#Asia Should you become a unicorn or a cockroach? Sukan Makmuri shares his views for Indonesian startups

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The Kudo CTO returns to Indonesia after years of building, mentoring, and investing in Silicon Valley. Find out what he had learned along the journey

Sukan Makmuri, CTO of Kudo

Sukan Makmuri, CTO of Kudo

If anyone asks Sukan Makmuri why he chose to return to Indonesia despite having had a long and successful career in the Silicon Valley, he would answer that he missed Indonesian snacks.

But Makmuri actually had a greater mission in mind.

“It was in 2012, and I heard millionaire Chairul Tanjung speaking in an Indonesian diaspora congress about how Indonesia is going to jump from the 19th to seventh rank of the world’s biggest economies, based on a Boston Consulting Group report,” he says.

“I have never realised it until that time. So, I thought, maybe I’ll investigate this,” he adds.

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By the time Makmuri was already in semi-retirement after working as software manager in various startups since 1985; he had also experienced working at Charles Schwab, Symantec, and Bank of America. He dedicated his time to mentor startups and teach programming language, while also investing in several companies. Eventually he came home to meet Martin Hartono; a year later, they worked together to grow Kaskus into what it is now.

In 2016, Makmuri finally met Kudo CEO Albert Lucius, and it took him only a day to say yes to become the company’s new CTO.

The company aims to give e-commerce access to customers who might even have no smartphone. It works by employing “agents” in local mom-and-pop-stores, and if customers want to shop in online marketplaces like Lazada, they only have to speak to these agents who will shop for them through the Kudo platform. By doing this, Kudo claims to be able to solve the payment and infrastructure issues that Indonesian e-commerce is facing.

“I was sold right away. Kudo has a very good business model … Many startups I have worked in are either a ‘killer’, where people burned out in just over a year, or too relaxed for my taste. But Kudo has just the right combination of backgrounds in it,” he explains.

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Check out the edited excerpt of Makmuri’s conversation with e27 about life in Silicon Valley, and the future of Indonesian e-commerce scene.

What are the most valuable lessons that Silicon Valley had given you, that need to be heard by Indonesian startups?
There are several points that some companies have begun implementing. Not only in Indonesia, in other countries such as Russia, if a startup wants to grow big, then they need to open an office in Silicon Valley as well. There is something in that place that just cannot exist anywhere else.

Having said that … One of the lessons that we can implement here is that we need to dare ourselves to try, fail, and learn from it. Luckily, this is also why I like Kudo, the CEO always tells us to fail fast.

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Second, we need to understand the exact pain points of our users. What are their fears, dreams, desires? How do they live their life? We need to study that so that we can create the exact product that they want.

Whenever I mentor a startup, I always have to remind them while swinging a rattan cane to their direction (laughs). “Hey, you should remember, don’t get lost inside your own head! You should always test it with your targeted users!”

What is your greatest inspiration?
When I first did a management consulting job, I thought, “Wow, this is amazing, I get to get paid doing this!”

We got thrown into a new company, we have no idea what their businesses are. But we have to quickly study them, and know better than them. That’s fun. It’s just like a game.

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The same also goes with startups. Often we don’t understand something but we have to create a solution to fix a problem in a sector. When I was working in a trading software startup, there was a designer. She had a Ph.D in mathematics from Berkeley, and one day she called me. “I think you’re quite good at making software, but you don’t seem to know anything about trading.”

It was quite embarrassing but it forced me to learn about trading and many things. I have read 376 books about trading, just for fun.

For Indonesian e-commerce scene, this year is quite a hectic one with some startups laying off their employees, pivoting, or even closing down business. How should startups deal with this situation?
Any new industry, for example in the 1900s, Henry Ford just created the first T-model. Once he succeeded, everybody was like, “Oh, we can do that as well!” and then there were hundreds of auto companies in the US. Years later, only three to five left behind.

This is what going on in Indonesia.

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I have already expected foreign money to come to Indonesia, but it happened much sooner than I thought. The money didn’t just trickle in, it’s flooding in. It’s actually a bit of a bad thing. Because anything we do in extreme, there is always a downside. I would rather see it grow normally.

Lazada lost US$300 million last year. They have no choice. MatahariMall was also going to step forward, but looking at how it develops, they decided to take control of themselves a bit. Those with less deep pockets? They are crushed, we can pretty much say.

In order to play this game, either you have a really deep pocket, or you have a very specific niche with a clear added value.

If someone say that they would like to start dabbling in e-commerce, well, then it’s already too late for them.

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Big e-commerce companies are already in Tier One cities. It’s easier for them … But Kudo, we are aiming for a different niche. We have prepared ourselves even before it happened. We go to where the giants don’t go.

Yes, the Tier 1 does have a strong purchasing power. But if we are looking at a pyramid, what makes them so strong? Because they have a strong foundation. In every country, there is always the economic pyramid where the middle and lower class actually help supporting. Why are we ignoring them?

Should Indonesian startups begin to change their approach? All this time we have been relying heavily on VC money, should we learn to be more self-sufficient, a la cockroach startups?
Now if I ask you back, what is the best car there is? You may say Mercedes Benz with all sort of reasons, but others might say smaller cars because it’s more convenient in crowded areas. Both of you are correct, now it all comes down to the criteria itself.

As for startups in Indonesia, should they stress on survival through profitability, or should they rely on VC money? We need to remember the VC’s point of view as well. Why do they want to invest? They invest because they expect to get the return of their money, and secondly, they believe that there will be return on their money, so there is profit on top of that. We must never forget this.

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If one invests without knowing what is on the other side, then that is a gamble. Meanwhile, as a startup owner, one must think, if I want to survive for a long time, then profitability matters more. The cockroach style, as one might say.

But if we have such a huge idea, like for example those who had become a unicorn today like Go-Jek or Tokopedia, then it is okay to become a loss leader. It means when you lose a certain amount of money in order to find a market to dominate. That is for those with a massive target market.

Facebook didn’t make money for the first eight years, everything was red. But since they are strong in customer acquisition, then it’s alright.

2017 is right in front of us. Let’s play fortune teller; what do you think will happen next year?
It has begun now. The trend will be consolidation and we will see who the survivor is. The giants seem to be able to survive, guys like MatahariMall, Lazada, Bukalapak. Blibli. But even Rakuten is moving away from here, and remember, Rakuten is not small.

Also Read: Watching baby unicorns grow up: The state of investment in Southeast Asia

Perhaps they thought they have one business model that they can implement everywhere. I also had an experience in this. We headquartered in Silicon Valley while expanding our business to five Asian countries. We thought it was simply a matter of translating the software into different languages, then sell it. Turned out we need to have an office in every country, with its own engineers to customise for each market’s requirements. This is what global companies should do.

For local companies starting out in Indonesia, they can consider having a partnership. Because sometimes the idea is good but the funding is not yet ready.

The post Should you become a unicorn or a cockroach? Sukan Makmuri shares his views for Indonesian startups appeared first on e27.

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