Those articles that appear on the front page of LinkedIn don’t always catch my eye, but when they do, they’re probably titled something like, “The Story Behind the Largest Internet Acquisition in Middle East History.” So it was that I found myself reading an article bearing precisely that title when I came across a rather remarkable claim:
Talabat’s acquisition by Rocket Internet for a stunning $170 million USD—the largest purchase of an internet company in the Middle East to date— has infused the regional tech startup sector with newfound optimism if not amazement.
The article went on to detail how the deal for the Kuwaiti startup Talabat went down, but amidst all that talk of optimism and amazement, I found myself hung up on that little aside: “the largest purchase of an internet company in the Middle East to date.” I knew Google bought Israel-based Waze for nearly a billion dollars just a few years ago. I couldn’t think of other recent Israeli exits off the top of my head, but even that one example was enough to make me suspicious of the article’s claim.
Now, you might be thinking to yourself, there’s a reason “Nina Curley” — if that’s her real name — is a LinkedInfluencer, and doesn’t write for a real journalist outfit. She just forgot to do her research. Missed one big example. Didn’t fact check. Happens to the best of us. Except that Curley isn’t the only one to make this sort of claim. Several other articles did too, as well as numerous Twitterers:
And so on. In case you are unfamiliar with the acronym, MENA stands for Middle East and North Africa, and at least according to Wikipedia, is supposed to include Israel. Which would make sense, given the country’s geographical location.
I’d like to imagine that oversight was just an innocent mistake, but it’s hard not to believe something far more nefarious has occurred right under our crooked noses: Israel has been wiped off the acronym. This means war.
So back to your celebration. $170 million. That’s kind of a big deal. Tell me again, what does this Talabat do? Don’t guess, I’ll tell you. It’s basically Seamless in Arabic, and over its ten years of existence, has “conducted more than 8 million orders, sees over 25,000 pageviews a day, and has more than 400,000 registered users.”
To put that in perspective, Seamless handles nearly 200,000 orders a day. But that’s not a fair comparison. Seamless operates in around 600 American cities plus London, while Talabat only services… the “State of Kuwait, Kingdom of Saudi Arabia, Kingdom of Bahrain, United Arab Emirates, Sultanate of Oman and State of Qatar.” It would appear this move was made with an eye toward expanding Talabat’s services across the rest of the Arabic-speaking world. As an aside, does translating GrubHub into Arabic really qualify as a tech exit?
And yes, it’s hard to imagine that Rocket has ambitions for Talabat far beyond the Arabic-speaking world. At the same time that it bought Talabat, it also purchased nine other companies across Asia that do exactly the same thing, but — get this — in different places. In other words, Rocket bought Talabat for the market, not because it wanted access to proprietary technology or even business secrets.
Still, after all that, I can hardly blame these guys for reflexively excluding Israel from their gleeful celebration of a $170 million Middle Eastern exit because frankly, the comparison is not flattering. I did a little poking around and turned up this remarkable fact: 70 Israeli companies were bought out or held initial public offerings in 2014. The average value of those 70 exits was $212 million. In other words, the widely-celebrated “largest tech exit” in the history of the entire Arabic-speaking world would hardly register a blip in Tel Aviv. And nobody buys Israeli start-ups for access to the Hebrew-speaking market.