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They Put $100,000 Into Careem. Uber Bought It For $3.1 Billion
They Put $100,000 Into Careem. Uber Bought It For $3.1 Billion
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0:00
There were definitely a few times when there was no money in the bank.
0:05
Before Careem became one of the defining startup stories of the Middle East,
0:10
Mudassir Sheikha was trying to keep it alive from one funding round to the next.
0:15
He’d left a safe consulting job, and he and his co-founder had each
0:19
invested $50,000 U.S. dollars of their own money into the company.
0:24
In the early days, Careem wasn’t an app that magically matched riders and
0:29
drivers. It was the founders calling drivers themselves in the early hours of the morning.
0:36
And seven years later, Uber – the rival Careem spent years fighting – agreed to
0:41
buy the company in a landmark deal for the region.
0:45
To do a deal with our biggest rival, the company that we thought was trying
0:49
to kill us, was just very, very different for the organization.
0:52
There are three numbers to look out for in Careem’s story.
0:55
$100,000 – the combined investment made by Mudassir
0:59
and his co-founder at the start.
1:02
$3.1 billion – the amount Uber paid to acquire the company.
1:06
And over 75 million – the number of customers Careem says it has reached across the region.
1:13
This is Founder Effect.
1:20
This is Mudassir Sheikha. I'm the co-founder and CEO of Careem.
1:23
Careem is the everything app of the Middle East. We started with ride-hailing,
1:26
but today we have almost 20 services in a single app, which includes food,
1:30
grocery delivery, payments, and a host of other services. If you're living in the Middle East,
1:35
this is the one-stop shop for everything that you need for your daily life.
1:38
Mudassir’s story began in Karachi, Pakistan’s largest city.
1:42
I grew up in a middle-class family in Karachi, the son of a rice trader
1:47
and a tiger mom. It was a tough childhood, nothing was good enough, but in hindsight,
1:51
that was sort of the upbringing that you need to achieve big things in life.
1:55
That upbringing pushed Mudassir toward a familiar version of success:
1:59
education, stability and a serious career.
2:03
But in the U.S.,he caught the startup bug during the dot-com boom, and his first company failed.
2:09
That was a spectacular disaster. I tried another couple - they were okay from an
2:13
exit standpoint. So, I joined McKinsey as a two-year program to learn how to do business.
2:19
That’s where he met Magnus Olsson,
2:21
a Swedish consultant who would become one of Careem’s co-founders.
2:25
In 2011, he had a bleeding in his brain that almost took his life. The doctors basically told
2:29
him, "Wrap up your life.” And in the deep reflection that happened in that process,
2:33
he promised himself that if he survives, he will call himself Magnus 2.0 and
2:36
build something big and meaningful. So that really became the starting point of Careem.
2:41
Big and meaningful became the brief. They looked at health care. They looked
2:45
at education. Then a former boss pointed them toward transportation.
2:50
The problem sounded simple: getting around was unreliable, expensive and difficult to manage.
2:56
For companies, booking and reconciling rides was a mess.
3:00
It's hard to get clean cars. It's hard to get captains that can speak
3:03
your language. It's hard to pay easily if you don't have the local currency. There
3:07
were so many things that were broken about that experience.
3:09
But Magnus wasn’t convinced.
3:11
And I went to Magnus and said, "Hey, we found an idea. This can be very,
3:15
very big.” He looked at me and said, “I'm getting a second chance in life and you're telling me
3:18
that we should move consultants around for a living?” That doesn't make any sense whatsoever.
3:22
What changed his mind was a driver he met in Abu Dhabi during Ramadan — he was
3:27
working 12 to 14 hours a day, sending 90% of his earnings home to educate his kids,
3:33
and sharing a bed in shifts with other workers.
3:36
We thought, not only is this idea big, but if you can solve the lives of people like him at scale,
3:41
it would be very meaningful as well. So, we found ground transportation as the
3:44
idea that could be big and meaningful, and that's how the journey of Careem started.
3:48
Careem launched in Dubai in 2012. It was radically basic. All we had
3:55
was a website. We would get an email, that email would trigger a phone, and the phone would start
4:01
buzzing that there is a new booking. And we'd call each of these different captains manually. “Hey,
4:05
are you able to take this booking?” We were guiding captains at wee hours of the morning.
4:10
That early mess became a kind of product research. Every late-night call taught the
4:15
founders what customers were actually asking for — and what drivers needed to make the service work.
4:21
Inside Careem, those drivers became “Captains.” And they say the title wasn’t just branding. It
4:28
was a way to signal that the people behind the wheel were the face of the company.
4:33
We literally build the service with them, and it would pain us that in the society,
4:37
and we have many great things about our culture, but one thing that bothered us
4:41
a little bit is these captains were seen as drivers and not treated as equals by many of
4:46
our customers. And captains would call me and say, "This is Captain Tarek” and you could see
4:50
the pride in their voice. And now we see the word captain being used everywhere.
4:54
Careem was building a ride-hailing company in a
4:56
region where much of the startup ecosystem was still taking shape.
5:00
Back when we started, I remember there were maybe three VC firms,
5:05
and we went to all of them. They all said no. Every funding round, we literally had
5:09
one term sheet. We're like one term sheet away from not surviving and growing as a business.
5:13
Look, building a tech company anywhere is hard, but in markets like the Middle East,
5:16
where the ecosystem doesn't exist, especially hard for three high-level
5:21
reasons. The first is funding, the second is talent, and the third is infrastructure.
5:27
That infrastructure problem showed up in basic
5:29
ways. Even the map had to become part of the product.
5:33
Like when you're building a startup in San Francisco, you don't have to worry about
5:36
maps. The maps are there, they're accurate, they've been built, but we had to rebuild
5:40
maps because many of the maps did not have places like Jumeirah Village Triangle or the
5:45
Ministry of Education or the Ministry of Transport. So many things that you
5:48
could just take for granted were just not present and they had to be built bit by bit.
5:52
Payments is another one. Most of the people were still using cash in the region. So, we
5:56
had to build a cash collection network to make sure that we are able to provide the
5:59
service and collect money from customers. In Silicon Valley, a startup could build on
6:03
top of systems that already worked. Careem had to build around the gaps.
6:08
That made the company slower in some ways — but also harder to copy.
6:13
Careem first proved the model in the UAE — in Dubai and Abu
6:16
Dhabi. Then the team took it to Doha, in Qatar, and wrote a launch playbook.
6:21
And then we took that playbook and said, let's replay this playbook in Riyadh,
6:24
which was the next city that we went to. And while we were able to get the service up and running
6:27
through the playbook, the service just didn't take off. Like customers were not using the service.
6:31
It wasn't until we got local leadership on board that understood that city,
6:36
understood that culture, is when things started really taking off.
6:40
That became one of Careem's biggest lessons. They learned the region wasn't
6:44
just one market. What worked in Dubai did not automatically work in Riyadh.
6:49
As Careem expanded, it had to earn trust city by city.
6:53
Nowhere was that clearer than in Saudi Arabia,
6:56
where women still weren't allowed to drive at the time.
6:59
I was at an event in Saudi in the fourth, fifth year of Careem, and a woman in the audience
7:05
got up and said, "There was a pre-Careem Saudi, and there's a post-Careem Saudi.”
7:09
In the pre-Careem Saudi, we were dependent on our male relatives or drivers to take
7:14
us around. In a post-Careem Saudi, we feel very empowered. We can go to work,
7:18
we can go out when we want. We're just more in control of our own lives.
7:22
That made Saudi one of Careem’s most important markets — but also raised
7:27
a question from investors: what happens to that demand if women are allowed to drive?
7:32
When the decree came out that women can drive in Saudi, literally in the next hour,
7:37
we launched our first women captains, and we called them Captainahs, of course.
7:41
Amidst all that growth, Careem was also repeatedly, low on cash.
7:46
There were definitely a few times when there was no money in the bank. So, Magnus and I
7:51
had to inject some more money from our personal bank accounts into the business to keep it going.
7:56
During one funding round, with documents still unsigned,
7:59
Mudassir called his lead investor and tell him the company was out of funds.
8:04
He said, send me the bank account information, and I'll get the funds in. Literally in the next
8:08
24 hours, half a million dollars ended up in the bank account to keep us going. I was like,
8:11
Wow. Nothing has been signed. This is just a word from him.
8:15
A few months later, that half a million is out as well, and I call him again. Again,
8:19
he's fired another half a million. Careem could have been done if it weren't for people like him.
8:24
By the late 2010s, Careem was facing a different
8:27
kind of pressure. Uber — its biggest global rival — wanted the region.
8:32
And they approached us, and they were more honest than we thought at that time. They said,
8:39
"This is our view of the world. This is what's going to happen here.” And we're like,
8:42
man, they're just trying to distract us, you know. We go down this path,
8:46
and then they will take advantage of this and sort of kill us commercially.
8:50
When Dara Khosrowshahi took over as Uber’s CEO, the conversation changed. But Mudassir
8:57
had seen what had happened to some of the region’s earlier internet success stories.
9:01
Maktoob was acquired by Yahoo, and then we don't even know of Maktoob. Souq got acquired by Amazon,
9:06
and now there's only Amazon. So, we didn't want Careem to face the same
9:11
fate. And Dara was very, very generous and kind, and he said,
9:14
“Look, nothing has to change. I'll just become a better investor than your existing
9:19
investors.” Careem stays independent. If you guys want to keep going, keep going.
9:23
But the decision still divided Careem internally.
9:26
And it wasn't until one of our early investors and mentors basically told us very, very brutally,
9:31
very, very clearly, that you'd be selfish if you don't take this deal,
9:35
and the reason you'll be selfish is because this ecosystem needs an exit,
9:39
this would be a phenomenal exit to be a catalyst for this ecosystem.
9:43
In 2019, Uber agreed to buy Careem in a deal valued at $3.1 billion.
9:50
The acquisition closed the following year.
9:53
But inside Careem, the reaction was not simple celebration.
9:58
I said, "Hey, this is happening tomorrow,
10:01
and I could literally see his jaws drop in sadness.” Okay, this is great for me financially,
10:07
but he's like, this is the worst kind of money I'm going to make.
10:10
Then, almost immediately after the deal closed, COVID hit.
10:14
Business was down 90 percent. So, who knows if Careem would have survived COVID independently.
10:21
Thanks to Uber, they didn't walk away. They stuck by their promise and they funded us,
10:26
they supported us and made sure that we weren't just doing ride-hailing,
10:30
but we were now able to do many other things that were relevant at that time, versus deliveries,
10:34
payments, and so on and so forth. So that's when we became the Everything App.
10:37
For Mudassir, the exit also changed how the region saw startups.
10:42
Investors finally saw that a startup from the region can actually be a source of very
10:46
good returns. All of a sudden there was an explosion of top talent that
10:49
was doing startups and joining startups. Governments in the region saw this as a
10:53
way that they can diversify their economies away from hydrocarbons.
10:56
Today, Careem is no longer just a ride-hailing company.
11:00
For users, it is still one app. Behind the scenes, the business is more complicated:
11:06
Uber owns Careem’s ride-hailing business, while the rest of the
11:09
app sits inside Careem Technologies, backed by Uber, e& and Careem’s founders.
11:16
The strategy is to build around services people use every day: moving through the
11:21
city, ordering food and groceries and paying for things inside the same app.
11:26
Of course, you can build anything and everything under the sun,
11:29
but customers are not going to give you credit for things that are very outside your core.
11:34
If you really look at the next level of detail,
11:36
we're an everything app in a few markets and not in most of our markets. In the UAE,
11:40
we have 20 services on the app. A customer can literally live their life on Careem.
11:44
But in the rest of the region, we're still largely a ride-hailing business.
11:48
Mudassir is now thinking about whether Careem should become what he calls an
11:52
“everything agent” for the real world — that's because AI agents could soon
11:57
become the first place customers go to order a ride, send money or get dinner.
12:02
The biggest risk is that you lose your contact with customers. It's very easy for a customer to
12:09
use ChatGPT or Claude and get the services they want without having to go through the
12:14
Careem app. And then we can become very similar to what the telcos have become — a dumb pipe.
12:19
His answer is not just to defend the app. It's to imagine what comes after it.
12:24
So just like we did, we became the first everything app in the region
12:27
in 2020. It's probably time to start thinking what that
12:30
everything agent looks like and take the next leap into the AI future.
12:34
But even as Careem evolves, Mudassir says he still comes back his original founder brief.
12:40
If you're going to do something, do something big. And to do something big, you need to find a
12:44
big problem. Every problem is an opportunity. The bigger the problem, the bigger the opportunity.
12:49
Find something big but start small.
