Crowdfunding Offers for United Miles and Status Overpriced

Wall & Main is a venture capital crowdfunding firm attempting to use crowdfunding to raise its own initial capital. For a firm that is supposedly all about facilitating investments, their fundraising efforts leave me scratching my head. First the good news:

MilePoint negotiated a special offer for its members who buy one of Wall & Main’s crowdfunding packages by 10 PM (Pacific Time) today. All purchases by MilePoint members will include Bose QC-15 noise canceling headphones ($300 value). In addition, the first 300 purchases will include elite status with United’s MileagePlus program.

  • Platinum package includes MileagePlus Premier Platinum status
  • Gold package includes MileagePlus Premier Gold status
  • Silver or Bronze package includes MileagePlus Silver status

I value Silver status at about $100. Most of its elite benefits can be replicated with a credit card annual fee. I admit I have not spent much time considering the value of Gold or Platinum status, but I will throw out ballpark figures of $500 and $1,000, respectively. The larger baggage benefit, free lounge access on international itineraries, and waived award booking/change fees (Platinum members) are the primary benefits. Domestic upgrades will still be tough for Gold members on most flights. I value Premier 1K status, which is not being offered, at about $2,000.

The problem is that these benefits are still too low to compensate for the high price that Wall & Main charges for United’s MileagePlus miles. The promotional benefits are worth roughly 3-10% of the total value of today’s offers:

  • Platinum package: 1,000,000 miles for $30,000
  • Gold package: 500,000 miles for $15,000
  • Silver package: 250,000 miles for $7,500
  • Bronze package: 150,000 miles for $4,500

It doesn’t really matter if these are lower prices than United normally charges. They are all still 3 CPM, which is awfully high for redeemable miles. I value my miles at 2 CPM, and I will consider buying them at a price below 1.5 CPM. If you use manufactured spend, it’s possible to earn them at a price below 0.6 CPM.

Wall and Main Offers

Despite the “crowdfunding” veneer, you shouldn’t think of this as anything but a typical offer to buy miles or points.  Others have taken issue with the fact that Wall & Main and some of its supporters have been using the words like “investors” to describe its customers. So to repeat, you are not “investing” in anything, just buying a product at an inflated price that United can devalue without notice at any time.

I know not everyone has time to do mileage runs, but for comparison, the benefits of those are (1) still earning miles at a lower price than this offer, (2) also earning elite status just like with this special offer, (3) actually visiting a destination on the paid trip in addition to the destination you visit on the award trip. If I’m not willing to do mileage runs at 3 CPM — actually 6 cents per flown mile because of my 100% elite bonus — then I’m certainly not going to buy miles and get less for the same price. Maybe if they included lifetime qualifying miles in the same package…

I don’t see any reason to purchase the Wall & Main crowdfunding packages unless you really need a lot of United miles. If so, buy your miles today just so you don’t pass up on the bonus, but don’t buy it because of the bonus. In fact, United just announced its own promotion today (targeted by email) charging as little as 2.6 CPM for up to 100,000 miles.

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  • Mowsquared

    I can’t agree with you more.

  • Mike S.

    not a good deal at all – with rewards accelerator, you can buy miles for around 2cents/mile

  • Oliver

    “So what are you waiting for?” — Randy Petersen in the marketing video on the wallandmain dot com website. If Randy says it’s a great deal and these packages “are a must-buy for any savvy traveler” (also on the site), then who are you to dispute that, Scott? 😉

    Seriously, I am very disappointed (but not surprised) to see the involvement of Randy and Milepoint in this endeavor. It’s not an investment into a company, it’s not crowdfunding. It’s a mileage purchase.

    Hope they paid Randy and Milepoint enough to make up for the complete loss of respect they’ve “earned” in this deal.

    • Scottrick

      I think it’s a good idea. I just wish the economics had been better thought out. But I’m not sure it’s possible to buy the miles cheaply enough to attract investors and still have money leftover for their other projects.

      • Oliver

        Scott… if I am an investor in a company, I own a part of it. This is not an investment (despite what folks like Gary may write on their blogs: “Wall & Main is a new venture capital business that is crowdfunding itself, looking for initial investors that they’re going to reward with large numbers of miles.”).

        Those who buy miles here are not becoming co-owners of the company. This is a sale of miles and dubious other benefits for a fairly high price, nothing more.

        • Scottrick

          You’re right. I was better in the post about keeping that distinction clear, but I slipped in the comment.

  • disqust101

    You can buy United miles at 1.7c if you want to sell some gift cards via the link at United’s site. But why bother? You can churn a ton of miles for half that cost all day long.

    • slodki

      Can you elaborate a bit more on this?

  • Wandering Aramean

    They aren’t a venture capital firm at all. Far from it, actually.

    And, while the points are more expensive than some other options out there it also requires no work at all to buy them in a volume greater than those normally available. For the people who have that kind of money around to buy miles with in such quantity it isn’t a horrid proposition.

    Don’t get me wrong – I doubt anyone reading your blog or mine should be buying in to this. But it isn’t the worst deal I’ve ever seen; it is actually borderline reasonable if you look beyond only the miles and consider that some people might actually be interested in some of the other things associated with supporting the company.

    • Scottrick

      Then what are they? I have a hard time figuring it out. When I got the email before the announcement this morning, I poked around their website. They were short on details, which made me skeptical to begin with. The high price for miles reinforced that.

      There will always be “legitimate” ways to separate a fool from his money (Las Vegas, for example) but that doesn’t mean the customers aren’t fools.

      • Wandering Aramean

        They plan to be a crowd-funding gateway/broker similar to Kickstarter, but with a different focus and a different set of customers. I tried to explain it a bit more in my post this morning. They are trying to prove their view of the crowd-funding model by using themselves as the test case. I think that’s somewhat laudable. At the same time, however, there are many unanswered questions and the focus seems all wrong.

        Most crowd-funded companies are all about their business model and their goals; these guys are all about selling you on the reward, not their business. That’s a red flag to me. On the plus side, the miles part of the reward is issued instantly so even if they fail you get that.

        As for the value of the points, how long will it take you to accrue 1mm or even .5mm points through CC churning and Vanilla Reloads? Some people do put a price on the value of their time and just getting what they want. That doesn’t mean they’re idiots or that they aren’t savvy. It just means that they have their priorities set in such a way. The converse of that is also true; there are many savvy people out there who know how to beat the price and they have the time and inclination to do so.

        • Scottrick

          I tend to spend miles about as fast as I earn them. If anything, buying 1 million miles up front is a liability because I wouldn’t be able to redeem them all in case of a devaluation.

          • Wandering Aramean

            That’s fair. I wouldn’t buy that many either. But if you want 320k for a couple F seats to SE Asia and you need them pronto how would you get there. This is a viable option for that and it isn’t the worst price to get at it. Plus it is pretty much instant.

          • Scottrick

            I guess I wonder why United doesn’t drop the price to 2.5 cents and sell them itself.

    • Oliver

      “But it isn’t the worst deal I’ve ever seen”
      — Wandering Aramean

      That’s what they should have put as an endorsement on their website, not Randy’s ridiculous blurb.

  • Kris Ziel

    I have to disagree with your valuation of Premier Silver. Sure, basically all the benefits can be accomplished with the Explorer Card, but there is one that can’t – Economy Plus. I wouldn’t value 25-75K miles of E+ at .02-.007 cents per mile. Economy Plus alone is worth 3+ times as much as your valuation of Silver for someone who travels internationally just a twice a year, and at least $100 for anyone who travels once a year .

    • Scottrick

      I may have lowballed it, but I disagree that E+ access as a Silver member is worth a couple hundred dollars by itself. For example: If an E+ seat costs $50 at booking, and Silver members don’t get it until T-24, then the “free” access via status is worth more than $0, but not the full $50. On international flights in particular, I would not want to risk waiting until T-24 to check in and find that everyone else has already snagged the E+ seats for the 6-8 hour trip.