Reading: Crises are the best time to revamp your business – learnings from TravelPerk’s CEO Avi Meir8 min
Why crises can be the best time to think long-term about your business
Avi Meir is a startup veteran. In 2015, he founded TravelPerk, and has taken it to being one of the fastest growing companies in the world – and has had to navigate the company through its toughest period in one of the sectors hardest hit by Covid-19. Here are his top tips for founders and CEOs, based on his experience.
© Design, Helmi Korhonen, Slush
The Covid-19 pandemic has been a transformational event, both at home and at work. Besides endangering public health, it has hit numerous industries and businesses hard, including at TravelPerk, where we saw a 95% reduction in total business travel bookings made in the immediate aftermath of the outbreak.
Startups across Europe who are in the early stages of scaling their business models haven’t been spared. As a result, founders and entrepreneurs have had to make some incredibly tough decisions for themselves and their teams as they adapt to reduced revenue streams, dampened growth prospects, and a radically different looking market to the one of 6 months ago.
The impulse might be to go into hibernation and wait for the crisis to pass. But I believe that, as the saying goes, the best form of defense is offense: CEOs and founders should be taking proactive, forward-looking action now when times are tough, to set themselves up for the best chance of success when the situation improves. The most difficult times can often be the best times to think long-term about your business.
My advice for startup leaders navigating this tough period centers on four core areas:
Team: Keep them motivated and productive today for a stronger workforce tomorrow
The first step is managing your team right. We’ve taken the decision to move our entire staff across Chicago, London, Barcelona, and Berlin to remote working and that’s probably the case for a lot of other startups at the moment. Even as we begin to see employees move back into offices, it can be difficult to keep the team motivated and productive if you’re still looking at another 6 months to a year of not seeing your colleagues in person.
As a founder or CEO, it’s your job to lead by example and to embody the values of transparency, empathy, and authenticity. It’s important your team sees and hears you talking about how you personally feel about the situation. Make sure you’re keeping your team in the loop and sharing the negative as well as the positive updates on the company. They know there are challenges right now so don’t pretend there are not and risk losing trust and credibility.
By the same token, make the time as a team to celebrate victories, even the small ones, like a new product release or a new customer win. Everyone will value the morale boost, the social interaction, and having their hard work paying off and being recognized by the leadership.
Also, double down on the individual support you provide to employees facing difficult situations outside the workplace. This pandemic has had an emotional impact on all of us, even those who haven’t come into direct contact with the virus and it’s important employers act on that. If you have any employees who have tested positive, ensure your HR team gets in touch and walks them through the process every step of the way. Don’t cut off communication if they have to self-isolate: keep in regular contact so they feel supported, remembered, and part of the team.
This extra investment in staff wellbeing is the right thing to do morally, but it’s also going to pay dividends further down the line. When times are tough, we all notice who’s there for us and who’s not.
Communications: Invest to build long-term trust and loyalty
Balancing communications with your customers, staff and investors can feel like a delicate exercise at the best of times, let alone in the middle of a global pandemic. But by taking the opportunity to invest now in getting your stakeholder communications right, the benefits will carry through for years after the crisis passes.
When it comes to customers, your communications objectives should be to make them feel that they’re a priority for you and that they’re getting the information they need when they need it. At TravelPerk, we did that by deciding early on to transfer most of our sales team to our customer care team, so they had the manpower necessary to deal smoothly with the huge rise in the number of trip cancellations and customer inquiries.
If something goes wrong, for example, your platform experiences an outage, don’t try to make up an excuse. Be upfront with your customers: admit you’ve got a problem, say you’re trying to fix it and most of all, say you’re sorry. Your customers will understand a lot of companies are under pressure right now so your objective should be to ensure that when we return to normal, they’re going to want to come back.
The same logic applies to your internal comms. Staff knows that many companies are having to make difficult decisions about furloughing or redundancies, so think long-term about how you can retain the most goodwill possible among your team. Be transparent – don’t hide or delay bad news because it’s bound to come out in a more damaging way if you do. Treat the team with respect – in-person meetings still aren’t an option for many workplaces so think about how you can use virtual meeting platforms in a way which transmits sincerity and thoughtfulness. If you get this right, you can turn a crushingly difficult episode for a company into a chance to build greater long-term trust and buy-in between leadership and staff.
Transparency is also key to how you communicate with investors. Having a level of trust between founder and investor is an essential part of any fundraise, but it can easily break down due to bad communication and misunderstandings. If you were hoping to raise funding this year from your existing investors then don’t be scared of having a tough conversation with them about bridge financing. You might have to give up a bit more equity, but it means you’ll increase your capital.
Values: Stay true to your founding principles
The idea of startups having ‘values’ often gets bandied about without much idea about what those values are for. But a crisis scenario is just the right time to test you have the right ones and that you’re putting them to work for your startup.
Your values – or founding principles – aren’t something you can just set or install out of thin air, and then hope to impose on your team. They’re something you discover as a company at an early-stage, and make sure are shared by the people you hire. At TravelPerk, our mission is to make business travelers happy, but how we achieve that is informed by our core values: “Impact over Effort”; “A 7-star experience”; “You’re an owner”; “We’re a team”; and “Be a good person”.
You’ll encounter plenty of new and difficult decisions in the course of this pandemic, which can be a daunting prospect. My advice for dealing with the unexpected is to always revert back to your values – in my case that means making sure we’re approaching the unknown in a team- and impact-oriented way that prioritizes delivering exceptional experiences for our customers. Those guiding principles are a good starting point for any new challenge, so getting them right now will equip you well for the future.
You should also make sure your values satisfy the Jim Collins definition: that you stick by them even if you stand to lose something in doing so. If you find that you just stick to your values when it’s easy, and forget about them when things get tough then the chances are these aren’t really your core values, they’re something more like virtue signaling. If that is the case, go back to the drawing board and ask yourself what your true values really are.
The rationale for this is that while sticking to your values can bring costs in the short-term, you should expect it to pay off in the long-term. Combine them with a resolution to keep calm, disciplined, and avoid making irreversible decisions if you don’t have to. If this means buying yourself more time in order to guarantee greater certainty, then do it. Making quick decisions without all of the information and without factoring in your values can have huge negative repercussions.
Strategy: Tough times require tough questions
Your fundamental business strategy should not escape attention. It might sound crazy to go right back to first principles when it feels like there are fires to put out right here and now, but it’s exactly the right thing to do. Ask challenging questions like: “Why are we doing X? Why are we not doing Y?” and break down complicated problems into the basic elements and give yourself the chance to put them back together from the ground up. Nothing should be off-limits.
For many companies, this process has helped them to find a path to higher cash flow in order to lose less money and make sure they have runway for the next 12-18 months. This might be through increasing revenues, cutting costs, raising money, or all of these combined. This in turn forces you to build a better business with better unit economics, which will be an incredibly valuable process when the immediacy of the health crisis passes.
The current landscape for European startups is unprecedented. Of course, at TravelPerk we like countless others are dealing with the crisis and the fallout from it so I don’t want to suggest there are any easy answers. But without sticking to a long-term perspective, whether thinking about my team, our communications, our core values, or our business strategy, we’d be a lot worse off not just today but in what I hope will be the many more positive years ahead.
Avi Meir is a startup veteran. He started his career by founding Hotel Ninjas before selling it to Booking.com. In 2015, he founded TravelPerk, and has taken it to being one of the fastest growing companies in the world – and has had to navigate the company through its toughest period in one of the sectors hardest hit by Covid-19.