Home Business Taking the streets of Beirut

Taking the streets of Beirut

Taxi booking apps Uber and Careem roll out in Lebanon’s capital

by Livia Murray

With few exceptions, when strolling down the sidewalks of Beirut, one would typically encounter more parked cars than fellow strollers. Whether this is due to the desirability of moving around in air conditioning to cope with the heat of the summer or just an attachment to rolling in style, most Beirutis prefer their cars as a primary means of transportation — from the large intimidating tank-like Land Rover LRX to the smaller, sensible Kia Picanto that can fit into the most impossibly tight parking spots.

This heavy culture of cars — globally a symbol of status and coming of age — suggests that public transportation, taxi or chauffeur services are not as quintessential a way of getting around in Beirut as, for instance, the yellow taxicab is in New York. But in an apparent move to defy these odds, two taxi booking applications are launching in Beirut this summer: San Francisco based international giant Uber, which has been disrupting the industry in every sense of the word and causing massive taxi driver protests in Europe, as well as its lesser known Middle Eastern twin Careem, based in the United Arab Emirates and operating regionally. But will either company realistically be able to cause a similar disruption in Beirut?

Both are still in their testing phase in Lebanon. Careem was the first to try the Lebanese market at the end of June, followed quickly by its older sibling Uber which launched in Beirut on July 11. Both companies are backed with ammunition for expansion in the Middle East. Careem, which launched in 2012, boasts of $1.7 million in equity financing from venture capital fund STC Ventures, as well as undisclosed investments from its two cofounders Mudassir Sheikha and Karl Magnus Olsson. While they are currently raising a second round of funding, Careem’s much more established twin Uber, born in 2009, has been valued at just over $18 billion.

The two apps work essentially in the same way: acting like an old school taxi central that links riders to rides, the business model is not so much new as it is a sign of the technologization of traditional industries. The user can place an order for a taxi through the app, pinpoint their exact location on a map and where they are going, and receive information about the cab. Partnering with local cab and chauffeur services, neither company owns a fleet of its own.

Early adopters

There was certainly some visible potential for the apps before the move. According to Sebastian Wakim, Uber’s Beirut general manager, the company noticed a number of people opening the Uber app in Beirut even before they had moved in. He explains this as coming from many of their clients in the GCC market who travel to Beirut, checking to see if they could use Uber at home. Careem’s Sheikha witnessed a similar demand. “One of the main reasons we launched in Beirut was because a lot of the customers we serve in our existing markets had been requesting Beirut,” he says.

Both companies for the moment have only launched their business class segment or executive category, which is perhaps a good match for their first users, many of whom are likely traveling on business. They are of course hoping to target other market segments, partly through the eventual launch of an economy category. For now they are happy with the test phase, and claim that they have also seen new customers registering for the service.

But will the apps go viral, or will they remain a tool for a select few, enthusiastically dubbed ‘early adopters’? Though there is certainly a demand for these apps in some market segments, Lebanon remains small, with around 5–6 million people if we count the recent inflow of Syrians, and has an even smaller affluent market. Thus the question remains as to whether the companies’ expansions will be worth it.

From a cost/benefit perspective, the answer is likely yes. Despite the small market size, there are very few upfront costs associated with expansion to Beirut. Neither company disclosed the exact investments, but their costs of rolling out in Beirut stem from three sources, none of which are capital intensive: hiring staff to head the operation, installing technology in the fleet and marketing costs.

Careem’s managing director claims that marketing, which will eventually take over as a leading cost, plays less of a role at the moment. Meanwhile, Uber has already had two ‘influencers’, none other than MTV host Pierre Rabat and season two winner of “Dancing with the Stars” Daniella Rahme to use their app in high-profile stunts. According to Wakim, Uber’s marketing efforts have been mostly in partnerships to promote the app with these influencers, events and venues.

Whether or not the apps catch on massively, the move to Beirut is likely justified for both companies. Profit-wise, Careem takes a 15–20 percent commission on the rides while Uber takes 20 percent. The cost of cabs for both companies’ executive segments is comparable, with Careem at $1 per kilometer with a minimum of $8, according to Sheikha, and with Uber’s pricing made up of three components which are added up: a base fee of $2.40, a per kilometer fee of $0.65 and a per minute fee of $0.16, with a minimum on any ride of $6, according to Wakim.


One can only speculate on the relationship these two companies have in the Middle East. While Careem ambivalently said they were competing quite well against Uber in Dubai, Uber shirked the topic, saying only that competition was a good thing. “We welcome competition,” says Wakim.

In any case, Careem’s presence in the Middle East doesn’t seem to interfere with Uber’s good old fashioned plans of world domination. While Careem claims that it wants to be a regional transport provider, Uber wants to be everywhere. Careem has 50,000 users spread between Dubai, Abu Dhabi, Riyadh, Doha, Jeddah, Dammam and Manama, with Beirut being their 8th city in the Middle East, and their numbers of trips per week in the tens of thousands, according to Sheikha. Uber is in more than 140 metropolitan areas worldwide, though as a later entrant to the Middle East market their number of trips per week is in the thousands, according to Wakim, which is decent traction considering they only first arrived in Dubai last September. In the Middle East the company operates in Dubai, Abu Dhabi, Doha, Riyadh and Jeddah.

Though the two apps are similar, Careem has launched several features adapted specifically for the Middle East, according to Sheikha. The first is payment with cash. Though cumbersome — involving a driver coming to pick up the cash and then crediting the user’s account — this may open the app up to a market that either doesn’t own a credit card or that doesn’t feel safe using it, an important obstacle to credit card use in the Middle East.

Another feature is mapping technology. “The Middle East is not properly marked,” says Sheikha, and he explains that Careem has adopted a landmark based navigation that recognizes important places and maps directions from there to a customer’s location, slowly building up a repertoire of locales that don’t exist on Google Maps. Uber, however, claims that they have so far not had any trouble with maps that are currently available, with Wakim saying the “current app works well in Beirut.” When asked about the specificities of the market, Wakim claims that it’s “pretty much a product that works anywhere,” with their adaptation being mostly language based since some drivers prefer to access the app in Arabic.

Whether the advantage will be with Uber’s internationally recognized brand or with Careem’s app built specifically for the Middle East, the competition is on.

Support our fight for economic liberty &
the freedom of the entrepreneurial mind

Livia Murray

Livia covers business, finance and economic policy for Executive.

View all posts by

You may also like