Lessons from the Turnaround Trenches: How we Navigated Past Bankruptcy Protection, Reimagined Guestlogix and Saved our Brand

In February 2016, our company, Guestlogix, went into CCAA (Companies’ Creditors Arrangement Act) protection. After a series of business misadventures and a violation of a variety of debt covenants, we were delisted from the Toronto Stock Exchange in March 2016.

As the saying goes, those that fly high, fall hard.

From the top of its game to bankruptcy protection in two years

Two years earlier, Guestlogix was at the top of its game. A Deloitte’s Technology Fast 50 and Fast 500 winner, the company was on track to be a Canadian-grown global leader. Within the airline industry, the company created the concept of the cashless cabin, capturing more than 60 airlines as customers and 100% North American market share. Through its airline customers, the Guestlogix platform was processing transactions in 144 countries around the world and serving 2.4 million travelers daily. Many startups aspire to innovation and dream of market disruption — this company had lived it.

At the time Guestlogix was a public company, listed on the Toronto Stock Exchange. As a smaller public company, some of the behaviours that emerged were predictable, namely a focus on share price, heavy product customization to win deals, etc., etc.

How things fell apart…

In 2015, the company stretched itself (aka over-reached) in acquiring a company called Open Jaw. On deeper inspection, accounting issues were uncovered. Layoffs ensued. When the company entered into CCAA protection and trading of shares was suspended in February 2016, the stock was trading at $0.095, down from a 52 week high of $1.03.

Measures were taken to right the ship. OpenJaw was sold. And about nine months after entering into CCAA protection, Guestlogix was acquired by a group of Toronto P/E investors who took the firm private. In Q4 of 2016 Guestlogix emerged from creditor protection debt-free and ready to rebuild.

We still weren’t out of the woods yet

On the upside, the company had very little customer churn during that period and had retained a small group of talented staff. On the downside, customer trust was extremely low and the company’s employee NPS was -40.

However, the investors had a thesis that Guestlogix could capitalize on an inevitable traveler-centric market trend/opportunity. The concept of purpose-built hardware to take on-board purchases — the thing that had made Guestlogix so disruptive — now had diminishing returns and required too much customization to be truly scalable. It was time to dig in deep with customers and the broader market in order to start to shape this turnaround story.

That’s when I was brought in…

Near-instant validation around a major problem for airlines

It became pretty obvious, pretty quickly that our investor’s instincts were correct. At my core, I’m a product guy, and it’s rare (particularly in the startup/scaleup world) to be handed a playground of 20 or so customers who are willing to give you broad access as part of figuring things out. To do this, I brought in a great voice-of-the-customer tiger team I’d worked with in previous gigs to understand not just what the airlines were going through, but also what travelers were going through and some of the psychology and behavioural economics at play.

Their take? Just as retail has in recent years undergone a transformation around customer experience, digitization, mobile enablement and personalization, airlines have the same challenges X10. They desperately need to apply a similar transformation strategy to increase revenues and better the passenger experience.

You’ve got to be lucky to be smart

A turnaround of this magnitude needs some luck, and in our case it was lucky timing. If we were starting from a blank slate, I would never have selected airlines as the entry vertical into the traveltech market — they are typically slow-moving and highly bureaucratic. However, we are at an interesting tipping point for the industry. Airlines are under pressure to drive ancillary revenues but gouging passengers with more and more incremental charges for things like baggage fees, in-flight food, reservation changes, and other amenities is just not ‘flying’ with consumers anymore. Passengers are pissed off and pushing back to the point where airlines are risking intervention and regulation with every increase. In 2019, Europe introduced a Passenger Bill of Rights. In May of this year, Canada did the same. And stars are aligning in the US for similar legislation to be enacted to protect American travelers.

This aligned well to our historical solutions allowing us to position that airlines needed to begin thinking about passenger experience beyond the flight, and who better to help them than a company who had been living that for years.

So when we knocked on their door with a customer-centric value proposition, the airlines yummed it up. It was one of the rare times in my career a story resonated instantly with airlines and with travelers — even cocktail party conversation quickly morphed into a product roadmap discussion because everyone has had shitty travel experiences and are happy to share how we could have fixed them.

From hypothesis to reality

My excitement grew with every customer visit and when laying out a vision and growth plan to our investor group, they became excited too. Ultimately this led to the opportunity for me to step into the CEO role to lead Guestlogix through this next phase of reinvention and growth.

Probably no surprise in the next steps… we started with a proper level set with the Board and the company at large. We took them through the emotional roller coaster ride of the realities of the business, how the market the company had been in had shifted, how to leverage and build upon the historical solutions and formally put forward a growth plan and vision for the company. However, that growth plan was still based on a bunch of guesses so it included a supporting validation plan to execute, the results of which blew away expectations…

• We wanted to meet with 16 airlines in that timeframe — we met with 38.
• We hit the minimal viable category milestone in less than 60 days
• We landed on an innovative, success-based pricing model
• We wanted to create $2M sales pipeline going into 2019 — we created over $20M.

A return to growth — on a whole new scale

Guestlogix once again finds itself in growth mode.

As you can imagine, the success of that validation plan has us almost scrambling to catch up across all facets of the business from development to catching our company and product messaging up with what we actually do.

Having released the new platform commercially last quarter we already have several new airline customers in various stages of deployment and our 12-month rolling sales pipeline has ballooned by over 4X.

And… while we have made great additions to the team, we are hiring like mad! In fact, we just launched a contest offering new recruits the opportunity to win an all- expenses-paid-world-adventure along with their dream job to draw attention to our story.

Some CEO lessons learned

With substantial startup experience under my belt (and the scars to prove it), I thought I had the tools in my toolbox to execute the Guestlogix turnaround. Let me say, helping this company emerge from the ashes has been a humbling, challenging and rewarding experience adding more than a few fresh scars over the past year.

Here are a few takeaways, most of which I wish I learned faster:

1. While a pivot is hard, a turnaround is next level shit. After a few startups, a pivot becomes second nature. In a turnaround (at least in this one), pivots or course corrections aren’t going to cut it. It requires disruption-level change and innovation.
2. The drive-by advice you’re going to get will piss you off. Well-meaning people who lack context about your business will be quick to tell you what you need to do. At best they’ll be partially right; usually they are flat out wrong. Search out mentors/coaches who ask you a ton of what will often be uncomfortable questions and err on the side of oversharing with them.
3. You are going to need a senior team around you sooner than you think and that needs to be made of people passionate about the vision, thrive on challenges, don’t shy away from looking under every rock, are comfortable having tough conversations and have a thick skin. But it doesn’t end there, you also need you to identify the amplifiers in your organization and get their buy-in. Only then do you have sufficient critical mass to begin to move the engagement needle.
4. It will feel like no good deed goes unpunished for quite a while. Instead of high fives when you institute things like full transparency you will be greeted with “what are they hiding” or even a surprise or resignation. You have to remember that the team has been through the wringer and are change weary so just stay the course and keep the “good deeds” coming.
5. Transparency, context, and alignment… lather, rinse, repeat. Things took much much longer to take hold organizationally than you expect sharing openly and giving everyone context became my mantra.
6. Even after rocky times, existing customers will be your champions if you are transparent and solicit their help. If your focus is on delivering value and solving their pain, it is in their interest to see you succeed. Plus, everyone loves a comeback story so allow those customers to take a starring role.

While the tray tables may be up and seats are in the upright position, I’m not here to declare the Guestlogix turnaround complete. We still have lots of really interesting problems to solve for customers, and we will face more challenges as the organization rebuilds. But we are now having fun meeting those challenges and I can say that this has been some of the most rewarding work of my career. Watching as a team finds its legs, gets its confidence back, and start to realize exponential growth has become my crack.

We’ve learned we’re not just building a platform that engages passengers at every step of the journey and create moments of delight. We’re doing something that potentially can transform an entire industry that is in desperate need of change.