Careem Türkiye

What did it do?

Careem, the Dubai-based ride-hailing start-up, entered Turkey in November 2016 with an airport transfer service in Istanbul. It initially offered chauffeur-driven cars and taxi hailing, then operated mainly with taxis in Istanbul, Bursa and Adana. Users could hail a taxi through the app and pay for rides with a saved card.

Why did it shut down?

In Turkey, ride-hailing apps were under pressure from the outset because of the backlash from taxi drivers and unclear regulation. In July 2018 Careem suspended its VIP transport service, run with 9+1 vehicles, until the legal position became clear. According to Menabytes, fines imposed on its drivers and on the company had led it to drop its private car service about a year after launch and operate with taxis only. Uber's acquisition in 2019 heightened taxi drivers' hostility, while the parent company entered a period focused on profitability. In January 2020 Careem left Turkey, citing the lack of a regulatory environment.

The story

Careem was founded in Dubai in 2012 by Mudassir Sheikha and Magnus Olsson and quickly became one of the leading ride-hailing apps in the Gulf region. When the company announced in the autumn of 2016 that it would enter Turkey, it was stepping into the eleventh country in which it operated. As Webrazzi reported, the service began in November 2016 with a transfer option at Istanbul's two airports. A month later Careem raised USD 350 million in a round led by Rakuten and Saudi Telecom, reaching a USD 1 billion valuation.

The company moved into urban rides in Istanbul in early 2017 and, at the end of that year, appointed Dilara Demir Kısakürek, who came from Turkcell, as general manager for Turkey. But ride-hailing in Turkey was never a comfortable space, because of the backlash from taxi drivers and unclear regulation. In July 2018 Careem suspended its VIP transport service, run with 9+1 vehicles, until the legal position became clear. According to Menabytes, fines imposed on its drivers and on the company had led it to drop its private car service about a year after launch, leaving it operating with taxis only in Istanbul.

In March 2019 Uber agreed to buy Careem for USD 3.1 billion. Careem continued under its own brand, but taxi drivers in Turkey did not warm to the merger. On 23 January 2020 the message to users was short and clear: because there were no regulatory conditions to provide a healthy environment for captains and customers, the service in Turkey would stop at midnight on 31 January. As Habertürk reported, the app was operating in Istanbul, Bursa and Adana at the time.

The same week the company also withdrew from Oman, bringing the number of countries it operated in down to 13. Its chief executive, Mudassir Sheikha, said that in the new period focused on profitability some markets would grow and others would shrink. That week, with Glovo having left Turkey a few days earlier, the ecosystem lost two foreign players at once. Careem Turkey's story shows how fragile it is to try to grow in one of the most regulation-sensitive sectors before the legal footing is in place.

Lessons for founders

• In a market that depends on regulation, do not build your growth plan before the legal footing is clear.
• In a model that pits you against incumbent operators, a route to accommodation with local stakeholders matters as much as the product.
• When a parent company turns to profitability after an acquisition, small and troubled markets are the first to be sacrificed.

Sources

1. Careem is leaving the Turkish market (Habertürk, 2020-01-23)
2. After Oman, Careem exits Turkey too (MENAbytes, 2020-01-23)
3. Dubai-based ride-hailing app Careem enters the Turkish market! (Webrazzi, 2016-10-31)
4. Careem, newly launched in Turkey, raises USD 350 million in new investment (Webrazzi, 2016-12-19)
5. Careem suspends VIP transport operations in Turkey (Sözcü, 2018-07-05)
6. Dilara Demir Kısakürek becomes Careem's general manager for Turkey (Webrazzi, 2017-11-28)

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