Stay The Course

By Devon Morris, Partner, Group 11

Today, TripActions announced closing a $155MM Series E round at a $5BN post-money valuation. The round was co-led by Addition, Cosmic Capital, and existing investor A16Z who joined other existing investors Greenoaks Capital, Vista Equity Partners, Lightspeed Venture Partners, Zeev Ventures, and Group 11.

Despite an incredibly turbulent year amidst COVID, TripActions continued to build out its platform, and launched and expanded TripActions Liquid. It now has over 4,000+ global customers like Glassdoor, GameStop, and Mozilla, and added new 2020 customers such as: Heidrick & Struggles, Mastec, SVB, ISG, American Tower, and many others. TripActions’ travel and bookings are returning to pre-March 2020 levels and 98% of its customers renewed contracts in 2020 showing strong engagement and trust in the platform and in the future of business travel. While legacy competitors are cash strapped and looking for consolidation and reclusion, this new funding brings TripActions’ total raised to over $755MM, and gives them years of runway to continue gaining market share, ultimately becoming the undisputed leader in enterprise travel and spend management.

The Stormy Seas of 2020

Funding any company, let alone a multi-billion dollar tech leader in travel, when global travel ceased for a few months in 2020, may appear risky from the outside. In 2020, many have had their businesses sunk by quarantine and stay at home orders. Many were left out at sea by our governments to tread water on their own.

In March 2020, travel bookings completely came to a halt as the whole world shutdown. TripActions and most of the industry saw a clear dropoff in bookings and consequently, many travel and hospitality companies experienced significant layoffs in Q1 and Q2. Everyone felt the shock and uncertainty and had to reassess their growth and even survival in light of COVID. Travel incumbents Expedia and Booking Holding’s (Priceline and Bookings.com) share values halved from February to March 2020 and Expedia cut 3,000 jobs, including 500 at its newly opened Seattle headquarters. Younger tech companies like the short term rental provider Sonder laid off or furloughed more than 400 people in March (30% of headcount) and Zeus Living, which provides furnished homes for business travelers, laid off 80 people (30% of headcount). Even apparently strong, IPO-ready companies like Airbnb saw nearly 1,900 (25%) of its employees laid off and a complete drop off in bookings for months.

However, there are a few businesses and industries that were fortunate enough to survive and even thrive. Some companies, by virtue of their design and focus on software and automation, were able to ride out the storm of 2020. With a long term vision of the distant horizon and a return to some normalcy, these companies sailed for clearer skies and calmer water in 2021. When Group 11 considers the tumult of 2020 and its impact on the tech and travel industry, and leaders like TripActions, we can’t help but think of the imagery of a strong ship traveling in stormy seas, fighting off lethal threats, and staying the course.

Advantage by Design

As we previously shared about Group 11’s introductory meeting with TripActions CEO Ariel Cohen back in 2016, TripActions’ inception was no accident. It was purposefully built by Co-Founders Ariel and Ilan for one reason: to completely reinvent corporate travel from the ground up. As a company founded in the 2010s, TripActions had the freedom to look at the problems and processes of the travel industry of the past, and innovate from a position of rational advantages. Instead of legacy models like on-premise servers and dedicated desktop applications, TripActions utilized cloud-first software, automation, updated APIs, clean mobile-first UI, and most importantly, actual human-on-the-line support agents. This new model is more robust yet faster, thus more efficient with time and cost. As shared in Group 11’s recent article Fintech’s Quantum Leap, Ariel and Ilan knew that, “True disruption appears not as a better version of a legacy product, but as an unrecognizable offering that obliterates the old value proposition.” With these fundamental components, TripActions is designed to beat the legacy competition with an updated product that is miles ahead.

When we reflect on TripActions’ leadership, perseverance, and design that helped it rebound in 2020, we are reminded of a comparable story of adversity: the legendary United States frigate, the USS Constitution.

I had the privilege of seeing this ship in Boston in the 1990s (yes, she has been rebuilt a few times and used as a model in a number of feature films). What impressed me the most in that visit was that she could fit a few hundred crew members, US Marines, and 50 heavy guns on a seemingly narrow, 43ft beam. In addition, she could still match the speed of other European frigates at that time. But these advantages were not by accident. What set her apart started with her purposeful design. Like TripActions, the designer of the USS Constitution had the foresight to look at the seascape of competition and had the freedom to create a completely new type of model from the keel up.

USS Constitution Celebrates 222 Years in Service. Oct 23, 2019. Credit: Craig Bowman

Built by the directive of the Naval Act of 1794, the USS Constitution was an innovative, uniquely-American frigate, unlike any of her British counterparts. She was one of six new frigates for the United States Navy and was designed by Joshua Humphreys to protect US shipping interests and American sailors throughout the world from the current competitor ships and potential legacy enemies. While instructed by the Naval Act of 1794 on the need for ships, Humphreys was not forced to follow any previous design other than a minimum number of guns. Congress essentially gave him the freedom to innovate (what is now an American hallmark and pride), so Humphreys threw out the traditional ship rating system of the (then leaders) British Royal Navy. Instead, he intentionally gave her a long keel, narrow beam, over 50 heavy guns, and even a new fire fighting system. These new design elements enabled the Constitution to overwhelm other frigates, catch merchantmen, and still have the speed to outrun European ships of the line.

Once she debuted in October 1797, the USS Constitution saw immediate engagements in New England, Nova Scotia, the Caribbean, and the Mediterranean. But it was during the War of 1812, that the strengths and foresight of Humphreys’ new frigate design really proved their worth.

Action between USS Constitution and HMS Guerriere, 19 August 1812: “In Action”. Oil on canvas, 32" x 48", by Michel Felice Corne. Collections of the U.S. Naval Academy Museum.

In a number of encounters, the USS Constitution was able to overtake and capture or sink older British and European frigates with her 30, long 24-pounder, and 22, 32-pounder guns. In addition, and as designed, the USS Constitution also outran pursuant hostile squadrons. European-designed ships of the line, which had made the United Kingdom the dominant naval power for over a century, simply could not keep up with the USS Constitution’s speed. Her agility and construction made her a powerful threat, and with a strong command and brave sailors aboard, her slower, older enemies were irrelevant opponents in sea engagements.

Not only was the Constitution’s newly designed hull able to out sail opposing ships and threats, but her deck design and siding were strong enough that on August 19th, 1812, broadsides from the HMS Guerriere literally bounced off the Constitution earning her the nickname to this day of ‘Old Ironsides’. Her 24-inch, triple-layered hull made of American White Oak planking with sheathed copper forged by Paul Revere himself proved their design. She went toe-to-toe with the competition and came out on top. This new, fast, well armed, and seemingly impenetrable frigate enjoyed decades of active service and became a ‘new class of ship’. The Constitution’s merits were the basis for the US Navy, even seeing engagements into the onset of the American Civil War. Today, the USS Constitution is preserved as a museum and is designated as a US National Registered Historic Place.

Built for Strength and Speed

The story of the USS Constitution is a fascinating and inspiring one. Much like this historic American frigate, TripActions was intentionally designed and built with the current seascape of competition in mind and also has had a fascinating story. Like the USS Constitution’s designer Joshua Humphreys and one of her most successful captains, Isaac Hull, TripActions Co-Founders Ariel Cohen and Ilan Twig are experienced entrepreneurs and leaders. They had fresh eyes in 2015 to look at the problems of the travel industry and their own experience with competitors in the industry. Most importantly, they had the freedom to disregard the legacy systems and innovate new models. This approach is the essence of technological disruption.

On top of the foundation of cloud-based software, automation, APIs, and mobile-first UI, TripActions’ overall platform sports powerful features for businesses and their traveling employees. Reiterated best by TripActions’ CMO Meagen Eisenberg in December 2020, TripActions has (paraphrased):

• Powerful Booking: AI-powered tools to surface results relevant to each traveler’s preferences. Intelligent management controls to empower EAs and other delegates to easily book for multiple travelers.
• User-First Interface: No more legacy servers or ‘needs-an-update’ desktop applications. TripActions is 100% cloud-based, multi-seat, and the front and back-end interfaces are all mobile-friendly.
• Automation First: Continuing on the above, TripActions’ platform automates as many tedious and manual tasks as possible. From intelligently pulling over loyalty codes from a frequent flyer or preferred member program, to automatically reconciling travel receipts for a finance team member.
• Live Traveler Map: Allows admins to quickly track travel, budget, and employee location.
• Business Travel Continuity™ tools: Allows companies to monitor and enhance their travel as a function of worldwide disruptions and be proactive with suggesting alternatives and rebooking.
• Centralized Billing and Billback: International companies can also benefit from the TripActions admin tools to better manage how travel is financed.
• Powerful, Modern Analytics: While most managed T&E programs provide the ability to download and analyze traveler data and spend, TripActions does it in real time in a mobile-friendly interface.
• Comprehensive, Tech-backed Support: TripActions support agents provide next-level customer service to travelers on the road through a seamless merging of email, phone, and chat.
• Insight into Carbon Impact: This additional program helps users understand the environmental impact of each journey and manage any potential offset.

Anyone who has used legacy business travel software knows how welcome the above features appear to employees. With these components and an uncompromising approach to customer service, TripActions has built a platform that is far superior to its legacy competition. Not surprisingly, TripActions’ offering has resulted in faster onboarding of business customers, more competitive pricing, and ultimately lower costs and higher margins for customers versus legacy competitor platforms.

While legacy and incumbent competitors have been shrinking or shutting down offices and services due to COVID, TripActions has been gaining speed and actually building out their services offered beyond just travel booking and management. TripActions was not only built to be an industry leader in travel management, but is now growing as a fintech powerhouse for businesses.

A Phase Transition: from a Solid to a Liquid

TripActions was not only designed with solid behavioral economic principles and a contemporary tech stack, but their leadership has also wisely expanded the platform with ancillary travel business services and thus revenue streams. From its original mission of business Travel management and booking, TripActions is now tackling the ‘E’ in ‘T&E’: Expenses.

Since mid-2019 (Group 11 was an early beta tester) and well before COVID, TripActions invested considerable resources building out what is now TripActions Liquid, its direct ‘fintech’ offering and an expanded service of their platform. Launched publicly in 2020, Liquid provides employees with a mobile-first interface to pay for company expenses, while giving internal finance teams one place to easily control, manage, and track employee spend. Though it pulls from multiple APIs and aggregates massive amounts of data, the back-end is an easy to manage company dashboard, and the front-end is a digital corporate card and digital expensing policies for employees.

With its 2020 launch, Liquid’s goal is to automate and streamline ALL of ‘Travel & Expense’ through: 1. Policy Awareness, 2. Addressing the Rise of Fraud and 3. Rectify The Lag in Reporting.

1. Policy Awareness — Liquid encourages employee compliance because it is transparent and can clearly communicate company policy on spend through simple clicks on a mobile device. Because policies are built into TripActions’ platform as software in a mobile interface; company policy is no longer a physical document or employee handbook .pdf that is buried on a legacy server somewhere. Employees can quickly add expense details at the moment of purchase, rather than having to remember and match receipts later at the end of the month’s reconciliation. With a digital corporate card, there is no longer any need for employees to carry the cost of work travel on their personal credit cards.

2. Addressing the Rise of Fraud — Traditionally, employee expenses were incurred whilst traveling or entertaining clients. In today’s workforce and environment, employees have business expenses like ads from digital marketplaces, software licenses, consulting services, and now in a Post-COVID world, home office equipment. This new world requires new remote, contactless tracking and reimbursement, and can not exist in the legacy model of yesterday. Managers need real time visibility and spending control, and smart digital corporate cards that can allow or block specific transactions, amounts, or vendors.

3. Rectify The Lag in Reporting — Anyone on an internal accounting team will agree that monthly reconciliation of expenses can (and should) be faster and more transparent. Industry leaders require accounting teams with the most efficient protocols and software available, with as much transparency into daily and monthly expenses as possible. It is essential for accounting teams; anything else is lost time and lost margins. Liquid automatically matches employees, trips, receipts, and bank statements in real time.

In all three of these steps, automation is the jib and leading component. TripActions is putting software at the forefront of the company, to correctly and accurately address the issues businesses face when handling and reconciling expenses. Whereas at the beginning of 2020, internal accounting teams could still have the legacy expense reconciliation model of dozens of employees scanning receipts and physically matching that to an employee, project, and date, COVID has only proven that this is completely unviable. Business and finance teams figuratively and physically are even more fragmented than before and need faster and more streamlined solutions. As Liquid customer Vik Shah, Corporate Controller at Zoom testified, “TripActions Liquid is a major time saver. We’ve been able to reduce travel payment reconciliation time from weeks to minutes each month.” Companies using the old model are only treading water for a bit longer before they inevitably go under. Expensing, like business travel, must be automated and seamless for a company to stay afloat.

This part of a business’ operations and thus bottom line is too important to remain a manual, error-prone process. As we shared in our most recent article, Fintech’s Quantum Leap,

“Before COVID hit, automation was a nice-to-have business owners would get around to when they had the time. Everyone knew it was coming, but it could come tomorrow. With COVID, automation suddenly became what you do to stay viable. As we moved to a war-like footing all barriers to adoption were dropped like a hot iron as manual processes had to be replaced immediately… once the pressure of COVID gets lifted from the economy and people try to return to ‘normal’, this economic landscape will be barely recognizable.”

TripActions’ leadership, and we, their investors, agree: the industry’s need for a multi-featured product like Liquid (the Expense in ‘T&E’) is critical. Especially since COVID has accelerated the need to adopt more automation software, Liquid could easily be as large of a business as TripActions’ travel management in a matter of years. With the launch and promising growth of Liquid, TripActions has made an important transition and fully sailed into the category of a ‘fintech’ leader.

Stay the Course

Sailing through and coming out on the other side of 2020 was quite an endeavor. For a travel and spend management company like TripActions, 2020 was not without extreme difficulty. We won’t say that the issues of COVID and 2020 bounced off of TripActions like the British cannonballs bounced off of the USS Constitution’s oak sides. As stated before, many Americans had their businesses sunk by quarantine and the stay at home orders of 2020 and some are still treading water. TripActions took some hits, had to help her crew, and replaced her rigging a few times.

But sometimes challenges make us stronger and present new opportunities. Remember that the USS Constitution’s story wasn’t without serious adversity. If you read deeper into her fascinating history, she had to borrow her first guns from a fort, had her rigging blow off a number of times, lost 2 of her most senior officers in the first minutes of the boarding encounter with the HMS Guerriere, ran aground on launch, accidentally collided with a friendly ship, and barely escaped an enemy chase by kedging (the most manual process you can do to save a ship). But in all that adversity, this ship, and the crew that sailed her, was integral to the independence and protection of the fledgling United States in the critical decades between 1790 to 1820.

Remaining optimistic and taking the long view, TripActions’ leadership saw the surrounding stormy seas and wisely secured the hatches. They focused on motivating and encouraging the community in each of their teams throughout the world. You can have a strong captain, but you need an able and willing crew with clear goals. TripActions’ leadership spent 2020 further improving their travel management software, building out Liquid, and even managed to close massive new travel management clients like Silicon Valley Bank, ISG, Heidrick & Struggles, Mastec, and many others. They knew that business travel would eventually rebound and some public investors are already betting on it.

And that is how we’d like to conclude this analogy. Hope in the future and a new normal was key in TripActions recovering and coming out into calmer waters in 2021. Industries will change but most will rebound. Corporate travel will resume: Humans do not want to live through Zoom and remain trapped in our makeshift home offices. Students, teachers, employees, managers, vendors — most of us want to be physically near those we are interacting with. We want to see faces in person and feel the sun, sea spray, and the wind.

The old work week in the tech industry will change. The future will certainly be some hybrid of Zoom, remote work (which requires travel), and face-to-face again. We will be traveling the earth again, for pleasure, for family, and for business. TripActions and Group 11, and all its investors and supporters, can clearly see this future. Along with their leadership and relentless team members, we have all been in it for the long haul. We now go forward at full sail towards that new horizon.

Wooden Ship to Rocket Ship

Group 11 still agrees with our simile from June 2019, saying that we can, “only describe our journey so far with TripActions as akin to an astronaut hopping on a rocket ship to the moon,” but maybe 2020 became more of a journey on a strong ship in stormy seas. It has been rough, we’re all soaked, but we’re certainly almost through it. Now that we’re in 2021, we’re ready again for the space suits.

Congratulations to TripActions’ Co-Founders Ariel Cohen, Ilan Twig, our fellow investors, and the TripActions family!

Let’s GO!

References:

• Scoular, Casey. MC3. The Fates of the Six Frigates Created by the Naval Act of 1794. The Naval History and Heritage Command (NHHC). March 27, 2019. usnhistory.navylive.dodlive.mil/2019/03/27/the-fates-of-the-six-frigates-created-by-the-naval-act-of-1794/
• Adam Bisno, Ph.D. President Washington Signs the Naval Act of 1794, 27 March 1794. NHHC Communication and Outreach Division, February 2019. Naval History and Heritage Command. www.history.navy.mil/content/history/nhhc/browse-by-topic/heritage/origins-of-the-navy/washington-naval-act-1794.html
• The Editors of Encyclopedia Britannica. Joshua Humphreys — American ship designer. www.britannica.com/biography/Joshua-Humphreys
• Colledge, J. J.; Warlow, Ben. Ships of the Royal Navy: The Complete Record of all Fighting Ships of the Royal Navy (Rev. ed.). (2006) [1969]. London: Chatham Publishing.
• Rated Navy ships in the 17th to 19th centuries. Royal Museum of Greenwich. www.rmg.co.uk/discover/explore/rated-navy-ships-17th-19th-centuries
• Klein, Christopher. How the USS Constitution Became ‘Old Ironsides’. Updated August 29th, 2018. Original: August 17th, 2012. www.history.com/news/how-uss-constitution-became-old-ironsides-200-years-ago
• Corne, Michel Felice. Action between USS Constitution and HMS Guerriere, 19 August 1812: “In Action”. Oil on canvas, 32" x 48". Collections of the U.S. Naval Academy Museum.
• Schell, Andy. “The Lost Art of Kedging: How to set a Kedge Anchor”. sailmagazine.com. SAIL. Updated: August 2nd, 2017. Original: May 31st, 2013. www.sailmagazine.com/cruising/the-lost-art-of-kedging-how-to-set-a-kedge-anchor
• USS Constitution Museum, Building 22 Charlestown Navy Yard. Charlestown, MA 02129. ussconstitutionmuseum.org/major-events/the-hms-guerriere-battle/