The Success And Multiplier Effects That Careem's Acquisition By Uber Will Have On The Middle East's Startup Ecosystem
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With Uber acquiring Careem for a record $3.1 billion, there are now various opinions about whether it is a “good” or “bad” thing. One concern is that the reduction of competitive pressure will hurt the consumer. There are also concerns about the potential to lose high quality jobs from the region if Uber consolidates them in the US. There is also a sense of loss that a homegrown business, and a significant part of its ownership and experience, is assimilated into an international player.
These concerns are valid, but I agree with Chris Schroeder and Fadi Ghandour that they are far outweighed by the positives. These positive effects can be broken down into two parts: the success and the multiplier effects.
Let’s take a moment to celebrate what the founders have achieved. They created a hugely successful business in the region, and scaled it at a very rapid pace. As a result, they created over 4,000 jobs, and enabled over a million captains to earn a living. They created an exemplary company culture, and focused on maintaining and improving that corporate culture, despite the complexities of rapid expansion of the team and their geographic footprint. They broke new ground by acquiring companies. Also, they made countless personal sacrifices to make this all happen.
The next layer of their impact is yet to come. The $3.1 billion exit will be injecting a significant amount of cash into the region. Careem’s investors will return gains to their limited partners, and, in effect, will be bolder in investing in earlier stage upcoming entrepreneurs. There are some amazing entrepreneurs in the region with so much potential to achieve success. Such exits will gain attention and interest from international investors. More importantly, some of the money will make its way to the founders along with their employees who will realize the benefit of the employee share options plan.
The multiplier effect will take shape first by how Mudassir Sheikha, Magnus Olsson, and Abdulla Elyas have inspired other entrepreneurs in the region, by showing you can successfully scale up a business in the region, in the face of tough competition and complex issues. They have already been inspiring so many, but this exit makes it even more visible.
Once an exit happens, many entrepreneurs, and some of their key colleagues, end up investing in other startups. Some set up or join VC firms, like Fadi Ghandour, Dany Farha, Ihsan Jawad, and Samih Toukan. Others choose to remain as angel investors.
The entrepreneurs also mentor the next generation of entrepreneurs. The experience that the founders have gained in impossible to quantify. We see it when Endeavor Entrepreneurs get mentoring sessions with successful entrepreneurs, and get advice and insight from someone who has been through it before. To their credit, the Careem founders have been actively mentoring entrepreneurs and supporting the ecosystem.
As Fadi and Chris mentioned, the ripple effect will be felt over the next few years as some of Careem’s people go on to start their own businesses. Others might choose to join existing startups in the region, where they can inject their experience and capabilities to empower other businesses to make their way to success.
Who knows, the entrepreneurs might eventually decide to start another business. Careem was already the second startup for each of the three founders.
For now, this injection of capital, inspiration, and experience into the ecosystem will have a long reaching effect on the region.
One thing everyone agrees on is that they are great people- and it’s nice to see nice guys win.