There is more money here, and that's why everyone wants to come here

Leonid Dovbenko, co-founder of the famous fast delivery service YallaMarket, has been living in Dubai for a long time. His company transports tomatoes by plane and successfully competes in the international market.

Recently, he launched a new — Yallahub. The company helps entrepreneurs enter the UAE market with the help of ready-made infrastructure and expertise of YallaMarket. RB.RU met with a businessman to find out how everything works and what is missing in e-commerce in the Persian Gulf.

Leonid Dovbenko develops FoodTech businesses. Founded the first company in Dubai with Russian roots for fast food delivery YallaMarket. In 2022, the business turnover amounted, according to its own data, to 1.5 million US dollars, this year the company plans to reach a turnover of 10 million US dollars.

Leonid went from being a waiter at the Hermitage restaurant to (2003) to the owner of successful international companies. Together with the team, he launched the restaurant automation service Syrve Middle East (formerly iiko), Tawreed, and the restaurant community UAE Restaurant Community in the Emirates. Manages YallaMarket, YallaHub, DocsInBox, Syrve Middle East. Leads the YouTube channel "Digitalizer's Diary" (20.8 thousand subscribers). 

— You are a serial entrepreneur with 15 different projects under your belt. We recently learned about the launch of a new company with IT services for the restaurant industry. What do you think is your superpower as an entrepreneur?

— I almost always manage to kindle a fire from a spark and first interest. That is, to do something that customers pay for and where employees want to work. Usually it takes a little time from an idea to the first step: I quickly recognize whether there is something interesting in the project or not.

— In one of your speeches, I overheard a curious phrase: "Start a startup as if you know what it will be after the tenth pivot." Isn't that the main superpower?

— There is probably something to this too. Starting a startup, I understand very well that my thoughts and stories about it have nothing to do with reality.

The world is designed in such a way that people want reliability, so project founders need to say something with a confident look. But in fact, any business at the start looks like this: “We will do something like this around here, but this is not accurate. We will definitely make money, everything will be fine, but what and where will we do — we will understand the process». 

Who lives well in Dubai

— You moved to Dubai in 2018. Can you tell us what has changed since then?

— Significant and profound changes are taking place in every sector, in every direction. Dubai is powerfully rushing forward. During this time, everything has become much easier with entrepreneurship, accelerators, investments, opening a bank account. 

Over the past five years that I have spent in Dubai, the life of visitors has improved significantly. It's not just about household items. For example, Ramadan — the main problem for all expats, — becomes less noticeable every year. Let me give you an example: if before you did something not in Ramadan style, for example, walked down the street with a bottle of water, then you were ashamed. And now it seems to the locals that they are uncomfortable that Ramadan is taking place here. They deviate from many principles in order to provide a comfortable life for all residents.

— Recently, a large flow of Russian-speaking entrepreneurs has been coming to Dubai. When you are asked to tell about the region, what do you say? Talking out of moving?

— I say Dubai — it's not a market. This is a great place to live as a founder. Here you can launch a pilot and get test sales, but the main market — it's all around Dubai. Pakistan, Bangladesh, India, Saudi Arabia, Egypt, Algeria, Africa. This is very important to understand.

Everyone perceives the idea of moving to Dubai as follows: you need to completely copy-paste your Russian business. But it doesn't work. I say: come here, bring your passion, your expertise. And further from what you know how, there will be a new unique pattern — what, to whom and why to sell.

The UAE is going to transform from a local company into a global one: it is important to understand the market and customers in other countries.

 — How did you end up in Dubai? If you lived somewhere in Singapore, in Hong Kong, USA, do you think it would be possible to build YallaMarket, launch YallaHub? Or is it still the magic of the place?

— It would work for sure. The question is the ratio of resources and profits. I came to Dubai with Syrve Middle East restaurant automation business. By that time, we had here, one might say, crazy clients. Conventionally, the restaurateur left Russia, opened an institution and, by inertia, continued to use what he was used to. There was no systematic work, but we arrived, adapted the product, made the translation. Now in Dubai, more than a thousand restaurants are connected to it, and around the world — about 50 thousand establishments.

When choosing where to open, I traveled to America, to England, to Australia. The whole English-speaking world went through! I looked at Singapore and Hong Kong. I'm sure the project would take off everywhere. But, for example, in Europe, state taxes will take all the money. In America, all competitors are 1000 times bigger than you, and they have disproportionately more budgets for development and competition.

In general, there are few restaurants in Singapore. This is an island that does not grow, the business has a ceiling there. To overcome it, one would have to climb into the Chinese world, and it is rather incomprehensible and complex. The Chinese think differently than we do.

That's why I settled on Dubai and made the right decision: the Arab world turned out to be wonderful. Weak competition, a fairly large market, and peoples are similar in many mental attitudes. The market is growing, which means it is easier to attract customers. And accordingly, you have the maximum bonus: if you succeed, then all the money is yours.

Aggregator, not a marketplace

— Let's talk about YallaHub. Do I understand correctly that the project arose because in YallaMarket — express delivery of products — Do you compete with other services not only for the time and quality of the product, but also for the range? And with the help of a new business, do you plan to quickly expand it?

— We started with the classic model of super-fast delivery from dark stores. Unfortunately, this business model has big drawbacks. The whole world was under the delusion that it works great, but it doesn't. The fact that some of the companies managed to develop according to this model, — a mistake of nature or a miracle.

The model itself is not perfect in terms of unit economics. The fact is that in mass retail, most people are not ready to overpay for speed. Other things being equal, people would rather spend their time to get a lower price.

Plus there is a lot of retail work that is needed for the system to function. At «VkusVilla» its development took about ten years, "Auchan" spent 30 years. This is work to expand the range, launch brands, organize supply chains, and so on.

YallaMarket is quite difficult to do the same for even 10 years. We are originally from IT, not from retail, which makes immersion into the sphere slower. Therefore, we were looking for options on how to improve the classic model.

All other delivery companies have ignored the delivery problem with darkstores, flooding it with billions of dollars of investment. We were also going to do this, but, thank God, we almost didn’t have time — later began to invest and look for money. And then they clearly understood that it was important to look for some other way out.

— What problem did you start solving first of all?

— It was necessary to make sure that not only we, but thousands of entrepreneurs worked on the assortment. At the start of work with YallaMarket, we probably received requests dozens of times a month: “Guys, help us go to Dubai, take us to your place!”. At this point, we thought: “Let go, this week we are busy with croissants, and next — sausage".

But at some point we realized that we weren't taking these guys into account in vain. We have already spent money on building infrastructure: to recapture it, it is important to use our tools to the maximum.

Then we thought: okay, what if we are the engine for other brands that sell not only products, but anything? And so this story was born. And here — On December 1, we opened access to the infrastructure, and since then we have brought more than 45 brands to the market. We are currently receiving at least five inquiries per week. In general, we are moving quite briskly.

— Where are the requests coming from?

— Now for any Russian brand the issue of development, scaling and diversification is very acute. Approximately 60% of requests come from compatriots.

But we understand that the hype can pass. Therefore, part of the team deals only with the foreign market. Our client pool includes companies from America, Europe, as well as India, Sudan, Kuwait, Jordan.

The world is in recession, so everyone wants to sell to the Arabs — the richest population today, and they want dollar revenue in the Arab world. There is more money here, and that's why everyone wants to come here.

— What brands do you bring to the foreign market? Is it just food?

— Of course, food products are still in the lead: we have a strong expertise in this area, a large and loyal customer base. For example, when "VkusVill" appeared in our delivery, sales of their products went up in three minutes. And we didn’t even have time to start an advertising campaign. Just so organic.

There are a lot of cosmetic brands represented. This includes household chemicals and cosmetics. Now we are testing the jewelry hypothesis: can it be sold online here as in Russia. We are actively developing the pet food category, trying to sell underwear, sportswear. 

While we choose brands where there is no large size range, a choice of colors. Many big fashion companies want to go abroad, but we are still afraid and want to gain experience.

— If I want to expand to a new region with your help, and I'm selling goods not in the upper-middle class, can you still take me? Is it just that my products won't be featured on YallaMarket?

— Yes, that's right. Not all brands we sell at home. There are 72 marketplaces in the Persian Gulf region, the light has not converged on YallaMarket. Some items, for example, are sold on Amazon or Noon. The goal of YallaMarket — to be something like "Azbuka Vkusa"; and «Vkusvill» on delivery.

It has its own assortment strategy and target audience: everything that does not fit into it cannot get into YallaMarket. But there is nothing wrong with that. We roll out sales, make a website, test hypotheses, the economy, find bloggers for advertising. We just understand how everything works here, we have warehouses, delivery and experience.

— That is, YallaHub — is this a marketplace?

— We are often confused with a marketplace. But we are not Wildberries, and I am not Leo Bakalchuk. Yallahub — is a marketplace aggregator and digital distributor. We just have our own niche shopping channel called YallaMarket: premium food delivery.

Our main idea is to add brands to the necessary trade channels from one place, one warehouse. Without us, the founders need to build agreements themselves, send a pallet to each cha