B2B travel site Skift shares lessons learned about survival, revenue, engagement

By Peter Bale

INMA

New Zealand and the U.K.

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Skift is an ambitious, New York-based, business-to-business travel news service. The company faced an existential crisis as the COVID-19 pandemic hit in early 2020, effectively shutting down the largest industry in the world — travel — and forcing it to shrink and rethink its future and whether it even had one.

Founder Rafat Ali says the company has emerged stronger after two years of dramatic staff cuts, closing some business lines, launching others, and rapidly rebuilding its in-person events. Skift may offer any media business lessons on how to deal with sharp shocks and long-term change.

Rafat Ali is chief executive and founder of Swift, a B2B Web site about the business of travel.
Rafat Ali is chief executive and founder of Swift, a B2B Web site about the business of travel.

“It was like hand-to-hand combat as it was in year one or two Skift,” Ali told me, as he explained how Skift dealt with the importance of reporting an immense story while also struggling to stay alive. “Obviously this was the story of our lifetime, and we were in the middle of this Category Seven storm trying to rescue the business.”

I have known Rafat for many years and admired what he did with the media news newsletter PaidContent.org, which he built doggedly into a valuable source of industry news before selling it to the Guardian Media Group in 2018. The site suffocated and is no more (the URL diverts to the GigaOm tech news site founded by Om Malik), but Ali had his sights on virgin media territory.

If Skift didn’t exist, you’d probably have to invent it. And it is extraordinary that despite the scale of the travel industry globally, there was no real equivalent. Yes, there were aviation newsletters and financial news agencies covering listed airlines and hotel companies, but there was no real online service covering the travel industry holistically. 

Into that space came Skift.

“What we are doing in travel is ‘connect the dots,’ and connecting the dots is not a trivial skill. It's a skill that we have developed,” Ali said. “I’m out to make others obsolete if not kill them and obsolete by irrelevance. We are the most relevant. My ambition with Skift is to be the most influential company in global travel — not the most influential media company in travel because we are that today, but to be the most influential company in travel.”

That ambition came to a screeching halt at the start of 2020 when the bad news that had been spreading from Wuhan about a mystery virus became a global pandemic about which we knew little but which had an immediate and catastrophic impact on the travel industry.

Skift laid off one-third of its staff when the pandemic hit.
Skift laid off one-third of its staff when the pandemic hit.

Ali and his co-founder Jason Clampet moved fast, firing more than a third of staff (many of whom had only been hired relatively recently and were part of an ambitious growth programme) and closing physical offices everywhere — offices they’ve decided they’ll never return to.

“If it wasn’t exhausting, it was exhilarating,” Ali said. “The energy that we were generating among all of us but particularly Jason and I as the co-founders. We had to be decisive. Decisions have to be made and we move on.”

It really was touch and go, and Ali acknowledges Skift might not have made it.

“I had to lay off one-third of the team, take it down to 38. We sacrificed Asia, Southeast Asia, four people in Singapore, we shut our offices down,” Ali said. “We really were three weeks away from running out of money at some point in April 2020.”

There are probably few genuine secrets in the Skift survival story, but some of the lessons are clear yet hard for newsroom and news business leaders to embrace in a crisis: act fast, decisively, and transparently, to defend cash flow, and morale. Maybe the most important is focusing on the needs of customers and understanding them so intimately you feel their pain and how you can help.

“We actually did OK in retaining customers in 2020 — we were down in revenue by 40% – and then 2021 was our most profitable year ever because we reset the business. But the physical events hadn’t come back and that [also] meant the costs of physical events weren’t there. Revenue wasn’t the highest but we were the most profitable. 

“And, 2022, we’re just closing the books on it, and we’ve crossed the pre-COVID numbers in terms of revenues. But the costs have come back, meaning physical events and inflation. So our profitability is lower. We’re solidly profitable, it’s just that we’re not wildly profitable.”

Ali readily admits Skift was helped by government support in its American base to give companies hit by the pandemic some financial breathing space.

“The PPP loan in the U.S., which was essentially free money, saved us, in addition to obviously our own financial control to cut down everything we could, even the 40 people that were left. I didn’t take salary in 2020, for instance. Everybody gave some sacrifice depending on what level they worked in so that really saved us.”

A combination of being thrifty, rethinking the business, and U.S. government subsidies helped bring Skift back to profitability.
A combination of being thrifty, rethinking the business, and U.S. government subsidies helped bring Skift back to profitability.

Here’s how Skift emerged and is thriving: 

  • It’s back to nearly 70 staff, all working remotely, and many hired in less expensive locations than its original New York base. It has about a dozen people in London. 

  • Skift shut a couple of newsletters in areas it thought it understood but decided it just didn’t know about: food and beverage, and wellness, for example.

  • The company doubled down on virtual events to help its clients manage and learn from each other, and now is investing again in its signature live events. Ali says turnover is about US$15 million.

Virtual events emerged as high-margin services that clients craved, which while they didn’t generate the revenue of live in-person events, helped rebuild the events business.

Skift also had major technology firms as sponsors and advertisers, and they kept spending through the pandemic, unlike the travel industry itself. Tech advertisers, Ali says, maybe like publishers needed to, told the travel industry: “We are here for you when you’re ready.”

Skift is now close to the model Ali originally envisaged of one-third of revenue coming from subscriptions, one-third from branded advertising, and one-third from events.

“We are there in terms of that three-legged stool of revenue. We are still a little less in subscriptions, like we’re between 25% and 30% from subscriptions, so we are almost there,” he said. “I would like that portion to keep on growing in terms of percentage for all the reasons you can imagine: recurring revenue is more stable and the most profitable part of the business. The cash flow comes from in-person events and branded content, but the profitability comes from these recurring things.”

What does Ali, a critic of inertia and complacency in the media industry, think the rest of the media business can learn from Skift?

The importance of ownership is critical: “If the owners are not 100% fully invested in things … this is the story of local media. If there are no local owners, why would local media thrive? Anybody who’s trying to create a local media network across the country or countries or geographies will necessarily fail because they’re just not connected.”

Skift, he said, is already the most-listened-to media in travel: “I would humbly say if you ask the CEOs in travel, the majority will say that for them Skift is the one thing that they look at to understand. They are looking for that holistic view. They are looking for what they don’t know.”

Rafat Ali will be part of a panel of industry experts in the Newsroom Initiative Workshop ahead of the INMA World Congress in New York in May. Sign up to hear him and learn more.

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About Peter Bale

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