ixigo had turned EBITDA profitable in the first two and a half months of 2020
At ixigo, we decided that we would not lay off anyone
Senior management has taken steepest pay cuts, along with other employees
Winston Churchill took over as Prime Minister of England on 10 May 1940, eight months after the outbreak of World War 2 in Europe. On the same day, Nazi Germany’s blitzkrieg campaign to overrun France, Netherlands and Belgium had begun, and within a few days, it was clear that they were winning over France and would set their eyes on England next.
War was imminent, and the adversary was militarily and economically stronger, with the odds clearly weighed against England. It was their darkest hour.
This is the darkest hour for travel. What the travel industry (and indeed any industry in our nation) faces today is no less than a war. India and the entire world are facing a catastrophe imposed by a microscopic adversary who has forced us to be confined to our homes, taken away our freedom to socialize with others, to roam and travel freely and forced us to give up all those things that help us experience the world and make us more human.
How Long This Uncertainty Will Continue?
Everyone is asking how long is this pain going to last. While no one can predict how long this crisis will last in India and the rest of the world, experts believe that it will be at least 12 months for travel to bounce back to pre-COVID levels. Entire fleets of the largest international airlines are grounded indefinitely. India is under full lockdown until April 14, at least. Domestic flights, even domestic trains, in India are not running any more.
Notably, even during the ‘62 and ‘71 wars, Indian railways never stopped its services. We believe all these are positive developments in the best interest of every Indian and will help to flatten the curve, but unfortunately, these will have grave implications for the travel industry in general, and for us at ixigo.
How ixigo Is Fighting This Crisis?
At ixigo, we had fought a battle through 2019 to grow almost 50% in revenue while at the same time reducing our burn by almost 85% and we had even turned EBITDA profitable in the first two and a half months of 2020, just before the Covid-19 crisis hit us. Modelling lower growth is one thing, but modelling a scenario with almost no revenue and negative growth is something growth stage companies seldom ever do.
So, we were taken by surprise and needed to react fast to the rapidly unfolding crisis.
In the past 4 weeks, we have seen ixigems coming together beautifully to support our customer support team, as it dealt with unprecedented volume growth of 8–10x of usual customer reach outs for cancellations reschedules and refunds over calls, chats and emails.
ixigems across functions worked diligently from home, day and night, some even in 15-hour shifts, to make sure critical changes to our cancellation and reschedule flows can be automated, airline policy information can be disseminated and incorporated in a timely manner and our customer issues can be resolved promptly in an ever-evolving situation.
We handled hundreds of thousands of requests coming in within days. Several ixigems from other teams took over our customer support email and chat responses, and ensured every case is closed.
2 weeks ago, anticipating a lockdown coming, we started working on a plan that could potentially let us survive even if revenues were to remain zero for 3 to 6 months and give us 12–18 months of runway in case the lockdown ends within 3 months.
We evaluated several options, including letting a significant number of ixigems go, but we realized that these are extraordinary times, where not only finding a job will be incredibly hard but also, without a source of income, people would lose the morale and financial resources required to fight with the larger threat to society’s existence.
Worst of all, firing a significant percentage of the team leaves indelible scars on the cultural fabric of companies, and our entire leadership team and middle management were aligned with our thought that in the darkest hour we cannot abandon those people who stood by us and worked hard in the good times.
So, we decided that we would not lay off anyone and ride the storm together as a united team, no matter what the cost of that sacrifice would be.
Over the last week, Rajnish and I spent countless sleepless nights, and in consultation with our leadership, came up with a Plan B that is painful, but necessary. To start with, the two of us took a decision to forego our entire salary immediately and for as long as required to get things back on track.
Our leadership team agreed on taking a 60%+ pay-cut graded by pay, and for the rest of our company, the mutually agreed pay cut level would be a function of the actual compensation level varying from 20% to 50% pay cuts.
We will reinstate the salaries as soon as the situation improves and we will also convert the accumulated salary deductions over the hardship period into equivalent ESOPs so that everyone benefits from future upside when the going gets better again. It has been a tough and hard decision for us, but the messages of love and support we are getting from our team give us hope and courage!
Why Did We Choose To Do This?
Because it is important for the team to act together in the times of crisis and it is one of our important cultural pillars at ixigo, built the hard way. How you deal with the crisis is what defines you, and how you will deal with this one needs to be different from how you deal with other crises, because this is a humanitarian crisis, more than anything else, and the response is one that needs to take everyone along.
This is not the first time we are facing adversity. Our company was born in adversity and it thrives in adversity. In 2008–09 during the global financial crisis we went through a near-death experience where our term-sheets broke down and we almost died. What saved us was the spirit of our team that chose to fight with us for nearly 9 months at almost 50% of their salaries instead of seeing any of their team-mates being laid off.
We were the least funded travel player in a competitive space and most people wrote us off for the dead back then. We executed so well with our product, marketing and technology in those years that we grew purely organically to a million monthly users in 2010 without even spending a million dollars while doing it.
At least 4 travel companies died during that crisis, but with the support of our team we survived and thrived, and most of the ixigems who stayed back with us ended up making a return with their ESOPs that far outweighed what they saw in their pay cuts.
Its Time To Stay Positive
The news every day in the days ahead will be depressing. But we need to retain positivity as a country, as an industry and as a company. We are a passionate team of dreamers, builders and doers. It might be dark, but this is the time to stand with each other, care for each other, and look at the brighter, bigger picture and prepare for the day that the sun shines again.
The future looks brighter for internet-enabled businesses than it ever did, and now, with no pressure for growth, is the time to double down on creativity and innovation, and think through real customer pain areas that can be solved through technology and empathy.
Now is the time to make products and businesses future-ready for a post-Covid world and build things that can make our businesses more anti-fragile. Now is the time to enable solutions that can help us care for each other and help each other.
So you may be wondering what Churchill did? Well, he roused up his nation to prepare to fight and the darkest hour speech is still remembered and recalled by many till today and I am reproducing it verbatim below, just as we did in our All Hands Hangout Meeting with the entire ixigo team a few days ago.
The travel industry and our countrymen fighting this war need to remember that the journey may be tough and long, but when all this is over, people shall rise up and travel again with unprecedented fervour.
We have before us an ordeal of the most grievous kind. We have before us many, many long months of struggle and of suffering. You ask, what is our policy?
I will say: It is to wage war, by sea, land, and air, with all our might and with all the strength that God can give us; to wage war against a monstrous tyranny never surpassed in the dark, lamentable catalogue of human crime. That is our policy. You ask, what is our aim? I can answer in one word: It is victory, victory at all costs, victory in spite of all terror, victory, however long and hard the road may be.
We shall go on to the end. We shall fight and defend our island, whatever the cost may be. We shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields and in the streets, we shall fight in the hills, but we shall never surrender.