After laying off nearly 300 employees in the wake of the Covid-19 pandemic reducing business travel to essentially zero, TripActions CEO Ariel Cohen says the travel management provider is investing in research and development, with a particular focus on how corporate travel buyers' future demands and priorities might be different than before they were outbreak.
"We are investing a lot of effort right now on innovating based on our assumptions of the world post-Covid," said Cohen. "Our product team has actually been busier than before."
The layoffs heralded a halt to what had been a run of gangbusters-like growth that had seen the Silicon Valley-based startup since its 2015 founding expand to more than 1,000 employees and rack up nearly a half-billion dollars in equity funding.
TripActions' foot remained firmly on the accelerator in the early months of 2020, making a foray into corporate payments with the February launch of its TripActions Liquid payment card, eyeing four-and-a-half-times yearly revenue growth and planning to double its existing workforce during the year, according to Cohen.
But the onset of the coronavirus pandemic in the U.S. slammed the brakes on those plans. TripActions' business model is heavily reliant on booking fees, a revenue stream that quickly went dry as its corporate clients' travel went dormant, said Cohen.
"Obviously this situation really required me to rethink our entire plan, because we make money on usage," Cohen said. "We were seeing no usage, and therefore no revenue."
Cohen said he first began to appreciate the magnitude of the situation in early March, when Covid-19 cases began spreading through Seattle, one of the first U.S. metropolitan areas to feel the effects of the virus at significant scale. In those early days of the U.S. outbreak, TripActions modeled a 50 percent revenue decline—a projection that soon was downgraded to a 70 percent dropoff as the outbreak rapidly spread in other cities. The company thought it could weather that decline via belt-tightening measures without letting go of any staff. But as the harsh reality of a nearly 100 percent revenue reduction hit, it became clear that layoffs were necessary, Cohen said.
TripActions ultimately shed 296 employees, 25 of whom were offered other roles in the company, Cohen said. The layoffs affected multiple divisions, with recruitment and marketing among the harder-hit segments, along with the firm's travel support agents.
"We had a recruitment team of 40 people, and their purpose was to double the TripActions team this year. We're definitely not doubling the team this year, so we had to lay off most of them," Cohen said. "We had a pretty big marketing team, including a big team for events, but we're not doing events this year."
One department that saw relatively few cuts was R&D, Cohen said—a reflection of the company's plan to double down on innovation during the corporate travel stoppage,
Cohen said he expects clients after the pandemic to place a higher premium on traveler safety and communication and seek greater data access to ensure decisions around business travel can be made using as much information as possible.
"Post-Covid, people will need to manage travel even more aggressively and better control spend," Cohen said. A positive user experience also will be critical as it becomes even more vital to keep employees booking in-channel, he predicted. "Companies that can build the tools to allow those types of things to happen will thrive."
And despite the cutoff of booking revenue, TripActions still has plenty of financing cash in the bank to continue driving product development—about $300 million, according to Cohen, who added that the Liquid rollout actually is being accelerated from its original timeline.
TripActions is prepared for it to take up to 12 months for business travel to get back on its feet, but Cohen is confident the industry will recover—and that his company will be prepared when it does.
"We don't know when people will get back to traveling," said Cohen. "But people are social creatures, so I'm 100 percent certain that it will happen, and that we'll be ready for them when they come back."