- The $4 billion corporate travel startup TripActions is making several cuts in addition to laying off employees in an effort to outlast the global halt to travel, cofounder and CEO Ariel Cohen told Business Insider.
- The Andreessen-backed startup is implementing pay cuts for remaining employees, removing its fitness stipend, and closed its Chicago office, effective Thursday.
- The startup cut 296 employees on Tuesday via a companywide Zoom meeting, a situation that Cohen said was challenging but necessary given office closures.
- The startup still has about $300 million cash on hand, and signed an undisclosed client on Thursday, Cohen said. He believes the company is prepared to operate at the current level for at least the next 12 months.
- Although the team had always planned for a recession, Cohen said they had never considered a sweeping halt to all global travel.
- Click here for more BI Prime stories.
The last three weeks have been a blur for Ariel Cohen.
Cohen is the cofounder and CEO of TripActions, a corporate travel startup backed by Silicon Valley bigwigs Andreessen Horowitz and Lightspeed Venture Partners to a valuation tune of $4 billion.
But by Tuesday, the company was triaging. Business Insider previously reported that 296 employees, roughly one-fourth of its global workforce, were going to be let go as bookings plummeted and revenue evaporated. On Thursday, it announced further cuts to employee benefits like its sizable fitness stipend and pay decreases across the board. Cohen cut his own pay in half, and decided to shutter its newly opened Chicago office.
“If you asked me if we ever thought about the recession in our business, the answer is yes,” Cohen told Business Insider. “That’s part of our value proposition. But if you asked me if I assumed a situation of a global travel freeze, it was not in our plan, for sure. I never thought there would be a global halt of all travel.”
The economic uncertainty combined with a global health crisis has meant trouble for many startups, and layoffs have become something of a macabre daily occurrence in Silicon Valley. Certain industries are currently unscathed to a degree, but others like travel and hospitality have been particularly hard-hit.
Cohen said the company didn’t have plans to raise more funding in 2020 given its last major cash injection was just last June and was in a good place financially with roughly $300 million cash on hand. Cohen said that the four-year-old company had signed a major, undisclosed customer just Thursday.
But it wasn’t enough to balance the employees that had been essentially rendered obsolete by changes to events and hiring. “This is actually the biggest challenge in these days,” Cohen said. “I believe that if you are going to let go of someone, you should meet face to face and get in the same room. We had to do it over video conferencing.”
Cohen said team members were invited to one of two different Zoom meetings on Tuesday morning where they learned whether they were in the group being let go or not. Managers followed up with individual Zoom meetings to discuss the changes with affected employees, and Cohen said he spent the remainder of the day calling the employees he had let go and helping understand how TripActions could best support them.
“We did something that was very tough,” Cohen said. “I did it, and it was my decision, and we will need to deal with it. It’s a really, really tough thing to do.”
Of the 296, about 25 were offered different roles at the company. Employees will be kept on until April 1 so as to keep their benefits through the end of the month in addition to 3 weeks severance. Hourly employees were given an additional 5 weeks of severance.
“Some industries and startups that are hiring approached us and we gave them the list of employees,” Cohen said. “We are reaching out to help these employees to help build their CV and improve interview skills and improve their Linkedin.”
A 12-month runway
As more companies started halting travel in the US and Europe, Cohen and his team were being forced out of their San Francisco offices and making the uneasy transition to remote work. The timing was particularly tricky, he said, because the call volume to the support team was spiking as flights were canceled and travelers scrambled to get home. Moving the customer support team from an entirely in-house setup to fully remote took just an hour, he said.
“The last 3 weeks really showed the resiliency of our platform,” Cohen said. “Our usual [wait time] for an agent to have a call is around one minute. During the time when the flights from the United States and Europe were cancelled, there was a huge uptick in travel support tickets, but we kept it at an average of six minutes. It was really, really impressive.”
The customer service function has scaled back down, Cohen said, as fewer people are traveling. TripActions’ business model is based on collecting a booking fee on each trip, however, so fewer tickets from fewer travelers also mean disappearing revenue. All told, Cohen estimates that the company will make it through the next 12 months, and possibly longer with additional belt-tightening. But he speculates that once restrictions are lifted, travelers will have no issues getting back out into the world and companies will reschedule in-person meetings.
“At the end of the day, people are people,” Cohen said. “They want to go to dinner and to business dinner. They want to hire face to face, and right now it’s amazing we can do some of these activities online but it’s far from perfect. As long as there is humanity outside, people will get back to traveling.”
SEE ALSO: Brex just open-sourced its recession contingency plans. Here’s how the $2.6 billion credit card startup is preparing to weather ongoing economic uncertainty.
Join the conversation about this story »
NOW WATCH: People are still debating the pink or grey sneaker, 2 years after it went viral. Here’s the real color explained.