SaaS Interviews with CEOs, Startups, Founders
EP 596: ClaimCompass Has Helped 1000 Airline Passengers Get $420 Each Back From Airlines for Cancelled Tickets and Lost Items with CEO Tatyana Mitkova
12 Mar 2017
Chapter 1: What does ClaimCompass do for airline passengers?
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They've passed 100 customers and have raised $2.2 million to help sales development reps sell more using artificial intelligence.
Chapter 2: How can passengers submit claims for delayed or canceled flights?
Good morning, everybody. Nathan Latke here. Our guest today is Tatyana Medkova. She is the CEO and founder of Claim Compass. We're going to dive into it today. Tatyana, are you ready to take us to the top? Sure. All right. Very good. Tell us what Claim Compass does and how you make money. So in one sentence, we get airlines to pay you up to $680 for screwing up your flight. Very good.
So what does that mean? Like it's delayed or it's canceled or what? Exactly.
Chapter 3: What are the rights of airline passengers regarding compensation?
It could be delayed, canceled, overbooked. The airline could have lost your luggage. It's a bunch of stuff that we help passengers deal with. And how do you do that? Let's say they lose my luggage. You're going to pay me 680 bucks for that. How are you going to get that money from the airline? For lost luggage, it could be even more, it could be up to a thousand bucks.
But we work on the basis of a regulation that exists mainly in Europe, but it's applicable for transatlantic flights as well. And it basically says you have some rights, the airline should compensate you for the time you lost, for the inconvenience, and that's a monetary compensation. But interesting is that more than 90% of passengers are unaware of their rights.
And for the remaining 10%, airlines have made it really difficult. They're creating endless processes, providing terrible customer service, or ignoring claims altogether. So we just decided to automate this process, this claiming process. We have a web app, and passengers can just submit a claim online in under three minutes, and we just take care of all the rest.
Chapter 4: How does ClaimCompass automate the claims process?
Okay, so I lost my luggage. I submit a claim. You get me my money back, or you get me $680. How do you make money? So we make money by keeping a 25% success-based commission. This means if we secure compensation, we're getting a cut out of it. If not, you don't have to pay us anything. Okay, so if you get me $1,000 back from the airline, you're going to keep $250? That's right. Okay, got it.
And on average, how many individual kind of fires are you giving money back to on a monthly basis? So we've been growing with about 75% month over month in the last three months. So in January, we're close to reaching 1,000 passengers or 1,000 eligible claims. And on average, what's the claim refund that you're giving back? The average is between $400, $420.
Chapter 5: What is the business model of ClaimCompass?
Okay, so call it $420. So is the math as simple as me taking $420 times 1,000 passengers times 0.25 to assume you're doing about $105,000 per month currently? Yeah, that's right. Very cool. And what systems do you use to kind of navigate this? Do you have a big team and they're literally calling these airlines and negotiating it one-on-one or do you have some software? Yeah.
We're very keen on automating as much as possible. So we have our internal software that's like a claims management system. And most of the work on each claim is already automated. So we work with a lot of legal templates. We know where to send them to. And it's only the more complicated cases where a real legal specialist would actually work on the case.
Other than that, we've established relationships with more than 50 airlines. So we are sending them a lot of claims on a regular basis and just know how the whole process works.
Chapter 6: What growth metrics is ClaimCompass currently experiencing?
But if you're an individual, that wouldn't be the case for you as you will be really confused. Don't even like where to send your email to or who to call and how to act. And what's your current team size? Our current, so we're three co-founders and we have four employees. The three co-founders are based in Mountain Views.
We're part of the 500 startups program here, but our other employees are based in Europe and Bulgaria. Okay, in Bulgaria, you said? You said in Europe and Bulgaria? Are all four in Bulgaria? Yes. Okay, very cool. And now that we know some of the numbers and stuff, take us back to kind of the story. When did you launch the business?
So we launched it a little bit over a year ago, but as we started, it was more of a side project. We just wanted to test it out, especially in Eastern Europe, as the service has never been introduced before.
Chapter 7: What challenges does ClaimCompass face from competitors?
And we as the co-founders were traveling a lot, mainly in Europe, and we never knew that this right existed. All of us have this personal stories of being really angry at an airline for whatever reason, for a delayed or canceled flight or lost luggage. And it's been happening over and over again, even since the launch of the company. We come from different backgrounds.
I mean, I have a legal background. Then our CTO is a full-stack developer. We have a CMO that did client acquisition for a top-tier airline. So we kind of combined that to create our platform. So you launched in January 2016, and are you bootstrapped or have you raised capital? So we've been bootstrapping up until three months ago when we entered the 500 Startups program here.
And how it works is it was an accelerator. It's already rebranded as a pre-seed and seed program. And you receive 150K from them. And you give up, what, 5% of your company? It's 6%.
Chapter 8: What are Tatyana's personal insights on entrepreneurship?
It's a convertible security. Got it. So 150K is all you've raised to date. We raised additional 50K from one of the micro funds of 500 startups based in Turkey and Istanbul, the same conditions. Got it, very cool. And so what's the plan look like over the next four, five, six months? Well, we've been growing a lot in the past three months, but we're looking forward to growing even more.
And of course, our goal is to reach as many passengers as possible. We're advertising like acquiring customers via channels like Facebook and Google AdWords, but we've already built an API that's for our partnership strategy. And it's integrated with booking engines. So imagine it could screen eligible flights and proactively notify travelers when they're entitled to compensation.
So opposed to reaching customers that had this awful experience on social media after it happened, we could actually track when it happens and be able to file a claim even on the same day. You mentioned you're doing Facebook and Google ads for a lot of your user acquisition. What's it cost you to acquire a customer currently?
It depends on the channel and audience as we advertise in a lot of different countries in Europe on a lot of different languages, but it goes between 15 and 27 dollars right now. Okay. And you're making on average 25% of 420 bucks per new paid customer. So that math works. Yeah.
So you're spending between 15 and 27 bucks basically to drive about a hundred bucks of new top line revenue for you, right? That's right. That's great. And so that makes a lot of sense. And what are you spending total per month in paid ads? Well, that's been increasing a lot.
I mean, first we started with guerrilla marketing, with not using so much paid advertising, but once we started to generate some revenue, we started reinvesting everything we could in our marketing budget. So in December, that was about 15K. In January, it's going to be even more. Like 20, 30? 20, 30. Yes, in this range. Very cool. So when do you graduate from the 500 Startups program?
Oh, it's in a month. We have our demo day on the 15th of February. And are you going to try and raise capital, or are you going to just keep going? So we can keep going.
We can keep going for more than six months, but we feel that it's a great timing to start thinking about our seed round, especially as I mentioned, we're based in Europe, so the stay in the USA is a temporary thing for the program, and it's a great way to... meet people, angels, investors, mentors, and we're going to try to make the best out of it. So we will be taking some meetings.
We'll be using Demo Day as a kickoff point for fundraising. Then again, great thing is we don't need the capital as fast as possible, and we are generating revenue already. But we do think it's we'll have this momentum of just having graduated this program. So what do you want to raise? How much? So we're looking into raising a million on a five mil cap. Okay, got it.
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