Three years ago, a startup called Miles launched a free app with the goal of becoming a sort of 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 could be exchanged for perks at Starbucks or discounts to services like Audi Silvercar.
I was curious, so I used Miles for a little over a year. I lived in New York City at the time and did a lot of daily walking and subway-riding, with occasional biking and bus travel. I was in a great spot to rack up miles without having to change my habits, so I shook the icky feeling of letting another app know my location to see if that occasional free coffee would be worth it.
It never was 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. You know all the kinds of ads for introductory offers you hear in the middle of podcasts? Those seemed to dominate the Miles app. I hoarded thousands of miles but had almost nothing to spend them on besides temporarily free or discounted subscriptions to services like Hello Fresh.
Now, Miles says it’s setting out to change some of that. On Wednesday it will announce a Series A round of funding of $12.5 million led by Scrum Ventures that includes Japan Airlines, TransLink Capital, and a host of others. The funding will help the startup create “Miles 2.0,” which will feature many new rewards, and new types of rewards — like, eventually, PayPal credits, airline miles, or even cash.
First, though, Miles CEO Jigar Shah tells The Stock Market Pioneer in an interview that the company has already made lots of changes to the app, especially since early last year, when it was forced to reshuffle priorities during the pandemic. With people around the world self-isolating, and both transit ridership and vehicle miles traveled dropping, Shah says Miles started tweaking its rewards system to encourage the outdoor activities it already tracked where social distancing was possible (like walking, running, and biking). The Miles team also got to work on drumming up new rewards that didn’t require going into physical stores. They brought on new partners, including streaming services like Disney Plus and FandangoNOW, as well as home delivery startups like wine company Winc.
“We went from almost 40 to 60 different partnerships in 90 days in March, April, and May of last year,” Shah says. The Miles team also started pulling other levers, like how many miles it cost to redeem certain rewards. It added a charity function, too, where miles can be donated to non-profits on the platform. If those non-profits collect enough miles, they get a payout directly from the startup. (The thresholds and payouts vary per 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 used the app, and users redeemed more of their miles. Out of 12 billion miles collected by users to date, 3.5 billion have been redeemed for around 7 million rewards, he says. Miles also says it has driven more than $200 million in revenue to its rewards partners to date. While it may be hard to grok those numbers, it’s obvious they were at the very least good enough to convince investors to come together for a Series A round.
Miles attracted new rewards partners along the way, which Shah says might help address the problem I had with the app. On Wednesday it will announce even more, including Lego, Buffalo Wild Wings, Garmin, Sam’s Club, Chewy, Wayfair, Rover, and HP. It still features plenty of subscription services, though, as some of its more recent deals include ButcherBox, Harry’s Razors, and Craftsy.
Shah admits that the balance was likely not right at the outset. “I think [in the] initial days, we were building up the marketplace, and it was all about the quality of the marketplace [versus] the quantity of the marketplace, and I think we couldn’t fight both,” he says. “And we chose quantity at that point in time over quality.”
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 has only gotten more fraught over the last three years as reporting from Motherboard and The New York Times has uncovered just how much of a black market there is for precise location data created by our phones.
Miles maintains that it does not share any location data with its rewards partners, and Shah takes his company’s position as a sort of middleman in this respect seriously. “They get zero data at this point in time,” he says, emphatically. “Even at the aggregated level, even at the anonymized level, they just don’t get anything. The only thing they get is to put a reward on our platform.” As Shah put it back in 2018, the selling point is that Miles has created a “predictive marketing AI platform” that is supposed to match users with appropriate deals based on their behaviors — sort of like a smarter version of advertising beacons.
The closest Miles comes to sharing information about people’s actual movements is in the relationships with cities and transit agencies, Shah says. Even then, it’s offered in aggregate and abstracted. “[Say] there are 14 percent of people in San Francisco who walk after taking a train trip, and their median distance of walking is 0.7 miles. That’s the formation of the data” that cities or transit agencies get in a dashboard created by Miles, he says.
(Cities and transit agencies don’t necessarily have goods to sell, so Miles can create “challenges” in its app that encourage, say, subway ridership. For example, the Miles app may challenge users to take the subway to work instead of drive in exchange for a reward from a different partner.)
If you want to be optimistic about all this, you could view Miles as a vanguard of sorts for trying to offer some kind of compensation for being tracked — something other apps are likely already doing without you knowing. A $5 Target gift card is not nearly as progressive an idea 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 get right now.
“It’s more than we get right now” is also a pretty grim place to be. So it’ll be up to Miles’ users to decide whether the tradeoff is worth it, all while the company adds new rewards and continues to tweak the platform to shift the underlying balance. In that light, maybe the best we can hope for isn’t necessarily that users get a free coffee now and then, but that the promise of one gets a few more people to experience riding a bus for the first time.