‘From zero revenue prospects to a £1.4bn business in 15 years’
Cazenove Capital is proud of its longstanding association with entrepreneurs and wealth creators. Here, in the latest of our series of interviews with entrepreneurs at different stages of their business development, we talk to Gareth Williams, co-founder of travel search engine Skyscanner. The germ of the idea behind Skyscanner originated in 2001. Just 15 years later the business sold for £1.4 billion
The origins of a “unicorn”
Like many business ideas Skyscanner arose as a solution to a problem. In 2001 Gareth Williams, then a young web developer working in banking, flew regularly to the Alps between contracts. But there was no easy way of comparing flights from a number of London airports to a number of potential destinations. Surely, he thought, technology can do this for me.
We built a Skyscanner prototype – but we had no revenue model
The dotcom boom had come and gone. There was little or no appetite to fund technology businesses – particularly those which couldn’t demonstrate a clear way of making money.
But Gareth Williams and co-founders Bonamy Grimes and Barry Smith nonetheless built a basic prototype. It was “a bit rough around the edges, and had never been seen by customers,” he recalled. It enabled them to approach potential backers and partners. “We had something to show. It wasn’t just about telling.”
Even so it was a slow grind, and in early years they had to “bootstrap” the business – funding it largely by themselves. “The early years were really about growth in isolation,” he said. Gareth worked on the project full-time while the others remained in their respective jobs.
“At the beginning we’d no idea how this would make money. AdWords did not exist. Affiliate marketing in the way we understand it now didn’t exist. We’d built something, and it worked – but we had to prove that it offered enough value to get people to come back again and again.”
Consumers did come back again and again, and what eventually evolved was the now-familiar commission model where the partner business – in this case an airline or travel agent – makes a small payment to Skyscanner when someone clicks through or completes a booking. BMI was one of the first partners in 2004 and momentum grew rapidly. “I knew we’d achieved something significant when I was with a group of people in a pub and someone said to me: ‘Before you book your flights you should use this search engine called Skyscanner”.
Funding came from several investors in the years between 2007 and 2016. Scottish Equity Partners was among the earliest backers. Sequoia Capital, the California-based technology venture capital firm, was a later investor.
In November 2016 the business was bought by Ctrip, the Chinese travel giant, and valued at the time at £1.4bn. Scottish Equity Partners was among the major owners. Its original investment, reportedly under £10 million, was at the point of sale worth a reported £470 million.
Skyscanner had already spotted the explosive growth in the region: its Chinese user base was growing at over 60% per year on the back of the country’s enormous appetite for air travel. The deal cemented this gigantic market in China with Skyscanner’s deep network of airlines, hotels and other travel providers in Europe and the Americas.
Since the sale, Gareth Williams has continued as chief executive, and now oversees almost 1,000 staff across 10 global offices.
Skyscanner is a “unicorn” – an example of those rare, privately-owned businesses that spring up from nowhere and rapidly achieve a value in excess of £1 billion.
Gareth Williams puts much of the success of Skyscanner down to a business culture which is largely “flat in structure” and flexible enough to foster a culture of innovation and creativity. Of all the definitions of what it is to be entrepreneurial, this is the one he favours: “The pursuit of opportunity without regard to resources currently controlled.”
Gareth believes in an outlook and attitude which he describes as “exponential” as opposed to “incremental”. “Incremental” growth describes marginal successive gains. By contrast his “exponential” mind-set allows for truly dramatic growth – of the sort Skyscanner has experienced in its short life.
A devotion to genuinely innovative ideas and a willingness to overcome doubts are part of the “exponential” mind-set, he explained.
But how do you manage recruitment in a business which grows at such a rate? The answer is to devote a great deal of time to it.
“I’d say 15% to 20% of my time is spent recruiting,” he said. “The importance of recruitment can’t be overstated. These are people you’re going to work with. It’s so important that you respect and like them.”
Gareth Williams was interviewed while attending an Entrepreneurial Scotland conference earlier this year. Cazenove Capital supported the event.
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