Dubizzle founders step down as Naspers takes a majority stake: What's next


Dubizzle founders step down as Naspers takes a majority stake: What's next

Note: photo submitted by Dubizzle. 

After eight years of running Dubizzle, the biggest classified ads site in the UAE, founders J.C. Butler and Sim Whatley have announced that they are stepping down to return to the U.S. and spend more time with their families.

"It's been something we've been working on for awhile. We made the decision that we wanted to transition out of the business last year. Dubizzle is so far away from where we're from, and it became about more than just us, it became about the needs of our wives and families,” says Whatley, who is expecting a child soon. 

“We also felt that Dubizzle needed us less and less; we had been able to hire very talented people who had grown within the organization, and we could see that we were being needed less and less to make decisions,” he reveals. Butler, who had one child last year and has another on the way, echoed the same sentiments.

The move will see the two founders sell a portion of their equity to investor MIH, a subsidiary of South African media multinational Naspers, which will now own a majority share. In 2011, MIH invested for a 25% stake in the company.

“If we're not going to be here, running the business, [we realized that] it was in all of our interests- J.C. and I and MIH- to get their share up to 51%,” says Whatley. Neither founder has immediate plans for the future, but both remain "significantly" invested in the company.

Can Dubizzle tackle a market outside the UAE?

The founders' departure comes after a two-year struggle to expand; while Dubizzle continues to see wild success in the UAE, it hasn’t been able to successfully own a new market.

It’s clearly a bittersweet moment for both Butler and Whatley, who famously built the company up from scratch, investing $12,000 of their own money, living on passion and a 10 AED-a-day budget until they met an angel investor in 2006.

In the early days, they acquired customers “one person at a time,” says Whatley, cold calling offline secondhand sellers with a friendly pitch to let them know that online was a better option.

Today, Dubizzle is the 7th most popular site in the UAE, ranking 1,180th globally, according to analytics platform Alexa.

Experience listing jobs, properties, and goods in the Dubai market did not prepare the founders for the steep learning curve that they hit when they went to make a regional land grab, says Butler.

“Our only experience had been launching in the UAE, where we were our target audience; we spoke English, and we could do a lot of trial and error. When we wanted to launch across the Middle East, we didn't know how to do it,” he candidly admits. “We wanted to launch in all of these markets at once. It was a plan, but it wasn't necessarily a good one. We made a lot of mistakes.”

After going down a “bumpy road” to launch an Arabic site, they "flipped the switch on" in every major Arab market from Morocco to Oman, except for Iraq, Palestine, and Yemen.

Today, the site has closed down Libya, Syria, and Morocco, all for obvious reasons; Morocco may not be politically unstable, but it’s a saturated market where first mover Maroc Announces is battling it out with Russian giant Avito and Swedish-led Bikhir to retain its market share.

When we asked Butler about Morocco this April, he noted over email that they shut down operations in early 2012: “We had dipped our toe in the market but had decided not to pursue it.”

To counter their mistakes, the founders hired Arto Joensuu, who will now step into the role of company CEO. “When we found Arto… that's when our internal communication strategy really started to form,” says Butler. "It forced us to go on a soul-searching journey as Dubizzle."

Going after Egypt

Perhaps Avito’s entrance into the Egyptian market (as Bekam, not to be confused with price comparison site Bkam) in mid-2012 made Dubizzle double down on owning Egypt after giving up in Morocco. When we visited Cairo this March, we couldn’t help but notice billboards plastering the city with Dubizzle’s name, boasting their unfortunate transliterated tagline: “bee3 weshtery in your city” (“sell and buy in your city”).

Avito, which recently merged with two other Russian sites to become the third largest classified site in the world after Craigslist and China’s 58.com, is known for spending millions on marketing and user acquisition. In its latest funding round this March, it was valued at around $270 million.

Not to be daunted, Dubizzle sent a team to study the market on the ground and quickly produce television ads. Now, Butler says that Dubizzle has become a “household name” in Egypt, despite the political instability. The company is taking a “long term view," but also having “bigger and faster success [in Egypt] than we had in UAE during the same time frame.”

When it comes to their customer acquisition strategy in Egypt, or any of their new markets, Butler says there’s no magic formula. 

“We use the same digital channels, the same offline channels; maybe we do more face-to-face on the ground stuff,” he says. “I think a lot comes down to the DNA of our vision; it's not just about conversion rates and numbers.”

What matters most, he says, is their philosophy (during our conversation, both Butler and Whatley repeatedly got philosophical about the impact of classified ads on growing economies): “Our goal is to disrupt something that's not working, and to better people's lives by bringing transparency to economies, and to allow self-starters to raise themselves up by their bootstraps and make money in ways they've never been able to make money before."

Challenges to Dubizzle

Dubizzle has successfully monetized via display ads, targeted property and auto ads, and by taking a fee for posts over a certain quantity. But if it rests on its laurels, rivals like Propertyfinder.ae and Bayt.com could potentially claw market share by providing a better user experience.

Dubizzle claims that its property section has “seven times the amount of traffic” that Propertyfinder.ae has, yet rival Propertyfinder.ae’s interface is a bit sleeker. In time, that could make a difference. Perhaps especially in the auto segment, which seems to dominate the majority of Dubizzle's non-UAE markets.

Whatley insists that the site is already improving its experience, and hints that that will be a bigger focus in the days to come: “You'll see some customization within these verticals. We release something every week." 

And now, the task of keeping users happy will fall to Joensuu, who displays what might be some trademark Dubizzle bluster. "It's a sad moment in terms of not being able to see the guys [Whatley and Butler] everyday, but in terms of our future, it looks very bright. We're not in the business of being another classified site; we’re in the business of changing lives. We're ready to kick some ass."

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