Insights after 40 mentoring calls with founders and CEOs on the COVID-19 Crisis
Over the last 14-days, TSI talked with senior travel executives and 40 emerging travel tech founders, one-on-one for 20-minutes each. Below is a summary of what we advised and what we learned.
No sugar coating, it’s really bad. In our view worse than the 2001 dot com and the 2008 financial crisis combined. The majority of companies we spoke with are generating close to $0 a day in revenue.
TSI advised:
Build a 3, 6, 12-month survival program with no revenue. Add back 10% and 25% of what you were generating monthly in Dec or Jan. If you can survive with that % of revenue after 6-months then keep going. If not look to sell your technology, merge or close up shop. Bringing together 2-3 companies in a merger is a great strategy and will save companies, don’t overlook this option. Pulling the plug will be hard to do and takes time to decide, don’t wait 12-18 months to do it.
Seek government funding where available. Here in the US there is the SBA Economic Injury Disaster Advance Loan. The SBA Paycheck Protection Program.
Cutting costs to save, to live another day is easy and there are many strategies and info out there on how to execute. The other side is to invest/buy/maintain. I spoke with a founder that was doing 400% growth, year-over-year the last 2-years with a business travel service. My suggestion to him was to hold the line, try to keep his team intact, lower salaries across the board, request long-term employee contracts. The company can raise capital with their sales growth pre-COVID so this is an option to buy time and keep talent on staff.
Talk to your key customers, partners. Let them know that you are still here, ask them what you can do to help them out. You may stumble on an opportunity you didn’t see by just asking.
Contracts – Look at renegotiating your inventory agreements. Review current deals and get re-signed or sign-offed, stating your current deals for the next 6-months are honored. Don’t assume current agreements will be honored. We are in a new world. My instinct says that hotel, air, GDS, OTAs and travel supplier contract agreements are in massive limbo. There will be a major reset, a back to the negotiating table for many suppliers and resellers. Hotels will want heads-n-beds and will do anything to get it, remember Groupon.
Transactions prove to be the lifeblood of travel. Companies that conduct a transaction, booking will survive. The closest to the transaction or booking wins.
Nice to have’s, content, secondary services far from the transaction become non-necessity. If you’re content or a nice to have you’re dead for the short-term. Look for partners to merge/sell too. Someone out there needs your technology to make their product better.
Iterate – Take your core value, it could be a process, a system you designed and apply it in another vertical. A founder I spoke with is taking her e-commerce booking/delivery/shipping system and repurposing it to help local retail merchants deliver products to local consumers.
Innovation and emerging travel technology – Find what larger travel companies will continue to invest in R&D and maintain their in-house incubators and venture arms. These are the companies you want to license your technology to going forward.
NDC – If there has ever been a time for travel ticketing companies, travel agencies, TMCs, OTAs to implement NDC, now is the time. If you don’t go direct now, you’ll never go. Please visit Airlines Technology a former TSI portfolio company, now part of TWAI.
Investment – Yes, investors are still investing in travel tech. An investor that attended the TSI Investment Symposium Jan 8th just invested $200,000 in a company that attended the Symposium. If you have revenue growth pre-COVID you can raise capital. No traction, it’s going to be very hard. No matter what, if you’re raising, don’t stop your communications to investors and spend time trying to build new relationships.
Travel is changed forever. Human behavior will be fundamentally different. This will enable new opportunities and products. Travel and our lives have had the ultimate reset. As entrepreneurs and senior travel executives you can capitalize on this fundamental change. If you’ve wanted to have a different job or build something new now is the time to help create a new world and the future for the travel industry.
Extended Mentoring Service – A few founders and CEOs have asked TSI to continue mentoring and advising them through the COVID-19 crisis. We have a few spots left open if you need help. Please go here to learn more about our 30-day mentoring service. We can customize a plan for you.
