Mostafa Kandil, co-Founder and CEO of SWVL, talks to Law Today about establishing the start-up that is taking Egypt’s public transport sector by storm.
LT: What would you say is the need that SWVL is meeting in the market? What was the inspiration for you to seize on this opportunity?
MK: Even when I was at school and university, I really enjoyed the idea of building and growing something. Working at Careem, my role involved helping us to launch in cities around the Middle East, so I was intimately aware of the average fares of countries in the region. Egypt’s average fare of $3-4 was, I knew, quite a lot. Reflecting upon the slowdown in tourism in the country, and the fleets of buses that were underutilised, it occurred to me to combine the two elements to create a public transport service that would be both reliable and affordable. I left Careem and started working with my co-Founders to establish SWVL.
I have a strong belief that ideas are worthless if they are not combined with good execution, which fundamentally means speed. Though it may be difficult to consistently be efficient in Egypt, it is very important. We had our iOS launch on March 26th 2017 and our Android launch two weeks later; now we’re launching our cash payment system and after just four months we have 50,000 users.
I believe our impact so far has been notable, particularly because we are offering an efficient approach and solution to a problem within a very inefficient market. We are planning by the end of the year to have launched in Alexandria; next year we will launch in Pakistan and Jordan and probably another country in Africa.
In terms of our value proposition, the truth is that people in emerging markets are currently stuck between two options. On-demand transportation is reliable but expensive; public transportation is perceived in emerging markets as being for the non-privileged and is often cheap, but unsafe and unreliable. We aim to provide safe, reliable, accessible, comfortable public transportation for everyone.
LT: You have said that you want to bring the London transportation system to Egypt. How possible is this, and how are you going about solving the problems that will come with this?
MK: It’s insanely challenging. Working on public transportation and somehow being profitable sometimes seems like a contradiction in terms. I did aspire to establishing a system like that of London but now I am more ambitious. If we manage to build the right technology, I think we can do even better.
So we are investing a lot in the technology, hiring top-notch engineers who can build a system that will tell you very precisely when buses are arriving and leaving and offer inbuilt contingency plans for buses that do not arrive on time.
One aspect of doing this is gathering data to accurately predict the flow of traffic, so that we can mitigate any congestion-related issues. Another is creating a structure allowing us to anticipate if a problem is going to happen. In this sense, our system is completely different to on-demand transportation, where most fleets are manned by part-timer drivers who want to increase their income for just two-three hours per day. SWVL uses commercial vehicles and so of course all our drivers are full-timers; this can pose challenges when it comes to, for example, punctuality. So we track our Captains from the moment they wake up to the moment they arrive at work and if they are going to be delayed our system gives us an alert so we can take action.
LT: What would you say to people who argue that technology alone cannot solve the complications within Egypt’s transportation system?
MK: We undoubtedly regard technology as an enabling layer but we also have an army of people working behind it to make sure we are executing our activities well and learning every day.
A lot of what we are doing relates to social mindset and behaviour change. You will see that our branding is very much focused on the idea of making public transportation cool, so we particularly target under-35s, positioning ourselves as public transport for Millennials.
In our first week we offered one ride and now we have thousands of rides in operation, so our approach seems to be working. Timing has also been on our side: people are really facing a crunch because of the economic conditions, so we are offering a more affordable and equally convenient option. We are also trying to emphasise the fun of group travel; we have had party buses going to Sahel and we are planning an adventure bus that will take groups around Egypt.
LT: We know that Careem has invested in SWVL to help with expansion and diversification of the company. What are the benefits of the Careem-SWVL connection from a strategic and a practical perspective?
MK: It has helped us a lot and given us a lot of credibility; people are more ready to trust what we are doing because of our relationship with Careem. We view the people at Careem not just as partners; they are godfathers. We were fortunate to have quite a lot of choice when it came to investors but we specifically chose Careem because we wanted people that we could learn from.
As an entrepreneur, you need nothing more than mentorship and collaboration. I have been very fortunate to be mentored by some amazing people early in my career: Wael Amin of ITWorx, Ahmed El Alfi, Mudassir Sheikha, the people at Rocket Internet. Working with these leaders absolutely gave me the push to start my own initiative.
LT: From a legal standpoint, how is SWVL defined and regulated?
MK: What is interesting is that we are classified as a tech company, not a transportation company. We are simply enablers, connecting people, and the biggest assets we own are our laptops. Uber and Careem need to be regulated, but we employ people who work with commercial vehicles, so the legal framework was already there when we started. We are set up as an offshore LLC company and our licences are all tech related; nothing is very complicated.
LT: As a start-up that is really trying to expand a new market, what kinds of legal and regulatory challenges have you faced?
MK: We are not legal experts and we had a lot of help from legal counsel when we were first established. Recently we hired our own in-house counsel because we recognise the importance of getting all our legal processes absolutely right.
I was given the very valuable advice once that the difference between us and the people in Silicon Valley is that, from the moment they start their businesses, they build for a trillion dollar company. This is not something we usually do in Egypt. We want to be a trillion dollar company so we see it as crucial to start planning for that now. We have very ambitious plans and, in order to make sure they really work, we knew that we had to have our own legal backup.
When it comes to things such as our commercial registration, tax issues, ensuring that our company description, frameworks and our contracts with partners were right, we did not pay attention to these aspects very much at the beginning; we simply saw them as something we had to get done as quickly as possible. Now we are taking the time to really understand them properly.