Cognitev co-founder turned around his failing company within four months
Marketing robots that helped a start-up bypass bankruptcy
When his first start-up was on the brink of collapse, Moustafa Mahmoud recalibrated his dreams, using robots for online marketing with Cognitev.
The 33-year old Egyptian says the idea was to be the “Uber of online marketing” or, basically, tackling a service that is in high demand and making it more accessible to the masses.
“We wanted to create that model where you can press a button and get it anywhere,” he says.
This was not Mr Mahmoud’s first foray into the start-up arena. In fact, Cognitev is a rebranded version from his original idea, Mena Commerce, an aggregator of e-commerce sites in the region. “It worked well. Everyone was happy from the customer side, but we couldn’t generate revenue,” he says.
It may be why such a search engine still does not exist today. “What we built was valuable, but we were literally about to shut down and go bankrupt,” Mr Mahmoud says.
However, he adds that some of his early investors felt strongly about his potential to create change and encouraged him, as well as his other two co-founders, to pivot the business. “The application of the artificial intelligence [AI] technology was aligned, but we were missing the market,” he says.
With zero cash, Mr Mahmoud had to go back to knocking on doors to drum up capital. “Many of the investors that came on in that round mostly invested out of faith, but all we needed was that safety net."
By flipping the previous AI model, Cognitev was born.
The rejigged start-up focuses on using AI for marketing information to help any company looking to sell products online. “Online marketing is hard and expensive. People don’t know how to do it, Mr Mahmoud says. “We wanted to democratise that space using AI.”
Cognitev takes a budget from a company which determines the amount of traffic it can drive to the client's website on a monthly basis. “We’ve delivered three times the results that customers received for the same budget without using our tool,” he says. In one case, there was 10 times the amount of traffic than using a traditional online marketing technique.
The company has seen double-digit growth every month since December, which is a far cry from where it was only two years earlier.
Nabeel Al Kady has invested in Cognitev because he believed its approach to advertising was innovative with the “traffic as a service” model as a world first. “It delivers higher conversion to retailers and more meaningful and informative messaging to people browsing the internet,” he says.
It fits with the rise of online business with the tools to better reach a company’s target audience evolving everyday with technological advancements. The tipping point can be seen in a survey conducted last year by the technology research firm, Gartner, that pointed to chief marketing officers banking on spending more in marketing technology than chief information officers this year.
These results were based on a survey of 377 marketers in North America and the UK at companies with more than US$250 million in annual revenue. The respondents allocated 3.24 per cent of revenue to technology spending last year, nearing the 3.4 per cent of revenues chief information officers set aside for IT.
It shows the growing synergy between IT and marketing, divisions that were previously worlds apart in a company.
Mr Mahmoud and his two co-founders had initially raised just under $2 million in two rounds of seed funding in 2015 and 2016. Now the start-up is back in the middle of a new round, expected to close by early-October, for $2m. Mr Mahmoud added: “We have an amazing group of investors, totaling around 30, from Dubai Silicon Oasis, regional venture capitalists and many angel investors - it’s a very diverse group that has been instrumental in helping us reach our stages.”
Having an idea is the first step, but the execution requires a different skill in order to build the company with the right people.
Mr Mahmoud may be seen as a prodigy of sorts, going to university at age 15 and graduating with a Master’s degree five years later. He spent nearly a decade working at large corporate technology firms, but wanted to bring a different approach to his own company.
Working for large firms made him feel like a “tiny clock in a huge machine” feeding a small part compared to the big picture. His wish list was two-pronged. First was to make an impact and the second was to provide a creative work environment for youth in the Middle East North Africa region.
Taking a note from Apple co-founder, Steve Jobs, he wanted to make a dent in the universe. “And I want everyone working with me to feel that they’re doing more to build something that is great,” he said.
It isn’t just about making money, but the drive stems deeper. He wanted to bring his skill back home and said that the region’s youth, particularly in Egypt, deserved the opportunity to work on something very meaningful. He said: “Many of our talented engineers and developers were leaving the country, and I felt that I could create something that would attract those people.”
His management style is to work the way a professional football team with everyone working together for a common passion. “When you build from scratch, you have nothing and you’re asking people to join you. And if they join, the main reason is because of you,” Mr Mahmoud said.
People want to see this leader that they can follow and trust, and Mr Mahmoud felt that he had to develop those skills a great deal. But ultimately, he really wants to create more leaders.
“I didn’t want to be a manager and only tell people what to do. I wanted to nurture and develop a wave of leaders in my company,” he said.
So he had to invest in his own leadership skills, working on his patience as well as listening to his employees. Mr Mahmoud said that he previously didn’t engage in discussions when workers would ask the simply question, “Why?”
“Their opinions weren’t entertained and I realised if I took the time, my team might actually help me make a better decision,” he said.
It also led to a new creation within the company called the “Golden Team”, a six-member group that has been with the company since Day 1. “They stayed even though the top tech companies have tried to poach them,” he said.
This loyalty has resulted in an unofficial board of directors. “Anytime that I am making a companywide change or there is a serious decision to take - even to the extent of letting someone go - I turn to these people as my advisors,” he said adding that every decision he makes is based on their feedback.
Company: Cognitev began in September from its precurser, Mena Commerce, which initially launched in 2015
Co-founder: Moustafa Mahmoud
Based: Dubai with offices in Cairo and San Francisco
Sector: Digital Marketing
Size: 40 employees, double-digit growth month-on-month
Stage: Round 3 of funding
Investors: Include a basket from Dubai Silicon Oasis to regional venture capitalists and angel investors
Who first invested in you?
It was a group of angels that began as one person who introduced us to his network. It’s always about referrals.
It started with an Asian customer from Mena Commerce who liked what we were doing so much that he introduced us to a Dubai-based investor. This person, originally from sub-Saharan Africa, is a super angel investor which brings a large network and investor sophistication. In addition, many of my former colleagues also invested.
What already successful start-up do you wish you had started?
PayPal revolutionised the way people transacted online, opening up so many possibilities for online businesses. And then I wonder why no one thought of What’s App given the love of Blackberry messenger before 2009 when it was founded by Jan Koum.
What is your next big dream to make happen?
To be honest, I’m living my dream. The whole point of quitting the cushiony job making four times what I’m making now, was so I could live my dream. Everyday I wake up in the morning and I don’t feel like I’m going to work.
When I think about pro football, these guys would never want to take a break. If it’s something that you love, you want to do it all the time.
What skills have you learned in the process of launching your start-up?
I learned how to develop my leadership skills to an extreme. I wanted to nurture and develop a wave of leaders in my company. So I had to invest in my own leadership skills.
If you’re going to be a CEO, it’s a huge responsibility.
In my early days, I had very little patience. I like to do everything very quickly. One of my symptoms was that I never engaged in discussions with why we were doing this. This was frustrating because people were doing things without understanding why. Their opinions weren’t entertained. I realized if I took the time, my team might actually help me make a better decision.