Careem: Riding the First Unicorn in the Middle East

Doubling in size every two months, ride-hailing service Careem was experiencing growing pains operationally and culturally. In this podcast, Shikhar Ghosh discusses how the founders struggled to keep its 4 million customers satisfied.

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Brian Kenny: Every so often, a new term appears in the business lexicon that becomes instant shorthand for an otherwise complicated concept. For example, "disruptive innovation" or "jump the shark." Now, we can add "unicorn" to that list.

Most often relegated to the realm of myth and fantasy, the unicorn entered the business domain in a 2013 article in Tech Crunch when Cowboy Ventures partner Aileen Lee used it to describe high growth startups with valuations of $1 billon or more. Unicorns are rare, they're aspirational, and some would say they are even magical in their ability to defy the odds. At the time of Leigh's article in 2013, there were 39 unicorns that met the criteria. Just three years later, there were 208 with a cumulative value of $1.3 trillion dollars. Which starry-eyed startup is next to join the list? Today we'll hear from Professor Shikhar Ghosh about his case study, Careem: Raising a Unicorn. I'm your host Brian Kenney, and you're listening to Cold Call.

Shikhar Ghosh is the course head for “Founders’ Journey,” a second- year course in the Harvard MBA program, and he's been a successful entrepreneur for the last 20 years, having been the founder and CEO or chairman of eight different technology-based entrepreneurial companies. That's quite a track record, Shikhar. Thanks for joining us today.

Shikhar Ghosh: Thank you.

Kenny: You clearly understand this case from the inside out. You've lived it yourself a little bit, right?

Ghosh: I've lived it a little bit.

Kenny: So start by telling us, who is the protagonist in this case, and what's on their mind?

Ghosh: What really got me interested in this case was that the protagonists were two consultants. One of them had a problem, he had to have emergency brain surgery and almost didn't make it through. When he had to be flown from Dubai to the Cleveland Clinic, it wasn't clear he was going to make it. When he did, he realized all of a sudden that he was one of the lucky ones. Not only had he made it through this, but he was in a position—he worked for McKinsey at that point—to do anything he wanted with his life. He decided to change the world for the better. He was going to do that by building something, not just by advising people or thinking through issues.

At the same time the second protagonist, Mudassir Sheikha, was at McKinsey, also leaving but for different reasons. It started with both of them leaving very secure careers to do something meaningful. Careem means generous. When they started the company, they wanted to do something that would change the lives of people around them.

Kenny: I suppose that a life-changing event is probably not an uncommon way for entrepreneurs to get whatever inspiration they need to venture out and try something new. How did you hear about Careem?

Ghosh: Our office in Dubai, the HBS Research Center there, told me this is a company you really should pay some attention to for your course Founders’ Journey. First of all, there aren't that many successful entrepreneurial ventures in the Middle East that we know about, not counting Israel. They said, here's this really exciting company that's looking at the world in a different way than the way traditional businesses in that region have. Then, as I read up a little bit and got to talk to the founders, I found that they faced many of the same problems that we face here, but many very different problems than what we face. They were just a fascinating group of people in the way that they were approaching things.

Kenny: What business is Careem in?

Ghosh: Think about Careem as the Uber of the Middle East. They started off as sort of a black-car service, mostly to professionals like consultants. They morphed into something that's pretty close to, from a consumer's perspective, an Uber. Now, they've tailored it to the Middle East with issues about women driving, safety of women, cultural norms. The labor pool being mostly immigrant, there's a range of issues that are unique to that area. They've tailored the whole thing to that. Fundamentally, the basic service they offer is a ride-hailing service.

Kenny: Did the founders know each other? They both worked at McKinsey, did they know each other when they were there?

Ghosh: They knew each other, but not that well. They got to know each other really well through the process of trying to create something. Mudassir Sheikha is from Pakistan, this was his idea, and Magnus Olsson, who is from Sweden, decided that this wasn't an idea that excited him. He said, "A car sharing service, that has no real purpose. It has nothing that's going to change. I want to do something that's really meaningful."

Then they went out and saw the way that drivers in the Middle East have to live. These people are not respected. They often live four or five to a room, they have to share beds, and they spend their entire period over there working seven days a week and sending all the money back home. It was a chance for them to take this class of people and give them respectability, give them professionalism, give them money, all of that to completely change their lives. When they reframed it that way, it completely changed the way they thought about the business.

"It was a chance for them to take this class of people and give them respectability, give them professionalism, give them money, all of that to completely change their lives"

Kenny: Most people starting an organization to have an impact on the world are thinking about the end user, so to speak, sort of the customer in the equation. Here, these guys started with the employees. Their play was really to improve the lives of the people who work for them by, as you said, raising their level of respectability and at the same time to provide a good service, obviously, for customers.

Ghosh: These people are not directly employees, but giving employment on the order of a million people in the region. It's pretty remarkable and they've been going into country after country where they're doing the same thing: Pakistan, Egypt, Tunisia, just across the whole region. They call them captains, they don't call them drivers.

Kenny: I love that.

Ghosh: They train them. They don't just train them on how to drive a car, read a map, do those things. They train them on how to be professionals. They insist that their service is a professional service and these are professionals providing that service, therefore you deal with them a particular way. They train them how to be on time. They train them how to be polite. They train them how to respect process and procedures. All things that, for these people ... nobody had taken the time to make them professionals.

Kenny: The heart of the case really looks at how they scaled this operation. Can you talk about some of the challenges they faced?

Ghosh: This is the only company I know that measures its growth rate in 15-minute increments. All their beepers go off if they haven't hit their target in 15 minute increments.

Kenny: That's a pressure-packed day right there. "Oops."

Ghosh: You've got to fix it before the next 15 minutes comes in. As they took off, it wasn't just that they had more customers, it was that they had more cities, more countries, more cultures, more kinds of services. I was originally intrigued by the company because of the growth, the number of customers. They had went from 4,000 to 4 million. The number of cities went from four to 40. Everything was by a factor of 10 or 1,000.

Kenny: We're talking over a period of months here?

Ghosh: No, so the first year was sort of slow growth, and then the next two years was when they completed the hockey stick head. When that happens to a company, you go from a set of people who can share a pizza to [a number of] people who can fit in a room, to [a number of] people who now have to communicate in all sorts of indirect ways. As a founder, you have to deal with the issue that you can no longer control everything. Every decision is made by somebody else who is two levels removed from you. You have to do it by specifying your values, by setting up processes, all kinds of things that are very indirect. That's a fundamentally different skill than starting up.

In most companies it takes much longer to get to scale, and therefore people have time to learn. In this case, they were growing at 30 percent a month, so every two-and-a-half months you're doubling. That means that every six months there are more new people in the company than people who have been there before. These people are coming from all kinds of other companies and other cultures, and holding together the culture, holding together even the operation becomes a huge, monumental challenge.

Kenny: They started almost like a mission-driven organization. Their values are critically important. How do you possibly inculcate those values when you're growing at that rate? You can print them up, you can hand them out to people when they get hired, but was there anything that they tried to really help new employees understand the values of the organization?

Ghosh: They would say that the reason they've been able to grow that fast is because of the values. That, if you don't have some common platform that everybody comes into, and something that keeps getting reinforced, people will disperse in a hundred different directions.

Just as a quick example, one of the things they did very early on was establish ... two sets of customer service people. One was for their users and the other one was for their drivers. The captains, as they call them, would have a dedicated place to call if they had a problem of any kind. This notion of saying, "If we have enough well-trained professional captains who are respected and respect themselves, then there's no limit to how far we could grow."

I think in their last year was when they achieved unicorn status. They raised over $1 billion in valuation.

Kenny: That's remarkable.

Ghosh: I believe it's the first unicorn in the Middle East.

Kenny: They encountered some other issues that Uber hasn't necessarily faced in the markets where they started. You talk about some of the innovations they did, having to create their own version of Google Maps, for instance.

"They now have three founders. One is Saudi, one is Pakistani, one is Swedish."

Ghosh: Right. Not only did they not have the infrastructure that we have in the west, addresses that count, but they also have regulations that are not clear. They had a number of situations where local governments would choose to do things differently than the central government had said they could do, where people were arrested. All kinds of issues of introducing something new into an environment that's been quite traditional, and everyone is trying to figure out, what are the new rules of this game?

In that process, you also have ... they now have three founders. One is Saudi, one is Pakistani, one is Swedish. I remember sitting across the table from them, and there was a Christian from India, a Hindu woman from India, a couple of western people from Stanford, just a mixture of sort of the whole world. All of these people were working together to create something that was bigger than any of them. To me, it was just a fascinating example of what entrepreneurship can do and how much it can transform societies, and in the process of transforming the user and the user experience, it's transforming what people think of themselves.

Magnus, one of the founders, flew all the way over from there [to attend] one class here. I asked him, during writing the case, "Why are you investing so much time? We could have done a Skype call." He said, "This is a region I really love, and it has so few stories that are positive success stories where people have built up something that everyone is proud of. I want that story to get known across the world, and I'll do everything I can to do that."

Kenny: The other challenge they faced was getting people to want to go to work there... In the early going it was hard to find the right people willing to come and work those hours for that pay.

Ghosh: Probably their biggest scaling challenge was finding experienced people who wanted to work for a startup, or who even had the skills. If you don't have an entrepreneurial ecosystem, you don't have a supply of people who know what it means to be in an uncertain, disorganized kind of environment that's growing really fast. Then when they brought in senior people, they faced the risk of those people diluting and changing the culture, because they came from larger companies.

They wanted to be a model for how other people around could build companies and meet the unique needs of that population. They're now looking at expanding to other lines of business, but in all cases, the foundation of the company is really about doing good for the region. You hear people talk about values a lot. You really see that being really core to what they do.

Kenny: How did the MBA class go? I'm curious as to how the students responded. Was there anybody who had used Careem's service?

Ghosh: There were a number of students who were very familiar with Careem. In fact, we had two students who had visited their offices. The other perspective that students found intriguing was... normally, cases are written from the perspective of the founder struggling through all these problems. What I tried to do here was to have one of the employees who lived with the chaos of the growth describe her experience.

It turned out that she was one of our students here. She called me here one day and said, "I hear you're writing a case on Careem. I was there. I saw what a mess it was." The point that she made was that in these very fast growing companies, you can either sit in the company and complain about why nothing works ... or you can say, "I have to fix this. It doesn't matter if I'm not technically a founder, I am a creator of this company." She took that posture and was able to be quite effective at a range of things.

Fundamentally, the job that has to be done when you join these companies is very different from the job that has to be done if you join an established company. She gives a little example of her first day there. She met the founder and asked, "What do you want me to do?" He said, "You tell me what you want your title to be and you tell me what you want to do." Over the next six months she did eight or 10 different jobs. The rate of learning there is much, much higher, but the rate of disorganization is also much higher.

Kenny: For people listening right now, how can they identify if they have the tolerance to thrive in a situation like that, or if it just scares the heck out of them?

Ghosh: You actually don't know that. It might scare the heck out of you and you might do really well in it. What you can be sure about is that you will learn a lot about yourself, about your limits, about what it means when you stretch your limits beyond what you're comfortable with. You know, it's a little bit like mountain climbing in that you could have a much more comfortable time watching National Geographic on TV, or you could try and climb the mountain yourself. If you do that, you'd be uncomfortable every moment of the way, but when you come down, you'd probably say, "That was an amazing experience."

Kenny: And you can accomplish something great. Shikhar, thank you for joining us today.

Ghosh: Thank you.

Kenny: You can find the Careem case along with thousands of others in the HBR case collection at hbr.org. I'm your host Brian Kenney, and you've been listening to Cold Call.

Transcript edited for length and clarity. Interview recorded on December 5, 2017.

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Brian Kenny: Every so often, a new term appears in the business lexicon that becomes instant shorthand for an otherwise complicated concept. For example, "disruptive innovation" or "jump the shark." Now, we can add "unicorn" to that list.

Most often relegated to the realm of myth and fantasy, the unicorn entered the business domain in a 2013 article in Tech Crunch when Cowboy Ventures partner Aileen Lee used it to describe high growth startups with valuations of $1 billon or more. Unicorns are rare, they're aspirational, and some would say they are even magical in their ability to defy the odds. At the time of Leigh's article in 2013, there were 39 unicorns that met the criteria. Just three years later, there were 208 with a cumulative value of $1.3 trillion dollars. Which starry-eyed startup is next to join the list? Today we'll hear from Professor Shikhar Ghosh about his case study, Careem: Raising a Unicorn. I'm your host Brian Kenney, and you're listening to Cold Call.

Shikhar Ghosh is the course head for “Founders’ Journey,” a second- year course in the Harvard MBA program, and he's been a successful entrepreneur for the last 20 years, having been the founder and CEO or chairman of eight different technology-based entrepreneurial companies. That's quite a track record, Shikhar. Thanks for joining us today.

Shikhar Ghosh: Thank you.

Kenny: You clearly understand this case from the inside out. You've lived it yourself a little bit, right?

Ghosh: I've lived it a little bit.

Kenny: So start by telling us, who is the protagonist in this case, and what's on their mind?

Ghosh: What really got me interested in this case was that the protagonists were two consultants. One of them had a problem, he had to have emergency brain surgery and almost didn't make it through. When he had to be flown from Dubai to the Cleveland Clinic, it wasn't clear he was going to make it. When he did, he realized all of a sudden that he was one of the lucky ones. Not only had he made it through this, but he was in a position—he worked for McKinsey at that point—to do anything he wanted with his life. He decided to change the world for the better. He was going to do that by building something, not just by advising people or thinking through issues.

At the same time the second protagonist, Mudassir Sheikha, was at McKinsey, also leaving but for different reasons. It started with both of them leaving very secure careers to do something meaningful. Careem means generous. When they started the company, they wanted to do something that would change the lives of people around them.

Kenny: I suppose that a life-changing event is probably not an uncommon way for entrepreneurs to get whatever inspiration they need to venture out and try something new. How did you hear about Careem?

Ghosh: Our office in Dubai, the HBS Research Center there, told me this is a company you really should pay some attention to for your course Founders’ Journey. First of all, there aren't that many successful entrepreneurial ventures in the Middle East that we know about, not counting Israel. They said, here's this really exciting company that's looking at the world in a different way than the way traditional businesses in that region have. Then, as I read up a little bit and got to talk to the founders, I found that they faced many of the same problems that we face here, but many very different problems than what we face. They were just a fascinating group of people in the way that they were approaching things.

Kenny: What business is Careem in?

Ghosh: Think about Careem as the Uber of the Middle East. They started off as sort of a black-car service, mostly to professionals like consultants. They morphed into something that's pretty close to, from a consumer's perspective, an Uber. Now, they've tailored it to the Middle East with issues about women driving, safety of women, cultural norms. The labor pool being mostly immigrant, there's a range of issues that are unique to that area. They've tailored the whole thing to that. Fundamentally, the basic service they offer is a ride-hailing service.

Kenny: Did the founders know each other? They both worked at McKinsey, did they know each other when they were there?

Ghosh: They knew each other, but not that well. They got to know each other really well through the process of trying to create something. Mudassir Sheikha is from Pakistan, this was his idea, and Magnus Olsson, who is from Sweden, decided that this wasn't an idea that excited him. He said, "A car sharing service, that has no real purpose. It has nothing that's going to change. I want to do something that's really meaningful."

Then they went out and saw the way that drivers in the Middle East have to live. These people are not respected. They often live four or five to a room, they have to share beds, and they spend their entire period over there working seven days a week and sending all the money back home. It was a chance for them to take this class of people and give them respectability, give them professionalism, give them money, all of that to completely change their lives. When they reframed it that way, it completely changed the way they thought about the business.

"It was a chance for them to take this class of people and give them respectability, give them professionalism, give them money, all of that to completely change their lives"

Kenny: Most people starting an organization to have an impact on the world are thinking about the end user, so to speak, sort of the customer in the equation. Here, these guys started with the employees. Their play was really to improve the lives of the people who work for them by, as you said, raising their level of respectability and at the same time to provide a good service, obviously, for customers.

Ghosh: These people are not directly employees, but giving employment on the order of a million people in the region. It's pretty remarkable and they've been going into country after country where they're doing the same thing: Pakistan, Egypt, Tunisia, just across the whole region. They call them captains, they don't call them drivers.

Kenny: I love that.

Ghosh: They train them. They don't just train them on how to drive a car, read a map, do those things. They train them on how to be professionals. They insist that their service is a professional service and these are professionals providing that service, therefore you deal with them a particular way. They train them how to be on time. They train them how to be polite. They train them how to respect process and procedures. All things that, for these people ... nobody had taken the time to make them professionals.

Kenny: The heart of the case really looks at how they scaled this operation. Can you talk about some of the challenges they faced?

Ghosh: This is the only company I know that measures its growth rate in 15-minute increments. All their beepers go off if they haven't hit their target in 15 minute increments.

Kenny: That's a pressure-packed day right there. "Oops."

Ghosh: You've got to fix it before the next 15 minutes comes in. As they took off, it wasn't just that they had more customers, it was that they had more cities, more countries, more cultures, more kinds of services. I was originally intrigued by the company because of the growth, the number of customers. They had went from 4,000 to 4 million. The number of cities went from four to 40. Everything was by a factor of 10 or 1,000.

Kenny: We're talking over a period of months here?

Ghosh: No, so the first year was sort of slow growth, and then the next two years was when they completed the hockey stick head. When that happens to a company, you go from a set of people who can share a pizza to [a number of] people who can fit in a room, to [a number of] people who now have to communicate in all sorts of indirect ways. As a founder, you have to deal with the issue that you can no longer control everything. Every decision is made by somebody else who is two levels removed from you. You have to do it by specifying your values, by setting up processes, all kinds of things that are very indirect. That's a fundamentally different skill than starting up.

In most companies it takes much longer to get to scale, and therefore people have time to learn. In this case, they were growing at 30 percent a month, so every two-and-a-half months you're doubling. That means that every six months there are more new people in the company than people who have been there before. These people are coming from all kinds of other companies and other cultures, and holding together the culture, holding together even the operation becomes a huge, monumental challenge.

Kenny: They started almost like a mission-driven organization. Their values are critically important. How do you possibly inculcate those values when you're growing at that rate? You can print them up, you can hand them out to people when they get hired, but was there anything that they tried to really help new employees understand the values of the organization?

Ghosh: They would say that the reason they've been able to grow that fast is because of the values. That, if you don't have some common platform that everybody comes into, and something that keeps getting reinforced, people will disperse in a hundred different directions.

Just as a quick example, one of the things they did very early on was establish ... two sets of customer service people. One was for their users and the other one was for their drivers. The captains, as they call them, would have a dedicated place to call if they had a problem of any kind. This notion of saying, "If we have enough well-trained professional captains who are respected and respect themselves, then there's no limit to how far we could grow."

I think in their last year was when they achieved unicorn status. They raised over $1 billion in valuation.

Kenny: That's remarkable.

Ghosh: I believe it's the first unicorn in the Middle East.

Kenny: They encountered some other issues that Uber hasn't necessarily faced in the markets where they started. You talk about some of the innovations they did, having to create their own version of Google Maps, for instance.

"They now have three founders. One is Saudi, one is Pakistani, one is Swedish."

Ghosh: Right. Not only did they not have the infrastructure that we have in the west, addresses that count, but they also have regulations that are not clear. They had a number of situations where local governments would choose to do things differently than the central government had said they could do, where people were arrested. All kinds of issues of introducing something new into an environment that's been quite traditional, and everyone is trying to figure out, what are the new rules of this game?

In that process, you also have ... they now have three founders. One is Saudi, one is Pakistani, one is Swedish. I remember sitting across the table from them, and there was a Christian from India, a Hindu woman from India, a couple of western people from Stanford, just a mixture of sort of the whole world. All of these people were working together to create something that was bigger than any of them. To me, it was just a fascinating example of what entrepreneurship can do and how much it can transform societies, and in the process of transforming the user and the user experience, it's transforming what people think of themselves.

Magnus, one of the founders, flew all the way over from there [to attend] one class here. I asked him, during writing the case, "Why are you investing so much time? We could have done a Skype call." He said, "This is a region I really love, and it has so few stories that are positive success stories where people have built up something that everyone is proud of. I want that story to get known across the world, and I'll do everything I can to do that."

Kenny: The other challenge they faced was getting people to want to go to work there... In the early going it was hard to find the right people willing to come and work those hours for that pay.

Ghosh: Probably their biggest scaling challenge was finding experienced people who wanted to work for a startup, or who even had the skills. If you don't have an entrepreneurial ecosystem, you don't have a supply of people who know what it means to be in an uncertain, disorganized kind of environment that's growing really fast. Then when they brought in senior people, they faced the risk of those people diluting and changing the culture, because they came from larger companies.

They wanted to be a model for how other people around could build companies and meet the unique needs of that population. They're now looking at expanding to other lines of business, but in all cases, the foundation of the company is really about doing good for the region. You hear people talk about values a lot. You really see that being really core to what they do.

Kenny: How did the MBA class go? I'm curious as to how the students responded. Was there anybody who had used Careem's service?

Ghosh: There were a number of students who were very familiar with Careem. In fact, we had two students who had visited their offices. The other perspective that students found intriguing was... normally, cases are written from the perspective of the founder struggling through all these problems. What I tried to do here was to have one of the employees who lived with the chaos of the growth describe her experience.

It turned out that she was one of our students here. She called me here one day and said, "I hear you're writing a case on Careem. I was there. I saw what a mess it was." The point that she made was that in these very fast growing companies, you can either sit in the company and complain about why nothing works ... or you can say, "I have to fix this. It doesn't matter if I'm not technically a founder, I am a creator of this company." She took that posture and was able to be quite effective at a range of things.

Fundamentally, the job that has to be done when you join these companies is very different from the job that has to be done if you join an established company. She gives a little example of her first day there. She met the founder and asked, "What do you want me to do?" He said, "You tell me what you want your title to be and you tell me what you want to do." Over the next six months she did eight or 10 different jobs. The rate of learning there is much, much higher, but the rate of disorganization is also much higher.

Kenny: For people listening right now, how can they identify if they have the tolerance to thrive in a situation like that, or if it just scares the heck out of them?

Ghosh: You actually don't know that. It might scare the heck out of you and you might do really well in it. What you can be sure about is that you will learn a lot about yourself, about your limits, about what it means when you stretch your limits beyond what you're comfortable with. You know, it's a little bit like mountain climbing in that you could have a much more comfortable time watching National Geographic on TV, or you could try and climb the mountain yourself. If you do that, you'd be uncomfortable every moment of the way, but when you come down, you'd probably say, "That was an amazing experience."

Kenny: And you can accomplish something great. Shikhar, thank you for joining us today.

Ghosh: Thank you.

Kenny: You can find the Careem case along with thousands of others in the HBR case collection at hbr.org. I'm your host Brian Kenney, and you've been listening to Cold Call.

Transcript edited for length and clarity. Interview recorded on December 5, 2017.

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