Generation Start-up: Washmen climbs the value chain from aggregator to innovator

Washmen Profile

Date Started: May 2015

Founders: Rami Shaar and Jad Halaoui

Based: Dubai, UAE

Sector: Laundry

Employees: 170

Funding: about $8m

Funders: Addventure, B&Y Partners, Clara Ventures, Cedar Mundi Partners, Henkel Ventures

In some ways, Washmen’s story is similar to that of lots of other technology start-ups. A bright young thing has an idea to ‘disrupt’ a traditional industry by connecting customers directly to the service provider, cutting out unnecessary middlemen and using an ‘asset-light’ model that means they don’t have to build much of the infrastructure themselves.

However, as the company notches up its fifth year in business, its model has transformed. It now picks up, cleans and returns every piece of laundry itself, using an impressive set-up that can tell them what type of garment is being handled, who it belongs to and how many times it has been through their facility – effectively recording its journey through every step of the cleaning process.

“Every item that goes in, we have video footage that tags and tracks,” co-founder and chief executive Rami Shaar says.

“If you say ‘I didn’t like the pressing of that item’, we’ll take it over and say ‘fine, we’ll fix it’,” he says.

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“We’ll want to know what happened. So we’ll go quickly into the camera, and from that – you’re talking about within seconds – it will show that shirt being pressed, what time it was pressed, who pressed it … we’ll know if it wasn’t a pressing issue or if it was a transportation issue.

“A simple problem leads to extreme investigation because … if this was an ongoing or recurring problem, we want to solve that.”

Mr Shaar is someone who takes a keen interest in the details. The Palestinian-Canadian began his career working in investment banking at Morgan Stanley before moving into private equity at Swicorp, which made a number of investments, including a chain of gyms in Jordan – one of which had a problem with a leak that was “causing a headache” for customers.

“I really wanted to get as involved as going and getting the plumber and getting it fixed and making the experience better. But in private equity I can’t get that involved. My boss told me, ‘you’re too expensive for that’," says Mr Shaar.

He spent a year in private equity, which he says taught him a lot in terms of thinking like an investor. He then left to start Washmen, only to be diverted for a year to work for Uber instead.

“I approached someone in Uber [and] discussed the [Washmen] idea with her. She said, ‘how about you put that idea on the side and join us at Uber? It’s a really exciting time for us’," he says.

“The next day I got a job interview and three days after that I got the offer.”

This was during Uber’s initial push into the Middle East, when the company only had a handful of employees.

In terms of getting his hands dirty, "Uber was as dirty as it gets", he jokes, adding that his operational role covered everything from going out on to the streets to recruit drivers to dealing with governments and regulators.
But the role taught him a lot about using technology and data "to be able to streamline operations without needing to hire a lot of people", which proved invaluable when he cofounded Washmen with chief operating officer Jad Halaoui in May 2015.

“I identified the laundry industry as being undisrupted for the last couple of decades – minimal tech innovation and a lot of room for improvement,” he said.

For instance, many of the neighbourhood laundries in areas across Dubai take in or pick up customers’ clothes, but often send them for washing or dry cleaning to a third-party industrial facility in areas like Al Quoz, Jebel Ali or Dubai Investment Park. With Washmen, Mr Shaar’s initial idea was simply to cut out the middleman through the app – the ‘asset-light’ model, where drivers pick up customers’ clothes and bring them directly to the industrial facilities, without having to pay rent for physical stores.

What’s changed in the five years since has been the drive for detail. The technology side had its frustrations, not least in finding capable staff, but this changed following the hiring of chief technology officer Ibrahim Bou Ncoula in August 2018.

“It took about seven months of, basically I call it flirting, with a candidate until we convinced them to come on board,” Mr Shaar said, adding that it was “the most important hire we have done” in the business, as he has recruited a team of engineers from universities in Lebanon who have helped to transform the business.

Operationally, although the company had worked with good laundries and even managed a little tech integration so that flows were optimised, “we realised there was a cap in terms of the amount of innovation you can do when you don’t own the asset”, Mr Shaar says.

“We also realised there was a cap in terms of quality laundromats in the city. So if we want to scale this five, six or seven times, we need to build our own facility.”

The company already had one wash and fold facility, but after raising $6.2 million (Dh22.77m) in Series B funding last year, it set about planning “potentially the best laundry facility in the world”.

The directors travelled around the world – to China, France, Germany, Singapore and South Korea – looking at laundries and equipment, then designing a system integrating the latest technology, such as a Wet Care system for washing clothes and Air Dry technology, with the entire journey monitored by a system of more than 100 sensor-activated cameras.

The 2,787 square metre facility in Jebel Ali took about eight months of planning, and a further eight months to build. Commissioning began in July last year and by December Washmen was handling all of its laundry in-house.

“Every single month after that it was getting better and better. Part of the KPIs we were looking at were damaged [and] missing item cleans,” Mr Shaar says.

“Those have significantly dropped to extremely low levels that we didn’t think was possible in a laundry. Over the last two or three months, we’ve been really on our best game.”

At peak periods, the company handles 12,000 items per day at its wash, dry and fold facility and about 5,000 at the new Jebel Ali launderette. It was built with growth in mind, though, with the capacity to handle about 25,000 items per day.

“In five years, I would see a very dominant Washmen in the UAE and a lot of smaller laundries going out of business. The laundry business hasn’t been doing well – especially businesses that are dependent on real estate, which we are not,” he says.

Among the investors in the company’s Series B round last year was Henkel Ventures, the corporate ventures arm of the German conglomerate that owns the Persil laundry detergent brand. Washmen was its first investment in the region, and Mr Shaar says that development of the company’s proprietary technology is the thing that has attracted capital.

"Being an operator and a developer at the same time allows you to build really good tech,” Mr Shaar says.

“Within the next six months we will be the ultimate vision of where we want this thing to get to in terms of technological advancement," he adds. After that, “you’ll see how we start thinking about this on a much bigger scale than just the UAE”.