Startup Pitch - Hooch Black combines subscriber discounts with digital rewards

Consumer-facing subscription models in travel and other verticals existed before the internet. Paying a fee in order to access discounts is a relatively simple model for consumers to understand - the B2B economics are more tricky.

In a digitally-led world, these subscription services have moved on, and interestingly it's not just about the discounts, its about the experience - offering access to special events, discounts on dining and nightlife, in-app concierge services.

HOOCH BLACK is an app which is powered by TAP COIN, a digital rewards platform built on blockchain technology. Subscribers book a hotel or experience at a negotiated rate using their credit card and collect 10% of their spend back in TAP which can be used across 100,000+ redemption partners.

Before the Q&A, here's a short video:

HOOCH BLACK TRAVEL from TAP on Vimeo.

What problem does your business solve?

HOOCH BLACK is an elite membership for those seeking next-level experiences and exclusive perks, worldwide.

The app, powered by digital rewards program TAP Coin, is changing the way consumers access travel, dining, nightlife, events and experiences. The antidote to the “couch economy,” HOOCH BLACK allows access to private hotel deals at up to 60% off at 100,000+ properties in nearly every global city.

The subscription also includes a daily cocktail at exciting venues in 10 cities, curated offers and experiences (Fashion Week, Coachella, Grammys, SXSW) and a personal concierge who can book restaurants and secure perks such as free champagne.

HOOCH BLACK also allows consumers to earn 10% back in TAP, making it a contender against credit card rewards programs. HOOCH BLACK annual membership is $295.

Names of founders, their management roles, and number of full-time paid staff?

HOOCH and HOOCH BLACK are the brainchild of:

nightlife veteran and cofounder Aleksey Kernes (Hotel Chantelle) CEO and cofounder Lin Dai (Keek, Emmis NY and Alloy Media + Marketing), cofounder and CRO Jared Christopherson (Yellow Hammer Ad Agency).

The company has 20+ members on staff.

Funding arrangements?

In May 2018, HOOCH raised $5 million in seed funding, but they had already raised $2.75 million in two pre-seed rounds. The funding was led by Revelis Capital Group and Blue Scorpion Investments, with participation from Access Industries Holdings, Warner Music Group, FJ Labs, Diesel CEO Stefano Rosso, former Comcast CTO Sree Kotay and others

Revenue model?

The company’s basic subscription of $9.99 gets consumers one free drink per day from a variety of partner bars and restaurants. HOOCH BLACK adds hotel deals, a concierge service and other perks.

Why do you think the pain point you’re solving is painful enough that customers are willing to pay for your solution?

OTAs such as Expedia, Orbitz and Travelocity have long been popular, but HOOCH BLACK is reinventing how travel is booked, and promises the best deals on hotels, offering private rates at up to 60% off.

So, how do we do it? Unlike OTAs that work on the “merchant model” by which they purchase rooms and resell to travelers, HOOCH BLACK is a subscription service that deals directly with hotel chains and can therefore provide discounted rates.

Because of rate parity, which is a legal agreement between hotels and OTAs in which the hotel guarantees to use the same rate and terms for a specific room type, regardless of the distribution channel, OTAs are unable to publicly display the unpublished rates accessible to HOOCH BLACK members.

As the HOOCH BLACK platform is behind a paywall, and therefore not on the internet, it is not bound by this type of distribution channel agreement.

External validation?

The company won the AB InBev startup competition at SXSW in 2016, and has partnerships with major beverage brands like Stoli, Dewars, Remy Martin, Red Bull and even partnered on a film release with Paramount Pictures which garnered press coverage in major outlets including Forbes, Huffington Post, Techweek, and others.

To date, HOOCH has more than 250,000 members and project to hit 2 million by next year.

The company is backed by top investors such Len Blavatnik of Access Industries, and Bill Tai of Bitfury/Hut8, the largest Bitcoin mining company in North America.

Tnooz View:

HOOCH BLACK resonates across a number of interesting segments of travel tech as a straightforward booking app and an interesting blockchain-based rewards scheme. The consumer proposition is clear, and the usual questions about "customer acquisition costs" is, in this case, thrown somewhat by the subscription model.

The blockchain component to what it does appears to operate in parallel with a traditional model, and is an example of how the theory and practice of blockchain is evolving. Getting rewards as TAPs gives users the chance to familiarise themselves with using a digital currency without needing to understand the intricacies of digital wallets.

HOOCH has been around for a few years, and HOOCH BLACK is about a higher subscription fee, a higher spend and a different consumer proposition. Coverage of the business in the tech and consumer press is sprinkled with celebrity stardust which helps brand awareness.

As a business, there are elements to its offer which do not sound too different from a top tier status credit card, other than of course the digital rewards. That small but significant distinction could make the difference to its long-term future.