Ethan Garr & Sean Ellis
Lola.com — Bringing Strong Consumer Product Experience to Disrupt the Massive B2B Travel Market
Product Driven Breakout Growth
When Mike Volpe is asked what he learned that he may not have known before taking the helm as CEO of Lola.com he does not hesitate, “There are things you know intellectually, and then there are things you feel and really know in your heart and your gut. Something I knew from running marketing [at Hubspot] was how important product is to growth. Now it’s gone from something I know in my brain to something that is in my bloodstream.”
That may seem like a surprising revelation from the leader of a B2B business selling travel management solutions to finance and operations departments at small and medium businesses, but a focus on product is the fundamental force driving Lola’s breakout growth. Travelers are end-users of the Lola platform even if they are not the buyers. A company that signs on to Lola’s platform only benefits from the cost savings and better travel expense controls if their travelers buy-in to and engage with the service, so a great product experience is absolutely key.
Fortunately, Lola has a passion for great consumer experiences ingrained in its culture. Before starting Lola, Paul English co-founded Kayak, a company known for lightning-fast meta-search services that deliver an amazing consumer travel experience. While the early Lola team originally built the service to compete in the consumer travel space, it quickly became clear that Lola was resonating more with B2B travelers. To better tap into this B2B opportunity, English recruited Volpe because of his success growing other businesses that targeted a similar SMB profile. By marrying English’s consumer experience with Volpe’s B2B SaaS experience, Lola took the next step in its journey to breakout growth.
In this growth study, we will learn how providing value to both travel managers and road warriors has led to incredible product/market fit in the massive corporate travel market, which exceeds $1 trillion. We’ll explain how Lola keeps its cross-functional team aligned in the chaotic world of breakout growth, and how the company is ensuring that its growth is not just rapid, but also sustainable through a focus on strong unit economics.
The Product/Market Fit Foothold
Lola’s B2B focus does not include big enterprise. They believe this is a well-served market by other upstarts and legacy players like Concur (an SAP product), and Lola is happy to avoid the complexities that come with serving clients of that scale. Instead, Lola capitalizes on the DNA it draws from Hubspot in the small and mid-sized arena, and the DNA it draws from Kayak in delivering first-class consumer experiences to offer three compelling reasons for companies with 50–1000 employees to use the service:
1. Companies can save time and money and better manage their annual corporate travel spend.
2. Through Lola’s exclusive relationship with American Express customers gain the savings and benefits of $40 billion in buying power that they could not get on their own.
3. A simple mobile application experience with 24/7 support from human travel experts ensures happier employees and travelers.
These value propositions resonate with the SMB market because travel is typically one of the largest expenditures for a company and one that is often poorly controlled. This leads to frustrations and runaway costs. As an example, smaller companies often rely on employees to book their own travel and file an expense report for their trips. Employees might go directly to an airline’s website because they belong to that carrier’s loyalty program and then select an economy plus seat for their trip, even if it is against the company policy or another airline offers a better price.
An awkward conversation between the employee and the finance department is bound to occur after the trip has been completed and the expenses have already been incurred. Lola solves this for both the traveler and the business. Travelers can easily save all of their credit card and reward program preferences in the app, while company policies can be saved to the platform.
Lola can show travelers multiple booking options that comply with the company’s policy, and the finance team can see what expenses are being incurred at the time of booking instead of in an expense report filed after the fact. The finance team has the reassurance that Lola’s buying power is giving them superior rates compared to what an employee might find through direct bookings and consumer sites, and employees are typically seeing 6–8 rate options, so that they can still choose options for a great travel experience.
The VP of finance of Flywheel told Volpe that when he implemented Lola it was the first time he ever experienced employees thanking him for bringing on a new platform or service; a story that exemplifies their attention to the traveler experience, and clearly one of the key factors in the platform’s breakout growth.
Aligning Teams to Leverage Product/Market Fit and Drive Growth
When Lola shifted its focus to the SMB market they still benefited from the fact that their product team was initially built to be consumer-product driven. The company did not have to make a large investment in consumer-product people to support the traveler side of the business because they were already in place. This helped them build a fantastic traveler experience that differentiated Lola from other B2B travel platforms.
Volpe understood that it would be challenging to align Lola’s resources against the company’s mission because there are natural divisions when building teams to deliver value for both administrators and travelers. These divisions are on top of the typical challenges from emerging functional silos in a fast-growing business. To address this, he drew on his Hubspot experience to inspire collaboration. Instead of traditional weekly leadership meetings, he opted for monthly all-day meetings with department leads designed to go beyond surface-level reporting. These meetings aim to stir vigorous debate around two predetermined topics that Volpe and English believe are critical to growth.
The full-day format offers opportunities for leadership to work cross-functionally on more strategic issues that require the input and collaboration of both the traveler and client sides of the business. Some time is set aside to go over the previous month’s numbers and to discuss housekeeping topics, but the majority of the day is spent on these collaborative debates. These meetings have been a key driver of Lola’s breakout growth, as they have served to not only align teams but also to identify what is needed to make each individual and team successful in their efforts to drive the company forward.
Volpe explains, “Your job as CEO is to make the linkages cross-functionally. A lot of times I see one group talking about something and I will make the connection with another team, but it is even better if I don’t have to do that because there is that cross-functional work happening without me.” The monthly meetings help make these connections, tightly aligning teams around who the target customers are and what the growth trajectory looks like from the vantage points of sales, marketing, product, customer success, support, etc.
Understanding and Accelerating the Lola Growth Engine
Where other B2B travel services typically charge booking fees, Lola has three subscription tiers ranging from $125 — $950/month. This means potential clients can quickly measure the savings and value they expect to get with Lola against a fixed cost for the subscription. Lola has optimized an extensive feature set so that finance managers can control and account for travel expenses, and they have also done an excellent job refining the onboarding process for these administrative users. Most clients are able to fully integrate the service without ever feeling the need to contact customer support.
On the traveler side, strong customer satisfaction metrics have shown Lola’s effectiveness in providing a great experience. This has certainly helped drive strong adoption rates by the travelers within an organization. Fortunately, unlike products like Slack, Lola does not need to be universally adopted across an organization for it to stick.
Lola does not have a single North Star Metric guiding its testing and optimization process but it does have specific methods for measuring success against its two main goals, which are to have the world’s best product and to have very strong unit economics. They have also adopted The Salesforce V2MOM (vision, values, mission, objectives, and measures) management process to align the company against its goals.
The team is still in the early days of implementing a process of rapid testing and optimization to accelerate the growth engine. Volpe says, “There are a million things we can do in that area, and about 100 we have done!” As the company has only been selling its service for 14 months, it is understandable that it is still working to drive high tempo testing in this and other areas of the business.
Using Unit Economics to Ensure a Sustainable Growth Engine
As mentioned earlier, one of the key goals for Lola is to have very strong unit economics. This is especially important in a hot and intensely competitive market. The global travel industry is exploding, and with that venture capital money is pouring in at a rapid rate. Certainly, Lola has been able to take advantage of this, raising a very healthy $80 million to support its growth, but it also creates challenges.
This infusion of capital has led other players to do “unnatural” things to spur their growth. For Volpe, building a company that will support sustainable breakout growth, means focusing on healthy unit economics and avoiding the short-sighted tactics that tend to destabilize organizations. He explains that there is an important balance that needs to be struck. High growth based on bad unit economics and heavy cash burn is dangerous, but low cash burn and strong unit economics at the expense of growth can be equally tragic. Lola wants to grow, but it wants to do it intelligently.
Final Thoughts on a Company in the Early Stages of Breakout Growth
Lola’s growth story is exciting in that it highlights how the journey to breakout growth relies on both innovative thinking and the ability to view growth through a changing lens. When the company was failing to gain traction in the consumer space that they originally targeted, they looked to dial in product-market fit around the must-have experiences they were creating, which were in the business travel space. Instead of settling for what they knew best, they built around the fit they had unintentionally created and have been optimizing from there.
To be successful and grow fast they have made it their mission to build the best product and to drive strong unit economics, and they have been creative in building the machinery to support that. Their monthly meetings focused on intense debate between department leaders pushes collaboration where it otherwise would not exist and are designed to help individuals and teams coalesce around the company goals.
Some elements of Lola’s process are not yet completely fleshed out, and will likely come into focus in the coming months and years as they catch up to their own incredible velocity of growth. Fortunately, the B2B travel space was primed for disruption and has provided an enormous tailwind to propel Lola forward as it further improves its growth processes. Perhaps a more specific North Star Metric or new areas of experimentation will emerge, but it is clear that already, in the short 14 months that they have had a product to sell, they have built an organization and process that is making a big impact in the travel management space.
Learn more about Lola’s emerging growth story in Sean Ellis’s Breakout Growth Podcast interview with Michael Volpe, Lola’s Chief Executive Officer.