What prompted actor Will Smith to invest in travel tech startup TravelBank? And what can other companies learn from the way the company has handled the pandemic so far?
Nothing like being in the right place at the right time, as one corporate travel startup is finding out.
Travel and expense platform TravelBank is currently benefiting from having several clients in a sector that’s managed to boom during the pandemic: food delivery.
It counts DoorDash, Caviar and Grubhub as customers, which have all been expanding as millions of people embrace local restaurant takeaways from the relative comfort (and safety) of their own home — with employers picking up the tab in many cases.
The stars also aligned, literally, with actor Will Smith investing in the company at the end of last year.
But it would be unfair to say it’s all luck, however, because TravelBank’s strategy is like a textbook answer to the question of what should, or can, corporate travel agencies do in the face of coronavirus.
Big Names, Small Customers
There’s a combination of favorable factors coming into play, including client acquisition, business models and expense management; celebrity endorsement is harder to achieve, but the travel industry does appeal to certain A-listers.
Actor Will Smith invested in TravelBank at the end of September last year, via his Dreamers VC venture capital fund. Smith set up Dreamers alongside Japanese soccer player Keisuke Honda and Tashi Nakanishi to put Japanese corporate investors in touch with early stage U.S.-based companies.
Dreamers invested an undisclosed amount in TravelBank, and for Duke Chung, TravelBank CEO and co-founder, it’s testament to his company’s success as the venture capital fund was also a customer. “We didn’t know at the time they were using our software,” he said. “They liked our service so much they asked to invest, and they did so late last year. It’s a great testament of organic growth. You don’t know who you’re going to meet, it’s not always these nerdy tech companies out here.”
When the announcement was made, Dreamers co-founder Nakanishi said: “Our team has experienced first-hand the positive impact TravelBank’s technology can have in the workplace, and how its simple to use approach streamlines important, yet time-consuming and sometimes confusing processes.” Westbrook Inc, Will and Jada Pinkett Smith’s media venture, is also a client.
There’s nothing wrong with nerdy tech companies, of course, and TravelBank has actively pursued startups, as well as small and midsize businesses.
“People ask us why we want to work with small companies, when all the travel management companies want to grab the mid-market enterprise,” Chung said.
TravelBank goes after startups in the Y Combinator program in particular, through its own partnership with the seed accelerator’s business credit card provider, Brex. TravelBank’s platform is the “private-label solution” for Brex Travel.
Chung said TravelBank has helped 50 to 70 percent of the startups with their travel and expenses. Food delivery platforms DoorDash and Caviar happen to be Y Combinator graduates, and business is good — so much so DoorDash is reportedly planning an initial public offering in the fourth quarter. Last week, DoorDash also finalized its acquisition of Caviar. U.S. firm Grubhub is meanwhile set to be sold to Europe’s Just Eat in a $7.3 billion deal.
“We’ve been privileged to work alongside them, and share in their success and help in their journey. It just happened that way, we’re very honored,” Chung said, adding it’s possible the next DoorDash — or 20 DoorDashes — to emerge from Y Combinator could already be customers. He just can’t tell right now.
“But we have challenges as our technology is still maturing,” he admitted. “We’d be foolish to think we could serve a Fortune 500 firm from day one. We have to grow with customers over time.”
With a subdued market ahead, should the more established travel management companies follow this example? Is now a good time to tailor new services with lower price entry points for smaller companies, or firms that are temporarily scaling back their managed travel programs?
In the first quarter, TravelBank also introduced a subscription model for the first time — ensuring revenue came in for its expense tool. It’s not the only corporate travel company to maneuver into a new business model.
TravelBank charges $8 per user, per month, for its expenses platform, or $15 for travel only, but offers a combined fee of $20 for both. Chung said this is a competitive price that had helped it attract several dozen new customers in the second quarter.
Expensing From Home
As well as expanding through its Brex affiliation, simpler expense management is a key focus. In fact, payment technology that makes life easier for consumers was identified as Skift Megatrend earlier this year.
The clue’s in the name, as TravelBank launched in 2016 as an expense management tool, and travel management came later in 2018. It only integrated ground transportation at the end of last year. With the collapse of travel in 2020, there’s since been a U-turn. “In April, we reduced our focus on travel and moved 90 percent of our resources to our expense product,” Chung said. “As we saw travel declining, we talked to our customers. Travel was a lower focus for them, everyone was focused on reducing costs, so we went deeper with them to find out more about how we could help them.”
The feedback? The transition to working from home proved to be the most significant impact as it led to a “democratization of expenses”, according to Chung. Overnight, internet access, office equipment, food deliveries and other perks became the only things employees were expensing.
TravelBank reacted by developing a tool to help finance teams create new expense policies and communicate them to employees, and launched a marketplace where purchases could be made. “Clients asked us to find providers that we should look at, especially if there are discounts and offers, for their employees. So we started to introduce a lot of new categories including everything from food delivery options to SoulCycle, and apps like Calm and Headspace. It’s the new travel … I hope it’s not in the long term,” he added.
As other travel management companies start to expand into payments in response to the crisis, including TripActions breaking into financial technology in February, it’s the kind of platform, and advice, that most organizations would appreciate in the current environment, with cost savings front of mind.
Meanwhile, with many travel agencies unfortunately cutting staff due to the pandemic, another emerging trend is collaboration. Despite winning new business, and growing to 150,000 users across 2,000 companies, TravelBank had to reduce its workforce from 70 to 50 people, mostly laying off support and marketing staff.
Today, it seems there’s safety in numbers and TravelBank recently signed partnerships with larger travel companies, including World Travel Inc and Upside Business Travel. TravelBank will now power World Travel’s new online booking tool and expense management platform, WorldHub Travel & Expense, while it’s also extending its “expenses footprint” through a partnership with Upside to offer the expense tool to its clients.
“The pandemic forced us to reduce our travel support, due to the volumes going down. It put is in a situation to think about this more, now we have some options. Do we re-hire travel support ourselves, or partner? We’re helping corporate travel agencies with access to new technology, in return they help with fulfillment,” Chung said. “We’ll lean on travel partners, that’s an area we’re looking at, in the spirit of building partnerships. It feels like it’s the right thing to do. It’s hard to do both, so it’s easier to just pick a path.”
This kind of outsourcing could ultimately lead to higher costs for TravelBank’s own customers, if it leans on other agencies too much when travel returns. However, it’s made its choice and many other corporate travel agencies may also soon need to pick their own paths. And as the crisis deepens, with new travel behaviors and patterns coming to light, the timing will be key.
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Photo credit: Through Dreamers VC, the venture capital fund set up by American actor Will Smith, invested in the TravelBank in 2019. celebrityabc / Flickr