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How did one Dubai startup scale to 24 markets with less than $10 million?

How did one Dubai startup scale to 24 markets with less than $10 million?
Rami Darwish, founder of Arrow Labs

A “real coup” is how Arrow Labs founder Rami Darwish describes the partnership he has signed with BMB, a multinational IT solutions provider with more than 3000 customers, including Coca-Cola, Maersk and Nestle. Under the agreement forged last month, Arrow Labs’ software is now jointly being deployed with BMB’s, giving the UAE-based startup access to a legion of global customers.

When Darwish founded his software company in Dubai back in 2011, there was no telling that he would scale to 24 countries, work with 40 different clients and attract investment from Tim Draper, the US-based tech investor whose portfolio includes Skype, Tesla, Twitter and AngelList.

The startup ecosystem in the UAE at the time was in its infancy, software development in the country was practically unheard of and embarking on a journey to compete with Silicon Valley’s finest seemed like a far-fetched idea. But Arrow Labs has managed this, all with just $8 million worth in VC investment, so how did Darwish and his team do it?

Darwish, who has worked for global tech firms like EMC, Hewlett Packard and Daon in both technical and sales roles including the design and architecture of city-wide surveillance solutions and airport and maritime security management systems, thought of the idea for Arrow Labs while working on several big projects in the public sector.

His daily workflow on these projects was inhibited by the lack of synergy between the different technologies available to the front and back offices.

“In the back office we had tonnes of digital solutions and tools to solve a lot of problems, but the information was lost, the accuracy was gone and instructions to what happens out in the field becomes difficult to relay information. It drove me crazy,” he says.

Tech solutions are typically bought and recommend by a firm’s IT department rather than the workers who actually end up using the software, leading to an experience gap of sorts. The problem Darwish also noticed was the difference in the technologies offered to the back office and frontline workers and the lack of communication between the two.

“The frontline and back office have to be on the same playing field to make it easier to make information flow. That was the point in time I decided to do something about this,” he says.

Dubai is not famed for its software development capabilities. In fact, many startups in the UAE will have their engineering teams and back offices based in Egypt, Jordan, or farther afield in Pakistan, India or Eastern Europe. Hiring a team of engineers in the emirate is costly, particularly when tech talent is scarce. But Darwish chose to remain in Dubai and set up Arrow Labs in the emirate as it is “well known for adopting new technology, for being open and trying out new innovations,” he says.

“Getting the right initial talent was super key, we weren’t building small for day one, we were building something big,” he adds. “We created a space here that didn’t exist in our region. There was really nothing that looked at this problem from a core perspective. There were some solutions out there, but they were built more like an afterthought to existing stuff.”

The team took its time to develop the software. Darwish describes the process as “purposely designed to solve a problem. Enterprise software solutions need to be robust enough for very large enterprises”.

He spent the initial few months researching his potential clients, spending time with different teams in various sectors to better understand their challenges and what they needed for a potential software solution. This research highlighted common problems across the board – teams were still operating manually most of the time, using paper, clipboards and walkie talkies on site.

“People are not reading from the same book, you have access to real-time information, to productivity tools in the backend, but on the front line, people are left with the legacy way of doing things – communicating over walkie talkies, there are lots of phone calls which is really unproductive for the front line. It adds a burden rather than focusing on the work they need to be doing whether it is repair work, installing infrastructure, collecting important field data – they’re spending time instead on admin work,” says Darwish.

Arrow Labs started its own research and development (R&D) centre in 2013, when it was building its first iterations of its software called MIMs, a SaaS platform that connects front line workers to machines and facilities via a mobile app and wearables to improve and optimise automation, performance and workflow management. The company continued building and developing the software in tandem with its first adopters, releasing different iterations with their feedback. Today, Arrow Labs claims MIMS can reduce operating costs by 20 per cent, increase staff productivity by 30 per cent, business efficiency by 40 per cent.

“From 2014 to 2017, we technically had a product that was available to customers, but I consider them R&D years,” says Darwish.

Through his work in the public sector in Dubai, Darwish was able to sign on both Dubai Ports and DP World as his first customers.

He describes DP World as “very innovative and open minded as an organisation and doesn’t shy away from bringing innovation. We had a very interesting concept for them when they were also looking at how they could digitise their entire value chain and get rid of paper”.

DP World wanted to give its employees, whether they sat behind a desk or were out in the field at the ports, to have equal access to technology according to Darwish.

“They were looking for something and we came up with something,” he says, simply.

But while the first initial clients were high-profile, acquiring customers was no easy feat in the early years.

“There were regulatory challenges at the time, the ecosystem was super nascent, access to clients was a lot more difficult and finding clients that have the mentality of supporting up and coming and new entpreneuers when they usually expect a big blue chip tech company was challenging,” says Darwish.

To ease the transition for clients, Arrow Labs built MIMS as a flexible, plug and play product, working with existing technologies that companies had in place.

Funding

The company bootstrapped for several years before considering raising external investment. Part of this was due to the lack of venture capital firms in the region when Darwish first started Arrow Labs.

“There was only one VC, there was no ecosystem then and it was very challenging. There was no access to capital and you had to build in an old-fashioned way, by bootstrapping. In a sense, I started out to build a company and a business, not a startup, that was the thinking at the time,” he says.

The lack of capital had its merits according to Darwish, enabling him to prioritise how he spent the money he did have. Once he felt the company had reached a level of maturity and the right product fit, Arrow Labs began pitching to VCs to help fuel its expansion.

The company raised a Seed round of $3 million led by Global Ventures in 2018. This cheque helped Arrow Labs scale to 24 countries and establish hubs in the US and Southeast Asia. The startup most recently raised a $5 million Series A round led by US-based VC fund Draper Associates, founded by Tim Draper.

“We wanted to reach a point from 2018 to 2021 where we scaled the company where growth is starting to become exponential,” says Darwish. “It was the right time to create another round especially in the US and Europe where we have needs and gaps to cover. So we wanted to fundraise from a group of investors who believe in what we’re doing, and the problem we are solving.”

Having Draper on board has opened a lot of doors says Darwish and has helped Arrow Labs land several clients in the US and now with this BMB partnership, Arrow Labs is building an “ecosystem around the product”.

BMB’s strength lies in the internet of things (IoT), which will be combined with the Arrow Labs’ platform to better connect all the devices used by front line workers.

“You need great tech partners who have reach, they [BMB] have the tech skills to be able to take our product to their customers and be able to implement our solutions,” says Darwish. “When you look at where the next big transformation will be, it’s in the deskless work. Operations are already digitally transformed, so when everybody talks about digital transformation, it’s about that entire space that hasn’t yet been digitalised – which is that deskless, out of the office space.”

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