How a Former Googler Cracked the Israeli Arab Market

Send in e-mailSend in e-mail
Send in e-mailSend in e-mail
Like Uber, but with cash and no need for exact street addresses, Haat has broken into a virgin market in Israel - Arab communities
Like Uber, but with cash and no need for exact street addresses, Haat has broken into a virgin market in Israel - Arab communitiesCredit: Haat / Courtesy
Sagi Cohen
Sagi Cohen

Hasan Abasi has a doctorate in computer science from the prestigious Technion-Israel Institute of Technology and has worked at Intel, IBM and Google. But the critical moment of his career came when he tried to order takeout food to his house.

This was in 2018, when Abasi was living in the Arab town Umm al-Fahm. “Until then, I had been living in Haifa and Switzerland, so it was my first experience ordering a meal to Umm al-Fahm,” he said, “I discovered that it was really difficult. The Facebook page of the restaurant didn’t have a menu or pictures of the food. It took me 15 minutes to explain to the delivery boy how to get to my place because it has no street name or number. I was upset: I’m developing autonomous vehicles at Google and I can’t order food home. That was when the penny dropped.”

Hasan Abasi worked on Google’s autonomous cars, but as an Arab in Israel couldn’t get food delivered to his home. Haat has solved that problem Credit: Madhat Zbayd

The event prompted Abasi to develop food-delivery startup and thus Haat Delivery was born. It’s name in Arabic means “bring” and that’s what it does –  bringing restaurant orders to people’s homes on the model of Wolt and 10bis, which are popular locally, or like Uber Eats in the U.S. The company has quickly conquered the Israeli-Arab market. 

Abasi hooked up with Aly Ayob, a software engineer that has previously worked at the Israeli tech company Mellanox. The two met when they worked together at Google and developed their first product in 2019. The service and app were launched on February 8, 2020 in what turned out to be a case of perfect timing –  a moment before the first coronavirus lockdown in Israel.

Haat raised $170,000 from family and friends in the Arab community and began processing scores of orders daily. Today, a little more than a year later, it’s handling some 60,000 orders a month serving scores of towns and communities home to Israeli Arabs - among them Umm al-Fahm, Kafr Kara, Sakhnin, Shfaram and Nazareth - and even Palestinians in East Jerusalem. 

It recently raised $3.5 million from a large group of investors led by Gigi Levy-Weiss of NFX R2 Capital. The others include Eyal Waldman, Jonathan Kolber, Dynamic Loop Capital, Rafi Gidron and other Arab investors. 

Haaretz has learned that another investor is the Palestinian businessman Bashar al-Masri through his SFMC Fund.

Haat employs 60 people at its Umm al-Fahm offices – engineers, operations staff, marketing, restaurant management, accountants and others, all of them Arabs and half of them women. The delivery staff are all freelancers, similar to the Wolt model, but the fee Haat charges is lower than Wolt’s 10-15 percent.

Haat employs 60 people at its Umm al-Fahm offices – engineers, operations staff, marketing, restaurant management, accountants and others, all of them Arabs and half of them womenCredit: Haat / Courtesy

A cash business

The secret to Haat’s rapid success is its entering an almost virgin market. Restaurants in Arab towns offer delivery, but the service is generally inefficient – orders have to be placed by phone and restaurants don’t as a rule bother to post their menus online.

Rabia Zbayd, vice president for business development, said that others had tried to enter the market for food-delivery in the Arab community, among them 10bis and franchises such as Pizza Hut and McDonald’s, but they didn’t succeed. So, Haat knew it had to adapt the service they were developing to the market’s unique characteristics and challenges.

Haat in Arabic means 'bring' and that’s what it does – bringing restaurant orders to people’s homes on the model of Wolt and 10bis, which are popular locally, or like Uber Eats in the U.S. Credit: Haat / Courtesy

For example, Haat allows payment in cash and not just by credit card. In fact, 80% of its turnover is cash, which meant Haat had to develop sophisticated accounting tools to make sure it’s business was legally sound. Another example is, that in contrast to other food-delivery apps that require users to provide an exact address, Haat allows orders to be sent to the location of the user’s smartphone. 

The system matches the location of the customer with the location of the deliverer in order to ensure even more exact delivery the next time. The company has also developed algorithms to provide delivery people the shortest route to the customer.

Like Wolt, Haat handles the entire process – the application, creating menus, photographing the food options and the delivery itself. “The restaurant only has to prepare the food,” said Abasi.

Abasi explained that most of the restaurants offered by Haat are local fast-food joints, offering menus featuring hamburgers, baguettes, shawarma and desserts such as Kanafeh and baklava. But it also works with chains such as Pizza Hut and McDonald’s. 

“Until they began working with us, McDonald’s did zero deliveries to the Arab community. Today they are doing hundreds of thousands of shekels a month,” said Abasi “They are entering together with us to new towns. In the middle of 2020, the CEO of Pizza Hut Israel called me to get a better understanding of who we are after he found out that the turnover of the Pizza Hut in Umm al-Fahm had suddenly taken off.”

Launched shortly before the first coronavirus lock down, today more than 60,000 meals a month are ordered through the Haat app. Haat means 'bring' in ArabicCredit: Haat / Courtesy

Abasi and Zbayd plans are to serve all of Israel’s Arab communities by the end of this year and later to begin serving mixed cities as well, like Haifa, Acre and Jaffa. To do that, the app will soon include an interface in Hebrew and English, not just Arabic. Further down the road, they talk about expanding overseas. 

“We’re not going to compete with Wolt in Tel Aviv but in [Israel’s] periphery. We can manage with cities of 20,000-30,000 people and with 10-20 restaurants,” said Abasi.

Levering the wadi

Abasi admitted that there were obstacles to starting up a company in the Arab sector, for example, infrastructure, (“It was hard to get fast internet, and today, for instance, I’m sitting at a place with no reception”). However, he prefers to focus on the advantages. 

“In some ways, it was much easier to set up a company in an Arab town. There’s no infrastructure, but on the other hand, everything is cheap. I’m renting a 250-square meter office for 5,000 shekels [$1,540] a month. People get minimum wage, but legally, and that’s considered good because a lot of people get paid under the counter and less than the minimum. So, it’s easy for me to recruit staff,” Abasi said.

Haat is leveraging so-called local disadvantages to 'build a top-notch company at low cost'. After an initial investment of $171,000, they've now raised over $3 million from top fundsCredit: Haat / Courtesy

“In the Arab community there are a lot of well-trained developers that studied at the colleges, and are very knowledgeable, but they don’t get a chance to work. These are engineers with a lot of abilities, but the pay is a third of what it is in Tel Aviv or Haifa. All of this gives me the ability, with an initial capital of just $170,000, to build a top-notch company at low cost,” he said. 

“We take advantage of all the bad,” he added, giving as an example the fact that without cellular reception, his employees concentrated more on their work because they aren’t on their phone all the time.

Haat’s success is an example of how Israeli Arab’s can join the high-tech industry and become a part of the entrepreneurial phenomenon. Engineers who worked for the big multinational tech companies present in Israel are forming startups in the Arab sector and then hire engineers. And because Haat is a service for consumers, its success is seen upfront throughout the Arab community, inspiring future entrepreneurs. 

“We would have had a harder time surviving in the Arab sector if we were a business-to-business startup,” said Abasi. “Because we reach every kid and parent, and every restaurant owner, everyone sees the big improvement in their takeout experience. Everyone admires us. When I go around on the streets, people want to take their pictures with me.”

Click the alert icon to follow topics:

Comments