Don’t Pivot Too Soon: ADARA Co-Founder and CTO Charles Mi (Part 4)

Sramana Mitra: Hilton was paying US Airways every time they were accessing a data set and you were getting a share of that revenue. Was that your business model?

Charles Mi: We get paid and share it with US Airways. Just like a consumer who’s purchasing from Amazon, you have to pay Amazon. Amazon then gives the money to the merchant.

Sramana Mitra: So the transaction completes on your side and you do the collection.

Charles Mi: Yes.

Sramana Mitra: For the airline, this was a fairly new revenue stream and a completely new way of looking at business. How do they wrap their arms around it and how did they respond?

Charles Mi: There was a lot of friction in the beginning. Customer data is very essential for a lot of airlines. That was the time when airlines were thinking of ancillary revenues. A lot of these airlines are already doing this in the offline world. They have a lot of co-branded work with Chase, right.

Sramana Mitra: The credit card companies do a lot.

Charles Mi: They always do a lot of these co-working offline. When we came in, they said, “I suddenly am able to move all my offline initiative to online and be exposed to a much bigger audience.” Sending a message on Facebook has a much lower cost. Also, as more and more people transact online, they wanted to tap into that channel.

It was hard at the beginning because it’s hard to trust a startup with data. There was a lot of initial friction. Transparency was one of the key product features. It was that transparency that moved the needle on their end. Like I said, it was the perfect storm of market conditions, the existing offline relationship, and also the product and technology that allowed us to break into a couple of airlines like US Airways and Delta. When everybody else is out there, you have to be out there. In the beginning, it took us a while to get them but soon after, they all rushed to get on board.

Sramana Mitra: How significant was the revenue that you generated for the airlines?

Charles Mi: It’s pretty significant. It’s definitely in the range of millions of dollars. They have almost no cost associated with the profit. On top of that, a lot of times, these airlines are also the biggest consumers of the marketplace too. They are also a big consumer of other people’s data too.

Sramana Mitra: There is no problem with airlines sharing each other’s data?

Charles Mi: They can’t buy each other’s data. US Airways would never let Delta buy their data. You have a safeguard in place where I give you this transparency. Before the data is even used by a particular vendor, you go through an approval process.

Sramana Mitra: Whose data is US Airways buying?

Charles Mi: US Airways is buying hotel data. They consume data from online travel agencies.

This segment is part 4 in the series : Don’t Pivot Too Soon: ADARA Co-Founder and CTO Charles Mi
1 2 3 4 5