Qyer Founder Xiao Yi: Whoever Disrupts Us Won't Be Any of the Companies You'd Guess

From a BBS to a decent business, from the name of a website to shorthand for a way of life: what is Qyer weighing as it thinks about its present and its future?

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When we visited Qyer ("Qiongyou," literally "Poor Travel") at Langyuan Vintage on Beijing's East Third Ring Road, the lobby was packed with people who had come for job interviews. Last year Alibaba led a Series B round of more than US$10 million in the company, with Zhixin Capital following, and since then this 11-year-old online travel company has been expanding faster.

The "11 years," though, is a loose figure. Qyer only began to operate as a business around 2011, when it took a Series A from Zhixin Capital. Before that it was a forum that Xiao Yi, a Chinese IT student in Germany, ran in his spare time. In 2011 Cai Jinghui, who had successfully brought Lonely Planet to China, joined the team with others, and Qyer started to be run as a business.

Today it has 200 employees and more than 60 million users. It is not yet profitable.

Just last week the international online travel platform Expedia announced that it would sell its 62.4% stake in eLong to Trip.com Group. In a sense, this shows that foreign travel companies have failed to break into China's online travel market, where the competition is mostly an "internal struggle" among domestic players. According to the 2014 China Tourism Investment Report, released by the China National Tourism Administration in May, actual investment in the country's tourism industry in 2014 reached 705.3 billion yuan, up 32% year on year, and financing for online travel reached 30 billion yuan, six times the 2013 figure. The market's potential, and the easy money in it, are quickly coming into view.

Starting as a business in 2011 put Qyer on the first train, but it has not moved fast. Tuniu, which closed its Series A in 2009, went public this year. Mafengwo, which closed its Series A the same year as Qyer, completed a Series C worth tens of millions of US dollars in March.

Qyer does not seem anxious about where it stands. You can see this in its products: it spent two years conceiving "Trip Assistant," which it launched last year, and before the launch it put a great deal of staff time into structuring the forum's content. Yet even though the product went live last year, the company's official line is still that it is "not ready; we're not very happy with the app; we're still improving it."

Qyer has brought in partners including Uber and Booking.com, and it was the first company in Asia to which Uber opened its API directly. Looking at how consumers actually behave, the company believes the benefits of these partnerships will ultimately flow to its own platform.

"Say I'm in the old town of Florence, I see a place that looks good, and I call an Uber from inside Qyer. You could say I already have an Uber account that works worldwide, but it's better to do it inside Qyer, because you don't actually know what the place you want to go to is called," said COO Cai Jinghui.

At Qyer, the key performance indicator (KPI) is the share of die-hard fans. "Maybe only 100 people use a product, but if 30% of them go on to promote it and spread the word on their own, that's a very strong product, and it gets a high rating here," Xiao Yi said. Nearly every employee and every project team has a KPI of this kind, measured on three dimensions: community activity, unprompted promotion, and feedback. "Only people who care about you will criticize you."

Having started as a forum, Qyer comes with built-in personal networks and personal loyalties. Both Xiao Yi and Cai Jinghui stressed to me again and again how much "people" matter at Qyer, from employees to users. The mark left by its long years as a BBS is plain to see. Even if you don't know where you're headed, it always helps to have your users with you.

As a commercial company, Qyer does the usual things. It raises money and wants to grow. Taking Alibaba's money in its Series B also fits the broader trend of private capital becoming the main source of tourism investment. Its founder sees users as the company's greatest asset and believes every problem comes down to user experience. As for competitors, as you will see in our conversations with Xiao Yi and Cai Jinghui, they are not a key question.

Cai Jinghui, COO of Qyer

Last year you launched four new products: Trip Assistant, the Uber partnership, Guides (Jinnang), and "People Nearby." People Nearby is based on location services (LBS), and some people say that technology is already outdated. What do you think?

Cai Jinghui: Location services will never be outdated. You will always need geographic information and need to know what is around you. "People Nearby" covers a different situation. Every traveler knows this: when you arrive somewhere, however well you've prepared, there is always 5% of the information you can't find. So you have to ask. On mobile, the problems you run into on the ground can be answered either by people who live there or by other travelers who are there at the same time, and their information is more current. What you want to know, they have just found out. Everyone can share and help each other.

Yesterday I read your job posting. It says that besides an annual company meeting held overseas, staff get extra-long annual leave?

Cai Jinghui: Since we are a travel company, we want our employees to truly understand travel and understand users on the road: the difficulties they may run into and the help they need. That is where our value lies, and that is why we give travel leave. In fact it makes no economic sense. Just when you need people, they're all gone, and being the boss is sometimes painful. But I see it as part of running the company and a price I am willing to pay. Letting people see what they are actually building does more good than having them bury their heads at their computers.

I set up this travel leave as soon as I joined the company in 2011. Our employees come back from it having used our products the whole way, such as Guides, discounts, and Trip Assistant, and once they're back they complain. Say everyone used the Guides and found the experience bad, saw what went wrong; they come back, shut themselves in a room and start complaining: "this part is bad, that part is bad." That feedback is very real. You know exactly where you fell short, and some of it you built yourself. I was the developer on Trip Assistant. I wrote the code, and when I finished I thought it was pretty good, but only on the road do you find out what the thing you built really means.

When you joined Qyer in 2011, was the team debating whether to change the name?

Cai Jinghui: We discussed it seriously at the time. I used to work at LP (Lonely Planet). Back then I discussed renaming with Xiao Yi, Qyer's founder. We both wanted to grow big, but the word "poor" in the name put people off, and that was a very real problem. A simple example: in 2009 a PR person from an airline ticketing agency approached us. Qyer had many users overseas and many outbound travelers, and the agency was promoting an overseas route and felt our users matched their target customers, so they wanted to discuss a partnership. At the time we had no clear policy on whether to take advertising. We started talking with them, but as soon as they read our company profile they said a company as upmarket as theirs would not work with a company that had "poor" in its name. They turned us down.

When an argument goes nowhere, you go back to the starting point: why did you start Qyer in the first place? That starting point is our users. So I said, let's stop arguing and ask our users. We didn't do a formal survey. We just went to Qyer's core members and asked them what the name "Qyer" meant to them. The long-time users who had been on Qyer since 2004 were no longer poor by 2011. The students abroad of 2004 had come back to China by 2011, had achieved things, and had a good standard of living, but they still liked the name "Qyer." They liked the sense of freedom on the road that Qyer had given them back then.

Before 2008, 80% of Qyer's users were overseas; now it's 20%. How many users do you have now?

Cai Jinghui: Almost 60 million.

Have you looked into who they are?

Cai Jinghui: We did a survey, and it showed that the core group is between 25 and 40 years old. If you want to describe one person, do market segmentation, and draw a portrait that stands for the target group, this person is a 30-year-old woman living in Shanghai, earning around 20,000 yuan a month, who has either studied abroad or works at an international company, and has at least a bachelor's degree. That is the typical user.

That's today's user. What about when the site was founded in 2004?

Cai Jinghui: The user back then was a Chinese student in Europe, without much money but with a lot of time to travel. Time, freedom, no money, and a wish to travel well.

Travel is something people do rarely, especially overseas travel. How do you keep users coming back?

Cai Jinghui: In several ways. First, we have to admit that people travel rarely. On average our users come to Qyer to consume practical information or products about twice a year. But outbound travel has one advantage: the cycle is longer. One or two months before a trip, people gather information, write up guides, plan and book; they can use us on the road, and they share when they get back. That gives us close contact for nearly three months, and over a year, one long trip and one short one add up to about four months. So the frequency may be a bit higher, and users don't just come once and leave, as they would if we were a pure booking site where people book and go. Second, Qyer has never seen itself as just a travel-services site. It has become a lifestyle community, a place where people with shared values gather. So we do a lot of work that is "not our proper business," and it raises how often we are in touch with our users.

I noticed that many well-known people got their start on Qyer.

Cai Jinghui: Zhang Qianli Zuoshou, Xiexie Caicai, Mao Li, and others.

There have been fewer of them this past year.

Cai Jinghui: That is a very good sign. It shows that more people are taking part in travel.

Xiao Yi, Founder and CEO

What role do you want Qyer to play in online travel, whether before the trip, during it, or after it, and how much say do you want it to have?

Xiao Yi: I haven't thought that far. Really. Maybe I'm not yet capable of thinking these things through.

Then what do you think about most right now?

Xiao Yi: There are really just two things I think about most. First, whether I can find the right people, people who share our culture and like our products. Second, how satisfied users are with our products. Those two things are all I can do. Everything else is beyond me.

How do you see the differences and the competition between Qyer and Mafengwo?

Xiao Yi: To be honest, I'd rather not talk about competitors. Because the first question is whether they are your competitor at all.

Who do you think your competitors are?

Xiao Yi: I don't know. Very likely it isn't any of the few you have in mind now. In fact, I'm sure it isn't. And this isn't just about Qyer. Look at the lists of competitors kept by executives at Mafengwo, Trip.com Group, and Qunar: if those companies are disrupted in the future, the company that disrupts them will not be on the list. I'm willing to make that prediction.

Is the reason you don't think much about competitors that, so far, no disruptive way of thinking has appeared?

Xiao Yi: I think, or you could treat everyone as a competitor, including someone you might look down on right now. You have to survive and stay standing in that harsher environment.

So what effect do competitors have on you?

Xiao Yi: Seeing others do well gives you drive. So whether you have competitors or not depends on how you look at it. Some companies spend all day watching their competitors, or the companies they think are their competitors, but these days there are too many examples of attacks from outside the industry. When Nokia treated Motorola as its competitor, it never imagined Apple would make phones. Apple wasn't on its list at all. Ten years ago that kind of thing might rarely have happened, but in recent years it has happened more and more.

Back to the usual question: how do you make money?

Xiao Yi: Qyer's model is very advanced, and our commercial business is very large in scale. I can't disclose the numbers, but the scale is very large.

What is your main source of revenue now? Advertising?

Xiao Yi: Commissions. I don't even consider advertising a business model. Different products carry different commission rates, and some simply pay fairly high commissions. Our conversion rate averages about 10%, three to five times the industry level.

How do you get such a high conversion rate?

Xiao Yi: Advertising is a short-term move. The very act of buying ads shows the advertiser is thinking short term, hoping to push the numbers up quickly, and you have to keep putting money in. Experience has shown that this is very unwise. In fact, behind everything I do there is a rigorous business logic. Qyer doesn't spend all day watching sales figures the way other companies do, because I believe that if you get those first two things right, the rest follows. If users love a product, think how much you save on marketing. And a user's value lasts a lifetime: you acquire them once and benefit for life. With advertising, one acquisition brings one return.

Some advertisers refused to advertise because of Qyer's name. If advertising has no value to you, why did this cause so much trouble?

Xiao Yi: It didn't. It didn't cause us much trouble. We never treated advertising as a business model in the first place. Advertising is always awkward, isn't it? You have to look after the advertiser's interests and also look after the user experience. We always want a positive model, where one good thing drives another, rather than two sides compromising to find a balance. As for the Qyer brand, we've worked on it for quite a few years. First of all, "Qiongyou" wasn't originally a word; without the Qyer website, the word might not exist. It used to refer to a website, and now it stands for a way of life, cool and with real character. Many of the companies that have tried to advertise on Qyer accept this, and so do our partners and our users. Do you think our users are poor? Not at all. Yet they might buy something printed with the Qyer logo. That is hard, not easy, a real challenge. In the very beginning it was a rather "diaosi" (loser) thing, right? But to pull off a brand revolution is extremely hard, extremely, extremely hard.

Is Qyer making money now?

Xiao Yi: We're losing money.

When do you hope Qyer will make money?

Xiao Yi: At the current pace it will be profitable soon. It's not that I hope so; at the current pace, profit is not far off.

Is there a time frame?

Xiao Yi: About two years.

What have you learned about how users behave when they travel? Is there anything they care about in particular?

Xiao Yi: First, the users are changing, from the "diaosi" users of the early days to a fairly mainstream middle class now. At first our users were students abroad, a fairly marginal group. Now we serve outbound travel, which draws on the better-educated, more cultivated part of the population, and Qyer has to keep up with that change. You can see from how Qyer has changed over the past few years that every step we take is about keeping up. Sometimes you aren't beaten by your rivals; you're beaten by the times.

Are students abroad and the middle class very different groups?

Xiao Yi: Very different, but they also have things in common. First, both are well-educated, cultivated groups, and people move from one to the other: a student abroad ten years ago may well be part of China's middle class today. They all like to travel freely, and they don't like being herded around or steered into shopping. And they are all Chinese, with the same cultural background and similar tastes in food. Those are the things they share.

Will Qyer take part in more stages of the trip in the future?

Xiao Yi: To be honest, I don't have a clear answer right now. I don't know what Qyer will become. I don't know. But I do have one basic principle: whatever Qyer does, it has to come from inner drive and passion, it has to be done with a humbler attitude, and it has to look far ahead rather than chase short-term gains.

Xuan Hailun and Liu Ximing also contributed to this article.

QDaily will keep following a certain kind of company: ones that have survived for a while and earned a good reputation among users and a voice in their industries, but cannot yet be called big companies. These companies keep their startup spirit but have begun to reach real scale. We will look at what they plan to do next and what they are thinking about now.

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