Feb 8, 2023 · 54m · news
Ariel Cohen: The Death of Salesforce; How OpenAI is Changing the Travel Industry | 20VC #975 · 20VC with Harry Stebbings
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of 20VC, Navan CEO and Co-founder Ariel Cohen shares his unconventional approach to leadership, detailing how Navan survived the COVID-19 crisis and is leveraging generative AI to displace legacy corporate travel and expense incumbents.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 13.6% of the talking time here. How this is scored →
Harry as informed peer 4.2 Guest teaching 6.0 Guest disagreement 2.6 Harry pushing back 3.9
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 33:11 Rejection of acquisition and legacy survival
Ariel flatly rejects the premise that legacy competitors can buy their way to survival or acquire Navan, asserting 'we are not for sale' and arguing incumbent corporate cultures destroy innovation.
Hardest push from Harry ▶ 22:31 Valuation reality checkHarry explicitly challenges Navan's valuation, asking Ariel how an investor can reasonably expect the necessary $40B return outcome when market conditions were correcting.
Biggest teaching moment ▶ 41:54 Surprising gross margin figuresAriel catches Harry off guard by revealing Navan operates at 75% gross margins heading toward 80-85%, contrasting sharply with legacy competitors stuck at 50-55%.
Harry holds his own ▶ 31:40 Pushback on distribution powerHarry presses Ariel on whether incumbent giants like Salesforce and SAP can maintain dominance simply through massive sales machines and entrenched change management despite inferior technology.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Ariel Cohen's Learning Style and Hook | 2 | 3 | 1 | 1 | Harry opens with a light personal connection regarding self-directed learning before asking about management takeaways from Ariel's previous startup. Ariel candidly explains that his first company failed to make an impact because they invented a problem nobody needed solved. | |
| Driving Innovation and Avoiding Corporate Slowdown | 2 | 5 | 3 | 3 | Harry asks a reflective question about what drives Ariel, prompting Ariel to criticize legacy tech giants like Salesforce and SAP for failing to innovate since the 1990s and 2000s. Ariel explains his core fear of Navan becoming reliant on M&A rather than organic product development. | |
| The Art of Decision-Making and Killing Projects | 3 | 6 | 2 | 3 | Harry presses on operational strategy, asking how to distinguish genuine opportunities from distractions and when to kill failing projects. Ariel describes the hard reality of pivot decisions, including losing most of his product team when shifting focus from travel to expense management during COVID. | |
| Surviving COVID-19 and the $9.2B Valuation | 7 | 7 | 4 | 7 | Harry puts his VC hat on and directly challenges Navan's $9.2B valuation, arguing that an investor needs a $40B path to justify it. Ariel pushes back by detailing their pitch during COVID when travel revenues hit zero, asserting that they will capture a massive portion of the $1 trillion business travel market. | |
| Rebranding to Navan and the Platform Vision | 6 | 7 | 5 | 6 | Harry questions how Navan can transition to a super app without incumbents like Concur or Amex blocking them using massive enterprise sales forces. Ariel forcefully argues that legacy incumbents cannot innovate or retain talent like Stuart Butterfield, predicting they will eventually go extinct. | |
| Integrating OpenAI and Chatbot Evolution | 3 | 6 | 1 | 2 | Harry inquires about Navan's integration of OpenAI into their virtual assistant Eva. Ariel details how automation has evolved to handle receipt retrieval and flight changes, predicting AI will automate 90% of contact center interactions. | |
| Why OpenAI Wins and Navan's Gross Margins | 6 | 8 | 2 | 5 | Harry brings up public market pressures on profitability and unit economics. Ariel reveals that Navan operates at 75% gross margins with targets of 80-85%, leaving Harry noticeably surprised by the efficiency of a service-heavy platform. | |
| Moats, Market Expansion, and a Travel Story | 5 | 6 | 2 | 5 | Harry challenges Ariel on why Navan doesn't intentionally trim gross margins to 60% and reinvest 20% into aggressive brand growth. Ariel explains their product-led strategy of offering free tiers for smaller businesses and shares a personal travel story illustrating product superiority over legacy competitors. | |
| Retaining Users and the Quick-Fire Round | 4 | 6 | 3 | 3 | Harry queries Navan's user retention metrics compared to consumer tech benchmarks before moving into a fast-paced quick-fire round. Ariel emphasizes high budget attainment rates relative to legacy industry standards and predicts legacy travel management companies will disappear within a decade. |
Statements from this episode (22)
Cohen: Companies that fail to adopt AI will not survive
“I would say maybe AI is eating the world and eating software, and companies that will not join the party will not be around.”
Cohen: Streamonce was sold after nine months with two customers
“Yes, three ones was never, you know, an organization that they needed to really scale. So it was very small. We sold it very early after nine months. We had basically two customers there.”
Cohen: SAP and Salesforce have not innovated in decades
“Salesforce and SAP, which are not innovating. I think the last time that SAP innovated something was in the nineties, and the last time that the, that Salesforce innovated was in the beginning of 2000.”
Cohen: Navan co-founder is building products to obsolete our current suite
“Actually, my co-founder right now is running two projects That are making a, basically a lot of what we've done to date obsolete, and I think that's how you maintain innovation.”
Cohen: Netflix, Heineken, and Adobe signed with Navan during COVID lockdowns
“Our biggest customers would sign up with us, like, customers like Netflix, Heineken, Adobe, sign with us on these times where people were not traveling because, again, change management, The easy thing to do at that time.”
Cohen: 28 of 30 investors claimed business travel would never return
“We've talked probably with 30 investors. 28 of them told us that travel will never come back.”
Cohen: Nobody will use Concur, Amex GBT, or Salesforce by 2028
“In five years from now, nobody is using, going to use Conquer and Emacs. Nobody, by the way, nobody is going to use Salesforce.”
Cohen: Companies spend 7% of budget on travel and entertainment
“Companies are spending seven percent of their entire budget on T&E”
Cohen: Salesforce and SAP revenues are currently declining, not growing
“If I look at the numbers, I think both Salesforce and SAP actually specifically now are not growing and in fact declining, right?”
Cohen: Navan is not for sale and will not sell
“We are not for sale, and there is a reason for that, and by the way, ah, we've, ah, kind of passed this test, ah, several times. Other companies could have sent me to retirement a few times by just, ah, you know, buying us, and we didn't sell because we think …”
Cohen: Navan is seeking Slack alternatives due to declining product quality
“The team right now is looking for alternatives. Not because you know, we love Slack. But you can see that over time, the search works a little bit, you know, worse. The buttons are moving to the wrong places. I care a lot about product and design. And I think …”
Cohen: Navan's AI bot handles 30% of support interactions
“And that bot today handles 30% of our support interactions.”
Cohen: Navan scrapped its internal AI stack to adopt OpenAI
“And so we decided to do it. We decided to kill what we have to use the infrastructure. The bot is the bot, you know, the UI is the UI, the ability to change the flight comes from our API to change the flight, but then to use their technology.”
Cohen: Navan's AI bot will handle 90% of support by 2024
“I think that this AVA, I think will probably by the end of the year will replace 50% of our interactions in the contact center, and I think by the end of next year, it will replace 90% of it”
Cohen: Public travel competitors operate at 50-55% margins versus Navan's 75%
“You're talking about 50, 55% gross margins compared to 75 today.”
Cohen: Navan could hit 85% gross margins in two to three years
“Going to 80, maybe even 85. 85 is not model deal, but maybe even 85, ah, in the next two to three years.”
Cohen: Operational infrastructure is Navan's primary moat over AI
“So I think the moat That we've created is actually not around that technology. The moat is around all of the infrastructure here that allows us to go globally, to service our customers globally, to provide one T&E report for all of the companies that are using…”
Cohen: Navan launches completely free tier for lower-end market customers
“On the lower end of the market, we are free, right? And that's new. We are completely free. You go in and you don't need to pay us.”
Cohen: Navan achieves up to 100% travel attainment versus industry's 40-50%
“It's I think that it goes by Segment more of the higher end of the market, what we are calling named enterprise, and even mid-market will get 100% attainment. As you start to go down market, you are getting more towards the 80% attainment, and even that number…”
Cohen: AI will make humans smarter by 2028, like scientific calculators
“Everything around us will be more efficient because of AI, and maybe the opposite of what we think all of us will be smarter because of AI. It's almost like we got, you know, you remember that we had this calculus, you know, computer, you know, when we were ki…”
Shorts cut from this episode
▶ AI is eating the world 🌎 #shorts · 20VC with Harry Stebbing (@0:00)
▶ The Biggest VCs Thought Travel Would Not Come Back 😲✈️ #sho (@21:51)
▶ Slack is a Disaster Inside Salesforce 👎 #shorts · 20VC with (@31:22)
▶ Why Amex and Salesforce Will Be Gone in 5 Years 🫠 #shorts · (@23:51)
▶ Is college worth it? 🎓 #shorts · 20VC with Harry Stebbings (@2:16)