Skift Take

Second seasons often disappoint, but Steve Singh's comeback bodes well for blue-chip corporations. Singh is a business travel icon, and his ideas and energy may rev up the metabolism of travel managers, whether or not they buy into his new startup Spotnana.

A new startup is attempting to strip traditional technology vendors of their clout in corporate travel. In a surprise, the New York-based company Spotnana revealed on Thursday that business travel luminary Steve Singh is its executive chairman.

The New York-based startup officially launched by closing a $34 million Series A funding round, led by venture firms ICONIQ and Madrona Venture Group.

Singh’s involvement in Spotnana will catch notice. He successfully sold travel-and-expense specialist Concur to SAP for $7.4 billion in 2014. He also has evaluated hundreds of startups as a managing director at Madrona. This Seattle-based venture-capital firm was an early investor in Amazon, and it maintains close links with the e-commerce titan.

“While I’m not the CEO of Spotnana, I spend an inordinate amount of my time on it because I love the platform,” Singh said.

Officially, Spotnana came out of stealth on Thursday, led by CEO and co-founder Sarosh Waghmar. But Skift had named and clocked its behind-the-scenes development earlier this year.

Spotnana does two things. One is that it acts as a travel management company, offering unbundled services to corporations.

“We have a consumption-based commercial model,” Waghmar said. “There are no upfront fees or minimums you must pay. This model differs from the way the industry has typically worked, which has been pay-to-play.”

Separately, the startup provides automation tools on a white-label basis to travel management companies. The companies can replace many point solutions, or single-function tools, with the startup’s platform.

“I don’t think you can beat the incumbents by building incrementally on their technology or copying their business model,” Singh said. “Instead, we’ve built something from the ground up that solves business travel problems 10 times better than what we’ve seen before — and that has a very different economic model for customers.”

Spotting a Need for Speed

Behind the scenes, corporate travel is an industry still dominated by traditional systems and data exchange methods. Typically, travel managers at a global corporation have their data and software broken up country-by-country, without easy integration for managing costs and policy compliance. Usually, a mid-market travel management company pulls content from a complex set of sources, leading to complex (and too often manual) workflows.

Singh said that corporate travel’s technology stack needs to shift to the cloud much faster than it has. Next-generation internet-based services offer benefits because vendors sell them via subscriptions, not licenses. They also come without cumbersome on-premise installations and with a single, consistent system rather than multiple ones.

“Obviously, I’m respectful towards the company I was fortunate to be a part of building [Concur],” Singh said. “But if you think about what a global deployment of Concur typically looks like for a corporation, it can take many quarters at least to deploy many instances of it globally for a company that may have, say, 300,000 employees.”

“Solutions built today with true cloud-native computing, like what we’ve done at Spotnana, should let you deploy to 300,000 employees worldwide in a matter of weeks or months. That’s a massive step-function change in cost structure for the customer.”

So is anyone buying yet?

“We have 50 customers using our product, ranging from enterprise accounts to middle-market accounts,” Singh said.

Only one corporate client so far is a “Fortune 1000 company.” Yet, the startup aims to tackle the high end of the corporate travel market, rather than the small-and-medium-sized businesses that business travel management startups such as TravelPerk and TripActions target.

What about its enterprise software tools for travel management companies?

Two mid-market agencies based in the U.S. have been using Spotnana’s platform, but the startup didn’t disclose their names.

“We charge one fee on a consumption-based model,” Waghmar said. “So mid-market agencies can stop paying 30 vendors to run their business on a mix of systems and point solutions, and instead move everything to us for one fee, only buying what they need.”

Looking to Succeed Where Others Have Stumbled

Spotnana has raised $41 million in funding since its birth in 2019. Besides Iconiq and Madrona, investors include Decibel, Mubadala Capital, 8VC, and Global Founders Capital.

Spotnana has more than 110 employees. Shikhar Agarwal, who was the Google Brain lead, is the startup’s chief technology officer and co-founder. Bill Brindle, who once served as the chief operating officer of American Express Global Business Travel, is vice president of operations. Johnny Thorsen, who has previously worked on strategy at American Express, Concur, and Travelport, is head of strategy and partnerships. A member of the board of directors is Greg Stanger, a former chief financial officer of Expedia.

Yet experienced executives and investors have backed corporate travel startups before with mixed results. In 2015, Priceline founder Jay Walker launched Upside, a company with a plan to upend how businesses book unmanaged travel. Upside drew more than $100 million in venture investment, but it closed its doors earlier this month. Lola, the mobile travel agency startup co-founded in 2015 by two Kayak veterans, attracted funding from top-tier venture capital firms Accel and General Catalyst. But it has meandered since until more recently gaining some traction in a cautious sector.

The startup’s leaders said the pandemic-related revenue crisis has prompted travel management companies and corporations to rethink everything and take risks. The mass cancellations created a mess of refunds with a lack of visibility into who spent what and how to track travelers to ensure their safety and security. Spotnana’s executives claim this crisis has created a willingness among many players to make big changes.

A Question of Content

Yet it wasn’t fully clear whether Spotnana had aggregated enough content — meaning all of the most desirable airfares, hotel rooms, and rental cars — that the corporate customers of travel management companies will need.

The startup said both corporations and agencies would prefer its commercial approach to obtaining content. Most travel agencies get much of their airfare content from one of three so-called global distribution systems, Amadeus, Sabre, and Travelport, which provide incentive payments to agencies to use their reservation systems.

The tech middlemen cut complex deals with airlines, and sometimes content may be displayed, promoted, or left out of any given corporate booking tool or travel management company offering. For example, Lufthansa Group had been witholding some content from Amadeus, Sabre, and Travelport but has slowly been making that content available, first through Sabre and Travelport.

“Things have gone wrong when a TMC [travel management company] in effect says to a corporate client, ‘Hey, you know what, I’m only going to make this content available to you because I happen to make the most economics on it.”

Yet Spotnana’s content will only be satisfactory if it compares to the breadth and depth of the current leaders, the global distribution systems — which, while they have some gaps in content, remain the gold standard.

The startup was vague on how much content it had today.

“The reality is the best fares in the broadest selection of content is only available directly through an airline or hotel,” Singh said, adding that the company is building business relationships with suppliers. “We’re not just building a booking tool or replacing pieces of the mid-office or the system of record. We are building out the distribution pipes with direct business relationships with suppliers.”

It seems like the startup’s executives are hoping that if it has “good enough” content for the most popular routes, that will be enough to entice some companies to test it out. Maybe it can also overcome a sector’s historic resistance to sweeping changes — a resistance that has often been grounded in practical realities.

“Look, maybe I’m being a little bit idealistic,” Singh said. “But I feel that after many decades of working in the technology space, I can say it’s not a false sense of idealism. You can’t solve big problems like the inefficiency in corporate travel without being ambitious in how you attempt to solve them.”

UPDATE: The article originally said “Spotnana doesn’t pay incentive fees to agencies, and it said it avoids using the global distribution systems [GDSes].” The company follows up: “It’s not accurate that we don’t pay incentive fees to agencies or GDS. We don’t accept GDS backdoor payments and overrides. It’s also not true that we avoid GDSs, we just don’t bias content toward any specific distribution source. If a user searches by price, they will see what’s cheapest, regardless of the source. Our site and app don’t differentiate between GDS and an alternative aggregator in the display to the user.”

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Tags: business travel, concur, corporate travel, corporate travel management, funding, fundings, investments, startups, tmcs, travel management companies, travel tech, travel technology, travel venture capital, venture capital

Photo Credit: Business travelers (pictured) is ultimately who startup Spotnana seeks to serve by offers services to corporations. Robert Couse-Baker / Flickr

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