STARTUP STAGE: KeyoCoin helps independent travel companies through universal rewards program

Describe both the business and technology aspects of your startup. 

KeyoCoin is a universal travel rewards cryptocurrency, platform and ecosystem that uses blockchain technology to gamify the entire travel experience. The model is centred on our rewards token, KeyoCoin, which can be earned by either completing location-based travel challenges, or by booking accommodation, tours, activities and local experiences through our app, KeyoPass.

For independent travel businesses, we’re providing a free bookings platform and rewards ecosystem to help them market themselves to potential customers, without needing to pay huge commissions to the online travel agents that currently dominate the online bookings marketplace. 

The KeyoCoin platform will use blockchain technology and smart contracts in a number of ways, but the primary function is to give any merchant in today’s travel ecosystem a free rewards platform to help them market their services.

Around 80% of tour and local experience purchases are currently made offline. Those that do sell online, largely do so through online travel agents (OTAs), who charge 10-30% in commission for the extra visibility their marketplace offers. By radically restructuring the marketplace value-chain, we’re taking that commission and redistributing it between the provider and the traveler, so both are better off.

KeyoPass is the first application in the KeyoCoin marketplace, but KeyoCoin’s blockchain API and marketplace will be open for developers all over the world to build their own reward programs utilizing the KeyoCoin reward token. 

What inspired you to create this company?

I’ve been fortunate enough to travel a lot, and love uncovering new experiences but have always been shocked by how many of these local experiences are practically hidden from view.

There are millions of incredible hostels, activities, and restaurants that are near impossible to find where travelers are most likely to look for them: on their mobile. 

By the beginning of 2017, KeyoCoin’s CTO Matias and I knew something needed to change, and had been working on plans to develop a new kind of travel app for some time, one that brought travelers closer to the millions of independent travel businesses that are creating one-of-a-kind travel experiences.

We were confident we could create such a platform, but the scalability hurdles were huge, and we didn’t want to sacrifice our dream of making something that was both free to use for consumers, and close to free for providers as well.

It was around that time that blockchain technology was finally reaching a point where we could use it to underpin large elements of the platform. 

Give us your SWOT (Strengths, Weakness, Opportunities, Threats) analysis of the company.

Strengths: While a couple of other projects are planning to use the blockchain to improve hotel booking processes, none have sought to connect the whole travel market (including transport, hospitality, tours, activities and local experiences), and none have set out to gamify travel rewards in the way that we do.

In this respect we have first-mover advantage, plus a live functioning marketplace already up and running in seven countries.

KeyoCoin’s core team now numbers 17 people, all 100% committed to our collective vision, while our all-star advisory team includes executives from Apple, Oracle, Hyperloop, Live Nation, Ticketmaster, Wedbush/Maco.la and IGN - advisors that have been carefully selected to help make KeyoCoin’s universal travel rewards platform a success.

Weaknesses: There remain some big questions in the blockchain space around scalability and transaction costs, which could limit the ability for blockchain technology (as it exists today) being used to manage hundreds of thousands of transactions a second.

These challenges are being tackled as a community, bit-by-bit, and we are seeing good progress in the areas that are likely to impact KeyoCoin in the distant future.

Opportunities: The travel industry is an absolute goliath, yet despite its size, and the recent explosion of e-commerce, a remarkable 80% of tours and activities are still sold offline.

OTAS help businesses make it online, but most providers are turned off by sky-high commissions that can eat up as much as 30% of the ticket price. The ability to recreate this visibility for independent travel businesses, giving them more direct bookings and cutting out the middleman, means we could be about to see a blockchain-powered paradigm shift in travel booking.

Threats: Regulators are still playing catch-up, and there is always a risk that uncertainty will kick off a knee-jerk reaction, leading to over-regulation. 

What are the travel pain points you are trying to alleviate from both the customer and the industry perspective?

Traveling is supposed to be enjoyable so it’s amazing how often the best laid plans go awry. What was supposed to be a simple journey from A to B, can quickly become a stressful affair.

From bureaucracy to lost luggage, blockchain has the potential to alleviate many of these pain points, but there’s one in particular that we’ve chosen to focus on first at KeyoCoin.

Loyalty and reward programs are an enduring source of frustration for travelers, and while some are successful in increasing customer engagement, most exhibit a pattern of failings that actually have the opposite effect.

High operating costs mean only a handful of providers can offer them, and even fewer are able to give their customers meaningful rewards. Those that do manage it can only to do so because they have found a way to commoditise the customer, capturing personal data and purchase history, which is then either capitalized by the business or sold to the highest bidder; a breach of privacy that many are uncomfortable with.

Then there’s a catalogue of pain points that make doing anything with reward points a thankless task. Each has its own unique redemption rules, validity periods, expiry dates, and point collection mechanics. Almost all prohibit sharing points with others, spending them at other outlets, or using them in conjunction with other offers.

Taken together these limitations result in a third of all collected rewards, some $100 billion each year, going unredeemed. Left unused, these points eventually become undesired. It's here that the blockchain comes into its own.

The customer, often deprioritized in the traditional reward framework, gains new power over their own rewards. They are no longer constrained by just one small ecosystem or a looming expiration date. Instead the rewards they’ve earned are shareable, divisible, and internationally redeemable, while their data is theirs to share if they wish.  

Tell us what process you've gone through to establish a genuine need for your company and the size of the addressable market.

The travel market as a whole is huge, an absolute goliath, but the needs of its participants are surprisingly uniform. Ask any hospitality, travel, tour or activity provider the one thing at the top of their priority list, and the answer will almost certainly be “more direct bookings”.

By doing away with OTA commissions, and bringing travelers and their providers closer together, that’s exactly what KeyoCoin will achieve. For travelers, the vast majority are looking for unique experiences.

People want to come home with stories, or at least have a few to add to Instagram.

Our location-based travel challenges encourage people to get out there and explore and by having a huge marketplace of local activities and recommendations in their pocket, there’s more opportunities to track down those experiences.

So you've got the product, now how will you get lots of customers?

We’ve been adamant about growing our community of partners and customers organically, using the product’s inbuilt incentive framework to drive word of mouth and social media sharing.

The first step has been to recruit an all star advisory team that can help us generate this organic growth using cutting edge acquisition strategies. These include Rick Savage, head of social media at Apple; Tamara Camp, former head of marketing at Ticketmaster, former vice president at Live Nation; Layla Revis, VP marketing innovation and head of global social media at Oracle; and Marat Gaziev, head of SEO for IGN and other Ziff Davis properties.

Furthermore, Federico Pistono, the head of blockchain for Hyperloop and early an Ethereum investor, is not only advising the team on technical infrastructure, but also in reaching early adopters in the growing crypto space.

The product itself will then become our biggest driver of awareness, as the average traveler has everything to gain. They will accrue KeyoCoin rewards by doing the very things they would ordinarily do, booking accommodation, tours, and local experiences from the more than 12,000 options currently offered through our KeyoPass app.

They can also earn them by completing fun location-based travel challenges. These crypto rewards serve as a store of value while held, and can be redeemed for accommodation, tours, activities and local experiences.

How and when will you make money?

KeyoCoin will earn a fraction of every reward that is provided by merchants in our ecosystem, either through our direct relationships or from third party developer partners that utilize our API to onboard new travel merchants.

These micro-payments are automatic and function on the blockchain via smart contract. As KeyoCoin increases in popularity, and rewards circulate throughout the world, flowing from merchant issuance to consumer redemption, we are confident that this new micro-revenue model will serve the company well into the future.

We are also building a series of complementary products on top of the KeyoCoin platform, including a mobile concierge for hospitality providers.

This product will have freemium model so we can obtain quick market coverage, while also having built-in premium features such as live messaging with real-time language translation, that will generate revenue from our property partners.

In time, developers all around the world will build applications on top of KeyoCoin utilizing our blockchain rewards protocol, and delivering solutions that will drive more direct relationships between travel providers and customers.

What are the backgrounds and previous achievements of the founding team, and why do you have what it takes to succeed with this business?

Our leadership team is a well-oiled machine with a distinct collective vision for KeyoCoin. First up our CTO and co-founder Matías Menafra, is a four-time CTO with a talent for back-end software engineering and fluency in Ethereum’s Solidity language. 

Our COO, Svetlana Kabanova has knowledge and insight accumulated from many years of project and operations management in global investment banking including six years with Goldman Sachs.  

Then there’s me, Matt Baer. I have been building and growing businesses for as long as I can remember. I’ve always kept a close eye on new technologies, especially the big innovations that have the potential to transform the world.

I have honed my business skills from the tech companies I founded, to building an accelerator program for the Chilean government, to selling mobile forensic software to clients all over the world.  

Besides driving the ship, setting our roadmap, and helping to create our products, I have also been building a formidable advisory team.  

What's been the most difficult part of founding the business so far?

It’s never easy to navigate unchartered territory, and so much of what blockchain has to offer remains unmapped. But while that journey of discovery has been a huge challenge, it has also been a blessing, and every step is building a community of contributors that believe in our cause, and are giving their time to find the best way forward.

Generally, travel startups face a fairly tough time making an impact - so why are you going to be one of lucky ones?

We have a superb team, all committed to our vision. We have a live and operational marketplace, with 12,000 travel and tour products ready to book right now.

The timing also couldn’t be more ideal, allowing us to be the first to capitalize on a genuinely revolutionary technology. We have been able to reimagine the economics of travel bookings, unrestrained by years of outdated systems and processes.

Finally, we have a very distinct community of early adopter customers, largely made up of committed blockchain and cryptocurrency advocates.  

Of course the long term plan is to develop a product so inspiring that it encourages even the staunchest technology laggard to start earning crypto rewards, but until then I prefer to think of us creating an entirely new market, rather than fighting to penetrate an existing one. The rest is down to blood, sweat and tears.