Mudassir Sheikha: The Meeting that Led to $3.1BN Buyout: The Battle Between Uber and Careem | E1056

1. 0:00 – 7:00

   Who is Mudassir Sheika?

   1. MSMudassir Sheikha0:00

      ... the two or three things that I generally tell founders are, one, let's just figure out how can you get a lot more from your spending than you would do without a lot of creative thinking. Second, make the product very, very local.

   2. HSHarry Stebbings0:11

      (instrumental music) Mudassir, I am so excited for this. As we said, I've spoken to the who's who of the ecosystem, from Fadi, to the Bekko team, to your co-founder, Magnus Adib. Thank you so much for joining me today, though.

   3. MSMudassir Sheikha0:23

      It's a pleasure to be, uh, to be here.

   4. HSHarry Stebbings0:25

      Now, I would love to start with a little bit of context. I always believe, and I'm a bit of an armchair psychologist, but I always believe that we're a function of our past. And so, when we think about that, what do you think you were running from to start with?

   5. MSMudassir Sheikha0:39

      Yeah, it's a, it's a good, uh, question. Uh, look, I, I grew up in, in Pakistan, in Karachi, in a very humble middle-class background. And if you've been to Karachi, you know that life is, uh, full of friction, a lot of daily challenges, um, basic things like water, power, uh, safety. It wasn't easy. Um, so I think one thing that, uh, I've, I've, I've learned over the last few years is to just be resilient, just to make sure that, uh, nothing can bring you down. So, if I'm running from something, I'm probably running from a lot of daily friction in life that, uh, can take away from people's potential to be, to achieve, uh, to achieve things that are aligned with what they're capable of achieving.

   6. HSHarry Stebbings1:23

      Can I ask you, you said that resiliency, uh, bad things happen, hard things happen, challenges occur. When they do, what does your resilient voice in your head tell you?

   7. MSMudassir Sheikha1:33

      The first instinct, uh, these days is to figure out, uh, what can we do to overcome it. And the second thing is, uh, okay, what's the silver lining in it? Every challenge, as we know, is an opportunity. And if you look hard enough, you'll find that, uh, silver lining that can actually become a source of growth or, uh, or something that makes you stronger. Yeah, those are probably the two things that, uh, come to mind when challenges occur.

   8. HSHarry Stebbings1:59

      I, I, I love that, and I'm totally with you on the silver lining. I always try and do the same. I want to move to the founding of Careem. We were with McKinsey before, and then we decided to co-found Careem. What was that aha moment, and what was that founding moment for you and Magnus with Careem?

   9. MSMudassir Sheikha2:14

      Like most people who run into a problem and they have a moment where they feel that something can be done better, I don't think we had that moment. But there were two things that happened that created a desire to build something. And more important thing happened in Magnus's life, where, in 2011, a year before we start Careem, he had a bleeding in his brain that almost took his life. And as part of the reflection that he went through on life and what he had done in the first 30 years of his life, he promised himself that if he survives, he will call himself Magnus 2.0 and build something big and meaningful. On my side, something much less dramatic. Uh, as part of McKinsey, we were trying to open the office in Pakistan, which is where I'm from, and I realized as part of that process that, as a country of 220 million people then, we haven't built large and lasting institutions. At that time, 2011, there was only one company outside of the national gas company and the national oil company that was worth more than a billion dollars. And I found that a little bit embarrassing, because, of course, I had spent many years in Silicon Valley before that. Every hundred meters, there are companies that are way larger than that. Magnus, I joke around with, "You grew up in Sweden. For a nation of nine million people, you guys have produced many large and lasting institutions. So, what the hell are we doing wrong in, in my country, in this part of the world, that we haven't been able to build those large and lasting institutions?" So, when Magnus came and said, "Let's build something big and meaningful," it was very easy for me to subscribe to it. And then we said, "Let's figure out what can become big and meaningful." So, as diligent consultants, we made a list of all the problems that we had faced in the region. We made a list of ideas and ranked them on size of opport- opportunity and how meaningful they could become. And then somehow transportation came up, which is something that we had faced day to day, week to week, as consultants going around the region. There wasn't an immediate angle which made it look meaningful until we got close to the captains or drivers and understood that their lives are, are very, very difficult in the way they serve customers. Many of them don't know where the next, uh, earning will come from. Their families are typically in Pakistan, Bangladesh, India, that depend on their... We realized that if

   10. HSHarry Stebbings4:23

       Mm-hmm.

   11. MSMudassir Sheikha4:24

       ... form, they can help them ear- earn a predictable income in a respectable manner, and this could be quite meaningful. So, that's really where we started, uh, uh, into Careem. It started as a, as a corporate car service before it became a ride-hailing service and before it became, uh, a lot more than ride-hailing.

   12. HSHarry Stebbings4:41

       I've got so many questions. This is gonna be a great discussion. I agree with you on the lack of huge billion dollar companies. Why do you think that is?

   13. MSMudassir Sheikha4:49

       There are, of course, many reasons, but it boils down to two things. Um, the first thing is what I mentioned a little bit earlier, that there is no shortage of potential. There is a lot of friction in daily life, Harry. You know, when you wake up in the morning, one of the things that you have to worry about is to make sure that there is water in the tap, which you can use to take a shower. If you're lucky, after getting water, uh, in the tank that can power your shower, you may or may not have power or electricity. After that, you have to worry about how will you get to your work or, or, or college or school, because transportation is not as easily available as, uh, as, as it is in many parts of the world. So, there's just a lot of daily friction of life. And a lot of talent in a place like Pakistan and other places like Pakistan, we just end up living our lives solving all these basic things, and don't really get the opportunity to think of big things and do those big things. So, that's one problem. Life is just full of friction, and hence, the potential doesn't get realized. The second thing is, is also lack of b- self-belief and, and confidence, because, you know, not many things have happened. A lot of people don't even believe that they can build big things. So, it really has become a little bit of a vicious cycle where since it's not been done, I don't think it can be done, and I'm not even gonna be trying. So, a lot of people, talented people, when they graduate from college...... they aspire to join multinationals or leave the country and join companies outside. They don't necessarily aspire to become entrepreneurs. So I think between life being full of friction and the lack of self-belief, confidence, inspiration has created an interesting, uh, paradigm where not many people are trying and hence, it's not happening.

   14. HSHarry Stebbings6:28

       I used to be very, um, agreeable (laughs) .

   15. MSMudassir Sheikha6:31

       (laughs)

   16. HSHarry Stebbings6:32

       And then I, and then I realized that, actually, I had some of my own opinions. I found two things quite unique, though. One is, like, in Pakistan, maybe you disagree with me, and if you do, please voice it-

   17. MSMudassir Sheikha6:41

       (laughs)

   18. HSHarry Stebbings6:41

       ... people want others to fail. It is a unique ecosystem where they see someone succeed and go, "You don't deserve it, you don't deserve it. I should have what you have. You are... You stole it. You..." There must have been corruption. That must have been fake. And then you have political risk, you have currency risk,

2. 7:00 – 9:19

   Biggest Problem with Investing in Pakistan

   1. HSHarry Stebbings7:00

      you have economic risk. Why on earth would anyone invest in that country when a business is hard enough to build? And then you throw in that, combined, and I'm like, one, if no one wants anyone to succeed, it's never gonna work. And two, if you don't have the money to invest, it's never gonna work. And those are the two reasons for me.

   2. MSMudassir Sheikha7:21

      Look, as we discussed, every problem is an opportunity, so uh, the fact that, uh, not many people are trying and not many people are investing has created a bit of a void, right, where there are 220 million people, actually 250 now, (laughs) based on the recent count. And they still need to lead their lives, they still need to solve the same problems that people in other parts of the world need to solve. Since there are not many companies globally and many companies locally solving those problems, the companies that end up solving those problems and making the effort, they just have a more open playing field to do well. So if you look at a lot of local businesses, uh, even in the traditional sector versus the digital economy that we spend a lot of our time in, man, local businesses have done really, really well, uh, historically, uh, because they don't get a lot of competition from outside, and even inside, you know, the competition that you get is generally not as formidable. So there is an opportunity. Now, of course, to your question on why are the problems there in the first place, we build companies and we know that, as leaders of companies, we can create a horrible culture, uh, in a company that is gonna create all the kind of things that you were describing. But like I said, there is opportunity in this madness, which is why I personally am an investor, um, in the right teams and the right startups.

   3. HSHarry Stebbings8:38

      Oh, that... Totally is, and please can you send them to me when you do invest as well? That would be gratefully received. Um (laughs) , my, my question, final one before we dive into the incredible stories we have, you mentioned that kind of consultants coming at the problem, mapping it out. We're told that, you know, you should always have this innate passion to solve this problem that you've had since childhood, and it should be this romantic ideology. Yours, to no offense, sounds quite analytical and (laughs) rigorous in a consultant way. Do you need the passion and the romanticism that we're always told, or do you not?

   4. MSMudassir Sheikha9:12

      Yeah, I totally believe that you do, uh, but, but in some ways, if you look at the Careem story, there is a desire

3. 9:19 – 11:09

   Do founders need to be passionate?

   1. MSMudassir Sheikha9:19

      to build something big and meaningful. And, and in the first couple of months of Careem, we mapped it out to what our purpose is, what Careem's purpose is, and that purpose ended up becoming simplify the lives of people and build an awesome organization that inspires, just based on the problems that I described, why these things have not happened in the region. Simplify lives so that people have simpler lives and their potential can get freed up to do big things, and secondly, let's do something in a way that creates inspiration, that creates others to, uh, aspire to do similar things. So the purpose of Careem is to simplify lives and build an awesome organization that inspires, and it is this purpose and the institution that comes out of this purpose that has created passionate Careem. And I often tell people that every company, every startup does something really, really well, and they probably do many things not so well, and the things that do, they do really well overpower the sins and the deficits. The thing that Careem does really, really well, more than anything else, is the gift of purpose. If you ask any person at Careem today what Careem's purpose is, you will get ditto the same answer, and this is a source of passion, this is a source of resilience that keeps Careem going.

   2. HSHarry Stebbings10:31

      I spoke to 17 people before this show, if you can believe it, and I heard some incredible stories, like fantastic stories. And so I wanted to, like, kind of play a story time game where I'm gonna give you a hint-

   3. MSMudassir Sheikha10:44

      (laughs)

   4. HSHarry Stebbings10:44

      ... and you're going to unpack the story, and I don't know these stories, to be clear. So I'm gonna start with one from Magnus, your co-founder, and it's tell us the story of how Careem in the early days used SMS rather than a mobile app to process bookings.

   5. MSMudassir Sheikha11:00

      So this is, um, summer 2012, and as you can expect, summer is a very slow time in the Middle East. It gets very, very hot,

4. 11:09 – 13:41

   Story Time Game / Using SMS

   1. MSMudassir Sheikha11:09

      and this is the time when a lot of captains don't have enough work. They're not as utilized as they normally are in the winters and in good weather. So we start the business in July-

   2. HSHarry Stebbings11:20

      Just so I understand, captains are drivers?

   3. MSMudassir Sheikha11:22

      Captains are drivers. That's a-

   4. HSHarry Stebbings11:23

      Gotcha.

   5. MSMudassir Sheikha11:25

      ... word that we use, uh, to call drivers because we just want to pay them respect and we also want to make sure that they understand their responsibility of carrying other people in the car and for their safety, just the same way that pilots and other captains are. So we started the business in July of 2012 and we mapped out what does it take to launch this service with an app on the captain side, with an app on the customer side, but we realized that it's gonna take us four, five months to get this thing out, and by the time we get this thing out, captains will not need work from us because they'll be quite busy with their existing work and it's gonna be difficult to get the captains on board. So Magnus came up with this brilliant idea that why don't we figure out a way to go live in the next six weeks while summer is still here so that captains will be more open to working with us and it'll be easier to acquire them.... now, of course, you're not gonna be able to develop an app and figure all these things out, uh, in such a short timeframe. So what we ended up doing was we ended up creating an SMS app where captains, of course, they all had feature phones, as we used to call them back then. Every time they would get a booking from us, when they were going to pick up the passenger, they would send a message, "See? I'm coming," to the customer. And as soon as our systems would get the message, we would trigger a message to the customer saying that, "Your captain is on the way." When they would arrive, they would send another message (laughs) . And that will tell the customer that, "The captain has arrived." And when they were starting a trip, we would have them send their car mileage, their, their current, uh, odometer reading. And then when they were ending a trip, the same one, so we calculate the distance they've traveled and on the back of that, we would price the trip. So it was very, very low-tech, but it got us out there very quickly. And of course, captains were looking for work, so many of them started working with us, service was available for customers, and it really gave us a flying start in Dubai, where, whi- which is where we started.

   6. HSHarry Stebbings13:12

      Did you have product-market fit from day one?

   7. MSMudassir Sheikha13:15

      The short answer is no. And, and you never do (laughs) . 'Cause we've launched many products, uh, now, in the last 12 years, 11 years, and almost nothing has worked on day one as we expected. So I remember, we'd launched the service, we have many captains that are waiting, but there's no one booking a ride. So we end up calling our custom- calling our friends, "Hey, these guys are waiting just for free, try it out." (laughs) But even then, people were not

5. 13:41 – 17:59

   Did Careem have PMF from day one?

   1. MSMudassir Sheikha13:41

      using it because they had existing arrangements that, uh, were taking them around. But, you know, y- what you end up realizing is you have to be very focused early on. You have to go after as narrow opportunities as possible. So we realized there were some use cases, for example, where people were not able to use their own transport. Uh, going to the airport was one of them, so we launched a, an airport promise that if you're more than five minutes late, that trip would be free, so we went after that use case. We went after corporates, which was our initial business to begin with, but we made sure that they were getting the right quality of service, the right levels of reliability, that ended up becoming a huge, uh, source of revenue and profits in the early days before we were able to raise money. So it took us a few months to get this thing going, but, uh, it didn't take us, uh, very long before the growth started showing up on the platform.

   2. HSHarry Stebbings14:31

      You said barely anything works on day one. Can I ask a hard one? What did you do that just flopped, that did not work (laughs) ?

   3. MSMudassir Sheikha14:41

      Well, where do I start (laughs) ? Look, there was a, there was an idea that we had, uh, back in the day that, uh, a lot of the companies, because there were a lot of limo companies that we were onboarding, in addition to... In some markets, we could not onboard individual drivers or individual captains, so we were working with companies and they were bringing all of their captains to work with us. So we figured they have their own business, they're working with us as well, what if we could give them our technology as a cloud offering, which would then allow them to do their business on our technology stack and also do our business? So this would be a way for us to get them to u- adopt our technology and would make the acquisition a lot, lot seamless. We spent a lot of time building it, we spent a lot of time trying to sell it. We, in fact, even had one large limo company in Dubai sign up, but that was a miserable flop, because we were just not designed to be a SaaS company. They kept asking for this improvement there, that feature there, and it was just another priority and we were just solving for our customers. And those needs were very different than the needs of an enterprise that is using us as a te- us a te- as a technology provider, so that was a, a big one. And l- like I said, there's a long, long list of such things.

   4. HSHarry Stebbings15:49

      How do you determine between focus on what you do and what you know versus an opportunity that could be chased? Like there, you did have the platform, but it wasn't core, and it was a different customer market, but it was revenue. Uh, how do you determine between stick to your knitting versus something exciting that we should pursue?

   5. MSMudassir Sheikha16:10

      Yeah, it's a great question and, and to be honest, uh, Harry, we're not great at that. We tend to, uh, get excited, uh, quickly and, and, and do more things that we can, uh, than we can chew. But there is an attitude at Careem that we don't give up (laughs) . So, uh, we stay at the problem, uh, for way longer, uh, than we should. And in many cases, we figure it out.

   6. HSHarry Stebbings16:32

      It... That's interesting. Like, is that good? 'Cause th- that, that's... I always think, like, how long should you stick at something versus realize that actually it doesn't work and you should move on?

   7. MSMudassir Sheikha16:42

      Look, it's, it's good and, and it's bad at the same time, right? It's, it's, it's good in the sense that a lot of the learnings, uh, that you get in trying something, they end up taking travels that you don't expect, and they end up becoming valuable somewhere else. Yes, the, the... You keep learning and you keep building on those learnings, you a- a lot of times end up getting somewhere that you would not have gotten to if you would not have pursued something long enough. So that's one aspect of it. But you're right, I think the, the downside of this is you just end, uh, end up piling a lot of things, which end up creating some weight on the organization that starts pulling you down. So this is something that, of course, we're trying to get better at. But, uh, this is, uh, this is the current DNA.

   8. HSHarry Stebbings17:28

      Tell me about the time when you were thinking about the choice between paid coffee, pay for printouts, or pay for electricity.

   9. MSMudassir Sheikha17:37

      (laughs) On the 1st of April 2014, uh, we, uh, we decided that, uh, we need to send a message of frugality, uh, to Careem. And there's, uh... It's been one of our values from, from day one, uh, the point being that, uh, we're in a very low-margin business, and since we're low margin, we don't want to tax our captains, uh, with very high margins. We just need to be super, super

6. 17:59 – 24:10

   How Careem Built a Culture of Frugality

   1. MSMudassir Sheikha17:59

      frugal as a platform so that we can be as efficient as possible. You have to keep repeating that message, especially when you raised funding, when all of a sudden there's money in the bank and everything that was being done for a dollar now ends up costing two dollars.... and, and the needs for capital just multiplied. So, the first of April 2014, uh, we, we decided that we were gonna send a message to the entire org, which was a small org. I don't know, we were probably 40-50 people back then. We raised all our money but, uh, we're still losing money, we're still a low margin business, we need to save money and we noticed that we're actually spending a lot of money on coffee, which is not great for people's health. We're spending a lot... wasting a lot of money on printouts and we see a lot of lights, you know, that are left turned on, uh, even when people are not in the office. So, we'll start charging for two of these three things and we wanted people to vote which of these two things do we charge people for. We got some pretty, uh, supportive responses. Uh, uh, one colleague responded saying that "This is completely ridiculous. Are you gonna start charging for oxygen next?" And (laughs) , uh, and then someone figured out that this is the first of April, uh, and most likely an April Fool's joke, so we all laughed and moved on. But it sent the message that frugality is important and every dollar, every wasted power or printout is something that we have to watch out for.

   2. HSHarry Stebbings19:19

      Is it hard to retain that element of frugality when you raise a lot of money as you did do?

   3. MSMudassir Sheikha19:25

      100%. It's very difficult. Uh, it's, it's very difficult.

   4. HSHarry Stebbings19:29

      Right.

   5. MSMudassir Sheikha19:29

      Especially when you are in a market where others are spending a lot of money. You know, we used to have this concept that every dollar that we spend has to match the $5.00 that our competition is spending in our market, because we were outfunded. And if you need to compete with much less funding, your dollars just need to stretch a lot more. And, and marketing, which as a consumer platform you need to spend and invest money in, is, is an area where we felt we would never be able to spend big dollars on marketing because it's just very expensive. So, what we would try and do, is we would come up with viral concepts that just spread on their own. And we did a lot of crazy things. You may have heard of this slingshot video in Dubai, where we basically threw a man from one tower in Dubai to another tower, and turned out that he misses and everyone thinks, including, uh, the intelligence in the city, that someone has died. Where this was a publicity stunt. It ended up going viral. I think Elon Musk, uh, tweeted that as well (laughs) . And, uh, we ended up creating tens of millions of dollars of publicity through a very simple video. In Pakistan, when we were launching the motorbike category, uh, we bought a small billboard that basically told women in the country that if you all run away from your wedding, you should call a Careem bike because we come quickly and we make sure you run away (laughs) . Which got us into trouble with a lot of people in the country, including the religious, um, segment. And our MD in the Pak- in Pakistan at that time had to leave the country just to make sure that he was safe. And so on and so forth. So we've done a lot of these crazy things that have just made our dollars go a much longer way than competition dollars.

   6. HSHarry Stebbings21:19

      Can I ask, what would you advise founders, having been through that process where your dollars are so out-competed by other people's dollars, they're so outweighed, what would you advise founders when they have much smaller budgets than their competitors?

   7. MSMudassir Sheikha21:32

      I hope that, uh, the excesses of the last 15 years are behind us, so hopefully we aren't gonna have many situations where those kind of decisions will have to be made. But the two or three things that I, I generally tell founders are one, similar to on the marketing side, let's just figure out how can you get a lot more, uh, from your spending than you would do doing things traditionally or doing things without a lot of creative thinking or doing things which other people are doing. So, I think that's one element that you can (laughs) optimize. That can the... Make the product very, very local and, and you know, a lot of time you end up competing with companies that are coming from outside that have access to capital from a different market and they're just able to spend a lot of money, which is what happened with us. So, make sure that your products are able to, sort of out-compete the, the funding thing. So, I'll give you a basic example. Early in Saudi- Saudi Arabia, which is of course the largest market in the region, um, not many people at that time had credit cards or even if they had credit cards, they were not able to use credit cards and people just preferred paying in cash. So this was something that we spotted very early on and we said, "Let's, uh, enable cash payments." And while Uber were spending a lot of money in that market but they were not able to use the service because just they didn't have the cards to pay for the service. So, that was one example. We had a call center that made it very easy for people in the region who preferred to make phone calls and get served, to, to call us and, and get supported and so on and so forth. So, there's a lot of things you can do in the product and service that can make you go a longer way that others may not be as close to the market, uh, as, as, as you are. And the third is, uh, on people. I think that's, you know, it's all about quality versus quantity, right? Um, rock stars are twice price more productive than average performers so let's just make sure that you get the right talent on board, um, and focus on the quality of that talent versus the quantity.

   8. HSHarry Stebbings23:32

      Can I ask you? We're gonna get into funding. What do you tell investors who go, "Oh, Mudassir, we think you're great, great company, but we don't want to invest in a company that's going up against these behemoths." How do you explain that to investors?

   9. MSMudassir Sheikha23:48

      Yeah. Look, I think we, we had to, right? So, and in some ways, we were able to prove that it can be done. And, and the case was, was very similar to what I'm describing, Harry. I think we're just local, we are closer to the market, uh, we understand the needs of customers, we keep adapting our products to those needs and we'll be able to prioritize

7. 24:10 – 25:16

   How We Beat Uber/Behemoths

   1. MSMudassir Sheikha24:10

      those needs versus a global company that's, that has thousands of other priorities that are sitting above the priorities for the region. So that's one big case to be made.Um, second, uh, we also at that time had a very different approach in how we worked with local stakeholders. So as you may have heard, we have a joint venture with the Dubai government, uh, that dispatches taxis. It's a very unique, uh, kind of model where the government and a ride-hailing platform has- has come together in a joint venture and have allowed the dispatching of taxis in the market.

   2. HSHarry Stebbings24:42

      We mentioned funding there. Uh, I've got another one for you. Tell me the story of an Airbnb bunk bed, which (laughs) is an interesting start, the night before raising $350 million back in 2016. How did that come to be?

   3. MSMudassir Sheikha25:00

      Our CFO, uh, back then, Ankur, you know, uh, he had this frugality, uh, DNA as well. So we were going for an investor meeting for the $350 million round in San Francisco and, um, he had booked these, uh, two rooms on Airbnb, uh,

8. 25:16 – 29:40

   Craziest Stories from Fundraising at Careem

   1. MSMudassir Sheikha25:16

      with bunk beds, uh, which frankly was actually quite difficult for us to sleep on, so I didn't get much sleep, uh, that night. I'm not a coffee person but I had more than my fair share of coffee just to make sure that I was able to present in that meeting and stay awake. And I think there was also one small thing there where we got to the meeting a little bit before the time of the meeting, so we said, "Let's catch up on sleep." So we had a small little car, I think it was Geo Metro or something similar, where we were sleeping in the car and one of our investors would come to meet us just to give us advice for that meeting, took some pictures and sent them around.

   2. HSHarry Stebbings25:49

      I absolutely love that. I mean, listen, it's an advert for Eight Sleep or Calm but, uh, that's very funny. Can I ask, on the fundraisers, when you review them, which round was the hardest to raise?

   3. MSMudassir Sheikha25:59

      Actually, all of them felt hard (laughs) at- at that time. Uh, but looking back, the first two rounds were probably the toughest because we were too small to go to global investors and the region was, uh, very early in their sort of appetite for local startups. So there weren't a lot of people that were investing. So the first round was... came through- through sheer, uh, luck. Uh, all the investors that we spoke to, there were a handful of VCs in the region, they ha- turned us down and then somehow one of them had a change of heart, called us back, and we were negotiat- negotiating on the valuation and they figured out a creative way to bridge the gap. But the second round was probably the toughest because we have some people with us. We have put two, two and a half years into doing this, running out of money. First, Magnus and I put more of our own money into the business, but at some point we were not able to put any more money, we're still running out of money. We have a lead investor on the table but that investor, the- the documents are just taking way longer to sign. And this is really where you see the- the beauty of the region come through. So I call our lead investor for that round and I say, "Abdullah, this thing is taking a lot longer to close, we're out of money, we've already put our savings into the business." And he's like, "How much money do you need?" I said, "$500,000." He's like, "Send me the bank account details and I will send it to you." No documents have been signed, this money comes from his personal bank account. A few weeks later... Well, a few weeks, maybe a few months later, we're still at that same board, the documents are still not done. I call him again, another half a million dollars arrived without sign, without anything signed, without, uh, anything in place and he sends it again from his personal bank account just to sort of bridge us, um, to getting the documents done. So Careem has been a- a labor of- of love from a lot of people in the region, um, and there are so many stories like this, Harry, where people have come through when we least expected them and supported us, uh, to- to get where we are today.

   4. HSHarry Stebbings28:02

      I spoke to Amir Kosa who was at DECO before and he said, "Was there ever a time when you thought that the company would die? Uh, and if so, which is the most poignant one?" That sounds like one which is a stretch and a hairy moment. When you think back on others, are there any others when you and Magnus sat down and went, "Oh my God, (laughs) how are we gonna get through this?"

   5. MSMudassir Sheikha28:22

      I think after maybe series A, I- I didn't think that the company would die. There was just a belief that we're onto something and it's going to be around. And it was a contentious, uh, process where there were some investors that wanted to sell and there were others that didn't want to sell, and it ended up creating a big divide in the board that made things, uh, quite challenging. And at that time, we felt that we were sort of left holding the bag, everyone is sort of looking out for what they want, and there's a risk that, uh, we are going to destroy everything that we've built for the last eight years. So that was quite stressful, uh, because we were so at the finish line but we were just not able to get everyone to cross it with us.

   6. HSHarry Stebbings29:05

      That's really, really hard. How do you manage a board effectively and what do you know now that you wish you'd known when you started Careem on board and investor management?

   7. MSMudassir Sheikha29:15

      One of the things that I... Of course, after the whole thing got done, I reflected on what we could have done differently, and board management was one where I felt, uh, we could have done a much better job. We were just so busy running the business, Harry, that we didn't spend a lot of time with our board other than maybe a- a few people here and there. We could have been more proactive in building relationships, building trust. That would have then created currency, uh, that

9. 29:40 – 30:55

   Board Management Tips

   1. MSMudassir Sheikha29:40

      could have helped us at those, uh, moments. But then one concrete learning for me was that let's have a chairman of the board that can help us manage the rest of the board. Because it takes time, as- as you know, and if we can get someone that is well respected by everyone, that has got the- the time and the ability to manage the, help us manage the board, getting someone like that in place and then making sure that we spend a lot of time with that person and with that person manage the board could have been- could be- could have been quite helpful. We tried doing that towards the very end after we reflected on it, uh, but by then it was a bit too late and it wasn't necessary.

   2. HSHarry Stebbings30:18

      You mentioned the acquisition and the discussion internally there. I wanna take a slight step back, and obviously I spoke to many people. I wanna start with the acquisition process, and your first meeting with Dara. I heard I had to ask this. Take me to the first meeting with Dara. Where was it? How did it go down?

   3. MSMudassir Sheikha30:36

      The first meeting was, uh, surprisingly positive. Uh, it was a- a meeting that happened in Riyadh on the first FII. It was both Dara and Travis. And Dara had just joined or was going to join, and Magnus and I met, uh, both of them. Uh, and Dara just showed

10. 30:55 – 39:09

    The Uber Acquisition: Behind the Scenes

    1. MSMudassir Sheikha30:55

       so much more respect. Uh, he mentioned his links to the region, he asked questions, "Why are we doing it? What are we doing it? What is our vision?" From someone that was heading a company whose name was a four-letter word at Careem, uh, there were people at Careem that would not wear black, uh, because, uh, that color was black. So, uh, it was a very different relationship, uh, that we had with them, uh, before the deal happened.

    2. HSHarry Stebbings31:20

       Fascinating to hear the contrast. How did the deal go down? I'd love to hear behind the scenes. They reach out and say, "Hey, we wanna partner with you." How did that look?

    3. MSMudassir Sheikha31:29

       At some point, they, I guess, had decided that they were going to, uh, uh, consolidate in markets where it made sense. Uh, that's where the China thing had happened. They'd done something in Russia. And- and Middle East was on that list as well. So they reached out to us. We had some discussions with them, but nothing made sense. And then, when we were about to start our second-last funding round, we were in San Francisco meeting investors and then our CFO had this idea that, "Maybe we should go and check on Uber as well, uh, see what they're up to." It was just a catch-up meeting that ended up restarting the process. And, of course, there are many reasons to do the deal, but there were also very crucial reasons not to do it. The thing that really made it happen in the end was Dara saying that, "You guys can continue you, continue pushing your purpose, keep your culture, keep your org. I'm just going to replace your shareholders and become a better shareholder." And that's really what felt, to us, like this was the best of all worlds. Our shareholders get an exit, our colleagues do well. The region gets an exit, which it needs for the ecosystem to start, uh, you know, running forward. At the same time, the purpose of Careem, which has been so, sort of, special for us and for the region, stays, the culture stays, and we continue to build and hopefully build a much bigger and lasting institution from the region.

    4. HSHarry Stebbings32:54

       How did joining change your ability to spend? When you think about the frugality you had before, did joining give you an elastic budget?

    5. MSMudassir Sheikha33:02

       The timing, uh, was pretty strange, uh, Harry. I think, uh, a few months after we closed the deal, uh, COVID happened. And as- as- as you expected, uh, our business was down 90%. We had to do a massive, uh, headcount reduction, uh, and there was a lot of focus, all of a sudden, on profitability and becoming efficient. So things became... The whole, uh, (laughs) environment changed, uh, dramatically. Which also, now that you look back, accelerated the- the s- the start of the delivery businesses and the build-out of the Super App, which is what we launched in June 2020 at the height of the- the pandemic. And today, if you come to Dubai, we have 20-plus services all the way from ride hailing, to food delivery, to grocery delivery, to home cleaning, to laundry, to payments, and so on and so forth. So a lot of the effort went into building things that were needed at that time versus the ride hailing business that was less relevant in that environment.

    6. HSHarry Stebbings34:03

       Can I ask you, what were the reasons not to do the deal?

    7. MSMudassir Sheikha34:06

       Careem is quite special, uh, Harry. And I don't say it because I, uh, I- I w- I was one of the people who started Careem. But I've been at startups before. I've been a part of founding team before. And these things generally start for relatively material things, right? Like, people want to become rich. People want to do something that really people look up to and inspire others. But Careem got lucky in the sense that Careem's start was a result of Magnus's near, like, death experience and the desire to build something big, and more importantly, build something meaningful. That's a gift that keeps giving. Um, and as a result of which, the purpose of Careem came about, uh, the passion for that purpose came about. We felt that it would be a shame to lose such a unique and special start to- to a competitor who is most likely going to merge it eventually, and the Careem brand, and the Careem purpose, and the Careem culture will disappear. It felt like a huge loss. And, uh, I remember when I was talking to... W- the night before the deal. Of course, I had to tell some of our leaders that this deal was happening. And one of the leaders I spoke to about the deal, his exact words to me was, "This is the worst amount of money that I'm gonna make. How can you do it?" And there are many people at Careem who are not happy that we did this thing, even though so many of them did really, really well financially but they were just not happy that this could mean the end of something special that could have been and should have been the Google or Amazon type of institution from this region over time.

    8. HSHarry Stebbings35:57

       Do you think it did cut you off at the knees and prevent you being the Google or Amazon from the region?

    9. MSMudassir Sheikha36:02

       Not at all. Uber and Dara have been, have been incredible. Uh, I think they have supported our vision, they have funded the vision, and as you probably heard, uh, we have, uh, done a spinout thanks to their help, with some retail investors on board now, that is restarting the entrepreneurial journey to build that lasting institution from the region.

    10. HSHarry Stebbings36:22

        Can I ask, what does your relationship look like with Dara today?

    11. MSMudassir Sheikha36:25

        It's great. I- I look up to him, I respect him a lot, and I hope some of that is mutual.

    12. HSHarry Stebbings36:30

        I- I- I'm sure it is. Uh, w- w- when you sell, you go through a period of reflection. When you reflect, is there anything that you would have done very differently? Do you have any regrets? I gue- that was one from, uh, Amir at KOTA.Any regrets from the journey?

    13. MSMudassir Sheikha36:47

        I wish we could have done more for our captains as, uh, as a part of the exit process. You know, Careem was built by these captains, um, and, and we are close to many of them. And as I look at them today, they're still doing what they were doing 10 years ago, and that saddens me a little bit. So many people at Careem have done quite well. They've grown, um, and they've progressed in life as a result of these last 10 years. But the captains, which were the foundations of Careem, which were the ones that taught us how to build this business, in many cases are still where they were 10 years ago. So I wish we had done something for captains that would have benefited them from the transaction as well.

    14. HSHarry Stebbings37:31

        Does it get easier over time? Everyone says, "Oh, it doesn't get easier." Does it get easier?

    15. MSMudassir Sheikha37:37

        For me and for us, it's not gotten easier, but the problems that you're solving are, are different. You're not on the street driving as a captain or speaking to captains and recruiting captains and supporting captains. But, uh, you're trying to figure out what are the structural things that we need to do to build a lasting institution, right? What kind of performance management system makes sense for Careem and its ambition? Uh, what kind of capital allocation process, uh, makes sense? Uh, what markets should we go after? How should we go after those markets? What should, should we do organically, inorganically? And many of these things are not straightforward, at least for many of us in the region. We haven't had those kind of big successes that have happened, uh, in other parts of the world. We're still learning and evolving, uh, uh, at, in this, in this new phase of Careem.

    16. HSHarry Stebbings38:26

        Speaking of learning and evolving, um, it's always tough to balance being an amazing CEO with being a parent and a father and a great husband. I heard that you once told your wife that you would be focusing on work, only sleeping four hours per day from 1:00 to 5:00 while she took care of the kids. Is that true and how did that discussion go down?

    17. MSMudassir Sheikha38:47

        I've said a lot of stupid things to my wife over the last 11 years. This was probably one of them. But look, like I said, she's been, she's been incredibly understanding. Um, and then not just understanding, she's been very, very supportive. You know, I've been working so hard at Careem for the last 11 years and before that at McKinsey and before that at other places. The only friends I have generally

11. 39:09 – 43:15

    Balancing Work and Family

    1. MSMudassir Sheikha39:09

       (laughs) are the people that I work with, you know? Since I don't stay in touch or don't have the time to stay in touch with others, I, I lose that, uh, connection over time. When we started Careem and when we start any service at Careem, she's actually been the cheerleader for those services. So when we started the ride-hailing business, she was part of the forum. She was spreading the word about those services to her friends. When we started payment service, she did the same. When we started food delivery, she was doing the same. So, she's actually been an early marketeer of many of our services and that's been, uh, incredible and, yeah, it's been great to see.

    2. HSHarry Stebbings39:42

       Can I ask, on parenting, what do you know now that you wish you'd known before you had your first child?

    3. MSMudassir Sheikha39:48

       You realize that every minute is an opportunity for you to teach them something, because they do so many different things and some they will do right and some they will do wrong. And if you're not there, then you're missing on opportunities to show them the right way. So, it feels like a lot of hard work, if you want to do it well.

    4. HSHarry Stebbings40:09

       How do you do that while also being a rockstar CEO? What advice would you have for me? I, I work intensely, like you. I want to be a good father. How do I do both?

    5. MSMudassir Sheikha40:19

       You know, marry well. I think that's, uh, 80% of the problem is just finding the right person to marry. Uh, and then, uh, become intentional about parenting. Okay, what is your responsibility? What is the other person going to do? So Saba, my wife, uh, she was very clear with me that there are two or three things that she would like me to focus on with respect to kids. Financial education was one of them, and there were a couple of other things that she delegated to me. So then over the weekends, I put some things in place for me to start coaching them on those topics. Yeah, having a discussion on, uh, what's important, uh, what she will do, what you will do. Try your best to, to do what you need to do, uh, and that's not easy either.

    6. HSHarry Stebbings41:02

       Final really personal one, I promise. Uh, money does matter and people like to pretend it doesn't. I think relationships to wealth are quite important. How do you think about your relationship to money today and how has it changed over time?

    7. MSMudassir Sheikha41:17

       Well, there are probably two or three things that come to mind. One, my lifestyle hasn't changed too much. Um, I'm still living in the same house that we lived before, largely driving similar cars, we travel similarly and so on and so forth. So, we haven't done too many changes in our life. We don't think that money should change our lifestyle too much because we want to make sure that our kids get the right upbringing which gives them enough hardship that makes them, uh, resilient over time. So that's one. It's also a huge source of responsibility, uh, Arion. We live in a region where, of course, you know, you can live in Dubai and it's very different, but as soon as you step in a country like Pakistan or Egypt or Lebanon, you, you do see a lot of, uh, suffering around you. And, and you feel, uh, like somehow, for some reason, you were chosen to be given wealth, and it's not something that you deserved or you, you have it for yourself. You need to somehow step up to the responsibility that this brings. So that's something else that, uh, we feel, uh, quite responsible for, uh, in some shape or form.

    8. HSHarry Stebbings42:31

       Speaking of being responsible for the wealth, can I be blunt and ask how many millionaires were made from Careem sales, speaking of the Careem mafia?

    9. MSMudassir Sheikha42:39

       I think in dollar terms, there were 75 millionaires. In dirham terms, there were, I think, 300 plus. It was a, it was a good exit, uh, for, for many colleagues at Careem.

    10. HSHarry Stebbings42:47

        Okay. So when we think about that, what are the biggest bottlenecks to those 75 millionaires in dollar terms creating the Careem mafia that we want to see? What will prevent them that we need to overcome together?

    11. MSMudassir Sheikha42:59

        It's a great question, and I think one thing that you...... hope we find in many of them and many others (laughs) that didn't, uh, cross that, uh, that number, is a huge desire to do something for their countries or for the region. Because

12. 43:15 – 43:30

    How many millionaires were created by Careem’s exit?

    1. MSMudassir Sheikha43:15

       in the last, like I said, in the last eight, 10 years of Careem, the purpose of Careem and the passion that the per- person bought was so central to our daily existence. Once, I was visiting Lahore, and the team in Lahore

13. 43:30 – 47:55

    Biggest Challenge for Startups in Pakistan

    1. MSMudassir Sheikha43:30

       did not let me enter the office until I read the manifesto that was outside the office, and that manifesto was all about, "I'm gonna create jobs, I'm gonna look after these captains, I'm gonna make sure they're earning a respectable living, I'm gonna look after them." These kind of things manifested in different ways in different markets. So, I feel and I hope that a lot of them are doing the next Careems, uh, for the right reasons, and they will build them, uh, in the right way. Now, what is stopping them, um, from, from being successful, you know, talent continues to be a challenge, uh, in the region. It's becoming a little bit easier to attract talent to startups, but it's not universal across the region. Like, in a place like Egypt, Pakistan, it's starting to become difficult once again. Capital, again, is available in some places, not available in others. That's a challenge for some. And, and one of the biggest challenges that I find still in the region is the, is the fragmentation o- of the region. The region is not small. There are 500 million people that live between Morocco and Pakistan, but it's made up of a lot of small countries, a lot of small markets, and you can create an incredibly large platform for the region, but to cover the region is extremely complex. You know, the region operates in a way that if you, let's say we're taking this to the US, you start a business in California, you can only serve customers in California. And if you want to take this business to New York, need to register a legal entity. You need to get licenses, you need to get payment systems, you need to get SMS systems. You have to redo the whole thing to go to New York. Then if you wanna go to Florida, you have to redo the whole thing. Now, just imagine how much entrepreneurship will happen in the US if the US was so difficult to target as a market. And this is how the region operates today. It's extremely, extremely fragmented, which ends up creating small pockets of opportunities and makes it difficult for us to create incredibly large platforms. So that's a re- that's a problem that we have to solve, uh, in some shape or form, and through the Super App, we're trying to create an obstruction layer where people can build their businesses on our Super App, and the Super App since operates in all the different markets, we have built underlying infrastructure. They can benefit from the obstruction layer that we have created. And the last problem, (laughs) and this is something that startups won- won't run into for the first decade of their, their existence, but they will run into it maybe later, and hopefully, by then we have solved it. You know, the region has had a lot of great starts. We tend to do quite well sometimes in starting something and taking it someplace, but we have not been as good as other parts of the world in putting lasting foundations and making our successes sustain. After the first successes, either things get acquired, or the founder leaves, or there's something that happens, and then all of a sudden the, the full potential and the full thing doesn't come to life. So, this is something that I feel we as a region need to learn from other parts of the world. How do you put the right foundations? How do you put the right governance? How do you put the right maturity in organizations that'll allow them to continue for decades and build something truly large and lasting?

    2. HSHarry Stebbings46:37

       What about also local markets? Like, when you look at, you know, the reliance on NASDAQ. We have this with Latin America as well, where, you know, bluntly, Nubank is the only one that's gone to NASDAQ, uh, efficiently. You know, what are you gonna do? IPO on Pakistan's local stock exchange? (exhales)

    3. MSMudassir Sheikha46:53

       You can see a line of sight to that problem being solved, I think. In Dubai, in Abu Dhabi, in Saudi, there are local and regional exchanges that are open for business. Some IPOs have happened already, and, uh, Inshallah, more will happen. So, I feel that over time, that problem will, will no longer be a big issue.

    4. HSHarry Stebbings47:12

       Can I ask you one final one before we do a quick-fire? You mentioned the Super App quite a few times. Super Apps have been tried and tested many times. Other than in Asia, they have always failed pretty much. Um, why have they always failed?

    5. MSMudassir Sheikha47:28

       Different reasons, uh, Harry, for different, uh, ones that have not done well. But I think the last few that have been attempted have been built in an environment of capital abundance, and they have been built in a way that is, has made it difficult for them to be profitable and sustainable while they are growing. I'll give you a basic example. In many of the businesses that we operate, the monthly retention of customers

14. 47:55 – 50:13

    Why Super Apps Always Fail (Outside Asia)

    1. MSMudassir Sheikha47:55

       tends to be in the 60 to 70% range, and that's actually been considered okay and even good in some cases. Now, if you have a monthly retention of 60 to 70%, and if you want to keep growing, what does that mean? Next month, the first thing you gotta do is you gotta acquire enough customers to fill the first 30% of the customers that have left. And then any customer that you acquire on top of it, you need to then acquire them so that you can keep on growing, and that's incredibly expensive. And to keep doing that as you grow, it becomes more and more expensive with scale, means that you need to have high margins to support that acquisition spend. And when you have high margins, those high margins end up, end up creating vulnerabilities. They end up creating frustration from the marketplace stakeholders. I actually feel that, uh, many of these businesses, including our business, um, have been built and have accepted things that should not have been okay. So, one of the things that we are trying to do as we start chapter three is how do we build Careem Super App differently and no longer accept these levels of engagement? Let's make sure that if, if we acquire a customer, that customer is gonna stay with us for a long period of time and that customer is gonna do-... a lot of things on the Careem platform. They should live their life on the Careem platform. And if you can do that successfully, then you can all create, add margins that are sustainable for all the stakeholders that you're serving. We do it differently and, uh, I would love to have another conversation here in five years when we have done it and we have shown that this can be done, and this has been done.

    2. HSHarry Stebbings49:31

       Now, I wanna move into a quick fire 'cause I could talk to you all day. So, I say a short statement and then you give me your immediate thoughts. Does that sound okay?

    3. MSMudassir Sheikha49:39

       Sure.

    4. HSHarry Stebbings49:39

       Okay. So, you can have dinner with one person, dead or alive. Who is it and why do you choose them?

    5. MSMudassir Sheikha49:46

       So, for me, that would be, uh, Prophet Muhammad. Um, I can definitely get stronger in my faith. And, uh, if you look at prophets in general, it's just amazing to see the kind of impact they've had for hundreds of years. And if you just take a secular view on things, there's a lot that we can learn from it in how do we build organizations, uh, successfully that'll stand the test of time?

    6. HSHarry Stebbings50:08

       What was the first luxury that you spent money on when you made it,

15. 50:13 – 54:09

    Quick-Fire Round

    1. HSHarry Stebbings50:13

       when the acquisition happened?

    2. MSMudassir Sheikha50:14

       I think a few months after the acquisition, uh, we did some, uh, interiors in our house. So, we changed some furniture, changed some lights. Uh, wasn't a big deal, but, uh, that was probably the first thing that, uh, we did.

    3. HSHarry Stebbings50:26

       Oh, Jesus, sometimes I miss American guests. They're like, "I bought a Learjet," and you're like, "I got some new lights." (laughs) Uh, good. I'm glad that, you know, the interiors were upgraded. What do you know to be true that others do not agree with?

    4. MSMudassir Sheikha50:42

       You know, one thing that we have believed for some time is that if you can dream something, there's a good chance that you can get there. Uh, there is this power of manifestation that gets unleashed when you believe something big can be done. You start thinking differently, you start attracting other people who get inspired by that dream, and then magically, it starts to come together.

    5. HSHarry Stebbings51:06

       What have you changed your mind on in the last 12 months?

    6. MSMudassir Sheikha51:09

       Like many people, uh, remote working is a topic that, uh, we're still learning, uh, and evolving on. Uh, in t- 2020, we thought, uh, this is gonna absolutely work and we don't need to come to the office anymore. We now believe that with the, with the way that we collaborate and with the state of technology that is available to us, there's still a lot of value in bringing people to the office and working together. This topic will probably evolve again as technology gets better, people and/or habits, uh, change. But at the moment, I'm starting to lean toward getting people to the office a little bit more than what we believed in 12 months ago.

    7. HSHarry Stebbings51:49

       I actually made it five days a week for everyone in this, in our companies, and actually-

    8. MSMudassir Sheikha51:53

       Really?

    9. HSHarry Stebbings51:53

       ... it's so much better. It is so much better. And if they don't like it, that's fine. That's not for them. They, they didn't need to join our company. Um, yeah, definitely. Happier mental health as well. Did not necessarily expect that. That we have a happy team because they are together. Tell me, if you could be CEO of any other company for a day, what would it be?

    10. MSMudassir Sheikha52:14

        I think maybe not a company per se. In many of the countries in the region, uh, Harry, including where I come from, Pakistan, there are some obvious things that need to be done that will put us on a different path of growth, but those things are not, just not getting done because the, there are a lot of vested interests and there are difficult decisions that can create a lot of unhappy people and collateral damage. So, um, if I could do anything on one day, I'd probably make a list of those decisions, make those decisions, and then be the bad guy and let the, let the change of the decisions, uh, put us on a different path of growth.

    11. HSHarry Stebbings52:54

        What three traits would you most want your children to adopt?

    12. MSMudassir Sheikha52:57

        Integrity is foundational, and then beyond that, uh, shooting for the moon, which is ambitious, and then, uh, perseverance. Don't give up.

    13. HSHarry Stebbings53:06

        What did your wife say when the Uber acquisition deal came through?

    14. MSMudassir Sheikha53:10

        Don't remember now, but she probably said something along the lines of, "Hopefully we'll see you more often now." (laughs)

    15. HSHarry Stebbings53:15

        (laughs) Okay, final one. Careem in 10 years. We do this is 2033. Where's Careem then?

    16. MSMudassir Sheikha53:22

        So, Careem should be a household name in the region, all the way from Morocco to Pakistan. And the service should be used by everyone in the region on a daily basis. Their quality of life is radically better as a result of Careem. And as, as a result of all the friction that we've taken away from their daily life, people are doing more meaningful things than figuring out how to get water and transport, uh, to live their daily lives.

    17. HSHarry Stebbings53:55

        Muddassir, as I said, I had so many great things. Magnus gave me the best stories. I'm sorry for slightly diverting away from the topics mentioned, but, uh, I love this. So, thank you so much for joining me, and it's been fantastic.

    18. MSMudassir Sheikha54:08

        It's a pleasure to finally meet you, Harry.

Episode duration: 54:09