Transcription
This is unreasonable. The ecosystem of food delivery is not going to last this way. It's never going to last this way. Restaurants aren't going to keep paying 30%, 40%, or up to 50% in the next years. It's never going to last this way. Most restaurants are losing money. If you asked restaurant owners if they are happy with the current situation of food delivery applications, they would tell you they are not. They partnered with these companies that charge commissions just like taxes.
I thought there must be a better way. I like that you created a problem and then solved it. Thmanyah presents Swalif Business with Mashhoor Al-Dubayyan. Welcome. Today I will be talking with Abdullah Al-Mutawa, the founder of Carriage application and the recent Cari application. Our guest had a very interesting experience. After he founded the application in Kuwait, it got acquired by the German company Delivery Hero for 180 million dollars in cash. He then expanded the business to Bahrain, Qatar, and Saudi Arabia.
A few years later, Delivery Hero decided to close Carriage and relied on its other delivery applications, HungerStation and Talabat. All of this, the establishing, acquiring, and closing of the business, happened in only around four years, which is considered a very short period for a startup company. I will talk with my guest about his experience before and during establishing Carriage. How was the acquisition from Delivery Hero offered to him? What were the details of the acquisition negotiations? What did they agree on?
We will talk through the whole experience of Carriage, including expanding it into multiple countries and getting into competition with other Delivery Hero companies, such as HungerStation and Talabat. After that, we will discuss the reason for returning with a different food delivery application called "Cari." And what were the problems he tried to solve for restaurants, coffee shops, and other business owners? Although he contributed to creating the problems with Carriage. What is the new business model he is trying to introduce? And more details about it.
How can he compete with other food delivery applications? Did he enter the market late or not? And other general details about food delivery applications, such as the subscription business model. I'll leave you to it. Welcome, Abdullah. Thank you. Before we start the interview, I would like to know about your experience quitting social media, which I think it's impossible to do. Did you quit all social media platforms?
Correct. Look, I made the decision during COVID, especially after I got married. I got married six months before COVID. Ok. I was waiting for a critical event to help me quit social media. It happened to be my honeymoon. You know, since I would be busy enjoying this new life. When I got on the plane, I deleted Instagram and Snapchat. I didn't deactivate them; I deleted them. I deleted the account.
You deleted the accounts and the applications. Exactly. Did you delete WhatsApp as well? No, I can't delete WhatsApp. It's a part of me. So, everything went well. I was distracted with my honeymoon. Humans can learn and adapt quickly. I came back from my honeymoon, and everything was going well. Then COVID happened. During COVID, I decided not to follow the news. I didn't want to know what was happening around the world. I wanted to be present with my family in my own bubble. It was very peaceful.
Because I didn't compare myself to others, like my friends and others. I didn't see who went on vacation or who did this and that. It honestly gave me peace of mind. Are you sure you don't have fake accounts? My friends have been nagging me. They want me to give them my fake accounts to follow me. What if you wanted to see what was happening? In general. Not necessarily during COVID. What if you want to know what's going on right now?
I will be honest with you. About three months ago, I got curious. I decided to go back. I downloaded Instagram and found that my account was still saved. I activated it. I logged in and saw things had changed. They added reels, which were new to me. It's swamped with videos. It's totally different. I like fishing and hunting. If I view one video, thousands of fishing and hunting videos appear. You got trapped again. I took the bait. But not anymore. I retook the decision a month later and deleted it. I returned to the Stone Age. I no longer have Instagram or any other app.
Did it make any difference to you? A great difference. In your personal life. Look... Usually, if I want to kill time, I open my phone... It influenced the way you use your phone. Yes. I now use my phone to read about current events and local news. I read about new topics. I know that my answer is kind of boring. But really, I made use of the one or two hours I usually waste online. I believe your screen time has declined. Yes, considerably.
I was also busy with other things. I started a family, thank Allah. I have become a father of two, Qais and Rola. May Allah protect them. Thank you. They keep me busy. But everyone has a family and still... still use social media. You're right. But personally, I like to make sure that I'm always available to my family and children. This is also my goal this year. I saw my average screen time. I recommend those who didn't check their average screen time to go and check it. Last year, it was eight hours a day. I was really shocked.
It didn't feel like eight hours because I use my phone intermittently during the day. Then I would realize I lost eight hours of my day on my phone for work and other things. I was on vacation recently. I felt sad seeing people on the beach looking at their screens instead of enjoying the view. I was even complaining to my wife about it. What are they doing? What kind of life are they living? It's an addiction. But I'm trying to reduce it to four hours. I noticed that spending less time on my phone reflects positively on my productivity and mood during the day.
True. I deleted TikTok, for example. It's the first thing someone should do if they want to save their time. I have never used it, but... It's addictive. My friends are very addicted to it. They did a great thing with the algorithm. I raise my hat to them. I heard something, but I don't know if it's true. That TikTok in China shows different videos to children compared to other countries. They show educational videos. Exactly. But I'm not sure. It isn't far-fetched. It's very possible.
Anyways, let's get into the topic. We got off track. I want to start with your overall experience with Carriage, especially the acquisition, which you didn't talk about a lot. Then we end the interview with your new business, Cari. We'll discuss why you chose the same sector, idea, etc. And what are the differences between them. But let's first talk about Carriage. You started Carriage in 2015, correct?
I came up with Carriage when I had just started my entrepreneurial life. I came up with many ideas I used to bounce off my late father. At the time... No, before that. Let's go back in time a little more. I was studying in the U.S., and I loved watching documentaries. Or the plural form of it. Documentaries. Yes, documentaries. I especially liked documentaries about oceans and sharks. I went on Hulu. It was fairly new at the time. I typed in "sharks" in the search bar. I wanted to watch documentaries about sharks.
A TV show called "Shark Tank" appeared in the results. I clicked on the first episode. I got hooked. There were five investors sitting with stacks of dollars in cash placed in front of them. People would come and present their products. I was drawn into it. They were looking for investors. Yes. I even said to my brother Musab, "Look how they invest in ideas." He told me, "Don't believe them, it's fake. No one invests this way." And that there has to be due diligence and stuff like that. The idea had always fascinated me.
How can someone stand in front of investors, talk to them, and then receive money to start the business? It was absurd to me. Anyways, fast forward. The TV show was dropping a new season every year. Each time I saw an interesting idea, I went to my father and consulted him on it. He was very frank with me. He would point out the cons before the pros.
Anyways, one year, I decided to do it and open a restaurant. This was before the trend of restaurants started. This was in 2015. I opened the restaurant in January 2015. Hold on a second. You watched many seasons of Shark Tank and saw different ideas. Yes, then I opened a restaurant. This was what I could come up with. But why? And not any restaurant, a burger restaurant. You didn't want to come up with something new, so you chose a burger.
Was it because burgers were trending in Kuwait back then? It was before the trend. But it definitely was a thing back then. It was before restaurants became this numerous. I wanted to start a business. And I wanted to quit my job. I was working in a private oil company. I got bored and tired. I achieved what I wanted. My work became repetitive. There wasn't anything new to learn and to give me the drive to wake up every day and work. So I opened the restaurant.
Long story short. I believed opening a restaurant would make me the most successful man in the world. And, of course, I learned that it wasn't true. At that time, I started looking for ways to deliver food. The application that was available back then was Talabat. At this time... It's called Talabat. Yes, Talabat was the company name. It was the exact time when Talabat got acquired. There was a coffee shop next to the restaurant. I used to go all the time. I was sitting with my business partner, and I heard some guys our age sitting behind us talking about Talabat's acquisition for 160 million dollars.
That an international company named Delivery Hero acquired... Delivery Hero company acquired Talabat for 160 million dollars. It was unbelievable. For a German company to come here and acquire a local company for this amount of money. There must be something that we don't know. My business partners knew one of Talabat's partners. He sat with us and explained to us the work nature of Talabat and how they receive orders. One of the questions I asked was, who delivers the orders? He said the restaurants do.
It didn't make sense to me at the time. It was unreasonable. They bring us orders and charge us, and we pay for the delivery expenses! So, Talabat didn't have deliverymen back then. You did the delivery yourselves. They didn't have deliverymen. So they only send you the orders. They were only a platform. They charge a commission. Yes. They didn't charge commissions back then. They charged a flat fee of half Kuwaiti dinar, equivalent to six or seven riyals. They didn't do much work. Things were going well for them. They didn't have to deal with delivery issues and other stuff. They didn't. They made a lot of profits.
Naturally, the German company saw that Talabat was among the top companies in Kuwait, Bahrain, UAE, and Qatar. It was the first mover in these countries. So, it acquired it. It didn't make sense to me. Anyways, long story short. We joined them, and orders started coming in. We received ten, twenty, thirty, and sometimes forty orders daily. A great number. The dining rate has decreased. There is a honeymoon phase... You mean dining at the restaurant. Yes. Orders for people dining at the restaurant.
I got preoccupied with the idea. I sensed there was an opportunity there. This is how the idea started. Back then, when customers made orders on Talabat, they couldn't track their orders. They used to keep calling the restaurant to ask about their orders. We would tell them something, and Talabat would tell them something different. There was a miscommunication. I told my brother Musab about this idea. I wanted to put tracking devices on the delivery cars. So after a customer orders through Talabat and we give the deliveryman the order, we send them a link to track it.
It was a very simple idea, in my opinion. He told me to think about it differently. He suggested we develop an application that combines these ideas. We agreed on it. Then we talked about adding new restaurants. We kept discussing until the idea of Carriage came together. It started by trying to solve the problem of order tracking. Exactly. Why would an order arrive an hour after a customer has placed it? Where is it? What are they doing with it? Making a burger takes only fifteen minutes. That was when the idea began to take form.
It was in 2015. I remember we were sitting in Starbucks in an area called Al-Nuzha when my brother told me that we had to work on an algorithm. It was the first time I heard of this term. I asked him what it meant. He explained how it helps customers to find the nearest deliverymen and so on. He explained it to me briefly. I liked the concept. I started searching. I was looking for algorithm developers. My brother told me he knew someone suitable for the job. I asked him who it was. He told me it was a friend who he went to school with.
In the U.S.? Yes. Me and Musab studied in the U.S. He went to California, and I went to Virginia. He was in the west, and I was in the east. He knew someone there who was studying computer science. I told him this is great; you should call him. Anyways, he called him and told him all about the idea. He said that this service already existed in the U.S. There was a company called Postmates and several other companies. He told him that it didn't exist in Kuwait. It was new to us. There was a great demand for something like it. Many restaurants didn't want to deliver because they didn't want to pay.
We started working on selling the idea. At the time, my brother's friend owned an ed-tech startup. Which is... Educational technology. Exactly. How did I do? You did great. This program taught me a lot. I can see that. We wanted to convince him to leave his business and come work with us in Kuwait. He told us there was someone who could run his business there, so he could come to Kuwait.
Anyways, he came to Kuwait. He arrived, and we met with him. At the time, I had an office on the second floor of the restaurant. It was around 15 m2. It was a food storage room with refrigerators and freezers on one side. And on the other side was a small desk and two chairs. I was the first one to work there. I was the operations manager. We sat in my office, me, the operations manager, Musab, and his American friend. The one we wanted to persuade.
Anyways, we persuaded him. We started slicing the cake. We decided how much each of us was going to take. Then they returned back to... How did you decide the percentages? I will tell you in a minute because we had a fourth partner. The percentages were based on... I don't remember exactly, but I had the highest percentage because I was the CEO and the one who came up with the idea. John and Musab received equal percentages. Musab went to Spain because he attended school there, and John returned to the U.S. I was left alone in this small office.
I didn't know how to start. Should I start with the restaurants, contracts, or recruitment? What should I do? I was lost. It was a new thing to me. We had the idea, divided the percentages, and then what? Anyways, I called one of my dearest friends, Khaled. He used to work at the bank back then. I told him everything and asked him to meet me in person. I still remember it. We sat at a restaurant. I opened my computer and showed him Talabat's website. It was a terrible website full of ads.
I remember him saying, "No, I think it's fine." I told him, "No, it's not. It has a lot of issues." He was biased. I told him what problems they had and persuaded him. We sliced the cake once again. I called Musab and John and told them about the fourth partner. He was going to have a vital role. We were going to work and plan everything together. So, we sliced the cake again. We reduced my percentage, Musab's, and John's.
What would he contribute to the business? He was basically a COO. A chief operating officer. I was the CEO, and Musab was the CFO. Which is... A chief financial officer. And John was the chief technology officer (CTO). So, we started the business. Everyone used their connections until we found fifteen restaurants that would join us. During that time, John was supposed to work on the application's algorithm. This was in 2015. It wasn't a really long time ago.
Around six, seven, or eight years ago. During that period, everything was changing at a rapid pace. Thirty years' worth of developments happened in a short time. We went to the Chamber of Commerce to register our company. At the time, we didn't know about the ADGM. The offshore entity that... To set up the company offshore... To set up a company owned by Kuwait offshore, and so on. So we went to the Chamber of Commerce to register our percentages in the license.
I will explain this quickly to the listeners. You set up your company offshore, which has the percentages, more flexibility, and complies with international law. It has more flexibility that allows a business to grow. This company owns the local company. Correct. Our percentages were decimal numbers. 33.3, 40.5. We went to the Chamber of Commerce to register our percentages. We told them the number of percentages. They told us that the system doesn't allow decimals. I was like, "What does it suppose to mean?" It has to be either 43 or 44.
Thankfully John didn't understand Arabic. How could I explain to him that our system doesn't allow decimals? We tried to explain this to him. But he refused. He wanted his exact percentage, which was understandable. He was used to the American system. We couldn't persuade him otherwise because he couldn't understand the ecosystem. And one of you has to give up a part of his percentage. Exactly. I told him I would give up part of my percentage to round his number up, and we could make an external contract to govern the partnership.
It ensures that everyone receives his rightful percentage. And since we are four partners... If one of us decided he no longer wanted to work in the business, he couldn't just receive profits after he quit. Right. So we set up something called a vesting schedule. Which means earning your shares according to a specific vesting period. To be granted over a three or four years schedule, for example. So you earn a sum of your total shares each month. Your percentage is vested after four years, for example.
This also didn't exist. I mean, they didn't allow decimals. But later, you set up your company offshore and made all these arrangements. Yes. Sorry, I know I went into detail. I have to tell you this because we had a problem for a long time. John didn't develop or work on the application for a whole month. So we had to either start the application or close the business and inform the restaurants that we had closed the business.
To sum it up. We solved the problem, developed the application, and launched it in April 2015. We started. We had a humble beginning. In the first month, May 2015, we made 200 orders a day on average. None of the restaurants we worked with had a delivery service. The value we added was sparing restaurants from investing in delivery fleets. Did your business model charge a commission or fee? We charged a commission.
It wasn't easy persuading them of the commission. They didn't think it was reasonable because we weren't their partners. Why did you decide to charge a commission instead of a fixed fee? Because the delivery expense was very high. So we had to take a percentage of the total value. If the demand is high... We take a larger percentage from high sales and a smaller percentage from low sales. Customers were charged a delivery fee. The second month witnessed a larger and faster growth.
During the third, fourth, and fifth months, we gained more reputation. We operated in Kuwait only. In the sixth month, I received a call from a company that was... a venture capital. It was in Saudi Arabia. It was one of the first VC companies in the market. They called me and introduced themselves. I found it odd. How did they know about Carriage? They told me they were a venture company that invested in companies and were interested to hear from us.
I welcomed them and asked them what exactly they wanted to know. They asked me to visit them in the Eastern Province of Saudi Arabia. That's the shark you've been looking for. Anyways. At that time, I had a LinkedIn account. I didn't open it, and I didn't know how to use it. But I checked it from time to time because I received emails about connection requests. I opened it and saw that someone sent me a message. The message says, "I'm so and so from Delivery Hero. We heard about you, and we would like to call you."
Was this in the sixth month of the business? The sixth or the seventh month of the business. We started in May and received the message in December. I didn't believe the message when I saw it and thought it was spam. Or what else would a company like Delivery Hero that acquired Talabat want from us? Also, my friends used to prank me. One of my friends called me from a UK number and talked in a British accent. So that's why I was skeptical. I ignored the message.
So, my brother and I drove the car to Saudi. What was the average number of orders at that time? It was around... Around 3000 orders a day. In Kuwait only. And we were also planning to expand into Bahrain. Why Bahrain, in particular? Because I wanted to expand into Saudi, but it's a big country, and I needed more money. So I decided to start with Bahrain first since it's a smaller market. Then I can go to the Eastern Province, and from there, I can expand into Riyadh and other cities.
Since the Eastern Province borders Kuwait and people were familiar with Carriage and... I've heard of companies that go to Bahrain first. In addition to being a small market where damages can be easily contained compared to bigger markets. They use it as a model of international expansion. They learn how to manage a business abroad and learn about different currencies, laws, etc. Then they take the model they built and generalize it to other countries. 100%.
The general manager was the first international employee I hired. Bu Aziz, may he rest in peace. That was my pitch to him. He was to work in Bahrain, learn, and make mistakes to gain experience before I moved him to Saudi. Anyways, my brother and I drove to the Eastern Province. During the ride, we practiced pitching our business to the investor. All this time, my phone was in silent mode. We met the investor and pitched the idea. But we had the impression that he wasn't interested.
I thought this was for our own good. There must be other interested companies in Kuwait. This was only the beginning, and we already had the material. So, we returned to Kuwait and decided to see other options. It was a practice. Exactly. We learned about the questions, requirements, etc.
Anyways. On our way back, I took my phone out of my pocket and saw a missed call from the previous CEO of Talabat, who sold the business to Delivery Hero. After I called him and we greeted each other, he told me that people from Delivery Hero had called him and told him they were interested in talking to me. I knew then that this was it. I ended the phone call and shouted with excitement. I told my brother, who was surprised by it. You have just started. We were only seven months in.
Anyways, we returned to Kuwait. We sat with our father and told him all about it. He was very happy for us. He didn't like to interfere. Speaking of which. How did we start the business? We raised a small capital. 1.3 million dollars. That was our seed round. It came from four investors. My father, may he rest in peace. My uncle. My cousin. And my friend. We collected this money to start the business. Thankfully, the numbers were excellent at the beginning. So we didn't need to increase the capital.
But the reason why we met with the Saudi investor is that we wanted to expand faster. Did they invest with you eventually? No. So, we wanted to expand faster.
Anyways, we returned to Kuwait and started talking with several companies. At the same time, we made some progress with Delivery Hero. I want you to expand more on that. What happened after that phone call? I gave him my email in the first phone call. They sent me an email. The merger and acquisition specialist sent me an email. Who works at Delivery Hero. Yes. He introduced himself and asked to meet with me. I agreed. But before this email, we talked several times on the phone. They asked about who we were, and we did, and other questions.
Of course, they already knew about us but wanted to collect more information. After that, we talked with other investors. Because we didn't want to put all our eggs in one basket. We talked with an investment company and other venture capital firms. A very successful person reached out to me using an inbound strategy. Or a grouper, as we call it in Kuwait. He was interested in investing in our company. Many conversations were happening at the same time.
But the most important conversation for me was the one with Delivery Hero. How did you surpass Talabat? Why didn't Talabat try what you did and move as fast as you? Or why isn't there a third competitor? The first thing we ever did was we safeguarded ourselves. We made sure that we... You know how castles had ditches or bodies of water around them. You built trenches. Yes. I don't know how to translate this.
Do you mean that you developed a business that was hard to copy? We dug a moat by signing exclusive agreements with restaurants. Restaurants that signed the agreements can't work with other competitors. Was this legal at the time? There weren't any laws at the time. Then companies tried to copy us, but they failed. So they started filing complaints to the Kuwaiti Competition Protection Agency and others.
You have restricted the restaurants. Exactly. They were welcome to join us. We already had demand and volume. You also had deliverymen. We had deliverymen and everything else. Were they deliverymen working for you or... Yes, I hired them. This was the riskiest decision I made to this day. I was very bold. I bought fifty motorcycles in cash and 120 cars. After I signed the agreement...
You bought fifty motorcycles and 120 cars... I paid for the motorcycles in cash and 120 cars in installments. But the installments were secured. The decision was... Very reckless. Yes. If you asked me how I did it, I wouldn't know the answer. But at the time, I was single and didn't have anybody to think of. The decision was much easier back then. I don't want anybody to get excited and make a similar decision. It's very risky. It's wrong.
I remember after we bought fifty Honda motorcycles, they were placed in the garage. They called me and told me they were ready. I went to the garage and took a video of the motorcycles. The sight left me in awe. What am I going to do with them? Who is going to use them? But it was too late at that point. I already paid for them, so I must take responsibility.
So, you built a fleet of deliverymen, cars, and motorcycles. Yes. We didn't have deliverymen. We would go near the Souq area in Kuwait, where ethnic groups usually gather in churches and other places. We used to go there and look for workers, especially on Sundays. We would ask them if they were looking for work. I displayed a motorcycle in the middle of my 15m office because I wanted to show them how fancy it was. It was a Honda 160 CC. It wasn't just any motorcycle.
So, they would get excited to work with me. Weren't you worried about hiring someone who would steal it? It's in my office. I brought it upstairs using the elevator. No, I mean the motorcycles you give to the deliverymen. It happened. I'm not worried about the one in your office. I'm worried about the ones in the garage. It happened, actually. A motorcycle or a car would disappear and be found one or two months later, parked at the airport or somewhere else.
What I did was I told the drivers from the beginning that if they worked for me for two years, I would give them a motorcycle for free. You might think that many of them had taken motorcycles for free, but only 3 out of 50 did. Ok. We got off-topic. We did. So you had excellent growth because you had strengths, including your private delivery fleet.
In addition to restaurants' exclusivity, which gave you an advantage over... Were there competitors other than Talabat? Only Talabat. So, this gave you an advantage over your competitor and made investors and Delivery Hero eager to work with you. Yes. So, we started having conversations with many investors. We also initiated conversations with other firms. I initiated a conversation with a famous company here in the Gulf. A taxi company.
I met with them and... Did Delivery Hero propose the acquisition from the get-go? Delivery Hero wanted to inspect us. They wanted to know who we were and what we did. But did they mention the acquisition at the beginning? No, but they expressed their interest to hear from us, which basically meant they were interested in the acquisition.
Anyways, our first meeting took place in London. I met with the person who emailed me and someone else whose company they acquired and eventually joined the board. That was the first meeting where we revealed some of our numbers. The way this person treated us because we were from the Gulf... I'm trying to tone it down a little bit. He treated us as if he was better than us. He was being... Condescending.
Yes, as if he was doing us a favor by talking to us. It wasn't a good meeting, honestly. After that, we became more interested in other conversations. One day, the same person called us and said he had an offer for us. We asked him about the offer. He said they wanted to acquire our company for 80 million. A full acquisition? Yes. However, they wanted to pay the 80 million dollars in Delivery Hero stocks.
At the time, Delivery Hero wasn't listed. It also had some activities that, let's say, weren't Shariah-compliant. We had some reservations about this matter. He said he was doing us a favor with the 80 million. Because if you looked at the Gulf market, there was a high risk. He said he was supposed to offer us 60, but instead, he would offer us 80. We told him to call us again if he had a better offer, and we ended the conversation.
Was it because of the non-Shariah-compliant activities only? We didn't like that the money was mostly stocks. But it has been only a year since you started. It's true. But because we received a lot of attention. As you know, when something becomes desired by many people... you like it more. We told him there were others who were also interested before we ended the conversation. Then, offers started coming in. Someone wanted to invest 50 million in cash, and another wanted to invest 100 million.
But they were only investment offers. Yes. That was the only acquisition.
Anyways, fast forward. At that time, we were very keen not to get distracted because we were four partners. Two of them focused on running the business, and Musab and I were focused on the acquisition. We have divided the work, which is great when you have many partners who are on the same page. Each one of us can focus on one thing. We also did a lot of PR back then. We made a documentary with Al-Jazeera network. In addition to Al-Arabiya and others.
We became a little cocky. We were also starting to expand into Bahrain at that time. I hired Bu Aziz, and we started running in Bahrain.
Anyways. All of a sudden, Delivery Hero called us again. They told us they were interested and asked if others were interested in the acquisition. We told them that other investors were interested and offered us a higher value than yours. In two days, the acquisition team took a flight and arrived in Kuwait. Ok. They had a FOMO. They didn't want to miss the opportunity. Exactly.
Anyways, they arrived in Kuwait. We met with them, opened our books, and showed them our numbers and everything else. It was a very stressful time. Because we want to show the numbers as accurately as possible. Our numbers weren't examined by an auditor. We were trying to provide them with all the numbers to close the deal as soon as possible. What made it even more stressful was one of the team members. He told us he had five days only to close the deal because if we didn't sign the deal within five days, Delivery Hero would get listed in the stock market.
From that day until the day they entered the market was an austerity period. There shouldn't be any activities, including acquisitions, to maintain the stock value. It's called a lock-up period. So we either signed the deal immediately or postponed it. And we didn't know what might happen later. This was in Ramadan, by the way. How long has it been since you started the company at the time? We have just completed a year. This was also in May 2017.
Nice. We then agreed on the money and everything else. They saw a number that they considered an excellent number. I don't know what it's called in Arabic, but it's called cohort retention analysis. This means if a customer orders for the first time on a specific date, how many times do they order again over a specific period. You're making it hard to translate. I know exactly what you mean, but unfortunately...
So, this number is... To put it simply, you built an excellent customer relationship. Yes. Without getting into details of what cohort means. I know you understand what I mean. This number was very important to them. It means that the same customers return to you every month. Exactly. It means when you acquire a customer with a certain amount, they keep ordering from you for a given period. They didn't see this number in any other application they acquired.
They saw that many customers who started ordering in January stuck with you until December, for example. And so on. Exactly. I translated it. What they found intriguing wasn't only their constant return, but how much their orders had increased over time. So, their order average was increasing. Yes. When they first saw the numbers, they thought there was a mistake. Ok. But the business intelligence analyst came with them and confirmed the numbers. Thankfully, the deal went smoothly.
I'll stop you here. How much did they offer you eventually? They offered 180 million dollars. What was the basis of the valuation? We valued it based on a revenue multiple. They multiplied our revenue based on potential expansion. Was this their first offer? Or did you negotiate how to value the company? As I mentioned, they initially offered 80 million, but we refused. Then they offered to pay us in stocks and cash, but we refused again.
Why did you refuse the stock payment? Is it because it was non-Shariah compliant? Yes, mainly because it was a non-Shariah complaint. And because we needed cash, of course. Because we don't know how much revenue we will receive if they get listed in the stock market. Since you saw how fast the business was growing, why didn't you keep it until it reached a high value of one billion, for example?
This is an excellent question. But I was young and had just quit my job, and someone had offered me a big cheque. They paid in cash. It was hard to imagine that the business would flourish this much. On top of that, there was a risk because we only operated in Kuwait. We didn't know if it was going to succeed in Saudi Arabia, Bahrain, Qatar, and UAE. Or if it would only thrive in Kuwait. There was a big risk. I wouldn't say I wasn't ready to take it, but I preferred to keep what I had over what I could have.
There is no right or wrong. But all or most business owners I met cling to their companies after they receive tempting offers early on. 100%. When they see how highly demanded their companies are, they realize they can grow it from 100 to 500 million or a billion riyal. Yes.