Complex Made Simple

What Careem can teach other aspiring Middle East startups

Careem's success story shows us that you can indeed build a local startup out of the Middle East and take it to great heights, if you focus on the region's needs.

The Middle East is not a region exactly known for its thriving startup sector, though this has been changing in recent years In this desert of a startup ecosystem, one company emerged with a new vision How did a homegrown local company from the UAE grow into the region's first tech unicorn and a venerable rival of a company more than 21 times its size, so much so that the US rival had to outright buy it out?

When you ask most startups today what their strategy or driving force is, many will share lofty aspirations telling you they want to solve a certain problem, or that they want to improve the world in some way or form. More often than not, this is empty PR talk, and while some may truly have noble intentions, they’ll often have done little in the way of actually bringing said aspirations to life. 

The numbers tell a similar story. Globally, around 50% of startups go out of business in less than 5 years – 30% go bust within two. So, in a sense, loft aspirations or not, most startups are destined to fail. 

So how, then, did a homegrown local company from the UAE grow into the region’s first tech unicorn and a venerable rival of a company more than 21 times its size, so much so that the US rival had to outright buy it out

Building a local business first and foremost

If you haven’t noticed by the title of this article yet, we’re talking about Careem and how they put a tough fight in the Middle East against a foreign, much bigger rival: Uber. More importantly, how did it manage to reach unicorn status in a region where startup culture has not been as prominent or developed as in the Western world?

Well, it did it by focusing on local problems, first and foremost. 

Careem’s co-founders Magnus Olsson (left) and Mudassir Sheikha (right). Image: Careem 

As I learned during my interview with Careem co-founder Magnus Olsson a couple of years ago, he believes that “you cannot build any business by trying to import something that you’ve seen somewhere else and then bringing it to another place. I don’t believe that is how you build a business.”

“To me, the path to building something is that you look for a problem – a local problem in the local community, and then you try to solve that.” he continued. 

Unlike Uber, which was hellbent on rapid international expansion at all costs, Careem focused on regional markets it had a good understanding of. Both Olsson and Sheikha had lived and worked in the UAE, so they understood the market’s needs. When they expanded to a large market like Pakistan, it helped that Sheikha hailed from the Asian nation and had an understanding of the country’s transportation needs. Careem eventually expanded rapidly, but not before ensuring that the roots of its business were steadfast. 

In a country like Saudi Arabia, where women were not allowed to drive before the summer of 2018, Careem had thrived. By catering their services to ensure the safety and peace of mind of women in the country, who often had to rely on male guardians for transport, they found great success. For the first time, women in Saudi had the power to control how they travel. Careem allowed them to view the information of drivers ahead of time, and even the option to mask their phone number when using the app. In fact, women came to represent 70% of their customers in the Kingdom back in 2018, thanks to helping them solve their mobility difficulties. 

More than an Uber clone

At first glance, most would be remiss to discount Careem as simply the Middle East’s Uber, because in a sense, it is. After all, its business model is not much different, if you look at its core services and offerings, and at the end of the day, they both offer ride-hailing services a growing suite of other functionalities such as food delivery. Additionally, Careem had transitioned from a private transportation solution for corporations and business professionals to a mass market ride-hailing solution around the time Uber was growing internationally and disrupting international transportation markets. In fact, both Careem’s new ride-hailing solutions and Uber arrived in the UAE around the same time. 

In truth, however, we must realize that soon after its international expansion, Uber was beginning to lose out to local competitors around the globe. pulling out of countries like China and Russia due to mounting competition. They realized that Western preconceptions about mobility didn’t always apply in foreign distant lands, and customers preferred those local companies that did understand their needs. 

In the Middle East, Careem was China’s DiDi and Russia’s Yandex (they merged with Uber in that region). 

Setting an example for the Middle East

In our interview, Olsson reminded me of Careem’s motto: “To simplify and improve lives and build an awesome organization that inspires.” In short, Olsson and co-founder Mudassir Sheikha wanted to set a precedent for Middle Eastern startups, to show them that even in a region where the startup entrepreneurial culture is not exactly thriving, great things can be achieved. 

Unlike most fluff talk I’d heard from startups across my career, this company had actually managed to pull it off. After a successful $3.1 billion exit at the hands of rival Uber, Careem shows us that you can indeed grow a local startup in the Middle East into something much greater. The region remains an untapped startup paradise for those willing to stake a claim here.