Airlift Case Study

17 min readNov 17, 2024

A story of a startup that went from raising $100+ million in investment during three (3) years to completely closing the business.

A brief about case study
This case study explores on the business operations, employee experience, product transition and investment of a startup from its first venture and a subsequent transition to second venture.

The comparison is done side-by-side, to give a meaningful context if what was happening at Airlift Technology company. And how it went from raising $85 million to completely closing the business.

It begins with a brief story of business background, where it highlights the why, vision and an achievement of the company. Which then goes on to the change of business and the new business model.

Further, it compares:
1. The customers of both the products (Airlift Transit and Airlift Express).
2. The number of orders generated followed by subsequent earnings from them.
3. The investment amount.

And whilst it was all going on, it tells how the experience of the employees was, what they thought of it all, and how did a company operate on a management level with certain challenges and strengths.

How their certain decisions led to the downfall of both the products: Airlift Transit & Airlift Express. Followed by profiling the company based on the published content.

Business Background

Airlift began business operations in year 2019. The idea was to build the world’s first decentralized mass transit system which offers a reliable daily commute. Their app-based taxi service operations began from Karachi and Lahore.

They offered a solution providing users a convenience to book a ride of their preferred route at fixed time and stops in advance. Their solution required for users to pay for each ride online from within the app.

At initial stage the rides were quite economical for customers due to large amounts of discounts offered.

They offered safe & reliable commute as compared to other ride hailing services available at that time, such as Careem and Uber. Their business was scaling with every passing day because they had addressed the very pain point of Pakistanis. Which was a decent and reasonable daily commute.

And then within ten months' time duration, Airlift grew rather quickly. Hundreds of new routes and buses were being added on daily basis in Lahore and Karachi with new tens of thousands new commuters being added up.

Airlift happened to raise $2.2 million in funding. It was the largest seed funding raised by any Pakistani startup. And it seemed to be because their Why, Vision and Achievement seems to be in proper alignment with the transit requirement in a metropolitan city like Karachi.

Why: It addressed the transit problem of Pakistan and offered a technology enabled mass transit solution for its consumers.

Vision: To self-empower people, bring independence, and self-reliance to people in the developing world.

Achievement: Serving millions of commuters daily with more than 1000 bus owners running on public routes.

Things were going well and good for Airlift until 2020 when COVID-19 arrived in Pakistan. Airlift announced suspension of operations to its users with the following message:

‘Amidst Covid-19, Airlift halted operations on the transit service, acting in the best interest of our customers. In March, 2020, our team announced a nationwide suspension of transit operations to play our part in preventing the spread of the Coronavirus.’

However, after the end of COVID-19, the services of Airlift mass transit never resumed. Airlift considered it too high as a risk to continue its services given the COVID-19 people-to-people spread. And had to obey the government regulations in strict lockdown. Wherein people were not allowed to travel with more than two people in one car.

Change of Business

Airlift adapted and changed the business model to groceries and named it ‘Airlift Express’. It was a delivery service that offered to deliver food items at doorstep of consumers within 45 minutes. Their mission, product philosophy and customer testimonials were also changed & updated on their website.

Mission: Build rails of commerce across Asia and Africa.

Service Offering: Deliver household essentials in 30 minutes.

How: Enter into traditional retail space go digital, enable technology, provide efficiency and convenience, operate a complicated network of dark stores and act as a mid-fulfillment centers.

Airlift Express as Mid-Fulfillment Center: Airlift Express arranged a mid-fulfillment center and dark stores (a store house).

Wherein they would receive inventory from suppliers, manufacturers and store them there. Then it would use artificial intelligence technology to forecast consumer demand and replenish dark stores. And when customer places an order the goods are delivered to them.

Airlift express used algorithms to study its consumers constantly so that it can identify consumer buying patterns and replenish dark stores. Every single order that was delivered flawlessly used more than 22 backend processes enabled by technology.

Product Philosophy: Airlift Express adopted its product philosophy from Airlift Transit which was about consumer-first mindset. Everything that was designed and built in Airlift Transit, consumer was kept at top priority all times. Every single detail of the mass transit was weaved around consumer convenience.

At Airlift Express, they did the same, product decisions were rigorously consumer driven based on their product philosophy:

‘Product decisions must constantly be driven by a consumer-first mindset’.

‘Customers are at the heart of what they built’.

Business Model

Deliver household essentials at customer doorstep and earn fee on the basis of service.
Acquire huge margins from FMCGs (manufacturer) on bulk purchases.

Customer

When customer reviews were sought, Airlift Transit customers (Transportation) were more content than Airlift Express customers (Food & Grocery Delivery).

Airlift Transit customers (Transportation) were grateful for Airlift to solve their daily commute problem in reasonable price with:

Convenient advance booking
Payment options
Quite decent vehicles

Transit filled the void for transportation requirement in city ecosystem and people appreciated it. And the very reason that it was growing rapidly, because there was long standing demand of citizens of Karachi, Lahore and Islamabad.

However, the customers of Airlift Express were not as content with its service as the customers of Airlift Transit.

Airlift Express made promise to deliver household essentials in less than 45 minutes.

It was an ecommerce model with an aim to provide quick services, which apparently were not easy to achieve & operate in Pakistan given the traffic problem.

Customers were facing delays with their orders, complaining about customer services and the inaccurate delivery order being received by them.

Airlift Transit funding

In March 2019, pilot project of Airlift was launched with initial investment of $50,000. It was funded by Usman Gul, the man who conceived the idea of Airlift.

In August 2019, Airlift Transit raised $2.2 million in seed round and then in November 2019, Airlift raised $12 million in Series A-financing.

In the month of October, more than 10,000 bookings for buses were being made, contributing towards annual revenue of $1.42 million. The new injection increased the ride bookings to more than 17000 per day in the month of November, 22,000 in December, 33,000 in January, 41000 in February and was expected to score 50,000 rides by March. The customer growth was recorded at 200% between October and January.

The strategy they used called Blitz scaling.

The idea of this strategy is to retain customers for longer-term by:

a) Spending money on customers

b) Offering them incentives and inexpensive fee

The strategy could have worked, had the company (Airlift) spent funds on customers with the idea to make customer experience the value company offers in their product by incentivizing their product or service.

And it did not work because it was not supposed to work. Because company was choosing to spend money on customers with the idea that they do not opt for competitor services.

However, it could have worked, if the underlying idea was of substantial value. Because then with this slight change in perspective of deploying strategy from very initial level, the approach and outcome that is supposed to further unfold, changes the impact.

What happened when Airlift deployed the Blitz scaling Strategy with an aim to outperform their competitors

Airlift spent huge amount of sums in incentivizing customer rides to generate more bus bookings than their competitors had. However, this worked for temporary basis and did not translate in retaining the customers.

Which meant that it did not work. A cue for founders to rework their original idea of deploying blitz scaling strategy, and how they approached it.

By the end of January 2020, Airlift had $5 million that was sufficient enough to retain company by end of June 2020.

February 26, 2020, first case of COVID was reported in Karachi and by early March 2020, Airlift Transit announced to halt company operations.

They had an opportunity to rework their idea, get more creative, innovative with updated data, technology, firsthand mass transit experience of less than a year and the excellent team who now also had experience.

They did not. And began to explore new business line.

That is when they moved into groceries.

Airlift Express Funding

Airlift moved into grocery delivery with $10 million in Series-A1 round on July 01, 2020, and then raised $85 million dollar in Series B financing round in August 2021.

It was operating quick commerce in eight cities. Offering to deliver fresh produce, groceries, medicines, sports goods and essential items in less than 45 minutes.

Airlift transit orders and earnings

Airlift transit bus ride orders were increasing every single month. These bus ride bookings were not organic rather motivated by continuous discounts offered from new investment funds to counter competition.

Airlift transit product was growing every single day, but by burning investment cash. They were investing more than they were earning. The company was in loss till March 2020, then COVID-19 came, and operations were halted.

Airlift express orders and earnings

In August 2021, Airlift express was delivering 10,000 orders per day. Average order was valued at $7.7, which makes PKR. 1,285/-. And such numbers were too high for a startup, as per market reports.

If an average value of startup was PKR. 1,285/- then on an annual basis an order would reach to $16 million amount. Which translates into 10,000 orders per day. And all on the basis of $10 million investment.

As per these numbers Airlift Express was indeed in profit. And raised $85 million in August 2021 funding round.

As number of dark stores increased per day bookings reached over 10,000+ (17,000).

And then a year later in July 2022, the company announced complete shutdown as main investor delayed funding, and the other small investors refused to put in money until main investor did.

(Note: All the numbers mentioned are cited from published papers. Their extent of accuracy is not confirm.)

Investment

Airlift Technologies raised a total amount of $109.2 million over the span of two years in six (6) funding rounds. There were total twenty-two (22) investors and funds were raised from six (6) lead investors, beginning from March 2019 to July 2022.

Employees

Management Idea of Employees

Airlift founding team believed in forming a nurturing team and nourishing culture across airlift business. They considered these to be the main drivers behind airlift’s exceptional growth.

Nourishing culture for employees were based on core values and operating principles.

Core Values at Airlift were:

1. 1% Better Everyday
2. Bias to Action
3. Fight Like You’re Right, Listen Like You’re Wrong
4. Be Relentless
5. Excel at Teamwork
6. Lead with Initiative
7. Assume Good Intentions
8. Live on the Front Lines

Operating Principles were:

1. Consumer-first mindset
2. First principles thinking
3. Empathetic communication
4. Grit to find success
5. Fighting for change
6. Hiring exceptional teammates
7. Making defensible decisions
8. Measuring the right things
9. Global solutions over local solutions
10. Iterating to excellence
11. Being scrappy

Management approach at airlift was to serve its employees by helping them remove obstacles in their work processes.

The core of management philosophy was to be empathetic towards their employees.

They practiced it by focusing on:

The strengths of teammates
Guiding them
Persuading them on the ‘why’ of initiatives and
Letting them discover the ‘how’.

When a manager learned something new from teammates, it was celebrated as a win.

Making mistakes and sharing them was acceptable, as the core value emphasized on seeking forgiveness than permission.

The aim of management approach was to self-empower employees, enabling them to work as a team and create high impact on airlift’s consumer products. They implemented it by nurturing employee experience.

Employees were given full freedom & autonomy to make decisions and do their work as they seem fit.

Idea was to make employees focus on deliverables and not on working hours or FaceTime.

However, employees were encouraged to be transparent in all matters to address problems, all while treating each other with utmost care and respect.

This process made it easy for feedback culture to evolve, improving processes and systems.

And in return, Airlift rewarded its teammates with employee friendly policies, such as self-proposed paid parental leaves, unlimited paid vacations and sick leaves etc.

Employee Experience

Company was divided between two groups of employees. The one that sat in head office and the other responsible for executing live operations from dark stores.

Employee experience at head office was phenomenal. Environment was light & fun with refined culture embedded in decent core values and operating principles.

However, the employee experience at dark stores, specifically for managers leading live operations was nothing similar to headquarters and an absolute chaos.

There was inventory mismanagement at warehouses due to flawed algorithms, misplaced pricing strategies, and lack of check & balance that led to rampant frauds.

Lahore warehouse manager disagreed with company strategy to manage warehouse and opined that with such conduct it was not possible for company to profit at all.

The overall shared sentiment crafted among Airlift employees was more about creating an impact on the country rather than a goal of solving a transport problem or providing groceries at fastest rate.

Employees at Airlift were in awe of Gul and the way he operated. They were drawn by his individualistic traits such as being down to earth, humble, smart thinking and inculcating the culture of respect.

Employees were given the freedom to make autonomous decisions like taking contracts. For example, if an employee made a deal of $100,000, they just have to send an email to management for approval.

Employees enjoyed it but also knew the drop side of it that it may not end well.

Employee Opinion of Grocery Model at Airlift Express

Employees concluded that implementation of grocery model was fast and way too costly. It took operations team only 7–8 (seven to eight) days to set up single warehouse.

Rental and utility cost of single warehouse in Islamabad was 2.7 million (1 million rent and 1.7 million utility bills).

In three months, operation team set up 23 (twenty-three) warehouses in Lahore with approximately 20–30 (twenty-thirty) million inventory.

And they thought that it was unnecessary and excessive.

Warehouse expansion was unplanned, there were three warehouses for a population of 15,000 in one area.

Inventory management at warehouses of all four cities Hyderabad, Lahore, Islamabad and Karachi lacked essential business acumen, strategy and vigilance.

Two warehouses in Hyderabad, managed by single manager, would often receive the excess inventory because of automated system triggered by glitch in algorithms.

Manager at Hyderabad warehouse received 3,000–4,000 kg of lentil staples, whilst manager at Lahore received more than 1000+ unsolicited coke bottles. And manager at Islamabad warehouse disposed of unrequired milk costing PKR. 150,000/-

Warehouses in Karachi were chaotic. Riders and managers were eager to complete the orders asap (as soon as possible) but due to mismanagement and indiscipline, there were delays. There was communication gap between live operations team and management.

Management lacked in their ability to find and resolve issues at warehouse. And live operations team was made to manage it all on their own. Moreover, management also neglected issues of supply chain and inventory turnover.

Airlift was making deals with suppliers to secure goods below market rates and attract customers, but some retailers would often purchase inventory from Airlift in low prices and sell it on profit at their stores.

Those retailers allegedly tried to manipulate the data of Airlift by placing huge number of orders. One retailer ordered cartons of Lay’s potato chips that could fill five large trolleys.

Due to sudden increase in orders, growth spiked, product management suffered, and fraud became rampant. Electronic accessories worth 1 (one) million were missing from Lahore warehouse. It was pilferage in just one warehouse. Employees said there was pilferage in all warehouses.

Pricing goals set by management were unrealistic and when confronted about it, the management would make comparison of Airlift Express with Amazon.

In addition, employees also opined that the level of growth airlift was aspiring to, was unsustainable. The journey that should have been travelled-to in 5 (five) to 10 (ten) years was being travelled in 2 (two) to 3 (three) years.

Airlift expanded in South Africa due to Pakistan’s geopolitical affairs and macroeconomic fluctuations.

However, the operations in South Africa caused a huge cost to company. And later on, it decided to shut down its operations in May 2022, as part of strategic realignment.

Challenges

1. Lack of oversight and accountability in inventory management.
2. Implementation of misplaced strategies.
3. Lack of direction in achieving the goal.
4. Coordination between warehouse staff and head quarter.
5. Constantly depleting funds.
6. Frugal expenditure.
7. High turnover of riders.
8. Maintaining balance between demand and supply of fresh groceries for timely delivery.
9. Customer service issues were rampant.
10. 30 (thirty) minutes’ delivery model was not working effectively.
11. Automated replenishment of inventories based on past historical data used by algorithms.
12. Unplanned abrupt expansion.
13. Communication problems from down to top.
14. Lack of appropriate policies & procedures to deal with the possible threats such as retailers and those who order in bulk & disrupts the algorithm of orders.
15. Transparency in business conduct.

Strengths

1. Excellent human resource.
2. Cultivation of international standard culture and environment at office premises.
3. Quick decision making.
4. Office ethos, employee creativity and focus on core values & operating principles.
5. Implementation of creative ideas.
6. Ability to communicate well from top to down.
7. Building and working as a team.
8. Less hierarchical layers.

Decisions

Decisions that led to the downfall of Airlift.

a. Airlift Transit

1. Burning cash fast with misplaced strategies to compete with one competitor.

2. Keeping focus on expansion and growth of customers.

3. Closure of transit operations, on arrival of COVID-19, with no intentions to resume.

b. Airlift Express

1. Changing the product line in haste with no substantial market research.

2. Delving into new product line with infrastructure and expertise of resources for transit product.

3. Not choosing smart goals, such as claiming 30-min delivery service for airlift express product.

4. Opening unplanned warehouses.

5. Being depended on algorithms solely to forecast order demands.

6. Allowing independent decision making for employees without complete view of the operations and company. And lack of coordination.

Airlift Profile

Airlift Transit failed because the team feared the fear of failing. They first gave in when COVID-19 came and then saw the opportunity to escape the fail.

A company that availed the opportunity to escape the failure is not destined to success. They did not believe in their own product after 6 months and lost the trust completely when they paid attention to media gossips about the company.

Their actions began to shape as a response from media gossips for company and not what was actually needed by the company.

When competition came in market, they experimented with misplaced strategies:

Focused more on competition and less on their product.
Making improvement around it and not on the product or for their customers.

Besides, it was more to do with captain of the ship, Usman Gul. He was inspired by the e-commerce business, and it was only a matter of time to work on what he always wanted to do when he saw that his first ship (Airlift Transit) began to go down.

At that time, it was not failed yet. But he saw it failing and began to form narrative of changing the ship (from Airlift Transit to Airlift Express) among his core team members.

And that’s when Airlift Express came into being.

The failure of Airlift Express was purely due to business reasons:

1. Wrong decisions made at wrong time
2. Incompatible talent & skills
3. Incomplete market research
4. Last hour planning that led transition from Transit to Express product
5. The product Airlift Express was not the problem being solved by the startup for consumers

Conclusion

An overview followed by recommendations:

Airlift operated as technology company for about three years, approximately. It raised $100 million in investment during the time. Employee experience was great, and they were able to source the right talent that complemented them in doing their business remarkably, even if that was for a brief time duration.

Management of the company was focused on tech-based solutions for providing top-notch service to customers and scaling up. The idea was to generate as many sales and gather as many customers as possible.

Their idea of scaling-up business and generating sales was based on strategies such as blitz scaling. Which is about spending cash on discounts to retain customers from choosing competitors — and apparently, it did not prove to be of much success.

During their course of business dealing, they kept evolving their business model be it about revenue generation, management of new business brought by employees, and better customer experience in terms of product or service (either by better employee management or through algorithm-based technology).

A good marketing worked for them in generating orders that converted to sales and brought in new investment.

Employee experience at airlift was high-end. It was inspired from successful companies in foreign countries. However, it did bring its own challenges and strengths, when applied to the demographics of an Asian country. Some of the ideas worked really well, whilst others did not.

And all this concluded to making decisions, that did not mean well for the company, in terms of sustainability in business continuity.

It seemed that it would have worked out well, had the company worked with at least some hierarchy or better employee and business management system.

A better track record of business, customers, scaling-up, investment and a credible & effective communication department or team — one who would have dealt with the communications and media related matters in a more professional manner.

Besides, had they opted to be enlisted as a public limited company on exchange, they would have been able to garner better relations with the potential investors — who aimed for truthful news about the number of orders, customers and investment of funds.