I’ve known Mike Volpe for well over a decade, going back to his days as HubSpot’s first chief marketing officer. And I’ve spoken with him a few times over the years for the series, the last time being when he became the new CEO of Lola.com a little over two years ago. As a refresher, Lola.com is focused on making business travel easier for the travel manager and the traveler.
Being that business, it’s not surprising that the pandemic has had a major negative impact on Lola. But even that would be an understatement as the company lost 97% of its revenue when travel basically came to a screeching halt overnight at the beginning of the Covid-19 shutdown. 97%!
Knowing the industry that he was in, I remember checking in on Mike at the onset of the pandemic via email. He told me that I should check back in a couple of months because they were working on a plan. And roughly five months later, Lola just announced a new service offering called Lola Spend, that helps companies to track expenses and manage spending. And the new offering was actually in part a collaborative effort from the same Lola customers who stopped traveling.
Interview with Mike Volpe of LOLA.com
So I caught up with Mike for a LinkedIn Live conversation to talk about what it was like at the start of the pandemic and seeing revenue drop to almost nothing overnight, why the company didn’t quit, the importance of having great customer relationships BEFORE the pandemic, and how that has helped them get through the current situation.
Below is an edited transcript of our conversation. To hear the full conversation click on the embedded SoundCloud player.
The Quiet Before the Storm
Small Business Trends: Take us to the beginning of the pandemic …
Mike Volpe: We first chatted when I first joined, it was the fall of 2018.
Small Business Trends: Right.
Mike Volpe: At that point, we had a great product and we were about to launch into doing corporate travel. We launched, sold a few customers, sold a few more customers, hired a couple of folks in sales marketing, sold a few more, hired a couple more. And so finishing up the end of 2018 in a decent spot and poise for a lot of growth. Grew a ton in 2019, and just really had the business going well. Had an aggressive growth plan for 2020. January, we’re on the plan doing great. February were on the plan doing great. But at that point, starting to hear from some of our friends that do more international corporate travel stuff. So we have a partnership with American Express Global Business Travel.
So we’re hearing from them and few other folks that, “Hey, there’s this thing in Asia.” And at that point, you’re reading news about it. And it’s one of those where you just don’t know where it’s going to go. Is this going to be some big global thing or…? SARS and MERS, there was a lot of early warning signs on those, but they kind of seemed more regionally contained, right? So you get into March and you have like a case or two pop up in the US and you start to look at the numbers and we’re starting to see people booking less travel.
We’re starting to see people canceling more of their upcoming trips. The first couple of days, there’s a little bit of that. And the next couple of days is a little bit more. And then there’s a little bit more. And then at the end of it, March was this big transition month. But if you look at the travel volume that was being booked to the corporate travel through our platform, April was down 97% versus February.
The Bottom Falls Out
Small Business Trends: Did you imagine in your wildest nightmares that it would be that dramatic?
Mike Volpe: No. No. Not until early to mid-March and then you’re like, okay, this is … Not only is this having a really big effect, and we’re headquartered in Boston. So Boston and New York were two of the parts early on in the US that were hit really hard. I actually took a train trip. I was in New York for a couple of days, like March 2nd and 3rd. Took the train down, took the train back. At that point it was like no one knew masks or how do you protect yourself? No one really knew. I bought Santa Rosa sanitizing wipes and I had those on the train I’m like wiping down my tray. But it was mostly like, “Oh, people who went to Italy. Got it. And brought it over here like a few of them.”
I think looking back, it was more widespread than we thought, but at the time it wasn’t really perceived to be a widespread thing. But no. It was around March 10th or so it’s seventh, eighth, ninth, 10th where the numbers started to get really bad and it was really clear that this is going to be a big deal. But then the big question was, is this 30 days, 60 days, 90 days or longer? No one really knew back then either that this is going to be like, we can get this contained quickly or not and how bad it’s going to be, no one really knew.
Small Business Trends: Wow, 97%. What were the first thoughts or the first conversations like with your team, your executive team and your employees too? Because I know they had to have tons of question.
Mike Volpe: Yeah. Lots of questions. I think that the only thing you can do in situations like this is look at all the numbers, look at all the data, have the right conversations and just be really open with people. Even though we had a lot of cash in the bank, we had raised $37 million in our last round. We were going from place of a big growth trajectory. We had lots of new customers signing up, paying us for annual subscriptions that were making money off of their travel bookings as well to a place where we expected no new customers to sign up. So we’re not getting those subscription payments and they’re not booking travel.
And early on, we really felt like that was going to be a longer term than most people are thinking. I think a lot of people were hoping it was going to be 90, 120 days. And I think that when we looked out and talked to a few folks, we really expected this is going to be like a more meaningful longer term hit than that. So we shared all that data with the team and we had to do a layoff. We laid off about a third of the company back in March. And the real reason there was just to extend the runway and make sure that the cash we had in the bank would last.
At this point, we’ve got cash into 2022, that’s a good thing, right? But we share those over to the team. We’re like, this is how much we have left. This is how much we’re burning. If we make these changes, here’s how that changes. Here’s how much longer the cash lasts. And I think people understood the decisions, no one likes those decisions. No one likes to have to make those decisions and have to implement them. But I feel like it was definitely the right call.
And I think the way we got the whole team through it was just being open and honest with everyone about, this is what’s going on. This is out of our control. It is what it is. Here’s the new plan. Here’s what we’re going to focus on. And here’s the changes we need to make right now. And yeah. These suck, and admit to them that they suck and just be open and honest and transparent with people. That’s all you can really do.
Quitting is Not Our Thing
Small Business Trends: Were there ever any thoughts of saying, we close up shop, we’re done or can we find somebody to sell to or…?
Mike Volpe: Yeah. That’s not really our thing. I think our founders, a guy named Paul English who started KAYAK and three to four other startups, and I think the two of us have a lot of resiliency. We actually have a corporate value called all grit no quit. And it’s really about the resilience that we have as a team. I know that startups are hard and it’s never smooth. You always hit obstacles along the way, whether it’s some giant company buying one of your competitors and then become competitive to you, pieces of your technology not working because there’s some sort of change in how APIs work or how partnerships work [inaudible 00:06:23] now a global pandemic. And the only thing you know about startups is there’s going to be big obstacles in a way that you can’t anticipate.
And so that resilience, I think, is really an important part of our core value of Lola. And I think it should be part of every startup. A couple board members, a couple of investors ask that question of a, “Hey, are we going to be better served by taking a low price today and selling to somebody who’s got half a billion or a billion dollars of cash in the bank sell us some really big player.” But we really felt like we had an opportunity because we had enough cash in the bank to have a couple of years of runway to really build something new.
And we had been listening to our customers a lot and we had heard from them some things that we thought we could build that were outside of travel specifically. That could be something that we could sell, even if no one’s traveling. So that started to get us a little bit excited and it gave us kind of some options of what we can do going forward.
Why Customer Relationships Matter Even When They’re Not Buying
Small Business Trends: Talk a little bit more about listening to your customers and in particular, how you kind of develop the idea of this is where we need to go. This is the product that we need to build based off of how you were able to look at data and gather feedback from your customers.
Mike Volpe: Yeah. We’ve done a bit of a pivot, that’s what this is kind of leading up to. But I think what I love about the pivot that we’re doing is it’s more of an expansion. There’s always the stories about Slack and they were building a video game and now they’re a chat app. Or there’s Twitter, it used to be a podcasting platform and then has become messaging, and everyone knows what Twitter is. And so those are very big pivots where you almost throw away the old business. We were a corporate travel and we were selling to finance teams and every implementation and every customer conversation, whether it was sales or post-sales, there was a lot of questions from customers around, can Lola help me manage expense reports more easily?
Do you integrate with my expense report system? How do you integrate my expense report system? Is there any way to streamline the way the receipts from travel and getting those into my expense system? Can Lola do my expense reports? And then we had a bunch of other questions too on buying things and paying for things. So can I store my corporate card at Lola and let my whole team share it? Is there a corporate card that Lola has a better integration with? Does Lola have a corporate card? All sorts of questions like that. And it was one of those, we’re hearing all those things from customers. We had done a lot of work, a lot of research into those couple areas of what’s possible, what could be built today.
We even had some designs, some mock-ups of what the front end would look like that we could show to a couple of customers to get their reaction and get their feedback. And we had, kind of in our heads, an architecture of what the backends could look like, but we hadn’t started to build anything yet. And so again, I think those insights from customers were really interesting and sort of showed us that maybe there’s some other stuff that we could build beyond just purely corporate travel. And if we built those things in the right way, maybe there’s something we could sell to the companies even if nobody’s traveling.
Small Business Trends: Talk a little bit about not just talking to customers and getting their feedback, but the importance of having a good relationship with customers. Because, let’s face it, a lot of instances customers are just saying, “Look, we’re out. We just can’t do anything. We’re struggling over here too.” But it sounds like you had enough good customer relationships that even if maybe some of them said, “Hey, we’re not able to do anything right now.” Can you help? Maybe you can help us over here. Talk about the importance of having solid relationships before the pandemic that helps you get through the pandemic.
Mike Volpe: I think a lot of times people underestimate the human side of customer relationships and they sort of assume that, if you’re sending out an NPS survey and you’ve got a high rating there, or folks interacting with maybe somebody in your customer service team or tech support team, and that’s going okay, that you’ve got good customer relationships. And to an extent you do, but I think that we had a set of customers that were almost like we have a group of folks, like a customer advisory board. And then there’s kind of even a set of customers beyond that where a few of the executives of the company talk to those customers with some regularity.
There’s even a couple that I even went visit in person, even though we don’t sell to big enterprises, like all of our accounts are sort of small. It doesn’t make economic sense for me to get on a flight and spend two days to visit a customer. But I’ve done that because those relationships are important. And it was a lot of those customers that were willing to spend a couple hours with us and talk through the new things we’re thinking about building, give us that feedback and almost advise us in a big way. And so I think you’re right. I think, if you sell to really big companies, I think that human side of the relationship is always there, because those are typically human driven sales, in-person sales.
But I think a lot of times for companies that have maybe a low price point and doing a lot of e-commerce or a lot of high velocity sales, they miss out on that sort of one-to-one relationship with some executives. And certainly, we had a ton of customers. It’s not possible for me to know them all. But there were a handful that I knew, and there were another handful that our head our products knew and another handful that our head of sales knew. And so we had enough there of folks that were really exploring and just kind of digging with us and spend some one-on-one time which was incredibly valuable.
Building a New Service Offering In the Middle of a Pandemic
Small Business Trends: How much did you have to invest in retraining kind of getting your employees aligned in the new direction, being able to create this new offering. Did you have to invest in bringing in new people or what was the mix and how did you go about it? Because even having this kind of a new direction, it still meant having to put some money out in a scary time, I guess.
Mike Volpe: Yeah. That’s right. I think that if we wanted to not invest here, we probably could have cut further and save more money. But again, you got to balance the cost savings versus being aggressive when the time is right. We hired a couple new folks, but it’s mostly been a process of training and educating the team on the new things that we’re doing and getting them excited about it, which is definitely a process. We have people that signed up to join a travel company because they love travel and travel is the number one thing for them. Even though we do corporate travel, we have a lot of folks in our team that are very avid leisure travelers and travel around the world and take photos and even a couple that have travel blogs and things like that, just travel is like a major component of their life.
And then you start to talk to them a little, “Hey, we’re going to also build a product that’s for finance people and helps them keep their teams on budget.” And [inaudible 00:13:16] gets the dork and the finance guy inside of me excited, but the photo journalist who loves to travel around the world to take amazing photos is like, “I can’t take a picture of a budget. I don’t get it.” So there’s definitely a process there. We’ve done it a few ways, is us talking about it, us sharing a lot of the information from those customer interviews.
We’ve also done some customer surveys. Like we recently just finished a survey of over 600 executives that are responsible for managing budgets within their company and they plan to do a lot of the pain points. 94% of people say they use a tool separate from the finance department to track their budget. So there are two of them and they can’t be on the same page because you’re using different systems like finance is NetSuite, and the person who’s running the budget has Excel or Google Sheets. And then 61% of them say they rarely or never agree with finance and how much they spent. So there’s real pain there.
So sharing data like that with the team and kind of showing them that there’s a real opportunity here to build something cool and interesting. Actually putting customers live. So in our last company-wide meeting, I had one of our customers, one of our early private alpha customers come on. And she talked about how she uses the product, what they were doing before, why were they’re doing. Now with Lola is much easier, much faster, much better. So for them hearing that live from individual customers, I think is super helpful.
And then I’ve got an industry veteran, a woman who’s been a SVP level person at a couple Fintech companies before sort of folks in this world. She’s Coming into our company meeting later this week. And she’s going to talk about, from her experience, why she’s been chatting with Paul and I about Lola and sort of what our perception of the market is and things like that. So it’s kind of multifaceted. You hear it from the executives within the company, you hear it from customers, you hear it from data, you hear the qualitative stories you hear from an outside industry expert. And you just need to constantly do that stuff over and over to bring people up to speed on the new things you’re doing.
Small Business Trends: How long did it take you to go from, all right, we made the decision to do this, to actually getting Lola Spend ready and generally, well, it is generally available, right?
Mike Volpe: It is, yeah. We’ve publicly launched it now. So it went from saying, “Hey, we should do this.” To us and another couple of customers using it in private alpha in five months. So the product has, finance team sets budgets for each team. The teams can then actually dole those budgets out to other parts of their team. So if you give the CMO a million bucks for marketing, the CMO can take it and give 100K of it to her events team and 200K to the demand generation team and 50K to the PR team and you kind of break it out and manage it that way.
All of the expenses are tracked in real time. And so anytime someone spends against that budget, the system updates. The person responsible for the budget is looking at the system and the finance person is looking at the system. Every employee gets a corporate card. So gone are the days of having, corporate cards are only for VP and above. And the reason why you did that was because people could buy a restaurant meal or pay a bar tab or whatever. There are no controls over those cards. We have automatic controls that are built in.
So if you’re the junior marketing manager and you’re only supposed to be doing the Facebook budget, your card can actually be limited a 2000 bucks a month and only to merchants that are digital advertising merchants. So the finance team is like, wait, I get more control now than I do when people are using their personal cards and putting stuff on expense reports, that’s exciting and interesting. And then we eliminate expense reports because if I mention your marketing manager, I’m buying my Facebook ads, I upload the receipt for Facebook ads. We know what the budget was. We know who you are. We know why that budget was authorized for you, and we know what the merchant is. And so we can automatically code it into the accounting system. All you need to do is just upload the receipts.
Small Business Trends: So what kind of goals do you have? What kind of timeframes do you have for Lola Spend that helps see you guys through the current hard times?
Mike Volpe: Yeah. The good news is, like I said, we were fortunate enough that we had enough cash in the bank. That this isn’t like, we only have a few months left kind of thing. And so what we’re hoping to see is just a lot more traction over the course of the rest of this year and then go into 2021 to start to drive some more growth. And then the double win for us would be if at some point kind of mid 2021 corporate travel comes back and this new product is also taking off.
Then maybe instead of the pandemic kind of hitting us one way, maybe coming out of that pandemic will give us two different winds behind our backs to kind of propel us forward. But even if travel comes back more slowly, which we’re already seeing comeback some, but even if it comes back more slowly, I think that into next year is where we’re going to start to see some real good growth from this product. So we’re excited about it.
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This article, “Mike Volpe of Lola.com: We Never Thought of Quitting, Even After Losing 97% of Revenue Due to COVID-19” was first published on Small Business Trends