The rapid rise and sale of GoNabit

The co-founders of GoNabit, the Middle East's homegrown "daily deals" website, have some blunt advice for digital startups in the region: Don't expect to get much sleep

GoNabit co-founders Dan Stuart, left, and Sohrab Jahanbani in their office. Mike Young / The National
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The founders of the daily-deals website GoNabit have some blunt advice for budding internet entrepreneurs: don't expect to get much sleep.

Dan Stuart and Sohrab Jahanbani, the founders of the site, know this only too well. GoNabit is among just a handful of internet startups in the Middle East to have been acquired by international companies.

Last month, GoNabit was bought by LivingSocial, one of the new kids on the internet block in the US, for an undisclosed figure in what was a landmark deal for the region.

To illustrate the importance of the takeover, LivingSocial has estimated revenue of US$50 million (Dh183.6m) a month and a valuation of $2.9 billion, according to the influential website TechCrunch.

So we asked the GoNabit founders about the background to that deal, the website's anti-spam policy, and the problems of launching a web business with someone you have known for only a short time.

When you set up GoNabit, was it with the intention of eventually selling it?

Mr Jahanbani: You don't start a business and think "we'll do these things and we'll get bought out". If you do that it will be a disaster. You start something to succeed. It's very important to do something you feel passionate about, because you could be doing it for six to 10 years.

Why did you choose to sell to LivingSocial? Did you have any other offers on the table?

Mr Stuart: We had ended up with three different offers to acquire all or some of the business.

Mr Jahanbani: We weren't solely driven by the best financial deal. We wanted a deal that was great for all our stakeholders, especially our staff. We spoke to other players in the space, but when we saw LivingSocial's values and approach, we were really impressed.

When you were in negotiation with LivingSocial, was there a time when you thought that you did not want to sell?

Mr Jahanbani: There's always going to be a time when you stop and say to each other "are you sure?". But I guess we were.

GoNabit has a policy against sending spam e-mails. Was the prospect of an acquisition by a US company behind that decision?

Mr Jahanbani: No. I think it was just that we wanted to go home and sleep at night. In the old days, when you did business, it was all face to face. Now you can sit somewhere and a server pumps out all these messages. But imagine you were back face to face, and approaching these people.

Other group buying sites have been accused of spamming. Do you think that's giving the industry a bad reputation?

Mr Stuart: For sure.

Mr Jahanbani: It's not just the daily-deal space that gets a bad reputation, I think it's e-commerce businesses in general in the region. Why do people go to shop at Amazon? Why isn't there a local competitor? It's about trust. Part of that is that your identity is going to be safe. Are they going to sell your e-mail address? These are important things that people think about.

What are some of the challenges when launching a startup?

Mr Jahanbani: I've been doing this for 10 to 11 years and had to make some major lifestyle decisions. My holiday time, my personal time, my ability to maintain friendships and relationships … You have to be prepared to invest your time, invest your money and invest a lot of who you are into the businesses you create.

How did you two meet?

Mr Stuart: We go way back. Way back …

Mr Jahanbani: To kindergarten. We met in February 2010.

Mr Stuart: And we started working together in March 2010.

Ah … you were being sarcastic.

Mr Stuart: I was already working on the site when I met Sohrab. I was doing everything - the hiring, the business modelling, the marketing plans. So I was actually in the market for some help. I was committing 14 hours a day, seven days a week to doing this. So one of the big things that was important was for us to both have the same level of commitment to the business. To partner with someone who didn't wouldn't have lasted.

You were working with each other for just 10 weeks before GoNabit launched in May last year. Was that tough, given you barely knew each other?

Mr Jahanbani: It's easy to say "oh yeah, I've known this person for years, therefore it will be fine to go into business together". And I've done that before. But the thing is, when you start working with someone, it's a totally different relationship to being friends or family. So it doesn't matter how long you know someone when you work with them, because your expectations are different.

Have you had any arguments?

Mr Jahanbani: No. Not rows. We've never had to get the mediators in. We've had different perspectives, different opinions, but we've always resolved it. The good thing about a partnership is that you get to talk things to death. So we've probably spent several thousand hours discussing the topic of payment options.

Are we going to see the floodgates open for digital-startup acquisitions in the Middle East?

Mr Stuart: If you had $100,000 to put into any online business in the region, who would you put it into? It's not a long list.

Mr Jahanbani: In order for there to be acquisitions, there need to be viable businesses to be acquired.

Do you have other advice for someone looking to launch?

Mr Stuart: Do what's hard. Because if you sort all that out, it's stuff that other people can't solve.

Mr Jahanbani: Stop talking about it, and start doing it.