Ariel Cohen: Going public offers significant advantages for payments companies, the challenges of timing an IPO, and the importance of company culture in fintech

Key Takeaways

• Going public can provide significant advantages for companies in the payments industry.
• Timing the market for an IPO is challenging and may not be the best strategy.
• Novant defines its market differently, focusing on servicing all frequent travelers.
• Company culture is crucial for long-term success in the fintech landscape.
• The biggest threat to a business is often unknown competitors that could disrupt the market.
• The market is not currently pricing in the significance of AI advancements.
• A consumption-based business model generates revenue only when the platform is used.
• Distribution is a critical factor for success in software companies, especially with AI integration.
• User satisfaction is crucial for software retention and can prevent churn.
• AI chatbots can effectively manage customer support during crises.
• Public companies have advantages in capital raising compared to private companies.
• Novant’s unique market positioning is essential for understanding its growth potential.
• Company culture can influence resilience and performance amidst competition.
• Awareness of emerging competitors is crucial for staying competitive.
• AI advancements present future opportunities or risks in market valuations.

Guest intro

Ariel Cohen is the Co-Founder and CEO of Navan, an AI-powered travel and expense platform formerly known as TripActions. Last month, he took Navan public after 11 years, with the company now valued between $4BN-$5BN following a 50% stock price decline from its $6.2BN market cap peak. Prior to Navan, he co-founded StreamOnce, a business multimedia integration platform acquired by Jive Software.

The advantages of going public in the payments industry

• Going public offers significant advantages for companies in the payments business.

• I think there is huge huge advantage to be a public company in the way that you are actually raising capital for that part of the business compared to being a private company.

  — Ariel Cohen

• Public companies have better access to capital markets, enhancing their growth potential.
• Being public can increase a company’s visibility and credibility in the market.
• Public status can attract more investors and partners, facilitating expansion.
• The regulatory requirements of being public can improve corporate governance.

• This insight highlights a strategic viewpoint on the benefits of public status in a specific industry, which is valuable for understanding market dynamics.

  — Ariel Cohen

• Public companies can leverage their status to negotiate better terms with suppliers and customers.

The challenges of timing an IPO

• Timing the market for an IPO is extremely challenging and may not be the best strategy.

• I think to try to time a market and say I will only go public when the market is having these ideas I think it’s really really hard.

  — Ariel Cohen

• Market conditions are unpredictable, making it difficult to choose the perfect time for an IPO.
• Companies should focus on their internal readiness rather than external market conditions.
• Delaying an IPO for market timing can lead to missed opportunities for growth.

• This insight reflects a strategic viewpoint on the difficulties of timing IPOs, which is crucial for potential investors and companies considering going public.

  — Ariel Cohen

• A successful IPO depends on a strong business model and execution, not just timing.
• Companies should be prepared to go public when they are operationally and financially ready.

Novant’s unique market positioning

• The market for Novant is defined differently, focusing on servicing all frequent travelers rather than just competing with established players.

• We define the market very very differently than everybody else… we want to service every frequent traveler that is out there.

  — Ariel Cohen

• Novant’s approach allows it to capture a broader customer base.
• By not limiting itself to traditional competitors, Novant can innovate and differentiate.
• This strategy positions Novant for long-term growth and resilience.

• This explanation provides insight into Novant’s unique market positioning and long-term strategy, which is essential for understanding its growth potential.

  — Ariel Cohen

• Novant’s focus on frequent travelers aligns with emerging trends in the travel industry.
• The company’s market definition supports its goal of becoming a leader in corporate travel.

The importance of company culture in fintech

• Company culture is crucial for long-term success in the competitive fintech landscape.

• I think our culture is what matters and that’s what will keep us around and that’s what will keep us a winner and probably the winner.

  — Ariel Cohen

• A strong culture fosters employee engagement and retention, driving performance.
• Culture can be a differentiator in attracting top talent in a competitive industry.
• Companies with a positive culture are more adaptable to change and innovation.

• This insight emphasizes the importance of culture in sustaining a business amidst competition, which is a critical factor for success in any industry.

  — Ariel Cohen

• A values-driven culture can enhance customer relationships and brand loyalty.
• Culture influences decision-making and strategic direction, impacting overall success.

The threat of unknown competitors

• The biggest threat to our business is not known competitors, but unknown ones that could disrupt the market.

• The only competitor that I’m worried about is the one that I don’t know about… that will create something a different point of view of what we are doing that will be very disruptive to us.

  — Ariel Cohen

• Unknown competitors can introduce innovative solutions that challenge existing business models.
• Companies must stay vigilant and continuously innovate to remain competitive.

• This insight highlights the importance of being aware of emerging competitors and the potential for disruption in the market.

  — Ariel Cohen

• Market leaders should invest in research and development to anticipate future trends.
• Collaboration and partnerships can help mitigate the risk of disruption from unknown competitors.
• Being proactive in identifying potential threats can provide a competitive edge.

The market’s undervaluation of AI advancements

• The market is not currently pricing in the significance of AI advancements.

• The public market not see because they’re not pricing in an AI story 100% not.

  — Ariel Cohen

• This misalignment presents opportunities for companies leveraging AI technologies.
• Investors may underestimate the long-term impact of AI on business models and valuations.

• This statement suggests a potential misalignment between market perceptions and the actual impact of AI, indicating future opportunities or risks.

  — Ariel Cohen

• Companies with strong AI capabilities can capitalize on this undervaluation.
• AI-driven innovations can lead to significant competitive advantages in various industries.
• Understanding AI’s potential is crucial for making informed investment decisions.

The benefits of a consumption-based business model

• The business model is consumption-based, meaning revenue is generated only when the platform is used.

• On the other side our our business model is very much consumption you come to the platform we only make money when you use us.

  — Ariel Cohen

• This model aligns the company’s success with customer satisfaction and usage.
• A consumption-based approach can lead to more predictable and scalable revenue streams.

• This explains the unique revenue generation strategy of the company, which is crucial for investors to understand.

  — Ariel Cohen

• Customers are more likely to engage with a platform that charges based on usage rather than fixed fees.
• This model encourages continuous innovation to enhance user experience and engagement.
• Investors should consider the long-term sustainability of consumption-based models.

The critical role of distribution in software success

• Distribution is the most important factor for the success of software companies, especially with AI integration.

• The only thing that matters is distribution… that is what Salesforce have and so why would Salesforce not be a screaming buy.

  — Ariel Cohen

• Effective distribution channels can accelerate customer acquisition and market penetration.
• Companies with strong distribution networks have a competitive advantage in scaling their solutions.

• This highlights a critical strategic perspective on what drives value in software companies today.

  — Ariel Cohen

• AI integration enhances the value proposition of software solutions, making distribution even more crucial.
• Strategic partnerships can enhance distribution capabilities and market reach.
• Companies should prioritize building robust distribution strategies to maximize growth potential.

The impact of user satisfaction on retention

• User satisfaction is crucial for software retention and can prevent churn.

• If the user loves you if the employees love you that’s the biggest moat that you can have… in the history of Navan we lost six enterprise customers five of them are back.

  — Ariel Cohen

• Satisfied users are more likely to remain loyal and advocate for the platform.
• Positive user experiences can lead to increased adoption and market share.

• This insight emphasizes the direct correlation between user satisfaction and customer retention, highlighting a key factor in software success.

  — Ariel Cohen

• Companies should invest in user experience design and customer support to enhance satisfaction.
• Retaining customers is more cost-effective than acquiring new ones, emphasizing the importance of satisfaction.
• User feedback can drive continuous improvement and innovation in software offerings.

The efficiency of AI chatbots in customer support

• AI chatbots can effectively manage customer support during crises.

• We’ve managed to support all of our customers in a timely manner… our AI chatbot… 55% of the chats were run forever.

  — Ariel Cohen

• AI chatbots provide scalable and efficient solutions for handling high volumes of inquiries.
• Automation through AI can improve response times and customer satisfaction.

• This insight illustrates the practical application of AI in improving customer service efficiency during emergencies, showcasing its value in real-world scenarios.

  — Ariel Cohen

• AI-driven support systems can reduce operational costs and enhance service quality.
• Companies should leverage AI technologies to enhance their customer support capabilities.
• AI chatbots can provide personalized and consistent support experiences for users.