February 2020 is a time that is forever etched into my memory. Our CRO JC Taunay-Bucalo kept sending me memos of cancelations we were receiving because of a ‘new virus.’ Like most companies, especially those that were experiencing rapid growth such as ours, I remained optimistic.
I had managed crises in the past; a major personal data breach at a tech company, and the fallout of a terrorist attack. Yet not even the most experienced company or political leader predicted in the early stages of the pandemic the massive challenges that lay ahead of us.
The view from a travel start-up
As a travel start-up, the negative effect on our business was more protracted and threatening than most, as the environment surrounding travel remained uncertain, complex, and ambiguous for many, many months. But we not only survived. TravelPerk has emerged stronger, more global, dynamic, and relevant than ever.
As businesses and economies bounce back, there is much reflection, and lessons to be learned, on the strategies that helped them do so. The acceleration of digitalization, a phenomenon that was well underway pre-pandemic, proved to be key. ‘Business Agility’ and ‘Business Resilience’ are two new concepts that emerged during this challenging time, and business schools are already drawing up new paradigms to help companies sustainably manage their way out of unknown waters.
Taking ownership, and not shying away from a drastic situation has always formed part of my way of operating. We responded to the COVID-19 crisis quickly and effectively by putting our greatest asset first – our people. Rather than downsizing, we took on new hires in our Product and Engineering department – growing it by over 250%! They went on to develop outstanding new products that gave travelers greater flexibility and certainty in an uncertain environment.
The mood at TravelPerk today is vastly different from what it was in February 2020. Pre-lockdown we employed a little under 500 people. Today, we are more than 1000, working in hubs spread across the world. We received several major funding rounds, and are back to doing what we love; making sure millions of travelers can connect in real life every day in an enjoyable and sustainable way.
Our roadmap to kicking the crisis
Here is a road map of how we did it. And while COVID-19, as many predicted, is something we have now ‘learned to live with’, I have also learned that change is constant, so we need to live with that too, and embrace the challenges it brings.
In the business world, it’s all too easy to look back at 2020 as a disastrous year. But I see it as a blueprint for new scenarios. The economic recession, inflation, and the plummeting of tech company share prices are currently on the table. The refrain ‘If we can survive Covid we can survive anything’ may have more truth in it than we originally thought. The interesting part will be applying and adjusting the strategies we developed during the COVID-19 challenge to new ones.
Map out the scenarios (especially the worst case)
The first action we took at the onset of the crisis was to map out three scenarios in order to predict the effect the situation would have on our cash flow. We used a simple 3×3 matrix that took into account reduced income streams and how long the lockdown was likely to last – which was of course a huge unknown at that point. Either way, the numbers were grim. Within the framework we used, we came to the worrying prediction that the vast majority of our future revenue would disappear if we didn’t take immediate action.
Framework your decision-making
Clearly costs needed to be cut. The urgency was clear, but by how much and where was the question. For this decision, we devised a 2×2 model. On one side, we included the cost of reduction. On the other, we included the impact on us emerging strong. All of our ideas were mapped against these two criteria.
The baseline of our strategy came out of this – identifying substantial cost-cuts that would have the least effect on our ability to emerge strong post-crisis. We would stop most of our hiring efforts and cut operational costs but remain agile in our management. Given the volatility of the situation and our optimism that there would be a quick global recovery, no decision should be irreversible. And most importantly, we should be mindful of risk, but not for the sake of discounting opportunities.
Care for your people
Today remote and hybrid working has become normalized. So much so that we have easily forgotten how foreign a fully remote workday appeared when much of the world’s workforce was required to stay at home with their laptops.
I don’t know of anyone who found it easy. On top of that, the real risk of the pandemic made nerves frayed. It was an incredibly difficult learning curve that forever impacted the way we work and also highlighted the need for mental health in the workplace.
TravelPerk’s risk reduction strategy was to focus on our employees’ security and wellbeing. Furloughs were unavoidable, but we mitigated some of the blow with a share swap, where they were able to exchange part of their salary for company shares or equity. The Leadership team would also take significant pay cuts, and anyone who wanted to end 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 undervalued. Taking the step to furlough nearly 500 people was critical to our survival strategy. Communicating this news mindfully was another. Frankly, it could have broken the circle of trust we had consciously built with our teams had it not been handled mindfully, not to mention cause irreparable damage to our culture, our community and our brand.
Our People Team carried out this task, which was bogged down in extremely ‘unhuman’ governmental processes, with the highest level of human empathy. By doing so, they not only ensured a future for our cherished employees but our company as a whole.
Change is constant. This is why a crisis strategy (or any strategy) needs to be constantly reevaluated. In the months after creating our first decision-making framework, and with a clearer understanding of the economic, cultural, and social ramifications of the pandemic, we created new matrices using the Sequoia Capital COVID-19 Matrix methodology. Each time they were more nuanced.
As our resilience built, our panic diminished. The matrix showed us at what point we would need to take more dramatic action to cut costs.
It was all about protecting our people, continuing to grow, and protecting the funnel our sales team had worked so hard to build.
Build a crisis management team with specific goals
A few months into the lockdown, we created a crisis management team that would mandate our constantly updated decision-making frameworks. In order for it to stay focussed, and not become a ‘dumping ground’ for ideas (which of course there were many), I wrote a charter that outlined specific duties and goals.
We needed to be clear on how we would make our decisions. Were we making decisions simply to save as much cash as possible? Were the cost-cutting decisions we had already made delivering results? Were we still working towards optionality? The charter helped us focus.
It should be said that we weren’t reinventing the wheel. We agreed that we were in the process of a U-Shaped recovery and then used the aperture optionality model to flesh out our tactical ideas. We assessed every single role in the company and every single cost to see how we could best save money.
At this point, we gave a name to our strategy – ‘Emerging Strong’. It was becoming clear that our constantly updated decision-making frameworks, agile action taking, care for our people and ownership of the crisis were the right track to recovery.
The exit door
Starting in February 2021, we were able to begin welcoming many employees back and shortly afterward we entered into a significant scale-up phase. We switched the focus from crisis to growth and were overwhelmed with the patience and loyalty shown by our teams and our external providers during what had been an unprecedented year.
Looking back I can identify some key lessons learned.
- Simple operational principles can solve very complex things. Empathy was key in guiding our people through complex furloughs and helping them understand their situation in a very uncertain time.
- Always anticipate a crisis will accelerate. With COVID-19, things started slow and then moved extremely quickly. In hindsight, we should have assumed this acceleration and built decision-making frameworks based on these assumptions.
- Making decisions that leave the door open to optionality is very hard and takes time, but leads to better outcomes in the long run.
Our goal was to ‘Emerge Strong.’ And with a constant stream of new and improved products and the continued interest of brilliant and dedicated professionals who wish to work with us, I can confidently say that we have done that.
Why does TravelPerk attract such amazing talent? Because candidates know that we take care of our people no matter what. They are not a commodity, but a priority. And they take pride in extending that same duty of care to every single traveler under their charge.