Many travel tech professionals have been envious of Jamie Wong, CEO of San Francisco startup Vayable.
They're jealous of her for having had the savvy, determination, and luck to launch a startup (Vayable) in a vertical that became heavily talked about (peer-to-peer tour guide marketplaces), that was accepted into the famed Y Combinator accelerator program (that's graduated AirBnB, Hipmunk, and GetGoing), and that has received $2.1 million in funding from prestigious sources, such as SV Angel, CrunchFund, and Youniversity Ventures.
Yet it's been a roller coaster time for the CEO. In July, Wong had to be hospitalized twice due to stress and a possible ulcer.
Cash flow has apparently become so tight that the six-person company will abandon its permanent office in a Victorian building in SOMA and go mobile, first to Europe. (The company did not divulge more details about how this will work. But the full staff will be on the road, says a spokesperson.)
CLARIFICATION 24 August: The company responds:
"The statement is completely inaccurate. Cash flow is not an issue and the business is making money. Vayable will operate as a pop-up headquarters. The first and foremost reason for doing this is to build rapport with Insiders and travelers in our key markets. "
I apologize for making an assumption about financials. Please see the end of this post for further clarifications on other points.
From pivot to twirl
Yet despite all the drama, the company may have finally hit on a consistently profitable formula for success. It may not lead to eBay-style growth, but it could become a sustainable business, say experts.
On Wednesday Vayable, unveiled its new website, which emphasizes its June pivot from being destination tours and activities marketplace to a custom tours and vacations search engine.
Essentially, it's switching from peer-to-peer marketplace to tour operator, the company says.
UPDATE 24 August: The company disputes this description, saying:
"Vayable did not say it was switching to tour operator. Vayable is not getting rid of the original marketplace. It saw an opportunity in its request-based services and has expanded its formal offerings to include them. The tour marketplace is still thriving and there are no plans of shutting it down."
The startup, which Tnooz profiled at its 2011 launch, is now connecting consumers with local travel experts who can act like agents. The so-called "insiders" charge fees to create tailored itineraries or else act as agents to handle the hassle of booking all parts of the trip.
The Vayable homepage lists the 10 most popular cities to travel to through Vayable: Amsterdam, Athens, Barcelona, Berlin, Dublin, Istanbul, Lisbon, Paris, Rome, and Vienna.
However, Vayable says it can book guided experiences in destinations all around the world and full trips in Europe, New York, and a few other select destinations at this time.
Surge in revenue
JJ Colao broke the story for Forbes, reporting, to date this summer, Vayable booked $1.7 million in these custom services, a huge jump from its earlier marketplace sales. The company confirmed those numbers to Tnooz.
New model, new UX
This is the new process:
Travelers use the site's search engine on its minimalist homepage to run a query on a destination, interests, and approximate travel departure.
Vayable asks the user to take a one-minute survey on their travel preferences ("What level of comfort do you need for your trip?").
The traveler receives an e-mail from the company within 12 hours, providing some additional information about possible local expert who can propose a custom itinerary that may include their own walking tour or activity.
If the traveler's cool with that, the "insider" will be in touch with an initial proposal within 48 hours, typically a suggested itinerary of about 300 words, presented on a Vayable webpage and based off of the answers the user provided in the questionnaire.
A traveler then pays a $45 "deposit", if they want to message directly with the operator for further details.
The "Insider" (a.k.a., the local concierge/guide) sets a custom rate to work with the traveler to perfect the itinerary, share exclusive information about their destination, and book any needed items such as accommodations, restaurants, and experiences for the traveler.
Rates are determined by the traveler and often depend on the level of complexity.
The traveler can ask the local expert to handle all of the logistics and prepare a single bill for one-click booking of an entire holiday, with Vayable taking a 3% cut, according to the company.
If a tourist hires the expert as a guide for services at the location, additional fees are charged, with Vayable taking a 15% commission.
Vayable also offers to book lodging for the customer. (But margins in know-where-you're-staying hotels is popular tourist destinations is only, at best, 10%, according to experts Tnooz spoke with.) Vayable's staff makes hotel bookings on its own using its preferred hotels and quoting the rate to the user either separately or as part of the total price of a custom itinerary.
For instance, a Vayable customer who searches for "Paris" will see in his or her search results the option to book with Anne Ditmeyer, a graphic designer and American expat, who offers, among other services a French design walking tour starting at $155 for up to 4 people for 3 hours. (See more, below.)
In a Tnooz test of the system, an anonymous request for options in Paris was responded to within two hours, offering a chance to get in touch with a guide directly to plan a custom package.
Workable model?
The traditional travel agent relied on commissions, from hotels, cruise ships, etc., to make the business viable. That begs a question about Vayable's new model: Will it be difficult to expose the cost of the concierge work as a line item on a bill, which Vayable essentially must do with its new model? Also, no two trips are the same, and it's difficult to anticipate both sides' expectations.
RIP, P2P tour marketplaces
Vayable's pivot comes after a string of changes in the peer-to-peer tour guide marketplace, with GetYourGuide trousering a hefty sum of capital and using it to buy iGottaGuide and Gidsy (both being closed immediately).
It's not clear how much traction there will be in the new models, either.
British tours and activities provider iExplore, whose motto is "been there, done that," has been there, done that, to the extent that it attempted to shift from marketplace to operator, via personality-based questionnaires for holidaygoers and matchmaking with local concierges, with limited upside to date. Its revenue numbers haven't since set the world on fire.
The service is somewhat comparable to boutique custom itinerary services, such as US-based Fortnighter (which Tnooz has profiled), which also hasn't become a Fortune 500 company.
Can this scale? Quality control with guides is one concern. Many locales require certification or licensing. Maintaining a consistent customer experience and being available to handle any possible fraud problems is another.
A busy four months
Not everyone has been thrilled about the pivot. Two commenters on Vayable's Facebook page complained, with one saying,
"It's a pity that you didn't kept the old low-profile booking for individuals who just want to meet a local guide and are capable of planning their own unique travelling."
Solid on-the-ground network
But the core, profit-generating local guide clients appear to be supportive of Vayable and the model in general. Says Ditmeyer, the guide in Paris:
As a general preface to your questions, I think what most people underestimate about the sharing economy is the amount of hustle and self-promotion that goes into any project.
This is not a bad thing, but it means that even good ideas can get lost in the wealth of information available to us, that the individual plays a greater role than ever before in spreading the word.
I started with Vayable in June 2012, so I've been giving tours for over a year now. My presence through my blog (Prêt à Voyager), Twitter (@pretavoyager) and Instagram, have helped a lot in creating myself as an authority on Paris and travel.
The way I've positioned myself has also helped me become one of the top guides. I probably average 6-10 tours a month. I've stopped counting, but I've given well over 50 tours since I started (and my tours are for 1-4 people).
I was initially drawn to Vayable because they were a start-up with a business model in mind for the user. For a freelancer + blogger type, this was perfect for me. I recently wrote this, which touches on many of these ideas.
The great thing about working with new start-ups is that you have the opportunity to work closely with the team. We've had a couple Vayable Paris meet-ups lately, so I did know there was some kind of update coming to the site but I wasn't sure exactly what was happening.
I actually saw the news of the re-design online before I received the e-mail from the company. As with any re-branding, I always worry that when people don't know it's coming, return users won't recognize the site and may be confused.
As far as I know the redesign involves the Vayable "Insider" in regular communication with the guest to help make it highly custom. (But I haven't gone through the process myself.)
However, that being said, the way I've "designed" my existing tour listings to be highly customizable.
Here is the Vayable page to my offerings.
CLARIFICATION:I originally wrote:
It was only in April that Vayable launched "Destinations", a kind of guidebook for cities that was generated by local experts and available to travelers. The page for that project now re-directs to the homepage.
The company disputes that description, saying:
Vayable's destinations page still exists--in fact, it's a growing feature. The old low profile pages are still available as well. If you search a destination (San Francisco, Chicago, Paris, Barcelona, etc.) without entering a departure date, you will be brought to a page with all of the destination information and more.
My response: When a user visits either the re-designed homepage or the re-designed vayable.com/destinations page, as of today, they are prompted to fill in both fields: ("Where are you thinking of going?" and "When will you leave?") It would be unusual for a user not to fill in the date and thus find the destinations page.
The company makes a related comment:
"The original P2P marketplace is still intact and can be found by users who are searching a destination with no departure date in mind."
Again, in this reporter's view, the user experience of the re-designed homepage, by default, pushes users to enter a date to run a query. The user is not told that, by withholding a date, he or she will find the old P2P marketplace. There is no link on the homepage to the P2P marketplace.
I ask users familiar with what the Destinations project was described as in April to use the new site and make up their own minds about whether its purpose has changed. That said, the destinations content does continue to exist, and it can be reached on the homepage by clicking links to city names and then on those pages clicking additional links, such as for "art & culture in Paris." The company says the content is being added to, and I failed to make that clear. I regret my mistake.
Separately, I was wrong to say "a spokesperson had no comment," and I apologize for that.
I do not think my original article said that P2P options had vanished, and I actually quoted examples of their availability on a Paris tour. In contrast, "When An Accidental Feature Becomes Your Entire Business: Vayable Turns To Custom Travel", Forbes worte that "The company unveiled a redesigned website focused entirely on custom tours and vacations." For some reason, the words "entire" and "entirely" don't bother the Vayable PR team in the Forbes article, but my "essentially ... a tour operator" and "coffin nail for peer-to-peer tour marketplaces" does bother it.
A last point: This reporter continues to wonder how the "pop-up headquarters" will work legally and practically, such as how the company will handle taxes, visa, and issues related to moving an operation from country to country, plus possible issues of staying in compliance with local rules about needing insurance when facilitating the sales of tours.
The company has always found ways to address such practical issues, though, and I am assuming it will figure them out. I would like to end repeating the positive note I had written in the original article:"The company may have finally hit on a consistently profitable formula for success. It may not lead to eBay-style growth, but it could become a sustainable business, say experts." For the company's employees, its immensely well regarded CEO, its customers, and its local Insiders, I'm hoping that's the case, and I'm optimistic that it is.