The story of Talabat

When I dragged myself out of bed at 5 a.m. this morning, groggy and sleep-deprived, I shuffled to the kitchen table, and remembered – I’d forgotten to pick up coffee capsules the evening before.

How was I supposed to write this without caffeine?

Desperate times call for quick thinking. I grabbed my phone, tapped a few buttons, and waited. Twenty minutes later, the doorbell rang. Standing there was a guardian angel in loud orange, holding the elixir that would save my morning.

I don’t usually believe in signs, but c’mon!

Founded in 2004 by a group of friends in Kuwait, Talabat started as an ambitious dream in a country where only 30% of the population had internet access.

Fast forward to 2015, and it’s acquired by Rocket Internet for $170 million—the largest startup exit in the Middle East at the time.

But the story doesn’t stop there.

Now, almost two decades later, Talabat is on track for an IPO in Q4 2024. Its parent company, Delivery Hero, plans to raise $1 billion with the listing, marking Talabat as the first tech company to debut on the Dubai Stock Exchange.

So, how did it get kickstarted?

Well, it began with Abdulaziz Al Loughani, and his bold conviction that online delivery could thrive in a market that wasn’t ready for it — until it was.

🚰 Untapped potential

In 2005, Kuwait’s startup ecosystem was still in its infancy. Platforms like Q8car and Koutbo6.com were emerging alongside Talabat, which drew inspiration from Egypt’s Otlob, one of the region's first food delivery platforms, founded by Ayman Rashed in 1999.

The name "Talabat" comes from an Arabic word meaning "orders."

Talabat’s founders pooled together $13,000 to get the platform off the ground, but the early days were tough. They struggled to convert users into paying customers—it was estimated that only 1% of registered users were placing orders.

That’s when Abdulaziz Al Loughani saw an opportunity. At the time, he was running his own online pharmacy platform but quickly realised that the market wasn’t ready for it. However, Talabat was sitting on a goldmine.

Traditional food ordering through phone calls was slow, inconvenient, and frustrating.

Talabat promised to revolutionise that process.

Despite skepticism from colleagues and family — probably justified given the low internet penetration in Kuwait — Al Loughani bought into Talabat in 2007, securing 90% of the company through a loan, leaving one of the original founders, Khaled Al Otaibi, with a 10% stake.

At the time, Talabat was generating about $10,000 in monthly revenue, processing around 200 orders a day, with over 30 registered restaurants, and a lean team of five.

Living on just $1,000 a month to pay off his loan, Al Loughani got to work.

🌑 Building in the dark

Al Loughani's first priority was functionality. Talabat needed to work seamlessly for both customers and restaurants - the design came second.

The goal was to simplify the food ordering process in a country where infrastructure was still catching up.

Talabat operated as a two-sided platform:

• Building relationships with restaurants (supply side)

• Serving customers on the platform (demand side)

To get larger restaurant chains on board, Talabat offered its services for free initially. This strategy helped the platform build the critical mass needed for scaling.

But Talabat also had a secret weapon for acquiring customers—an unrestricted digital marketing landscape. Google Ads allowed them to precisely target users based on high-traffic events like the World Cup or searches for popular musicians and celebrities.

Traditional marketing couldn’t compete with the effectiveness of these digital campaigns, so Talabat leaned in heavily on this strategy.

🍀 Making your own luck

Timing played a crucial role in Talabat’s success.

Around the same time, the Kuwaiti government and telecom operators were investing heavily in digital infrastructure.

Internet speeds improved, and costs dropped as the country transitioned from dial-up to fiber-cabling — just what Talabat needed to fuel its growth.

As the infrastructure evolved, so did Talabat’s product.

Orders, initially routed via fax machines, transitioned to software installed on restaurant computers.

Eventually, SMS-based systems were implemented, and mobile apps were launched as smartphones like Nokia and BlackBerry became more widespread.

By 2009, Talabat had become cash-flow positive, boasting a 70% bottom-line margin.

Every month for two years, the platform introduced new features to keep users engaged.

Gamification elements, loyalty programs, and over $100,000 in prizes—including an Audi A4—helped drive customer acquisition and retention.

Talabat wasn’t just a convenience anymore—it was becoming a habit for its users.

🌍 Dreaming bigger

That same year, the regional tech ecosystem saw a major boost when Yahoo! acquired Jordan-based Maktoob.com for $165 million.

This seminal moment prompted Talabat to think bigger and shift its focus from a local player to a regional powerhouse.

Expansion into Saudi Arabia seemed like a natural next step.

In 2008, Talabat entered into a franchise agreement with a local Saudi partner.

However, the expansion was far from smooth.

Saudi Arabia’s market was fragmented and culturally different from Kuwait’s, presenting both operational and cultural challenges.

What worked in Riyadh didn’t necessarily work in Jeddah or the Eastern Province.

Talabat struggled with quality control and operational inefficiencies, forcing the company to buy back the Saudi franchise in late 2009.

This experience reinforced the importance of local knowledge and operational flexibility when expanding regionally.

💰 Can I get the cheque, please?

Recognising the strategic importance of Saudi Arabia and Egypt, Talabat needed substantial capital to scale further—about $3 to $4 million.

But in 2008, early-stage funding was hard to come by in the region. Venture capital and angel investors were scarce, and few were willing to write checks that large.

Frustrated by low valuations from potential investors, Al Loughani decided to go it alone until 2010, when he found the right partner in Mohammed Jaffar, a restaurant owner already registered on Talabat’s platform.

Al Loughani sold his stake in Talabat for four times what he had invested, allowing him to pay off his loans.

Jaffar became the CEO, while Al Loughani remained involved in a non-executive capacity.

Jaffar’s acquisition brought with it the financial muscle needed to scale the business, and from 2010 to 2014, Faith Capital, Jaffar’s investment firm, fuelled Talabat’s expansion abroad.

Under Jaffar’s leadership, Talabat scaled rapidly, especially in key markets like Saudi Arabia and the UAE.

The platform also rebranded from 6alabat.com to Talabat.com, shifting from a hybrid of Arabic and English spelling to a fully English spelling.

🚪 Heading for the exit

As competition in the food delivery space intensified, regional players consolidated, and international players entered the market.

By 2014, Talabat had processed over 8 million orders, with more than 1,300 restaurants on board, including major brands like Burger King, KFC, Johnny Rockets, Hardee’s, TGI Fridays, and Subway.

But Talabat’s leadership realised they would still need a larger, well-funded partner to capitalise fully on their market leadership.

Rocket Internet, the German e-commerce giant, emerged as the ideal acquirer.

With Talabat’s clean financials, documented operational processes, and scalable platform, the company was perfectly positioned for acquisition.

In 2015, Rocket Internet acquired Talabat for $170 million, a deal valued at twice the average multiple for similar companies.

Talabat was then integrated into Rocket Internet’s food delivery business, which Delivery Hero acquired in 2016.

Today, Delivery Hero is preparing to list its Middle East & North Africa business, including Talabat, on the Dubai Financial Market in Q4 2024.

The IPO will involve a secondary sale of shares by Delivery Hero while retaining a majority stake in Talabat, covering eight key markets: UAE, Kuwait, Bahrain, Qatar, Oman, Jordan, Egypt, and Iraq.

Not bad for a food delivery company that started with a group of friends in Kuwait back in 2004.

As for Abdulaziz Al Loughani? He hasn’t exactly stayed quiet.

In addition to teaming up with Mohammed Jaffar as a partner at VC firm Faith Capital, in 2017 he founded Floward, an e-commerce startup specialising in delivering flowers and gifts across 37 cities in nine countries in the Middle East, North Africa, and Britain.

Floward has raised $156 million in funding and is reportedly gearing up for an IPO in Saudi Arabia in the near future.

As they say, if you’ve got it, you’ve got it.

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