VNV Global AB (publ) (VNV) Earnings Call Transcript & Summary

Hi, everyone. We're sort of -- we're getting the hang of this now. And it's sort of sad that it's already Friday because this is like -- this is -- I don't know. It's presumptuous for me to say, but I've been starting to enjoy these 3:00 sort of gatherings, but we're soon getting the technique ready here for Friday afternoon here in Stockholm. So welcome, everyone, and a particular welcome to Dany and Mostafa, who are our speakers today. So Dany runs the best investment company in the Middle East, Beco, who we have invested together with for several years and in several deals. And Mostafa Kandil is the founder of SWVL, which we own together with Dany. I think Dany you invested before us and then helped us invest. So we're super, super grateful for that because SWVL is one of our rising stars. Come a couple of years, and then we think SWVL give Babylon and BlaBla and Voi a run for their money, because it's going to be big. So this is -- so we'll run this in the usual sort of fashion. Dany will introduce to the region, and it's -- yes. And then Mostafa will continue with SWVL, specifically. So over to you, Dany.

Thank you, Per and Björn. Thank you, everyone, for being here. Just to give you some context about us as a firm. And then what I'll do is I'll fly through some slides that hopefully give you a deeper insight into what's happening in our region vis-a-vis, obviously, the venture ecosystem, take you on a trip down memory lane. And then obviously, I think we'll do a lot more in-depth discussion for you to gain more color in the Q&A. So at BECO, we're a 2 GP firm. We manage about $200 million AUM. We're in early-stage investors, so our ideal entry point is just before the A that we have a concentrated strategy where we basically concentrate and back and go heavy behind the breakouts like SWVL. You'll hear more about that in a moment. We have quite a diverse team. And I think the reason that I put this up here is 2 reasons: number one, we are unusual in the way we're structured. And I'll tell you why that is, particularly in this part of the world. So we have 2 people here in the firm, that's 20% of the headcount, that do nothing but fundraising. And not just fundraising for us. We only raise once every 3 years. It's fundraising for the portfolio, for people like Mostafa, who want to concentrate on running the business, and then need to do the growth rounds, which, in our region, are a challenge, and we'll talk to you about why. One other thing I wanted to just highlight here, and we're also doubling down on this in the firm, is that we are adding people and data to basically have -- be able to go granular early on, on everything from core analysis to unit economics to growth economics and really understanding product market fit as quickly and as early as we possibly can and to maintain discipline when we go hard behind the breakouts like SWVL. As a fund, we hold ourselves to very high standards. So we've performed better than the equivalent vintage in the U.S. top port IBC in both our funds, and Careem has returned the entire fund and some. Now here's where it gets interesting. So we spend -- we've been doing this. This is the tenth year we would have been doing this. And we started from very small humble beginnings, 2, 3 people in an office trying to figure out what to do and when this ecosystem would mature. And it's maturing beautifully, and we're going to talk about how that is. But one of the things we did very early on was spend time outside of our markets in the globe in the world, both courting Per and Björn so that they -- we know -- we get to know them. They trust us. They like us. They can -- we know what they want, so we can show them stuff so that they can invest alongside us. And I'm glad to say that we've done this with Vostok -- with VNV several times now. But again, a lot of these names that you see up on the screen here, some of the best investors in the world have invested in our region pretty much for the first time and pretty much for the first time in our portfolio, and that is just us spending time out in the Bay Area, building relationships and understanding what people want and showing them what amazing founders we have, like Mostafa and others. Just to show you the opportunity -- a real opportunity here to give you a bit of data. Now I've shown you the outliers, right? We know that the most amount of money, dollars going to venture per capita is in the U.S., and that's at about $330, and Israel is off the charts. If you actually take Silicon Valley on its own and strip out Silicon Valley from the U.S., it's probably equal to what's going on in Israel. It's about $850 per capita. We're at $3 in the region. Now that's not a good thing, but it's a very good thing because that's the opportunity, right? There's so many amazing founders like Mostafa doing some incredible things and tackling really large markets that can potentially result in very, very large outcomes, and they really just need the money. Now if you -- just a quick skew here. This is Mena, and Mena is the GCC, Egypt and the Levant. It's about 180 million to 200 million people. If you take the UAE and Saudi, which are small markets, but a lot of activity is going on there, they're probably closer to about $10 per capita, but still vastly underfunded. Just to take you on a trip down memory lane, I've been in this ecosystem since 2000. I was a co-founder of the region's largest job site called bayt.com back in 2000. So my gray hairs are there for a good reason. But in that decade, 2010, a total of $50 million, 5-0, $50 million was invested in the technology ecosystem. If you look at the Israeli ecosystem or any other ecosystem, it's in the tens of billions, if not, more. So really nothing happened. And we still had a few successes, and these are some of them. What's happening now is a lot more money is going into the ecosystem. I think while the pandemic is a tragic event globally, it has actually been -- it's brought us many silver linings, and I'm sure you're going to hear about those from Mostafa, but most of the companies that we've invested in have seen the same V-shaped recovery or they've been on the upward of the K, and they have been far more efficient than we ever thought they would be, thanks in large part to this -- to what happened with -- in the pandemic. So we had very few companies, 4 from 2,010 to 2,005, that were above $100 million mark. We've now got 20 and counting, and the count is rising very fast. In terms of the regional ecosystem, there is us right in the middle. We're sort of just before the A, Series A, a bellwether around Series A. There is a lot of activity now going on in the region with earlier stage investors, seed and precede and Series A funds, particularly in Saudi, the government is pumping a lot of money into the region, into Saudi, particularly. And what we are struggling with in the region, which is why we've configured ourselves to have 2 people in fundraising for a number of years now is this Death Valley, which is the larger Bs and Cs. And that is why we spend so much time, hopefully, building trust and strong relationships with our friends at VNV so that we can show them exciting opportunities, and they can invest alongside us and capitalize on that opportunity. The way we look at the region is really threefold. It's sort of a 3-pronged investment thesis. And it's high level, and we can go deep in the Q&A, if you like. But basically, the GCC is like the world's best kept secret. And the GCC, for those who don't know it, is Saudi, Bahrain, Kuwait, UAE, Qatar, it's those Gulf countries. And while they are probably 80 million in population or maybe even less, they have some of the highest ARPUs, both across enterprise and across consumer. And so -- and very, very low cap, which is a really profitable relationship. Then you have Egypt, and Mostafa is the best ambassador for what can be done in Egypt. You have Egypt with a very large 100 million people. About 40-some million have access to high-speed Internet connection and sort of bandwidth on their phones. But what's cool about Egypt is it is so difficult in Egypt, with all due respect, to build a fast-paced business. You have lots of headwinds in its bureaucracy, infrastructure, hard and soft is not -- it's quite sometimes broken and lots of headwinds. So if you can build something massive like Mostafa has at SWVL in Egypt, our thesis is, you can take that and you can -- and it's such a big market. You can build to scale in a market like Egypt, you can build that anywhere. And particularly in emerging markets because the problems that we face in emerging markets, particularly where Mostafa is catering to broken infrastructure, and I'm talking about public transport, there's no other mode of modality of transport apart from mass transit, and so Mostafa is helping move people around and take them to their offices and back that, that transports to Middle East and Africa, Southeast Asia, Latin America and so on and so forth. And I'll tell you why Southeast Asia and Latin America with Mostafa specifically, is an important comparison point. And finally, the UAE is a nice place to be. It's very safe. It's very secure. It's got high-quality infrastructure, health care. We've seen how amazing they've been with the pandemic. Nice beaches, nice sun, you can tell from my sun tan, and tax free, for the most part, and highly connected as in connectivity with airlines, not just bandwidth connectivity, which means you can hop on a plane at any time from Abu Dhabi or Dubai and get to anywhere in the world and service your -- the greater area and really build a global business out of Dubai. And it's easy, and Mostafa will talk to that, I'm sure. And if he doesn't, I'll ask him to. He will talk to how relocating his C-suite and senior leadership team to Dubai has enabled them to hire global talent he otherwise was struggling to hire in other markets and even in markets like Egypt for a whole variety of sort of leisure and other logistical reasons. So this is sort of the combo that makes the region really special. High level. But again, spend on consumer is amongst the highest in the world, maybe not the U.S., but if you take most other countries, we have the highest spend in a lot of these sectors. In fact, food delivery, when the big food delivery champion here, Talabat, was acquired by Delivery Hero just before they went public, and it's a public company. So we download their financials and their filings every year and read it. It's the only region that is profitable in the food delivery space in the world for Delivery Here just to show you. And ARPU is off the charts, and retention is off the charts and basket size of the charts and growth rates still just incredible. So lots of amazing stuff in the region. It is a Dubai story. The UAE -- and it is a UAE story. Abu Dhabi is playing a big role in this as well. But the region is catching up, the greater region. I think everyone now realizes -- when we used to go out and talk to people about the tech ecosystem, it was like we were talking Japanese. And now everyone realizes that they're either going to have to get with the program or probably die. And so everyone, and governments included, are basically playing the right game and catching up, but the UAE is still ahead. Egypt is caught up in terms of number of transactions. And the beautiful thing about Egypt is over the last 10 years, the first wave of Egyptians were -- thought Egypt was a big country. And it is when you're in Egypt, but it's not for an investor like us who wants to make a massive impact and generate large outcomes. And so they went through there -- I want to build for Egypt, and then they went for I want to build for Africa and then I want to build for the region, and the ambition levels with successes is growing. But what's amazing about Egypt is you have the Ciscos and IBMs, and Intel has, maybe M&A as well, has chip design factories and establishments in Egypt. So you have a very deep tech pool and the greatest number of graduates coming out every year joining the talent pool, along with this huge commercialization engine that started also about 7, 8 years ago with the likes of the Food Delivery guys and Jumia with Rocket and Careem and Uber. Uber is still, I think, #7 in the world -- Egypt, sorry, for Uber, as a city in terms of number of rides. So it's a big country, and you've got this beautiful combination of tech talent. And Mostafa will talk about that. I'm plugging you, Mostafa, right here. And with the commercial savviness at scale, working for a company like Careem, which was acquired by Uber, for $3 billion just last year, which was our biggest exit in the region. Now the node effect. The node effect is so important. This is actually New York. New York was not on the scene until 10 years ago when -- well, 2003, when Kevin Ryan sold DoubleClick to Google for $2 billion. And that node has been traced back to have created over 1,000 people that have gone back to mentor, invest, angel invest, co-found, found or become senior leadership and members of team in amazing companies with huge aspirations and lots of capital going to the region. Now why am I talking about Kevin Ryan in New York? Because New York, as you've seen, has caught up big time on the tech scene in the U.S.. And that is something that we are looking for. Careem, we believe, is going to be our node. This already has been our node. You have young Mostafa here, who's an ex Careem-er, and you see this flywheel. There are a few more that we haven't put in there. A few of them are signed term sheets, so we don't want to disclose them too early so that people don't go after them too early. Exits have been there, and they are coming. And the more amazing companies get built, the more we will have exits. We personally don't have a -- we're sector agnostic. We follow the best founders. But our first fund was a lot of consumer, just bringing consumer services to people in the region. Our second fund, we sold a rise of enterprise. And our third fund, which we just kicked off now, the fundraising for is seeing a surge, again, in B2B, building the infrastructure layer for the next wave of consumer but also fintech. Fintech -- and not fintech Neo banks because it's highly regulated here. So that's going to be a challenging proposition. Fintech, I'm talking about consumer finance and the likes. Last slide. So when we think about the evolution of the ecosystem, and this is, I think, really the most relevant to this audience, hopefully. We knew innovation -- and business model innovation was going to come out in the region at some stage. We just didn't know when. We didn't actually think it would happen in Fund 2. But the way we think about this strategically is when -- you need 3 things to build a massive company. You need access to talent. You need massive markets, and you need access to capital. And the evolution is from Fund 1 to Fund 2, at least in our case. And what we're seeing now with Fund 3 is the talent pool was only in the UAE. Egypt kicked in very nicely. And you're going to hear that -- about that in a second. Now our founders are hiring people in San Francisco because work from anywhere has become quite the norm. Before, it was still quite a strange thing to get around one's head. And talent from around the world, but founder is based here and engineering team somewhat based here and then distributed has been really, really powerful. Markets. Mostafa will talk to you about his global -- not just global emerging markets. When we made the investment with Mostafa, we did a TAM and said, "okay, Egypt alone is a $1.5 billion outcome" if he gets it right in Egypt." And then we looked at other TAMs that we thought he could take, and it was $3 billion outcome. I don't want to steal your thunder, Mostafa, but with the software and the transport as a service and all the wonderful things you're doing, we -- and the reason I'm mentioning this, and this is for you guys, VNV, to help us think through is private funding is great. But at some stage, for these founders to really build the $10 billion, $20 billion outcomes, we're going to have to tap public markets. And who better than the VNV team to guide us through that process. And that is me.

Thank you so much. It's -- I don't know about the rest of you, but I always find it super inspirational to listen to Dany.

Thank you. Now I'm going to introduce Mostafa. Is that okay?

Go ahead.

So Mostafa. Mostafa, we learned a couple of years ago after having made the investment, had applied for a job as an associate or an analyst at Beco. Thank God whoever he was talking to didn't hire him because he wouldn't be who he is today. I don't think we had an opening. But anyway, I always talk about it. I think, my God, thank God that happen. But anyway, so Mostafa cut his teeth in the tech ecosystem in the region initially with Rocket and then as a market launcher at Careem. He was reporting straight into Mudassir, the CEO, who is just a phenomenal leader and a phenomenal entrepreneur. And Mostafa -- this is another amazing thing about Mostafa is, while he's Egyptian, is a global citizen because he has worked and operated in marketing and growth and ops and all these wonderful things that we need to know to build a big business in Egypt, in Pakistan, in Kenya and in Singapore, in Malaysia, Southeast Asia with all of these former employers before he stepped out to start SWVL. He is also recently -- was very -- well, I was very proud I was sent by a friend of mine in Egypt. They produced a list of the wealthiest Egyptians and the Godfathers of Egypt and the bankers of Egypt, and then it was the ones to watch for. And Mostafa was on that list, and I was so proud because it's so well deserved. And by the way, before I shut up, happy birthday, because it's is -- it was his birthday yesterday.

I love you. So great to see you, Dany. Thank you so much for the intro. Truly, it's really an honor to you always.

Shall I hand you over the screen?

Sure. Please, please, please.

Okay. Now let's -- Björn, can you help? I just did something silly.

I think -- can you guys see my screen now?

Yes. Perfect. Thanks you.

Amazing. Amazing. Again, thank you so much, Dany for the intro. Thank you so much, VNV team, for hosting me. I'm truly, truly honored. You guys have been much more than investors to us. You guys have been more like our co-founders in a way, and we're truly, truly grateful to you guys. Yes, maybe I can start. Dany introduced me, so thanks. He's always too generous with his intros. But I'm Mostafa Kandil. I'm a petroleum engineer. I worked at Rocket Internet, part of their venture development team, which is the team that manages -- they had this global team that manages different Rocket ventures around the world. I was part of this team in the Philippines. We started a car classifieds company. We grew it quite nicely. It became the second biggest car classifieds in the Philippines. Then Rocket acquired the food delivery company in Egypt, joins. This would be the company to restructure it, make it a bit more efficient, integrated within Rocket. Then luckily, I came across Careem around 4 years ago, joined as part of the expansion team. My job at Careem basically was to expand Careem, myself and the team around the world. So at that time, we launched Careem in 8 cities, which back then was around 1/5 of the footprint. Then I was 24. I thought that if I stay longer, I will just get too comfortable. I really like Careem at that time. I really enjoyed it. I really -- it was such a thrilling experience being always with your backpack traveling everywhere, launching Careem. So it was a very thrilling experience, very impactful. But I thought to myself, if I stay longer, I'll just get too comfortable. And this is not in the time -- I'm not a person that who, whatever, wants to be in a comfort zone. So I quit in just 6 months, went back to Egypt, started SWVL. And the inspiration was that there was -- Egypt is a very tourism country, as all of you guys know. And at that time, there was a Russian plane that got attacked at the time. And that meant that Egypt, there was a travel ban in Egypt. Egypt was struggling quite a lot with a very -- with a very slowed -- with the restaurant slowdown on tourism. And that meant that you always -- you grow up in a city like Cairo, you see all of these very high-quality buses running around, buses that work with Tour companies, with schools, with universities, all of these, mostly tour companies carrying tourists all day long, but you never question what else do they do. So at that time, the hypothesis was that given that tourism now is suffering quite a lot, there is a potential opportunity, basically, that these buses are sitting around doing nothing, right? So the idea was how do we build our own mass transit plan in a city like Cairo, where can you -- yes. In a city like Cairo, where transportation is extremely broken. Buses doesn't run on a schedule. Buses barely exist. If you are a woman and you take a bus in a city like Cairo, you will most certainly get harassed. A bus that should carry 50 people carries 200 people. And on the other end of the spectrum, the Careems and Googles of the world. But if I'm an Egyptian, could be an engineer actually, and they make $500 a month, which is a good salary in a city like Cairo, and they have to pay $20 a day just to go work and come back, because I live just a bit farther from where I live. I work a bit farther from where I live. It's a very big chunk of my salary that I really cannot do on a daily basis, right? Not only this, but actually, the government has absolutely no incentive whatsoever to invest in this massive infrastructure, right? They've been -- they've tried several times, and it's not only the case in Egypt or in Cairo. It's the case around emerging markets in general is that public transportation is very strategic and is the backbone of the economy. Without public transportation, people cannot go to work. Basically, the economy stops. So it's a necessity, but it's a -- they are regulators. They're not really operators. So whenever they invest in mass transit, whenever they try to build it, it's extremely subsidized. It deteriorates in health very quickly. They're not really able to maintain it, and it goes back to square one. Just to give you some examples, Cairo, for example, spends around $200 million per year just running the public buses, right? They generate $16 million, 1-6 million dollars of revenue, and they spend $206 million running the public bus. Just to put this in perspective, the entire R&D budget for the country is $80 million, right? So imagine that, that amount of money can actually be saved and can be rather invested in education, health care, so on and so forth. Things that are much more pressing, things that are much more of a priority. Let alone actually that while all of these massive investments for a City like Cairo, for example, they're quite massive. They still -- they have one of the lowest number of buses per million people, right? So 231 buses for every million people, transporting around 3 million people a day. So just the entire city of Cairo, which is 25 million people, they have 3,000 buses, pretty much, right? So what we wanted to do, you have basically a demand that's kind of torn apart between very expensive online transportation, very unreliable mass transit. You have supply, which is -- has 2 major problems. One is inefficiency. This asset class works only twice a day. Let's say they work with a school. They work with a university. They work with a 2 company. They take employees to work. They bring them back, and that's it for the rest of the day. They basically -- they're completely empty. So the utilization is around 2 hours, 3 hours per day for the entire day. So that's just high demand. And for years, you have a government that's really not able to invest in building public transportation and doesn't really have the capacity neither the expertise to run this efficiently, right? So what we wanted to do is, it seems like a perfect combination, right? We're solving a problem for all the stakeholders. We wanted to build a parallel mass transit system, bus that runs on 3 key value propositions: one is affordability, offering a service that's up to 80% more affordable than taking an Uber; two is reliability. It comes on time every time. If we tell you have a trip, you definitely have a trip; and three is convenience. It's a nice bus. There's AC. You can pay by cash and card. And that meant that we're actually -- if you think about it, when Uber came, they were the first -- not the first ones, but they were the ones who basically commercialized drive at a tap of a button, in a way. But they were really great at solving the medium-range commute, any commute that's, let's say, 11 to 15 kilometers. Because anything less than that, the Uber was too expensive because you have to pay a minimum fare. And anything that's more than that, it's also too expensive because it keeps counting per minute, per hour, per minute per kilometer et cetera, et cetera. And then there came the scooters -- although I haven't studied that. Dany, I know you’re an investor at [ Mighty ] just -- I'll tell you my take. They solved great for the very short commute, right? Commute, that's 1 to 5 kilometers. And that meant that they offered a very good service for people who walk in the park, for people who want to commute short distances, et cetera, et cetera. But imagine taking a scooter from -- basically for 20 kilometers. It's pretty much impossible. And imagine, let alone in emerging markets that have very broken infrastructure, very broken rollings. This is just not possible, right? So if you think about it for the long haul commute, any compute that, let's say, very far in kilometers, the biggest revolution that came on to it was Wi-Fi in the bus. There has been never anyone who thought about how do we rebuild mass transit, how do we rethink mass transit. And that meant a great opportunity for us and for emerging markets because, in a way, we can leapfrog the nations that we work in. Because if you think about -- let's take the financial industry. Think about M-Pesa in Kenya, for example. What M-Pesa did in Kenya is they've taken a very cash-driven society, pre M-Pesa, and they've managed to skip at the car data. They completely skip the car data and went straight to mobile money. And that means that for us, and in emerging markets, we have exactly the same opportunity for emerging markets, right? How can we allow governments to basically not any more build public transportation but actually go straight from very, very unreliable way, inconvenient way, inhumane mass transit to world-class, very privatized, very profitable mass transit systems that delivers on affordability, convenience and reliability, that can be taxed, that the government can actually make money out rather than invest in, right? And we found our sweet spot from that point was middle class commuters, right? Majority of a city like Cairo, for example, was middle class, people who want to go to work, who are university students, employees, especially women, whether you work in a corporate, whether you go to school, whether you want to go on the weekend, going to go out, all of those young millennials who are aspirational to find to commute who didn't have the stigma of using -- there's a stigma. Again, it's using public transportation in a city like Cairo. All of these millennials or state coming out of the revolution we're ready kind of to question the status quo, adopt new things, et cetera, et cetera. And then SWVL of was kind of one. We started 3 years ago now. We've grown quite nicely. So we -- just to give you some perspective, we do hundreds of thousands of bookings every day. A booking press is a seat book in a bus. We have thousands of buses running across the road. So we want to know the biggest fleet providers across the entire world. We have hundreds of thousands of customers taking SWVL every day, every week, every month. So we've grown quite nicely. We are now actually the biggest in the bus space globally. We -- other players came. I think we -- I don't want to take credit for it, but I think we've shed some light in the industry. But -- so players such as Careem and Uber launched buses for the first time globally in Cairo, actually, because we've taken a massive market share from both players. And Cairo is one of the most of the biggest cities, as Dany mentioned, for Uber globally. So they kind of launched the buses around 2 years ago. Other players such as Via, Shuttle, Ola, et cetera, et cetera. Luckily, we've outgrown everyone. We've managed. We're now the biggest in the bus space globally across most of -- almost every metric, except revenue because revenue -- we're in emerging markets, so it charged with pounds and shillings and e-cards versus U.S. dollars and euros. Running public transportation is something that's extremely -- it's not as straightforward as running cars, in general. It's something that, imagine you are trying to give a customer a promise that you're going to show up on time in a city like Cairo where the average commute is 1.5 hours, running -- a scale that promise over thousands of buses running at the same time, with this extreme on reliability, where the driver can switch off his phone 10 minutes before the trip and not show up. This is a massive challenge to solve for. Imagine actually even you have the chance to design a public transport network across these markets, basically, the extremely complex markets. And you have to design all of this network to maximize for utilization, maximize for efficiency, to minimize the depth kilometers, to maximize the efficiency of the vehicles, to increase the marketplace efficiency. We have seen -- we were looking actually for some figures on -- what we came up with something called effective utilization of the asset is asset class, the buses. And we found out that actually, there's something called a tractor. So there are 3 metrics, and I'll walk you through. There's utilization, which is number of seats booked on a bus. There's a load factor, which is number of monetized kilometers, so a number of paid-for kilometers of a total travel business. And then there is effective -- there is asset utilization, hour utilization, which is how many hours per day does the vehicle actually work. And in the industry that we're in, before SWVL, the effective -- if you multiply all of these factors together, the effective utilization of this asset class was around 8%. So imagine all of the buses around the world are utilized at 8% of their potential, right? So imagine if you can take this 8 -- SWVL now with that 17% -- so imagine -- and we're making money. So imagine if you take that 17% to even 50%, right? They fit the total of all of these utilizations. That's a massive, massive margin. That's an entire revolution to this space. Imagine, overnight, you don't need half of the number of buses around the world, basically. So it's actually a revolution to the entire bus manufacturing industry. Yes. We, as I mentioned, started 3 years ago. We raised $92 million so far by -- luckily, we have Beco, Vostok as our biggest investors. We have a few of the biggest investors in the region. We have investors from all the way from the U.S., all the way to China. So we've gathered kind of quite a great set of investors who are quite lucky to have. Just -- I'm going to speed up. COVID -- and COVID -- all of this then COVID happened. And COVID, for us, was a massive opportunity, actually. I think we benefited from COVID the most probably everywhere. So it was actually quite great for us that it happened. Luckily, I think we've built a culture at SWVL that everyone is a very strong problem solver. So everyone in the business team, everyone can code, basically. Across the company, everyone can code. So that meant that when COVID came, we, of course, when a company grows that fast, the comp hinges every month, and you prioritize growth over efficiency. But when COVID hit, that meant that given that we are a highly, highly variable cost kind of business, we're able to bring our costs to 20% of what you used to burn in a matter of a week, week and a half. Not only that, but go very quickly from the defense mode to the offense mode on how do we actually use this as a massive opportunity. So we sat down, and we -- this was pretty much the only time where we've got like a one of a -- once in a lifetime chance to work on efficiency. There was no growth to pursue anymore, and there was only efficiency at that time. And luckily, as I mentioned, because our team -- everyone is a very, very -- is a problem solver. Everyone can code. That meant that you have 500 people who are extremely capable, who you can throw them at any problem, and you know that they can -- whatever -- whatever the domain is, and you know they can solve for it, right? So we sat down. We structured every -- we actually outlined every single problem we have inside the company, 100 problems. We -- let's say, we are not measuring the supply acquisition funnel in Kenya. We're not where we need to kind of increase the LTV of x by x, so on and so forth. So many kind of problems, around 100. And we started creating these cross countries squads, people, one person from Egypt, one person from Kenya, one person from Pakistan, one person from Dubai. And these cross country squads, we started assigning them on a -- what -- under single credit owners, basically. We started assigning them these sets of problems, and they started solving for them. We stayed for 3 months at a very, very minimal burn, and now we bounce back. We're -- this month, we're at almost at 70% of pre-COVID levels than a couple of months, 2.5 months. We are growing at 40% month-to-month. So we expect to be fully recovered in the next couple of months. And hopefully, the target -- I just came back from our yearly summit. Our plan is by end of 2021 is to be the second but the fastest Unicorn in the Middle East and China. Yes. We're going -- basically, what happened is we've managed to take a deeper look at our business and break it down into 3 main categories, particularly what we call retail, which is purely going for after the normal consumer, the ones I've mentioned so far. But then there is this massive space, which we call transfer of service, which is how do we run SWVL for anyone for corporates, for schools but also governments, right? Governments that if a country like Egypt, basically, has 200 buses, has to spend $200 million per year. With our technology, we can bring that to $50 million or $100 million, right? So imagine a 50% or 75% cost saving for the country of what they spend on our line items such as transportation. It's quite revolution for that. So not only on the OpEx level but also on the CapEx level. I imagine if you -- overnight, you can actually let go of these thousands of buses because you have a much better planned network. You have much more efficient planning that in the end, you can let go of all of this CapEx you have to run. So we have the transfer service, and we have the intercity, which is connecting cities together, which we've seen already a 300% -- 350% growth from pre-COVID levels, actually. So now that meant that we have a very strong value proposition across every category and so on. And that meant that our original approach of going to every country, expanding the 3 categories is -- which was limiting us to emerging markets is not any longer needed, right? Because every category of its own has a very, very strong value proposition. So now we're going after world domination, in a way, where we're going through a very category-driven expansion, where retail can be focused on cities like Mexico City, cities like São Paulo, cities like Nairobi, Cairo, Karachi, so on and so forth. But the transport as a service can be expanded into Latin America. It can be expanded in the U.S., Australia, so on and so forth. And the intercity can be in a continent like Europe, for example, where there's fixed bus, for example. We're as big as fixed bus in terms of volumes, much more, much bigger in terms of buses, but they do 10x more revenue because of the ticket size. In terms of technology, we're very, very well advanced. So there's absolutely no reason why we shouldn't compete. Yes. That's it from me. Ready for any questions.

Fantastic. Thank you so much, Mostafa. And super impressive company, I must say. Björn, do you want to kick us off with questions? And if there's any questions from the audience, you know how to do it by now, that you punch them into chat through Q&A, and we'll read them up.

Yes. Maybe first question on potential expansion here on the slide that's showing right now. We have a few -- are there anyone that's extra prioritized? Or I guess, and I'll put it another way, in like 12 months' time, how many markets would you expect to be compared to today's 3?

Hello. I don't want to overpromise, but we aim to -- we're trying to get to a pace where we launch a city per week.

That's good. And also, maybe you could elaborate a bit on like what's the key characteristics of the cities you want to enter into? Is it -- do they need to be a minimum certain size? Or what kind of dynamics need to be present before you look at attractive market?

Yes. Yes, yes. So every category has its own characteristics, right? We have the retail category, which is focusing on emerging markets. Mega cities, let's say, have 10 million, 15 million-plus citizens. And then there is the transfer of service, which is pretty much applicable everywhere, right? This is caters for corporates, schools and governments. So this is pretty much everywhere this can work. And then there's intercity transport and intercountry transport, which also almost everywhere economic. It's very strong in Latin America, very strong in Australia, very strong in Europe, right? So those are the continents that we're focusing on. As of the next couple of months, we already -- actually now we just launched the UAE. We're launching Jordan next month. We're aiming that by January, we're going to be across the entire bulk. So we're going to have Qatar, Bahrain, Kuwait, Saudi as well as UAE and Jordan. Those are kind of the Gulf expansion, goes within by January, February, max. And then we're getting the next -- what we're actually hiring for now is LatAm. So we're launching Mexico City. We're launching Brazil. And hopefully, after that, we're looking at Australia and Europe. Those are the 2 countries that we want to get to. Yes.

Great. So we have a question from the audience, which reads like this. Could you elaborate on your technological optimization advantage versus other operators? What differentiates you?

So actually many things. It's a good question. So there are 2 main things, right? There's a network. You have a massive network, right? Why is this super hard to do different from, let's say, ride hailing, is that ride hailing is a very straightforward marketplace, right? You go once you have supply and demand in the same place and you have a 5-minute ETA. 5 minutes is kind of the magic number because this is where most the demand is far, where demand grows exponentially for idling services. As long as you have cars and, at the same -- within a 5-minute distance, you're good to go, right? You have a very healthy marketplace that can grow exponentially. That's what I tell you. For buses, there's a very strong added element, which is the network, right? You have a network in between. Only if you have a route that's at a good working distance, right? At exactly the right time because you have to go to work, right? So you have a commitment -- a time commitment. And at the same -- at a good price. Only when you have those 3 factors, you can take it out, right? You can take a bus going from A to B. Else, even if it's for free, it's irrelevant, right? So if I want to be at work at 10:00 a.m. but there's a bus for free and will take me there at 11:00 a.m., I will not take it. It's completely irrelevant for me, even if it's for free because it's just -- I have to be at work at 10:00 a.m., right? So now you have a very complex network, right? You have to, one, plan this network. How do -- you have thousands of buses. So this is a very -- an extremely difficult optimization problem. You want to go -- you want to basically -- you're optimizing between several things. You want to -- you want the customers who work the least distance possible. And you want the driver to take a trip from the closest location to a zone. And you want -- let's say, if he's going to do 4 trips a day, the bus on SWVL, you want him to start every trip that he ends, starts the next trip from when he ended, so to minimize all of the inefficiencies in between. And you want him, at the same time, to end his full ride plan, let's say, where he started, right? Now, okay? So that's one. So now let's dig this a bit more. So you have a demand that you're trying to map against. You have a network that you're trying to optimize how this flow across of the bus across -- how do you make it one continuous trip throughout the day, right? Because it's a cost function, right? Any extra plummet is an inefficiency. And you have these plans. And then you have a set of captains who live across the city or you're trying to -- whenever they sign up, you were trying to give it exactly the right plan that works for that person that minimizes he's from home to work kind of distance and from work to home distance. Okay? That's one, okay? Two, now we have this network design inside the network itself. Every day, there's demand. There's a certain predictability in demand, but the management -- there's a certain demand pattern. There is daily seasonality, right? For us, Sunday, for example, is a week day. So Sunday is the highest day of the week, and Thursday is the lowest day of the week, right? So how do you throw out while you can plan very well a fixed route and with a high degree of accuracy. But this -- the commuter demand is not necessarily the same every day. So how do you maximize the utilization? You have a fixed cost anyway, right? The bus as long it's going from A to B, you're going to pay for it. So it's a good and a bad thing. It's a good thing because if you're able to actually pay for it, if you're able to achieve that break in utilization, the margin is in statements, all yours. It's 40%. It can go up to 40%, 50%. But that means also if you run below the utilization -- the break in utilization levels, you burn money, right? So how do you -- so now how do you dynamically, while the bus is going from A to B still, how do you dynamically move it across this, let's say, 30-kilometer route to maximize demand? One. Why keeping the customer promise? Any customer who is booking across the south, you're giving them a promise. You're telling them I'm going to show up at 8, and I'm going to drive you at 9, and you're going to get to work at 9. So we're trying to solve this very computationally heavy, very expensive problem, real type across thousands of routes, across emerging markets that are extremely unreliable, right? So that's 2. Three is now, you have a set of users. Those are price-sensitive users, right, because they are commuters in emerging markets who are mostly middle class, right? Now this price-sensitive user, you want to price to him exactly what he can pay, not what he wants to pay, what he can pay. that so means that pricing is a super difficult problem to solve here. Now you can -- if you price too low, you cannot breakeven. If you price too high, you will lose money because you will run below utilization levels, and nobody will take your service, right? So how can you price every seat in the bus at a different price point to maximize the revenue of the bill. So take airlines as an example. How do airlines manage their pricing? It's a function, basically. If I book so early, price, there's an early-bird pricing. Pricing keeps increasing and then it starts going down. How can I, every hour, basically, know the probability to achieve a certain bus utilization, and then every hour run this across the entire network, see what actually bus utilization have achieved. And they cannot have a pricing action, whether to increase price, or reduce price because either it can be leaving money on the table or either it can be actually burning money. That's a very fine balance, right? At every hour at every bus at every moment across the entire network. So it's a very complex pricing mechanism, right? Fourth is the promise bit of it, which is -- all of that. You're in emerging markets as well, which are extremely unreliable, right? The President can be passing today from A to B, and they can shut down the entire city with end users go. And you have to -- in the end, you're promising a customer waiting on the street who you have to show up for. So do you have a certain set of drivers or captains who -- you have no commitment. Again, they can switch off their phone and not show up. How do you manage this very complex operation real time, right? For us, we have the same -- we have actually more number of buses than the kind of transport authority. They have 30,000 employees. For us, the entire company is 500 people, right? And we have more buses than they have, right? And we can run Cairo, for example, with 30, 40 people with the same number of buses, right, that the Cairo Transport Authority does. This is like to walk you through some of the optimization problems that we have to solve more. They are much more, but just for the sake of time and wrap up here.

Super. Thank you. And to follow-up on that last part, a bit more basic question from one participant in the audience. Could you elaborate a bit more on the supply side, who owns the buses, how design supplier to the service?

So it's -- basically, we never own anything, right? We -- in these markets, as I mentioned, these buses, this asset class was suffering from 2 main problems. One is inefficiency. Pre-SWVL, they were working on me twice a day. And for the rest of the day, they just sit around not doing anything, right? This is pretty much empty. And the second thing is seasonality. A lot of them are work -- or traditionally have worked with very seasonal businesses. They work with either schools, which work 8 months a year, right, or they work with 2 companies, which works, let's say, 6 months a year, all the work with corporates, which is a bit more stable. But for them, they just do 2 trips a day, so it's an extremely inefficient operation, right? So now we came to these guys, and we said, okay, you used to get GBP 100 per trip from this corporate. I'm not going to pay you GBP 100. I'm going to pay you 60. But instead of you doing 2 rides a day only, I'm going to let you do 6. So on an aggregate amount, you're making a lot more money with no opportunity cost. On a price per ride, I'm paying you less, yes. But in aggregate, you're making a lot more money, right? You're utilizing your assets much, much more. How do I acquire my supply? It's several channels. So we have these opportunity centers across the city. And in a way, we have these very massive kind of acquisition teams that gone round to different governments that go to different parts of the town, basically, that kind of builds that fleet capacity. We have several channels. We have actually many channels. We have a channel, which we call [ Tubido ], which is basically a very turbo, which is a sales channel. We try to make every bus driver or every actually one in our network a salesperson, they work on commission, to get us drivers. We have referred programs. We have our own acquisition teams that go on the streets. We go even -- we do a lot more gorilla kind of approaches where we go to the schools and sign up the buses that they work with or their corporates, et cetera, et cetera. So we go a bit unorthodox on how we acquire buses. And we build kind of this massive fleet. Yes.

So another question here is how long does it take to gather enough data to optimize sufficiently if you're number one? And just, number two, have any chance to?

Yes. So actually -- so the first question depends on the city growth, right? Of course, the better -- the good thing is that it just gets better and better with -- you can launch with a very fair set of data. We use search data, for example, as a starting point. So while people download the app, they start searching. We start -- we already -- we have our own tools, basically, that cluster that and tells us which routes that we should drive basically. And we start building through that as the system kind of -- as the demand grows and we build more data, it just gets more and more efficient. Does the second mover have a chance? Absolutely not, because we've seen it, for example, with Careem. For every booking that we had to do, Careem, we were burning $1, and they were burning $7. And that's because it's a vicious cycle, right? To get to that level of utilization levels, you're paying for supply regardless. To get to that level of utilization, it's extremely a tough problem to solve that nobody has solved before. We're already actually filing for patents for the technologies that we have built so far. So it's an extremely though problem to solve. It requires a lot of learning. The pricing technology that we are basically -- we've taken that -- what have -- what airlines and what scooters across the world have done, and we've created it for buses, basically, for the first time. So that means that for every dollar that we have to spend, any second or even if there's some more person before as we started something like SWVL in any country, with the level of efficiency that we operate with, it's very hard to match. So that means that we can very, very quickly blow any competition away because for every dollar that we need to spend, to match the same efficiency, you need to spend $10. So it's super hard for anyone to compete.

Thanks. And another question here from one of the audience is in this expansion that we're looking for over the next year and for how long will it take essentially to breakeven in a new market and now how capital-intense will it be to go and pursue, Mexico per city?

Yes. So the expansion that we're prioritizing is the task expansion and the intercity expansion. Task expansion was profitable from day 1 because you work with entities, B2B or B2G entities who pay you. You're profitable from day 1 with very, very high margins. It's very rare to see a business that can make this margin on $100,000 and $1 million, and $100 million is the same margin, right? You're making great margins from day 1 with very, very skeletal teams, right, very small teams that can operate this business because it's highly automated and just start printing cash, in a way. So these are the task expansions. For the intercity expansions, these are very high-margin business, requires a bit of investment. But the margin there, we're seeing, for example, in a city like Cairo, which is the ticket there is even is less than a lot of markets that we can go to. It's stated to 40%, even sometimes gets to 50%. And that margin, you can pretty much be profitable on very, very quickly. And let's say, you add more buses, you get to profitable, then you add the next bus and the next bus and the next bus. Retail is the one that requires a bit of investment, and this is kind of the very strong growth massive opportunity, basically. A few of them are massive opportunities, but the retailer, the mass -- is the massive kind of B2C opportunity. This requires a bit of investment. So we are prioritizing it, hopefully, after our subsequent trial. The existing markets will be very, very close to profitability anyway. So any future fund raise that we're doing is purely for growth, right? Very minimal of it will be spent in the existing markets.

I have a question for Mostafa.

Please.

Is that okay, guys?

Yes. Go ahead.

Mostafa, if the task is so exciting and so scalable and so high margin and so applicable to corporate and public and private transport, do you envisage like being at the core at pass business? And would you ever need to be an operator as well? I mean, I know that the -- being an operator has given you the level -- the extreme level of depth and granularity of being able to build out the most efficient pass solution. But what -- when do you think I don't need that anymore, and we want to go out and become a powerhouse?

Very good question, Dany. And there are 2 things. One is the B2C business is our business where we're building this technology, right? If we could -- if we didn't build that massive size fleets running across the world, it's impossible to build that technology, right? Like it's very, very hard, right? You cannot solve this problem. And that's why, as I was saying, like we're solving this problem for the first time at that scale. And we are actually filing patents on how we're solving it, because nobody had that massive leads except governments, and governments are not really very incentivized to invest in -- especially in emerging markets that suffer from that, to invest in solving this problem to that extent. So that's one. Two is the beauty of this is that the more you're able to cross utilize your fleet across the 3 categories, the more the fleet becomes profitable. Because now the bus, it's -- we've agreed that there's an effective utilization of assets, right? The more you're able to increase that effective utilization of asset by utilizing it across every day of the week across different types -- there are different peaks of demand, right? The demand of travel, for example, is the weekend where there's no commute. It's very supplement -- it supplements each other. The demand for schools is at 7:00 a.m. while the demand for call centers is 11:00 p.m., let's say, right? So how can you -- the more you're able to win these pockets of demand, the more you're able to utilize your fleet, the more you increase the effective utilization of the vehicle, the more the margins become -- the more you become a lot more efficient, and the margins increase.

Fantastic. Beautiful.

Yes. Maybe a final question. Looking at the average frequency of user, let's say, 1 of your mature markets in Cairo. The average user, do they use SWVL like every day? Or is it a few times a week or? Elaborate a bit.

So -- yes. Yes, yes. So we work pretty much for the week -- for the commuter demand, 22 days a month, basically. So they use us an average of 7x, and that's a great opportunity for us because our north starts to get them to use us 44x a month, right? How can we get that? That's -- all of that is a share of wallet that we we're targeting, that we're getting into that. And that's how you get into by a few things. One is building a very strong pricing technology, which is how do you get the right price. I'm a user. We actually traditionally, we look -- our businesses look at -- they have this breakdown of users, let's say, high-value, mid value, low value. And low-value are usually the most subsidized users, let's say. The way we look at it for if a low-value user is willing to pay me GBP 10, right? How can I actually -- you take that GBP 10 because I have a fleet anyway that's running anyway, as long as there's no opportunity cost, it is not taking the place of any other person that bus, it's actually money that I'm beating on the table, right? So how do I price for every user, as I mentioned, and cross it with which bus is going to take and what would be the utilization of that bus and given exactly the right price point that I will not cannibalize myself and, at the same time, take that money that he's willing to pay, right? So pricing a bit of things is very important. And the second is how do you log them -- we just launched, for example, right before COVID and when COVID hit, we couldn't escape. But packages, for example, how can we move everyone from a ride per ride to a month per month, right, buying what we -- like a subscription, right, that you're buying the 30 trips a month, right? How do I price even that package for every user, depends on how much he can pay, right? So that's the way we look at it. Yes.

Super. Thank you very much.

I think there's like -- there's one final sort of, what do you call it, not a question, a comment, suggestion, which reads, Mostafa, please don't sell the company ever. Keep that promise.

Thank you. I promise you. I promise you. We won't IPO.

A family in Italy. But...

Ability to keep them private as much as -- as long as possible. We're going to be there for his follow-ons.

Yes. Guys, thank you so much for joining on a Friday from Cairo and Dubai. It's fantastic. [Foreign Language] And everyone there, thank you for joining and listening in for the good questions, and it's been -- this has been fun. And thank you so much, everyone.

Thank you so much, guys, for your time. I'm truly honored. Thank you, guys. Take care. Bye.