There's a lot of interest in loyalty and frequent flier schemes at the moment, and rewards points in general are a big part of how we shop.
The airline industry was one of if not the first to reward its passengers with a virtual currency - United is thought to have been the first to do so, way back in 1972.
Fast forward more than 40 years and airline rewards schemes are as sophisticated as they are significant. This week saw the release of the latest IdeaWorks/CarTrawler ancillary revenue report which outlined the billions of dollars of revenues airlines pull in from their frequent flyer programmes.
One of the highlights it pulled for the 100+page study was that "United disclosed mileage sales of $2.999 billion for 2015 with the majority of miles sold to Chase Bank for the MileagePlus co-branded credit card."
So reward points are important to airlines, and consumers are big fans too. There are newspaper columns, websites, blogs, Facebook groups and Twitter feeds all offering hints and tips on how to make your miles go further.
This is where Slingshot fits in, a travel-focussed bootstrapping startup which is aims to do the legwork for you and connect the dots between where you want to go, the points you already have and the offers out there in the market.
Before the Q&A from CEO Dan Pierson, here's an introductory video:
What problem does your business solve?
Reward travel is a tangled web of airlines, alliances, credit card offers and award charts. Every year, between loyalty programs from banks, credit card issuers, airlines and hotels, consumers earn points and miles with a perceived value of $35 billion - only to then fail to redeem (ie. cash in) one-third of their total bounty ($12 billion)
This system is too confusing; the average consumer doesn’t have 20 hours to pore over blogs and forums in order to discover the best way to earn (and then more effectively use) the miles and points to help them travel further.
SlingShot takes 50+ data points, across your preferred destinations, frequent flyer and hotel program participation / mile and point balances, credit cards in your wallet, spending patterns, credit info, and more. We then analyze that data to create a comprehensive, step by step plan to help you reach your travel goals - for free.
Click here for an example of how this works.
Names of founders, their management roles, and number of full-time paid staff?
CEO Dan Pierson runs SlingShot’s marketing and business development. CTO Adam Kaczmarek leads our development team, and we have three great colleagues working in operations and marketing on our fully distributed, remote team.
Funding arrangements?
We are proudly bootstrapped to this point. Having built out our beta product and helped thousands of users make the most of frequent flyer travel, we’re now in discussions to raise a seed round of capital.
Revenue model?
The fastest, easiest way to accumulate frequent flyer points and miles is to very responsibly use your credit to open a new account and earn a bonus - but out of the dozens of cards on the market, which financial product will help you travel the furthest?
SlingShot is an agnostic layer that sits above airlines, hotels, banks and credit card companies; we’re 100% committed to serving our users with the recommendations that will help them travel the furthest. When we do a great job of educating you towards understanding that the card we’ve recommended will help you travel the furthest, and you apply and are accepted as a new card member, the bank or credit card issuer pays SlingShot for helping them acquire a new customer.
Again - we are 100% committed to providing the most relevant, effective financial product, regardless of compensation.
Why do you think the pain point you’re solving is painful enough that customers are willing to pay for your solution?
SlingShot is free for consumers. We think it’s a no-brainer: we’re providing recommendations at no cost to help people make the most of their personal finance and travel further. And in addition to helping people save money by learning how they can travel for free, we’re saving people time, we’re saving them the time of researching the ins and outs of reward travel.
External validation?
We’ve now had several thousand people take the time to give us detailed frequent flyer, credit, and spending data. Our advisors and investors include the engineer who built eBay’s personal recommendation algorithm, and the marketing lead who ran all of Lyft’s Facebook advertising.
In addition, founder Dan Pierson has worked at the intersection of travel and startups for more than a decade; most recently, he led travel partnerships at Lyft, creating campaigns with brands such as Hawaiian Airlines and Joie de Vivre Hotels.
Tnooz take:
For people who travel often enough to be concerned about optimising the redemption of their accumulated points, and for people who are interested enough to open a credit card account just so they can get the bonus points related to their flight, Slingshot undeniably provides a service.
And when there are so many sources of information out there, its ability to aggregate a whole bunch of disparate data points into a suggested itinerary is compelling.
In theory this is great, but, as ever in the start-up world, a great idea is a million miles away from a successful business. At this stage in Slingshot's development, it's all about the commission it takes from the credit card companies when it persuades one of its users to apply for Credit Card X.
One observation here is that it could be outsourcing its margins to a third party - if Credit Card X suddenly decides to drop its commission, SlingShot's revenues drop too.
The counter argument to that is that the commissions/fees are high enough to be trimmed every now and again.
It will be interesting to keep an eye on SlingShot and the extent to which it can carve out a niche in a competitive and crowded space. The building blocks are in place.