Tuesday, September 6, 2011
Interview with Ryan Eberhard, PointHub
Story by Benjamin F. Kuo
Last month, Santa Monica-based PointHub (www.pointhub.com) announced a new, online service aimed at helping travelers better use their mileage and loyalty points. Ryan Eberhard is the co-founder of PointHub, who we spoke to about what the startup is up to, and to get a more in-depth idea of what the company is about.
What is PointHub?
Ryan Eberhard: We describe it as a loyalty program shopping and management website. The idea behind PointHub, is that it simplifies reward point management and redemption. What motives and inspires us, it to take a top-down look at loyalty programs. In the U.S., there is something like 48 billion in loyalty points outstanding. But, last year, because the experience of redeeming points is so frustrating and difficulty, 16 billion of those points expired before getting used. The problem is generally the hardest in travel. Our customers said that is the most difficult and time consuming. I'm sure everyone can relate to this, if they've ever tried to use their frequent flyer miles. There's a wall of blackout conditions, redemption fees, restrictions, and it's all very complicated. Every program, whether it's a hotel or an airline, imposes their own rules, and invents their own currency. It's very difficult to use them and to effectively manage them. That's why we initially focused on the travel space, but we now have plans to launch into comparison shopping for travel, dining, cruises, rental cars, and other categories as well.
Can you give an example of how someone might use this in travel?
Ryan Eberhard: What we've released so far is a cash versus points recommendation engine. What it gives useres, is a real, side-by-side comparison and recommendation between the purchas price and rewards points price for a flight or hotel. That's especially valuable for anyone who is facing the decision on a particular trip, on whether it is in their interest to use their points or cash. Rather than the current user experience, which forces you to go to each of an individual hotel or airlines' website, we consolidated it, just as the first generation OTAs were consolidated by Kayak. We've created a meta-search engine for loyalty points. We go through all of the factors you might have to think through, including redemption fees, whether you have to forfeit your rewards, upcoming loyalty program changes, elite status, expiration risk, and all of those are favored into our recommendation.
How did you and your founders decide to start the company?
Ryan Eberhard: My co-founder, Justin Byers, came up with the idea. Like so many other good ideas, it was motivated by love. He was in a long distance relationship, coast-to-coast, and racking up miles. Wanting to see his girlfriend as much as possible, he saw there was an opportunity to maximize those points. He ran head on into the problem that man of the leaders, business travelers, and other experience, which is figuring out how to effectively use those points.
How difficult was it to connect into those programs?
Ryan Eberhard: Back to Justin, his background was a part of the early engineering team at Pricegrabber. This category, loyalty program management, is very similar to comparison shopping back in the early days of Shopzilla. What ShopZilla needed to do, was write a search engine which could crawl and build a structure around the web. That's what we've built at PointHub. Just like Google, we crawl 250 programs and create a structure around their terms and conditions, and turn that into a single experience. That's been the biggest engineering hurdle. The second is, once you've crawled that, writing a recommendation engine that provides, in real-time, the best value recommendation between the two options. You've got to crawl, match up the loyalty price and the cash price, and have the intelligence to make recommendations on what is the best value.
How does your company make money on providing this service?
Ryan Eberhard: Right now, our focus is on the user. We're focused on our value proposition, and attracting and thrilling our target audience. Over time, there are a whole slew of revenue opportunities. There are conventional referrals like the OTAs. We also can make referrals and recommendations on the best loyalty program you should join, based on your travel patterns. However, our main focus right now is on the user and the user experience.
How is the company funded?
Ryan Eberhard: We're self funded right now, we bootstrapped this ourselves. We're now taking our first round of meetings with investors.
Finally, what's the next big step for you guys?
Ryan Eberhard: I think the next big step for us, is to expand into retail. We see that the first, really big move for the business is the travel space. But, down the line, we see creating a similar shopping experience for users, adding their credit card programs, adding dining, retail loyalty programs like Best Buy, and giving them the ability to manage those programs and shop with them. But for now, we're really focused on travel and attracting and delighting our first cohort of users.