Face to face with home-grown Careem

Careem’s co-founder tells Mina Aldroubi all about the next leg of his company’s story

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Careem, the Dubai-based ride-share company, is marking its fifth anniversary with ambitious plans to further expand in the Saudi market – as revealed in The National yesterday. It already competes with Uber and has grown exponentially from 25 drivers at its inception to 250,000 across the Middle East, north Africa and Pakistan. The company is valued at more than US$1 billion and looking at expanding its services further. Here, Mudassir Sheikha (who co-founded the company with Magnus Olsson) tells the story of the last five years – and predicts the next five. 

 

Q How did the Idea of Careem start?

A In 2011, both Magnus and myself were consultants working at McKinsey. Two incidents happened that got us discussing if we should do something different.

Magnus was at a conference in London. He loses his vision twice and goes back home…gets tested and discovers there's bleeding in his brain and gets operated on. He was told he had a 15 per cent chance of not making it. He then told himself if he survives the operation he would do something meaningful in the world.

In my case, it wasn't something as big and dramatic. My last project was to see if we could open an office in Pakistan for McKinsey. As part of that assignment we looked at companies we could serve and realised in a nation of 200 million people there was only one [non-oil] company that was worth US$1 billion. There were others but those were oil and gas.

The fact that such a large nation has not been able to produce large corporate institutions which comes so easily to other parts of the world [was surprising]. I lived in areas such as San Francisco and every 100 metres you would find companies that are worth hundreds of millions of dollars, [but] here in a nation that is so big we don't have any.

Magnus and I said let's find a problem in the region. We looked at many problems in the region – the bigger the problem the bigger the opportunity. The problem also had to be a fundamental issue in order for it to create a meaningful impact.  We looked at health care and education, but nothing really came up that we thought we can do at scale.

Transportation was initially not clear. We knew that a transportation opportunity was huge. As transport consultants roaming the region we had faced many challenges. Everywhere we went cars weren't always available and we were looking for locations so it was a painful process. Then we realised this can…impact lives.

The first version of the service was targeted at companies and corporate businesses. We made a web base interface anyone can go in and make a booking from point A to B at a fixed time. We went to consulting companies and law and accounting firms…then a year later we decided to launch the app…similar to what we are today. Along the way we had another co-founder, Dr Abduallh Elyas, a Saudi-German entrepreneur who was running a start-up in Jeddah also trying to solve a fundamental issue in the region, the lack of street addresses in Saudi…so we ended up merging with him and bringing him on board as a co-founder.

 

What are your plans over the next five years?

In the next five years we want to be the biggest mover of people and things in the broader region. We currently move people at some scale, but when you look at the size of the opportunity we are a tiny fraction of the overall opportunity. We need to become the dominant mover of people in the region. We also want to become the dominant mover of things. The infrastructure we have built can be put to work for the movement of food, groceries, electronic parcels, among other things. We believe that we are currently doing less than 0.5 per cent of the total trips that happen in the region. Very few people know of Careem; even today there are 700  million people that live in the region from Morocco to Pakistan including Turkey, which is 10 per cent of the world's population – so we are tiny compared to the size of the opportunity.

 

Uber has had a lot of negative publicity, how has Careem benefited from it?

Competition is great, it pushes you to do your best. If it wasn't for Uber coming to the Middle East in 2013 this was a year after we started – I'm 100 per cent sure we would have not been where we are today. We would have been slower, less aggressive, less ambitious, it's been a great blessing that has made us sharper in our approach.

Our biggest competition is really how do we get the other 99 per cent of the population that are using other forms of transport on board.

For many people in the Middle East you need to think twice before leaving the house – if you are a woman in Saudi you need to always rely on your father/brother/husband to take you, if they are not at home they cannot take the trip. The ministry of labour in Saudi did some work that they shared with us. We found there are 2.7 million women in Saudi that are not working today because they don't have a reliable means of transport to go to work. This is our main focus: how do we enable people that are not on the platform to come and to provide service for people that are waiting for something to be available?

 

Is an IPO on the cards and are you profitable yet?

With this frame and objectives, it's a natural milestone – at the moment we are growing rapidly, it's hard to say when. We are still very focused on the business. We have just raised a large round of funding from investors so we don't really need the money at this point in time. We are still so early in the journey of Careem that profitability is not the right objective for now. Our focus is still on creating more awareness and products that improve the accessibility, affordability of the service and getting more and more people on the platform. We are in the investment phase. While some cities in the Careem network might be profitable, overall we are still investing much into the business – so profitability is something that might happen in the next few years There is a huge unemployment issue in the region. We have created almost 250,000 jobs [and] our target is to create 1 billion jobs by next year across the region. There will be half a million in Egypt and in Pakistan by end of next year.In many of the markets where people can't afford to buy the cars we have created programmes that will allow them to buy these cars. In Pakistan we have partnered up with the prime minister's youth business law programme and banks to make it easier for people to lease cars and to start working with us. These people may not have been creditworthy before, but now with the income that we are able to show for them and guarantee for them they are qualified to buy these cars. In the same way in places like Egypt and Saudi we have created a programme for people to buy/lease/rent the cars to get meaningfully employed.

 

How do you scale a business in Saudi Arabia?  

Saudi is an exciting market – not only big but different. When we launched in KSA we realised that many people don't have a credit card so we said let's figure out a way to pay for the service [in a way other] than a credit card – and that's when we launched "Cash". While cash might be a small feature, [there is an] infrastructure required to support cash in the back end because we now need to support cash by collecting from the captains [Careem's name for its drivers]. We also found that since women cannot drive – a lot of customers are actually going to be women –  so the question was how do we make sure that their contact details are not shared with the captain and create problems down the line?

 

For Careem's five-year anniversary are you doing anything different? 

Our fifth anniversary is focused on captains this year. We're encouraging customers to recognise the captains and their service. Some of them have been with us since we launched five years ago. They were the guys that lifted us and gave us a platform that we could build on. It's really their anniversary and their event to celebrate. [Our] aspiration is to build a lasting institution from the region and our hope is to inspire others to improve the lives of people. There needs to be a purpose as to why we are doing this. Having a clear purpose and mission has really brought us this far and has attracted other similar minded people. to the platform.