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I have long been a huge admirer of Dsquares Marwan Kenawy, Ayman Essawy and Momtaz Moussa built an incredible business and we were lucky enough to invest in the Series A in 2019. Today, Dsquares is one of the world's largest loyalty companies, serving almost 100 bluechip enterprises and powering the experience of 150 million consumers across 7 markets (and growing). The company enables corporate customers to offer loyalty points to their end users, which can then be redeemed for discounts or cashback deals at a network of over 15,000 merchants. If you’re a Vodafone Red customer, for instance, Dsquares is powering your loyalty experience behind the scenes. Your points can get you a discount on a new phone at Tradeline, a cheaper flight via EgyptAir or about a million other things. The merchant network was built painstakingly over time and, as I'll explain below, is one of Dsquares' greatest sources of competitive advantage. But let’s step back and systematically analyze the business model characteristics that make Dsquares a great business. 1. Powerful Flywheel and Three-Sided Network Effects Dsquares benefits from highly defensible network effects that compound over time: => As the merchant network grows, the loyalty offering becomes more attractive to consumers (more deals at more retailers) => Better deals => more corporates want to use the platform for acquisition and retention => More corporate clients => more end consumers are onboarded => More end consumers => higher point redemptions => higher incremental revenue for merchants => Higher revenue per merchant => Dsquares has greater leverage to negotiate even better deals/deeper discounts with merchants => Better deals => greater value for consumers => more corporate clients onboarded => cycle is reinforced The implication? As the network scales, so does the value extracted by consumers, corporates and merchants, raising switching costs and building a strong moat. 2. Strong Revenue Scalability High Average Contract Value: Most enterprise contracts generate well over six figures ($), reflecting the company's top-line relevance to its clients. Recurring Revenues: The loyalty programs Dsquares manages are long-term strategic initiatives for enterprises, leading to predictable, multi-year revenue streams. The Winning Formula Dsquares is both an Enterprise SaaS and a Marketplace business. This allows it to generate large, recurring revenue streams while benefiting from strong and compounding network effects. At Algebra Ventures, we are especially bullish on companies that combine these traits. If you’re building a business with these characteristics, reach out!