Rewind a couple of years ago and a then little known ride-hailing app from Dubai called Careem showed up at the Web Summit, the world’s fastest growing global technology event. International investors and venture capitalists were sceptical to say the least, says Paddy Cosgrave, CEO of the event organiser.
“Everybody thought the idea they were going to take on the might of someone like Uber was ridiculous. That they could compete with these global firms that already had such a head start just seemed ludicrous,” Cosgrave recalls.
Fast forward to March 2019 and the little company that dared to take on the big international brands is having the last laugh as it was announced Uber is in the process of buying Careem as part of a mammoth $3.1 billion deal.
“They proved pretty much everybody wrong,” Cosgrave adds. “They built a great company in the Middle East and exited to Uber for a pretty stupendous amount of money, proving it’s very, very possible to build incredible companies out of the Middle East.”
Gheed El Makkaoui joined Careem two years ago and was one of the key figures that set about proving the doubters wrong. She helped it grow from the fledgling company it was into the powerhouse it is today and she is delighted that it is now held up as a shining example of what is capable in the region.
“It’s always bittersweet. I’m very grateful that Careem was actually able to support the region in putting itself on the map. We’ve highlighted the opportunity that’s present in this region and hopefully we will make it easier for a lot of people who are looking to build their own start-up and to develop that space,” she tells the audience as she takes the stage at the recent Arabian Business Startup Academy in Dubai.
“It is super exciting. It gets investors excited and opens their eyes and ears in this region, but also I think it sets the ground for entrepreneurs to get that sense of excitement so that they can think big and get somewhere.”
Thinking back to 2017 when she joined, things were very different and El Makkaoui is delighted that the hard work and anxiety has finally started to pay off.
“I was looking after emerging cities, so my responsibility was to set up outside of Dubai. It was a bit crazy,” she remembers, adding that in those days when you’re working for a company classed as a disruptor, there is no benchmark you can rely on as you are the one setting the parameters.
“I had absolutely no clue about what to do… This is why it’s exciting. You ask, ‘Is Dubai the right benchmark for Abu Dhabi?’ I was on my own developing the strategy. When you are in the disruptive space, you will always have to go through that process over and over again; there is always something new,” he recalls of the fast paced early days at the start-up.
“How do we get things done, start, launch and learn quickly? If you are doing something for the first time, you will continuously face challenges.”
When hiring staff, it was also important to find people who were willing to work on something that hadn’t been done before, hadn’t been proven and were willing to go out on a limb and face a fresh challenge on a regular basis.
“When I was looking to hire the team for Abu Dhabi, it was challenging. You want people who have a different kind of energy. We were doing so many things, with very little time and at a fast pace.”
One of the things she remembers was that the team had to be quick problem solvers and enjoy finding solutions when obstacles appeared. An example is when Careem set up in Egypt.
Cars are a lot more expensive in Egypt and it can be difficult to manoeuvre around the traffic. Someone on her team decided it would be better to try launching motorcycles first and see if that took off. The idea was a success and the team decided to launch the same concept in Pakistan. Now, a fifth of Careem’s revenue comes from its motorcycle business.
“So it’s really all about celebrating activities as you go but you need leaders who will say ‘what is next?’” she believes.
Raising the bar
So what is the quality she thinks was most important when the company was first starting to grow and which is vital for all entrepreneurs entering the start-up arena?
“Speed is key, at least in our space. The market is not patient. Customer standards keep going up. You raise the bar and then you have to raise it again. So, you should never be okay with what is today.”
Under the UAE Competition Law, companies operating in the emirates are required to submit a request to the Ministry of Economy to make sure any merger or acquisition does not lead to a dominance of the market they are operating in.
Sultan Bin Saeed Al Mansouri, the UAE’s Minister of Economy, in June issued a decision giving the green light to the merger of Careem by Uber. So what is in the next five years for Careem?
“Our next five years are twofold: one would be expanding our existing mobility solutions across all the markets. In parallel, our goal is to become the first super app in the region… The idea is to have a one-stop shop for customers for people who live in those cities.”
The next Careem?
According to the Roads and Transport Authority (RTA), Dubai has one of the highest vehicle densities in the world. There is more than one car for every two people in the emirate, averaging about 540 vehicles per 1,000 people, compared to New York and London with 305 and 213, respectively. There were 1.4 million cars in Dubai at the end of 2014 but this is forecast to reach the two million mark next year.
In such a fast-paced market, and in light of the headline-grabbing Careem deal, it is no wonder many entrepreneurs are looking to the automobile and transport sector, each hoping to emulate the ride-hailing app’s $3.1bn bonanza.
One of those who recently entered the arena is Omar Al Ashi, the founder and CEO of Urent. Dubbed an 'Airbnb for cars', Urent offers the first peer-to-peer vehicle sharing platform in the region, creating a whole community that focusses on building trust between two people, one being the private vehicle owner, the other being the renter.
Started less than a year ago, after Al Ashi used a similar service while studying in Canada, Urent recently announced it had partnered with Seed Group, an association of diversified companies owned by The Private Office of Sheikh Saeed Bin Ahmed Al Maktoum.
Al Ashi says “it’s not easy at all” negotiating strict regulations related to the car sector, especially when you are dealing with a domain that blurs the area between private and public interactions.
That said, it helps if you are partnered with one of the most important figures in Dubai, such as a member of the royal family. “He’s helping me take care of everything government-related in terms of licensing, making sure that the ecosystem around the system is safe and meets the criteria,” he says.
So how did the partnership come about? “I was turned down hundreds of times,” he recalls. “So it’s knocking on doors every single day, every week. I was testing this idea. It was the snowball effect, it was word of mouth. It was like the movie. It took a year just to get a phone call from the private office.”
Al Ashi is starting with cars but eventually he wants to expand into other vehicle types and modes, such as jetskis, yachts and even construction vehicles and equipment.
New car buyers
Another car fanatic who has entered into the start-up arena is Adam Whitnall, the founder of Simplynewcars.com.
“For me personally, my journey started about two years ago. It was prompted by an issue I had when trying to find my next new car. I was looking around for something and really struggled to find what existed in the market that was going to meet the criteria that I wanted my car to be. So that’s where the idea of Simplynewcars came about. It’s a platform that allows you to find your next brand new car based on your desired features and benefits.”
While Whitnall admits that the new car sales market is slow and has been down since 2015, he believes this will only help to spur on his offering as people have become increasingly picky about their buying choices and will welcome a medium that will offer them more choices and options.
But consumer choice is not the only option, he is also looking to monetise the number one commodity in the world at the moment – data. Whitnall’s long-term goal is to compile the data on consumer behaviour on his site and then sell those valuable marketing insights back to the dealerships and car brands he lists on the platform.
The fact that new car sales are declining, down as much as nearly 50 percent year-on-year, is good news for Gaurav Sharma, the founder of OpenBonnet.com, a platform which connects car owners with garages and service centres around the emirate. Launched in April, Sharma says that the idea for the business, like Whitnall, was triggered from his own personal experience.
“I sold my first car immediately upon expiry of its warranty period and saw many of my friends do the same. This is when me and my close friend, and now Open Bonnet co-founder, Maninder Singh, started brainstorming on what pain-points can be addressed through enabling technology in this sector.”
While Al Ashi’s Urent model comes with a lot of unchartered regulation, Sharma says this is not really the case for him, despite embracing the service sector.
“There are no major regulations as we are bringing the model, as it is, to the digital world. Workshops like what we are doing to digitalise what they are doing. The regulation side has not been a challenge as we are not challenging it.”
Looking to Careem, which had to jump through many regulatory hoops before it got to where it is today, does El Makkaoui have any tips for the up-and-coming start-ups?
“There is no right way to go about it. When you’re creating something new, I think it’s only fair for regulators to take a step back and say ‘is this safe? Dubai offers a great ecosystem, that’s what’s important.
“However, there are high standards… I would say take things slow and make sure the right people are aware of what you are doing. When you understand their challenges and what they think is easier to get them on your side.”
At the end of the day, international investors originally scoffed at Careem, but who’s laughing all the way to the bank now?
This article was originally published by Arabian Business, a sister title to Logistics Middle East