Hello! Who are you and what business did you start?
Hi, my name is Alexi I am the co-founder and the owner of AwardWallet. AwardWallet started out as a website that helps individuals track all of their loyalty accounts in one place. It works by asking users for their credentials to their loyalty accounts, once the credentials are provided it retrieves things like account balance, elite level, expiration date, historical transactions, etc. and displays this information in a simple report.
Once our users populate their AwardWallet accounts with all of their loyalty programs we pretty much take care of the rest. We notify the users when their accounts are going to expire or when the account balances change. We launched the product in 2004 and over the years we’ve added many more features to our offering.
In addition to tracking loyalty accounts, AwardWallet also tracks and manages travel plans for our users. Travel reservations can be imported from users’ email, from their loyalty accounts, and simply via confirmation numbers. Once trip segments are imported into AwardWallet we monitor trips for changes. For flight reservations, we monitor all flights for delays, cancellations, gate changes, etc.
We package our technology into APIs that we sell to our B2B clients. The two main APIs that we offer are:
- Loyalty Web Parsing API. This API allows you to send us user credentials for any loyalty program and in return, we will respond with that user’s loyalty profile (how many miles they have, when the miles expire, what elite status user has, etc.)
- Email Parsing API. This API takes a travel reservation email as an input and as output we return that reservation in a structured format so that it can be consumed by another system.
AwardWallet also runs a travel blog that focuses on the loyalty space and a few Facebook groups such as Award Travel 101 and Award Travel 201. We educate our users on the subject of playing the “loyalty game” and make affiliate revenue from credit card offers that we have on our pages. If you don’t take into account the current COVID-19 situation in the world, which affected AwardWallet’s revenue, we are making about $150,000 per month on average.
What's your backstory and how did you come up with the idea?
I graduated college in 2003 and with all the free time on my hands (all I had left was just a regular 8-5 job as a sales engineer for an enterprise software company) decided that I want to start a business and build some type of IT product.
Back then I had a coworker, Todd Mera, who was traveling a lot and he showed me a stack of loyalty cards and said that it’s a real pain to track all of them, so he basically came up with the idea for AwardWallet. We developed a prototype and launched the first version about 8 months later.
In parallel, we also built other projects like a horse classifieds website, a website for summer camps that allowed parents to communicate with their kids, software for managing Microsoft virtual servers, and a few other projects all from completely different areas. We didn’t know if any of them would succeed but wanted to increase our odds by having multiple projects at the same time. AwardWallet happened to be the one that really took off so overtime we decommissioned all the other websites and focused solely on AwardWallet.
I studied computer science and love coding so this definitely helped me launch these products. Initially, we did it all with the help of 1 developer. We hosted the website out of Todd’s house where he had half of a T1 line and a server. We had no experience in raising cash so we never went that route. Instead, we found local businesses that needed IT support, this is how we were able to pay our first developer. Eventually, AwardWallet started paying for itself so we never really needed to raise money to run it. Our first big break was when the LA Times wrote an article about us in their Sunday edition.
Take us through the process of designing, prototyping, and manufacturing your first product.
We didn’t know if it was feasible to login to a website programmatically and then extract some data after the login. The technology was very different in 2003. For reference, Facebook did not yet exist back then. The websites were different and the frameworks that allowed crawling were very different. There were no CAPTCHAs and no bot detection software, so in a sense, it was easier but there were no good libraries to do more sophisticated crawling, so we had to create our own.
The biggest challenge was to pass the authentication screen. Back then we did most of the scraping using regex as opposed to xPath. Our thinking was that if we can support about 50 - 60 loyalty programs we pretty much would cover everything that exists in terms of loyalty. For a reference, today we support about 700 programs.
I think the only reason why we are growing is that we have the best product in the world for tracking miles and points. All the roads lead to us when it comes to tracking miles and points so my marketing strategy is to keep it that way.
Since we never raised cash and both Todd and I had no money to invest in the business we had to do everything on the cheap. So the technology stack that we picked was LAMP (Linux, Apache, MySQL, PHP). We went from hosting everything on our own (including the hardware) to moving the hardware to a datacenter to then completely migrating into Amazon AWS. Back then cheap hosting with the flexibility of owning the actual OS did not exist. In that regard starting a new product is cheaper and easier now than it was in 2003.
Todd Mera on the left, Alexi Vereschaga on the right
Describe the process of launching the business.
When we launched the product, it did what it was supposed to do but we had zero marketing budget so our growth in the first four years was minimal. We were probably getting 3 - 5 new users per day.
On top of it the loyalty program websites that we supported kept on changing so we couldn’t just leave it and forget it, we constantly had to tweak the code so that the service stayed operational. I think what saved us was the fact that we were able to plow through this by focusing on other things making money from small outsourcing IT projects and at the same time, there wasn’t much competition. There were probably 3 or 4 services that attempted to do what we were doing but technically we were always superior. Here is what AwardWallet looked like back then:
But the main thing is that our parsers worked and when they did break we would fix them very quickly. It’s a though space so the competition that we had all either went bankrupt or had to pivot to do something else. This made us the leader in the space of tracking miles and points.
We became the “mint.com of points and miles” and any reputable miles and points guru would have an account with us which gave us some good street cred. Our expenses were minimal, it came down to paying a developer or two and paying the hosting fees. Neither I nor Todd obviously took a salary initially, we maintained our full-time jobs.
As far as lessons learned, I think success boils down to luck but we have ways of increasing or decreasing our chances. I think starting multiple different IT projects was the smart way to go as it increased our chances of getting lucky. Initially out of all the IT projects that we built I never thought that AwardWallet would be the one. I felt like the other projects were much more promising. The other thing that I learned is that it is important to find a balance between spreading yourself thin by building too many weak features vs building a few that are really good.
Since launch, what has worked to attract and retain customers?
Pretty much every marketing strategy that I tried had failed. Every marketing person that I ever worked with so far was not very successful, unfortunately. Marketing and sales are by far the weakest part of AwardWallet. I don’t know what it takes to grow fast so I am still looking.
Up until now, our growth has been mainly by word of mouth. Yes we tried paid campaigns, Google ads, Facebook ads, paid posts, magazines, TV, etc. These things work with various degrees of effectiveness but the cost of acquisition is way too high. For example, I can run a campaign, invest a lot of time and dev resources and money and get 300 new users, or I could do nothing and get 300 users in any given day that just found us by word of mouth.
I wish I could give some useful insights on the topic but unfortunately nothing I tried so far really worked. I think the only reason why we are growing is that we have the best product in the world for tracking miles and points. All the roads lead to us when it comes to tracking miles and points so my marketing strategy is to keep it that way. As to Google ads, whenever we tried them we were off by a magnitude of 100x, meaning we are spending about 100 times more than what it would take to break even.
How are you doing today and what does the future look like?
Last year was our best year ever, we made almost $2MM in revenue and our expenses are still not that high as we came to this point by bootstrapping. Unfortunately, 2020 is not going to be as good as last year. Running a business in a travel space in the middle of a pandemic is problematic, to say the least.
I am answering these questions in May of 2020 so it remains to be seen what is going to happen to us, but we are definitely affected by this situation. Traffic is down, obviously, no one is traveling and no one cares about miles and points right now. I think what is saving us is that we diversified our streams of revenue, however, all of them are suffering right now. Some are hit harder than others. The biggest hit was our affiliate revenue as our affiliate partners just stopped paying for advertising in certain sectors. Luckily there are other sources of revenue that we can still rely on to make it through, the only question is: how long will this pandemic last.
We have many ideas about where to expand our product. Our backlog is basically endless; the only question is what to prioritize at any given point in time. Loyalty space is very interesting, there are many gaps that need to be addressed and we are very well positioned to fill those gaps. However, as always it's a balancing act to find resources to build new stuff and at the same time make enough money to run and sustain the business.
Through starting the business, have you learned anything particularly helpful or advantageous?
If I learned anything from this experience is that to build a business you need to constantly evolve and do things. Back when I started AwardWallet cable TV was a major timesuck so I never had cable in my life, right now social media is doing that. If you want to be able to build stuff you need to throw that away or minimize it as much as possible.
Also, persistence is very important, some doors are very hard to unlock but you need to keep trying to pry them open, if it were easy then others would have done it a long time ago and you would not have that opportunity in the first place.
In terms of mistakes, I made an endless number of bad decisions from marketing strategies to hiring the wrong people to partnerships that led nowhere. We missed many opportunities because we focused on irrelevant things and unfortunately, I still don’t know what is going to work and what won’t.
As far as starting a business, bootstrapping is my style but I don’t think this is the right way to go for everyone. Bootstrapping is a much more conservative way to go, it is painful and slow, but once you start making money it becomes sustainable. I’ve seen so many businesses that take VC money and burn it to the ground. It is stressful for everyone involved and I just don’t want to be in that situation.
What platform/tools do you use for your business?
Different folks at AwardWallet use different tools but some are pretty much used by most people, those tools are:
- Google Gsuite for emails and documents.
- Amazon AWS for hosting.
- Paw for playing with APIs.
- PHPStorm for coding.
- Github for code version control.
- Slack for communication.
- SoundCloud for staying sane.
What have been the most influential books, podcasts, or other resources?
From the non-fictional books that I read recently these three come to mind. There is no specific connection between these books and how I ran AwardWallet, these books just made me take a pause and think:
- Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets by Nassim Nicholas Taleb
- The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb
- Sapiens: A Brief History of Humankind by Yuval Noah Harari
Advice for other entrepreneurs who want to get started or are just starting out?
Don’t look for reasons to not do stuff. If you have an idea - do it. Do it however you can, don’t shoot for perfection, creating something even if it is not perfect is better than not doing it all. It will get better with iterations.
Once you find the thing, stick with it, and go deep, become an expert at that one thing. Avoid contractors who work on a per-project basis if you can.
Hire full-time people, it pays off over time.
Adopt fast, inexpensive communication channels, like group chats. Avoid big in-person meetings where you expect to solve all the world problems. They don’t work and usually are a big waste of time and money.
Lots of small iterations is better than a few big releases. If you are in software, write automated tests for your code - it helps with two things: (1) quality of the product goes up, (2) the dev guys will not be afraid to improve or fix stuff if they can test everything before pushing their code to production.
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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