Episode 67 Transcript

Welcome to Episode 67 of the Business in Morocco Podcast today we're
going to be talking with Mohammed Alaoui
who is the managing director of Carmine
which is a ride-sharing business here in
Morocco car rental something like Zipcar
in the United States but before we get
into that welcome Mohammed thanks for joining us
on the podcast thank you I do you think
you could just start with a little bit
of your background where you went to
school and where you grew up and some of
the things you studied in school before
you entered the economy in the job force
yes of course well I was born and raised
in Mknes it's a city I think nobody
knows because then I moved at the age of
18 to Montreal and this is what I
obtained a Bachelor of Actuaries for
those who don't know actually it's a mix
of math statistics and and finance to do
pricing for insurances and unnatural
products then I worked in the insurance
field it was not it was a short
experience I quickly understood that I
it was not the right thing for me so I
started looking for other other
opportunities and out of nowhere I
decided to go to San Francisco
and this is what I had also a master
degree of finance and this is actually
where the magic happens I I spend I
spent two amazing years over there I've
met with great people great mindset this
is what I did where I discovered the
entrapreneurship in in the nature that I
like in
it's best definition let's say and
actually this is when I decided to to
become the entrapreneur so I went back
to to Morocco worked as a consultant for
each propeller ship consultancy company
but it was also sports and right after
that I decided to launch Carmine which
is the first car sharing this is
actually not right sharing it's a car
sharing business, there is a difference
between car sharing and ride sharing, so today I am the founder and
general manager of his company trying to
make it grow in Casablanca first and in
other cities in the next the next years
so when you when you went to San
Francisco you rubbing shoulders with a
lot of entrepreneurs what was it that
made you decide you know what I think I
want to be an entrepreneur myself yeah
actually actually I grew up in in a
business family and so my dad is a
businessman there is a difference
actually between a businessman and
entrepreneur but I didn't know about
this difference when I was young I mean
Rocco I loved some stuff that my dad was
the one but I didn't like other stuff
that she will do it and I never I was
never able to explain it so when I spent
just those two years in San Francisco I
I found out that there is actually
difference between a businessman the
intrapreneur and the general manager so
the the the intrapreneur is is is also
businessman his general manager and his
business is about creating value and
creating value that can grow during the
time and this is what I I discovered and
like the most while I was spending some
time with with people in San Francisco
because I know if you've been there but
the whole energy in San Francisco is
about entrepreneurship and and the yes
we can mindset so yeah everything is
possible everything is is can everything
is about transforming things everything
is about innovation so I think I got
this energy from there and and today
it's it's it's certainly lots
so after sorry just one more question
after you had spent years to North
America what brought you back here to
Morocco yeah well I tried to to launch
some businesses in in the US but to be
honest it was difficult because I found
out that there was a big gap between the
skills let's say that I had accumulated
and all the networks let's say that I
thought I that I have acclimated
accumulated during my academic school
and and I and I was like it's going to
be smarter to go to a country where
where there is there is more
opportunities easier let's say
opportunities because if you want to
compete in the u.s. see see offer
especially for someone who is art in his
career as an intrapreneur
maybe maybe in the next business maybe I
can I can be more ready to compete in
international or American market but I
was like the first thing was it's maybe
easier to do it in Morocco
second thing there are opportunities in
Morocco and third thing is because I
wanted to to help also contributing in
in in transforming the
like the the intrapreneurship ecosystem
in Morocco so this is also was one of my
motivations it's great I love that what
year did you move back back here to
Casablanca it was in 2014 14 and when
did you found
Carmine it wasn't it was in the end of
2014 when I created the let's say the
legal structure but we launched on June
2015 2015
it took us six months from the creation
of the company and the launch of the
service because we needed we needed to
get the technology already the
partnerships ready buying cars having
the first financing for for MVP USA so
it took us six months to to be ready for
the launch so we have launched in 2016
so let's let's do sort of a thought
experiment here let's pretend that I'm a
potential customer I'm at my office here
in wolf under finance city and I have a
business meeting and CD burner see and I
want to use carmine to go to that
meeting what would I do
talk to us about the process of becoming
a customer and how I find the car and
how I rented and what that was
okay well the first thing you need to
start with is to become a member
becoming a member is a separate thing
from using the service so to become a
member you need to apply online there is
a form where you provide your name email
address all the information about
yourself your driver license the ID the
CN identification card and once we
receive your application we approve your
we approve it if you if you respond to
all the criterias that we
the criterias are easy you need to have
at least two years experience with your
driving lessons your name your name you
need to match your the one on your on
your when your IDs and and not having
any suspicious like fraud or or a
problem with the authentic card so once
we approved your card we provide you
with an ID and the password and you can
download the application and you can see
all the cars that are available next to
you and you can search for any card
anytime you want
so if you want to take your example to
go to bar Lucy and let's say we are in
good shape for example you can let's say
you need 30 minutes you get to your
meeting 30 minutes to go back so if
that's one hour and maybe your meeting
will take two hours so you will need the
car for three hours so you're gonna
reserve gonna look for the nearest car
which is available for three hours you
will serve it on the app then you go to
the car you use a bad way when we
approve your application we give you a
smart heart that's ables you to open the
cars all the cars so once you make a
reservation on the app you go to the car
and you put the card on on on the
windshield lecture and the door is open
you get inside the keys are inside you
just turn on the engine drive and at the
end of the when you're back you you
bring back the car to the same spots you
you close it with your card and so the
next customers can reserve it and take
it so I need a bank card in order to
sign up and be a member so right I'm
sorry I didn't hear your question I need
a bank card like a credit card in order
to be a member no not not really
we we have a prepaid account you can
open your account with us with us
without not having without providing us
anyway thank you formation and you
prepay before using the service you can
for example pay I'd say three hundred
your hands for the example that you we
talk or three hours it will cost you
something around night with your hands
because it's treating hand per hour so
we're just gonna subtract 90 your hands
for three hundred so you can I have two
hundred and ten left on your account but
you can use on another trips so so it's
it's a prepaid service and you have to
be Moroccan do you have to have a cart
seizure or a national identity card yeah
well no we we accept also international
driver's so you know you don't need to
be actually residents you can if you
have like a valid international driver's
license valid in Morocco you can you
cannot access to our service and you
mentioned the rate per hour do you also
get charged based on the kilometers you
drive yes actually there are which are
three things the first charge is the how
to call them in English its membership
fees because this is what we're talking
about the sharing economy this is what
allows us as a business to provide a car
with to read their homes per hours who
is a membership fees monthly or annual
motor fees and once you you pay those
fees then you pay per kilometer and for
per hour but you have always an MDD I
forgot to mention the gas is always
included right so we pay the gas and the
user pay pays per hour
and per kilometer and for every
reservation there is 80 kilometers
included in the so let's say for example
for the example we took of three hours
if you drive 40 kilometers with the car
during those three hours you're not
gonna pay the kilometer it's in 30 their
hands so you're gonna pay 90 their hands
including the 40 kilometers however if
you drive more than 80 kilometers you
may wonder how a kilometer but always
the gas included okay and are you able
to travel the other cities using one of
the cars yes yes you can
well I'm gonna just give you an
explanation on why people use our
service and then we can talk about this
about this question today the the
counseling service is is a kind of
alternative of car ownership
so this is our added value what we tell
to our customers is whenever you need
the car for any kind of trade we are
alternative and it's an attractive
attractive alternative with all the ease
of only in a car so this is what we're
trying to do today we are offering what
we call a local offer which is per hour
like like the example we mentioned it's
three hours so today if you need to do
like this kind of trips three or four
times during a month it will maybe cost
you 600 - helps promote so this is
attractive for someone who doesn't want
to own a car instead of paying maybe
5,000 or 6,000 per month including Gaza
insurance and the depreciation of the
car
he will pay 600 and have access to the
service whatever you need and then
there is another offer that we call long
distance and this is for people who
wants to travel with their car so so if
if if you want to travel with your car
and do a long distance trip the the
offer that we need to give to customers
needs to be competitive to other offers
so this offer is the one which is let's
say competitive with the traditional car
rental plus all the added value that we
provide that you can reserve yourself
go get the car yourself pay online and
to the arrows so you already happy with
the pandemic there is no contact with
anyone you don't touch anyone you just
go to the car and crafted and so we have
an offer only for long distance which is
comparative to 2d 2d 2d to the car
rental and there is a third offer that
we don't have today but this is the one
that we're working on get coverage to be
able to offer it which is the free
floating because sometimes only the car
just to go from A to B and spend six
hours in the bezel so I don't want to
keep the car six hours and pay for it
when I just want to go to the to the
point P so so this all offer I can give
you an example on what we are working on
the customer will pay for example 600
their hand per month and he will have
unlimited access to our cars during 30
minutes with the condition of of leave
in one hour between every usage I'd say
you take the car from from good day you
drop it in city models that's 30 minutes
you spend six hours I'd say doing
something and then you want to go back
to India for example you take a car from
City emirates rapid to me
so we have a limited-use like that and
you only pay 600 per month as well as
let's say for free yeah that would
require a lot of vehicles can you share
like what cities are you in and how many
vehicles do you have at this point yeah
so today we have 20 cars and we have
something around 600 users and right now
just before the crisis we we just closed
a round of fundraising which will allow
us to to get to 300 cars and $5,000 yeah
Wow
yeah yeah gradually it's gonna take us
two years to get there
well yeah I mean that is massive growth
that's incredible congratulations thanks
thank you can you talk a little bit
about that fundraising process and also
what are you going to do with the money
besides buying new cars in terms of talk
about your customer acquisition strategy
yeah we don't buy cars actually we don't
you don't buy cars now we either like
rent them or we sometimes will finance
them way too busy so so we don't if we
three hundred cars if you Python it's a
lot of money no nobody would invest on
that for these five banks that's have
diversification strategy asset
management and this is actually what
most of people think our business is not
an asset management cars for us our
asset so we just use them to to to serve
our customers but our main business is
what you said is marketing is to onboard
people the acquisition try to retain
them and offer them a good customer
service
and a good price implants that that can
conquer their needs so this is actually
what we do this is our main main
business and so so you asked two
questions you asked the one off
fundraising and then the customer
acquisition wanna start with you talk to
us about the fundraising how did you
find these investors and and how did you
convince them to invest what are some of
the things that you told them the things
that I'd say this is a good question
well actually the the fundraising is the
is the let's say it's the most difficult
part especially here in Morocco but but
in my opinion it's the it's the best
part because this is what gives you
energy this is what makes you go after
what she wants I think if I if I had
enough money I wouldn't be doing the
real car my maybe I would invest like I
don't know
so the thing is when I and I first
started I I started doing it with a
business and so that's that was a
complete failure
it cost me two years and yeah it was the
wrong person and then I had to recover
from that I had to to get support from
this partner and then I I partnered with
the second person which this time worked
very well and anyway it's a business
angel the way like it works is that you
make a business plan you you present all
your KPIs you you sell your products and
you try to to
to sell your development because what is
an investor interested in in this type
of business is the value of the company
that you will buy his sparks today
compared to the value that he may sell
in five years so the whole work is about
convincing the investors about his the
pre value that he will be making during
his investments how did you meet that
angel
I met the the second angel in house a in
networking events so okay networking
events and since I got to know him and
and but there is a huge work between the
meeting and closing it's it's it's a lot
of meeting someone
doesn't mean you can't be a partner with
it and you've met a lot of different
investors I mean did you pitch carmine
to a whole bunch of people before you
received funding from the same yes yes I
pitch it to many investors either here
in Morocco or abroad but at the time
when I was looking for an investor there
was not too many choices
it was in 2016 2016 there was only one
VC available in Morocco and the rest was
business angels yes that's why I end up
I ended up with the business and so
instead of the the only VC that's that
was created at that time today I think
there are many others I think today is
easier anyway I choose to get money even
though there might be more funding
available now it's still important for
entrepreneurs especially some of our
listeners that are thinking about
starting out or all have opened a
brand-new company it does take a lot of
pitches you've got to be willing to hear
know many times before you can finally
find somebody willing to invest in your
company yes of course well there are
many things that
happened when you when you like you you
find the right partner or the right
investors it's not only a question of
money it's also if the investor is is
interested in you as a person if he
believes in you or if he believes in the
the timing if if he can provide some
good synergies with his partners so
there are too many things that that are
taken into consideration between the
intrapreneur and the founder and the
under investor and unfortunately in
Morocco we don't have specialized
business angels like you need to be
lucky to find someone from the field
where you do business interested in you
interested in your business willing to
make his money so there are a lot of
let's say things to validate to to make
the deal happen
besides as you say when you keep
pitching and you keep looking you like
you end up finding that's right yeah you
will add a networking event when you met
this angel so you got to put yourself
out there in that context make pitches
and you want with you if you don't give
up you will get a yes exactly so how
much money has been invested in the
company and what was the most recent
valuation well we don't talk about this
like these numbers they were not making
them we're not making them public for
now but can you tell us how long is the
runway
I mean without giving us specific
numbers how much how long can you
operate now given this investment in
order to grow the business well yes it's
an investment that will able us to grow
to 300 cars in the two next years and
reaching 5,000 members sorry are you
profitable today meaning cash flow
positive no no we are still we are still
like pain
Superman Shinzon you say like great like
we're still investing like say on the
company we're not far from the from the
the break-even like a cash flow quick
use how many members is is cash flow
breakeven it's around 40 cars and maybe
some something around 1,000 okay so that
I can get there yeah we're not far yeah
and is that specifically just Casablanca
well for this there for this plan of
developments there is Casablanca and
there is a partnership with going to F
we are going to be providing cars in the
like around the train station around the
train stations inside the train stations
so with this with this partnership you
can i we're gonna gonna go to Tangier
Rabat and and market you know so so this
is how we let's say we're gonna extend
we're gonna start expanding with the
train stations and once we see how we
how it works and how we can operate
remotely from Casablanca then we're
going to expand to out of these stations
the the train stations that's a great
idea especially with the tjv I mean you
could go up to the change here for a
meeting
exactly you know you take the train you
just get another car line drive to a
meeting come back back on the train it
would be perfect that that's that's
that's we that's why we want to offer
and with the same with the same car the
same membership you can either drop the
and we're markets all about even if you
have if you own a car in Casablanca you
can still use the service when if you
want to travel it's more convenient if
you can spend your your time traveling
and working instead of driving and once
you like you have your car waiting for
you in the train station and you can use
it by the hour for one day ever you want
that's brilliant
and then there is Casablanca and we can
see their robots maybe I think I'd say
an extension of Casablanca so if we if
we if we see like a quick opportunity
happen in Rabat we're gonna move you can
extend to Rabat faster yeah yeah so talk
to us about your marketing strategy what
channels are you using and how are you
acquiring new customers what type of ads
are you doing well we use 100% digital
the we use content on social media
facebook youtube linkedin all the oldest
was the social media and we do we do our
acquisition with with banners with
videos that explain explain the concept
and then we obtain some leads people
interested in knowing more about the
product the concept and then we try to
convert them to users and once they are
users well we we provide them like with
many advantages that will keep them use
the service for example in the beginning
when we started we have let's stay two
big barriers to entry I mean for our to
convert new customer there is a deposit
of four thousand five hundred which we
give back
once you shut down will you stop your
service and there is also membership of
963 an animal so for a new person that
want to try the service if you ask him
to pay these two amounts the conversion
rages becomes low because people doesn't
know you and they don't want to get to
know you by paying almost two thousand
dollars so we took of these two barriers
during two months so we give access to
our best plan without paying the deposit
and not the membership like you don't
pay anything and you can use the service
with our best plan with the price of
thirty three and four hours and then
once you get to know the the service and
and see how useful it is for you then
you pay the deposits and the membership
twenty if you want to keep the same
advantages if you don't want to pay the
deposit and the membership you you still
can be a member but you just lose the
advantages of paying thirty grams you
pay sixty the round instead and you
don't have access to the long-distance
pricing and you don't have access to
another pricing that we have an offer
which is called
crypto buy as for workers which is 220
their hams for 10 hours and this is
actually for people who come for example
from robbers to Casablanca and they want
to keep the car for 10 hours then bring
it back let's say - to the station of
Casablanca and then take the trans robot
so instead of paying 300 if they are
paying only 220 so they you lose all
these advantages but you can still use
this the service by paying more than the
people who give the deposit and the
membership fee so in that process of
converting a lead to
one of your new customers do you have
somebody from your team that actually
calls and discusses all these different
options and of course offers yes of
course we have the we have different
type of leads there are some leads who
make it to the subscription without any
help because they took time to to read
on our website or maybe they call us and
ask questions and there are some leads
that are needs to be pushed and we call
them we explain to them answer their
questions and we make them converse and
how long does that application process
take like when you talked about like the
time to check the IDs and to get that
card it's less than 24 hour oh wow yeah
as you come to the carmine office to
pick up the card we give the choice to
the customer either you can come pick it
up or we can ship it to you today we are
we are are considering another option
which is opening and closing the the car
with your smartphone so while working on
that so we can eliminate the smart card
you can just download the app without
without any smart card you can open all
the cars with your smartphone that's
great well we thank you a lot for
Mohammed for for coming on the podcast
talking to us about your business and
carmine congratulations again on your
fundraising round and we wish you the
best of luck and growing your business
and we'll hope to have you back in the
cup podcast once you reach that 1,000
users and 300 cars again thanks again
either yeah but you said 1000 would
probably be the mark where you your your
your profitable so that's worth
celebrating and and updating the users
yeah that clear all right thanks well
thank you for your invitation and talk
to you soon
thanks Mohammed

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