How Careem Launched the Next Era of Tech Startups in the Middle East

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Written by Jacqueline Christ

The ride-sharing app that has taken over the Middle East began with a model that isn’t regularly used in the realm of modern app-driven businesses. Careem, the region’s largest startup valued at $1 billion, has thrived due to its use of locality. The company has successfully done what businesses across the globe have attempted: to tap into the Middle East market. The area posed many barriers to access: not only does the area have governmental regulations blocking entrepreneurs from launching businesses, the Middle East doesn’t necessary match the talent and industry in competing areas such as Silicon Valley. However, Careem surpassed Uber and Lyft in the region because it molded around Arab culture. Stretching across 13 countries, the company has propelled a business that has paved the way for future Middle Eastern startups and has made an impact on communities.

In Careem’s skyrocketing growth, the company has filled the gap for jobs in the region. According to a report from the World Economic Forum, the Middle East needs to create 75 million jobs by 2020, a jump of nearly 40% from the number of jobs needed in 2011. Careem has boosted employment and contributed to aiding job creation. In the past three years, the company’s employment catapulted from 4,000 to 300,000 drivers, an increase of an astounding 7,400%. The company is set to grow even more with a steady growth of 30% every month.

The success of the start-up derived from innovation within the region. At a “Disrupting Mobility in the Middle East” discussion at the Middle East Institute, co-founder of Careem Abdulla Elyas said that the reason why the company has been so successful is because rather than focusing on the competition, the app was created with original ideas and centered on local costumers. Elyas said “in those markets, we are the locals, we understand those markets.” By localizing talent within the region and cooperating with governments, the company has collected more costumers and funding.

In addition to going local, Careem has also attempted to bring about change in the region by hiring female drivers and hosting events that contribute to the UN refugee agency. In building the company, Elyas said that he realized that “tech entrepreneurship is the easiest way to change people’s lives and to make our cities better places to live in.”

In countries across the Middle East, Careem has provided an opportunity for women to commute and hold more jobs. In Saudi Arabia, for 2.7 million women that have not been able to work, partially because of problems with public transportation, Careem has allowed more women to commute and hold jobs (80% of the riders in Saudi Arabia are female). Along with mobility, the app has sought to create jobs for women. Since the ban on female drivers was lifted in Pakistan, Careem has launched initiates to hire female drivers in the country. The company also plans to emulate programs for female drivers in Saudi Arabia, following the decision to allow women to drive last month.

Careem exemplified how the success of a startup can be tied to social impact. According to “The Future of Arab Startups” report by Orient Planet Research, the majority of startups that are successful were centered around doing good. The study found that of the most successful entrepreneurs, 79% are involved in philanthropic causes and 59% seek to contribute a positive impact on communities. The report also found that because of Careem’s strategies, the company was the second most well-funded tech startup in the region in 2016, with $420 million in private investment.

With such large investments and market potential, Careem has changed the perception of tech-based companies in the Middle East. Elyas says he hopes to encourage the new generation of entrepreneurs in the region: “Our mission is simply to improve the lives of people and built an awesome organization that inspires in a region where people are looking up to Facebook, Amazon, and Apple.”

According to a 2017 report from the HSBC Bank, millennials in the Middle East are the world’s most entrepreneurial, with 63% of business owners under 35 years old. The population of millennials in the region are also found to be the most hard-working, spending more time on company strategy and working longer hours than millennials from other areas of the world.

However, the gaps in talent required to move concepts to actual businesses has remained an obstacle in the Middle East. In a panel discussion titled “Middle East Unemployment: Can Startup Help?” hosted by Wharton Business School, researchers on Middle East employment Jamil Wyne and Teeb Assaf stated that “In MENA, this challenge is exacerbated by the fact that the ecosystem remains comparably immature and startups’ legitimacy and credibility hasn’t yet diffused through the general population. Working for startups is not as common or attractive in MENA as it is in other parts of the world. Because of these and other factors, startups in the region may be faced with a more difficult task of finding, enticing, and developing talent.”

Despite gaps in talent, startups such as Careem have built a tech empire in the Middle East.  According to a recent report form the MIT Technology Review, entrepreneurship has been able to thrive particularly in Dubai and the United Arab Emirates, which host 42% of all startups in the Arab world.

Careem has spearheaded a new era of technology and business in the Middle East.  The success of Careem “seemed to signal a turning point in the Arab world, made possible by local access to technology and a rising middle class.”