Ep 44: Discover Live - How Accessibility & Connection Power Value Creation at This Virtual Travel Company

Welcome!  Upside/Downside is a podcast about value creation, and how business leaders like you can grow your profits and cash flow.  I'm your host, Matt Cooley.  

In this episode, Jay Wei, CEO and Founder of Discover Live, takes us on a value creation journey through the power of creating connections and accessibility for the 94% of the world's population that can't physically travel.

Jay shares the importance of understanding what you're really selling and how to use key metrics to drive value creation.  With a NPS score of 88% and a ton of customer stories, including memories of a first kiss, a 5.8 earthquake and climbing the Great Wall in the pitch black of night, we explore the building blocks to stronger profits and cash flow.  We learn why exceptional guides are like great chefs, and how they are fundamental to value creation.  And we get into unit economics and the power of partnerships.

This episode feels like an inspirational college course in a friendly 27-minute package.  Find a comfortable seat and join us!

Thank you for listening and please visit Upside/Downside podcast and enter your email for my FREE list: "10 places to look for higher profits and cash flow right now!".

Matt

Transcript

SPEAKER_01: 0:02

Welcome back, everyone. This is Matt Cooley, host of Upside Downside, where we explore value creation and how the actions we take in business drive profits and cash flow and affect everyday people. What if you could escape at the click of a button to an exotic destination on the other side of the planet with a passionate local guide and a group of like-minded adventurers to experience the sounds and sights without the lines at a Newark airport, the hot weather, or even the carbon footprint of flying on airplanes? Joining me today is Jay Way, CEO and founder of Discover Live, a virtual travel company that takes its customers on live tours to over 200 destinations around the world with local expert guides. Discover Live offers group and private tours, and they also have a partnership with Ancestry offering private family tours where they customize the tour around your family's heritage and that destination. It sounds so cool. It's all very fascinating. Full disclosure, I met Jay through a family business called My in my age tech lab where Discover Live is a supplier, but we're here today to talk about value creation at Discover Live. Welcome, Jay.

SPEAKER_00: 1:10

Thank you so much for having me,

SPEAKER_01: 1:12

Matt. Oh, pleasure is mine. Thanks for making the time.

SPEAKER_00: 1:15

Yeah, no worries. I actually liked that introduction. You captured exactly what we're about. You mentioned the idea of escaping at the click of a button, you know, really resonates with our mission. And, you know, that partnership with Ancestry has been incredible. There's simply nothing quite like why Oh, I can't imagine that. That's so

SPEAKER_01: 1:38

cool. So let's get into the details, my friend. What is virtual travel and how did you get involved in this industry?

SPEAKER_00: 1:49

Yeah, those great questions. Virtual travel is live interactive exploration where you join a real tour guide in real time as they walk through the different destinations around the world. So think of, you know, if you're watching a travel documentary, so basically it's a one-way delivery of the experience. What we do is actually allow you to interact and ask questions and have conversations with the tour or guide in front of your TV or computer, except, you know, from your living room. So that's kind of like what virtual travel

SPEAKER_01: 2:28

is. Oh, that's great. And how long has it been around?

SPEAKER_00: 2:31

We've been going around for, we're heading into our ninth year now.

SPEAKER_01: 2:35

Oh, that's great. Okay, excellent. I have limited experience, you know, with Discover Live and one of your competitors, but it's just, it's a wonderful value prop. So what's the basic business model for Discover Live? and why do customers show up? What are their value drivers?

SPEAKER_00: 2:55

So the business model centered around, I think, three main revenue streams. First of all, we have shared group tours. So think of them as our public transportation of virtual travel experiences. So where a group of people join a guide for travel experience, just like you're getting on a tour bus in a physical tour. Secondly, we have private tours for families, friends, or corporate teams, mainly for special occasions. For example, the birthday celebration, anniversary celebration, team building events or year-end holiday celebration you know we're heading into the fourth quarter where we have a lot of corporate events uh because we offer many holiday market tours starting in uh early november so that's the second form of business stream um and then the third obviously we have partnerships programs just like the one that we have with ancestry where we jointly develop an entire new line of heritage travel experiences

SPEAKER_01: 3:55

Oh, that's excellent. So that's really breaking, spreading your opportunity pretty wide. And to customers, is that why they show up? Because they want either a group, a private or partnership type experience. What causes them to say, hey, I want to subscribe to Discover Live?

SPEAKER_00: 4:16

Yeah, that's a great, great question. You know, I mentioned about the three ways of our revenue streams. But, you know, I didn't really answer a question about your value drivers. Because what's really fascinating about our value drivers, they're not, you know, what you would normally expect in a typical travel industry. Our customers, they're not buying a destination. They're buying accessibility, personalization, and connection. So just let me, yeah, so let me just say, because it took us a while to actually figure that out. So let me just explain to you a bit more. Yeah, please. So the accessibility piece is actually really huge. You know, we have made the travel possible for people who physically can't travel, right? Who don't want to deal with the airports that I could just like what you mentioned about, or can't afford international trips. And one customer, you know, who went to Prague, I believe recently, told me that she finally got to visit the city where her son was studying. She was never able to make that in-person trip herself. So the accessibility piece is huge for us. And then the personalization is where I think we really shine because our guides adjust the experience in real time based on what the customers want to see. So if you're traveling in Ireland and someone asks about a local cuisine, don't be surprised all of a sudden we're in a bakery talking to the owner about how the different types of scones are being made. Because all of our tours are happening in real time. And because of that, there are a lot of flexibility and personalization that we can actually incorporate into tours. Now, the connection piece of our virtual travel actually surprised me the most. We had a four-generation family on one tour. The grandparents, the parents, their adult children, and grandchildren. So during the tour in Rome, the grandson actually mentioned that he had been to that exact spot for a wedding. And the three generations learned something new about their family history in that moment. And that's the value that you simply can't put a price on.

SPEAKER_01: 6:37

Oh, and are you saying that was a complete surprise? Not even a surprise,

SPEAKER_00: 6:42

but that's something that during the tour, during the conversation, virtually visiting that physical place to start a conversation and bring up a lot memories that the rest of our families simply didn't

SPEAKER_01: 6:57

know. Oh, that's so cool. Wow. Really good for pulling families together too, when they learn stuff like that. Yeah. So those are

SPEAKER_00: 7:04

the three, you know, I think the value driver, why you ask the question, why are people using our service, right? So those are the things that people are trying to get.

SPEAKER_01: 7:12

Okay. Excellent. So as CEO of Discover Live, you've got to navigate a lot. And I'm curious from, you know, for example, how do you navigate value creation, uh, particularly when it comes, uh, to, to, to those value drivers. So for example, I was just thinking, you know, do, are you going to add more destinations? Are you going to increase the quality on the destinations you already have? What, not that that's the, an ideal example, Jay, but, um, you know, how do you, how do you wrestle with how to create value like profits and cashflow over time, um, with something, something like that? Uh, Do you go for the volume, the quality, or the optimal mix, which is probably what you're going to say? How do you wrestle with those business decisions from a value creation perspective?

SPEAKER_00: 8:05

Yeah, that's actually a perfect question that you asked, Matt. This is actually probably our biggest strategic challenge, and it's a great example of a classic quality versus scale decision every business faces, right? So on one side, we could rapidly expand to like 500 to 1,000 destinations and focus purely on volume because we know the demand is certain there. The virtual tourism market is, I think, depending on different types of reports that you see, it's supposed to be reaching$111 billion worldwide by 2033.$111

SPEAKER_01: 8:41

billion?

SPEAKER_00: 8:42

Billion dollars worldwide, 2033. Wow. But here's the thing. Not every guide can create this magical moment that people are looking for. So over the past years, we have learned that exceptional guides are just like great chefs. They can be easily replicated. So instead of growing destinations horizontally, keep expanding, we're going deeper vertically. So we're currently working with over 200 different guides in different destinations, but we spend a significant amount of time training them on engagement, storytelling, and reading virtual audiences, which is a totally new skill set compared to just regular tour guiding. So from a cash flow perspective, this creates some very interesting dynamics. The high-quality guides, usually they command premium pricing, but they also drive higher customer retention and word-of-mouth growth, which is the two main areas, the streams of us that get our customers. So our customer satisfaction score, the CSAT, is 98%. And our net promoting score is like how likely people will be talking to others to use our service is 88, which is, you know, in the experience delivery business, like what we're in, is simply phenomenal.

SPEAKER_01: 10:10

Oh, NPS of 88% is huge.

SPEAKER_00: 10:12

NPS is 88, right? So this push and pull really shows up in our decision making, right? Almost like on daily, monthly basis. So when we get some requests from customers or prospects of the new destinations, we always ask ourselves, can we deliver an experience that meets our quality bar? If the answer is no, we pass. Even if it means like saying no to revenue. We'd rather have fewer destinations that create lifelong memories than many that are just okay, right? So.

SPEAKER_01: 10:45

Totally makes sense. So with the exceptional guides, really, it sounds like they're the linchpin to a large degree to your success. Are you, I'm just curious, I'm thinking of the AI talent in Silicon Valley. You're not going to get into any crazy bidding wars, are you?

SPEAKER_00: 11:04

No, actually, you know, we, so there are different AI things that we're doing. Like, you know, so on one side, we have, you know, been investing, having our AI companion, Adora, to help personalize the experience at scale while maintaining the quality because the cost is big and we have customers and you know sometimes get onto the tours and we have hundreds of customers how do we make sure that each one of the customers still get the quality that they need so ai plays a huge role in here so it's our way to scale the human connection aspect without losing the personal touch on the other side you know considering from the training of the tour guide standpoint there is a lot of opportunities for us to use ai to actually speed up the training process so ai is a big a big thing in our corporate strategy for the future growth as well.

SPEAKER_01: 11:59

Oh, very interesting. Okay. I'm curious, what do business leaders or owners of virtual experience companies like yours need to be thinking about while they're building their businesses? Let's say that somebody's just starting out, not necessarily in travel, but some kind of virtual experience business. What should they be thinking about?

SPEAKER_00: 12:21

Sure. I'll answer a question in a little bit different way. I have to say, I wish... You know, over the past eight years, I wish three critical things that somebody had told me at the beginning. And I had to learn to overuse myself, sometimes in a hard way. So first of all, technology is your enabler, not your differentiator. Okay? Everyone thinks virtual experiences are about having the coolest VR headsets or the fanciest streamers. platform. Our company actually, the first year we started, we started in the VR field. That was totally wrong. Interesting.

SPEAKER_01: 13:11

Your tours now are on Zoom, right?

SPEAKER_00: 13:13

Well, tour is on Zoom. Okay. So let me just explain to you why, because it's all about the human connections facilitated by technology, right? So what we learned was at that time, right? So we had a VR platform, but I learned at that time, I was a spending more time teaching customers how to use or troubleshooting a VR goggle than actually delivering the experience. That's

SPEAKER_01: 13:41

super interesting.

SPEAKER_00: 13:42

Right? And then it's also against our mission because our mission is to make this world exploration experience as accessible to as many people as possible. The technology was so complicated to use. It's so expensive to use. So there's a variety of different reasons at that time. So obviously, the technology is getting better and better over the years, and it's still going to be introduced back into our platform at a certain time. It's still not... quite ready yet. But the lesson was when to make the technology invisible. You know, there's so many different technologies. When people don't feel using the technology is a barrier, they still can enjoy the experience. And that's what we want to accomplish.

SPEAKER_01: 14:28

That's a huge lesson. I hope folks are listening because that sounds like a pivotal lesson. It's an enabler, not a differentiator. I love it.

SPEAKER_00: 14:37

Thank you.

SPEAKER_01: 14:38

I

SPEAKER_00: 14:39

may not I think the second thing I learned is really understand your competition. When we first started, we always thought that we're in a travel industry. You know, that's what we tell everybody. We're in a travel industry. But that actually kind of like a blindsided us in terms of trying to figure out who our real competitors are. We're really not competing with Expedia or traditional travel companies. We're actually competing with Netflix or Apple TV, with anything else that people do for entertainment or a connection during their free time. So the realization of that completely changed how we, you know, think about the experience, design, pricing, and marketing, right? So that is like another big lesson that I learned, really figuring out who we are, because that drives everything, drives our message, drives our positioning, drives our activities and our efforts in terms of who is our competitor and what they do and how how do we compete with them, right?

SPEAKER_01: 15:51

I'm curious, Jay, how long is your average tour? It's 60 minutes. Okay. So an hour. An hour. Yeah. Yeah. So, okay. So that totally makes sense. So you're absolutely competing with the Netflix and Apple TVs of the world. Okay.

SPEAKER_00: 16:06

And especially those short movies are getting more and more popular nowadays as well, right?

SPEAKER_01: 16:10

Wow. Okay.

SPEAKER_00: 16:12

And then the third thing that I learned was, you know, talking about the financial part of it is that the unit economics are deceptively complex. So here's what I mean. We're in the entertainment entertainment business with travel margins or sometimes with the margins that, you know, all the activity directors for senior living. Something

SPEAKER_01: 16:36

tells

SPEAKER_00: 16:37

me that means low. That means low. So really, all we need to think about is more like a Disney than like a Airbnb, right? So Airbnb is a platform, right? They connect the supply and the demand. They take a cut and a scale by adding more inventory. And their costs don't really increase per transaction. But But Disney, on the other hand, is in the experience business, which is where we fit. So every guest expects magic, personalization, and memorable moments. So Disney invests, if you look at what they're investing, they invest heavily in cast member training, experience design, and quality control. They can't just add more rights without ensuring that each one of them meets their quality standards. So we're like Disney in that case. We can't just add more destinations without ensuring each guide can get over that magical moment, right? That's what we're aiming for. So we invest heavily on the guide training, the experience curation, and the quality assurance. And our cost, including ongoing, you know, all those relationships with the guides, because we have to maintain those, we have to continuously improve those experience. Our cost covers the customer success and our cost covers, you know, the new and innovation, like all those technology investing. So at the end of the day, we're creating memories, not just facilitating transactions. And the cash flow implication is that we need higher margins for experience because, you know, you can't always scale linearly like a pure platform business, right? And we actually saw quite a few competitors, including some of the better-known, well-known Fortune 20 companies, came into this space and laughed and felt miserable because They couldn't figure out what's important in this experience field.

SPEAKER_01: 18:32

Wow. So you're saying they didn't know your Disney secret?

SPEAKER_00: 18:35

Well, I figured they rushed in as almost like a, you know, like a go digging rush. And then they couldn't figure it out. And they expand too quickly without taking care of the basics. And they also didn't have the patience to actually getting the battery. So they just left.

SPEAKER_01: 18:55

Very interesting. Okay. All right. So that totally makes sense, and it's fascinating. So are there a lot of entrants coming into this space now, maybe smaller startups like you guys were at the beginning? Or do you think the big corporates are going to come back at some point if they do figure it out?

UNKNOWN: 19:18

Yeah.

SPEAKER_00: 19:18

Um, you know, I, so every year there are new competitors getting into the space. Um, and then, you know, they, they leave or they stay, you know, continue to go on just like us. Um, I think because the virtual tourism is a, um, an industry that is exploding. Um, so at some point that I would, I would assume that some of those big players is going to be getting, getting, getting back here. And then we look at this one and say, Hey, you know, how, what do we do wrong and how can we do this better and doesn't necessarily mean that they have to like invest from the beginning and redo everything started and they could be just buying off other companies you know just like Meta just did with the scale AI for

SPEAKER_01: 20:03

example right yeah exactly you know with the aging of the human population across the world you know plus inflation like those two things should totally be in your favor to drive users right

SPEAKER_00: 20:17

yeah and if they can and all those different kinds of things.

SPEAKER_01: 20:21

Fascinating. Very cool. I'm curious if there are any crazy travel stories. You shared a few, but is there anything else that sticks out that you would have never expected in the virtual world, but something

SPEAKER_00: 20:35

you could share? Yeah, crazy stories. There are so many, as a matter of fact. I remember last year, in the last year or two years ago, a magnitude of 5.8 earthquake happened in during one of our tours in Mexico City. So after we made sure our tour guides, you know, were safe, our audience actually got a very unexpected lesson from our tour guide on how to calmly deal with an earthquake situation, which, you know, it's like, it's almost like everybody living in Mexico City got trained and got educated on that. So that was really fascinating. Oh my gosh. Yeah. But we have like, you know, climbed up the Great Wall in pitch dark to see the sunrise. We have been glider flying over the 3,400-year-old lobster temple in Egypt. And we have also had our tour guide in Jerusalem put a prayer note inside the Western Wall to wish speed, you know, a recovery of a cancer patient. But here's the thing. The one that really, really still gives me chills. We had this woman whose aunt had owned a travel agency before and was really, really passionate about travel her whole life. But due to the health concerns, she ended up in a, you know, assisted living community and couldn't travel any longer. So her niece booked a surprise virtual tour to Florence for her. During this tour, the guide took us to this restaurant, literally right next to Dumont. And the purpose of, you know, going to this, went to this restaurant was just that he was trying to show us the menu on this restaurant so that we can learn a little bit more about, you know, what's on the menu and the things like that. that um but then we noticed that and to start the crying turns out That was the exact spot where she and her late husband had their very first kiss 60 years earlier. Wow.

SPEAKER_01: 22:34

All

SPEAKER_00: 22:34

completely a surprise. It was completely a surprise. It was just like a normal tour. Nobody on our side knew anything about it. It was just pure coincidence. But that's when you realize that you're not just in a travel business. You're democratizing the access to world exploration, right? And creating these connections that would otherwise just be impossible. possible.

SPEAKER_01: 22:57

Wow. Yeah. I love the word connections and how it applies here and just how sticky it makes Discover Live as a business. I think that's so, wow, that's a great story. Yeah. Thank you. Wow. So I'm curious as we wrap it up here, where do you see Discover Live, let's say three years from now? There's a lot going on in the industry, in your company, and I encourage everybody to go check you out right away. The value for what you get is amazing. I have a attended a few tours myself. But where do you see the business in three years for Discover Live and your value creation journey, Jay?

SPEAKER_00: 23:34

Yeah. Three years in an entrepreneurial world, it goes very, very fast. And so about three years from today, I see us having significant expansion to the world population who have never had an opportunity to enjoy the world exploration before So here's the stats. And I mentioned about, you know, really what drives us, drives everything that we do, right? So only 6% of the world population get to enjoy the international travel. And that's a massive void. That's it. Real. Yet 6%. However big of a current tourism industry, people talking about the billions or trillions of dollars, it only serves the 6% of the

SPEAKER_01: 24:21

population. Wow. Shocking. Shocking.

SPEAKER_00: 24:23

So our mission is to make this world exploration experience accessible to all. And I see us serving many more people who fall into that 94%, right? Whether they're older adults who can no longer travel physically, their families who can't afford international trips, or people with disabilities, or anyone who is curious about the world but faces barriers to traditional travel. So the Ancestry partnership really, I would say, like it exemplifies this mission. We're not just offering tours, so we're giving people access to their family heritage in ways that they were never possible before, right? So imagine like a family in Ohio where the grandmother is, you know, 83 years old and can't travel, but her DNA results show Irish roots. Through our ancestry discovery tours, three generations can explore County Cork together now. The grandmother from her assisted living facility, the parents from their living rooms, and the grandkids from their college dorms. So that's not replacing physical travel, we will never be able to replace the physical travel. But we're creating access where none existed before. So many of our customers tell us that these virtual experiences are the only way they will ever visit their ancestral homelands.

SPEAKER_01: 25:42

Oh, gosh. That's wild, right? I mean, you could see how it's a new, it's expanding travel. It really is. Even if it's virtual, you can never go on that three-generation trip, you know, if somebody's unable to travel and they're in assisted living. So you're actually expanding the segment. And I love how you say that you're basically going after the 94%, right? It's a big market.

SPEAKER_00: 26:10

Yes. I mean, if you think about it, what we're doing is we're addressing one of the world's biggest inequities. Hmm. That's what that is. The 6% is usually reserved for the privileged ones. Sure.

SPEAKER_01: 26:24

Absolutely.

SPEAKER_00: 26:26

So we're not trying to replace the magic of travel for those who can do it. We're trying to create that magic for the 94% who can't.

SPEAKER_01: 26:33

Wow. That's pretty neat. Yeah. Jay, you've got a lot to accomplish in the next three years, my friend. It sounds like fun. And quite honestly, from a creation standpoint, I'd love to check in with you maybe next year and see how things are going and which levers you've decided to pull and push and see

SPEAKER_00: 26:56

what's going on. Yeah, no, thank you. Thank you. And thank you for really having me on Upside Downside. And this conversation really has been a very great reminder of why we do what we do.

SPEAKER_01: 27:08

So I really appreciate it. of this opportunity. Oh, pleasure's mine. So thanks for being with us today and sharing those insights. And thank you to the listeners of Upside Downside. Please check us out on upsidedownsidepodcast.com, where in return for your email address, you'll receive my latest list of 10 places to look for higher profits and cashflow right now. All right, Jay, have a great day. See everybody next time. Thank you, Matt.