20VC The $3.1BN Meeting That Led to an Uber Acquisition, The Battle With Uber; How to Outcompete When You Have 10x Less Cash & The Marketing Campaigns That Led to Pakistan MDs Fleeing and Elon Musk Fanboying with Mudassir Sheikha, CEO @ Careem

In a candid conversation, Mudasir Sheikha, co-founder and CEO of Careem, shares the company's tumultuous journey from near bankruptcy to becoming a ride-hailing giant acquired by Uber for $3.1 billion. Sheikha recounts how early investor trust and personal funds kept Careem afloat during critical times, highlighting the importance of resilience, seizing opportunities, and maintaining a frugal mindset despite substantial funding. He delves into the challenges faced in fragmented Middle Eastern markets, the significance of localizing products, and the necessity of high-quality talent over quantity. Sheikha expresses regret over not being able to better financially reward the captains (drivers) post-acquisition and emphasizes the role of a supportive spouse in balancing intense work with parenting. Looking forward, he envisions Careem as a daily necessity for people across the region, improving their quality of life by reducing daily frictions.

• Mudasir Sheikha, co-founder and CEO at Careem, discusses the financial challenges they faced early on.
• Their lead investor provided half a million dollars twice without any formal documentation, directly from his personal account.
• This support acted as a bridge for the company during a crucial time.

"We're out of money. We've already put our savings into the business. So I call our lead investor, and he's like, how much money do you need? I said, half a million dollars. 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."

This quote highlights the trust between the lead investor and Mudasir Sheikha, demonstrating the investor's willingness to provide significant financial support without formal agreements, reflecting a strong belief in the company's potential.

• Harry Stebbings emphasizes that all successful companies, including Careem, have faced near-death experiences, offering solace to founders in similar situations.
• Mudasir Sheikha's background from Karachi, Pakistan, taught him resilience and the ability to find opportunities in challenges.

"Now, I chose that clip very specific, typically, because I think every founder sees incredible companies like Kareem and thinks it was always up and to the right."

Harry Stebbings uses this quote to dispel the myth that successful companies have a smooth journey, instead highlighting the reality of significant challenges faced by founders.

• Mudasir Sheikha believes that his upbringing in a challenging environment in Karachi instilled resilience and a drive to reduce daily life friction.
• He looks for the silver lining in every challenge, viewing them as opportunities for growth.

"Look, I grew up in Pakistan, in Karachi, in a very humble, middle class background. And if you've been to Karachi, you know that life is full of friction."

This quote explains how Mudasir Sheikha's challenging childhood experiences influenced his character and entrepreneurial drive, shaping his approach to overcoming adversity.

• Mudasir Sheikha and his co-founder Magnus Olsson were both consultants at McKinsey before founding Careem.
• They did not have an "aha" moment but were driven by a desire to build something big and meaningful.
• Magnus's life-threatening health scare and Mudasir's observation of the lack of large institutions in Pakistan were pivotal in their decision to start Careem.
• They chose to address transportation issues after realizing the impact they could have on improving the lives of drivers (captains).

"So, 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."

Mudasir Sheikha clarifies that Careem's founding was not sparked by a single moment of inspiration but rather a series of realizations about personal purpose and regional needs.

• Mudasir Sheikha identifies daily life friction and a lack of self-belief as barriers to building large companies in Pakistan.
• He believes that these challenges create opportunities for those willing to address them.

"So what the hell are we doing wrong in my country, in this part of the world, that we haven't been able to build those large and lasting institutions?"

Mudasir Sheikha's quote reflects on the systemic issues in Pakistan that hinder the creation of major companies, while also hinting at the potential for change and development.

• Despite the challenging environment, Mudasir Sheikha sees the lack of competition and vast population as creating investment opportunities.
• He personally invests in promising teams and startups in the region.

"So the fact that not many people are trying and not many people are investing has created a bit of a void."

This quote underscores Mudasir Sheikha's perspective that the relative scarcity of entrepreneurs and investors in Pakistan opens up unique opportunities for those who do venture into the market.

• In the early days, Careem used SMS to process bookings due to the limited resources and time constraints.
• This strategy was employed to quickly onboard drivers (captains) during the slower summer months.

"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."

The quote illustrates the innovative and pragmatic approach taken by Careem's founders to overcome initial technological and operational hurdles, demonstrating their adaptability and focus on rapid growth.## Initial Operations and Technology

• Careem started with a simple, low-tech solution to get its service running quickly.
• Captains (drivers) would manually send messages about their status and odometer readings to calculate trip costs.
• This approach helped Careem launch rapidly and attract captains looking for work.

"So it was very, very low tech, but it got us out there very quickly."

The quote emphasizes the pragmatic approach Careem took to launch their service without sophisticated technology, focusing on speed and functionality.

• Careem did not have product-market fit from the start, which is common for new products.
• Initially, there was low demand for the service despite having available captains.
• Careem focused on narrow opportunities, such as airport trips with a punctuality promise and targeting corporate clients.

"But what you end up realizing is you have to be very focused early on. You have to go after as narrow opportunities as possible."

The quote highlights the importance of targeting specific use cases and customer segments when initially struggling to find product-market fit.

• Careem attempted to offer their technology as a cloud service to other companies, which failed.
• The company's focus was not aligned with being a SaaS provider, leading to mismatched priorities and customer needs.

"But that was a miserable flop because we were just not designed to be a SaaS company."

The quote reflects on the unsuccessful attempt to diversify into a SaaS model, underscoring the challenges when deviating from core competencies.

• Careem often pursued new opportunities quickly, sometimes taking on more than they could handle.
• The company's culture was to not give up easily, which led to persistence but also to an accumulation of projects.

"We tend to get excited quickly and do more things than we can chew."

The quote describes Careem's tendency to embrace new opportunities enthusiastically, which can be both a strength and a weakness.

• Careem emphasized frugality to maintain low margins for their captains.
• The company executed a symbolic act on April 1, 2014, to reinforce the importance of cost-saving by suggesting charges for coffee, printouts, or electricity.
• Maintaining frugality was challenging, especially when competing with well-funded rivals.

"But it sent the message that frugality is important and every dollar is something that we have to watch out for."

The quote underlines the cultural emphasis on frugality within Careem, even in the face of increased funding and operational costs.

• With limited marketing budgets, Careem used viral strategies to gain publicity.
• They focused on localizing their product and service to outcompete well-funded international competitors.

"So what we would try and do is we would come up with viral concepts that just spread on their own."

The quote explains Careem's approach to marketing, which relied on creativity and virality to compensate for smaller budgets.

• Mudasir Sheikha advises founders to optimize marketing spend, localize products, and focus on hiring quality talent.
• He suggests that founders should be resourceful and understand their market deeply to compete effectively.

"It's all about quality versus quantity, right? Rock stars are price more productive than average performers."

The quote suggests that hiring top-quality talent is more valuable than a larger number of average employees, which is critical for startups with limited resources.

• The initial rounds of funding were difficult due to regional investment climate and Careem's size.
• Careem's CFO demonstrated the company's frugality by booking bunk beds on Airbnb before a major fundraising meeting.
• The first two rounds of funding were the toughest, but personal relationships and trust played a key role in securing funds.

"The first two rounds were probably the toughest because we were too small to go to global investors and the region was very early in their sort of appetite for local startups."

The quote reflects on the challenges Careem faced in its early fundraising efforts due to its size and the nascent investment ecosystem in the region.## Support from the Community

• Mudasir Sheikha shared stories about receiving unexpected support from people in the region.
• This support was crucial for the company's success.

"There's so many stories like this, Harry, where people have come through when we least expected them and supported us to get where we are today."

This quote emphasizes the importance of community and unexpected allies in the journey of a company's growth. It highlights the gratitude towards those who have helped along the way.

• Mudasir Sheikha never believed that the company would die.
• He described a particularly stressful time towards the end of negotiations with Uber, where internal disagreements created challenges.

"There was just a belief that we're onto something and it's going to be around towards the end of the process with Uber."

The quote reflects Mudasir's unwavering belief in the company's longevity, even during contentious negotiations with Uber.

• Mudasir reflected on the importance of proactive board management.
• He wished they had built stronger relationships and trust with the board members.
• He learned the value of having a chairman to help manage the board.

"One of the things that, of course, after the whole thing got done, I reflected on what we could have done differently, and board management was one where we could have done a much better job."

This quote reveals Mudasir's hindsight realization that more attention to board management could have been beneficial for the company, particularly during challenging times.

• Mudasir described the first meeting with Dara Khosrowshahi of Uber as surprisingly positive.
• Uber's initiative to consolidate markets led to reaching out to Kareem.
• A key factor in the acquisition was the assurance that Kareem's purpose and culture would be preserved.

"The thing that really made it happen at the end was Dara saying that, you guys can continue pushing your purpose, keep your culture, keep your... I'm just going to replace your shareholders and become a better shareholder."

This quote captures the pivotal moment in the acquisition talks where the preservation of Kareem's identity was assured, which was crucial for the deal to proceed.

• The acquisition by Uber led to a focus on profitability and efficiency.
• The Covid-19 pandemic accelerated the development of new services and the creation of a super app.

"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."

The quote outlines the diversification of services offered by Kareem post-acquisition, highlighting the company's adaptability and growth.

• Mudasir discussed the uniqueness of Kareem's purpose and the reluctance to lose its identity through acquisition.
• There was a sentiment among Kareem employees that the acquisition could end something special.

"But Kareem got lucky in the sense that Kareem's start was a result of Magnus' near death experience and the desire to build something big and more importantly, build something meaningful."

This quote reflects on the foundational purpose of Kareem and the emotional investment of its employees in the company's mission, which made the decision to sell a difficult one.

• Mudasir believes that the acquisition by Uber did not hinder Kareem from becoming a significant institution in the region.
• The relationship with Uber and Dara Khosrowshahi is positive and supportive of Kareem's vision.

"Uber and Dara have been incredible. I think they have supported our vision, they have funded the vision."

The quote expresses Mudasir's satisfaction with the post-acquisition support from Uber, which has enabled Kareem to continue pursuing its vision.

• Mudasir expressed a desire to have done more for the "captains" (drivers) during the exit process.
• He regrets that many captains have not seen significant changes in their circumstances despite Kareem's success.

"I wish we could have done more for our captains as a part of the exit process, Kareem was built by these captains."

This quote reveals Mudasir's reflection on the social responsibility towards the drivers who were integral to Kareem's operations.

• Mudasir spoke candidly about the challenges of being a CEO and a family man.
• He emphasized the importance of a supportive partner and intentional parenting.

"Marry? Well, 80% of the problem is just finding the right person to marry and then, as much as possible, become intentional about parenting."

The quote highlights the critical role of a supportive spouse and the need for deliberate efforts in parenting while managing the demands of a CEO role.

• Mudasir discussed his unchanged lifestyle despite increased wealth.
• He feels a sense of responsibility to use wealth to address suffering in the region.

"It's also a huge source of responsibility. Harriet. We live in a region where, you know, you can live in Dubai, and it feels very different."

This quote conveys Mudasir's perspective on wealth as a means to contribute positively to society, rather than as a tool for personal lifestyle enhancement.## Wealth Responsibility and Impact of Kareem Sale

• Kareem's sale resulted in significant wealth creation for many employees.
• 75 individuals became millionaires in dollar terms, and over 300 in Durham terms, reflecting a successful exit.
• The wealth generated carries a responsibility to contribute positively to their countries and the region.

"In dollar terms, there were 75 millionaires. In Durham terms, there were, I think, 300 plus."

This quote indicates the number of individuals who became millionaires in different currencies due to Kareem's sale, highlighting the financial impact of the transaction on employees.

• The desire to contribute to their countries and the region is strong among former Kareem employees.
• Talent acquisition and retention remain challenges in the region, with variations across countries.
• Capital availability is inconsistent, posing a challenge in some areas.
• Regional fragmentation creates complexity in market coverage and limits the creation of large platforms.

"Talent continues to be a challenge in the region... Capital again is available in some places, not available in others... The region is not small... but it's made up of a lot of small countries, a lot of small markets."

This quote discusses the obstacles faced by entrepreneurs in the region, including difficulties in attracting talent, securing capital, and navigating a fragmented market landscape.

• Kareem's super app aims to provide an abstraction layer for businesses to build upon.
• The super app's infrastructure is designed to simplify operations across fragmented markets.
• The goal is to address regional challenges and enable businesses to scale more easily.

"Through the super app, we're trying to create an abstraction layer where people can build their businesses on our super app."

This quote explains the purpose of Kareem's super app strategy, which is to offer a foundational platform that helps businesses overcome regional fragmentation and scale effectively.

• The region has a history of strong starts but lacks lasting foundations for continued success.
• There is a need to improve governance and organizational maturity to sustain and grow businesses over the long term.

"How do you put the right foundations, how do you put the right governance, how do you put the right maturity in organizations that will allow them to continue for decades and build something truly large and lasting?"

This quote emphasizes the importance of establishing robust foundations and governance to ensure the longevity and growth of businesses in the region.

• Local and regional exchanges in the Middle East are becoming more open to IPOs.
• The trend of listing on local exchanges is expected to grow, reducing reliance on international markets like Nasdaq.

"In Dubai, in Abu Dhabi, in Saudi, there are local and regional exchanges that are open for business."

This quote suggests that local stock exchanges in the Middle East are increasingly viable options for IPOs, which may alleviate the need for companies to list on international exchanges.

• Many super app attempts have failed due to unsustainable growth strategies in capital-abundant environments.
• Kareem aims to improve customer retention and engagement to ensure sustainable margins and stakeholder satisfaction.

"Let's make sure that if we acquire a customer, that customer is going to stay with us for a long period of time, and that customer is going to do a lot of things on the Kareem platform."

This quote outlines Kareem's approach to building a super app that prioritizes long-term customer retention and engagement to achieve sustainable growth.

• Mudasir Sheikha values integrity, ambition, and perseverance as traits for his children.
• His personal luxury spending post-acquisition was modest, focusing on home interiors.
• He believes in the power of dreaming big and manifesting those dreams into reality.
• His views on remote working have evolved, recognizing the value of in-office collaboration.

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

This quote reflects the personal values that Mudasir Sheikha considers important for his children and potentially for entrepreneurial success.

• Kareem aims to be a daily part of life for everyone in the region, from Morocco to Pakistan.
• The company seeks to improve the quality of life by removing daily life frictions.

"Kareem should be a household name in the region... Their quality of life is radically better as a result of Kareem."

This quote conveys the long-term vision for Kareem to become an integral and beneficial part of everyday life for people across the region.

• The conversation concludes with Mudasir Sheikha expressing pleasure in meeting Harry Stebbings.
• Harry Stebbings offers thanks and directs listeners to additional content.

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

This quote marks the cordial conclusion of the conversation, indicating mutual respect and the potential for future discussions.