Ariel Cohen is a serial entrepreneur and the co-founder and CEO of TripActions which is a corporate travel management company. The business has raised so far close to $1 billion in equity and debt. Some of its top tier investors include Lightspeed Venture Partners, Andreessen Horowitz, Goldman Sachs, Silicon Valley Bank, Frontline Ventures, Comerica Incorporated, Group 11, and Zeev Ventures to name a few.
In this episode you will learn:
- How TripActions built a business model which compels them to continue to create value for customers and keep users engaged
- Ariel Cohen’s top three tips for weathering storms like the coronavirus
- Handling layoffs in moments of challenge and change
- His top advice for others considering entrepreneurship
- Why he says you should start your own business earlier
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
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Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
About Ariel Cohen:
Ariel Cohen is the CEO and Co-Founder of TripActions where he’s focused on the company’s growth.
Prior to TripActions, Ariel Cohen made his foray into entrepreneurship with streamOnce, a business multimedia integration platform that Ariel Cohen co-founded with his current partner and TripActions CTO Ilan Twig.
The company was successfully acquired by Jive Software, where Ariel Cohen had previously served in a senior position following his time at Hewlett Packard.
Ariel Cohen graduated from Northwestern’s Kellogg School of Management and currently resides in Palo Alto where TripActions is headquartered.
Connect with Ariel Cohen:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. I’m really excited about the founder that we’re having here on the show today because he’s done it a bunch of times as well. He’s been there, done it, the full cycle. Now what he’s doing is unbelievable, and we’re going to learn quite a bit on coming to the U.S., on building something, going to different types of roles and different types of skillsets. But without further ado, I’d like to welcome our guest today. Ariel Cohen, welcome to the show.
Ariel Cohen: Hi. Thank you for having me. It’s really exciting to be here.
Alejandro: So originally from Jerusalem, from Israel, the Startup Nation. How was life growing up there?
Ariel Cohen: Yes. I was actually born in Jerusalem but then moved more to the central side of Israel. Israel, to your point, it’s a very techy environment. Most of the economy is stack and startups, and therefore, you know from the get-go, as I was finishing University, I went and worked for a startup. That’s been my life since then in different technology companies, building stuff, and being part of this ecosystem.
Alejandro: And very early on, when startups were not such a popular thing. Now, everyone wants to be in startups, but back then, in the ‘90s, around that time, there was not a lot going on in startups.
Ariel Cohen: Yeah. Actually, the first startup that I worked for, I joined them in ’99, so that’s a long time ago. It suggests my age. I don’t know if I want to. [Laughter] But I do have a lot of grey hair, so that gives you a hint. It was interesting. That’s what I like about startups. They have so much of the ups and downs. I know that people are always using the cliché of a rollercoaster, but every startup has its own rollercoaster. For people that like it, it’s a lot of fun. You start, you are part of this, you go up, and then something happens, and you go down. Then you go up again and so on. I love it. I love the excitement. I love the buildup of this. So from the get-go, I’ve always enjoyed that kind of thrill.
Alejandro: In your case, you passed through different roles and different companies. You were in Commtouch, in Mercury, in HP, and then in Jive, which is the last one you did before diving into it as an entrepreneur. What would you say you learned through all these different roles and from all these different companies?
Ariel Cohen: I think in every place that you work for, you learn something. I’ll give you an example in a place that is the opposite of the startup, HP. I got acquired. I used to work for Mercury Interactive, and we got acquired into HP in ’06. Me, being an entrepreneur, HP probably could be the opposite of what I like. But even then, there, a lot of the things that I know about B2B, about channels, about how to go to market, how to understand the enterprise customer happened there. So that was a really interesting experience. Then at Jive, I learned how to think about the end-user as part of the problem. Jive was a social platform for enterprises, and it was very focused on the end-user experience, how they would experience that app. So this is what I learned there. If I’m thinking about the various companies that I worked for, they all try to achieve product/market fit, that in my mind as a product person, that’s the most important thing that you can think of.
Alejandro: So, as a product person, and especially for the people that are listening, what do you think it takes to get to product/market fit?
Ariel Cohen: It’s interesting. This is my second startup. Actually, I’ve done two startups with the same co-founder, with Ilan Twig. In the previous startup that we had, I think that we’ve never achieved product/market fit. We had a really good idea in the observation of the need. But it was very hard to find the right customers for that product in a given market. I think that when this is hard—startups have a lot of hard things, but when you’re out of product/market fit, it’s actually very, very hard to be successful. When you’re at product/market fit, I think you can make a lot of mistakes, but you’ll still be very successful. It is related to the market. It’s related to the market that you’re operating in. It is related to your approach to the market. Do you have a unique observation? Can you create something? Do you have unique value proposition for this market? You need to be passionate, I think, about the problem. If you don’t fully, fully understand the problem by yourself and excited about solving the problem, it’s actually very hard to build a real product, an exciting product. I think the market needs to be ready for you, the users, the customers, and you need to have unique observation on this market. I can tell you a little bit later how we thought about TripActions in this context, but this is what I would define as product/market fit.
Alejandro: You love entrepreneurship. You were talking about it before. Why do you think, in your case, it took you so much time to say, “I’m going to take the leap of faith and go at it on my own”?
Ariel Cohen: It’s a really good question. I did my first startup on what I would say a fairly late stage of my career. Each of us has our own stories in life. For example, when I worked for Mercury Interactive 20 years ago, I really liked the company, and I was very much drawn to the mission there. I felt that “I’m part of this journey.” In a lot of ways, when you feel like that, you don’t have a lot of reasons to go and try to build your own thing. You’re very proud of the culture of something that you believe in. Over time, you start to have these—at least that was my experience. You start to think about culture. What type of company do you want to create? What type of culture do you want to have in this company? What kind of difference do you want to make? For me, it took me some time. I think mainly because I was happy in the various places that I was part of, and I think that when that’s the case, you have less reasons to jump. Eventually, there is another thing, and I know that there are a lot of entrepreneurs that are listening to this. Making the jump, like really starting a startup, it’s a hard thing because you basically need to give up everything. It is very different than the way it looks like in the movies. It takes time to get funded. It takes time to nail and idea. It takes time to have the belief that you’re onto something. So making this jump, definitely on the first startup, it is actually very hard, but once you do it, I don’t think there is a way back. Once you do it once, you always want to be an entrepreneur.
Alejandro: 100%. Obviously, here, it took you to streamOnce, your first business. It was a short-lived experience and quite fast. Tell us about this one.
Ariel Cohen: The first one was really short. We sold it in nine months. From a return perspective, it did nicely. We gave more than 3x return to our investors, so it was cool. But from the creating-something perspective, creating a real company, we didn’t manage to do it. It was from that perspective a failure. streamOnce was interesting. I think today when you have Slack, it is easy to understand it, but back then, it was hard. What we were saying is that in order to collaborate in the enterprise between all of the various Cloud systems, you need to be able to integrate them easily, and you need to do it on the communication layers. I’ll give you an example. We connected email to Jive, so people can communicate in email and in Jive seamlessly. We connected between Box and DropBox, and G Drive, and SharePoint, and again, people will be able to collaborate between these platforms seamlessly. You think about Slack today, one of the major principles of Slack is that it is integrated to your workflow, to your workplace, to all of the systems that you’re using. Back then, that was not the case, and we tried to create the platform that will allow this integration. So, again, it’s much easier to explain today if you use something like Slack. Back then, it was very, very hard to explain it.
Alejandro: Of course. So how was that journey with streamOnce because one thing that is remarkable is that leave Jive, and then you go back to Jive because Jive acquired the business.
Ariel Cohen: Yes. That was an interesting story. Part of our business model was OEM. We developed this technology, and we had partnerships. The two first partners that we had were Jive and Box. We developed good relationships with their product teams. We were a very small company, by the way. We were like five people in the company, so a really, really small company. It was Ilan, my co-founder, and me, and three other developers later. When we sold, we were six, so a very small company. We had this relationship with Box and Jive. We signed partnerships with them, and both of them offered to acquire us. At that point, it’s more like, “Do you believe that by yourself you can get to a product/market fit. Our belief was that we could not. We had two customers at that point. We had these partnerships, and we felt that we could bring streamOnce to many more places and to many more customers and users by going and being part of either Jive or Box. Eventually, we landed on Jive because of negotiation reasons. But it was basically getting back home. I was working there, I left, and then I got back to Jive, so it was an interesting experience.
Alejandro: Yeah, interesting, for sure. Then, you were there for another couple of years. It seems like the folks from Jive did not want to let you go, but eventually, everything led to a snow blizzard that led you to TripActions. What happened?
Ariel Cohen: Yes, in these two years, Ilan and I were talking a lot, but the things that I think are the most important thing for entrepreneurs to think through—it’s not so much the idea of how are you going to raise money or how are you going to start a startup? It was actually a different discussion. It was why do we want to do a startup? What is the reason for us to go and do another startup and not just stay at Jive or go to a different organization? This discussion led to a deep observation in understanding about ourselves, which is, we want to build a company that will last for a very long time, that will make a real difference, that will change an entire industry. Interestingly enough, in the beginning, we didn’t know which industry, but we spent a lot of time defining that. It’s about changing something. It’s about building something meaningful. When you look at this from that lens, then the discussion led to not only product/market fit, it needs to be product/market fit in a really big market that is ready for disruption. That was another definition that was very important. Then, we looked at different things. We looked at insurance. We looked at benefits. We looked at a lot of different things. When we landed on travel, the reason that we got excited about it is not only the fact that it is a huge market, it is probably the most ready-for-disruption market that I’ve ever seen in my life. But there was another thing. We were very passionate about it. Both of us were road warriors. We’ve used any travel solution that is out there in our past. We also saw it from the management side. We saw the type of capabilities around managing the budget effectively, knowing where your employees are. We knew it from both sides, from the sides of the users, us as road warriors, and from the sides of executives in companies that are trying to manage travel. We got passionate about it, and we knew that it met other criteria such as a big market and ready for disruption. We felt because of it, that’s what we should do. I think the time that we took to define these things, I didn’t talk about product up until now. We didn’t define the product at this stage. We defined the criteria. In a lot of ways, that’s why TripActions is so successful.
Alejandro: Wow! So how do you guys make money with TripActions?
Ariel Cohen: Right now, it’s an interesting time because we are going through the coronavirus crisis. We’re not making a lot of money right now. Generally, our business model is that we sign B2B customers. A B2B customer could be somebody like—interesting enough, Zoom is a customer of ours. Slack is using us, and so on. We signed them as a corporate customer. Then their employees are starting to book their trips through us. The company can manage the budget, can have visibility into the budget, can know from a safety perspective where their employees are, and so on. The way that we make money is we charge a certain platform fee, but then we also charge a booking fee per trip. So it’s very much usage-based. As long as people are using the product, we are making money. It’s a bar that we’ve purposely created. We wanted to have a bar where if only if you create value, you’re getting paid. So only if the product is really good, only if the employees like to use us, only if the companies like to use us, we’re going to get paid. If they don’t get value, we don’t get paid, and when you do that, we think that it assures a really good product. The one caveat there is that, obviously, in a situation like COVID, then your revenue goes to a very small number. So, obviously, when we built the business model, we didn’t think about that scenario. But all-in-all, I’m still happy about this business model because it creates the right alignment between the customers and us as a provider.
Alejandro: Got it. Even though the time that we’re living in now, obviously, is difficult for everyone. We’re going to come out of it, and it’s just a matter of time. I think that you guys, it’s incredible, the timing on the raise that you guys did in February. How much capital have you guys raised to date?
Ariel Cohen: We’ve raised close to half a billion through equity, and we also have a debt facility of another half a billion. To your point, the timing here was very, very critical. We’ve closed our last equity financing round in May last year (2019). When we closed it, it was when we still didn’t even touch the money from the round before it. So we’ve accumulated enough cash. The intent was to mainly fuel our growth. That’s why we were doing it. But, obviously, right now, it allows us to weather the storm. Our belief is that we’re going to come out of this stronger. The main reason we believe that we’re going to come out of this stronger is that we are a technology company, and we’re operating in the travel space. Usually, we’re competing with travel agencies. So you think about something that is very, very antiquated in the way that they operate. A lot of agents, a lot of manual work, and so on. So, for us, coming with the technology to manage the post-COVID era, for example, our data team is right now building an entire functionality around allowing business travel managers, around allowing our customers to know if it is safe to take a certain route, a certain trip. Not now. No, everybody is sheltering in place, but I’m talking about when things will get back to some normality. You have to use data and technology to do that. We’re also building unique abilities around how to manage your budget in the most efficient way. All of these things, before that, you could afford to use some travel agency and a lot of agents, but I believe that post-COVID, you will not be able to afford it, and you’ll have to use, like in a lot of other business lines, you’ll have to use real Cloud data-driven technology companies like us. So, while this situation is really, really tough for everybody, I also think that we have enough money to weather this storm and to come out of this stronger.
Alejandro: Absolutely, and obviously, you’ve seen the dot-com bust. You’ve seen 911. You’ve seen 2008. Obviously, you definitely have the experience to know how to tackle this.
Ariel Cohen: The experience here is super, super important, and it’s not just me. It’s even in my board. Think about someone like Ben Horowitz. He managed his company, Opsware or Loudcloud, back then during the dot-com crisis and in 911. Oren Zeev, who invested in companies during these crises. I have [21:02] coming from Lightspeed, who has, right now, such unique visibility on all of the B2B companies, the most exciting companies that are out there in the market, and see how they’re affected by the crisis. All of this experience, alongside the fact the Ilan, my co-founder, and I, and most of our management team have been around in 2000 as well as ’08, it’s extremely important right now on how to weather a storm like the one we have.
Alejandro: So for the people that are listening, mainly the entrepreneurs, Ariel, what would be the three tips that you would share with them on how to weather the storm?
Ariel Cohen: I think the first one is to be as transparent as you can with your team. I think it’s a huge, huge mistake to promise something. Think about the situation. The amount of unknown here is huge. Employees definitely want certainty. They want to hear from you that their job is protected, that you’ll never do layoffs, that you’ll not cut their salaries, and so on. I think that the right thing to do is to constantly share the situation with your employees, the business model, your assumption around the situation, and to be honest with them, to be as open as you can with them. I think that’s the first thing because, obviously, we already took one tough decision. We laid off 300 employees. When you do something like that, it comes down to trust. Do I have the employees that are part of TripActions lasting me or not? You do it through transparency. That’s one thing. I think this is very, very important. The other thing that I think is it’s important to continue to grow the business, to sign new customers, to make sure that you don’t have customers that are churning. It’s really important to continue and build the business, even in tough times. A lot of the focus that we have here is around that, how we are continuing to explain the value proposition of TripActions once people are coming back to travel and why that’s the time to run a change. That’s the time to actually look. If you’re using something like Concur and its traditional travel management such as the American Express, or FCM Flight Centre, you don’t have the right solution for the day after. It is our role to explain to the customers, even in this situation. So continuing to grow the business is the second principle. The last one is to innovate. The environment has changed, and it creates a lot of opportunity for innovation. We’re doing really amazing things right now in the product and R&D team and data team around the future. For example, when this situation started, we released the map that showed our customers where their employees are, and also based on their planned trips, where they are going to be. Then we allowed our customers to act upon it. We correlated it with the CDC recommendations, and we showed our customers, “You have x-amount of employees that are planning a trip to Italy,” as an example. I’m talking about the beginning of March. Then they could decide, “We want to cancel the trip. We want to have a discussion with the employee. We want to take the entire ability to fly to Italy from the platform.” It was data-driven, our data plus the CDC data, and our insights, and then the actions that the customers could take on this. This was an initial feature that we released back then. Since then, we’ve done a lot of iterations around this functionality. I think that when people will get back to travel, it’s really, and I mean it, and you can probably hear it in my voice, it’s not a marketing thing. I don’t think how you’re going to use anything else that it’s not TripActions. You cannot give at least to the American Express or FCM Agents that will show them where you can travel and where you cannot travel. You need to use data-driven technology solutions to do it. All of the bookings need to happen online through our technology. That’s a must, and I think that’s innovation in tough times, which is really, really important.
Alejandro: Got it. After doing the layoffs, how many employees do you have now?
Ariel Cohen: We’re around 800 employees right now on the various teams.
Alejandro: About leadership, Ariel, obviously, having to do the layoffs is not fun, but at the end of the day, we’re dealt certain cards in life because there’s a lesson there for us to learn. Going through times like this, I’m sure it has been super difficult for you as well and as the leader. What would you say was the lesson there that you needed to learn?
Ariel Cohen: I think, first of all—I’ve talked about communication earlier, so it’s not only that we needed to do layoffs, we needed to do it in an era that you cannot meet your people, so you have to do it using a video conferencing solution. Think about layoffs. You want to stand in front of the team and in front of the people that are affected. Then you want to talk with them. Then you want to talk with your entire organization, with the people that are staying, which is all of the steps that we took. We talked to the people that got affected. Then, we talked to them on a personal level. Then, there were some exceptions; we talked to them about that. Then, we talked to the entire TripActions team. But the caveat was that we needed to do it over video conferencing. This is really, really, really hard. I’m sure that there are some entrepreneurs that they are doing it right now or have been doing it in the last month or two. Figuring out how to do it in the most efficient, compassionate way is so important. I think we did okay there, but there is always room to improve on how you’re creating. It is a very, very personal experience while you cannot really meet the person that you’re laying off.
Alejandro: Of course, Airel. So, now, let’s imagine that you go to sleep tonight and let’s say that you wake up five years from now. It’s an off-the-chart snooze, Ariel.
Ariel Cohen: Yeah.
Alejandro: Basically, you’re waking up in a world where the vision of TripActions is completely realized. What does that world look like?
Ariel Cohen: Our mission is to empower the end-person connection that moves businesses and ideas forward. I think that missions are very important to stress in hard times. Think about it. We defined our mission four years ago. Now, I cannot think of something that is more relevant for that—for businesses to get back to business. To move forward, you need to meet face-to-face. You eventually need to go on a trip and meet people face-to-face. So our mission really stands. We always said that to meet this mission, we want to build the best travel solution on the planet that everything around us is seamless. It’s super-easy to book your trip. It’s super-easy to pay for it. It’s easy for the companies to manage it, to reconcile the trade, to think about the expense side of it, and so on. If you look at TripActions in five years as the standard for travel and expense and safety solution, basically, everything that you need on managing travel in one solution and becoming the #1 platform leading the market, it’s more than a dream. I’m certain that that’s where we’re going to be.
Alejandro: Ariel, it’s been an amazing journey as an entrepreneur that you’ve had. Now, with TripActions, the last, you did the full cycle, so if you had the opportunity to go back in time. You speak with that younger self that is thinking about launching a business. Knowing what you know now if you had the opportunity to give one piece of advice to that younger Ariel knowing what you know now before launching a business, what would that be and why?
Ariel Cohen: I would say do it much, much earlier, and don’t be afraid to do it early. We kind of touched on it earlier in this discussion. I did it fairly late. As I said earlier, there are a lot of reasons for that, but I’m sure that I could have made a bigger impact on the world if I had started to be an entrepreneur much earlier in my career. That’s definitely the advice that I would give to my younger self and also to everybody that is listening. If you have this passion to be an entrepreneur, just go and do it as early as you can. Don’t be ignorant about it. Talk with people, learn, listen, take advice, and so on. Don’t think that it’s going to be easy, but definitely start it as soon as you can. I think you’re going to probably fail a few times, you’re going to learn a lot, and eventually, you have the ability to create something really, really big.
Alejandro: Very profound, Ariel. For the folks that are listening, what is the best way for them to reach out and say hi?
Ariel Cohen: My email is very open. It’s firstname.lastname@example.org. You can always shoot me an email. I always try to be very responsive, whether it’s with our employees, but also with anybody that is out there. So just try to do it through my email.
Alejandro: Amazing. Well, Ariel, thank you so much for being on the DealMakers show today.
Ariel Cohen: Thank you so much. I had a lot of fun. It was a fun discussion.
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