The biggest news last week (unless you’ve been living under a rock)?
China based travel giant Ctrip’s acquisition of Skyscannner. This Edinburgh-based travel search site has sold up for a whopping £1.4bn only 10 months after raising a £137m Venture Capital backed funding round.
What makes Skyscanner’s achievement so remarkable is the fact that the company survived for 13 years taking just $4m of investment, from Scottish Equity Partners, whilst mixing it with the big boys of the travel search world, and winning!
So how did they do it?
Doubtless there are many more reasons (and feel free to add yours below) but we’ve looked at five areas where we believe Skyscanner absolutely nailed it.
Now, far be it from us to suggest you can turn your start-up into a billion-pound acquisition target just by reading the below, but we promise you one thing; if you don’t, maybe you won’t!
Every good start-up solves a problem
Boy can this mantra never be emphasised enough. If you are not solving a real-life problem that affects a sizeable number of people, then you aren’t a real start-up. Period. So, if that’s you, go read something else.
Skyscanner exists because its founding members, Gareth Williams, Barry Smith and Bonamy Grimes all agreed at the turn of the millennium that finding the best cheap flight deals online was a pain in the passport. So, they decided to do something about it, and crucially, being IT professionals, they had the skills to do that.
Now this lot got into the comparison engine game more than a decade ago, back when nobody really knew what the internet was for. And they guessed right – searching and comparing is what online does best – it is, after all, thanks to Google, one giant algorithmic search engine. These three founders got on the right ride, at the right time, and that was no fluke.
You can succeed in a crowded marketplace
Before the age of the internet start-up, when “being a Rockstar entrepreneur” was not something you discussed with your careers advisor, young professionals had 4, maybe 5 options; doctor, lawyer, accountant, marketer, or banker. In those days, “niche services provider” was where you found freaky n’er-do-well’s, aristocratic “trustafarians” and the odd eccentric genius capable of inventing something completely new that nobody was even aware they needed. Think Airbnb / Uber; the “sharing economy” – honestly, who knew?
Again, far be it from us to suggest you are not about to stun the world with a glorious, world / life / attitude changing idea, but if you put your commercial hat on and think analytically, the chances are your start-up will be pitched into what is an already congested marketplace.
Just like accountants, medics et al faced overwhelming competition for the top jobs, so, today, you face serious competition to find funding for an idea that thousands of other founders have had too.
Niche is called niche for a reason – unless you are a visionary genius, it will never make you rich – you do it for the love.
But you can still be disruptive!
Disruptive doesn’t mean changing the world. Disruptive means discovering the small wins that make your business just a tiny bit easier to use, more efficient, cheaper, more straightforward or capable of scaling faster than your rivals.
Think of building a start-up like running a 100-metre race. Every action that you take, no matter how infinitesimally small, counts. From the tip of your little finger, to the nail on your little toe, there a million teensy alterations, tweaks, and techniques you can use to gain a competitive advantage over your rivals.
Great Start-up founders realise that the devil is in the detail; find a commonly acknowledged weak-point in a process, no matter how small, and make your version of it better than the competition, a miniscule gain becomes a barely detectable advantage, becomes a noticeable gap, becomes a wide-open space, becomes a chasm, becomes the reason your target market uses you every time and not your competition.
Crucially, Skyscanner was just a teensy bit faster, a little bit more convenient, a touch more inviting than the rest. And that, it can now be demonstrated, is worth $1.4 billion, in the long run.
Make Your Staff Your Partners!
“And remember, we’re all in this together!”, you tell your employees, via video link from your penthouse in Manhattan to the toilet-cubicle sized office you have rented for your 15-strong technical team.
Listen up – that only works if your name’s Donald Trump.
For the rest of you – live the life your employees live. Share everything. Skyscanners’ founders gave their staff equity in the business. Now, this does not necessarily mean, as is being widely reported, that Skyscanner staff will bank £166k each as they split a share-stake worth £122m, but it does mean that they are in line for a windfall – a long dreamed of windfall that probably kept them going during dark times, and made them get out of bed in the morning with more reason to go to the office with a spring in their step than just the thought of being fired if they didn’t turn up.
Nowhere more so than in the start-up world, where staff salaries are negligible, incentivising staff with share options, and making good on your promises, is a pre-requisite to running a successful operation. Just ask 674 staff in Glasgow, who are probably still celebrating.
Look International, Look East, Now!
It’s never too early to think internationally. In fact, it has never been more important for UK based start-ups to position themselves as ready to do business internationally right from the get-go.
Take Denmark – every year this Nordic state wins every gong going for being the best place to run a business. This is a country with a small domestic market, and so to succeed as an enterprise, Danish companies must think outside their domestic market. It’s become second nature, and because of that, Danes enjoy an open-minded, tolerant business culture that is the envy of the world. And they have some rocking start-ups, like Peter Muhlmann’s Trust Pilot.
For years Skyscanner has been focusing its attention on Asian markets, partnering with the likes of Baidu, the Chinese Google, Yahoo Japan and the Malaysian government.
It takes guts and oodles of effort to reach out abroad where the business culture is often radically different, and make a go of it.
And of course, in the case of Skyscanner, it’s led to a mega-acquisition. The kind that just doesn’t happen if you are only thinking domestic.
If you can do all this…
Want to hear our Rudyard Kipling impression? Here goes;
If you can solve a problem while everyone else is trying to invent a new marketplace; if you can mix it in an over-crowded marketplace without losing your head; if you can find points of difference and small wins in a business sector that looks uniform from the outside, make your staff feel as valuable as one of the founding team, and look beyond the border at the rest of the world….
a few years from now you may just find yourself in line for a hefty windfall – and you’ll deserve it, too!
Keep on hustlin’