Startup pitch: 30K helps travellers earn more miles when they book a flight
30K enables online travel service provides such as OTAs and metasearch engines to display air miles for every flight result displayed to users.
The US-based company has created a rules engine and API service to be used by travel brands, connecting searches conducted by their users to the top 50 frequent flyer programs.
For example: when a traveller runs a flight search for Bangalore to Shanghai, an OTA will send the flight results information via an API to 30K. The startup runs the result through its miles-computation engine in order to calculate the number of miles/points each of those flight results earn. The final result is sent back to OTA for display alongside search results.
Though essentially a B2B product, 30K has developed a demo flight search engine for other users.
30K was founded by Alex Jawad (CEO), Rui Bom (CMO) and Vitaly Pukhalsky (head of technology):
- Jawad is the product owner. Prior to 30K, he had two successful exits in e-commerce and trading.
- Bom is also the head of business development, he co-founded the first social network in Portugal at the age of 25 (www.zooom.pt).
- Pukhalsky is 30K’s architect and lead developer. He has built travel technology for several American and European travel giant clients.
Q&A with Bom below:
Tell us how you founded the company, why and what made you decide to jump in and create the business.
30K provides an API solution to travel search and related companies that allows them to inform their users, at the time of a flight search, of the exact number of frequent flyer miles and points they can earn from each fare option, according to 50 different frequent flyer programs.
The core of our solution lies in the lack of a convenient way for regular frequent travellers to understand what travel loyalty entails and how you can best optimize your benefits and become loyal to one or more airlines.
We, the founders, were frequent business travellers and we wanted to reap the benefits of frequent traveling. But, the intricacies and lack of transparency of travel loyalty programs made it an extremely difficult task. The result, instead, was the absence of loyalty, a handful of memberships with a few thousands miles on each and frustrated travellers that never reached any benefits but rather felt tricked.
After some research we found that there were many more people with the same problem as us. In fact, most travellers don’t optimize their loyalty without having to become experts in frequent flyer programs, and the airlines miss out on the potential to get many more truly loyal customers.
Since its incorporation, 30K has raised two angel investment rounds for a total of $233,500.
Estimation of market size?
Independent research suggests frequent flyers are willing to pay an additional 5%-7% for tickets that earn (more) miles. That’s a potential $9 billion/year profit waiting to be captured by the industry. To put things in perspective, that’s roughly the same profit the industry recorded in 2011.
There’s currently no competition for what we’re doing.
Revenue model and strategy for profitability?
30K has a ‘pay-as-you-go’ pricing model, charging its customers on a cost-per-API-response with a monthly fixed minimum. We are offering a very affordable and easy to integrate solution so it’s a no-brainer for OTAs and metasearch to try it out.
We’ve recently closed our first customer. Based on the current burn rate we expect to be profitable by the end of this year.
What problem does the business solve?
In 2013, 280 million trips were booked by frequent flyers. The problem is that most of them aren’t optimizing benefits as there is no easy way to find out how many miles different flights earn – they continue buying based on price without realizing there are similar-priced fares than can earn (more) miles.
The result: millions of travelers earning no or fewer miles and reaching fewer benefits or never reaching them at all. Powered by 30K’s technology, travel search engines and related companies can now show the exact number of frequent flyer miles their users will earn from each flight result, based on the traveller’s own frequent flyer program membership(s).
How did the initial idea evolve and were there changes/any pivots along the way in the early stages?
We initially set out to build an online travel agency with a mileage component feature. The idea was to have a place where travellers could come to search and book for flights and have information on how many frequent flyer miles those flights would earn them.
Launched in August 2013, we sold close to $100,000 in tickets. For various operational reasons we decided to shift towards a B2B model in late 2013. At the end of Q1 this year, we’ve released the first version of our API and we’re currently providing our mileage-computation engine to existing consumer-facing websites.
Why should people or companies use the business?
By showing price and miles together, it adds a lot of value to both travelers and the industry:
For travellers, the obvious value resides in the additional information being provided – the number of frequent flyer miles each flight option earns. By taking this information into account travellers will be able to make better decisions and choose the flights that take them to rewards and status faster.
Displaying miles also provides enormous value to flight search sites as it helps motivating travellers to look at other fares than only the cheapest ones (users now see there’s slightly more expensive deals earning more miles) resulting in higher revenues.
It also motivates users to register with the website to save preferences, providing them with previously unavailable data, ready to be monetized. Additional revenue sources could also be allowing users to sign up with frequent flyer programs and giving the website an opportunity to receive a referral fee from the airline.
Needless to say, the airlines are the obvious recipient of the value-add to users as more people will become loyal to them, which will allow a much-needed increase to their revenue and profits.
What is the strategy for raising awareness and the customer/user acquisition (apart from PR)?
As a company focused on the B2B opportunity, 30K’s customer acquisition strategy relies on a one-to-one contact with the 400-500 customers we’ve identified as our primary targets.
Participating in the most important travel exhibitions and events, as well as help from our advisory board in connecting with relevant people will help boosting our awareness.
Where do you see the company in three years time and what specific challenges do you anticipate having to overcome?
In three years we expect to having become an industry standard, with 80% of the top metasearch and OTAs around the world as our customers. The product will go beyond air travel loyalty to include hotel and rent-a-car loyalty programs.
As for challenges, we’ve identified two:
1) Given the fact that most big players have a rigid 6-12 month innovation pipeline, we anticipate a fairly long sales cycle, with at least a 6-month closing period between the first contact, testing and final integration;
2) As a novel feature with a difficult-to-prove direct impact on top and bottom line, some customers might be reluctant to pay for it before feeling the real benefits.
What is wrong with the travel, tourism and hospitality industry that requires another startup to help it out?
We believe the current one-size-fits-all offering of flight search doesn’t cater to the millions of frequent flyers while having fundamental flaws prohibiting the commercial aviation industry from existing in a healthy manner.
Today, the industry is taking many necessary steps to provide a better experience for travellers and more sensible revenue models for industry players. 30K’s solution is part of that initiative.
What other technology company would you consider yourselves most closely aligned to in terms of culture and style… and why?
We really like Skyscanner. We’ve followed the company’s past few years very closely and we are really inspired by how they’ve managed to keep their startup-like mentality and speed of action even after having become such a big and important player in the travel industry.
We also admire their understanding of the necessity of continuous innovation and appreciation of added value. We may not be very similar as companies, but we think we’re aligned in values.
While there are numerous service offerings around air miles – such as ability to earn air miles by booking a hotel, or ability to reserve a hotel room by using air miles – 30K’s solution is as simple as displaying air miles for flight options.
The pivot from a self-servicing flight booking portal (by showing air miles) to a pluggable B2B API is a sensible one given there is probably more chance of traction as a business than entering the busy consumer-facing market.
30K’s plans to display hotel loyalty programs also makes a lot of sense – it’s a natural extension to the current business.
As the company rightly pointed out, the sales cycle (pitch to go-live) in this model is lengthier considering the various integration points.
For example, 1) if an OTA/metasearch is displaying flight recommendation results based on its own display algorithm, then the algorithm should now be updated to include air miles too. 2) Perhaps, the OTA/metasearch might also want to include “Sort by Air Miles” as a search result sorting option too.
Vine video about 30K
Karthick was general manager for Tnooz in Asia until September 2014.