MaxMilhas is a Brazilian marketplace for brokering the buying and selling of frequent flier miles.
Since it began two years ago this month, more than 70,000 airline tickets have been purchased through its platform, and more than $6 million USD has been paid to the sellers of those miles.
MaxMilhas has a flight search system, which makes it easier for travelers to compare the prices for airline tickets in cash and miles and to figure out how many miles they need to buy to take a trip.
That makes it more useful than some other platforms that are essentially bulletin boards or listing services for swapping miles.
The startup, which has 38 employees, is one of the largest companies, and is the largest travel-specific business, in the portfolio of Start-up Brasil, a federally-supported acceleration program.
It's also supported by the 21212 accelerator.
The company created a Vine to illustrate its six-second pitch:
A Q&A with Max Oliveira, CEO and co-founder:
What problem does the business solve?
We have a big problem in Brazil. We have a very large airline market and a huge number of miles and credit card points. But, still, millions of people don’t get to fly because it’s too expensive.
At the same time, people are losing miles. Every year more than 25 billion miles and 50 billion points expire in Brazil, representing over a half billion dollars of waste.
MaxMilhas has a flight searching system. It shows users the price of every itinerary if they were purchasing it with cash from the airline versus if they were purchasing it with miles through MaxMilhas. That way they can find discounts up to 80%.
Tell us how you founded the company, why and what made you decide to jump in and create the business.
I had a particular experience that woke me up to the idea. When I was buying an airline ticket, at the payment section, I saw a message saying that an error had occurred and I had to restart the purchasing process.
When I tried to purchase that same ticket, its price had gone up from $30 USD to $125 USD.
This event made me realize how consumer access to the airline market is still limited in Brazil because of the high prices charged for some routes and dates and the confusing internet interfaces.
So, I thought about starting a business to facilitate the access to airline tickets at affordable prices.
As I had travelled with somebody else’s miles before, I had the idea to create a secure and agile marketplace for people to purchase low-priced airline tickets by buying miles from those who would like to sell their miles.
With this idea in mind, I joined myself with other two co-founders, also from the state of Minas Gerais in Brasil. We launched our website two years ago this month.
MaxMilhas was created to connect owners of airline miles to people who want to fly by affordable prices, thereby avoiding the waste of points accumulated in relationship programs of credit cards and making an airfare more accessible to the population in general.
Size of the team, names of founders, management roles and key personnel?
We currently have 38 employees.
I’m the CEO. Conrado is the COO, and he’s responsible for product and customers, so he’s in daily in contact with them to verify how our business is developing and to check on customer and client satisfaction or disappointment in relation to our services.
Funding arrangements?
In 2014, we received $65,000 USD as an investment from Start Up Brasil and the 21212 Digital Accelerator. These programs were essential to helping us leverage our business vision and develop our team.
We are looking to raise $2 million USD to invest in users’ acquisition and to make key additions to the team and its infrastructure.
Estimation of market size?
Every year in Brazil, more than 150 billion airline miles and more than 220 billion credit cards points are earned. Out of that total, 25 billion miles and 50 billion points expire.
More than three hundred thousand airline tickets are sold each day in Brazil. That is more than 100 million tickets per year, and the market is growing by more than 6% a year, despite economic troubles overall.
We are going after individual ticket purchasers, the equivalent to a third of the total market.
Competition?
There is just one big competitor, Hotmilhas, that works only with travel agencies.
There are some small ones trying to work with individual travelers, such as Elomilhas and Centralmilhas, but, as we have created a thriving marketplace, we are nowadays by far the largest player in this market.
It’s important to highlight that we have developed a new flight search system, which makes it completely easy to compare the prices for airline tickets in cash and miles. In addition, we give the sellers the opportunity to make an offer for their miles at the price they want.
Revenue model and strategy for profitability?
We charge a commission fee on the transactions. We currently have an average fee of $32 USD per ticket sold.
How did the initial idea evolve and were there changes/any pivots along the way in the early stages?
When we started the business, we thought that it would be much better if the seller booked himself the ticket for the buyer.
But, since the sellers sometimes took too long to do it (which causes the ticket’s price to often increase), we began to ask them for their award program login and password, so that our staff could book the tickets.
It changed a lot the way we do our business, needing to take care of the booking process also, but it has been working very well since then. Nowadays, 85% of the sellers voluntarily give us their passwords to their loyalty accounts.
Why should people or companies use the business?
I think there are several advantages in using MaxMilhas.
Currently, there are numerous ways to acquire miles. Besides acquiring miles by traveling or by paying the credit card bill, there are several establishments that provide miles to their customers on the consumption of goods, such as appliances or fuel at gas stations.
Thus, users who pay more attention to this kind of benefit use it for travel and, if they don’t travel, they are able to make an extra income allowing another person to travel with their miles.
To have an idea, there are people who get a monthly income of around $750 USD, because they know how to manage their miles and sell them on our website.
What is the strategy for raising awareness and the customer/user acquisition (apart from PR)?
Currently, our main marketing strategy is focused in customer satisfaction – most of our new business comes from client referrals. We work also hard on SEO, social media, retargeting, and business development.
Where do you see the company in three years time and what specific challenges do you anticipate having to overcome?
We plan to sell more than 1 million airline tickets within next three years, enabling thousands of people to travel.
One of our biggest challenges is to develop a business model that will add value to the award programs and airline companies as well. We work hard to have a partnership with the airline companies.
What is wrong with the travel, tourism and hospitality industry that it requires a startup like yours to help it out?
I think there’s nothing wrong, as every player catches its place at the market in which it is selected to work hard for.
We just innovated in the Brazilian airline market to see the opportunity to connect people with extra miles with those wanting to fly but who are not able to pay the total price at the airline.
What other technology company (in or outside of travel) would you consider yourselves most closely aligned to in terms of culture and style... and why?
We believe that we are very close to Airbnb in terms of culture and style. We both believe that it is very important to focus on aggressive growth while keeping our customers satisfied.
We share also the same mission of creating a huge community: while Airbnb is creating a community of hosts, we are creating a community of miles sellers and travellers.
In addition, Airbnb and MaxMilhas have a big challenge in common: both companies operate in markets that don’t have specific legislation yet. Airbnb is disrupting the hospitality market in the same way that we are disrupting the travel and miles market in Brazil.
Which company would be the best fit to buy your startup?
We are likely a good acquisition candidate for online travel companies in Brazil such as CVC, Hotel Urbano, Decolar; or an award program company, such as Smiles and Multiplus.
Tnooz view:
MaxMilhas presents an interesting business model that could scale globally.
A nice aspect of MaxMilhas is that it has "built-in" viral marketing. It enables the owners of frequent flyer miles to monetize their miles, and it enables consumers to find a creative way of purchasing a flight.
Both methods are a bit unusual today, and both methods provide a story that consumers can tell friends and family -- spreading the word for free.
Brazilians, to generalize, love social media, so it's no wonder than MaxMilhas's Facebook page has already received more than 120,000 "likes".
The team has been vetted by, and has received support from, leading mentors in Brazil. Its website interface is easy to use on desktop -- though its mobile interface still has room for improvement.
Impressively, it has already managed to get some suppliers and some consumers engaged with each other through its marketplace for brokering the purchase and sale of airline tickets redeemed via frequent flyer miles. Getting a "flywheel" like that in motion on a platform is a difficult task that many consumer-facing startups struggle with.
This startup seems to have done its homework and the heavy lifting needed for a strong start. There are also variations on the concept that are possible, such as what well-funded RocketMiles is doing in the United States. We're eager to see what it does next.