Sponsored by:
This Vator Box is brought to you by Liquid Scenarios.
During times of economic crisis, a system that squeezes out free airline flights from unmanaged frequent flier miles may be worth a few bucks. In this segment, we look at such a new service. We also dive into the self-study market by looking at a startup that's creating a self-study language app for mobile phones. Guy Kawasaki, author of newly-published Reality Check, venture capitalist and founder of AllTop, was our guest host again, to help us evaluate Travelfli and UrbanPlanetMobile.
We started with Travelfli, a Boulder, Co.-based startup backed by David Cohen's TechStars. Travelfli is addressing the 17 million elite frequent flier travelers who may need assistance managing their frequent flier miles. Apparently, there are 10 million unused miles each year. Both Guy and Ezra Roizen, digital media investment banker and Vator Box regular, weren't convinced that there was a real pain point when it came to managing miles, partly because elite travelers likely used the same airline, or would care about saving $500 for a free ticket.
In our exit and liquidity scenario portion of the show, Liquid Scenarios looked at Mint, Sidestep and Kayak for its analysis of options and possible outcomes for Travelfli.
We then focused on UrbanPlanetMobile. This startup received rave reviews from Ezra, mostly because of the opportunity and the platform.
In our exit and liquidity scenario portion of the show, Liquid Scenarios pointed out that the language instructional market is $83 billion, and that 40% went to self-study programs. We also point out that comparable companies include italki, Proxis and SharedTalk.
It's very costly to serve this self-study market. To this end, UrbanPlanetMobile may be well positioned -- to the extent that it provides cost efficiencies - to be a potential partner or acquisition target for Rosetta Stone.
(Our next guest host will be Brian Ascher from Venrock, followed by Google's Marissa Mayer and then Zynga's Mark Pincus.)
A special thanks to:
First and foremost, Travelfli would like to thank Bambi, Guy and Ezra for their feedback and the fascinating discussion surrounding our business. We are thrilled at the opportunity to be a featured company on Vator Box and really appreciate your frank insight! I’d like to take a quick moment to respond to several of the main questions that came up during the show.
In no particular order....
1. Relationships with the airlines
The common perception is very similar to the one you voiced, Ezra: that airlines do not want people to redeem their frequent flyer miles. Interestingly enough, this couldn’t be further from the truth. AIRLINES DEPEND ON PEOPLE USING THEIR FREQUENT FLYER MILES!
Most people don’t know this, but frequent flyer miles are big business for the airlines. Loyalty programs are often the most profitable division of almost every airline’s operations. The reason for this is due largely to the popularity of “co-branded” credit cards and other similar programs that reward consumers with frequent flyer miles for a variety of everyday consumer activities. Airlines earn billions selling miles to partners but invest very little energy in making redemption options easy for users. On the flip side, if loyalty programs aren’t perceived by users as valuable, airlines are at risk of losing major revenues from credit cards.
What does this mean and how does TravelFli fit into the equation? Airlines spend millions every year in customer retention campaigns. The reason for this is that airlines like United want consumers to stay involved in their loyalty programs and to find value in frequent flyer miles so that companies like Chase Bank will keep spending billions of dollars buying their miles. TravelFli acts as a free user retention program for the airlines while providing new income streams from traditional fare purchases, ancillary purchases, and co-branding opportunities. Most importantly, Travelfli helps customers maximize the value they get out of their programs. This deepens the customer’s attachment to their programs and increases their value to the travel supplier.
Travelfli has taken a travel supplier-centric approach to our business. We have met with top level officers and directors from both the loyalty and distribution sides of the house in 12 major airlines and hotel chains, and the response has been overwhelmingly positive. We have been successful at forging partnerships with many of them, which will drive revenue in the form of commissions as well as provide a reliable way to access content (i.e., fares and room availability) from the travel supplier’s sites.
2. Addressable Market
We couldn’t agree more with Guy that Travelfli is not a service for the exclusive United flyer, for example. There is no reason for this person to be any place other than United’s site. Moreover, this segment of the market is the bread and butter for the airlines and we would be a competitive threat if we were going after these power frequent flyers. Travelfli is a product for the larger segment -– referred to as “splitters” in airline-speak. These frequent flyers are not loyal to a specific airline but instead accumulate miles in a variety of loyalty programs. Travelfli can help them manage their portfolio of miles, suggest ways to optimize their mileage portfolio so they belong to the most fitting programs, and help them use their miles most effectively so they extract the maximum value out of their loyalty programs. Travelfli has conducted extensive research into this demographic and we feel like this market is large enough for us to make a significant impact on.
3. Are we addressing valid pain points?
The airline industry currently has an accumulated liability of over twenty trillion frequent flyer miles! We think every frequent flyer will agree that it’s easy to earn miles but very difficult to redeem them for travel.
Part of the reason is because the airlines release a limited amount of award seats sporadically right up until the date of departure. Travelfli’s tools can monitor fares for our users and alert them when award seats become available. This will drastically increase one’s chances of scoring an award seat and ultimately save time and money. Our management tools (we, too use the Mint for Miles analogy, Guy!) help frequent flyers retain miles in accounts they don’t proactively manage (such as an airline they no longer fly or a hotel loyalty program in which they’ve accumulated miles but never used). Our goal is to help frequent flyers manage this undervalued asset just like any other currency because at the end of the day, miles and points can be translated into real dollars if managed effectively and used appropriately.
Thanks once again for selecting Travelfli for Vator TV! We totally agree with your exit and liquidity forecast. :)
Please feel free to email us directly with your thoughts or any follow up questions. We get tremendous value out of your opinions and feedback. Happy flying! Krista{at}travelfli.com.
P.S. Bambi, you can borrow the airline outfit anytime you'd like!