A former English literature teacher and a telecoms guy walk into a coffee shop... The punch line is that a year later they sell their e-commerce start-up in the first M&A deal in this space in the short history of Middle Eastern e-business.
GoNabit was born out of recognizing both opportunities and hurdles. In December 2009, I was tracking a number of businesses both successful and fledgling in other regions, looking for inspiration to start my first business. My recent experience was in the online recruitment space so I was focused on doing something online. I looked deeply into the business models of many different e-businesses, but seeing the model of Groupon and later LivingSocial gaining major traction in North America, I took to the seeming simplicity of implementation, clear business model and short timeline to launch. I also recognized that since the product that we would be delivering was via email, I could avoid the issues around poor regional address systems and the expense of courier companies.
After a week or so of business modeling and some discussions with friends and potential investors, I came home and told my pregnant wife that I was quitting my job, liquidating our savings, and starting a company. That talk went surprisingly well. After some great advice and some serious discussion, she handed me a virtual pair of running shoes and told me to start running, and that I'd better make it work.
While the market in 2009 was still struggling to get back on track, I managed to attract investors, which was a great validation of my ability and the potential in the business, and this gave me the impetus to move forward. What I learned is that committed investment - even from good friends - is still someone else's money and getting to signed documents probably requires a few hard meetings. And maybe even a difficult conversation or two... or three.
Before the money came in, what I needed more was a committed partner to share the load. The most important decision any start-up entrepreneur makes is finding a partner with as much commitment to the business and passion for entrepreneurship as you have. Sohrab Jahanbani came into my life and after only four hours together we were partners. He had been involved in several start-ups before, and he was ready to commit 100% to the business. We didn't share the same skill and experience set, but we made equal claims to being the hardest working and most passionate members of the partnership.
The main areas that we focused on were how we did what we were doing, and racing to quality and scale. Before we ever hired a single person, we had laid out our vision for how we wanted to operate. We created a set of six values that drove our actions and decision-making. These values ended up being very similar to those of LivingSocial, and this was one of the key decision-making criteria for us to favor their offer over others'. We walked away from business opportunities that didn't mesh with these values, we hired based on these values, we made them a part of the everyday dialog in the office, and we competed on the premise of these values. We wanted to be successful, we wanted to become the leading e-commerce company in the Middle East, but we also wanted to be able to come home at night and feel good about how we were growing GoNabit. Our values helped us find ourselves - eight months after running our first deal - with three term sheets for full or majority acquisition of GoNabit.
The acquisition process by LivingSocial, and likely the acquisition of any company by another, was strongly dictated by our path on the way in. Our capital raise felt like a one-way ticket, but the fact that we had bought the return-trip ticket from the start made all the difference. We had outlined how we would get back - how we would exit the business as shareholders, and what would happen when shareholders differed on which offer was best for the company. These shareholding documents were invaluable for providing the structure that got us to where we landed. We had a few more difficult conversations, but we all benefited from the sound shareholder rights and protections that we had collectively laid out from the outset. There is no replacement for doing it right on the way in.
You spend so much time head down and racing forward that the operations and the acquisition consume your time completely and without break. Throughout the entire process you are lucky to get a few brief moments to take in what you've achieved, to stand back, look around your office at the jobs you've created and the company you've built, and remember when it was only you and a spreadsheet.
It's a mistake to think that setting up an e-commerce business in the Middle East is (only) a sprint. It's a marathon, and you have to outlast as much as you need to continually out-compete. You race, you cherish any small chance for rest, but ultimately what brought us success was knowing where the finish line was, and focusing on landing each new step.
© Zawya 2012
