How the founder of Dubai's propertyfinder.ae wrestled his company back from NewsCorp
Last week, propertyfinder.ae solidified its position as a
startup to watch, closing a round of series A funding led by
BECO Capital and various
heavyweights from Turkey, Asia, Dubai, and Silicon Valley.
Total investment in the Dubai-based real estate portal is
rumored to be in the solid single digit millions, with BECO rumored
to have put in at least $1 to 2 million (unconfirmed).
Those joining the round include Evren Ucok, co-founder of Turkish
successes Trendyol and Peak Games, Patrick Grove and Shaun Di
Gregorio of iProperty Group, a leading property portal in Asia,
Mustafa Abdel-Wadood, CEO at Abraaj Capital, and a few unnamed
investors in California, all of whom will help the
startup expand from the UAE into the Arab world and Africa,
says founder and CEO Michael Lahyani. [Disclosure: Wamda
was launched by Abraaj Capital].
Yet the startup's path to success has hardly been easy; four
years ago, it was on the brink of shutting down.
Lahyani wouldn’t be where he is today if he hadn’t wrestled it out
of the hands of REA Group, an Australian real estate advertising
company owned by a subsidiary of NewsCorp, the multinational media
company run by Rupert Murdoch.
When he first launched the startup in 2007, it was a freely
distributed print magazine called AlBabWorld. At the time, it
struggled to compete with Gulf News classifieds. “Gulf News had ad
clients locked in to exclusivity agreements, by offering discounts
as high as 92%,” Lahyani explains. “They started calling those
clients and pointing out that they couldn’t advertise with us, or
they would lose their deals.”
Just as AlBabWorld headed for closure, however, REA Group came
calling. To the real estate giant, which was expanding beyond the
massive success of its site realestate.com.au, AlBabWorld looked
like a great fit in the Middle East.
The group ended up acquiring 51% of the startup for a reported $1 million, later
investing another $2.1 million into it. “They saved us from
bankruptcy,” Lahyani admits.
AlBabWorld then relaunched as propertyfinder.ae, tackling the
online space, where offline ad contracts didn’t apply. Over the
next two years, Lahyani and his team continued to run the portal,
which monetized by charging subscription fees. “We learned from the
best,” he says.
"The recession was good to us"
In 2009, the global financial crisis hit, and REA Group wanted to
pull out of Dubai. Propertyfinder.ae wasn’t yet profitable, but its
owners demanded: break even by the end of the year or else.
“I would have had to fire half of my team to do that,” Lahyani
explains. “At the time, I thought that was the wrong decision.”
He also knew that Dubai would recover. REA didn’t. “They didn’t
understand Dubai. They dismissed it as ‘just a bunch of Arabs
spending money,’” he quips.
Admittedly, he didn't try too hard to convince them of the
opportunity; by agreeing that it was a doomed venture, Lahyani was
able to buy back 51% equity for less than the amount REA Group had
initially paid him for it, and retain his team.
Then, he describes, the recession began working in their favor.
“The beauty of the crisis was that agents suddenly didn't have the
revenue to advertise on print, so online became the answer. Clients
realized that we could provide leads at a cheaper cost than
print.”
A year later, in 2010, the company broke even.
That sense of loyalty has helped the team band together and execute
to this day, says Lahyani. “When we came out of that moment of
crisis, everyone was really connected. We were like a family.
Today, there are still a lot of people who were with me from the
beginning, including my partner, Renan Bourdeau.”
After a successful venture into the Qatari market, which was
“small” and “not too scary,” Lahyani applies the same optimism he
had during the economic recession to Egypt. “Despite what everyone
thinks, property is booming in Egypt. The pound is dropping, so
it's becoming more affordable for expats, and locals are also
putting their money into real estate.”
In Egypt, propertyfinder.ae has also hired an ex-Rocket Internet
MD, Youssef Zikri, who ran Mizado before its
abrupt closure, to execute swiftly in the massive market. By
the end of the year, it hopes to have launched in 9 markets.
“It’s an execution game,” Lahyani explains. An ex-Rocket employee
knows that as well as anyone, he says. “It’s just an execution
style that you have to adopt.”
[photo © Yossi art, from the propertyfinder.ae
Facebook
site, of Dany Farha of BECO Capital
and Michael Lahyani and Renan
Bourdeau of propertyfinder.ae]