At 21, Mudassir Sheikha saw the startup he worked for go belly-up, forcing the then young-graduate to introspect.
Now, the CEO of Dubai-based Careem has seen the company he co-founded make seven acquisitions and three separate investments, according to data available on Crunchbase website.
Along its journey, the company also managed to convince its rival, Uber Technologies, to cough up $3.1 billion for its acquisition while preserving brand and identity in 2019. The transaction was complete in 2020, marking a significant shift in the ride-hailing business and setting the stage for Careem’s future plans.
“I joined a startup after graduating in December 1999 — at the height of the dotcom bubble,” said Sheikha during his conversation with Asma Mustafa Khan during Aaj News’ In the Arena.
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“It (the startup) showed us dreams of becoming rich very quickly. And I ended up working really, really hard - literally slept in the office with sleeping bags, 20-hour workdays, invested any money that I had saved in college into that startup as well.”
Sheikha said he lost everything when the startup went out of business, calling the experience a “spectacular disaster” but one that left him with a lot of good learnings.
“At the time it was a crushing hit.
“But when I sit back and think of what I learnt — a few things came out of it. You can be a lot more ambitious than you give yourself credit for. We saw in the dotcom bubble, there were people like me, thinking of ideas, building businesses, they were getting funding, they were getting big exits, so it seemed like if they can do it, I can do it. It really gave you a lot of confidence.
“Second thing I learnt is the value of speed. That you have to run super-fast. And the third was the value of people — you surround yourself with amazing people and then amazing things happen.”
Sheikha’s remarks come at a time when startups, including some popular ones in Pakistan, face a tough time given global and local investors’ closer watch and tighter wallets. Pakistan’s startups may have raised a record amount in 2021, and some momentum has been carried forward, but never have announcements of layoffs and shutdowns been more frequent either.
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Sheikha, who along with Magnus Olsson founded Careem in 2012 with an initial investment of $100,000 that was shared equally between the two partners, said by the time the company was registered, and a few initial deposits were paid, the two were left with $20,000.
“How do you build a business in $20,000? Then there were a lot of small challenges that were all about building a product, getting it to the market, learning from it, getting people to believe in it. We problem-solved our way through those problems.”
Sheikha’s training at McKinsey would have helped, but it was really his meeting with Olsson after the latter’s surgery that paved the way for building something meaningful, as he puts it.
“As part of that very difficult experience in life, he (Olsson) had come to a realisation that his purpose in life is to build something big and, more importantly, build something meaningful. I met him and he said ‘I want to do something big and something that can be our legacy on this planet’.”
However, easier said than done, the challenges had just begun. From finalising a product that would solve a real-world problem, the journey was going to be a lengthy one, but Sheikha said he found a bottomline statement that resolved this issue.
“From day one of Careem, instead of saying what will we do or how will we do it, we were asking the question: why are we doing it? This is because of Magnus’ journey in life. He said let’s write down why are we doing it. And that line has became Careem’s purpose and mission for the last 10 years — to simplify the lives of people.”
Sheikha said there was a sense that transportation was something “we were suffering from on a daily basis as consultants – it wasn’t reliable”.
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“We didn’t know anything about transportation other than being customers of its services. After we identified the problem, we said let’s start learning it. One segment that really helped us with its learning were captains because a lot of them, especially in Dubai and Saudi Arabia, were from Pakistan and they really embraced us. They hand-held our way onto the business we were about to start.”
While guided initially by captains, Careem was still going to face issues even if it had a product that solved a problem. Startup funding was not going to be easy, and attracting talent was even more difficult.
“The two biggest challenges were talent and funding because in 2012 startups in the regions were not a thing. To attract amazing people to join a startup was very difficult, especially when we didn’t even have the money to pay them. That was a huge challenge. Everyone wanted to work at McKinsey and other companies of that sort.”
It helped Careem’s cause that it managed to raise $1.7 million in a seed round in September 2013, with Dubai-based STC Ventures and an individual investor stepping up. Since then, the rounds got bigger, and the amount raised fatter. Its last round (Series F), before Uber’s acquisition, was a cheque for $200 million where the lead investor was Riyadh-based Kingdom Holding Company.
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The multiple rounds, each of which only raised Careem’s profile, made it easier for the company to attract talent, and spend on its expansion plans, adding further weight to Sheikha’s ambition as well.
“The plan was never to just do ride-hailing, the plan was always to simplify the lives of people and we gave ourselves a very broad canvas. The first opportunity we saw was in ride-hailing — and we solved that problem. We found more problems, and then we solved those problems.
“It’s very similar to a company like Amazon starting with books, in ecommerce. Now they do so many other things.”
In Pakistan, one of the countries where Careem operates, the company started off as a ride-sharing app. Now, it has a payments affiliate – Careem Pay – that has earned In-Principle-Approval (IPA) of the State Bank of Pakistan (SBP) for an Electronic Money Institution (EMI) licence, a step towards extension of services beyond its own ecosystem.
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Sheikha said this is not the time to stop. “I feel we have a responsibility to keep going, this is the time to say how I can accelerate my journey – based on more resources and other things that have come my way because the region definitely needs it. Pakistan definitely needs it.
“We are only simplifying the lives of a few million every month. There’s 100x more impact to deliver. We are so early and we see so much room to fill the gap that we feel we don’t have an option but to keep going and frankly, it’s not just on our shoulders now. The ecosystem is thriving and coming up as well and all of us collectively have to bridge this gap.”
Sheikha also had words of advice for new founders.
“The first advice generally is shoot for the moon. You have a lot more potential than you may give yourself credit for. The second is do it for the right reason. When you do anything for the wrong reasons, bad things happen — people leave, and things don’t happen the way that you want them to happen.
“Third — have a long-term perspective, especially these days the startup environment is going through a bit of a shakeup. We are all coming from a time where yes, the speed is important but you have to show growth and valuation and raise money. Take a long-term view on this. This is not a sprint. Be prepared to run a marathon.”
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Copyright Business Recorder, 2022