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Careem to the Ecosystem
Careem in Arabic means generous.
Careem - the company - has been generous to the MENA (Middle East North Africa) ecosystem.
From becoming the first unicorn in the MENA region (excluding Israel), to spawning over 100 founders of companies across the world, to beating Uber and eventually getting bought by them.
Careem is a powerhouse in Northern Africa and the Middle East, and a catalyst for the region’s growth.
And today we're digging right into Careem's story.
Before we kick off, a pop quiz.
Guess how much Careem was acquired for by Uber?
Hint - it was Uber’s biggest acquisition at the time.
Building something meaningful
Careem’s story starts with Magnus Olsson in a hospital operating room.
Magnus - originally from Sweden - had brain aneurysm.
He promised that if he survived, he would call himself ‘Magnus 2.0’ and build something meaningful.
Survived he did. In recovery from the surgery, Magnus called up his friend and colleague at McKinsey, Mudassir Sheikha.
Mudassir was game.
He had grown up in Pakistan, but had plenty of experience in tech - with an MBA from Stanford and a successful exit of his tech company, DeviceAnywhere, in 2011.
While scoping companies McKinsey could work in Pakistan, he found only one company in the country (outside of oil and gas) worth more than a billion dollars.
Mudassir was surprised - he saw a lot of potential from people in the region, but not much value being created.
Mudassir attributed this to the difficulty of living in Pakistan - or, friction.
Growing up in Pakistan, sometimes there would be no water to bath or shower. Other times there was no power. Getting to work by bus took hours.
By the time you start your day, he recounts ‘your brain is already fried.’ This drove the best minds out of the region.
So, going into building Careem, Magnus and Mudassir had two goals:
- They wanted to remove the friction of daily life from people in their region.
- They wanted to build an extraordinary company that created impact and inspired others in the region.
That was it. These were the objectives. Everything else, like business plans, industry to build in, and go to market strategy - was on the table.
Naturally, most of their ideas ended up in the dumpster. The one that stuck was mobility.
McKinsey had issues with corporate transport in the MENA region - dealing with unreliable service and lots of expensing paperwork.
So in 2012, they started as a corporate-focused website that let professionals and firms pre-book vehicles to get from A to B.
Realising that mobility was an issue for individuals - and not just McKinsey - they opened up the service to consumers. And when they started, things were scrappy.
Like all great startups, their initial process was surprisingly low-tech:
- A user would create a request on a website.
- The website sends an email to the team
- The team SMS the driver the details of the pickup and dropoff.
- The driver would SMS when he started and ended a ride, manually entering the miles covered on the odometer.
It was chaotic and complex.
“We made mistakes early on and you don’t realise that there are 20,000 things that can go wrong – from directions to traffic, to the technology and lots of things we didn’t expect,” Mudassir says.
But as they tested and proved the idea, Careem started to grow.
They moved away from their ‘magic box’ solution to a tech platform. But it wasn’t all easy riding.
Not even a year after Careem launched, Uber was at their heels - launching in Dubai giving Riz Khan a lift.
And by 2015, Uber was doubling down on the region.
Uber re-upped and announced a $250 million investment into MENA - with a focus on Egypt, one of their fastest-growing markets.
Careem had to compete with Uber’s advances in MENA while raising less than 3% of Uber’s total war chest at the time.
And media from 2018 says it was about tied - with Uber winning in some markets, and Careem winning in others.
But whenever compared to Uber, Mudassir would reject the comparison.
He claimed that the whole operating model was different - ‘you cannot do something better than someone else who came up with this thing, right.’
And what Careem did differently was focus on local problems and slowly build trust with drivers and riders.
Starting with their drivers - Careem called all of their drivers ‘Captains’ and spent time training and coaching their captains.
Olsson explains that Captains are from poorer parts of the region and have moved to cities to make a living. They aren't treated all that well by others.
Careem also created an emergency fund so that temporary setbacks wouldn’t send drivers’ families spiralling into poverty.
You can see the value of careem (generosity) throughout the company.
And being careem to their ‘captains’ has paid off, with higher loyalty from drivers and great experiences for riders.
With that great experience came safety.
Careem wanted to focus on making a service that was safe for everyone - particularly women.
Building for women was central to their strategy
Mudassir commented that in Saudi Arabia there were more than 2.5 million women who wanted to work but could not because of a lack of reliable transport.
This was a reality for many women in the region.
In Saudi Arabia, women were even barred from driving until June 2018.
Careem built out its services to make sure there was high trust from women, and they could comfortably move from A to B.
Part of their onboarding for drivers is an extensive background check, including (sometimes) sending investigators to check drivers’ credentials.
Riders could also call-mask their phone numbers - so drivers can't see their phone numbers (and possibly give them a call later).
And it paid off. Today, the majority of Careem’s customers in Saudi Arabia (70%) are women.
By honing in on the pain points in MENA and building trust, they sped past Uber.
If you can't beat them, buy them
By holding down market share and building a platform for the region, Careem raised a $350 million round - becoming the region’s first unicorn (outside of Israel).
And in 2018, Uber was beaten out of Southeast Asia by local players Grab and Gojek.
Dara Khosrowshahi, CEO of Uber, commented that “One of the potential dangers of our global strategy is that we take on too many battles across too many fronts with too many competitors.”
The writing was on the wall. A similar story was about to unfold in MENA.
Uber saw MENA as a critical region, but couldn’t get past Careem.
And in 2019, realising they couldn't beat them, they bought them.
The acquisition was Uber’s biggest ever, at $3.1 Billion.
Careem would keep its brand and leadership, but was fully owned by Uber.
It meant a lot for Uber’s growth in the MENA region. But it meant more for startups in the MENA Region.
Careem to the ecosystem
Careem was generous to the ecosystem.
From a ‘magic box’ solution of text messages and manual trips to building better products and beating out the behemoth that is Uber.
So it’s only natural that Careem employees have gone on to create incredible startups. More than 100, in fact.
Some of them include:
- Mohamed Aboulnaga, Co-founder and Chief Commercial Officer of Halan - حالا. MTN-Halan is Africa’s newest unicorn, raising $400 million earlier this month.
- Mostafa Kandil, CEO of Swvl. Swvl is an Egyptian ride-hailing platform that started with a $500,000 investment from Careem. In April 2022, Swvl listed on the Nasdaq at a $640 million valuation.
- Belal EL-Megharbel, Co-Founder and CEO of MaxAB. MaxAB is an Egyptian food and grocery B2B e-commerce platform and has raised over $100m.
- Mahmoud Abdel-Fattah, Co-Founder and CTO of Cartona. Cartona raised a $12m Series A round to digitise trade between small businesses and wholesalers in Egypt.
- Abbas Gassem, Founder of Gawaarida - a classifieds startup that sells vehicles, motorcycles, and tuk-tuks online in Somalia.
- Muhanad Osman, Co-Founder and General Manager of GO Digital Services - a ride-hailing platform in Sudan.
I like the idea that great companies can stimulate entire regions.
In Nigeria, Paystack’s $200 million acquisition by Stripe spawned even more founders and angel investors.
Careem has had a similar impact in Northern Africa, paving the way for the continent's best founders.
When Mudassir and Magnus started Careem, the goal was to build an extraordinary company that would inspire the region. Inspire is an understatement.
What do you think of Careem’s impact on the region?
Let me know here
Nigeria has @paystack Mafia.
Kenya has @Cellulant Mafia.
And Egypt has the @careem Mafia:
- Mohamed Aboulnaga, Co-Founder @MNT_Halan
- Mostafa Kandil, CEO @SwvlEgypt
- Belal El-Megharbel, CEO of MaxAB
- Mahmoud Abdel-Fattah, CTO of Cartona
Careem is the region's most..
— Caleb Maru ⭕️ (@calebmaru)
Mar 1, 2023
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