Baghdad and Lezzoo, a glimpse of a startup journey in Iraq.

“It’s all about Baghdad; make sure to launch in Baghdad.” This was what we heard right at the start of our conversations with investors. It’s true that Baghdad is a crucial market with powerful indicators, from density to purchasing power, population, and the location of the largest SME network in Iraq. It makes good sense to take that path, though it’s easier said than done.

Delving Deeper

We were well-aligned with our investors and our team that going to Baghdad was the right strategic step to take, so we began preparations with much excitement. However, there were challenges (too many to count ??). We believed that establishing an entity in Baghdad from Erbil would be a straightforward process. As it turns out, it isn't. The first shock was realizing it might take 6-8 months to set up our entity. We began preparations in mid-2019, but by the time we reached our 6th month, COVID-19 struck, halting all our paperwork. One of our co-founders departed from Lezzoo, and another co-founder was stuck abroad due to COVID-19 travel restrictions. This was a significant setback, especially since we were in the midst of our fundraising process and managing the departure of a founder.

The insistence resumed: “You need to launch in Baghdad!” So, we continued the process, and by March 2021, our entity was finally established ??. We were ecstatic about our Baghdad launch but simultaneously realized we needed more capital to fuel our growth. Were we profitable then? Of course not. We were deep in the “unprofitable and growing” phase. Initially, we planned to raise our equity round 12-16 months post our seed round. It's worth noting that we were new to all this. Gratefully, YC and Crossboundary guided us through the maze. When raising an equity round, having a lead investor is crucial. We learned it's common to approach initial (pre)seed investors first to gauge their interest in becoming lead investors. We did just that, receiving overwhelmingly positive feedback, which we interpreted as a green light to launch in Baghdad.

Following this, we began recruitment, established a team, expanded our network, and went live. We saw traction, growth, and a solid team foundation, but also faced significant expenditures and team mismanagement ????.

So, what happened?

Prior to the launch, our co-founders were bullish about moving to Baghdad. Yet, not all our operational staff were locals. Anyone familiar with working in Baghdad knows the complexities of securing a VISA for foreigners, especially Syrian nationals. We realized we couldn't rotate staff as initially envisioned, leading to increased remote management and a dependency on our Baghdad team. This dependency marked the start of turbulent times. An industry issue we faced was the normalization of "burn," but this became problematic when it skewed the team's perception of their contribution and impact. For instance, if a growth manager is given a 100M IQD budget and they expends it all to achieve 30% growth in orders, is that genuine growth or just a product of aggressive pricing? This phenomenon, in our experience, distorted the perception and self-awareness of team members.

Given our budgeting approach in Baghdad, some staff misinterpreted the budget as a reflection of their personal achievements, which created a strained environment. Simultaneously, competitors amped up their spending in a defensive play to maintain market share. This led us to realize that we needed to restructure both our team and our spending strategy. However, doing so required more capital. As we embarked on our quest to raise our third round of funding, our lead investor backed out within the first three weeks—a major setback.

Feedback from other potential investors was often disheartening. We were often met with comments like, “But you’re in Iraq,” “Iraq is not in our investment thesis,” or “Iraq is not venture-ready.” Sadly, we gave weight to the advice of establishing an “experienced team.” This proved to be the beginning of our downfall. We assumed a seasoned team from abroad would resolve our issues—this was a grave mistake. While we gained a wealth of theoretical knowledge, it lacked in practical application. Financial constraints grew tighter, and growth plateaued. We found ourselves at a crossroads: pour more resources into Baghdad, pivot our focus, or shut down operations. Given our limited runway and where our profits were mainly generated, none of the options seemed right.

This dilemma taught us a crucial lesson: there's no culturally "right" or "wrong" approach when survival is at stake. We became introspective, acknowledging our ego traps and delusions. The decision to shut down was pivotal. It forced us to re-evaluate our identity and core values. This introspection felt like an existential crisis, with Baghdad merely being the tip of the iceberg. This experience honed our decision-making skills, equipping us to make pivotal choices, a trait that steers us in the market today.

Life in the business world isn't binary. While many see outcomes as definitive wins or losses, like in football matches or elections, we view our journey as continuous. Exiting Baghdad might have seemed like a “game over” to many, but for us, it's just a chapter in our ongoing story. Lezzoo doesn't just look two years ahead; we envision our impact over the next 30 years, building a legacy and infrastructure.

After a year and a half of reaching profitability, as we plot our next steps, our launch strategy might surprise many. But, being a tech-first startup, we have innovative digital offerings we're eager to unveil. These products, we believe, will spark the next wave of innovation in Baghdad's tech landscape. We're thrilled to share that we're now operational in 15 markets across Iraq, with Baghdad marking our 16th.

To everyone who supported our Baghdad relaunch, your encouragement has been both motivational and inspirational. Witnessing such camaraderie across Iraq has been heartwarming. We commit to sharing both our triumphs and challenges, for it's in navigating these experiences that we truly grow.