Image: Good News from Indonesia
Hello WU Friends!
This week WU Inspire will be highlighting one of the most phenomenal and successful startups in Indonesia, GO-JEK. It's a technology company with a social mission to improve the welfare and livelihoods of workers in various informal sectors in Indonesia. GO-JEK champions 3 essential values: speed, innovation, and social impact.
GO-JEK was established in 2010 as a motorcycle ride-hailing phone service, GO-JEK has evolved into an on-demand mobile platform and a cutting-edge app, providing a wide range of services that includes transportation, logistics, mobile payments, food delivery, and many other on-demand services.”
But unlike Uber and Grab, which had both feet firmly planted in transportation at launch and added other services later, Mr Makarim had in mind a suite of services from the outset. Ride-hailing services alone, he reasoned, would not generate sufficient network effects to achieve lift-off and scale. Business would slump outside the rush hours.
To keep drivers busy all day and increase demand, Go-Jek also offered Go-Send (a courier service) and Go-Food (food delivery) that very year.
As Mr Makarim explained to me, “All three are the same essentially: a motorcycle from A to B. The difference is in the sense that one is picking up a human and one is picking up a package.”
By mid-2015, Go-Jek was one of Indonesia’s most downloaded apps. In its first 14 months, the app logged 100 million transactions. Additional services were introduced in swift succession, including Go-Mart (grocery delivery), Go-Clean (a housekeeping and cleaning service) and even Go-Massage (for booking spa treatments anywhere).
In short, Go-Jek had become perhaps the only app outside China to merit the “super-app” status of an Alipay or WeChat. Recently, Go-Jek moved into the fintech space, offering an e-wallet called Go-Pay that customers could use for all Go-Jek services. Aware that 64 per cent of Indonesians had no access to banking services, Mr Makarim saw great potential for eventual expansion into transactions outside the app system.
A series of fintech acquisitions in December 2017 brought his hopes closer to reality.
LESSONS FOR SUCCESS
Two main points of Mr Makarim’s strategy enabled Go-Jek to grasp the opportunities of the Indonesian market – chiefly its 260 million-strong population, 55 per cent of whom are younger than 30 – without running into its many roadblocks.
First, Mr Makarim realised from the start that the drivers were his lifeblood. Deviating from the standard demand-dictates-supply business logic, he correctly predicted that a massive deployment of available drivers would release pent-up demand for Go-Jek’s suite of services.
So while Uber spent millions upon millions on promotions and price cuts aimed at both drivers and customers, Go-Jek focused marketing efforts squarely on the fleet.
The company held a string of huge, street-fair-style driver recruitment events in basketball stadiums, signing on drivers by the tens of thousands.
Drivers flaunted their association with the app via branded attire and accessories, which quickly made the streets of Jakarta stream with Go-Jek’s signature shade of green.
Second, Mr Makarim’s familiarity with the local environment helped him sidestep pitfalls early on.
The pivotal decision to concentrate on ojeks, for example, was doubly context-savvy: It skirted direct competition with Jakarta’s existing taxi industry, while dodging the nation’s transport regulations, which applied only to four-wheeled vehicles.
By the time the app introduced four-wheelers in 2016, Go-Jek had already cultivated a public profile as a boon to the local economy and a patriotic symbol of Indonesian progress.
Go-Jek’s goodwill in governmental circles was tested on December 18 2015, when news broke that the Ministry of Transportation had announced a blanket ban on ride-hailing transport apps.
This also happened to be the day Mr Makarim’s first child was born. “It was both the worst day of my life, and the best,” he told me.
Less than 12 hours after the ban was announced, however, Indonesian president Joko Widodo overturned it, declaring, “We need to remember that ojek exists because the people need it.”
Mr Makarim explains the turnabout: “It’s not always regulatory concerns that are most important; it’s how much political capital you have by providing the most number of jobs, by having a million users.”
Hope this article will inspire you!
Author: Jason Davis is an Associate Professor of Entrepreneurship and Family Enterprise at INSEAD