Capital Impact: UAE through the Lens of Pioneers: Property Finder & BECO Capital

[Music] good afternoon everyone let's have show of hands apart from the imatis who's been in the UAE living here since 2010 okay 10 15% how about since 2000 okay not bad all right so since we're going to talk about um our pioneering Endeavors in the UAE I mean I don't know how far we're going to go back we're not going to go back too far I think we're going to start with Michael would love to for you to tell the audience I know the story about what actually brought you here to the UAE and when you came sure good afternoon good morning everyone thank you for having us um so back in 2004 was the first time I actually stepped foot in this beautiful country in the UAE I grew up in in switzeland and I came here to visit a family member as most people do and it was quite obvious that something big was going to happen they were planning the Palm Island was being built actually my uncle that I came to visit was doing the foundation of the Palm Island so he brought me on the middle of this Palm Island and it really opened my eyes and thinking if the U we can deliver a fraction of the real estate project that they're working on this is going to be a pretty impressive real estate industry obviously it took quite some time to uh materialize but as I asked around a little bit about where are all these properties going to be rented out resold um Everybody pointed me to a newspaper and there was a supplement in a in in the major newspaper called golf news and that's how people would look for their apartment to rent buy sell and obviously the classification of of of of that product was pretty poor it was a pretty unpleasant user experience and it was quite obvious that it was ripe for disruption and uh and that there was room to create a better media and uh we started as of print but always had our eyes into moving the whole business into online and into becoming the leading real estate Marketplace uh here in the in the country so hold that thought I just going to connect the dots to my personal experience because I uh was a co-founder of a company called bait.com from 2000 to 2010 and the what you did to the real estate space we did to the job space people looking to find a job used to pick up the newspaper and apply through facts and so we digitized and brought that to the internet uh 24 years ago at least we started the journey 24 years years ago so I I totally identify so okay so we we know why you came to the UAE we know that you saw a big problem I think the Palm Island and the big reate development were um enough for you to see that there was going to be a future in this you started this is something actually I really would love to talk about because a lot of people ask me or or don't even ask me they just tell me and it drives me crazy uh and the insinuation is that property finder is a copycat and Karim copied Uber which is not true by the way but we're can have a different discussion on that uh some other time so can you just take us through the Journey of how you started building property finder in the print world and then what you did to basically pivot into the digital space I will tell you that when we were building the job site back then it wasn't it was more obvious that jobs classifi were a thing and were needed but when we first met my initial reaction was really uh a vertical real estate uh classified it wasn't obvious and the world leaders in the US and Australia and China um in Europe and the UK were themselves getting going they were building their the category themselves and so you built a category in this region and and particularly in the UA can you tell us about the the transition so in 2005 when we decided to start the business internet penetration in the region was sub 40% so if you wanted to deliver Roi to rais agents that would advertise on your Marketplace you needed another medium than just digital so we decided to start with with the print we got head-to-head with golf news which was a very powerful uh publisher and um and and when I say head-to head is they had locked in their advertisers in exclusivity agreement basically saying we'll give you 95% discount if you advertise exclusively with us I was a client that signed up to that exact same contract by the way to get the big discount from Gul news so two years in as we're grabbing market share golf News starts calling all our clients and say you can't advertise in this publication otherwise we're going to sue you and try to um uh trying to get you to pay proactively or retrospectively the discount that we've given you so that was really hard because you know I had decided to move here invest all my savings into building a business and then suddenly realizing that I was fighting against a massive you know dinosaur uh that it was going to be really really hard to uh to compete against and at the time there was you know no VC money there was no investor willing to back such a such a venture and so our only way to survive was to attract an investment from a global strategic and that's a group from Australia that came in called the Rea group and they're a subsidiary of News Corp and uh they run a very successful property portal in Australia called ry.com.au and they decided to come into the UAE and and back us and and invest into the company I had to give 51% of the company in 2007 to actually get that money that funding and um luckily with them we were able to Pivot from the print to online GF news didn't see that pivot happening and we kind of got off their radar and we were able to start building the online platform and um when the market decided to switch from print to online which was accelerated with the 2008 Global financial crisis that had hit this Market pretty hard when this transition happened all the dollars went from print to online and we were able to kind of capture uh the entire Market um so there was quite quite a lot of uh uh uh hustle going into building that business so I have so many questions about that experience but I guess the ones that pop in my mind are what the hell were you thinking building a business when there wasn't Venture Capital number one and number two well may maybe maybe I can ask the question for you or just give you at least what I saw so uh in 2012 a friend of mine calls me up I think he's in the crowd here somewhere Patrick are you here yeah there he is uh and he says hey what are you doing now I had left my previous role at at bate and I said well you know what I was doing at bate like building a tech business in the region I don't want to be an operator I want to be able to find the next danni's of the region and basically help them invest in them but not only give them money um give them my operating experience that was simply the way I was thinking about the world back then and he said and he doesn't he doesn't come from the Venture World he's in the real estate uh space traditional space and he said oh I'm a client of this property finder uh service you should meet Michael so I go to meet you and uh it was instant love but but beyond the the fact that you were very engaging uh and knew your business what was clear to me was he was doing with two salespeople what we were doing with 15 and so when I asked him I'm like how does this work I'll spare you the the the long Q&A because it took hours for me to like wrap my head around it but basically in the job space which was a very profitable we were making a lot of money back then very profitable business model um we would uh sell and always have to continue selling our customers who would subscribe to our product products and take monthly or three month packages or single postings that we' have to wait a few months until they consume them and then go back and sell them whereas Michael would sell his customers an annual package once and every time someone would knock on their doors the doors of the Brokers it was oxygen because it was revenues so I was selling an overhead and he was selling revenues and hence he was 10 more than 10 times more efficient than than me and that was for me at least when the when I had that eure a moment you every once in a while you talk to a founder and you don't get it you don't get it you keep asking and then suddenly Boom the penny drops that's when the penny dropped um for me and and I can return that actually my first conversation with Danny I couldn't believe that he was he could understand what I was doing actually I had spoken to so many investors here in the region and telling them about risk they classified and how an amazing model it is with recurring Revenue high margin very defensible and then nobody would ever understand and then I meet Danny and he's like yeah I get it yeah I get it and he was looking to invest so it was just a perfect match and uh and and luckily we found each other that was in 201 2012 12 when you invested uh for the first time 12 years ago okay uh switch gears I'm mindful of time so most people I mean you've built a very successful uh business category leader high margin defensible uh liquidity Network effects all the things we look for the Holy Grail attributes of a business we look for as investors but most people don't know the the pain and the difficulty and the trauma and the near-death experiences that every founder goes through right it always looks like so easy and it's a 15year more overnight success and it's always from left to right and the arrows up to the right it's not right it's not um can you share some of the really difficult moments with with the audience sure uh luckily they're from a long time ago uh recently we had less near-death experience although covid was quite challenging because you know when our customers called us up and said hey we can't leave the house we can't do viewings if we can't do viewings we can't sell properties we can't charge commissions and therefore we can't pay your subscription so there was a bit of a moment there where we all got really scared luckily the market rebounded in a tremendous way postco and so the business you know did really well from there on but I would say probably the biggest near-death experience was in it you know in the first two years competing against golf news right when we competing against somebody that just has way more market share and way more Capital than you um and until we got the Raa group to uh to invest I think that negotiation with with the Raa group lasted about nine months and you know every month you're funding salaries from your from your own savings and and trying to find the way to keep the business up and running because if you can't pay salaries then you can't sell the business so you can't raise that money uh so that was one two years later after that so that was 2007 2009 when the global financial crisis you know hit the world or 2008 it hit the world and it we thought for a while that it would spare the UAE but it didn't spare the country and eventually you know real estate prices plummeted um and the rea group wanted to S wanted wanted to actually have a business that generates profit and I explained to them look it's not possible this is the time that we need to invest eventually we didn't we realized that we didn't see eye to ey and that I was you know either they would buy me out or I would buy them out and eventually we we agreed and shook hand that I would buy them out and so I had to find the funding in order to buy them out in the middle of the financial crisis uh luckily I had kept some of the money that I had cashed in from the sale two years earlier and I was able to take control so I guess that was another uh interesting experience um of of of of near-death yeah maybe in between all of these near-death experiences and very difficult times I can tell I can attest to having watched Michael just play this beautiful balance between pressing hard on the accelerator to grow without without losing money and try try and stay somewhat you know cash neutral and then things that go well you put you press a little harder and then maybe the market slows down you take your foot off but you're constantly having to tweak and calibrate um and it's just it was uh wonderful to watch let me ask you because you've asked me a ton of questions and um and Danny is a very humble man and he'll never want to talk about it himself but I mean Danny did spot three four unicorns in in in this country and got involved with them very very early on like preed and and and and series a um and and that includes uh kareim Kopi property finder but you're also in fresha where we're in together uh which moved to the UK but is also on its way to be to be another unicorn so what do you look in Founders uh that are about to create unicorns and how do you spot them that early I'm gonna say it very quickly because I have one last question for you but basically three things right the Perfect combo of vision with operating prowess what that means is if you have too much Vision one can be very very dreamy and forget about actually getting stuff done really well and if you're really really in the weeds and you're really good at as an operator you'll lose the Strategic uh you know inputs and therefore you know it's a moral hazard so that combo is super important the second thing is um company building right when you see Founders who just know how to recruit and retain and fund raise and communicate and just build a firm it's ultimately you're building a company right so company building is really really important for us um and then another one it's more of an attribute it's impatience um and by the way impatience shows itself in very different ways right you're impatient but you don't come across as impatient as I am and I have worked with Founders that if you talk to them they just they're so calm and so um calculating and so but they're incredibly impatient inside is lots of turmoil going on but they're very very composed so don't judge a book by its cover those are the three things in the absence of time I want to ask you everyone asks me this question and I know that you and I have grappled with the answer and the answer there's no right answer the answer is changed from uh year to year but I know that everyone would love to know what is what is your end game what is the end game for property finder is there a listing on the cards and I know that the answer could change but as of today what would you tell the audience look the endgame is obviously to build a very successful company that can spend the the the the test of time um a listing is probably going to be part of this story it's not an end goal in itself uh it's just uh another way to get access to capital or bring liquidity to shareholders tomorrow is a very important day in the UAE stock markets in general because there is a big IPO of the first growth consumer Tech IPO talabat is list tomorrow and hopefully that paves the way and is of for more growth techs to be coming to the to the public markets so um it's not part of our plans as in imminent it's not something that we're actually working on but you know property finder is likely to be a public company at some point one day so the journalist you've heard it from the horse's mouth right here uh thank you everyone I believe time is up and that's a wrap thank you Michael thank you very much [Music]