As one of the founders of Daraz, Pakistan’s biggest e-commerce platform, Muneeb Maayr is considered one of the country’s most successful entrepreneurs after the company was acquired by China’s Alibaba Group in 2018.
Now, his latest venture, a motorbike-hailing and logistics platform called Bykea, is also attracting investor interest after closing a $5.7 million Series A round - the largest Series A raised in Pakistan to date.
We spoke to Maayr about his entrepreneurial journey.
Why did you become an entrepreneur?
It boils down to a desire to build something meaningful. After I graduated from Virginia college, I worked in investment banking then I returned to Pakistan to set up the back office for a company that sold data to banks called SNL. I did that for about seven years and I hired around 600-700 employees in Pakistan to do data analysis for investment banks in the US. So, I always wanted to build something utilising the internet. I think entrepreneurship is about building things and it is a painful journey. Everyone says “I didn’t get a job let me start my own sort of venture”, but I think that is a bad idea because if you were unable to get some of the best jobs coming out of college, I don’t think you will have the resilience to build something big or raise money for that matter.
How did the idea for Bykea come about?
We started it primarily because of my experience prior to Bykea, I ran Daraz which ultimately became the largest e-commerce venture in South Asia, outside of India. When I ran that business we did a lot of deliveries and so initially the idea was to take some of the learnings from cash-on-delivery and try to build a motorbike-based network for deliveries. But when we started with researching motorbike platforms, we were very inspired to start a motorbike or two-wheeler based taxis in Pakistan. No one was doing the two-wheeler in the offline space, let alone online place, before we launched this category.
Most of the business continues to be transporting people and yes there is and continues to be a significant portion of the business, about a quarter for business deliveries but the people-transport business far outgrew our expectations. So the idea was how to leverage the 17 million motorbikes in the country and of course all these smartphones that a lot of these people have and how to make these two things, motorbikes and smartphones, a way for people to make money.
What is the transportation sector like in Pakistan?
Unlike many global metropolises, the cities here do not have a real metro or tram system. Recently, two cities [in Pakistan] have set up microbus systems but again microbuses are things that developed economies put out maybe 60 or 70 years ago and they don’t solve the last-mile [problem]. All of the cities we operate in have a population of five million people. So there are a lot of people, very geographically spread out, and very densely populated. A lot of their residential areas where people work and live, you can’t take a car in these alleys and that is one of the reasons why motorbikes are very popular. Traffic congestion is a problem and public transport is broken and in terms of private transport, you had these three-wheelers but they were unreliable and most of the guys would only operate in short zones.
How did you know this was a viable business?
When you look at transport, you have to understand economics - what is the cost of the asset and what is the fare you are charging? Ride-hailing works in countries where the average fare for the trip is high because that fare based not only for the cost of the driver but also the cost of the asset. What we recognised early on is that it is only motorbikes that can really make ride-hailing profitable in emerging markets. So, yes, cars can absolutely be profitable in San Francisco, Dubai, Kuwait but ride-hailing cars cannot be profitable in cities like Cairo or Karachi because the fare is very low. Motorbikes have an opportunity to be profitable where the fare for trips is low. In the earnings for one month, you can pay for the cost of the asset.
What are the challenges you face?
One big challenge is that big companies come in with a lot of money and try to steal market-share from you. They would throw all the money they have to give crazy incentives like five or 10 free trips and once they have acquired the customer, they keep giving promos over and over again to keep re-acquiring the customers. That is a challenge because essentially they don't care about profitability or their economics because it is not their mandate. They have to choose growth. The second challenge has been around the country. Most people in the country can’t type and search in their own language. In Pakistan, people can’t search in their own language online and I know that sounds very odd but as a nation, we haven’t developed online content or capabilities for people to be able to type fluently in the local language. The challenge we solve is dumbing the product down and dumbing it down means just writing stuff, videos, voicenotes. Passengers and drivers exchange a lot of voice notes with each other.
What are the main lesson that you have learned?
Know what you are talking about and know the space that you are in. I think there are a lot of entrepreneurs who don’t know their category better than the [venture capital] VC they are talking to. Because if you go ill-prepared, the VC will ask you very pertinent questions and if you can’t answer that, you will not be able to win their trust. I think it is very hard to pull in a bunch of people to agree to invest in you as an entrepreneur, because these companies that you are setting up are initially, from the onset, not companies and it is only after a few years that the founding team is able to build something of value that dissociates the investor’s trust into the business itself. But initially, the investors are looking at the credibility and the ability of the founding team to not waste their money.
What do you think your sector will look like in the next decade?
I think what is going to change is the ability for people to communicate and be matched with each other is going to improve. In the next 10 years, I see the product as a platform for transactions and services that can be in transport or in trade which can be in logistics and payments. The opportunity we are really trying to crack is dumbing the product down enough to make it super simple for people to be connected to one another, to communicate with one another and be able to receive money from each other as well.