The sky's no limit for a soaring site

A concentric circular diagram curves within the reception table, with Edinburgh in the centre and a peculiar selection of place markers in orbit further out. They sit at illogical distances from one another, these Abujas and Tirees, these Beijings and Invernesses. It looks less a map than a psychological experiment.

Then one of the rooms purges, scattering denim and plaid in many directions, morning missions downloaded to all their heads. You wonder whether there is a collective noun for 29-year-old new media people. An aggregation? A transubstantiation?

Before reaching any conclusion I am led to the yellow room, and Gareth Williams soon bounds in from his previous engagement. He is beyond 29, though would been thereabouts when he co-founded Skyscanner at the turn of the millennium.

Skyscanner is the sort of business that would get eaten alive on Dragons' Den. It has about 100 competitors. Its technology is difficult to protect. It depends heavily on the value of its brand, which convention says costs a fortune to build.

Yet here in central Edinburgh, in the trendy Quartermile offices a few yards from the Meadows, is mounting proof that none of this matters very much.

Whether Skyscanner is your favourite flight search site or an unfamiliar name, few have probably realised what is beginning to look possible. What Andy Murray is to tennis, what Sean Connery is to acting, Skyscanner could yet become to online travel.

Even a year ago such a prediction might have looked foolhardy, even stupid, but then came October's stop-press announcement. Sequoia Capital, the tech investment house, had just bought a slice of the company that valued it at $800 million (£490m). Sir Michael Moritz, the Sequoia chairman, had joined the Skyscanner board.

Sequoia is Silicon Valley royalty. It has been an early backer of tech names as renowned as Apple, YouTube and PayPal. Moritz, a native Welshman, is a former board member of Google and Yahoo!, with a net worth estimated by Forbes magazine in the region of $2.2 billion (£1.3bn). When this outfit comes calling, the potential is often astronomical.

"They contacted us less than a year ago," he begins in his unassuming style. "They expressed an interest in our company by email. We had a follow-up call and that led to closer discussions."

He says Skyscanner gets a lot of approaches from would-be investors, but turns most down.

"Normally I don't have time to engage with them. Let's put that differently," he adds, in one of numerous indications that Skyscanner takes its media image very seriously. "Sequoia was different because of its pedigree."

Moritz and his colleague Jake Anderson flew to Edinburgh to meet Williams and his finance director, Shane Corstorphine, a few months ago. There followed a second meeting in Palo Alto, California, the heart of Silicon Valley, where Williams had visited three years earlier on a trade mission along with 20 other internet companies. Advice he had picked up on that occasion led to the company's decision to open an office in Singapore in 2011, its first outside Scotland, marking a key step change in business strategy. Since then there have been openings in Beijing, Glasgow, Barcelona and most recently Miami.

The Sequoia deal completed at one further Quartermile meeting in early October. The recipients may have trembled as they examined their bank accounts. Unlike most investment deals, the $100m (£61m) rumoured to have been invested is not going to the company but to shareholders selling down their stakes.

Williams says the company is not saying who benefited until the 2013 financial results are published next year, but a look at the company documents give a pretty good idea. Sequoia acquired about 11% of Skyscanner by buying several percentage points from co-founders Bonamy Grimes and Barry Smith, Grimes's wife Juliet, original investor Scottish Equity Partners (SEP), and Williams himself, who must have pocketed the best part of £5m.

SEP remains by far the biggest shareholder with about 42%, with a value approaching 100 times what it paid in 2007, surely already the best piece of business the Glasgow firm has ever done. Below them come Williams on about 15%; the Grimes family, Barclays Wealth Trustees and Sequoia with about 11% apiece; and Smith on about 4%. Following Bonamy Grimes's decision to step down as an executive last month, Williams is now the only one of the founders who still works for the company.

"The investment is a very public confirmation of two things," he says. "First, that we are competing in the internet economy successfully on a global scale. Second, we are at the beginning of the journey and not towards the end. Online travel search for consumers is not a solved problem. There's still a long way to go and it's such a large market that there's scope to create a much more significant company."

He describes Sequoia as "founder-friendly ­investors" who have bought into the board's vision. Though Irish web entrepreneur Ray Nolan stepped down as chairman after three years shortly after the deal went through, Williams says this was not a condition of the investment.

He doesn't want to focus on the valuation, for fear of forgetting why Skyscanner exists, but he acknowledges its importance for Scottish tech. "It's a really good thing for the Scottish economy to have a billion-dollar web company," he smiles.

Where many companies have their "started around a kitchen table" story, Skyscanner's version involves an Excel spreadsheet. Williams and Grimes were a couple of coding enthusiasts who became friends at Manchester University in the Madchester era. Grimes later got to know Smith while working as an IT contractor for Marks & Spencer.

Williams came up with the idea out of frustration while looking for flights to French ski resorts. He created the blueprint on a spreadsheet, then the three launched in Edinburgh in 2001 with a brief to become the "Reuters of travel searching" within two years.

This proved somewhat ambitious, but the site's neat functionality helped it to gain a foothold where others had slipped.

Users don't have to get bogged down in dates and exact destinations in the way that many search engines demand. By choosing things as broad as whole countries or whole years, they can compare different days' prices at a glance. To maximise speed, the engine remembers previous users' searches and throws up the results.

By 2007, this had built up a following of about 1.5 million monthly unique users, which secured the £2.5m backing from SEP. The business had not yet reached profitability, but it had a promising model based on being paid a commission by airlines and travel agents when users bought flights.

It began building a global presence, using the SEP investment to translate the site into 25 languages. In 2009, it branched into hotel and car hire search.

Opening overseas offices came next, since it is much easier to service far-flung places from closer by than Edinburgh. Every move has been about improving usability in the belief that recommendations and return visits are ultimately much more important than spending on brand-building.

In the same way as the company has built most of its own technology, the interiors of each office are designed in-house too. The office amenities include a ping-pong table, day beds and stand-up video-conferencing terminals to encourage quick meetings. There are also little brainstorming pods named after the same destinations as the table diagram in the reception. Now the distances between the places begin to make sense.

Having reached profitability as recently as 2010, the figures from calendar year 2012 show pre-tax profits and turnover and roughly doubling to £7m and £34m. This might still be chicken feed next to big companies, but Skyscanner has since more than doubled its following again to about 25 million monthly uniques, suggesting the financials have gone in the same direction.

It is now the biggest travel search engine outside the US and is snapping at the heels of US-based sector leaders like Expedia and Kayak. The vision is to become no less than the in-house service for mobile-phone operators and generalist search engines, having already reached such a deal with Chinese search giant, Baidu. This would send Skyscanner into a whole different stratosphere.

Williams says he expects to be serving 10 times the current number of visitors in due course. "I won't put a deadline on that, but we expect to make significant progress in the next year," he says. "There's still an opportunity to be dramatically better than the alternatives. Our Sequoia investors completely agree with that analysis."

Above the reception exit are the mission words that must be burned into his mind: "Be the most trusted and most used online travel brand in the world".

On the last few months' evidence, the time to fasten your seat belts is now.