Companies spent more than $1.2 trillion on business travel and entertainment last year. TravelBank is a startup aiming to eliminate wasteful travel expenses by incentivizing employees to spend less.
Launching on Thursday with $10 million in Series A funding led by venture capital firms NEA and Accel Partners, TravelBank CEO Duke Chung explained why the expense system is ripe for disruption.
“We look at the expense landscape as first- and second-generation systems. The first generation is really focused around retroactive expenses. [Managers] get an expense report and you have no idea what you’re going to get. [TravelBank] is predictive. Imagine before every report you can actually predict the cost of a trip before it happens,” he said.
Prior to starting TravelBank, Chung was the founder of the customer service software company Parature, which he sold to Microsoft (MSFT) in 2014 for $100 million. While he was at Microsoft, he was able to see how inefficient and clunky existing expense systems like Concur and Expensify are for both managers and employees.
“We learned how large and how much is spent around business travel,” Chung said. “We saw that firsthand. And we saw how things can scale so fast and this needs to be managed in a much bigger way.”
Filing expenses 2.0?
TravelBank started out with an intelligent algorithm that accurately predicts budgets based on real-time pricing. The algorithm takes into account airfare, ground transportation, meals and local parking. Once the budget is in place, employees expense against it — with green, yellow and red bars to show how spending over time compares to the predicted budget. Chung believes this layer of gamification makes it less arduous and far more pleasant to file expenses.
If employees stay within their set budget, they have the opportunity to earn back that money they didn’t spend on expenses. Hundreds of employees at 100 small to medium-size companies have already started to use TravelBank.
WeddingWire, a wedding planning website that operates in 14 countries, was one of the first customers to start beta testing TravelBank. Lee Wang, the company’s COO, said several teams began using the service last year.
“When I first heard about it I wondered why no one else had gotten into it. It made a lot of sense, especially as a mobile-first application,” Wang said. “Instead of taping receipts onto pieces of paper, submitting originals, TravelBank is really leveraging technology.”
Though he’s not sure just how much the new expense system will impact WeddingWire’s bottom line, Wang said he’s hoping it will shift the culture of spending significantly — especially as his employee base is heavily skewed toward millennials.
“I think adoption will be quite easy because people are willing to stay with friends or at a cheaper Airbnb over a nice hotel,” he said.
Wang hasn’t started paying back employees some of the unused money that was budgeted, but he’s considering it as he continues to roll out TravelBank to other teams within WeddingWire.
The target customer for TravelBank: start ups
Chung pointed out that businesses are spending more on travel every year. “As we’re seeing markets embrace business travel, we think it’s an important part of the ecosystem,” Chung said. “And because of all that spending, there needs to be a better way to manage it.”
“This has never been done before and we’re the first company to introduce the process to let companies set budgets, let their employees beat budgets and therefore let them earn a reward if they’re able to beat it,” he said.
There’s ample opportunity for TravelBank to become an industry leader, especially within start ups like WeddingWire, where executives like Wang pride themselves in establishing a practical culture.
“My partners and I do not fly first class. We don’t stay in 5 star hotels. We believe it will be a game-changer for us not only to maintain the culture but allow us to extend corporate responsibility as we scale further.”
Melody Hahm is a writer at Yahoo Finance, covering entrepreneurship, technology and real estate. Follow her on Twitter @melodyhahm.
Read more:
Uber CEO on business in China: You have to rethink everything
The No. 1 quality for an entrepreneur to have, according to VC legend Michael Moritz
Top WaPo editor reveals how Jeff Bezos changed the paper
3 tech luminaries reveal what they’d do if they had a Trump donor on their board
Why this female entrepreneur is endorsing Trump for president