The Startup Journey: How Careem Defied the Odds
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Chapter 1: The Conversation That Sparked an Idea
Imagine this scenario:
Your friend excitedly announces, "I have a fantastic business idea!"
You respond, "Oh really? What's the idea?"
Your friend quickly retorts, "Are you kidding? I can't share that yet. First, I have to secure a patent and get a lawyer to draft an NDA. Only after you sign will I spill the beans."
You question, "What are you afraid of?"
Your friend replies, "Haven't you seen The Social Network? Look what happened to the Winklevoss twins when Zuckerberg took their idea. I don’t want to end up regretting my decision."
You then say, "Well, I have an idea for a business too."
Your friend asks, "What is it? I promise I won't steal it."
You laugh, "You think it's funny? I’m planning to launch an Uber-like service in my city where it’s not well established yet."
Your friend responds incredulously, "That's the dumbest idea I've ever heard! You're just replicating an existing model without any unique angle? That’s foolish!"
You explain, "I know the local market. I can create a smoother app than Uber's buggy one, attract riders and drivers. Eventually, I’ll secure investments and sell the company to Uber for a substantial profit."
Your friend laughs, "Good luck, but it’s not going to happen. You need to think outside the box in this startup world."
Fast forward eight years:
Your friend asks, "Wow, it’s been ages! How’s life?"
You respond, "Great! How’s your secret project?"
Your friend says, "We’re still in stealth mode with our billion-dollar idea. We’ll be seeking investments soon. What happened to your Uber concept?"
You reply, "Oh, we just sold the company for $3.1 billion."
Your friend exclaims, "WHAT? How did that happen?"
You explain, "I did exactly what I planned. My friends began using my app, and soon it spread. Within a year, I had more rides than I could handle. I secured funding, competed with Uber, and eventually sold to them."
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Chapter 2: The Birth of Careem
This conversation reflects the inception of Careem, the Middle East's answer to Uber and Lyft. Despite a lack of innovation, the company carved its path through strategic funding and fierce competition.
Let’s break it down:
- Idea Innovation: Nonexistent
- Unique Selling Proposition: Nonexistent
- Technological Distinction: Nonexistent
It's akin to opening a grocery store directly across from an existing one, both selling the same tomatoes. The outcome? A price war leading to financial strain.
What do you do when cash flow runs low? You reach out to friends for investment in exchange for equity in your company. Careem managed to raise $771 million to sustain its competitive edge.
Ultimately, both businesses realize they’re hurting each other, leading to one acquiring the other—especially if one has significantly more capital.
This may oversimplify a startup's journey, but it sets the stage for a more in-depth exploration.
Chapter 3: Careem's Growth Story
Mudassir Sheikha and Magnus Olsson founded Careem in 2012. I’ve used the app myself; it operates much like Uber or Lyft, with differences mainly in pricing and availability. A robust fleet and solid cash flow were essential for their success, allowing them to operate at a loss initially.
Careem’s journey culminated in a $3.1 billion acquisition by Uber. For context, Uber reported $30 billion in revenue in 2022, making Careem's sale seem modest.
Let’s examine their pitch deck that achieved a 100X return for investors:
The video titled "Careem Raised $771m. Here's Their Early Pitch Deck. (Analysed)" provides insights into how this remarkable growth was achieved.
Careem Pitch Deck Slide 1
In 2013, investing in Careem was a gamble. However, high-risk ventures can yield substantial rewards.
Careem Pitch Deck Slide 2
The executive summary demonstrated their operational status in Dubai and Abu Dhabi, with an annualized revenue rate of $600k-$650k and a monthly growth rate exceeding 50%. While such growth can’t last indefinitely, it illustrates a compelling case for investment.
Careem Pitch Deck Slide 3
The presentation detailed what Careem offers—similar to Uber, yet tailored to the regional market.
Careem Pitch Deck Slide 4
They explained how the service operates, noting that in 2013, Uber wasn't as well-known as it is today. I recall friends discussing Uber's launch, and we found the name amusing, unaware of its impending success.
Careem Pitch Deck Slide 5
The presentation elaborated on functionalities beyond immediate rides, including scheduled options.
Chapter 4: Business Model and Growth Trajectory
Careem Pitch Deck Slide 6
Their business model varied based on the services provided.
Careem Pitch Deck Slide 7
Traction is vital when convincing investors. The growth curve resembled a hockey stick, indicating a startup burning cash but also positioned for high returns.
Careem Pitch Deck Slide 8
Technical details were included to balance the business focus.
Careem Pitch Deck Slide 9
A strong driver fleet was essential for success, necessitating a showcase of their vehicles and driver selection process.
Careem Pitch Deck Slide 10
A reliable fleet translates to positive rider feedback.
Chapter 5: Future Plans and Financial Outlook
Careem Pitch Deck Slide 11
They concluded the deck with plans for expansion beyond the UAE, which they successfully executed, operating in 11 countries.
Careem Pitch Deck Slide 12
Financial figures highlighted their cash burn rate, crucial for investors to understand.
Careem Pitch Deck Slide 13
They indicated interest in acquisition by a major player in the transportation sector, specifically Uber.
Careem Pitch Deck Slide 14
The pitch deck also included funding requests from friends, family, and angel investors, outlining intentions to expand into new markets.
What Can We Learn?
Break away from conventional thinking. In a world where companies like OpenAI rapidly gain hundreds of millions of users, simplicity can be a powerful strategy.
Consider launching a localized version of a successful model in your community; you may find yourself with millions in your bank account, despite what others might say about your entrepreneurial spirit.
What are your thoughts on this approach? Let’s discuss in the comments.
I'm Al, a business consultant based in Zurich, Switzerland. I strive to deliver valuable insights to my readers. Follow me on social media for more content.