Matt DuPlessie: Building a Business Out of Play

CHARLIE MELCHER:

Hi, I’m Charlie Melcher, founder of the Future of StoryTelling. Welcome to the FoST podcast. My guest today is Matt DuPlessie, a pioneer in location-based entertainment. Long before escape rooms became a global phenomenon, Matt was creating them. Back in 2004, he launched 5 Wits, which evolved out of a business plan he developed at Harvard Business School. Since then, he spent 17 years leading an award-winning design firm called Boxfort, and in 2021, founded Level99. Level99 has emerged as the market leader in challenge room entertainment, a new form of competitive socializing with great food and beverage offerings. Even as a brand new concept, it took off fast. At its first location in Natick, Massachusetts, Level99 hit 200% of its stretch revenue goal. Now, just five years later, the company has expanded to two more locations and is getting ready to open a third at Disney Springs this year. Level99 recently secured a $50 million follow-on growth equity commitment from Act III Holdings, which is helping to fuel its growth into a nationally dominant entertainment brand. It currently has active negotiations happening in over 15 states where it’s planning to expand into top urban and suburban markets with 30 to 45,000 square foot venues that offer close proximity to its core 21 to 39-year-old adult demo. Today, we talk about the strategy behind their success from designing for repeatability and high throughput to tapping into people’s desire for real world connection. Please join me in welcoming Matt DuPlessie.

 

Matt, welcome to the Future of StoryTelling Podcast. So excited to have you here.

MATT DUPLESSIE:

Excited to be here. Thanks, Charlie.

CHARLIE MELCHER:

I’d like to start this conversation by asking you to tell our listener what Level99 is. If they’d never been, could you give us a kind of quick description of it?

MATT DUPLESSIE:

Oh, boy. You put me on the spot right from the beginning.

CHARLIE MELCHER:

You made it.

MATT DUPLESSIE:

I know. I know. Five years we’ve been open, and this is a struggle. Anytime you’re kind of building a new category and people don’t have the reference, boy, you have to define things. Level99 is a sprawling playground for adults with over 50 life size mini games and challenges. Some of them are very physical, like a Ninja Warrior obstacle course type game. Some are very mental, like the best puzzles from an escape room. Others are skill or communication oriented. Each one is set in a themed environment like a room setting that could range wildly from being in an Aztec temple to a hall of abstract art to an infinity mirror room. Guests play these challenges in small teams, two to six people, and the challenges are very short, typically one to four minutes long. It’s an open world exploration. You can choose to do the same room over and over again and get good at it as you try to earn one star, two star, three star outcome in that room, or you can walk across the hallway and be presented with a radically different challenge as you explore the venue. The games are the tallest leg of the stool. And then, yes, an amazing food and beverage program with local partners, big craft beer and craft cocktail element in the venues. So food and beverage is the second leg on the pillar. The third is events where we’re particularly filling the weekdays with team building events, corporate events. And the last leg of the revenue stool is merchandise.

CHARLIE MELCHER:

And how many of these Level99 venues are there now?

MATT DUPLESSIE:

We have three open. Our initial venue in Natick, Massachusetts, that’s been open about five years now. Providence, Rhode Island and Tysons Corner, Virginia. Under construction, we’ll open later this year at Disney Springs in Orlando and in West Hartford, Connecticut. We’ve already have four more queued up for next year. We’re ramping up at this point to a speed of four new units a year.

CHARLIE MELCHER:

Wow. Okay. So now help people understand the numbers, like how successful this is. I know from having talked to you that you’ve really cracked the model, help people understand how many people are coming through, how long are they staying, and then the issue about repeatability. How many times are people coming back?

MATT DUPLESSIE:

I’ve been in location-based entertainment my whole career, going back to 1999, and this is the most successful concept that I’ve been involved in. And that includes both my own and our production company has done a lot of design build work for theaters, theme parks, museum exhibits for a couple of decades — so exposure to several hundred different projects, and this is the one I’m most excited about. The numbers are fantastic. Put it this way, when we opened in Natick, our first venue, we had a underwriting case where we said, “Oh, we think the venue will break even here, but boy, wouldn’t it be great if we did 50% higher than that?” That was kind of the stretch goal. We came out of the gate 200% of the stretch goal. I mean, doing double what our optimistic projection was. So the investor group said, “Wow, what’s going on here?” It’s actually grown since then. I mean, we’re up again here Natick is in year five, but it’s up 6% year on year, so continuing to grow five years in. And largely that is, you put your finger on it, it’s the repeat play rate. We have people coming back at a higher rate than I have seen in most entertainment concepts. It’s one of the two fundamental problems to solve for: throughput and repeat. And if you can fit enough people and you could get enough people to come back, you have a concept that can sustain itself. So this fires on both cylinders.

CHARLIE MELCHER:

So how many people can you accommodate in an evening?

MATT DUPLESSIE:

Each of our units right now, we limit it to 550 simultaneous players. We could allow more people in than that, but we found that restricting it to that number of people makes the waits short enough to get into the challenge rooms where they’re not disappointed with their experience. We artificially limit our own revenue in order to have a better guest experience and keep it to 550 people. We can turn that 550 about six times over the course of a day.

CHARLIE MELCHER:

Wow.

MATT DUPLESSIE:

We’re selling time, essentially. People buy a two-hour ticket, a four-hour ticket, an all- day ticket, depending on that mix and how quickly the venue ramps up at the beginning of the day, determines how many times we can turn that full capacity.

CHARLIE MELCHER:

Just for those who are curious, what does it cost for full day tickets?

MATT DUPLESSIE:

The base ticket is two hours on a weekday, and that’s $29.99. And then it’s a little more on Friday night and Sunday, and then a little more still on Saturday, which is of course the peak day for location-based entertainment. So it escalates from $29.99, $39.99, $49.99 for a two-hour, four-hour all day ticket. The goal there is really affordability. Two hours of highly immersive entertainment, custom-built entertainment for $29 feels like a bargain, I think, in today’s world, and it’s one of the reasons we’re able to fill the venue.

CHARLIE MELCHER:

What percentage of people come are repeating?

MATT DUPLESSIE:

Yeah. It’s funny how we’re meeting on this earlier today. Obviously, it goes up year over year as folks in a given market get to know you and know you exist. When a new venue opens, everybody’s new. So I’ll use Natick as the example, because that’s in year five here, and we’re pushing up on half of the clientele on any given day being repeat versus new or first-time guests.

CHARLIE MELCHER:

So Matt, that’s amazing that you have nearly 50% repeat visitation. I mean, so many immersive experiences, they never get people to come back. They’re one and done type experiences. And here you are with this thriving community of people who repeat. Obviously, you’re doing something right. I mean, people are enjoying it, so they want to continue to play. You’ve solved the capacity or throughput problem. How did you come to basically figure out the solutions for some of the problems that are most vexing for location-based and immersive entertainment experiences?

MATT DUPLESSIE:

Through making a lot of mistakes, Charlie, through messing things up for many years. So 22 years ago, I started 5 Wits, which was the first escape room style concept anywhere. And boy, the throughput problems with escape rooms are, I think, pretty widely recognized. It’s one of the fundamental issues.

CHARLIE MELCHER:

Six people, eight people. I mean, that’s it at a time. Yeah. I don’t know how anybody makes a living doing an escape room, honestly, with that such a small throughput.

MATT DUPLESSIE:

We were trying to solve it then in the original 5 Wits locations with — we were combining groups, so you get more to 12 or 15 people. Turns out that’s not as good a guest experience. They’d rather be with their own group alone. We were doing what I think has come to be called pipelining where people move from one room to another, and you’re letting a group in after that and daisy-chaining folks room by room through a multi-room experience. Even at those levels of three-digit number of people an hour, it is still challenging to make the economics really work in prime real estate. And if you want to build multimillion dollar high level sets and you need an ROI on that. So many of the design features of the concept were designed to increase throughput. In between 5 Wits and Level99, our design build company has done a lot of work for attractions ranging from live performances in the Disney parks to museum exhibits, to escape rooms and theatrical productions like Blue Man, everything in between. And I think over 20 years of working on all those different projects, the team was able to distill what works and what doesn’t work. And Level99 is basically a greatest hits collection of all of those mechanics that we found associated with venues that people come back to and venues that have high throughput.

CHARLIE MELCHER:

Matt, you have such a unique background that I think might be at the center of why you’ve been able to help solve some of these key problems that other location-based entertainment has struggled with and other types of storytelling. Tell us about your history, academic history, and some of your early work experience.

MATT DUPLESSIE:

I came up as a mechanical engineer. That was my training, graduated MIT in 99 and moved to South Florida where I project managed some design build work for the bigger theme parks. My first big project was Disney’s Animal Kingdom Lodge down in Orlando, where I helped run the theming package for that beautiful hotel. Came back up north here, went to Harvard Business School for an MBA. It was actually at HBS at Harvard Business that I wrote the business plan for 5 Wits as my entry into the business plan competition as an entrepreneurial venture, I was eliminated in the first round of that competition. I think the judges thought I was crazy, but I went for it.

CHARLIE MELCHER:

I think you would be the only Harvard Business School grad ever to have created a business school plan for an escape room business.

MATT DUPLESSIE:

And trying to explain that to them when the term escape — when there was nothing else to look at in the world, they thought I was nuts. Yeah.

CHARLIE MELCHER:

Yeah. So you have both an engineering and background in building things and a business degree kind of makes perfect sense for what you’re doing. Did you feel that this was a good idea for your career from a business perspective? I mean, this is not a normal path that you took. Many of us are appreciative that you did, but what did your parents say when you said, “I want to go into escape rooms and location-based entertainment?”

MATT DUPLESSIE:

Yeah, it is funny that I think the decisions felt reasonable at the time. The time to take a risk, for example, on starting an entrepreneurial concept is when you’re young. There wasn’t a lot to lose. I invested my entire life savings into 5 Wits, which was $1,000. That was my full capital contribution to get that off the ground. My wife and I talked about it back then and said, “Basically, we’ve got two years.” She was working as a professional engineer and she could kind of support our two-person family as we were getting things going. And if I was able to make 5 Wits work and earn a replacement salary, kind of show that this was actually viable, I had two years to give that a go, and then she was going to leave her job to — we were going to start a family. And if I couldn’t do it in two years, well, she was going to leave her job because we were going to start a family and I would basically have to get a —

CHARLIE MELCHER:

Need to go get a job.

MATT DUPLESSIE:

“A real job,” but 5 Wits worked and haven’t really looked back.

CHARLIE MELCHER:

So now you’ve taken the best of escape rooms. You’ve taken other important learnings from things like video games and gamification. You’ve turned this all into this very sticky and financially successful Level99. What do you think of the heart of Level99? Is this really about creating an experience for people to play together? Is it the social component that makes it as successful as it is? What would you boil down the secret sauce of Level99 to?

MATT DUPLESSIE:

Certainly the social element. There’s a hunger in young adults to do something real again and kind of put down the phone, get off the couch, go out and do something physical, real people in a real space. I think the variety of content is a big element as opposed to an entertainment concept that’s really many stations of the same thing. I think the challenge aspect is important to the component. I have to strive. I have to try. This is difficult. I’ve got to earn success and progress. I think many of the mechanics we’ve been able to map from the digital world onto the physical world kind of have hooks and are mechanics that people want to keep participating in. Scale is another element. Got to build a venue big enough that you feel like you haven’t seen it all. Content rotation, changing out content to bring people back, reward and loyalty system.

Yeah, boy, it’s a long list of things. And I think entertainment concepts are really successful if they can figure out the balance of these and how to incorporate the right mix without overwhelming the guest with complexity, without making it kind of too much to absorb and too much to know in order to enjoy. You’ve got to be able to get in and it’s going to be very accessible, but then have that depth and those layers that you can unpeel for the person who wants to come back a hundred times and get better and better and go all the way down at the rabbit hole.

CHARLIE MELCHER:

I know I’ve asked you this question before, but do you consider there to be a story or some sort of meta-narrative component to this?

MATT DUPLESSIE:

I don’t. And I know this is kind of countercultural maybe in location-based entertainment or even the excellent title of your podcast and book and so much of your scholarship. I don’t think if we dive deep enough they’re in conflict with one another. I think what Level99 is saying is let the story be about the choices that you make as a player and you get to decide what to do next and be the hero of the adventure and win or lose on your own merits and explore and discover. But we started from a place, I mean, most of our team is theme park design, people who come out of location-based entertainment. And we started from, well, should we work with an IP? Maybe we write our own story. After a year or two of thinking about it, we said, what people actually going away talking about is not, oh, did you hear what this character said to that character?

What people go away talking about is, what did I get to do? What did I do? What did my group do? What did we experience and see? And what they actually want is what they get to do. And sometimes you achieve that by being story light and action heavy, agency heavy, choice heavy, and challenge heavy is kind of the route Level99 has taken.

CHARLIE MELCHER:

So anybody who’s familiar with my book or even just listened to a bunch of episodes here knows that the things that you’ve solved are what I consider to be the essential components of good, immersive or living stories. In a way, I think of it as a story world that you’ve created. You’re just not hitting people over the head with a particular narrative or a particular set of characters, but rather a platform for each of us to develop our own adventures, our own path and take away our own sense of accomplishment and if you will, a story of our own experience in your world.

MATT DUPLESSIE:

That is very well said. Would you be interested in joining our marketing team potentially?

CHARLIE MELCHER:

Yes, I am. This is an audition, actually. But I think it’s one of the reasons why I’ve been so attracted to what you’ve accomplished that plus just the bringing of such intelligence and financial rigor. You’ve been able to really dial it in and not just wing it or hope or have these ideas, but not know how to actualize them or realize them. I really feel like your decision-making has been very informed by data and you track so much and you’ve been able to solve this through that right combination of left brain, right brain to get it there.

MATT DUPLESSIE:

That’s what I love, is the marrying of what I love to do, wish fulfillment, childhood fantasy, but this is what needs to exist in the world, but boy, we don’t get to do that for long if there isn’t a viable economic model underpinning it. And kind of working through the hard nuts and bolts that join those two things is what gets me up in the morning.

CHARLIE MELCHER:

When you made the decision to develop this idea and you weighed whether you should work with existing IP, you rejected that path. I don’t see any Marvel characters or Disney characters inside your Level99. Everything you’ve built was your own creation. Why did you do that? Many people would’ve thought they needed to have an identifiable IP to draw people in.

MATT DUPLESSIE:

Number one is one of scale and plain economics that particularly when you’re a startup with one location or now three going on five, the cost of licensing and sorting through rights. And then of course, if you’re using someone’s brand and someone’s beloved character, they want a hundred people at the table when you’re making creative decisions. It can bog down a scrappy entrepreneurial creative organization at the beginning. Whatever the popular Netflix show or the popular Disney movie is, number one, is only popular for a short time generally, other than perhaps really the big archetypes. For the large percentage of people who aren’t into that IP, I think what we realized is it can actually be a deterrent. There are a whole lot of people who say, “Oh, this is about comic books. This has comic book themes on the door. That’s not my thing. I don’t know that character. I don’t know that backstory, and therefore maybe this isn’t for me, this isn’t a fit for me.” So we’ve chosen to go the route of independently developed, but very classic artypical adventure themes and a very wide array of them sprinkled around the venue. So yeah, if you’re into the ancient civilization, you want to — yeah, we’ve got an Aztec temple on our floor that you can explore and play in. We’ve found we’ve been able to check more boxes with variety than with licensing one specific IP or even a family of IP.

CHARLIE MELCHER:

I do think that some of the success of some of those IPs tends to be because of the nostalgic connection. You grew up with that IP. And I do think that there’s something still about your Level99 that plays to a sense of nostalgia, to some sort of gameplay that we had as kids, whether it was jungle gyms or different types of word challenges or intellectual challenges or all sorts of play that we just did with each other as kids. You still can tap into some of that, but I don’t think it’s helping you for your marketing. Like you’re relying on word of mouth, you’re relying on whatever your own marketing is, and clearly it’s working. So you didn’t need the crutch of a Disney character or a Marvel universe character. I guess there’s a good segue to tell us about how you do market it. How did you start when you had your first one and no one knew what Level99 was?

MATT DUPLESSIE:

We started very marketing light and social heavy. So hundreds of millions of views organically a year because the content is very video friendly, very photo friendly. These are cool things to look at. We’ve invested in high quality sets. You’re seeing people having a blast. So it’s a natural fit for social media. We don’t do a lot of kind of old-world marketing, if you will. We’re not putting billboards on the highway or ads in the newspaper. I mean, some of our most viral posts, some of the things people have watched the most times are not content we’ve shot. Some of it is content guests have shot and equipping them to be able to do that.

CHARLIE MELCHER:

As somebody who’s got it successfully working on all cylinders, what would you say to somebody trying to break into this field?

MATT DUPLESSIE:

It’s a really wide ecosystem of people in location-based entertainment. You’ve got the companies that are doing some of the design, the tech who are doing more of the creative and writing, and then the actual venues themselves that operate. And you could get in at any one of these levels and start to understand how the industry works and what’s available. The recommendation I give to everybody most strongly and how I got my first job in this industry is go to a couple of the trade shows. And it’s a relatively small investment of a couple of days of your time. I’d recommend the IAAPA Trade Show, for example. IAAPA is the International Association of Amusement Parks and Attractions. And there you have hundreds and hundreds of companies that do everything from build the cotton candy machines that might go into your local fair or the folks who have roller coasters half constructed on the show floor and spend the couple hundred bucks to get into the show and walk booth to booth and understand the breadth of what’s out there.

And then as you create in your mind, don’t copy them. Figure out what the gaps are in between what is out there as opposed to you don’t go to Netflix House and say, “I’m going to build my own hometown version of Netflix House.” You’re going to have a hard time. You’ve got to see what the gap is, what people are asking for that doesn’t exist and be willing to build something new.

CHARLIE MELCHER:

And so where do you think this is headed now? I mean, we’ve seen that the number of people going to traditional theaters, the number of people participating in some of the more traditional forms of storytelling and entertainment have been in many cases on a decline. Do you think that Level99 and these kinds of playables worlds are going to be replacing that? Are they on a big upswing?

MATT DUPLESSIE:

I think it’s one solution among many. Concepts will continue to come out that take location-based entertainment in new trajectories and win new fans. I mean, escape rooms maybe as the preceding example, I think Level99 is an evolution on that where it’s much larger, much the technology is more advanced, the open world nature of many different short challenges, the physicality, it’s an evolution. But I do think, and we’ve already seen actually in the five years Level99 has been open, there’s on the order of a dozen concepts now around the world that are this type of business, whether — I don’t know what name it’s going to land on. Maybe you’ll coin it, Charlie. Are these challenge rooms? Is this a — I’ve seen many people try to name it, and of course it took years for escape rooms to be called escape rooms. But yeah, people are piling into this niche and the guests are enjoying it. I don’t think it’s the end. I think it’s an intermediate step in where location-based entertainment can go.

CHARLIE MELCHER:

I definitely see from the lens of storytelling that there’s a big growth in the types of stories that let people have the agency, that let them into and live the story. There is a great growth of that. I think people are hungry for it, both because of its social components, also because of their desire to be re-embodied after so many hours of looking into their little phones and moving their thumbs. And something like Level99 does a great job of that. I mean, it really is so fun, physically fun. There’s a language of challenge and exploration and discovery and camaraderie that comes from the games that one plays there. So I do think we’re in this phase of a lot of experimentation, a lot of growth and people trying to create new forms, but a lot of it, and I think you would agree, it does tend to tap back into a kind of joy and wonder of childhood.

MATT DUPLESSIE:

I think that’s right. I think that’s right. Extrapolated, extended for the adult, but you want to play again. Would you rather be at home sitting on the couch or would you rather be out with real people in a real place instead of miming doing the behavior on a teeny screen, do it, live it, be it, get into it. And reality is the highest fidelity version of a screen, right?

CHARLIE MELCHER:

It’s funny you say that. I have a corollary, which is that our bodies are the original joysticks. We’re meant to experience the world playing us instead of some little character on a screen that we control the joystick.

MATT DUPLESSIE:

That’s right.

CHARLIE MELCHER:

Matt, thank you for being on The FoST Podcast. Thank you for bringing the unique parts of who you are to creating Level99, a place that gives so much joy and pleasure to so many people. Can’t wait for the one to open in Hartford because I’m not that far, so I will be able to go there and experience it with friends and family. And I just can’t wait to see amazing work that you and your team continue to do. So thank you.

MATT DUPLESSIE:

Thanks so much, Charlie. And your podcast has been an inspiration, so it’s really a privilege to be part of it.

CHARLIE MELCHER:

Once again, I’m Charlie Melcher, and this has been the FoST Podcast. My thanks to Matt DuPlessie for joining me today. To learn more about great efforts in experiential storytelling and some of my own innovative ideas about the next generation of media. Check out my book entitled The Future of Storytelling: How Immersive Experiences Are Transforming Our World. It’s available in stores and online wherever books are sold. And for exclusive access to speakers, workshops, and curated global trips in immersive entertainment, please check out the FoST Explorers Club at our website, which is fost.org. The FoST Podcast is produced by Melcher Media in collaboration with our talented production partners at Charts & Leisure. I hope to see you again soon for another deep dive into the world of storytelling. Until then, please be safe, stay strong, and story on.