Masterclass With CEO of Saudi Proptech Ejari Yazeed Al Shamsi

StartupScene’s op-ed series ‘Masterclass’ invites some of the region’s most dynamic entrepreneurs and experts to divulge their secrets, dispense their knowledge, and share their experiences with the MENA region’s ever-growing startup ecosystem. Whether they’re written by old guards or trailblazers, these masterclasses have been created to illuminate the path for aspiring entrepreneurs.

This month’s Masterclass contributor is Yazeed Al Shamsi, CEO and Co-Founder of Saudi proptech startup Ejari. Al Shamsi shares his views on how founders can pivot their startup to maintain a relevant and successful business, especially during today’s ever changing market dynamics.

How Founders Can Pivot Their Startup Successfully

Pivots play an important role in a startup’s journey. More often than not, they enable a startup to reach its final product and become successful, all while pursuing its main vision. This was the case for Ejari.

After experiencing the difficulties of paying a full year’s rent up front when I was a university student in the UK and upon returning to Saudi Arabia, my co-founders and I decided to come up with a simple solution, to rent properties from property managers before re-renting them to tenants with a flexible, monthly payment plan. But the process wasn’t that straight forward.

We pivoted our business model seven times within a nine-month period in quick succession before settling on our current iteration. The continuous alteration process we went through extended beyond simple product adjustments. It encompassed revising how to deliver value to our customers through the change of the entire business model, while sticking to the core premise of how to best solve the problem for the local market.

MARKET VALIDATION

Like any startup, establishing market validation is key. It helps with identifying potential issues, market gaps, and most importantly, getting valuable customer insights before spending time and money on the business.

What many entrepreneurs miss is that most people are willing to go to lengths to talk about their personal pain points if given the chance. This process helps confirm that the product or service has a viable market. There are several ways startups can achieve market validation, some of which include surveys, interviews, focus groups and pilot programs.

For Ejari, we engaged with landlords, real estate agents and tenants to better understand their pain points. For about a three-week period, we embarked on physically visiting real estate agents and landlords in the different areas of Riyadh, asking them about their pain points to try and better understand why the market operated the way it did.

We learned that landlords needed their cash up front and to do tenant screening and collection services, while tenants struggled with the lack of monthly payment options. These insights guided our initial steps and helped us shape our value proposition.

REGULATIONS

Each sector has its own regulations. Whether a startup is operating in fintech, proptech or ecommerce, it must be aware of regulations not only in its sector, but also in the country or countries where it operates.

After all, understanding and complying with local regulations can influence a startup’s business model and operational strategies. It can also help avoid potential fines or shutdowns, while also building trust with customers and stakeholders.

To deal with regulations, founders should research the regulatory environment of their industry, build relationships with regulatory bodies to stay informed and get feedback on their business model. Most importantly, founders need to be flexible. They must be prepared to adjust their business model to remain compliant.

In our experience launching Ejari, we engaged heavily with the Saudi Central Bank, the relevant fintech regulator which allowed us to test out several potential business models we had in mind. This process helped us validate the feasibility of our models from a regulatory standpoint and guided our strategic decision making in refining our approach.

INTERNATIONAL BENCHMARKS

Looking at international benchmarks can provide valuable insights into what has worked (or not) in other markets. This helps in shaping your strategy and understanding how different market dynamics can influence your business.

Benchmarking against global peers helps identify best practices and innovative solutions that can be adapted to your market. It also provides a reference point for investors and stakeholders. Some of the ways that startups can use benchmarks is by looking for markets with similar challenges and dynamics; studying how successful companies in those markets operate, and customizing these insights to fit your local market needs.

In our case, we benchmarked against markets like the US, Canada, South Korea, Nigeria and the UAE. We discovered that while similar problems existed with rent payments, the solutions varied due to local regulations and market specific dynamics. This helped us understand what models could be adapted to the Saudi market. However, we found that most models did not fit the unique dynamics of the local market. This realization pushed us to think creatively and develop a bespoke solution tailored to local needs.

DEVELOPING A UNIQUE MODEL

Sometimes, existing models from other markets might not fit perfectly. In such cases, developing a unique model tailored to a startup’s specific market conditions is necessary.

This is important, because a tailored approach ensures that a startup’s solution directly addresses the unique challenges and opportunities within the market. It differentiates a startup from competitors who may be using more generic models.

The best way to develop a unique model is by understanding the specific needs and challenges of your market; thinking creatively and outside the box, and continuously testing the model and refining it based on feedback and results.

While developing our unique subleasing model in Saudi Arabia, we aimed to address the specific challenges of upfront rent payments. Our model therefore comprised us renting units on behalf of customers and subleasing it to them with monthly payment plans and personalized pricing. This model tackled the pain points of both landlords and tenants effectively.

Our pivots were based on one thing: the product and how it delivers value to the customer, focusing on the market and customer segment as key pillars to solve for and experimenting on the product front until something worked. This is opposed to a market pivot or customer pivot where the product is there, but needs to be repurposed accordingly. Essentially because previous iterations of the product didn’t fit our original market and customers, we replaced it with a new product. This also gave us an advantage because we leveraged our knowledge of customer needs and market trends to pivot accordingly.

It’s important to note that the success of a pivot relies on recognizing market signals and acting decisively. Pivots are not a sign of failure, but a reflection of growth and adaptation. By focusing on market validation, understanding regulations, leveraging international benchmarks, and developing unique models, startups can maintain agility and responsiveness in a dynamic market.