Unicorns have always captured the imagination of children, but increasingly it’s the business world that’s enraptured with the mythical beast.
That’s for two reasons, the first being the creature is now synonymous with success, having become a definition in the dictionary that means a company which has achieved a valuation greater than $1 billion.
But there is another definition that also fits, ‘something that is highly desirable but difficult to find or obtain’, that certainly speaks to the unusual level of success required to pass said valuation.
Kitopi is a company which fits both descriptions, having become the UAE’s latest company to achieve unicorn status after it raised $415 million from a group of investors including SoftBank Group Corp.’s Vision Fund 2.
It’s a milestone which the cloud kitchen company passed in just three years in operation. Mohamad Ballout, CEO and co-founder sat down with Arabian Business at their recently-minted premises in Hessa Street, Dubai, to unpack the success.
So Kitopi is the UAE’s most recent unicorn, a company which has a valuation of over a billion dollars. For someone who has just arrived from the moon, can you give us an overview of Kitopi, what you do and what sets you apart from the competition?
Kitopi is the world’s leading managed cloud kitchen platform and our mission is to satisfy the world’s appetite. We are a platform of kitchens that partners with F&B brands to help them scale across borders, in as little as 14 days. We do this by taking care of the entire operations – from supply chain, staff training, food preparation as well as delivery of the food and customer experience. This allows F&B brands and restaurant owners only need to focus on what they do best i.e. product innovation, recipe development and marketing, and we do the rest. This has helped us attract several globally recognised brands such as Papa Johns, Nathan’s Famous and iHOP as well as local heroes.
A large part of our competitive advantage is our proprietary Smart Kitchen Operating System (“SKOS”). SKOS is a suite of applications that optimises the performance of its cloud kitchen operations in real time. The solution focuses on delivering a great customer experience across multiple brands in a single kitchen by maximising operational efficiency. Since launch, SKOS has enabled Kitopi to scale to 200-plus brands in 60-plus kitchens over just three years.
What does it mean to you and the company to achieve this unicorn status? Was this always the dream starting out?
We didn’t dream of achieving this milestone, let alone in as little as three-and-a-half years, but this investment reconfirms that what we’re doing is right. More importantly, this investment is commitment to our industry and region and we hope it inspires other start-ups in our region, to build and find solutions to complex problems.
We still have a lot of work to do. We want to be the world’s most customer-centric organisation, and we want to continue to innovate while solidifying our relationships with new and existing brands. We’ve already celebrated but our heads are down and we’re already back to our mission of satisfying the world’s appetite.
If you could go back to the day you started the business what would you tell yourself, what did you get right, and perhaps more importantly, what did you get wrong?
At Kitopi, we celebrate mistakes. The logic behind this is that as long as it’s a two-way door decision, mistakes are completely excused – this allows us to learn from them and move super-fast. The goal then is to identify those one-way door decisions that need to be closely analysed before executing.
And if you could go back and change the mistakes, would you?
Mistakes are meant to be learned from. If you don’t make them, there’s a high chance you’re being very safe. And being safe isn’t what got us to being first movers in this space.
What has made you the most proud over your journey to this point with Kitopi?
The fact that we have built one of the best, high performing teams. We like to think of ourselves as a sports team that’s out to win the play-offs. And just like any other team, we recognise that we’re stronger together.
What’s your view of the digital start-up scene here in the UAE? Is it a hotbed of opportunity and if so what are the key ingredients for anyone wanting to jump off that cliff? What are your essentials for success considering nine out ten start-ups are set to fail?
I massively believe in and support the tech ecosystem in the MENA region. There will be 10s or more unicorns in the next few years alone and we’re all excited to see what’s yet to come.
You’ve just raised $415m in a funding round, how difficult was that? To some that will seem like an eye-watering figure, but are the fundamentals of raising money the same as you go through the rounds? Again, do you have a golden rule, or are there pitfalls to avoid?
We believe this round is not only a testament to Kitopi or the industry but to the entire region. Having said that, we’ve been very mindful about finding the right partners to help us further our mission.
Every business has different needs, but when it comes to investment, my advice is to find investors that are aligned with your vision – it’s not a one-way street and we’re very fortunate to have the support of leading international and regional investors.
We were looking for long-term capital investors, and what was unique in SoftBank is their portfolio of phenomenal companies that we can build synergies with globally.
I also think it’s very important to be genuine and authentic (investors can see right through that), and build relationships with partners from early on. It’s highly unlikely a new investor will invest a large sum of money when first meeting you – trust is built over time and businesses should spend time on this.
How much did coronavirus accelerate the growth of the business, and how did you pivot or change course to embrace the opportunity?
The Covid-19 crisis impacted a lot of industries and the food industry has been no different. In the first few weeks of the pandemic, we saw an initial dip in online orders, which came from customer apprehension of food delivery. However, we spent a lot of time working closely with our brands and delivery partners to educate our consumers on our health and safety practices.
As a tech-enabled organisation, we’re always trying to optimise our kitchens for efficiency and it’s no different when it comes to health and safety standards. We adopted AI technology to help monitor anomalies in our kitchens. For example, this tech could help ensure our colleagues were washing their hands for 20 seconds, wearing their masks correctly etc. If an anomaly was identified, we’d be able to rectify it immediately.
We also introduced thermal cameras to scan temperatures for colleagues and drivers in the waiting areas in addition to regular H&S training and double sealing bags when transporting food.
In addition to this, we teamed up with our delivery and brand partners as well as supported the government in distributing free meals to communities impacted by the pandemic.
Last, but not the least, we also invited small businesses and F&B brands alike to join our platform if they were struggling with keeping their physical outlets open.
What the pandemic has done is help the F&B industry leapfrog to the digital age, which otherwise would have taken them years to do. Cloud kitchens are the future as they not only help restaurants scale beyond borders quickly, but provide customers access to their favourite brands, from anywhere in the world.
Are you competition for the hospitality sector or are you complementary? And do you think your model is changing the food industry for the better? Are you forcing change the same way Uber did?
Kitopi has helped redesign the F&B ecosystem by finding a middle ground between aggregators, restaurants, with the mission of satisfying the customer’s appetite. All our end users are the same: The customer, and we’re all working closely together to deliver fresh food, fast.
So I do believe our managed cloud kitchen model is not only complementary to the hospitality sector, but we’re partners that work closely with F&B brands, to help them succeed. Our problem statement was identified, keeping the hardships restaurants face in mind and our business model was created to help them solve this problem.
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