FOR all the cliched takes of finance bros on markets as the best selector of outcomes, the reality is usually different. In fact, they are kind of bipolar, swinging between two opposites too bullish and too bearish even though the ground realities are often in between. The two years right after Covid-19 were high on the optimism side.

This was the age of `biggest-ever rounds` and shoddy metrics. Money was cheap and abundant enough that everyone thought they could conquer everything. As a result, you`d see well-funded startups quickly launching new verticals within days in an attempt to capture a particular category. The race for the super app was truly on, and leading that in the Middle East, Northern Africa and Pakistan region was its poster child, Careem.

The whole idea behind super apps is to build an active user mass (usually through discounts) around a core service and then offer additional services. That helps reduce customer acquisition costs and increase the average order value, thus making up for neat unit economics in theory.

The model has done wonders in certain parts of the world, such as China or Southeast Asia broadly, led by the likes of WeChat, AliPay and Gojek.

So once enough money was available in our region, startups thought they could do the same. Careem launched its super app in the middle of 2020 when the world was under peak Covid-19. At the time, the company`s mobility business was seriously disrupted due to lockdowns and needed to diversify to other verticals quickly.

It did too, but mostly just in Dubai, where Careem headquarters arebased. There, you can still use the app for a number of things, from booking a cab to ordering food to hopping on a shared electric scooter.

Elsewhere, the story was starkly different. For example, in Pakistan, the food business was shut in 2022 and the payments vertical has long been in limbo. Forget that, the company struggled to hold on to even the core ride business, as by early 2021, customers had started flocking to a new rival, InDrive. This held particularly true for volumetric markets like ours and Egypt`s.

This ambition required spending money that the post-Uber acquisition Careem couldn`t anymore even for the core service and the business greatly suffered. But that changed a couple of weeks back when the company announced it had raised $400 million for super apps from e&, or Etisalat Group, the Emirati telecom group which partially owns PTCL too.

This brought together two parties (three, if you count Uber) who have been in the super app race for quite some time. In fact, telcos have been believers of this model long before others came. Remember when Veon spent millions of dollars on building its own version of WeChat and was all over your ads? For them, the case is simple: average revenue per user from voice has been declining so new revenue streams must be unlocked, which are inevitably going to be in tech instead of telecom. Basically, they are just leveraging those tens of millions of customers.

While the bet didn`t exactly work out for Veon then, the company pivoted slightly to unbundle its offerings.

Instead of one super app, it moved to multiple platforms across categories Jazzcash for financial services was already big, but now there was Tamasha for video entertainment or Bajao for audio streaming. And individually, they have all gotten big, especially in terms of users.

Careem`s partnership with e& should be seen from a similar lens of a tech company short on cash turning to one of the biggest state-owned groups and that of a telecom player hoping that the region`s poster child will help establish its footprint in digital.

In theory, things should work out, butwill they? After all, Careem has all but lost its volumetric markets. In Pakistan, it did over 100m rides in 2019 alone, while from 2020 until October 2022, that number was just 63m. So in almost three years, the company did less than two-thirds of its peak volumes. In almost all countries, it has been displaced from the top spot of Google Play and App Store.

This complicates things because the whole idea was to capitalise on existing critical user mass to sell additional services too. Now, that`s mostly gone and bringing them back requires money. Does this mean we`re back tosquare one, the same old era of subsidised growth? Not exactly, e& still has millions of sticky customers, which Careem can build for.

But that somewhat masks the broader point: the (un)conventional wisdom passed among startups on how to grow and about things with questionable unit economics and halfbaked metrics doesn`t pass the test once markets turn the tide. At least, 99 out of 100 times. Careem could possibly be an exception as the company`s ability to raise eye-popping amounts of capital is unparalleled, something other founders should be mindful about. •