Earlier this year, Apple removed RadickRadio from its App Store. It looked like a music app, like Spotify, and streamed a range of genres and artists. But once users with an Iranian IP address opened it, the true face of RadickRadio revealed itself — as Snapp, Iran’s first ride-hailing app.
The “RadickRadio” cover story was one of many subterfuges that Snapp has had to use to survive, as Iran has been isolated by the world economically and politically over the past four years. Citing U.S. sanctions, Apple blocked the country’s access to the App Store in 2018, forcing Snapp to maneuver through marketplaces channels in covert ways.
Despite the force of those sanctions, Snapp has thrived. Launched in 2014 as “Taxi Yaab,” Snapp is now twice the size of Careem, the Dubai-based ride-hailing app with operations in 15 countries in the Middle East and South Asia, which was acquired by Uber in March 2019 for $3.1 billion. After three years of explosive growth, Snapp’s service in Iran, the core of its business model, has greater than 85% market share and operates in 34 cities with 1.5 million drivers. It facilitates more than 2 million taxi rides a day.
How did Taxi Yaab become Snapp?
When Taxi Yaab first launched in 2014, it didn’t take off. Dr. Mahmoud Fouz, the company’s Syrian German co-founder, told Rest of World that this was a consequence of “entering the market too early.” While 3G networks had already been introduced in Iran, coverage was limited, and packages were expensive; it took time for people to adopt it.
Unlike other countries in the region, such as Saudi Arabia, where there is an average of 1.38 cars per household, Taxi Yaab did not face the challenge of selling taxi culture to its customers. Iranians were used to hopping into unofficial, unlicensed taxis. Where the app failed was in incorporating a staple of the daily Iranian commute into its product: haggling.
Taxi Yaab’s first iteration offered an estimated price range for a route. Its customers preferred the analog custom of bargaining with drivers in person to determine their fare. Recognizing this, the team developed the product further and relaunched it as Snapp in 2015. Its only major competitor is Tap30, which holds the other 15% of the market and launched in 2016. (While Snapp and Tap30 are similar, the latter also offers its app in Azeri, in addition to Persian and English, for Turkish speakers in the country’s north.)
Snapp’s relaunch also catered to its widening ambitions. The company knew that it wanted to expand beyond ride hailing. Removing “taxi” from its name made business sense.
Fouz and his cofounder, Eyad Al Kasser, saw an opportunity to introduce and integrate other basic services into Snapp, such as food delivery. Iran, a country of 80 million where international competition is minimal, was a gold mine. MTN — the South African telecommunications giant with a knack for investing in the region’s most precarious countries, including Yemen, Afghanistan, and Syria — backed their ambitions. Today, Snapp is considered a “super app,” a Swiss-army app with many core functions; its more than 20 services include flight and hotel bookings, food delivery, and telemedicine. Today, MTN owns 43% of it and is Snapp’s largest international investor.
How was Snapp affected by U.S. sanctions?
On the eve of the 2016 U.S. presidential election, Fouz was betting on a victory for Hillary Clinton. The election arrived mere months after the Iran nuclear deal, when sanctions on the country were lifted by the U.S., and E.U. foreign investors were able to retrieve $100 billion in frozen assets overseas, oil trading resumed, and interest in Iran, the second-biggest market in the Middle East, was rekindled. The promise that Iran would be welcomed back into the global economy energized its nascent tech scene.
“With the nuclear deal on the table, there was excitement from international players from Europe to China to enter the market,” Fouz told Rest of World. “That completely died out when Trump was elected.” Although Iranians are hopeful that President-elect Joe Biden will reignite confidence in the country, the country remains an uncertain terrain for foreign investors.
As Trump moved to apply “maximum pressure” to the Iranian regime, Apple and Google pulled Snapp from their app stores in late 2017. Across the country, Snapp cabs stopped street side as the app’s navigation system, reliant on Google Maps, crashed without warning.
In response, Snapp adapted its product and distribution to circumvent American tech giants like Apple, Google, and Amazon altogether.
Prior to May 2018, when fresh sanctions were imposed on Iran, MTN was able to repatriate more than $1 billion, though it still has approximately $170 million trapped in the country, its second-largest subscriber market.
Did Snapp fight back?
It did — as with its fake RadickRadio app.
“There’s a lot of discussion on the policies that Apple has and how they’re monopolizing the system,” Fouz said. “We experienced it firsthand, before anyone else: the power that one company is wielding and how it can be turned against any other company at any time.”
After Apple and Google Play removed Iranian apps, Snapp shifted to a “progressive web app” format. Now, clicking on it opens a page in a web browser that closely simulates the experience of the original. While this format has drawbacks — no push notifications, limited offline presence — it was one of the only solutions available.
Snapp’s isolation from the international tech market was not a choice, but it pushed it to become almost entirely self-sufficient. After Google began pulling its services from Iran in late 2017, Snapp decided to build a new navigation system in-house, to break its dependence on Google Maps.
Its newfound independence was put to the test in November 2019, when the Iranian government pulled the plug on the internet amid nationwide anti-government protests, cutting the connection to the outside world for the longest period in the country’s history.
“In November, when they shut down the internet, there was no need for Snapp to use the international internet, as the local intranet network was working,” Amir Rashidi, a researcher at the Center for Human Rights in Iran, told Rest of World. Two years earlier, when a similar internet shutdown occurred, Snapp had been unable to function.
Today, Snapp is independent of American hardware and software services. Instead of Amazon’s cloud computing servers, Snapp stores all its data locally in centers in Iran — which also opens it to the risk of surveillance by the Iranian government.
What is the future of Snapp?
In 2017, MTN injected a further $22 million into the Iran Internet Group, Snapp’s parent company. This allowed it to invest in growing its other businesses: Bamilo, an online shopping platform; ZoodFood, a food delivery platform; and Pintapin, for hotel reservations. All three were rebranded and incorporated into Snapp’s platform in 2018: Bamilo is now Snapp! Market, ZoodFood is Snapp! Food, and Pintapin is Snapp! Trip.
|FOUNDERS:||Dr. Mahmoud Fouz, Eyad Alkasser|
|BRANDS:||SnappBike, SnappFood, Snapp Supermarket, Snapp Flight, Snapp Doctor, Snapp Bourse, Snapp Charity, Snapp Train, Snapp Trip, SnapQ, Snapp Room, Snapp Bill, Snapp Line Taxi, Snapp Club|
Although Snapp exists in a political bubble, it considers itself to be in the same league as Indonesia’s Gojek and Singapore’s Grab; both are so-called decacorns, private companies valued at more than $10 billion.
Those Asian companies, rumored to be merging, have secured additional funding by the promise of becoming super apps. “They are not just positioning themselves as ride-hailing companies but are evolving as a fintech company and service company,” Fouz said. “That’s the development that we also see for ourselves.”
Iran was one of the first countries to be hit severely with Covid-19, and it remains among the most affected nations in the region, with more than 30,000 deaths. While ride hailing still constitutes the core of Snapp’s business, sales on its grocery and food-delivery services doubled and tripled respectively, which helped make up for the drop in transit activity as national lockdowns kept people indoors for months. Meanwhile, regional competitors like Careem saw declines of more than 80% in their business.
“The future of this group will no longer be primarily as a ride-hailing company but to our other services ” Fouz said. The company is shifting gears toward the other 20 services available on the platform, including e-commerce, flights and hotels, telemedicine, and even its own trading platform.
In August, it was revealed that MTN would be exiting the Middle East, starting with the sale of its 75% stake in MTN Syria to TeleInvest. However, MTN has confirmed that, as of August 10, there were no “immediate plans” to exit Iran.