Hipmunk launched its first premium account product today but says it is not focusing on the money. Instead, chief executive Adam Goldstein is hell-bent on delivering new products. This one just happens to diversify his business model and bring in a little extra cash.
The company, which recently took on $15 million in funding, released a business class accounts product today, centered around helping administrators at small to medium sized businesses book travel. Goldstein told VentureBeat that administrators around Silicon Valley expressed a need for this product and he saw a way to deliver. But that doesn’t change the fact that the company, which makes the majority of its money off commissions on booked flights and hotel stays, is expanding into new revenue streams.
“I think a lot of people’s criticisms have been displaced. They see no ads and they think we’re making no money. In fact, we’re making lots of money,” said Goldstein in an interview with VentureBeat. “It’s not like we’re hurting for cash.”
Hipmunk’s new premium model includes a lot of what you see in the free, consumer version, with a few key tweaks. The business account includes Hipmunk’s existing calendar tool, which shows events in-line with flight and hotel search results. The consumer version only supports Google Calendar, but administrators using the premium account will also have access to Outlook calendars. Employees can also set preferences for travel, such as favored airlines or hotels in a specific area. These results are pushed to the top of any searches an administrator makes for that employee.
The e-mail tools, however, seem like the most valuable function. Administrators can choose a few different options and click a button to send those options off to the employee. Hipmunk automatically generates an e-mail with all the pertinent information for each flight or hotel option (airline, times, any layover information) and provides an “approve” button for each. The employee clicks the approve button of their choice and an e-mail is automatically sent back to the administrator alerting them to the employee’s choice.
While Goldstein stressed that he was looking less for a new business model and more for a new way to serve his customers, the CEO did admit that the product was a selling point in Hipmunk’s recent and successful attempt to get funding. The latest funding round included existing investor Ignition Partners, which joined in the last round having invested in the company right after its graduation from Y Combinator.
“When you hear the level of enthusiasm and excitement from your users and hear them tell you, ‘We would really love to pay you money,’ that’s music to your ears!” said Ignition Partners founding partner Brad Silverberg in an interview with VentureBeat, “How much revenue it generates, whether it’s a huge amount or a little amount, we’ll see.”
He went on to explain that Ignition Partners uses the business class product to book travel and that Goldstein spoke with some of Ignition’s administrators while doing research for it. Indeed, Goldstein told us he spoke with 20-30 administrators about their pains booking trips.
But if Hipmunk is looking to diversify further, why not go after the big dogs, like Fortune 500 corporations that spend plenty of cash each year on travel expenses?
“The big companies really do get benefit from a travel agent,” said Goldstein, “If you’re booking complicated, international, first-class tickets, for 50 people, Hipmunk isn’t going to help you, I’ll admit.”
The product is free for the first 60-days and then $10 a month for the first year — a price Hipmunk hopes will be attractive to stingy SMBs. What the second year will bring, Goldstein doesn’t yet know. He’s testing the product out on these first customers, who will likely get to keep their low $10 rate as a thanks for being early adopters. You can cancel the account at any time.