Three years ago, a startup called Miles launched a free app with the goal of becoming something of a rewards program for all travel – with an emphasis on clean transportation. Cover enough ground by bike, bus, subway, or even on foot, and you’d be rewarded with “miles” (aka points) that can be redeemed for perks at Starbucks or discounts on services like Audi Silvercar.
I was curious, so I’ve been using Miles for a little over a year. I lived in New York City at the time and did a lot of daily walks and subway rides, with the occasional bike and bus ride. I was in a great place to accumulate miles without having to change my habits, so I shook off the icky feeling of letting another app know my location to see if that free coffee every now and then would be worth it .
It was never for me. While Miles had teased gift cards from places like Amazon, Target, and Starbucks, the rewards I saw were always far less enticing or tangible. Know all the types of introductory offer ads you hear in the middle of podcasts? They seemed to dominate the Miles app. I’ve hoarded thousands of miles but had next to nothing to spend them on except for limited-time free or discounted subscriptions to services like Hello Fresh.
Miles says it plans to change that. On Wednesday, it announced a $12.5 million Series A funding round led by Scrum Ventures, including Japan Airlines, TransLink Capital and a host of others. The funding will help the startup create “Miles 2.0”, with many new rewards and new types of rewards – such as ultimately PayPal credits, airline miles, or even cash.
But first, Miles CEO Jigar Shah tells: The edge in an interview that the company has already made many changes to the app, especially since early last year when it was forced to rearrange priorities during the pandemic. With people all over the world self-isolating, and both transit ridership and vehicle kilometers traveled decreasing, Shah says Miles began modifying its reward system to encourage the outdoor activities it already tracked where social distancing was possible (such as walking, running, and biking). The Miles team also set to work creating new rewards that didn’t require physical stores. They brought in new partners, including streaming services like Disney Plus and FandangoNOW, as well as home delivery startups like wine company Winc.
“We went from nearly 40 to 60 different partnerships in 90 days in March, April and May last year,” Shah said. The Miles team also started pulling other levers, such as how many miles it took to redeem certain rewards. It also added a charity feature, where miles can be donated to nonprofits on the platform. If those nonprofits accumulate enough miles, they get a payout directly from the startup. (Thresholds and payouts vary by charity and are negotiated with Miles.)
All of these changes accelerated growth across the board for Miles last year and into 2021, Shah says. More people were using the app and users were redeeming more of their miles. Of the 12 billion miles accumulated by users so far, 3.5 billion have been redeemed for about 7 million rewards, he says. Miles also says it has generated more than $200 million in revenue for its rewards partners to date. While those numbers may be hard to figure out, it’s clear that they were at least good enough to convince investors to get together for a Series A round.
Miles attracted new reward partners along the way, which Shah said could help solve the problem I was having with the app. On Wednesday, it will announce even more, including Lego, Buffalo Wild Wings, Garmin, Sam’s Club, Chewy, Wayfair, Rover and HP. However, it still offers plenty of subscription services, as some of the more recent deals include ButcherBox, Harry’s Razors, and Bluprint.
Shah admits the balance probably wasn’t right in the beginning. “I think [in the] the first days we were building the marketplace and it was all about the quality of the marketplace [versus] the amount of the market, and I think we couldn’t fight both,” he says. “And we opted for quantity over quality at that time.”
The pitch Miles originally made in 2018 of constant location tracking in exchange for rewards was eyebrow-raising to say the least. In theory, that idea just came more loaded in the past three years as report from Motherboard and The New York Times has discovered how much of a black market there is for accurate location data created by our phones.
Miles states that it does not share location data with its reward partners, and Shah takes his company’s position as a sort of middleman in this regard seriously. “They are currently getting zero data,” he says emphatically. “Even on an aggregated level, even on an anonymized level, they just don’t get anything. All they get is putting a reward on our platform.” As Shah put it in 2018, the selling point is that Miles has created a “predictive marketing AI platform” that should match users with suitable deals based on their behavior — sort of a smarter version of ad beacons.
Miles is the closest to sharing information about people’s actual movements in relationships with cities and transport services, Shah says. Even then, it is presented in an aggregated and abstracted way. “[Say] there are 14 percent of people in San Francisco who walk after taking a train ride, and their median walking distance is 0.7 miles. That’s the shaping of the data that cities or carriers get into a dashboard made by Miles, he says.
(Cities and transportation companies don’t necessarily have goods to sell, so Miles can create ‘challenges’ in its app that encourage the use of subways, for example. For example, the Miles app can challenge users to take the subway to work instead of to ride in exchange for a reward from another partner.)
If you want to be optimistic about this, you could see Miles as a sort of vanguard to try to bid some sort of compensation for being tracked — something other apps are probably already doing without you knowing. A $5 Target gift card isn’t nearly as progressive as a federal law requiring tech companies to compensate people for the labor of generating data while using their services. But it’s more than what we’re getting now.
“It’s more than we’re getting now” is also a pretty grim place to be. So it’s up to Miles users to decide whether the trade-off is worth it, as the company adds new rewards and continues to tweak the platform to shift the underlying balance sheet. In that light, the best we can hope for is not necessarily the occasional free cup of coffee for users, but the promise of a few more people experiencing bus transportation for the first time.