What does a former engineer and an ex-Uber logistics manager have in common?
A laundry app aimed at eradicating washing machines from UAE households.
Founded in 2015, Washmen picks up, cleans and delivers laundry as fast as the next day, and for typically 20-30 percent less than premium services of its kind tend to charge.
Founders Jad Halaoui and Rami Shaar tell Arabian Business how they managed to raise $400,000 in seed funding, what the costliest part of the business is and why cleaning up after people is lucrative.
How did you acquire that amount of funding in so short a period of time?
Rami: It’s a confluence of factors. At the time, Uber was changing the world’s perception of app-based services, and we had a good idea too, with a clear path of execution and financial experience. I understood our prospective investors’ concerns and was able to translate those into financial and legal terms that addressed all of their points.
We had a live document that included in-depth answers to the questions they asked, so for every new investor, we would share that document in advance.
How did the idea of Washmen first come about?
Rami: I was a banker. Getting my laundry done was a nightmare as my schedule and the laundry guy’s schedules never matched.
I never knew when he’d come. When he did, I had to fumble with cash to pay him because he didn’t accept cards. I initially had the idea of Washmen before joining Uber, and had tried to poach a friend there to help me build it, but she poached me back and I ended up joining them! After a difficult year, I decided it was time for me to leave and start my own thing. So I told myself, “Rami, you can either let this bring you down completely or find a way to get stronger out of it.”
Jad: It’s a sticky service.
You need it every week. And people are willing to pay for it. The market was already very developed in the UAE in terms of existing cleaners and most facilities, good or bad, had excess capacity, so it seemed like a perfect business to mediate through an app.
Most laundry services have higher prices than yours. What allowed you to charge lower fees?
Jad: We operated in a very lean manner from day one. We always think about the financial sense behind every choice we make. When you’re small, the cost of the offering is really high. But as a start-up, we can’t transfer that cost onto our customers. Along the way, certain customers’ behaviours and our data around those behaviours prompted some innovation on how we operated. We brought down the cost of logistics on a per-order basis and we transferred the vast majority of those savings back to our customers. In fact, being an online business was a disadvantage in terms of allowing us to charge lower fees, because the costs associated with the tech development of a business that is growing are high.
There is a misconception that digital businesses are less expensive to start and operate than physical, traditional ones, though...
Rami: That’s a grave misconception! Washmen was very costly to set up. The technology was the costliest part. While the cost of transacting online and being a middleman service is cheaper than a physical, traditional business, a digital business requires patience in pursuing the product-to-market fit.
The majority of retail stores and offline laundries are intimidated by the process of digitising their businesses. And they should be, if they are thinking of outsourcing that development. Just like setting up any business, you have to learn about the fundamentals and nuances of operating an online business.
What was the worst decision you made in terms of operating Washmen?
Rami: We started the business without a technical co-founder, and that was a serious deficiency. If you’re going to build an online company, we strongly advise you start the business with somebody who is technical and, at the same time, can put in the hours and sweat to make it a great business.
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