From Startup to $170 Million

[00:00:00] What kind of a company takes 11 years to become an overnight success

[00:00:05] ؟ لا أدري، رأيت هناك أو أخر، أم ربعت

[00:00:14] These were the sales for that day. و شعورك 95% of it قادت من الTalabat. I am like my goodness. يعني أنا أعيش، عقب الله سبحانه وتعالى أعيش على هذا الموقع، فاتصلت بعبد العزيز، قلت له عبد العزيز تكفى أبي. to talk business with you. قال لي لا محمد، that gut feeling it turned 3 million dollars into 170 million dollars.

[00:00:37] But here's what nobody tells you.

[00:00:39] For most of that decade everyone thought he was wrong.

[00:00:45] This is the Talabat exit and it's a master class in surviving until the market catches up.

[00:00:55] It's 2010, in Kuwait. Mohammed Jaffar is a corporate banker who opened up a restaurant called The Kitchen and the kitchen is dying. It was a difficult challenge in the beginning and my daily sales were very low ranging between 30 to 40 dinars which was way below the break even level of 150.

[00:01:23] He's making 100 dollars a day.

[00:01:24] He needs 500 just to break even. So he does something desperate. list the kitchen on a local food delivery website called Talabat. So I joined Talabat. On my first day I sold for 420.

[00:01:41] So from 30 to 40 to 420 and I thought that's it.

[00:01:45] His sales multiplied in one day and that's when Jaffar saw what nobody else in Kuwait could see yet.

[00:01:55] This wasn't just a website.

[00:01:57] It was infrastructure a network connecting hungry customers to restaurants. And once you were in you didn't want to leave.

[00:02:08] So he convinced this family to do something crazy. buy the whole company. 3 million dollars for a food delivery website.

[00:02:17] In a country where most people still called restaurants directly.

[00:02:22] الصبر، وهذا أصعب درس يعني، أصعب درس يمكن يواجه لأنك يجب أن تصبر على المطاعم ما يتقبلون هذه الفكرة، يجب أن تصبر على العملاء كيف يتقبلون هذه الفكرة. العملاء يعني في السابق كان يدك تلفون، وشيء أمامه يحاك. فيضمن أنه عندما أقول لك أنا without onion it's without onion. ضامن هذا الموضوع.

[00:02:49] His family thought he was insane.

[00:02:51] But Jaffar understood something the market didn't. When you are early you look wrong until suddenly you look like a genius. The question is can you survive long enough to find out which one you are.

[00:03:06] If your business is in crisis right now. If the margins are gone and the runway is short this wait for the market advice might feel a bit useless.

[00:03:16] I hear you. We will cover exit options for distressed companies in a future episode. But for now stay with me because even in crisis these principles we share today will apply to your case.

[00:03:34] The company was founded in 2004 by a group of Kuwaiti students. When we first started we used to route orders via phones.

[00:03:45] Yes we had a website but when we receive an order we used to call restaurants and communicate the order to them manually but we were just being redundant. The customer could have called the restaurant directly.

[00:04:00] A year down the road we used to route orders via fax machines.

[00:04:04] Yes. A fax machine. Sometimes it worked sometimes it didn't sometimes the restaurant just ignored it.

[00:04:15] In 2004, less than 1 in 4 Kuwaitis were online.

[00:04:19] The iPhone wouldn't exist for another 3 years.

[00:04:23] Nobody trusted e-commerce. Nobody ordered food online.

[00:04:28] The founders were solving a problem most people didn't know they had. By the time Jaffar bought the company in 2010 they grow slowly.

[00:04:40] About 700 orders a day. But they also made a critical mistake.

[00:04:48] In 2007, the founders tried to expand into Saudi Arabia. using a franchise model. It failed badly.

[00:04:56] The franchisee didn't share their standards. Operations collapsed.

[00:05:02] By 2009 they had to buy back the Saudi rights just to stop the bleeding.

[00:05:07] This is what Jaffar inherited a business that worked in one country.

[00:05:13] And had failed in its biggest expansion and was operating in a market that still thought online food ordering was a gimmick.

[00:05:24] However, we didn't know. So we said let's outsource the application. Back then we had only websites. There was no iPhone app، no Android app and the trend of the apps was on the rise.

[00:05:35] So we made that big mistake of having to say let's outsource to companies so that they can give us the best industry practice. Even though Talabat had engineers that can do that job.

[00:05:48] And that was a huge disaster. of course. We outsourced the website، a new website. We outsourced the application and it was a complete disaster. After that moment we never outsourced anything and we do everything in-house.

[00:06:00] And a business like Talabat، it needs it.

[00:06:04] It keeps quality consistent.

[00:06:06] Jaffar learned the lesson. You can't outsource your standards. If you are going to expand you do it yourself. So that's exactly what he did.

[00:06:17] Faith Capital his family's investment firm poured 15 million dollars into GCC expansion. UAE, Bahrain، Oman، Qatar and Saudi Arabia.

[00:06:30] Direct offices, local teams, full operational control.

[00:06:35] Jaffar spent 5 days a week outside of Kuwait. flying country to country setting up operations building the network restaurant by restaurant.

[00:06:46] "We found it very tough in the beginning just like any other startup company in the GCC، especially since we expanded to all five countries in roughly the same period.

[00:06:58] It was also very expensive and growth was slow at first."

[00:07:03] Expensive, slow, and for years it looked like a bad bet until it wasn't.

[00:07:11] The iPhone launched in 2007. By 2012 smartphones were becoming mainstream in the Gulf. Internet penetration climbing mobile apps taking off.

[00:07:23] Payment solutions emerging. Talabat launched iOS and Android apps.

[00:07:29] And suddenly everything they built for years the restaurant network، the delivery operations, the customer trust it all started compounding.

[00:07:42] 700 orders a day when Jaffar bought the company. 50, 000 orders a day by 2015. That's 5 years. The market finally caught up.

[00:07:52] There are over 15, 000 orders per day.

[00:07:54] الحمدلله.

[00:07:56] 7 people, 140 people. We are about to hit 1 million downloads for our application.

[00:08:02] Now these are good numbers. When I look at them I feel very proud. However I believe this is just the beginning still.

[00:08:08] This is what being early actually looks like. You spend years building when nobody believes. You survive the slow period.

[00:08:16] You keep your standards high when it would be easier to cut corners.

[00:08:21] And then one day the world changes and you are already there.

[00:08:25] By 2014 Talabat was the dominant food delivery platform in the GCC.

[00:08:30] Over 1,500 restaurants، 400,000 users market leader across multiple countries.

[00:08:39] And that's when the phone started ringing.

[00:08:42] Rocket Internet، the German e-commerce giant.

[00:08:46] They were building a global food delivery empire.

[00:08:50] They had operations in dozens of countries.

[00:08:53] But they had a problem.

[00:08:55] No presence in the Middle East.

[00:08:57] The Middle East in 2014, was one of the fastest growing e-commerce markets in the world.

[00:09:03] Young population rising smartphone penetration, cash on delivery that actually worked.

[00:09:10] They needed to be there. But building from scratch would take years and bring its own risks. or they could buy the company that already did all the work.

[00:09:20] It has a huge value. We didn't want to sell it، فقلنا اذا تبون ترى هذا السعر.

[00:09:28] This is the point الذي نتكلم فيه.

[00:09:29] Anything less we are not interested.

[00:09:31] عندما كملوا سوالف عرفت أنهم موافقين على هذا السعر، ردوا علينا وقال لنا

[00:09:35] we're all interested.

[00:09:36] All the parties. فبالنهاية أنا لي three huge offers. فالنهاية أي واحد ألاقي بهم.

[00:09:46] This is the tricky bit now this offer or this offer or that offer.

[00:09:48] That's what happens when you build something acquirers need before they know they need it.

[00:09:54] Quick question for you. Have you ever been in that too early phase where the market wasn't ready but you knew it was coming.

[00:10:05] If yes drop it in the comments. I am building a list of founders who survived the wait. Some of you might become future episodes.

[00:10:13] Talabat didn't just become attractive to Rocket Internet. They became a necessary addition. But here is what separates founders who get acquired from founders who get acquired well profitably.

[00:10:27] "You should always have an exit plan in place. I'm not saying you should go into a business with the intention to sell. Instead, you should go into a business with the intention to build something great."

[00:10:41] Build to sell even when you have no intention of selling. That's not about being mercenary. It's about discipline.

[00:10:50] When you build with exit readiness in mind you build better systems, better documentation, better governance a business that runs without you.

[00:11:00] And when the buyer shows up you are ready.

[00:11:01] Jaffar continues in the interview saying "I focused on creating an actual culture within Talabat. An environment that allowed our people to strive for success because they believed in the business. I also saw the importance of having a quality management system. All our business operations expressed in writing policies processes and procedures."

[00:11:30] And when Rocket Internet did their due diligence they didn't find chaos. They found a machine, a system.

[00:11:38] Once the decision to sell was made the deal closed in days، not months days because everything was already in place.

[00:11:51] February 2015.

[00:11:53] The deal closes.

[00:11:55] 170 million dollars at the time that represented roughly 2 to 3 times Talabat's gross merchandise value or in short GMV.

[00:12:05] A premium reflecting both regional scarcity and strategic necessity.

[00:12:11] For Jaffar and Faith Capital that's roughly 50 times their investment.

[00:12:16] "It was very emotional for me. I would tell any aspiring entrepreneur not to take this for granted. Like anything you become attached to your business. You become attached to the people you work with daily. It is not easy to let go of that."

[00:12:33] But here is the twist nobody expected. Weeks after acquiring Talabat Rocket Internet transferred the company to Delivery Hero.

[00:12:43] Their own portfolio company which is focused on food delivery. The acquisition was never about rocket building their own Middle East operation. It was about strengthening their position in the global food delivery game and under delivery hero Talabat kept growing.

[00:13:03] Today, Talabat operates in 8 countries with over 9.5 billion dollars in annual orders valued at roughly 10 billion dollars.

[00:13:14] From a fax machine in Kuwait, to the largest food delivery platform in the Middle East.

[00:13:20] Let me give you the three things from Talabat's exit you can actually use and before you think that this is just a 170 million dollars tech story and it doesn't apply to me or to my business remember, Jaffar he started from a kitchen a struggling business.

[00:13:38] First, being early looks wrong until it doesn't.

[00:13:42] The question isn't is the market ready. The question is am I solving a real problem that will become obvious once infrastructure catches up?

[00:13:54] Talabat solved a real problem convenient food delivery. The infrastructure wasn't there yet but smartphones were coming and internet penetration was rising.

[00:14:05] They built for where the market was heading.

[00:14:08] If you're early on something real your job is to survive long enough until the world catches up.

[00:14:16] Second, build what acquirers need before they know they need. Rocket Internet needed Middle East presence. Someone was going to own that position. Talabat made sure it was them Ask yourself, what strategic imperative will force a larger player into my market? What would make us the obvious acquisition?

[00:14:42] Build that, document it. Become impossible to ignore.

[00:14:46] Third, exit readiness is a discipline not a phase. Jaffar didn't scramble to get his house in order when buyers came calling. He had been building a machine from day one.

[00:14:58] Culture documentation systems and processes.

[00:15:03] A business that runs without the founder. When the offer came they closed in days. That's not luck. That's preparation.

[00:15:16] Talabat wasn't an overnight success. It was 11 years of building in a market that wasn't ready yet.

[00:15:24] Surviving a failed expansion, maintaining standards when it would be easier to cut corners.

[00:15:31] And becoming so essential that global players had no choice but to buy them. That's not timing. That's engineering.

[00:15:41] If you know a founder who engineered a rewarding exit in an emerging market drop their name in the comments.

[00:15:49] If you can tag them as well please do so.

[00:15:51] The best stories become future episodes.

[00:15:54] I'm Adel. This is Exit Builders.

[00:15:57] Build something they have to buy.