With the booming market of start-ups, one that has caught the attention of social media in a span of two days after launching is ‘Swvl’ (pronounced: Swivel). We sat with Mustafa Kandil, one of the co-founders, and Ramy Khorshed, Co-founder of KBI Ventures, an investor in early stage start-ups, to know everything about Swvl.
How did the idea of Swvl start and when?
Mustafa: I was Careem Dubai’s market launcher. We had a growth meeting everyday to discuss all the numbers of the previous day, and one of the key elements of the meeting is the average trip value. In Egypt, the average trip value was 3-4 dollars and that’s the equivalent of 60-80 LE. Coming from Egypt, I knew the struggle if you’re a daily commuter. You either take the public transportation which is very unreliable but very affordable, use Careem and Uber which are quite expensive with their surge pricing policy or take your own car which is stressful. We wanted to create something in between to fill in this gap since you either pay 4 dollars per trip or 2 cents; there is nothing in between. I wanted to create something that caters for affordability, reliability and convenience.
We started three months ago. Ahmed Sabbah, Mahmoud Nouh and I all quit our jobs on the 25th of February, 2017. It’s been a month, and we’ve already become the first trending app on Apple Store on our second day. Now, we are gearing up a big investment. We are talking to a few national and international investors and planning by the end of the year to be covering all Cairo and expand to Alexandria as well. So far, we have more than 5000 downloads and 4000 signups.
Ramy: And the thing is, this came with almost zero marketing costs. The idea behind the first week was to have an MVP just to go out and test our product, and it really blew up in a viral way. With the first users who experienced Swvl, we already had posts circulating on social media about their fantastic and phenomenal experience. And that is a testament of the gap that exists between public transportation and private vehicles which are super expensive.
What’s your background?
Mustafa: I’m a Petroleum Engineer. I joined AUC when I was only 16. I interned at Schlumberger and then found out that the corporate life wasn’t for me. Luckily, I got accepted into Google Internship, where they’ve selected 30 people from Middle East, Africa and Europe. It was really eye opening; I came back and found out about this company called Rocket Internet. They basically clone already proven business models in the US and scale it all over the world, and it either goes public or they sell it to these companies. I joined Rocket and you basically start a company within a company. I went to the Philippines and started a company, then scaled it to three cities in the Philippines. Then came back for my last semester at AUC, worked as a teaching assistant, then joined P&G and I was finally certain that the corporate life wasn’t for me.
Ramy: I graduated from Dukes University in the US. I was studying Economics and Information Science. To sum up my past experience in entrepreneurship, I was working with Flat 6 Labs in their first year of operations in 2011. Being around growing start-ups and seeing the opportunities in Egypt, I was still deciding whether to come back or stay in the US. During junior and senior year of collage, I ended up working with Future Energy Corporation, a developer of renewable infrastructure which is led by a high caliber team of MIT engineers.
What’s the concept of Swvl?
Ramy: For decades, people have globally assumed that public transportation is provided by the government. It’s always been a loss making sector; a benchmarking study by McKenzie revealed that most public transportation recovers about 70% of the cost of the trip. As a result, you end up having systems that aren’t being optimized for quality because of political regulations. Governments don’t have the luxury of the surge prices like Uber and Careem to match the supply and demand. What we are looking to do through Swvl is to actually re-engineer and re-model public transportation starting with emerging markets, and one of the worst public transportation systems in the world is here. So if you are able to restructure it and apply affordable convenient and reliable transportation in country like Egypt in a city like Cairo for millions of inhabitants, you have set a global case study.
What’s the reason behind the name ‘Swvl’?
Mustafa: Swivel is the coupling effect; we are solving two problems. One is the demand problem which is what we all suffer from on daily basis, and the second is the supply problem. The buses of the tourism companies which have no business recently are unutilised; it’s an asset that depreciates with no value. Swvl basically emerges from this double sided problem.
So how do we Swvl?
Mustafa: You select your location and destination and then your nearest station and your drop off station will appear as well. Once you choose your station, the station’s exact location will appear along with the route and duration. You will add your credit card and time and get a boarding pass which includes your name, pick-up, drop off…etc. Before your trip starts, a tracking option is visible for you, so you will be able to track the bus itself including live updates. At the moment, the payment method is credit card only but throughout the next couple of months, we will include four other payment options including wallets, cash on delivery, and many more.
We are actually sponsoring Sandbox; this is our first pilot for interstate transportation to Gouna in May. After that, we will be launching in Sahel for this summer.
What are the difficulties you’ve faced?
Mustafa: There are so many problems, but the main one was the very underdeveloped ecosystem in Egypt. I feel bad for VCs and investors, and unfortunately, the caliber of entrepreneur starting their own company isn’t usually that high. They feel kind of scared to invest in any business, because there is 99% chance they will not see their money back. What happens is, to hedge their investments, they try to invest so little in so many companies. This leads the entrepreneur to a vicious cycle. We don’t have enough money to start their business and kick it off, and at the same time, the investors are waiting for their returns. A business has to grow and increase in value. The first challenge is fundraising. Second is finding the right people. For us, if you want to hire someone who will really take your business to the next level, it is very hard. You will have to search endlessly, because all the talents flee the country and there is a brain drain here. It all goes back to the fundraising, because start-ups don’t have the money to lure these people.
What’s your ultimate vision for Swvl?
Mustafa: What we want to do is to be the operating system of transportation, so we are more interested in developing the technology that organizes the transportation and webs the whole network together. We want to you to be able to go to Korneish El Nile, Maadi, be dropped at the station there, then take the Nile Taxi to the next end of town, take the metro and go to whatever your next destination is. We want to create this operation system of the transportation that provides you with the most efficient, most reliable and most convenient route for you.
Ramy: The entire system of transportation in Egypt and globally is segmented separately. For example, the metro is functioning regardless of anything. It is very governmentally structured; it wasn’t scaled in sort of a start-up tech way where every dollar matters and every percentage in terms of efficiency is important so it ends up being a loss system. A certain percentage of the governmental taxes collected from us goes into public transportation; there is no real incentive there for this loss to be improved by a very tech enabled and intelligent system.
Mustafa finally adds: Bottom-line is, we want to do is bring the London transportation systems to Egypt!