قصة بيع وإغلاق تطبيق كاريدج | بودكاست سوالف بزنس

The Future of Food Delivery: Challenges and Innovations

Current State of Food Delivery Applications

• The food delivery ecosystem is unsustainable, with restaurants facing commission fees as high as 50%, leading to financial losses.

• Restaurant owners express dissatisfaction with current food delivery applications, feeling burdened by high commissions akin to taxes.

• Abdullah Al-Mutawa, founder of the Carriage application, shares his journey from founding the app in Kuwait to its acquisition by Delivery Hero for $180 million.

The Journey of Carriage and Its Closure

• The rapid timeline of establishing, acquiring, and closing Carriage occurred within four years—a brief period for a startup.

• Discussion includes details about the acquisition negotiations with Delivery Hero and competition faced from other apps like HungerStation and Talabat.

Introduction of Cari: A New Business Model

• Al-Mutawa introduces his new food delivery application "Cari," aiming to address issues faced by restaurants and coffee shops that arose during his time with Carriage.

• The conversation shifts towards Al-Mutawa's personal experience quitting social media during COVID, highlighting its impact on mental well-being.

Personal Reflections on Social Media Use

• Al-Mutawa deleted social media accounts during his honeymoon but retained WhatsApp for communication purposes.

• He discusses how avoiding news during COVID allowed him to focus on family life without external comparisons or distractions.

Impact of Reduced Screen Time

• After reactivating Instagram out of curiosity, he found it overwhelming due to changes like the introduction of reels; he later decided to delete it again.

The Journey of Carriage: From Idea to Execution

The Impact of TikTok's Algorithm

• The speaker discusses the addictive nature of TikTok and praises its algorithm, suggesting it effectively engages users.

• There is speculation about TikTok in China showing educational content to children, contrasting with other countries' offerings.

Introduction to Carriage

• The conversation shifts towards the speaker's experience with Carriage, particularly focusing on its acquisition and subsequent developments.

• The speaker reflects on their entrepreneurial journey that began with the inception of Carriage in 2015.

Inspiration Behind Carriage

• A pivotal moment occurred when the speaker watched "Shark Tank," which sparked an interest in entrepreneurship and investment.

• They were fascinated by how entrepreneurs presented ideas to investors, leading them to consider starting their own business.

Initial Business Ventures

• In January 2015, the speaker opened a burger restaurant, motivated by a desire for independence from a monotonous job in an oil company.

• Despite believing that opening a restaurant would lead to success, they quickly learned about the challenges involved.

Observations on Delivery Services

• During discussions about Talabat's acquisition for $160 million by Delivery Hero, insights into food delivery operations emerged.

• It was revealed that Talabat did not have delivery personnel; restaurants handled deliveries while Talabat acted as a platform charging flat fees.

Identifying Opportunities for Improvement

• As orders increased through Talabat, communication issues arose regarding order tracking between customers and restaurants.

The Birth of an Idea

The Initial Concept

• In 2015, the speaker recalls a pivotal moment at Starbucks in Al-Nuzha when his brother introduced the concept of an algorithm to help customers find nearby deliverymen.

• The speaker began searching for algorithm developers after being intrigued by the idea. His brother had a friend studying computer science in California who could assist with this project.

Market Research and Demand

• They discovered that similar services existed in the U.S., like Postmates, but were absent in Kuwait, indicating a significant market opportunity due to high demand from restaurants reluctant to offer delivery.

• The brother's friend, who owned an ed-tech startup, was persuaded to join their venture after ensuring someone could manage his business back in the U.S.

Establishing Partnerships

• Upon meeting with their new partner in a small office space, they discussed equity distribution among themselves as co-founders.

• The speaker held the highest percentage as CEO and originator of the idea while Musab and John received equal shares.

Navigating Early Challenges

Initial Struggles

• After partners left for different locations (Musab to Spain and John back to the U.S.), the speaker faced uncertainty about how to proceed with launching their business.

• He sought advice from Khaled, a friend working at a bank, discussing issues he identified on Talabat’s website which highlighted potential areas for improvement.

Adjusting Equity Distribution

• With Khaled joining as COO, they re-evaluated equity percentages again. This led to adjustments where all partners' shares were reduced slightly.

Company Registration and Legal Hurdles

Setting Up Legally

• They registered their company at the Chamber of Commerce without prior knowledge of offshore company setups that would provide more flexibility under international law.

• When attempting to register ownership percentages that included decimals (e.g., 33.3%), they encountered system limitations requiring whole numbers instead.

Resolving Disputes Over Percentages

• John's insistence on retaining his exact percentage created tension due to cultural differences regarding business practices; he was accustomed to American systems that allowed decimal ownership.

Implementing Solutions for Partnership Management

Creating Fair Agreements

• To resolve disputes over ownership percentages, it was proposed that one partner would relinquish part of their share so everyone could have whole numbers while maintaining fairness through external contracts governing profit distribution.

Introducing Vesting Schedules

Business Journey and Challenges

Initial Struggles and Development

• The speaker discusses the challenges faced when John did not work on the application for a month, leading to a critical decision point: either launch the app or close the business.

Launching the Application

• The application was successfully developed and launched in April 2015, with an initial average of 200 orders per day by May. Restaurants lacked delivery services, allowing them to avoid investing in fleets.

Business Model Insights

• A commission-based model was adopted due to high delivery expenses; higher sales resulted in larger percentages taken from commissions while customers paid a delivery fee.

Growth and Expansion Plans

• By the sixth month, they received interest from a Saudi venture capital firm, indicating growing recognition of their business.

Unexpected Opportunities

• The speaker received a message from Delivery Hero expressing interest in collaboration, which initially seemed suspicious but later proved significant as it came shortly after meeting with another investor.

Strategic Decisions for Expansion

Market Selection Strategy

• The speaker planned to expand into Bahrain first before moving into Saudi Arabia due to its smaller market size and proximity, allowing for easier management of potential damages.

Learning Through Experience

• Hiring an international employee for Bahrain was part of a strategy to learn about managing businesses abroad before expanding further into larger markets like Riyadh.

Investor Meetings and Pitches

• During their trip to meet investors in Saudi Arabia, they practiced their pitch but sensed disinterest from one investor. This experience provided valuable insights into investor expectations.

Turning Points and Future Prospects

Realization of Interest from Delivery Hero

• After returning home, the speaker learned that Delivery Hero had reached out through Talabat's former CEO, marking a pivotal moment in their journey just seven months post-launch.

Initial Funding Sources

• They raised $1.3 million as seed funding from family and friends without needing additional capital initially due to strong early performance metrics.

Ongoing Discussions with Investors

Investment Strategies and Competitive Advantages

Initial Conversations with Investors

• The speaker discusses initial interactions with potential investors, emphasizing the importance of gathering information despite them already knowing about the company.

• Multiple conversations were held simultaneously to diversify investment sources, including discussions with an investment company and various venture capital firms.

• A notable investor reached out through an inbound strategy, expressing interest in investing in the company.

Competitive Edge Over Talabat

• Questions arose regarding how the speaker's company surpassed Talabat and why Talabat did not replicate their strategies quickly.

• The speaker explains that they created a competitive moat by signing exclusive agreements with restaurants, preventing them from working with competitors.

• Legal concerns were minimal at the time, allowing for these exclusive arrangements without significant regulatory pushback.

Risky Decisions in Building Infrastructure

• The speaker reflects on bold decisions made during early growth phases, such as purchasing fifty motorcycles and 120 cars for delivery services.

• Despite feeling overwhelmed by the responsibility of managing a fleet, he acknowledges that being single at the time made risk-taking easier.

• Instances of theft occurred within his delivery fleet; however, incentives were offered to drivers to encourage loyalty and reduce losses.

Growth Factors Leading to Investor Interest

• The company's rapid growth was attributed to having a private delivery fleet and exclusive restaurant partnerships that provided a competitive advantage over Talabat.

• As interest from investors grew, conversations expanded beyond Delivery Hero to include other firms in the Gulf region.

Acquisition Discussions with Delivery Hero

• Initial meetings revealed Delivery Hero's interest in inspecting the company but did not immediately mention acquisition intentions.

• An offer was presented for an $80 million acquisition paid in stocks; however, concerns arose due to non-Shariah-compliant activities associated with Delivery Hero at that time.

Investment Offers and Strategic Decisions

Initial Investment Offers

• The company received significant investment offers, including $50 million and $100 million, but these were only investment proposals without acquisition commitments.

Division of Responsibilities Among Partners

• The four partners divided their focus: two managed business operations while Musab and the speaker concentrated on acquisition efforts. This division helped maintain clarity and efficiency.

Public Relations Efforts

• The team engaged in extensive PR activities, including producing a documentary with Al-Jazeera and expanding into Bahrain, which contributed to their growing visibility.

Delivery Hero's Renewed Interest

• Delivery Hero expressed renewed interest in acquiring the company after learning about competing offers. Their urgency was evident as they quickly sent a team to Kuwait for discussions.

Stressful Negotiation Period

• During negotiations, the team faced pressure to present accurate financial data without prior auditing. They had a tight deadline due to Delivery Hero's impending stock market listing, creating an intense atmosphere.

Cohort Retention Analysis and Valuation

Importance of Customer Retention Metrics

• A key metric discussed was cohort retention analysis, indicating how often customers returned after their first order. This metric demonstrated strong customer loyalty over time.

Positive Business Insights

• Delivery Hero found it impressive that not only did customers return consistently, but their average order value also increased over time—an indicator of healthy business growth.

Confirmation of Financial Data

• Despite initial skepticism regarding the numbers presented, a business intelligence analyst confirmed the accuracy of the data during negotiations, facilitating smoother discussions.

Final Offer Details

• Ultimately, Delivery Hero offered $180 million based on revenue multiples reflecting potential expansion opportunities rather than just current performance metrics.

Decision-Making Factors in Acquisition

Negotiation History

• Initially offered $80 million by Delivery Hero, the company rejected this offer before negotiating terms involving cash versus stock payments due to Shariah compliance concerns.

Risk Assessment

• The speaker reflected on personal circumstances influencing their decision-making process; despite rapid growth potential in other markets (Saudi Arabia, Bahrain), there was uncertainty about success outside Kuwait.

Perspectives on Business Ownership

• Many entrepreneurs tend to hold onto their companies when faced with lucrative offers; however, some choose immediate cash out for security—a balance between risk tolerance and opportunity recognition.

Finalizing the Deal

Authority in Decision-Making

• The negotiation team had pre-approved authority from higher management to finalize deals swiftly without needing board approval at that stage of discussions with Delivery Hero.

Acquisition Insights and Financial Growth

The Value of Acquisition

• The acquisition is projected to double the company's value, with an initial purchase price of 180 million leading to a market valuation increase to one billion due to growth potential.

Investor Satisfaction and Profitability

• Investors agreed to sell as they realized a staggering 2000% profit within a year; one investor turned 50,000 dinars into 150,000 dollars.

• Conditions were set for the deal, including cash payments instead of stock options, ensuring investors received their returns before exiting.

Payment Structure and Operational Goals

• An upfront payment of 90 million in cash was made, allowing for immediate payouts to investors while the remaining amount depended on achieving target numbers.

• Additional funds were allocated for operational expenses (5 million dollars), aimed at expanding into international markets after dominating Kuwait.

Employment Terms Post-Acquisition

• Partners were required to work until the end of 2018 without salaries, focusing on meeting objectives despite financial constraints.

• The team was willing to work without salaries due to prior large cash payouts from the acquisition deal.

Expansion and Employee Morale

• Minor issues arose during expansion efforts but were resolved; the company began its growth trajectory using acquired funds.

• Employees were informed about the acquisition through a celebratory announcement that included bonuses equivalent to three or four months' salary.

Financial Struggles Before Acquisition

• Prior to acquisition, the CEO faced personal financial struggles despite running a successful business; he managed on a modest salary while focusing on long-term potential.

Emotional Impact of Receiving Acquisition Funds

Reflections on Sudden Wealth and Contentment

The Initial Reaction to Wealth

• The speaker describes a moment of excitement and disbelief after receiving a significant amount of money, contrasting it with their previous modest salary.

• Despite the sudden influx of wealth, the speaker notes that their lifestyle did not change immediately; they were unaware of the possibilities that came with financial freedom.

Understanding Happiness Beyond Money

• The speaker emphasizes that achieving financial goals does not guarantee lasting happiness; true contentment comes from within rather than material possessions.

• They share observations about wealthy individuals who remain discontent despite having substantial fortunes, highlighting that happiness is tied to personal satisfaction rather than monetary value.

Personal Financial Decisions

• Upon receiving their wealth, the first action taken was paying off debts, which provided immense relief and a sense of contentment.

• Although they enjoyed spending on travel and luxury items, the speaker asserts that their fundamental lifestyle remained unchanged despite improved financial circumstances.

Business Expansion into New Markets

Market Entry Strategy

• The speaker recounts entering Qatar's market without any advertising costs for over a year due to high demand driven by word-of-mouth recommendations.

• They note that Qatari consumers have a strong preference for Kuwaiti brands, which contributed to the success of their service in this new market.

Competitive Landscape

• As they expanded into Saudi Arabia, they achieved significant order volumes compared to competitors like Jahez during late 2018.

• The discussion touches on competition dynamics with HungerStation and how both companies operated in overlapping markets without sharing information or strategies.

Insights from Competition

• The speaker reflects on challenges faced by HungerStation's founders due to internal conflicts but maintains focus on achieving specific business targets independently.

Acquisition Dynamics and Trust Issues

Trust in Business Relationships

• The speaker discusses the accountability held by their partners post-acquisition, noting that competitors could benefit from any failure to meet targets, raising concerns about trust.

• Despite potential threats, the speaker had a positive experience with their partners, stating they honored agreements and achieved significant growth beyond initial targets.

Financial Decisions Post-Acquisition

• The speaker preferred immediate cash over waiting for a larger sum at year-end due to a pessimistic outlook on business sustainability.

• They expressed concern about potential declines in business performance despite current success, emphasizing a cautious approach to financial management.

Negotiation Strategies

• The desire for early payment led to negotiations with the CEO, who was eventually persuaded after presenting clear data and reasoning.

• The CEO's willingness to pay earlier was influenced by recent IPO cash surplus and an eagerness to finalize transactions.

Risk Management Perspectives

• Acknowledging inherent risks in business growth cycles, the speaker maintained a cautious mindset throughout their dealings.

• They leveraged their position by offering collaboration with Talabat as part of the negotiation for early payment.

Strategic Alliances and Market Positioning

• After securing funds, they formed an alliance with Talabat while maintaining separate identities but collaborating on market strategies.

• The competitive landscape showed varying strengths between Carriage and Talabat across different markets; both companies continued operations in Kuwait.

Post-Acquisition Developments

Transitioning Away from Employment

• Upon contract expiration, the speaker declined a generous offer from their partners to return as employees, preferring independence as an entrepreneur.

Company Changes and Market Consolidation

• Following management changes within Carriage leading up to its absorption by Talabat, there were discussions about company direction amidst declining performance in certain markets.

Carriage: A Journey Through Founding, Acquisition, and Subscription Models

Emotional Attachment to the Brand

• The speaker expresses a strong emotional attachment to the Carriage brand, highlighting its established reputation in the market.

• The brand was recognized for pioneering the order delivery model, which contributed to its significance.

Rapid Business Evolution

• The speaker recounts a condensed business journey involving founding, acquisition, and eventual closure of Carriage within three years.

• This experience included transitioning from a startup to a more structured governance model.

Subscription Service Experience

• During their tenure at Carriage, they introduced a subscription service known as Carriage Black that allowed unlimited orders without delivery fees.

• The average delivery fee in Kuwait was one dinar (12 riyals), while in Saudi Arabia it was around 10 riyals; free delivery significantly boosted order numbers.

Strategic Insights on Subscription Model

• The subscription model aimed to monopolize customer loyalty by offering unlimited orders for a monthly fee of 3.5 dinars (36 or 40 riyals).

• Similarities were drawn between this model and gym memberships where many subscribers do not utilize their membership fully.

Challenges with Customer Behavior

• Some customers exploited the subscription by placing minimal orders (e.g., just water), leading to financial losses on those transactions.

• Unlike gyms where attendance requires effort, ordering food is easy and can lead to unprofitable situations for restaurants due to low-value orders.

Financial Implications Post-Acquisition

• After leaving Carriage, issues arose regarding Delivery Hero's liabilities owed to restaurants in Saudi Arabia following Carriage's closure.

• There are ongoing claims from restaurants waiting for payments that have yet to be resolved since the company's shutdown.

Current Market Dynamics

• Competitors like HungerStation and Jahez now offer similar subscription services but may not have minimum order fees.

• Restaurants face high costs associated with joining these platforms due to commissions and additional fees related to visibility and marketing campaigns.

Economic Strain on Restaurants

• Many restaurants are reportedly losing money due to high commission rates ranging from 10% up to 32%, especially in regions like Kuwait and UAE.

• Additional charges for participating in promotional campaigns further strain restaurant finances while benefiting the delivery applications disproportionately.

The Impact of Food Delivery Applications on Restaurants

Business Models and Dependency

• The speaker reflects on the Careem application, noting its previous model of charging restaurants a fixed monthly subscription fee, which has evolved to a commission-based structure that is more profitable.

• The strategy involves adjusting commissions based on restaurant preference, allowing for increased charges over time, leading to dependency among smaller restaurants.

• Restaurant owners initially experience profit boosts from applications but gradually become reliant on them as dine-in customers decrease, prompting thoughts of cost-cutting measures like transitioning to dark kitchens.

The "Gargour" Analogy

• The speaker introduces the concept of "gargour," a fishing trap metaphor illustrating how restaurant owners can feel trapped by their reliance on delivery applications.

• Some restaurants raise meal prices to offset high commissions; however, they often face restrictions from applications regarding price adjustments.

• Many restaurant owners express dissatisfaction with current food delivery ecosystems due to unsustainable commission rates that resemble taxes.

Challenges in the Current Ecosystem

• The speaker emphasizes that most restaurants are losing money and highlights the unsustainability of paying high commissions (30%-50%) in the long term.

• Despite partnerships with delivery companies being lucrative for these firms, many restaurant owners feel burdened by excessive fees and seek alternative solutions.

Shifts Towards Direct Ordering

• A trend emerges where restaurants begin creating their own apps or websites for direct orders but soon realize customer acquisition costs are prohibitive.

• This shift leads some establishments away from aggregators towards disaggregated models where individual apps are created for each restaurant.

Innovative Solutions in Food Delivery

• The discussion transitions back to the speaker's return to the food delivery business motivated by these challenges and a desire for change in revenue models.

• A new approach is proposed: restaurants pay only for initial orders from new customers rather than ongoing commissions.

Understanding the Business Model of a Restaurant Application

Concept of Yearly Contracts with Restaurants

• The speaker discusses a hypothetical scenario where customers order from McDonald's for a year, emphasizing that if they don't order again within that year, it raises questions about payment structures.

• A yearly contract is proposed where the first order incurs a fixed fee to the application, while subsequent orders within the same year do not incur additional charges.

• If an order is made at the beginning of one year and another at the start of the next, both would require payment under this model.

Customer Churn and Retention Strategies

• The discussion highlights customer churn—how new customers may not remain loyal indefinitely due to changing preferences.

• The application aims to encourage frequent ordering by motivating users to try various restaurants rather than sticking to just one or two options.

• Customers receive discounts through the app as an incentive to explore different dining options.

Financial Implications for Restaurants

• The model mimics what restaurants would experience if they had their own applications, covering delivery costs and marketing expenses.

• Restaurants can choose how they handle delivery fees—either absorbing them or passing them on to customers—thus managing their financial outlay effectively.

• By acquiring customers over multiple years, restaurants can reduce overall expenses as repeat orders become more common.

Revenue Generation and Market Differentiation

• Questions arise regarding long-term profitability beyond initial customer acquisition; strategies are hinted at but not fully disclosed.

• The application enhances product visibility by showcasing new restaurant options tailored to user preferences, similar to social media algorithms like Instagram's Explore page.

Competitive Landscape and Sustainability

• Unlike traditional models that prioritize paid placements, this app focuses on user preferences for restaurant visibility, promoting diverse choices based on individual tastes.

• Offers such as discounts and free deliveries are used strategically by restaurants within the app to increase customer engagement without incurring high costs compared to competitors' commission-based models.

• The application does not take a percentage from sales; instead, it allows restaurants full revenue retention which can be reinvested into promotions or operational costs.

Challenges from Competitors

• Other applications may attempt similar business models; however, established customer bases provide competitive advantages against potential imitators.

Why the Name "Cari"?

Origin of the Name

• The name "Cari" is derived from the verb "carry," reflecting its connection to transportation and delivery.

• The choice was influenced by research conducted while developing a related concept, "Carriage."

• The distinct "k" sound in "Cari" makes it more memorable compared to other names.

Business Launch and Success

• Cari was launched successfully in November in Kuwait, achieving positive gross profits within two months.

• A significant portion (70%) of restaurant orders do not incur a fee, indicating high demand for certain restaurants.

Expansion into Saudi Arabia

Market Potential

• The Saudi market is seen as an emerging opportunity with potential for growth, despite being only 2-3 times larger than Kuwait's market size.

• The speaker expresses confidence in competing against larger competitors in Saudi Arabia, believing there is room for success.

Vision for Growth

• There is ambition to evolve Cari into an international company rather than just a regional player.

• Inspiration is drawn from Jahez's achievements as a successful example of rapid growth and market demand fulfillment.

Challenges in the Food Delivery Sector

Need for Restructuring

• The food delivery sector requires restructuring due to rising commissions and fees that threaten sustainability.

• Current business models are deemed unsustainable; competition should drive down costs rather than inflate them further.

Impact on Restaurants

• Increased commission rates can suffocate restaurants financially, limiting their profitability and overall market growth.

Value Addition Beyond Commissions

Focus on Service Quality

• Emphasis on providing value beyond just lower commissions; it's about enhancing service quality for both restaurants and end users.

• Competition benefits all parties involved—restaurants gain leverage, consumers enjoy better services, and providers innovate solutions.

Responsibilities of Restaurants

• Restaurants are expected to manage customer issues independently without relying heavily on delivery applications for problem resolution.

Innovative Solutions Offered by Cari

Unique Business Model

• Cari merges food delivery with business solutions tailored specifically for restaurants, allowing them direct access to customer data and engagement opportunities.

Customer Engagement Features