved money, but without laying off a single person.
Empathy (along with humility) is often underestimated. The move to furlough about 500 people was critical to our survival strategy. It was another to report this news carefully. Frankly, it could have broken the circle of trust we consciously built with our team if it hadn’t been thoughtfully handled, not to mention irreparable damage to our culture, our community, and our brand.
Our people team completed this task, which was bound up in highly ‘inhumane’ government processes, with the highest level of human compassion. In doing so, they have ensured a future not only for our cherished employees but for our company.
Change is constant. This is why a crisis strategy (or any strategy) needs to be constantly reevaluated. Months after developing our first decision-making framework and with a clear understanding of the economic, cultural and social impact of the pandemic, we developed new matrices using the Sequoia Capital COVID-19 Matrix methodology. Each time they were shorter. As our resilience builds, our panic diminishes. The matrix shows us at what point we need to take more dramatic steps to reduce costs.
It was about protecting our people, continuous growth and protecting the funnel that our sales team worked so hard to build
Create a crisis management team with specific goals
A few months after the lockdown, we created a crisis management team that will mandate our constantly updated decision-making framework. To keep it focused, and not become a ‘dumping ground’ for ideas (of course there were many), I wrote a charter that outlined specific duties and goals.
We need to be clear about how we make our decisions. Were we just deciding to save as much cash as possible? Had we already decided to cut costs to deliver results? Were we still working towards optionality? The charter helped us focus.
It should be said that we were not reinventing the wheel. We agreed that we were in a U-shaped recovery process and then used the Aperture Options model to flesh out our strategic ideas. We evaluated every single role and every single cost in the company to see how we could save money. At this point, we have given our strategy a name – ‘Emerging Strong’. It was becoming clear that our constantly updated decision-making framework, taking agile action, taking care of our people and reclaiming ownership of the crisis was the right path.
Starting in February 2021, we were able to start welcoming many employees and shortly after that we entered a significant scale-up phase. We have shifted focus from crisis to growth and have been overwhelmed by the patience and loyalty shown by our team and our external suppliers in what has been an unprecedented year.
Looking back I can identify some key lessons.
- Simple operational principles can solve very complex things. Compassion was key in guiding our people through the complicated holidays and helping them understand their situation at a very uncertain time.
- Always assume a crisis will accelerate. With COVID-19, things started slow and then went very fast. In hindsight, we should have assumed this acceleration and built a decision-making framework based on this assumption.
- Making decisions that leave the door open to options is difficult and time-consuming, but leads to better outcomes in the long run.
Our mission was ‘Emerge Strong’. And with a constant stream of new and improved products and the continued interest of bright and dedicated professionals willing to work with us, I can confidently say that we have done just that.
Why does TravelPerk attract such amazing talent? Because candidates know that we care about our people no matter what. They are not a product, but a priority. And they take pride in extending the same responsibility of care to every single traveler in their charge.