Country: United Arab Emirates
Industry: Company services
Founder: Mustafa Sadek
Established in: January 2013
Number of Employees: 5
After leaving the US for Dubai three years ago, Mustafa Sadek encountered an old college friend, Nehme Boghdadi. Their 20-year-old friendship blossomed into a business partnership when the two discovered “there was a big opportunity” in another type of relationship: that between a company and its customers.
Sadek and Boghdadi had been in contact with small and medium-sized businesses (SMBs) and “realized that [SMBs] are really underserved in [the Gulf], in terms of the tools and the environment that they need to help them grow, compete, and mainly build their relationships with their customers.” Customer relations are more developed in the US than in the UAE and the region as a whole, which is where UrbanBuz fits in.
The pair, along with fellow co-founder Salam Saadeh, officially launched UrbanBuz in January 2013 as a platform for SMBs to design their own customer loyalty program. These SMBs then engage and establish relationships with their customers, not only in the store, but outside of the store as well — meaning that customers can be engaged by collecting and redeeming points, accessing the company through social media websites, and more.
UrbanBuz is targeting smaller companies and “not going after the big guys” just yet. It focuses on these SMBs because they usually lack the funding or resources to create their own customer loyalty system or pay for a very well established one. Although Sadek did not reject the idea of targeting larger companies, he prefers keeping that option open for his long-term goals.
SMBs that are working with UrbanBuz range from beauty salons and restaurants to gyms and online businesses, across 35 locations in the UAE. Although its focus has mainly been on Dubai, the company is finalizing agreements with businesses in Abu Dhabi as well.
UrbanBuz charges its customers a minimum monthly fee of $137 per location, although this may vary depending on how many locations a company has and what sector it belongs to. While it has not yet raised a significant amount of money, the outfit is going through its first round of funding. “We’ve met with several investors and it is still ongoing,” says Sadek.
Although Lebanese, Sadek has been focusing on funding from the UAE, and mentions that raising funds in Lebanon is not easy. “It seems, to a large extent, investors are risk averse; they do not like to take risks on startup companies, especially if that startup company is a new model or new idea altogether,” he explains. Sadek does, however, note that the relationship between investors and startup companies has been developing.
Initial investment for the startup came from Sadek himself and an angel investor. Over the next five years, Sadek hopes to expand to take two percent of a regional market worth some $800 million per year. In comparison to the US, the Gulf market “is very open to a lot of ideas, technology, products; so it is full of opportunities,” he explains.
Despite this, setting up a company “was very tough,” says Sadek, who previously founded a startup in the US. Doing the same in the UAE is much more expensive, costing at least $5,000 — compared to the $300 to $400 that would be paid in the US. It also takes one to two months to set up a company in the UAE, whereas it takes just a couple of days in the US. Sadek also expresses his frustration at the challenges he faces with banks. “You have to open your account and then deal with the bank, getting a business credit card is a big hurdle. I do not know why.”
Competitors that Sadek mentions include Air Miles, Shukran, and SNAP. Air Miles is a loyalty network where loyalty customers get benefits on the Air Miles network. UrbanBuz, however, works slightly differently — allowing customers to have loyalty with specific businesses rather than a general network. “We do not interfere, we simply provide the tools,” he says. Sadek also distinguishes UrbanBuz from other companies because it allows businesses “to set up and manage their own customer program and to better serve their customers, as opposed to traditional customer loyalty programs, where they give the businesses a direct solution that makes it hard to customize and manage.”
When it comes to expanding his business, Sadek says his main focus at the moment is expanding in the Gulf region and other countries outside such as Lebanon and Jordan. When asked to elaborate on expanding to Lebanon, Sadek explains, “the challenge with Lebanon is that it is too small to think about it as a money-generating market, for a startup at least.” UrbanBuz does plan to expand to Lebanon, but is simply “looking at it as a market share,” and a way to increase its regional brand presence — not as a revenue source.