As Indonesia’s most talked-about startup, Go-Jek can’t blow its nose in the local market without getting a barrage of media attention while simultaneously creating ripple effects for the sectors it touches. Go-Jek founder and CEO Nadiem Makarim took the stage at Tech in Asia Jakarta 2015 to share his vision for the future, and what role Go-Jek will play in shaping Indonesia’s digital economy.
By 2019, smartphone penetration in the archipelago is forecast to hit nearly 50 percent of the population, or around 125 million people. Meanwhile, Indonesia’s wireless networks, by and large, will be upgraded to 4G speeds come 2017. The government hopes to see a total of US$4.5 billion investment in the sector. Put these numbers together, and what you can extrapolate is a large market ready for a mobile revolution. Local tech people argue it’s already happening.
For those who aren’t familiar with Go-Jek: it is Indonesia’s on-demand motorcycle service, comparable to Uber for two-wheelers. Nadiem shared an entertaining piece of information. He claims that the government recently found there was an inexplicable decrease in Jakarta’s unemployment rate. According to him, the only explanation for it was the recent flare up of on-demand transportation services like Go-Jek, GrabBike, and others.
It’s no secret that many people in Jakarta have quit their jobs to become Go-Jek drivers. Workers like private drivers and office assistants, for example, often find that driving a Go-Jek represents the opportunity to increase income and bolster their livelihoods.
In Indonesia, the unemployment rate measures the number of people actively looking for a job as a percentage of the labor force. As of Sunday, November 15, it sat at 6.8 percent, an increase from its previous 5.94 percent, but still part of a larger downward trend that’s been happening over time in the archipelago. However, Nadiem clarifies that folks signing on as Go-Jek drivers should not expect to become salary men. Simply put, they earn as much as they work.
Nadiem doesn’t often share the numbers on Go-Jek. However, last week, he claimed Go-Jek has 200,000 drivers in Indonesia. The app has 6.4 million downloads. However, in terms of the app’s monthly active users, his lips are sealed, despite prying questions from the moderator and audience.
Go-Jek recently accompanied the Indonesian government on its trip to Silicon Valley. “Going to the Valley felt like going to the mecca of technology,” says Nadiem. “It’s incredibly inspiring […] There’s a culture of questioning things and creating things without ego. It was amazing that four of our ministers came and attended and brought with them several startups.”
Nadiem says he’s only been to Silicon Valley a handful of times, despite it being the homebase of Sequoia Capital, his startup’s most prominent and likely largest confirmed investor to date. How much has been invested into Go-Jek? Is it in bed with other big name investors from Silicon Valley? What’s the firm’s current valuation? Nadiem’s not breaking radio silence, as it would be unwise to let competitors know those kinds of numbers, tactically speaking.
Nadiem says Go-Jek’s investors from the Valley naturally spend more time in Jakarta than he does in the US. “We’re not trying to impress people or raise more money by saying how much we’ve already raised,” he explains. “Our strategy is keep your head down and do the work.”
Who’s feeling the heat?
Over the past year, Go-Jek has grown to become one of the largest tech companies in Indonesia. The firm is famous for rolling out a lot of different products. Currently, Go-Jek is experimenting with eight distinct services, ranging from personal transport, to food and grocery delivery, on-demand hairdressers and nail artists that come to your home, and even on-demand massages. This extensive breadth of services also gives the firm a high number of competitors. Nadiem says for each vertical, he’s appointed product managers who act as “mini-CEOs,” meaning they are free to make all the decisions.
“We intentionally pick people who enjoy pressure, but who also enjoy autonomy […] You can’t just put a crazy target on someone’s head, and then micromanage them to achieve that target,” he says. “What you do is you give them a crazy target, then give them a lot of funding, and say, ‘Whatever it takes. You’re the boss. You decide how to hit that target. No one will mess with you. I become your coach, your sugar daddy, and your friend.’”
In recent weeks, Go-Jek experienced a public relations hiccup in terms of alleged driver dissatisfaction. Word spread throughout Jakarta that a number of drivers were organizing a strike. Alas, the strike never took place, and Nadiem clarified to Tech in Asia that several folks tried to instigate a boycott due to normalizing the per kilometer price for drivers, but failed. It was business as usual the following Monday.
But if we zoom out to the larger issue — and it’s one that Uber faces too — Nadiem says the only real way to keep Go-Jek drivers happy is to keep the orders flowing. Go-Jek’s take-rate is 20 percent, meaning for each ride, the company keeps that amount. That figure is comparable to Uber’s take-rate in most markets, says Nadiem. “None of these guys are employees,” he adds. “They are micro-entrepreneurs. They work for themselves. They’re free to take orders whenever they want, or not.”
Nadiem says in this case, the CEO and middle managers had to make a tough decision. They decreased the price per kilometer, thereby affecting the income of the drivers. Nadiem believes the drivers respect the decision. He adds that for the most part, none of them are throwing in the towel with Go-Jek, which indicates the service is still one of the best options out there for previously informal workers looking to build a better life.
“There has to be this safety net that catches these people who get dumped out of the formal economy,” he says. “Companies, not even ones like Go-Jek necessarily, even companies like Bukalapak and Tokopedia, which enable them to sell stuff online, it’s a huge value add for the people who’ve been turned away […]”
When the cash runs dry, be fearless
In the same way that local ecommerce companies like MatahariMall and Traveloka are known for subsidizing user acquisition by burning cash on digital marketing and forfeiting transaction fees, Go-Jek has also been giving customers insanely low rates in the capital. At one point, it cost a ridiculous IDR 10,000 (US$0.73) to get anywhere in Jakarta. As a result, the users poured in. However, Nadiem says the low price will soon change.
He laughs, “The prices for Go-Jek are not going to go down. I’m sorry, the merry-go-round must stop at some point, but it will be a gradual transition.” The transition is meant to wean the company off of its subsidy dependence so that Go-Jek may become a self-sustaining enterprise one day.
With all the noise in the Indonesian ridesharing economy, it might be difficult for firms like Go-Jek to maintain focus and stay true to their goals. This is particularly true for Nadiem, who envisions Go-Jek becoming the single app for all on-demand services in Indonesia. In response, Nadiem says he and his product leaders must maintain an understanding of why people use Go-Jek in the first place.
He says, “The philosophy is not to do everything that we can do. The philosophy is to try everything and then do what we do best. So that means iterate, kill fast, refocus.” Painting a mental image of the Terminator busting through walls, Nadiem adds, “Be fearless, that’s our number one principle. Being fearless makes every single obstacle or challenge simply just that, an obstacle. It doesn’t matter. It’ll come, it’ll hit, we’ll get through it. But no matter what, we’re going there.”
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