Off The Beaten Path: Kamal Al-Samarrai, Founder And CEO, Dawaami
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Frustration is a risky state to be in, especially if you are an entrepreneur. To Kamal Al-Samarrai, a Dubai-based banker-turned- entrepreneur, it has served as inspiration to overcome limitations of the global recruitment industry by launching Dawaami, an online marketplace disrupting the sector.
But, in doing so, he aims to first put one entrepreneur out of business- himself.
In 2012, Al-Samarrai launched Dawaam, a Dubai-based specialized recruitment agency, out of his living room, and self-funded and grew it to employ 12 people and fill around 160 roles for 87 different clients per each of its peak years- 2014 and 2015. With 12 years of banking experience behind him, including stints at Merrill Lynch in London and Abraaj Capital and Al Mal Capital in Dubai, it wasn’t an arduous task.
“In 2012, my idea was that since Dubai had started to move up again, it would need more staff,” he remembers. “I had banking experience, and I knew a lot of people, so I decided to start a recruitment company. Business was much easier at that time. I remember that we were sending CVs out, people were hiring, and the business grew really well until about the end of 2016. Our USP was the so-called Dawaam promise –a one-week promise– meaning that in a week, we would send you interviewed candidates specifically for the role you need, and not just people from a database. The problem with traditional recruitment in this part of the world is that, firstly, a lot of the big, international groups have contracts with big, international recruiters from abroad. Secondly, local companies that own 90% of the rest of the business have massive recruitment teams internally, because they hire a lot across the board. Thirdly, those small companies that you can go after source Asian recruitment teams that will charge much less than 15% of the annual salary. So, if they have one sales guy here, and the whole recruitment team in India, they can charge 5% or one-month salary. That was killing our margins.”
However, Al-Samarrai managed to find a niche in catering to medium-sized enterprises that employed 50 to 100 people and appreciated a personalized approach in recruitment. He describes them as businesses “where the CEO is easily accessible, the HR can speak directly to the CEO, they know what they are looking for, and they don’t mind paying that small recruitment fee to get the right person.”
Recruiters and executive search firms usually get paid a fee of the candidate’s annual starting remuneration, which ranges from 5% to 35%, and is billed on the first day of employment. In difficult times, however, it is a burden for smaller companies looking for ways of cutting costs. For that reason, the impact of the slower market conditions on Al Samarrai’s business has been evident over the last two years- the client list has dramatically reduced to just 37 names. “My traditional recruitment business is doing okay only because of the relationships I’ve built,” he says. “The people who work for me have built their relationships with certain clients that continue to give us roles, because they trust us. We’ve been here for five years, we know the market well, we know the right people. We not only give you a candidate, but we have guarantee periods for them. And that is what big groups here still don’t understand about recruitment. They sign up lots of recruitment firms, and when they get a job, they send it to all of them. Everyone ends up chasing the same people. We are small, personalized, and we want to grow, but we need the support of the groups here. If those big groups work only with big recruitment players, then the middle market doesn’t work. For all those reasons, my client list hasn’t changed over the last year at least. And that is the reason why I started my new business, and why I am really excited about it. I want to disrupt my current business model, because it’s old and archaic. Dawaami will be the largest recruitment company that doesn’t have any recruiters.”
This irritable situation has given rise to Al Samarrai’s mission to lower the time and the cost of recruitment. Launched in May 2018, Dawaami is an online marketplace that connects recruiters and hiring companies globally. It not only cuts out the middleman, but it also embeds a bidding system that enables the two parties to conduct real-time auctions, setting the terms of each interaction as per their own preferences. “Throughout my six years in recruitment, I have started to understand the faults in recruitment, from my own perspective, and from the perspective of HR managers,” Al-Samarrai explains. “Firstly, HR managers have to sign terms of business, which takes time and effort. Secondly, you are stuck with the same fee with that recruiter, no matter what you look for, a driver or a CEO. Thirdly, when an HR manager has a job opening and goes to a recruitment company, you don’t know who will be the recruiter actually working on it. All those three things are a problem. On the other hand, as a recruiter, I also have to sign terms of business with companies, which takes too much time and effort. Then, I know that there are roles that I can fill, but I cannot reach them because I don’t have terms of business with them at that very moment. Lastly, my fee is fixed regardless of the time and effort that particular job opening might require.”
He continues, “When I realized all these three points, I started to think how to change this industry. So, I thought, what if I could design a platform that both a hiring company and a recruiter agree to sign up to, and they are governed by the principles of the site? A hiring company places a job on the site, posts it for free and anonymously, and recruiters start to bid on that job, depending on how much they want to bid for- a percentage of the annual salary, or a fixed fee. Also, they can bid on the jobs that they think they can do, allowing them to specialize for certain roles. A hiring company can pick and choose up to five recruiters work with on any one role. It makes recruiters to work for them more efficiently, because they can pick the exact specialization that they need. So, if you sit in London and want to open an office in Dubai, but you don’t have any recruiters here, you can hire them via our platform without signing terms of business, and you can pick and choose a fee that you want. It’s important to say that the HR manager is still protected by the system. When a hiring company hires someone, we invoice the hiring company, but we hold the money in escrow. So, we don’t pay the recruiter straightaway, but we hold it for 60 days for our 100% money back guarantee. On the 61st day, we pay 50% to the recruiter, and on the 91st day, we pay the other 50%."
"So, the hiring company is protected for 90 days which is better than most guarantee periods that you have. For recruiters, it’s the other way around- I can work with any company I want that posts on there, and for the fee that I want. Those are the struggles that I’ve had as a recruiter. As a recruiter, if I could go on a platform where there are enough clients giving me roles, without the limitations of the contracts that I have and the geography I operate in, I could do it all day and night. If I could access job openings globally, I wouldn’t stop. It is about not being limited by constraints of a traditional business, like any recruiter is right now.”
When it comes to revenue generation, and consequently profit, Dawaami charges a percentage of the recruitment fee. The business model seems to be too simple to be overlooked by major recruitment players, which is a question Al-Samarrai gets asked a lot. “People ask me why LinkedIn isn’t doing it,” he says. “It’s a database that connects people, we are not. LinkedIn would have to change their business model from B2C to B2B. We are a very niche B2B marketplace that connects HR managers to recruiters. Also, this is a US$350 billion industry globally, it’s a huge market that is controlled by a few who don’t want to change it. Adecco made $22.7 billion in revenue last year, Hays was at around $7.2 billion. So, why would they change it? What incentive do they have?”
But Al- Samarrai has that spark the incumbents miss, and that is how we end our interview. “Dawaam has been a means to an end, Dawaami is a passion,” he concludes.
Dawaami founder and CEO Kamal Al-Samarrai's tips for entrepreneurs
1. Be mindful of who you do business with
“Contracts are often not respected here, so make sure to know your clients before you do business with them. Notice how they do business with you, how quickly they sign a contract, whether they come to see you, and so on. All of those can be warning signs. The more warnings signs add up, the more you want to avoid the client.”
2. Take care of your finances
“Avoid taking loans from banks. I would have closed my doors long time ago had I been in debt to a bank. The pressure that amounts on you is huge, just to pay your staff, let alone paying a bank on top of it.”
3. Get the best people around you
“Loyalty is very important, and I look for that in people that I have around, because times will get bad, and you need people who will stick around while you are going through that. I’ve lost some good people over time, because I couldn’t afford to keep them. But it is important how they leave- they should do it with honesty and openness. People forget how much a business means to an entrepreneur, and how hurtful it is when someone they trust and is key to them leaves them.”