This article was originally published in my newsletter Emergent.
This week Emergent interviews Mostafa Amin, CEO of Breadfast. Breadfast is Egypt’s leading quick commerce startup and today delivers 2,500 different items to over 200,000 households in Egypt in as little as 30 minutes. Since its founding in 2017 Breadfast has grown rapidly and the company has raised 30 million of funding to date, and has set the ambitious target of making over 6 million deliveries in the next 12 months.
For more information on Breadfast’s product, market and growth opportunities, check out our deep dive.
Highlights from the Interview
[Lightly edited for readability]
Mikal: Mostafa, thanks for joining us today to share the Breadfast story. I’d love to start our conversation by learning about where the idea for bread fast came from and how you came up with the name.
Mostafa: Thank you, Mikal, firstly for having me and secondly for asking about the story. We started Breadfast back in 2017. The name is, yes, very unique.
We believe that bread is the most basic unit in the household and hundreds of millions of people globally, if not billions consider bread the most basic unit in the household. Before Breadfast my co-founders and I we built several tech companies. In 2016 a major currency devaluation happened in Egypt. It was a little bit of what I would call it an economic crisis.
I had this week in 2016 thinking what’s next? Should I leave and travel and co-found the company in the US, or should I stay? I had this week trying to talk to myself and thinking of my next step. This week was very, very unique because I had to really think of all the companies that I built previously.
Before Breadfast, I personally failed four times and for me each failure was a very, very strong learning experience. So, I started to reverse engineer and think back, and I concluded each failure in one big statement.
For one of the companies the reason I failed was due to the commitment of my founding team. Another company’s failure was due to a very, very bad business model. A third company failed also due to the business model and the monetization strategy. So, for every learning I had to extract a statement and I had this whitepaper and I started to write. If I’m going to stay in Egypt, I’ll try to avoid these mistakes. The first thing I wrote in this white paper was a very committed team.
Most of the criteria and the lessons I wrote down were more customized for emerging markets. The reason why I decided to stay is I told myself, okay, I can go to the US tomorrow. No worries, I’m going to start a company. What about emerging markets? You know, I’m lucky being Egyptian. I’m lucky being from this part of the world which is currently the hottest spot in Africa and Middle East. The market is big. Egypt has 105 million people. The location of Egypt is very uniquely located between Africa and Middle East.
I decided that I think I’m in the right place. It’s my decision to stay. I said okay, if I’m going to avoid all the mistakes that I made in my previous companies – I think I’m going to stay. The most important thing I decided was building a very committed team. You know it’s very, very tough to find committed people in emerging markets. This is the first challenge. Basically my current co-founders Muhammad and Abdullah are the most committed people I have met in my life. I went and spoke to my co-founder Mohammed and told them “Hey, I’m going to start a new company are you going to join me, or do you want to travel and leave Egypt?”
He said “if you’re going to start a company, I’ll be joining you.” And then I talked to our third co-founder Abdullah who’s our CTO and we decided to build something. We didn’t have a specific idea at that time in 2016. All we knew is that we were going to work together based on the commitment that we have, the trust we also have and that we really want to do something big out of Egypt, to be able to scale it across Africa and the Middle East.
The three of us are all coming from tech backgrounds, and we’re also coming from the school of validation. We started to think of many different ideas. When we started the process we started to think of things like VR, AI, AR because our minds are very, very influenced by tech. But every time we went back to check on the criteria in the whitepaper, we said “no, no, no, this is not the thing that we’re going to create.”
We cannot over-complicate the product we’re building for the customers we’re targeting. It should be very, very simple. Basically, for each idea we had to conduct user interviews. For each idea we created a pitch deck and got the .com for it. Then we conducted somewhere between 100 and 150 user interviews for every single idea.
Then we sent the idea to our network of global investors to get the feedback. And if the idea was not good, if the feedback was not good, we killed the idea and we were doing this for almost one year. Until I was having this very late dinner with my co-founder Muhammad. We were having a dinner in a seafood place in Cairo, and it was very, very late.
The first thing that came on the table was a basket of fresh Egyptian Bread. Basically, Mikal for this year any problem I saw in front of my eyes, it went from my right ear and then it went through my processor. Then it would go out from mm left ear as a very quick pitch line. So I looked at the bread and then I looked at my co-founder and then I told him Muhammad: “freshly baked bread delivered to your doorstep every morning using a mobile app.”
Muhammad was sort of “okay hmm, interesting.” Then we woke our third co-founder Abdullah up – it was like almost 1:00 AM in the morning. “Hey, Abdullah” – and I pitched him over the phone – freshly baked bread delivered to your doorstep every morning using a mobile app. Abdullah also liked the idea. And I remember the second day I was driving with my wife and I told her “Hey I’m starting a new company.”
She started to laugh. Like what’s new, you’re starting a company every quarter. I told her, please, no jokes. I’m trying to find the name. So, she asked me to pitch her. I told her freshly baked bread delivered to your doorstep every morning, using a mobile app.
In less than three seconds she said “why not to call it Breadfast?” I stopped the car, looking for the .com, we’re a little bit crazy when it comes to the domain. We always prefer to have a .com. The third day I met with my co-founders, and I mentioned the name and they said this is a very cool name, let’s work.
We started to work on the story and basically the story of Breadfast – from bread to everything. From the most basic unit in the household and in time to the most advanced unit in the household. So Muhammad before we left that meeting said “guys, do you think we need a different name since we know that we’re not going to only deliver bread in the future.”
We said, yeah, why not? Then Muhammad suggested a great name as well. He said why not to call it habits – habits.com. So the first thing we did, we looked up the domain and we couldn’t find the.com. So actually we became more attached to Breadfast. Part of our penetration strategy is to be able to deliver fresh bread every single morning to customers’ doorsteps and to build a great customer experience on top of this very basic type of communication with customers.
The plan was to continue adding products and be able to maintain the same level of experience. When we started Breadfast we started delivering three SKUs in the bread category. Today we deliver more than 2,500 SKUs – not only bread, but bread, fruits, veggies, daily products, fresh and non-fresh products. We even now deliver coffee machines to customers’ doorsteps.
The first thought for the business model was – “hey guys, we’re going to build Uber for Bread.” There are lots of bakery shops around us in Cairo and very easy to build the stack just to be able to connect the consumers to the nearest bakery shop, and then we can handle the logistics. But I stopped and said “no, we are not going to build Uber for bread. We are going to bake the bread ourselves.”
I remember my co-founders Muhammad and Abdullah they almost had a panic attack – “what, what do you mean by baking bread?” I told them “guys, rule number one in emerging markets, reliability does not exist.” We had to go and start it from the scratch. Believe it or not but globally Breadfast is one of the first companies in the world to start what’s called B2C native supply chain. The first six months with the company we had to learn how to bake. We were only three crazy guys trying to learn how to bake bread.
The one who taught us he’s a very, very dear colleague of ours. He passed away in the beginning of 2021 due to a heart attack. This guy he’s the one who taught us how to bake bread, and he’s the one who basically pushed us all the way. He believed in our story he said “I think you guys are crazy, but I feel also there is something in your energy that’s going to change things.”
We had to learn how to bake. I was the first driver in the company. My co-founder Muhammad he was the first customer experience agent in the company, and our third co-founder Abdullah he was the first coder in the company. We started as three people. Today Breadfast employs more than 1,500 employees. This is part of the story that we really feel proud of that today we’re 1,500 people and we know that in seven or eight years from now Breadfast is going to be a family of 50 or 60,000 employees hopefully taking over Africa and the Middle East. Our goal basically is to change how people consume their daily essentials, starting from the basic unit which is bread, and in time to reach more and more advanced products. This is pretty much the story of Breadfast.
Mikal: I love that story. What a beautiful origin story with all those little details. You mentioned your previous failures as a founder, which is a theme I’d love to explore with you today. I think we’re in an environment where for the moment it’s increasingly harder to fail. There’s so much capital available. There’s so much FOMO, MNA activities at record highs. The market has changed a lot, but how do you think the current market is negatively affecting founders today?
Mostafa: So look, I think failure is something also essential, right?
The liquidity in the market today wasn’t the same five or six years ago or even 20 years ago. It changes with time, according to each environment. If you’re raising in the US it is totally different than raising in Europe which is totally different than raising in India or Pakistan or Africa. But right now the liquidity is there, but of course this brings new types of challenges right?
I have two current concerns based on the failures I experienced in the past. Right now people think that because money is available this means that it’s easy to build a company. No, this is totally wrong. People get excited very, very quickly. People see all the titles and PR everywhere – like this company raised X number of money and that company raised another X of money, blah, blah, blah. Then people think, wow it’s very easy, okay. Money is there. I’m going to quit my job and I’m going to start something.
This is good, but also this is very, very bad because excitement is one of the things that founders feel at the beginning and after facing a couple of challenges they give up. I think if you’re not a hundred percent sure of this step, don’t ever take it because this step means you’re getting money from investors. This means you’re employing people who are going to rely on your income as a company to be able to feed their families. It is a big, big, big responsibility. So, the first concern, don’t get excited too quickly, you have to study very well. You have to understand what type of responsibility you’re going to be going through.
Number two I see people who never built companies before, when it comes to teams – because liquidity is there – they start with a Ferrari team, this is what I call it. You cannot start with the Ferrari team from day one. Believe me, you have to believe in your own vision first and see it growing day after day before you onboard the Ferrari team. The Ferrari team has to come at the right time. If you’re starting with the Ferrari team to impress investors, the founding team should be the foundation of the Ferrari team. But they shouldn’t be the smartest guys who are going to lead the company’s future.
You need people who have the right commitment and the trust at the beginning. I see lots of great founders today when they start the company, they only focus on having the best teams in town. I don’t think this is the right approach. What will make the company sustainable and scalable is seeing your vision growing day after day and bootstrapping at the beginning. Don’t rely on funds big time, because if the funds are not there in a year or two years time the company is not going to continue anyway right?
These are two of the current concerns I see. Of course there are lots and lots of other things but this is what I have on top of my mind at the moment.
Mikal: I love the concept of Ferrari team. It’s such a great way to put it. You mentioned how hard it is to find and retain people in emerging markets and increasingly this is a global problem. People are changing jobs, professions, locations, and more. How do you think about retaining your Ferrari team at Breadfast?
Mostafa: I think we’re about to have our Ferrari team after five years. We took it step by step. We’ve been trying to focus on the engine at the beginning. Now we’re completing the missing parts of the Ferrari. It depends also on the company, if you were a B2C company, in our case we’re a B2C company, right? Thankfully as a company we really do our best to have a good reputation with our customers first.
You’ll be surprised most of the team members we have today they already come to the first interview very, very excited and passionate to explore what the next steps are because they already have heard of Breadfast or someone told them these guys are trying to change something in a unique way. They are delivering bread at 5:00 AM! People come to us a little bit ready to discover and explore what we really want to do in the future. I think after they go through the story and see that we as a team we’re not managers in the sense of telling people what to do on what not to do.
I think we really love to empower our teams because all of us are very, very hungry to learn. If you give or you send the sense of you being the manager and the one who knows and others don’t know, this is a very bad thing.
Mohammad was the first customer experience agent and until today if there is a problem he puts his hands on the spot to solve this problem. Mostafa was the first driver in this company, if there is any rush Mostafa can go and deliver until today. Abdullah is the first coder in this company. Every new member in the management team they have the same attitude. Our COO when he joined us he had to deliver all the orders for quite some time. He goes until today to the warehouse. It’s not about being a COO or a C-level in this company. I think this energy really exists in Breadfast big time. I believe this is one of the main reasons why we can retain our great employees.
One thing I find very striking about Breadfast and your approach is how systematic and deliberate you have been in scaling the company at every stage. Unlike other businesses in the category that have raised one, two or three hundred million and blitzscaled you’ve been a lot more deliberate. I’d love to understand where this approach came from and what the benefits have been to Breadfast from that approach.
So let me tell you right now as you said the fundraising market has started to change dramatically.
I would also like to tell you part of the story here because I remember when I was pitching tech investors, because all the investors I know are coming from the tech world. I remember when I was pitching investors at the beginning once they heard we’re baking our own bread they were like “what, what do you mean you’re baking your own bread?” I was like yes we are baking our own bread. “You mean you have equipment, is it an asset heavy business?”
I would say Yes. Then they would say “Oh, I’m so sorry. We cannot invest. We only invest in asset-light models.” Again we started back in 2017 it was a big struggle to go and talk to a tech investor telling him that we’re baking bread. Today, we feel so proud that Breadfast was one of the initiators of this trend. We believed that for a category like the grocery category it will never be sustainable if you’re doing it in a marketplace model. It should be following the e-commerce playbook not a marketplace. You need to own the supply-chain, it should be an end-to-end supply chain game. Why was that? Because the margins are very, very thin.
The only way to sustain such a model is to build a good customer experience and to invest a lot in the brand you’re building. Because it’s going to be a relationship between you and the household. You need to focus on the frequency per month, on the retention and on the quality of the customer experience you’re building.
But anyways back in 2017 it was so, so, so hard to go and raise money. I think I would say part of it was luck. Luck that we couldn’t raise much money in the past and this pushed us and forced us as a team to learn tons and tons and tons of lessons. We are confident of what we’re building. We are confident of our vision. We know that we’re going to do this and one day it is going to be from bread to everything. You have to navigate and find your own way around. If we were able to raise lots of money in the past I don’t think Breadfast was going to be Breadfast we have today in Egypt and very soon in Africa and Middle East.
So I think we’re a little bit lucky that we couldn’t raise lots of money in the past. Recently we’re having many very interesting conversations. We closed our Series A two months ago which we will announce in a couple of weeks.
Let me give you also the example of Getir – one of the great examples we have in today’s world. So these guys they were able to raise lots of money recently. When they started they started bootstrapped for quite some time. I think the team is a very strong team.
You can also look at GoPuff. These guys are not recent players. These guys have been operating now for a long time. At the beginning of each player of the names I just mentioned they really bootstrapped for quite some. These guys had to find their own way around. All of them really went through very unique learning experiences.
That’s why these companies today are able to raise lots of money. But, at the same time they know how to spend this money. Some other companies raise lots of money and they spend it the wrong way. I see this as more of an investor decision, not only a company decision. Because if the investor decides to inject all this money and they are not sure if this team is the right team to execute and to scale the company using this funding I think this is also a responsibility coming from the investor side. It’s not only the company side.
Mikal: So today, Cairo is your main market in Egypt and also Egypt’s biggest city and former capital. Personally, I think one of the most interesting features of emerging markets is that the capital city or the economic hub is often very different from the rest of the country. So, I’m curious as you’re thinking about expanding across Egypt to some of the smaller cities such as Luxor or Aswan, what differences do you think there are in consumer behavior? What changes will you make to the product and operations to better serve adoptions across all of Egypt?
Mostafa: Thank you for this question. So a couple of things here. First the good and the challenging thing about being a grocery darkstore player: this game is a very, very hyper-local game. You’re not scaling a SAAS company. You’re scaling a very, very tricky part of the daily consumption by billions of people in the world, right? Scaling Breadfast in Cairo and Giza is totally different than scaling Breadfast in Alexandria, Mansoura or any of the cities that you were just talking about.
This is the nature of how to scale a company. You need to always adapt to your operations to the local taste, to the local sense and to the local consumer behavior. We at Breadfast we consider all of this. We don’t think scaling very fast is that a good thing.
When it comes to grocery darkstores you really need to understand lots and lots and lots of data points before you decide on where to expand and where not to expand. Cairo and Giza we call it Greater Cairo. It is a big enough market because Cairo and Giza now have almost 22 million people. It’s one of the largest cities in the world.
We as Breadfast we’re expanding in the next year to eight cities, and we are about to start to do this after learning for four and a half years. We were just trying to learn to crack the operational model of Breadfast before we decided to go and scale to other cities within the same country.
At the same time once you go and expand in Kenya or Nigeria or Emirates or Saudi, every single market has its own learnings. So, scalability here is a little bit tricky. Egypt alone is 105 million people. It’s a huge market. It’s the hottest spot in Africa and Middle East.
We’re very excited for what’s really coming in the next few years. It’s not only Breadfast. There are lots of great companies coming out Egypt at the moment. Each company represents a specific industry, and each industry has its own challenges with serving their customers.
Mikal: So you’re offering over 2000 SKUs today, which is a huge range. How do you plan to evolve the product portfolio over time? Are you going to be experimenting with different types of delivery and what’s your vision moving forward?
Mostafa: Actually right now most of our deliveries are delivered in under 60 minutes and in three months from now all of our infrastructure is going to be for 20 minutes delivery. We have a couple of fulfillment points at the moment delivering in under 20 minutes. Our goal to make it 20 minutes across all of them. This is happening in three months from now. As for the product portfolio we believe that as a household some of the items you need to be delivered very quickly. I mean if you’re in the kitchen and you need a cucumber to make a salad. Of course you need the ingredients now, right? But if you want a coffee machine you’re not in a rush to have the coffee machine right now. It can be delivered tomorrow, the day after tomorrow, next week, or in two weeks – there’s no rush.
We’re studying at the moment all the consumer needs and we’re trying to build a very dynamic and flexible operation. If you need it on the spot it will be delivered on the spot and for the stuff that you need it to be delivered on a scheduled basis, we’re going to adapt to this as well.
This is also part of Breadfast’s muscles. When we started Breadfast we started with a model called Breadfast Tomorrow. We were delivering bread at 5:00 AM in the morning. We’re the only company that’s delivering fresh bread at 5:00 AM in the morning in the world. Today we have Breadfast Now, our on-demand arm. For the on-demand deliveries of course there will be a limit for the number of SKUs. We believe it’s going to be somewhere between 2000 and 3000 SKUs. For the scheduled deliveries the sky is the limit.
Mikal: So I want to transition a bit and speak a little bit about Egypt and how the ecosystem has evolved. You’ve been in the ecosystem for over 10 years, building a variety of different companies and a lot has happened in that time. So, I’m curious from your perspective, how’s the Egyptian ecosystem evolved over the past decade.
Mostafa: I’ve been now in Egyptian startup scene for almost 10 years. I remember when I started I was talking and getting advice from great entrepreneurs at that time. Most of the entrepreneurs at that time they couldn’t continue because they couldn’t raise any money. The reason behind this is because of the investment landscape. At that time, we didn’t have any experienced investors. If you had investors most of them came from a real estate background.
So people who have money and were interested in learning about technology. They would say “okay we can invest money.” And then you see this investor who wants to invest $10,000 and take 50% of the or 20% of the company.
They used to deal with the companies as if they are buying an apartment. The next day after the investment they would ask “hey, what is the return on my money.” We didn’t have really good investors at that time. Today we have started to have really great seed investors and we are about to have great Series A investors after 10 years. But this is again part of building the startup world in such environment.
The startup scene has evolved big, big time. Today it’s not only investors from Egypt who are looking at Egypt or not only investors from Emirates or Saudi or any of the surrounding countries who are checking on Egypt. Today we have big names from the US and from Europe checking on Egypt in general.
At Breadfast we have lots of great investors from Egypt, from Saudi, from Emirates, from USA and Europe. There are lots of other great companies now in Egypt. You have started to see great founders who also have built companies before. Recently you have started to see lots of founders who really want to take the risk. They are bringing investments from everywhere in the world. Our friends at Telda for example, Sequoia invested in them. There are lots of other great companies like Trella, Maxab and lots of other great companies raising like 30, 40 and 50 million dollars.
This is now started to be the norm and these guys are really achieving great numbers. So, they are showing the potential of Egypt to the whole world. Which is the great part of the story. So man, it really evolved big, big time and I’m very, very happy and optimistic for what’s coming next for Egypt.
Right now Egypt is going to lead all the innovation across Africa and the Middle East. Hopefully you will see lots of news in the next years about how many unicorns are coming out of Egypt representing the continent.
Mikal: Absolutely. The first generation of founders are always ambassadors for the country and ecosystem, right? How fast their companies grow, what investors they secure and the talent they help create have a significant impact. These early founders play a huge role in setting the trajectory for an ecosystem.
Mostafa: Exactly.
Mikal: So do you think Egypt has an entrepreneurial culture? Is entrepreneurship rewarded? Is it part of the culture of the country or is it still something that’s still under development?
Mostafa: I mean an entrepreneur is someone who has a vision for something and decides to take the risk to start it from the scratch.
We have had lots of great people in Egypt who were entrepreneurs. It is part of the culture. But I would say for the past 10 years there have started to be many more tech entrepreneurs – following the global trend. So, if you’re talking about tech entrepreneurs yes it has now started to be integrated as part of the culture. In the past we also had entrepreneurs who started lots of companies and weren’t able to find as much success as recently.
You know, it’s all about taking the risk Mikal. This is one of the main factors for any entrepreneur to start a company. So I would say like somewhere between 1980 and 2000 people were a little bit disappointed in Egypt. People didn’t want to take the risk but before this and after this entrepreneurship has been part of the culture absolutely.
Mikal: So we’ve had all this progress in the ecosystem over the last decade. I’m curious from your perspective, what do you think are still the big challenges or gaps what’s holding the ecosystem back that we as a bigger tech community need to work to solve?
Mostafa: I think it is the same challenge you mentioned a few minutes ago. Recruitment is a bit of a challenge. Tech talent in Egypt now, all the great guys they are working for US companies or for companies in Europe. The pool is very small when it comes to tech talent. So, recruitment in general honestly is a big challenge.
We have to be very innovative to solve it because you have hundreds of millions of people around you and you want to serve them. So, the only way to do it is to be innovative.
Mikal: My last question for you is what do you think foreign investors don’t understand about Egypt today? What are they most often get wrong?
Mostafa: This is a very tough question. I think investors need to really come and visit Egypt. Most of the investors I know that had really easy decisions to invest in Egypt, they had visited Egypt. Sometimes you hear some stuff in the PR that really affects the country’s reputation.
But this is PR right? There is always a political agenda behind every press release. If you are an investor and you really want to understand what’s going on in Egypt, you have to visit Egypt. Egypt is a huge country with lots of diversity in everything and consumption is crazy, growth is crazy, internet penetration is crazy. It’s flying at the moment. So again, I experienced this first-hand for all the investors who really had easy decisions to invest in Egypt. The common feature between them they have been to Egypt.
So I would like to invite any investor who is interested in learning about Egypt not to go and read online about us. Because the very interesting part is that when you read online about anywhere in emerging markets – not only Egypt – 90% of what you read is not built on data. You know it’s built only on opinion. Like someone will just want to say something about this emerging market. But if you, if you really want to read online about Europe and USA it is a hundred percent data-driven right. There is sort of credibility and benchmarks involved.
But in emerging markets – not only Egypt – but any other country if you really want to understand what’s going on you have to visit. You have to talk to locals. You have to understand what’s going on here. This is my advice for any investor who wants to really understand more about Egypt.
Mikal: Awesome well Mostafa I really enjoyed this conversation today. Thanks for taking the time to share the BreadFast story and your take on where Egypt is today.
Mostafa: Thank you so much Mikal, my pleasure. And again, thank you for having me.
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