From the moment that Mudassir Sheikha and Magnus Olsson first decided to launch their own start-up in the Middle East, they knew they wanted to build something both “big and meaningful.” Almost a decade into their journey with Careem, they are succeeding beyond the wildest expectations—on both counts. What started in Dubai as a grassroots ride-sharing app back in 2012 has evolved into a full-fledged platform and Super App expanding across the region, bringing new opportunities for employment and access to services for millions of people.
Acquired by Uber for $3 billion in 2020, Careem now offers customers in Dubai 11 services, including ride-hailing, micro-mobility, food and grocery delivery and payments, as well as partner services such as home cleaning and PCR testing. Careem’s mission to simplify and improve lives and build an awesome organization that inspires hasn’t changed. Through the Super App, Mudassir and Magnus are building a platform that leapfrogs the region into a digital future, further empowering the start-up ecosystem and giving people a much easier way to access services that lead to a better life.
Just before the start of the pandemic, in early 2020, Mudassir and Magnus met in Dubai with McKinsey senior partner Tarek Elmasry. The edited conversation appears below.
The Origins of Careem–and of its Purpose
McKinsey: How did you come up with the idea of Careem?
Mudassir Sheikha: Actually, that wasn’t our first idea. The first idea was that we should go and do something else with our lives. But then Magnus came and said, “Hey, I want to build something big and meaningful,” I’m like, “Man, that sounds amazing. Let’s figure out what we do that can become big and meaningful.”
So, we started basically looking for ideas. Project Bamboo was the code name, and we made a list of all the problems that we had faced in our time in the Middle East. And every problem is an opportunity. The bigger the problem, the bigger the opportunity. And I think at some point, if I remember, I came and met you, said, “Hey, I want to take some time off to think of what to do next.” And you asked me, “Hey, what is that thing that you’re thinking of?” And I gave you a couple of ideas, I don’t even remember what those ideas were. You were quite polite and diplomatic in the way that you responded to those ideas. But then you said, “Hey, what about ground transportation? That’s a big problem to solve.” And that’s really where the whole thing started.
McKinsey: Where did the name come from?
Magnus Olsson: Obviously there was a play on words that this was a car business. And, Careem.com was free, and there’s not a lot of six-digit or six letter dot coms that are free these days. But, more importantly, it actually came from the notion of being Careem, which in Arabic means “to be generous.” And we wanted to be Careem to our customers and to our captains and to our colleagues. And this has been with us since day one.
McKinsey: What did you know about ground transportation or ride sharing at the start?
Magnus Olsson: We knew nothing about transportation. We had no idea how supply and demand works in the sector, and what happens in the morning, what happens in the evening and what the customers care about.
We didn’t know anything at all. We had a sense from the customer perspective, having been consultants, which was helpful. So, the more we started working on this, we realized that this really has the potential to make an impact in the lives of captains.
McKinsey: Was that the point at which you felt Careem had begun to find its meaning?
Magnus Olsson: From the very first day, there was a notion that we could use Careem to do something meaningful. And this was actually captured on day one, when the first thing we did was write down our values, even before we created a business plan. We created our values, and we wrote down our purpose.
But what really made the difference in those early days was that we just truly cared for and respected our captains. And that was not a ploy to make it happen—we actually really did, from the first batch of captains that we interviewed in a parking lot in International City. We had 20 of them, they came in one by one. Each interview took 45 minutes to talk about how to scale-up. There was an English test, there was an Arabic test, that I conducted.
There was a driving test which was basically asking for 15 different challenging locations to see if they could describe how to get there. But we showed them respect and they built Careem together with us.
McKinsey: How did that evolve and grow in terms of giving purpose to the company?
Magnus Olsson: In more recent years, I think we have come to realize that we can bring Careem to colleagues by creating an environment where this amazing talent that we have in the region can learn and grow, because you need a platform to learn. And for us, turning Careem into such an organizational platform is also creating a lot of meaning.
And then I think we grew into it. It expanded. We realized, man, we can have all these important captains, we can have all these impact on customers. We can have all this impact on the communities where we operate, whether it is to help in times of various levels of disaster in the cities we operate.
Mudassir Sheikha: But I think the biggest and most gratifying thing is this ability to give people some meaningful employment, give people ability to earn an income on the platform. And up until now, I think there’s 1.3-1.4 million captains (drivers) that are registered to work with us. That number is growing by almost 50,000 every month. And in the time that we finish this, there will be another, let’s say, 500 jobs that’ll get created.
Women’s Empowerment and the Growth of Careem
McKinsey: Clearly, the role of women drivers (and customers) has been critical to your company’s growth, and its larger purpose. Did you have any inkling early on how important that would become?
Mudassir Sheikha: Yes, women empowerment has been a key aspect. Back in the day, we heard that in Saudi Arabia there were more than 2.5 million women who wanted to work but were not working because of a lack of reliable transport. And this is not just a Saudi thing. You know, even though women could have driven in Egypt, Pakistan, or Jordan, they were not feeling safe, secure or able to drive freely. So, there is a lot of untapped potential that is now able to contribute meaningfully to economic development to the society.
McKinsey: What changed in the months after women were allowed to drive?
Mudassir Sheikha: Within an hour after the announcement was made, we took an oath to society that we will create a few thousand women captinas on our platform by a certain time. So we announced that, OK, we’re going to create Saudi captains, positions are available on the platform. It was an incredible time. The whole company celebrated that moment.
Of course, we were all a little bit nervous about potential social backlash at first. But we said let’s do it, and I think we started in one of the smaller cities where it wasn’t as center stage as maybe Riyadh. And we started having Saudi “captinas.” The numbers were not massive, but it was soon accepted.
McKinsey: Were you at all surprised how quickly Careem took off in the country?
Magnus Olsson: You know, if you go back to when we first moved into Saudi, we obviously realized that the Saudi woman would be a target customer in addition to our corporate colleagues or corporate customers. But we weren’t even sure whether she would be comfortable sitting in a car with a stranger, with a strange man.
Opportunity Youth
On Start-ups and Entrepreneurialism in the Middle East
McKinsey: From your experience, what are some of the major organizational obstacles to launching start-ups in the region?
Mudassir Sheikha: Things have evolved a lot since we started. Back then it was actually very expensive to even start a business. We had a hundred thousand dollars at the beginning, and by the time we were done paying the installment for our office and the deposit for the credit card acceptance and licensing, I think we were down $60,000 to $70,000. So we had very little to work with.
I think one thing that comes to mind is talent is still a challenge. We do not have as many, at least in the technology, entrepreneurship space, not as many strong technical universities that are producing strong graduates that can then join these types of businesses. We have had to look for regional talent that was working in areas such as the US and UK. And it takes time. I believe when people are settled, they are waiting for their passports or green cards. They have families. It’s not easy to make that happen at scale. So, talent overall is still a challenge, technically qualified talent.
McKinsey: Are there regional or regulatory issues you face in launching a new business in this part of the world, and how can policymakers help alleviate them?
Mudassir Sheikha: After talent, the second biggest issue is that this region is massively fragmented. If you’re building a technology business, you need to invest in building a technical platform that can scale to doing millions of transactions on a daily basis. That is expensive, and none of the markets in our region are big enough on their own for that level of investment. So, you really need to be a regional platform to justify that scale, to justify that investment. And going and becoming a regional player is still incredibly difficult. From basic things like registering a legal entity, sometimes finding local partners, to setting up offices, to funding, gateways, payment partners, dealing with different regulations in different markets. It really ends up taking a lot of resources and time to make that expansion happen. And it is critical.
So, I wish the region would come together a little bit more and make it easy and seamless for businesses to operate in this region that has a large market, 600 million people that live here. At least how we define the market between Morocco and Pakistan. It’s 10 percent of the world’s population. There isn’t a shortage of opportunity and scale. But there are a lot of problems to solve, just a lot of roadblocks and boundaries and geographical considerations that come into it.
McKinsey: What advice would you have for entrepreneurs in the region, or even for a younger version of yourselves? Magnus Olsson: So, my advice is, first, know the why, and basically, have a purpose. Careem from day one was anchored in the purpose. Whatever the purpose is, but have a purpose because then you can attract people that will join you on your purpose. When people join Careem and they are onboarding, I tell them, “You can be here for three reasons: Level one is that you need a job. We all need a job. There’s no shame in needing a job. But if you’re only here because you need a job, please leave. But if you want to learn and grow, now we’re talking, because this is a rocket ship. You will learn and grow. And by the way, we need you to learn and grow so that Careem can learn and grow. This is a symbiotic relationship. But the third level, which I’m hoping that we can get to, is that if you know what you care about as an individual you can channel that through Careem, and we have a relatively large canvas, we want our purposes to simplify and improve the lives of people in the region and build an awesome organization that inspires.
If you can subscribe to that, then magic happens.
McKinsey: Okay, what comes next?
Magnus Olsson: And the second thing is speed. From the first day we sat down and said, let’s do Careem, it was about speed. In the early days, we had a little website where you could schedule a booking. It looked relatively nice for the customers, and on the back end when you booked a ride, an email was sent to us. That e-mail went to a phone that had a very loud ringtone. People booked in the middle of the night, so we took turns sleeping with this phone. And then we had a list of 20 captains, the ones that we had interviewed in international city or outside the airport, and we called them one by one. “Hafeez, are you free?” Ok next. “Oh, give me a booking from where you are now. Alberto Villa something Street 5 in Jumeirah.” And we always ended up in the wrong house.
Sometimes I have entrepreneurs come to me saying, “hey, look at my business plan. I’ve been working on it for a year.” And I’m like, “oh, for the love of God, just get started. You have no idea what you don’t know. Just start and learn.” So speed is critical.
And the last one is, be super crazy about the customer.
McKinsey: Mudassir, any additional advice to offer?
Mudassir Sheikha: The first advice is, focus on big problems. There’s so many things that are waiting to be solved in this region. In some ways, by living in Dubai, you’re living in a bit of an oasis as well. The real life is happening in Cairo, in Karachi, in Casablanca. And life is difficult.
Definitely get inspired by what might be happening in the rest of the world as potential solutions to these problems. But don’t obsess with what’s happening in the rest of the world and say, “I want to bring this to the Middle East, I want to bring this to this part of the world.” You have to understand the problem and solve it with different solutions.
The Next Horizon for Careem–and the Region
McKinsey: What do you envision as Careem 2.0?
Mudassir Sheikha: We call it chapter 2. If you really look at the purpose of Careem, why we exist and why we do what we do, there are two parts to it. One is to simplify and improve the lives of people. And the second part is to build an awesome organization that inspires. And as we start digging deeper into both of these things, we realize that there’s so much to do. We’re just getting started.
So first off, simplifying the lives of people. There are 600 million people that live in this region from Morocco to Pakistan. We believe that at least a 150 million are addressable in some shape or form. But literally, if you look at the basic math, we’re touching less than 1 percent of the people on a daily basis. And the remaining 99 percent have problems that we can solve, but we’re still not able to access them. We still don’t have the right price points for them. We’re still not accessible enough. And even the people whose lives we are simplifying mdash we are only simplifying their lives in one way, primarily transportation. So, our view is that on the first part of our purpose, simplifying the lives of people, we’re still super, super early, both in terms of how many people we are helping and how we’re helping them. In Chapter 2, as well as Chapter 3, 4, and 5 that come after it, Careem should become the platform that leapfrogs this region into the digital future and gives the people of this region a much simpler, easier, more efficient and reliable way to access and procure services that they need to live better lives.
Then there is the second part, which is to build an awesome organization that inspires. I mean, scaling, growing fast is not easy. And, you know, the way that we think of this now is, maybe we have built a service, maybe we have built a business. But now we need to build an institution. We need to build something that can actually be around for decades and centuries to come. And there’s a lot of work to be done on that front.
Magnus Olsson: The scale that we have reached is a blessing. There is a lot of opportunity and also a lot of responsibility that comes with it.
When we launched an initiative focused on refugees, we partnered with the UNHCR. We feel this is one of the big problems of the region and no one but the region is going to solve it. And, you know, we’re in the region, so we need to see what we can do to help. One thing that we recently did was to add a simple option to this loyalty program that we introduced, whereby you could give a donation from your account using your points.
McKinsey: What are the ideas or trends in the region that you are most excited about in terms of entrepreneurial activity?
Magnus Olsson: There is so much white space in the region, and there is this massive 600 million population. People are young, which means that they are quick to adapt to new things, and people are very super connected. So, if you have a great service and you put it out there, people are going to jump on it. And so, I actually think that if you’re solving a real problem and you’re passionate about it, you can make it a business. The demand is there for great services. Then the question is, OK, how big could it become?
Mudassir Sheikha: Make sure that you learn as much as possible and drive this region forward. And if you just focus on the learning and impact, then other things will really follow.
