Careem’s Success Resounds Through the Region
Why Careem’s Exit Is Celebrated Around MENA
Did the ride-sharing service live up to the value of “generosity” suggested by its name? Careem’s recent exit to Uber will make its founders a pretty penny, but it shouldn’t simply send the message that you can become rich as an entrepreneur. As the 4000 Careem employees with stock options and the less-than-double-digit equity shares of the founders might suggest, this company stands for more the self-interest. Careem’s success should send the message that entreprepreneurs, with vision beyond their own success, can have enormous impact.
Network Multiplier Effect
There are those, like Fadi Ghandour, who have pointed out how the earnings and experience gained by key employees will have a reverberating impact around the region. How exactly will this manifest? The first tangible impact, of course, is the payout to scores of employees. As reported by The National, the sale will make 75 Careem employees dollar millionaires, another 200 employees will become dirhams millionaires (about $270k), and 4000 other employees received stock options (of which Uber purchased all shares). To quote Ghandour, “so many massively talented people will leave their work at Careem and become new entrepreneurs, innovating and wanting to replicate what they saw at Careem, or become co-founders of already established startups or invest in startups.”
The success may benefit countries on a regional level. According to the MIT Enterprise Forum, compared to the UAE, “other Arab countries fall behind in terms of entrepreneurship maturity. This is largely driven by the availability of investors and supporting institutions as well as increased attention from regulators and policymakers in terms of developing the ecosystem.” In light of Careem’s international nature, perhaps some former Careem employees will become angel investors or mentors to new startups around the region. In fact, some of Careem executives could help stimulate entrepreneurship in countries the likes of Jordan. Ibrahim Manna, for example, is a Jordan native, and Careem’s Managing Director for Emerging Markets, who was an important figure in the company’s expansion in recent years. It’s possible that employees like Manna will return to share their expertise or start new ventures.
The exit will have a substantial multiplier effect in the long-term. According to a recent report by Strategy& and Endeavor, nine Jordanian tech companies that were founded from 1980–1989 led to the founding of 107 companies between 1990 and 2012. Similarly, five Lebanese tech companies founded between 1992–2003 contributed to the emergence of up to 80 other tech companies between 2006 and 2016. This data suggests that Careem’s sale will lay the seeds for at least a dozen (if not dozens) of other startups around the region.
Not Just a “Copycat” Success
Does this event give any signals about the business models that will be inspired by Careem? Souq and Careem’s success may further encourage the “copycat” model. Many startups seen in the region mimic businesses seen in the West. These companies hope their exit opportunity is in getting acquired by the western counterpart trying to access their market, in which case the highest valuation they can really expect is the comparative cost of the western companies setting up shop in the region themselves. But what Careem’s sale shows is that compared to companies like Google or Facebook which had no issue dominating international markets, business models that address significant customer support, quality management, and trust barriers, require cultural savvy and local sensitivity. This opens these models up for regional adaptation and modification.
New Standard of Employee Support
The more important cultural modification to consider, however, is how Careem may influence the culture of employment itself. The support structures within MENA’s most recent unicorn, demonstrate the growth potential made possible by greater employee-centric support and incentive systems. As entrepreneur and investor, Christopher Schroeder, states, Careem became “a model of how to build a culture of support. I’m not sure many know how aggressive they have been to offer the best in maternity leave and support the growth of women across their enterprise.” The company, for example, provides three month’s paid maternity leave, runs healthcare days with in-office health checks, and offers sabbaticals and extra time off for high performers.
The region may also see a greater emphasis employee stock options. As noted by Menabytes, a large proportion of MENA startups still don’t utilize employee stock ownership programs, and founders and investors often hold all equity for themselves. Careem’s exit will encourage startups to offer employee ownership in their compensation plans. The exit therefore sets a precedence in the region: that entrepreneurship is not just about the exit and the founders making a fortune. On the contrary, the region’s biggest startup success story (at least financially) is one that empowered employees and promoted social progress in the workplace throughout MENA and Pakistan.
Broad Impact
Mudassir Sheikha and Magnus Olsson (Careem’s founders) were interested in impact over personal gain from the beginning. As Sheikha and Olsson have attested, the company grew out of the ambition to become a significant source of job creation for the region. Besides having championed numerous charitable projects for refugees and the homeless, Careem will also attract new investors to MENA, spur future ventures, encourage a new employment culture, and above all else, inspire men and women around MENA to dream bigger.
