Such deals do not come together without a lot of hard work, stealthy activity and soul-searching, whilst still maintaining a business-as-usual face both internally and externally.
Tnooz asked the CEO of the Edinburgh, Scotland-based Skyscanner to pause for a moment and give us his personal take on the sale of a company that he co-founded with two of his mates in 2001.
Here, in his own words, is Gareth Williams.
On… why did the deal happen
This felt like the natural progression for Skyscanner.
Ctrip is the leading OTA in China and working with it allows us to deepen our understanding and offering to the Chinese market, where we’ve already seen great success, as well as leverage Ctrip’s product investments and insights.
In short, this allows Skyscanner to strengthen and augment its existing offering, ensuring that it’s the world leader in the metasearch field.
For us, this step made the most sense rather than looking to IPO at this stage.
In my view (which could be wrong), many of the most long-term successful IPOs have started with a relatively large enterprise value at IPO and have maximising EBITDA as a relatively low priority.
However, as a $2 billion or so-valuation company, I feared this would not be the best tactic for us at this stage.
Instead, taking this approach with Ctrip, we’ll be able to learn a huge amount from a company I very much admire, while still remaining largely independent. That is very attractive to me.
On… how long did it take
It was fairly quick – a matter of months. I had an existing relationship with Ctrip co-founder James (Liang) and there were obvious similarities in our outlook – traveller first-technology first being the biggest.
On… who was involved
There was a small yet highly efficient team looking at this, as one of our goals during the process was to minimise operational impact.
Skyscanner’s chief legal officer Carolyn Jameson thus became the crucial person within Skyscanner and, in terms of corporate finance advice, Qatalyst Partners also assisted us.
On… worries and challenges of doing a deal with a large company
One of the compelling attractions for this deal is the degree that both companies will learn from each other.
As the larger company, clearly Ctrip has solved many more problems than we have, for which I have huge admiration.
However, we have learned a great deal in localising our product and growing into multiple markets across the world.
I have long believed that in the West we are far too slow to understand the innovations and scale of accomplishments of Asian and especially Chinese companies.
We get to learn some of those lessons.
A clear example to me a few years ago was Tmall (owned by Alibaba), which doesn’t have a great equivalent in the West.
Tmall exists for brands that want to be more than tins of baked beans on a shelf. And the Chinese consumer has certain expectations that we are less insistent on in the West.
The Chinese traveller wants to purchase in the same mobile experience as the search (Qunar pivoted in this direction some time ago), they prefer not to use something as old fashioned as a credit card and they expect customer support whenever they want it, and by voice, chat or other channels.
Ctrip has delivered on this. And what the Chinese traveller expects the rest of the world’s travellers will catch up on.
Skyscanner will be a global marketplace for suppliers – but with the product and service that we know will become expected everywhere.
On… the logistics of administrating a $1.8 billion sale
I suspect 100 lawyers and accountants were involved by the end representing all parties. Fun!
On… telling the staff
I’m really proud of the comms we did internally. We have historically been very transparent as a business with employees, and we place a huge amount of trust in our employees.
As soon as we were able to communicate. we had many, repeated, town hall and information sessions on the different aspects and what it would mean to our team, and gave everyone the opportunity to speak with a CXO individually.
The fact that I stood behind the deal wholeheartedly as being great for the company’s future made it much easier to do personally, and to answer innumerable questions around it.
The atmosphere within our offices was one of great excitement and the news has been received very well.
On… carrying on with the “day job” when selling the company
Our financial director Colin McLellan told me breezily early one morning that he had managed to get two hours of sleep the night before – a win compared to prior nights.
So undoubtedly a huge amount of additional work was created for the small team working on this internally, though as I said in a more wider operational sense impact was minimised, as we’d hoped.
We didn’t pause any operations of the company and don’t tend to operate with much slack, so there was a huge effort to do the deal in addition.
As far as we could we tried to limit the demands on to as few people as possible so as not to cause distraction.
On… allowing the company to continue its path
I was known as “mañana – two-years-Gareth” within the company.
Whilst I could see the logic of a transaction (IPO or majority sale), it always seemed best to consider this in two years after we had further meaningfully progressed on our current accelerated growth plan.
That two years would slide a day, each day that passed.
There was still an element of this thinking as we discussed the deal with Ctrip, and they were great in envisaging a deal that allowed us to do that – keep growing.
As such, I’m very pleased with this next step in Skyscanner’s journey.
On… preserving the Skyscanner culture
Many companies will speak internally and publically about autonomy and preservation of culture at a time like this.
I have done so passionately and so I will add a few further points.
The first is that preservation of culture and autonomy has become much more common in internet economy deals – especially the successful transactions.
The second is that all parties are incentivised towards our further growth.
Given our consistently impressive double digit growth figures, changing our culture is not a good plan.
We have put a huge amount of effort in to making sure that we continue to provide entrepreneurial-like rewards for high growth.
Our culture will remain the same, precisely because it is so much of a part of our success.
On… what it means to me
I am delighted to have helped in having a positive impact upon a lot of people.
Most of the time work is about fulfilment and impact; occasionally it has financial benefits.
These are great, but the motivation to solve a problem (as yet unsolved) remains.
NB: Gareth Williams image via VisMedia.
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