The good businessman

business > listening post

THE GOOD BUSINESSMAN

38 > QATAR TODAY > DECEMBER 2015

THE MAN BEHIND THE BIGGEST TECH EXIT THE REGION HAS EVER SEEN, TALABAT’S FORMER CEO MOHAMAD JAFFAR, TELLS YOUNG ENTREPRENEURS IN DOHA THAT BEING A GOOD HUMAN BEING IS A PREREQUISITE TO RUNNING A SUCCESSFUL BUSINESS.

BY AYSWARYA MURTHY

T

o the young entrepreneurs assembled at Qatar Business Incubation Center (QBIC) that evening, Mohamad Jaffar was nothing less than a rock star. He was one of their own, and was blazing a trail for them to follow. He was living proof of the official coming of age of the region’s tech startup scene. Within five years, Jaffar took over a small online food delivery business based out of Kuwait, expanded it to the rest of the GCC, became a major player in the space in all six markets and sold the business to a giant internet company for $170 million (QR690 million). And the fact that he was extremely personable and refreshingly honest was just an added bonus. At this Global Entrepreneur Week talk, Jaffar charmed everyone with a fundamental piece of wisdom – carry on your business ethically and success will come knocking at your door.

The die is cast For as long as he could remember, Jaffar wanted to be an entrepreneur. He would spend his summers making himself useful at his father’s company, before he was shipped off to England at 12 for his studies. “After I completed my graduation in economics, I wanted to come to Kuwait and start a business. But not only was a huge culture shock waiting for me (as I had gotten used to the European mentality and the efficiency of the Western world), I quickly learnt that I understood nothing about business,” he says. Jaffar’s father convinced him to put his entrepreneurial plans on hold and gain some real-world experience. “So I started off my career in corporate banking where I remained for four years, understanding the foundations of business, how a company is run, how to deal with people and the importance of

efficient systems, corporate governance and policies in a company.” In fact, that is another piece of advice he has for aspiring entrepreneurs. “You can’t just dive into entrepreneurship after graduation. You need the experience that you can get at big institutions like investment banks.

And when do you know you are ready to take the plunge into the unknown? After three to five years, you’ll realise that you are learning at a slower rate than when you first started out. That’s the right time. And entrepreneurship is not a part-time hobby either,” he continued, answering a question on a lot of people’s minds. Many incubators like QBIC and ictQatar’s Digital Incubation Center are grappling to convince bright young people with ideas to chuck their cushy government/corporate jobs and risk it all for a chance to build something. “If you are giving a part of your time, you’ll never achieve your goals,” Jaffar said, candidly.

“After all, we are all humans and we can only do so much in a day. And being an entrepreneur is not easy. You are always thinking, getting calls all day and all night, always travelling and taking big risks with your own money. Many prefer a normal 9-5 job; wrap up work, go home and watch TV. But others want to make a difference, want to do more.”

Jaffar says back in the mid-2000s, food and beverage ventures were the craze among young Kuwaitis. “I wasn’t particularly interested in F&B. I always knew that I was suited for operational roles; I like to roll up my sleeves and get down to work. But it was a trend for young Kuwaiti entrepreneurs to open their own restaurants. In Kuwait right now, the most popular restaurants are local brands, which are doing much better than a lot of the international franchise brands. Really, I was just following the trend when I set up my own little restaurant with the help of my father.” And thus the die was cast.

“There is one question I get asked all the time – what did I see in Talabat. Well, QATAR TODAY > DECEMBER 2015 > 39

business > listening post

Mohamad Jaffar talks to QBIC's Chief Executive Officer of Ayesha Al Mudahka during the Speaker Series.

I consider it a sign from the Almighty.

I saw an opportunity that came out of nowhere and I ran after it. I had a lossmaking restaurant on my hands and after I listed it on Talabat in 2009 as a last-ditch effort to save it, I started seeing a big turnaround. Over 90% of our revenue was being generated through the website.” But luckily for him, he found himself losing interest in the running of a restaurant and rather keen to explore the phenomenon that was suddenly boosting his profits. It was purely serendipitous that his attention was diverted in this manner. “The natural progression would have been for me to open a chain of restaurants. But there were some issues about the F&B business that scared me (like cases of food poisoning).

The business was a headache and I knew my limitations.” Talabat, meanwhile, was new and intriguing.

Phase two So whether it was a sign from God or subconsciously honed businesses instincts that were now kicking in, Jaffar saw a huge potential in the business. “I went back to my father and told him that we could really do something big with this company. He was shocked at first when he heard that it was on online food delivery business. The first question he asked me was what does the company own; what are its assets. I told him we own a couple of rickety chairs and desks in a tiny office with a small window,” he laughs. Jaffar admits that he was worried his father wouldn’t cough up the cash he needed to buy the company and scale up.

But that wasn’t the case. “As it turned out, he

40 > QATAR TODAY > DECEMBER 2015

was positive about it. There is a big delivery culture in Kuwait and internet penetration was on the rise. And the model could be replicated across the GCC. We recognized that the region is special. People are smart, their purchasing power is high and they like trying out new things. We did our due diligence and six months later we acquired the business.” This was at the beginning of 2010. In February 2015, he would end up selling the company for nearly 50 times the price he paid for it.

Right off the bat, Jaffar admits he didn’t have to face the primary difficulty that plagues entrepreneurs in the region – access to capital. His family was able and willing to inject as much capital needed for the business to reach its full potential.

But that doesn’t mean there weren’t other challenges. “I had zero IT experience and even less when it came to e-commerce. So I started to build a team even before we acquired Talabat. We were able to hire some of the best people (as we grew, many came to us because we had such a good reputation among our employees) who were able to learn quickly and implement efficient systems in finance, HR, operations, etc. A good company should have good systems right from the start. People asked me why I was worried about these policies when we were only seven people in the team. Well, today we are over 200 people. In a couple of years it might be 500. I knew that we needed to have these foundations laid out from the beginning. We also spent thousands and thousands building our security barriers. It was very important when we were holding so much customer information. Prevent

hacking. So there were a lot of factors to get my head around. But once we had everything in place, the growth was just a snowball effect.”

One of the first things Jaffar and his team tackled were web and mobile interfaces. “We knew the website was lousy. We couldn’t scale or upgrade it. It was very important to change the whole infrastructure. The website had to be changed to something dynamic and scalable across other countries. We worked on a new website for a year and another year later launched our iOS app. In fact we were the first to launch an app in the worldwide online food delivery space. “But now it was a constant to stay on top of quality control and user experience.

“Talabat is just a mediator between people and the restaurants. We constantly get complaints about delays, quality of food, etc., that we have no control over and we have to handle these situations as they arise. And we concentrated on that a lot; spending a lot of time and money to create a consistency in user experience and quality. There is one thing that everyone who visit Talabat have in common. They are all hungry and hence quick to anger easily,” he laughs. “We had to make sure the whole process was easy and friendly, with minimal frustrations.”

“So we instituted penalties for restaurants to maintain quality and make sure the deliveries go out on time. We’d even advise them on how to make things right with an annoyed customer. When we bought Talabat , it had 60 restaurants listed. Now we have close to 2,000. So we have a big team to make sure menus are consistent. And we also give the restaurant the tools to control their menus online – make sure the prices are right, new promotions are listed and the items are available (our team approves all the changes eventually). I was lucky to have found the right people with a nose for product experience,” he says.

Beyond Kuwait When Jaffar bought Talabat it was growing at an amazing 30% per annum. But it was still small and he knew it could be doing much better. “I have great respect for the founders.

They created something from nothing. And this was in 2004 when people used to laugh at the idea of ordering food online. One of the first restaurants the founders spoke to laughed them out of the premises. But they never gave up and worked day and night to launch Talabat. I just made it better. They also knew their limitations – they had to spend a lot more money to take it to the next level and it was taking too much of their time. One of them thanked me for taking Talabat off his hands because he never slept and never saw his family.”

Jaffar faced some real obstacles when the time came to expand across the GCC.

“There were a lot of invisible walls with these countries. I’d be the first to admit that Kuwait is the most bureaucratic of them all. Bahrain and the UAE had a much more advanced business environment when compared with countries like Saudi Arabia.

Not only do these countries have easy and friendly regulations for businessmen, but the people themselves are eager to do business. But the situation is improving across the GCC and I anticipate that things will be better in the next few years. Why do you think American and European tech companies are so successful? Because it’s easy to do business between the states.

We need to do the same to catch up or else we are going to be stagnant. We have to be competitive. The reduction in oil prices has led us to rethink these models and encourage the youth towards starting businesses. The better the business environment, the better the products will be for the consumers.”

But he also allays the fears a lot of local entrepreneurs have about scaling up from

“I had a loss-making restaurant on my hands and after I listed it on Talabat in 2009 as a last-ditch effort to save it, I started seeing a big turn-around. Over 90% of our revenue was being generated through the website.”

small markets like Qatar. Isn’t it better to set up in countries like the UAE? “Qatar is a good market,” he says. “There is a lot of purchasing power. Kuwait and Qatar might be small but they are very lucrative markets.

So the size of the market shouldn’t stop you at all.”

And he also lets us in on a secret. “The fact that we were a local company made us kind of heroes. We had a lot of support from all quarters as we expanded across the region.

This helped us overtake our competitors in a lot of the markets we entered. For example, we were competing against Rocket Internet (the company that eventually acquired Talabat) in several of the markets we entered. But we were able to reach No. 1 in less than two years. Eventually, we reached a point where they didn’t want to compete anymore and approached us about QATAR TODAY > DECEMBER 2015 > 41

business > listening post an acquisition.”

Once Jaffar learnt to navigate these barriers and set up in all six Gulf countries, he went about linking together the financial, HR and operational systems across the borders. “We concentrated on reducing paperwork and gearing up towards automation. We were a young business, after all, and had to be quick and straightforward.

By the time we were acquired, we were growing a lot faster than 30% per annum,” he smiles.

ABOUT TALABAT MORE THAN

I,900

RESTAURANTS ACROSS VARIOUS CUISINES EXCEEDED

I5

MILLION ORDERS TILL DATE OVER

800,000 REGISTERED USERS MORE THAN

2

MILLION APPLICATION DOWNLOADS IN iOS, ANDROID AND WINDOWS MORE THAN

9I,000

UNIQUE VISITS PER DAY

42 > QATAR TODAY > DECEMBER 2015

Lessons from the big exit Back in the day when Jaffar was convincing his father about investing in the company, he knew the end game was going to be one of the two options – they make back the money either through an IPO or they exit.

“We identified which markets would be best for an IPO and we also kept a close eye on the big players worldwide in the online food delivery space – Grubhub in the US, Justeat in the UK, Delivery Hero in Germany, Takeaway in Holland ... back in 2009-10, everyone was content in their own territories. But then we started seeing consolidation. They started to expand into other markets and the most effective way to do this was the purchase of companies that were already market leaders in those countries. Rocket Internet was buying almost all the players in the region.”

“When you build a company, people will come knocking at your door sooner or later. It wasn’t the first time someone had approached us about buying us out.

But the time was never right. Until we realised that the market in the region was consolidating. Rocket Internet was buying up our competitors and I realised it wasn’t advisable to go up against a consortium.

It’d be silly for both of us; we’d be spending millions just to keep our market positions.”

Jaffar says it was hard to let the company go but it was the right thing to do. “The circumstances were right and I couldn’t just think of myself. I had to think of my family’s investment. They were my shareholders.

Also, Rocket Internet talked to us about their strategy for the company in the future and I felt they were the right people to take it forward. Eventually, it was less about the money and more about continuing the success. And just like we created Talabat, we’ll create something else, Inshallah!”

Jaffar is suddenly the new poster child.

But his advice is simple. “A lot of young entrepreneurs now come and ask me whether I am doing the right thing. I don’t have answers for a lot of their questions; I am not aware of the workings of every single industry. But I do know this – Never underestimate the success you’ll get as a result of people wishing you well. And when

do people wish you well? When you treat them right and with equal respect.”

He learnt that important lesson from his inspirations – Prophet Mohammed. And his own grandfather. “I was raised by a religious family and my first inspiration is the Prophet. He was a businessman before he got the revelations. He used to trade between Mecca, Medina and other regions and they used to call him the trustworthy one.

His good character and ethical treatment of people made sure that people rallied around him.” Jaffar’s other inspiration is his grandfather. “My grandfather started off as a poor man in the 1920s in Kuwait. He never changed over the years despite the successes in his business. You could never tell by looking at him that he was a rich man.

He was always humble and that was the secret of his success. People always wished him well because he always treated them well. He knew everyone by their name even though he had thousands of people working for him. He was gifted like that and growing up in his shadow, it was easy for me to follow in his footsteps. I didn’t have to reinvent the wheel.”

And these lessons stood him in good stead when it came to keeping his employees happy. “They were the pillars of the company. When you run a company, it’s not about the individual, it’s about the team. And my role was to keep the team happy and motivated. This helped us attract some of the best talent in the country. A lot people came to me and asked to work for Talabat because they want to be part of it. It’s never about money. Even though we paid competitive salaries, the people who were with us weren’t those that were always looking for the extra dollar. They were happy to be there. Just like I was happy to come to Talabat every day. Together we enjoyed working the crazy hours. We created a wonderful environment – we had a gaming room, we played football together and went to the cinema. We were like a family. And they gave their best towards building the company. Though the employees didn’t have any equity, they received a big bonus after the exit, as a thank you from us.”

And Jaffar’s commitment to ethics didn’t stop within the walls of his company.

Talabat is deeply involved in charity work across all the markets they operate in and beyond. “Every time anyone places an order on Talabat, a certain amount of money comes out of our revenue towards feeding a hungry person. Not only that, we complete a mosque and a hospital and are funding an orphanage, all from revenues generated through the company. Everyone who is using Talabat is contributing to charity without really paying; it’s a beautiful threeway model. And I believe that if you help people, God will help you,” he says simply