Travel Tech CEO Reveals Shocking Prediction for 2021's Travel Industry (with Avi Meir)

What part of your culture has made you like that? Because I'm just kind of generalizing here. I'm like, it has to be a cultural thing. It's like the way they work, and it's just like they get things done. So anything you can speak to there, I'm just curious.

Yeah, it's one of these topics that everybody has an opinion about why, you know, you have a book called Startup Nation trying to explain why you have so many tech, especially tech entrepreneurs coming out of Israel. I mean, the numbers are crazy. in terms of absolute, not relative, it's not per capita, absolute numbers of companies listed on NASDAQ that are not from the US or Canada, I think Israel is number 1. Or at least, you know, it's a few-year-old statistic. Maybe now China is number 1 and Israel number 2, but China is a slightly bigger country than Israel.

Just a little bit.

Yeah. So I would say we don't have the hours and I don't have the entire knowledge to explain exactly, but my guess would be We are okay with things that are not perfect, and we wanna go fast. And that's something that, it might be a generalization, but that's something I've seen very occurring between many Israeli friends that are entrepreneurs is, we don't wait for something to be perfect to release it.

Yeah, obviously travel space right now, not the best time, so, How you mentioned, you know, you mentioned furloughing people. And what I found in talking to other founders, at least in the United States, is people that generally get furloughed— I'm not speaking for you, but people that generally get furloughed, they're like, yeah, we're probably not going to bring them back. But it seems like you— I guess my question, the broader question is, how are you dealing with the current kind of climate knowing that your space is, you know, getting hit pretty hard right now?

Yeah, so a few things. One is the plan is definitely to bring them back, and the furlough, just to be clear on what it means here, they get paid 80% of the salary, so it's not— you don't get unemployment.

Oh, okay.

So some of the 80%— yeah, so the way it works is we reduce someone to 30% work time, so they get paid 30%, work 30%, and then the government pays them unemployment benefits for the 70% reduction, but in Spain it's capped and the cap isn't super high. So we as a company— so let's say it's 10%. So you have 30% from the company, 10% from the government, get paid 40%, then we top you up to 80%. So we go out of pocket, we don't have to, but we think that's the right thing to do. So we top everybody up to 80% regardless of how much they actually have to work, right? And I wouldn't do it, of course, if I didn't have plans to bring people back. It would be silly. We would just go into layoffs. And the reason we decided to go after conserving the team and our culture, and I think it goes hand in hand, right? Like if you replace the team, it's not the same culture. Like you take the 400-ish people in the company and you put 400 new people, the whole culture is different. The building is the same, the name is the same, but the culture is different. So the reason we decided to preserve the culture and team is one, because we care a lot about our culture and we think it's amazing and we don't want to lose it. And it's a big part, probably the biggest part, if you try to explain the fast growth and success so far of the company, I would assign it to the culture and the team. And the more practical point here is that business travel is not going anywhere. You know, I did this conference yesterday and asked— we did the same conference last year, so this year we had to do it on Zoom. Last year we did it in person in Stockholm, and I asked by a show of hands, and nobody— like CEOs, nobody had any incentive to lie— show of hands, who would prefer to do this meeting, you know, the 30 of us, in person like last year versus in Zoom, saving you— so Zoom saves you the travel time, saves you the hassle, the cost. Who prefers to do it on Zoom versus in person in Stockholm? Everybody raised their hand. Everybody wants to be in Stockholm in person doing it. We all get it, you know, intuitively we get that the human connection is required to move the world forward, right? Something that is so inherent to our species, it's not going away because of virus.

What are, I mean, can you share some of the numbers you've been sharing on Twitter? I'm just wondering, 'cause you guys have all the data, right? So you can see, okay, March happens, boom, everything drops off. What is it looking like? What can you share that might be helpful for people right now in terms of travel?

Yeah, so I think the latest stat I shared yesterday was Spain travel. So Spain as a country suffered one of the most severe lockdowns. because the virus had a severe effect here, especially in March and April. So the country went into a very tough restriction and we've seen 16 times, 16x growth in revenue, our revenue in Spain travel. So Spain-originated travel. So it could be domestic or it could be international starting in Spain. And I'm talking about a month. So between months ago, and now that's 16x, 1-6 growth in revenue. And you see it all across, you see it in all of our core countries, you see this kind of— this is pretty extreme, 16x, but you see very fast week-on-week growth. I shared another stat last week, I think I shared it, where we saw a week of more than 60% week-on-week growth. That's global, not just for a specific country, and I'm talking about revenue. You see this kind of crazy numbers all around now, the same way as we went, by the way, we went from, as I mentioned, very fast growth year on year to, you know, at the bottom we did something like probably 5% of the same revenue a year before. So that's a 95% decrease year on year. That's the bottom. So, you know, just take everything into consideration, you know, the entire industry basically grinded to a halt. And now we're seeing this super fast growth out of this crisis.

Which is crazy because again, yours is mostly— it's all business travel, right?

Yeah.

People are getting ready to gear up again.

And that's actually an interesting part because we have a product that we created. It looks like we actually had a crystal ball and we had predicted this pandemic and we didn't. We created a product called Flexiper, and we released it last year. What Flexiper does, and that's— we're actually the first company and the only company as far as I'm aware in this industry that does it— we aggregate the entire volume of trips from all companies, not just your company, and then we use machine learning to estimate the risk of cancellation. Basically, how likely you are to cancel this given trip, and then we can do it on a trip-by-trip basis. What we offer to the companies is the ability to cancel a trip or change a trip for any reason. So it's not an insurance, right? For insurance, you have to come and justify why you're canceling a trip because, you know, God forbid you have to go to the hospital or something, you know, severe medical condition, whatever. With Flexperk, you just— I don't feel like it is a good enough reason. So you don't have to justify why. You click on the app, you just cancel a trip, and you get your money back. So this product in normal times is very appealing to C-level who changed their plans a lot, investors, so this kind of, it was like the niche product for them. And then COVID comes and suddenly everybody needs a tool that reduces the level of uncertainty. That's what it does if you think about it. So you can now book for November without fearing— I'm in business travel and even me, I'm afraid to book for September because I don't know if I'll be able to travel or not. And if I don't travel, I lost the— in many cases, you lose your flight ticket, your Uber booking, whatever, hotel booking, whatever you booked, if it's not a refundable fare. And refundable fares on average cost 68% more than non-refundable fares for exactly the same seat in the plane, just refundable versus non-refundable. So for a small fee, use FlexiPerk, which is much cheaper than buying a refundable ticket, And your entire trip, not just this one trip, the entire company trip, travel of your company becomes refundable. So the level of uncertainty gets lower, so people book for— so that's kind of the two edges that we see. We see people booking for today or tomorrow, and people booking for October, November using FlexiPerk. These are kind of the two behaviors we see right now.

You have a prediction for what's gonna happen in travel, so let me just preface this. What I've been looking at, you know, a lot of the analysts out there are like, travel's not gonna come back till 2023. So what's your response? What is your prediction for 2021?

I think travel— so my prediction, just the bottom line, my prediction is 2021 will be larger than 2019. If you take global business, I'm talking about business travel, and I'm talking global business travel expenditure. So what companies spend on business travel. 2021 larger than 2019. And it's an opinion that I think I'm probably one of the only ones in our industry that holds it, which makes it more interesting to talk about. It's not the consensus, right? The consensus is more like the analysts you mentioned. So that's my prediction. Cool.

I love it. And predictions have to come from the numbers that you're looking at and your engineering brain as well. So yeah, I hope you're right, actually. And by the way, I just want to say, you know, the predictions I was saying is probably more general travel 2023. So Avi here is specifically referring to business travel, which I think To me, I think there's a shot. I think it's a low shot, but, you know, we'll see what happens. So, you could be right.

I wish that worked. Yeah, but the point here is, I think, and by the way, like the 2021, 2019 is like, it's funny to have this bet, and I actually have the bet running now with a few people because I'm very public about it. But what's really interesting is the underlying point, which is human nature that didn't change because of the virus, right? People need this connection. And this is not going to go away, hence travel will come back. The question is, is it this year, next year, or the year after, but it's coming back. It's not like we're not switching to Zoom, like this is not a thing. And by the way, I'm a Zoom shareholder, amazing company. Please continue to be successful because, you know, as a shareholder, I'm happy that it is.

Same.

But it's a nice, it's a different use case, right? It's not the same. It's a transaction. It's not a relationship building.

Well, I'm telling you, after, like, if I've been calling all these calls, but there's times where I get up to 14 to 15 calls where at the end of the day, it feels like a Friday. Every day feels like a Friday.

You know what I mean?

I don't, I'm assuming, you know, based, a lot of people don't really take time off. And then you realize with all these Zoom calls that you actually need to take time off now. So anyway, it is what it is. That's the fatigue. So Avi, this has been great. What's the best way for people to find you online?

I was going to say Twitter. Tropic.com, tropic.com, this way. And Twitter, Avi Mir on Twitter.

All right, Avi, thanks so much for doing this.

Thank you, Eric. Cheers.