My Startup World speaks to Nehme Baghdadi, the Technology Director of Urbanbuz; Salam Saadeh , the COO of Urbanbuz; and Mustafa Sadek, the CEO of Urbanbuz; about their entrepreneurial journey in setting up Urbanbuz and growing it further.
Can you tell us something about yourself?
We, all three founders, are of Lebanese origin and come from big families. We spent our childhood and teenage years during the Lebanese civil war. We all met in the American University of Beirut, while studying Computer Science. We immediately became friends even though we were moving in different circles.
Mustafa and Nehme moved to the US to work in technology, while Salam continued her studies in Finance and went on to work in Capital Markets and Investment Banking in Beirut and then Dubai. After the financial crisis we all re-connected, and here we are today.
How did you arrive at the idea behind UrbanBuz?
We were originally inspired by the “Give to Charity” initiative by Google, which gave birth to our Responsible City platform idea that aimed to build awareness about local charities and to encourage businesses to be more involved in their local communities.
After testing it with merchants in the region, we realized that the market was not ready for it, and we realized that regional merchants, especially SMEs, needed help when it came to customer engagement and loyalty. So we started researching regional and global market trends and UrbanBuz was born.
How and when was the company started?
The UrbanBuz platform was established under a different name in 2012 in its beta version. 2013 was all about testing, sales, re-branding, raising capital and then finally incorporating the company. As soon as we acquired the necessary funding, we started hiring and it’s been full steam ahead ever since.
Give us details on how you collected funds for the company, the people you contacted and so on.
Fundraising for a startup business is a slow and painful process. There is nothing fun about making your investor prospect lists, scheduling pitch meetings and asking for money. Fortunately, that process was reasonably smooth because one of our co-founders comes from the financial services industry and has experience in fund raising. Our business model is a proven one, with a range of paying clients, and it is sustainable and highly scalable.
We started the fund raising process in June 2013. We pitched to 12 groups and were actually oversubscribed. By December 2013 we had closed with 4 of them and the money was in the bank. We consider this a great success, especially in the Middle East, where this asset class is still new and investors are known to take their time in assessing and committing, let alone paying.
Tell us about how you went about registering the company, the initial number of employees, the managing partners of the company and so on.
We hired a law firm to advise us on the shareholders agreement, the registration of the company, and seeing it through. UrbanBuz operates under the legal name UB Program JLT, which is fully owned by UrbanBuz BVI. We are 3 co-founders and this is the number of employees we started with. Shortly after we began work we hired 2 additional team members. Now we are around 20 people.
How do you think UrbanBuz will change the way people look at SaaS and related services/solutions?
Technology is supposed to provide solutions to end users or businesses in a cheaper and much more efficient manner. We are a technology company and that’s what we live by.
We look at UrbanBuz as a solution that keeps evolving and getting better with time and so we are able to provide businesses with the solutions they need now while keeping those solutions up to date with new technologies and consumer trends. SaaS is the new business model through which technology is delivered these days.
What is the USP of UrbanBuz’ products and solutions?
Our USP is simplicity. Retailers and consumer outlets now have the capability to set up their own, advanced digital customer loyalty program. This was something previously available only on a very large budget. Our partners can make the programme as sophisticated as they want it to be from a business with one location to a business with multiple brands looking to create a group loyalty program – it is entirely customizable.
SMEs, in particular, don’t have the resources of big organisations so we have designed the platform to be set up and managed very easily, at an affordable price. It takes no time to learn how to use it.
We also regard our offering as a full-service – not just a product. For example, we monitor activity on the platform to provide feedback to our partners, and manage all complaints and questions by consumers related to the loyalty programs. We channel feedback to our partners, and sit down with them to discuss how we can improve their offering. We monitor the platform closely, and send our partners reports on how they’re doing.
If we see areas that could be improved, we work out a solution. This is why we refer to our sales team as ‘relationship managers’. This is what makes our platform more than just a software or product – there’s a whole team of consultants to come with it.
What is the primary source of revenue for UrbanBuz?
Our primary source of revenue is the rates paid by our partner companies to use the platform. We charge our partners a fixed rate ‘by branch’, and the more branches the platform is used in the lower that rate becomes.
Did you encounter any hurdles while setting up the company?
The journey has been rocky but rewarding. The first challenge was to validate the platform as something businesses wanted, and were willing to subscribe to. We had to understand our customers and ensure we were creating something regional businesses actually needed. Initially we made many revisions to the platform. We offered our pilot for free to receive the feedback we needed. Our first success was acquiring our first paying partner.
The next big challenge was to create a structured ‘company’ with passionate and talented employees. For that we needed to raise capital. Raising funds and pitching to investors takes time. In the UAE technology start-ups are treated with caution. We engaged well with investors and raised $735,000 in seed-funding in a short period of time, which is a huge achievement in this market. Investors liked our founding team, saw potential, and wanted to be part of the story.
Since then we have been growing rapidly, adding business partners to our platform and improving the features as we go. There have undoubtedly been hurdles, but so far we have overcome them all.
What kind of investment was made to launch UrbanBuz? Have you broken even?
We raised $735,000 in seed-funding in a short period of time, which we were very pleased about. Due to our light capex and easily scalable business model, we are pleased to announce that we are very close to breaking even, which is a very big step in the technology space.
How do you market your services?
We are a B2B company and as such it is all about establishing ourselves as thought leaders in this space. We work very hard internally to stay ahead of the curve when it comes to new customer engagement and loyalty trends across different sectors. We primarily use PR services for building a name for ourselves in the UAE media, and we regularly blog and attend conferences and exhibitions to network and discuss our work with potential partners.
Apart from being involved in UrbanBuz, are you also involved in other business / initiatives / companies/startups?
As entrepreneurs, we realize the huge effort you need to put in if you are to make your business a success. You always feel that there are not enough hours in the day. So it is really hard to be involved in other businesses or initiatives. Besides, the shareholder agreement that we signed precludes us from being involved in any other business or initiative. We believe this is as it should be.
What are your future plans for UrbanBuz?
To live by our promise and our mission, to become the number one customer loyalty and engagement platform in the region and beyond, helping businesses across different sectors connect better with their customers and establish a more rewarding relationship with them.
What are your future plans as entrepreneurs?
To build a highly successful technology enterprise that the team, the shareholders and the community at large are proud of.
What is your advice to other entrepreneurs in the process of setting up shop in the Middle East?
Startups are extremely difficult anywhere and the Middle East is no exception. It is even harder here because this is a new field. We would advise an entrepreneur to start with a solid founding team. You might have a brilliant idea but without a team with the passion and determination to turn the idea into a success then you will struggle.
It is the founding team that will make or break a company, and investors will tell you that. If you get that right from the beginning you will save yourself a lot of pain later. This is one of the major factors that have got UrbanBuz to where we are today.
What factors according to you should they take into consideration prior to starting their own business?
I see a lot of entrepreneurs focusing on the ‘cool’ factor – wanting to create something that is ‘cool’. Others want to solve world hunger. Often these approaches are too emotional, and lack proper foundations. Before starting a company the entrepreneur should validate their own assumptions about the product. Identify your potential customers, talk to them to be sure that you are actually solving a problem (for consumers or businesses) and then build on that.
The mantra should be: validate, test, adjust, and build. Our model at UrbanBuz is that of the ‘lean startup’ – we never build anything without talking to businesses first and listening to them to make sure it is something they will use. The majority of the features we have developed were requested by the businesses themselves, so we know we are actually providing them with a solution – this is what gets us really excited.
