Hob and spoke: the Indonesia start-ups that morphed into an Asian giant
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Hob and spoke: the Indonesia start-ups that morphed into an Asian giant

Indo FinTech

The Indonesian founders of a social enterprise to help rural women cook and a platform for bike taxis combined their operations to form GoPay, a payments system that has become the largest digital wallet in southeast Asia.

GoPay may be one of the impressive entrepreneurial ventures in southeast Asia, but this multi-billion success story can trace its origins back to a pot in a village and a motorbike in a city.

Two men who studied together at business school in Indonesia forged their distinct journeys with the same aim — to use finance and technology to enable millions of people leapfrog out of rural and urban poverty into prosperity.

Ten years ago, Aldi Haryopratomo was working for Kiva, a San Francisco-based non-profit with an online lending idea, and had been touring around Vietnam and Indonesia on a motorbike looking for microfinance banks.

He realised that what communities needed to escape poverty came down to the most basic thing — affordable access to pots and pans. In Indonesia a pot that would cost Rp300,000 ($40) in a store in the city was twice that price in the village because they could only ever be bought on credit.

With costs so prohibitive, villagers could not afford enough pots, and so would take turns using them. In response, in 2009 he founded Mapan, a social enterprise that leverages the power of communities to enable housewives in rural Indonesia to buy basic necessities in an affordable and reliable manner.

A group of women led by a trusted community leader form an Arisan, a rotating savings and loan group for the village. The members would take turns to make the payment, meaning at the end of each month one person gets their item, and after a number of months everyone receives one.

There is no interest, just commission to the person, usually a woman who leads the Arisan. Demand has flourished and within three years, one million  families in 120 cities were using Mapan.


Meanwhile, Aldi’s college friend Nadiem Makarim had started a revolution in Indonesia’s cities. The inspiration came from the traffic-clogged streets of Jakarta, Indonesia’s capital where the best way to get around is on motorbikes known as ojek that serve as taxis.

Ojek drivers were spending all their time looking for customers and ojek customers were spending all their time looking for bikes. The idea of GoJek, which he founded in 2010 with just 20 drivers, was to build a platform that would link them together. In Makarim’s words, the key was to find people with time and no money and connect them with people with money and no time.

GoJek is one of Indonesia’s modern success stories. The original 20 drivers became recruiters, and the operation’s reach steadily expanded to the point that its green-helmeted drivers are now a ubiquitous sight in Jakarta and Indonesia’s other big cities.

GoJek swiftly and successfully branched out into food delivery and other areas.

By 2014, the firm was able to raise $1.5bn in a fundraising round whose participants included Temasek, KKR, Tencent, Warburg Pincus and JD.com.

It is the most valuable start-up in Indonesia, the flag-bearer among southeast Asian unicorns alongside Grab, its closest equivalent and rival, which is Singapore-based but also aiming most of its resources at Indonesia. Like Grab, GoJek then developed a payment wallet GoPay, initially just to pay for GoJek’s own services, but then for payments more broadly.


Poor to middle class

By now fully established in different fields — Makarim in the cities and Haryopratomo at the rural level — it occurred to them they could work together. “We have always had the same passion,” says Haryopratomo. “How do we leapfrog this country into prosperity and equality?”

So they piloted a programme in Jogjakarta, Java, in November 2016, where they would bring the two together directly into a family. The husband would be a GoJek driver and his wife would be an Arisan leader. GoJek would bring in income, Arisan a method of using it effectively and responsibly.

Haryopratomo says one family went from earning Rp1m to Rp10m in three months. “It was crazy. They went from poverty to middle class, like that. When you see things like that you start thinking maybe one plus one creates more than two, because it helps families more holistically.”

Makarim had been looking for ways to build GoPay beyond its basic origins and in December 2017, GoJek announced an audacious triple acquisition in financial services and technology. It bought Kartuku, Indonesia’s largest offline payments processing company; Midtrans, the biggest online payment gateway; and Mapan.

Haryopratomo, who is chief executive of the merged GoPay business, acknowledges that integrating a three-sided merger will not be straightforward but says the route to success will be to ensure each team is empowered to do what they do best. The idea is that the business has several free-standing verticals, but customers can move between them.


Spirit of Indonesia

Having worked its way into Indonesia’s heartlands, it is easy to see why GoJek, and by extension GoPay, has attracted interest from some of the world’s smartest investors. Indonesia offers immense potential: 260m people with a median age of 28, a growing middle class, and a population that is largely unbanked.

The widespread appearance of afford-

able smartphones is crucial to the whole GoPay/GoJek model, although there is acceptance that not everyone is tech savvy just yet: one quirk of the GoJek/GoPay alliance is that you can use a driver as a deposit-accepting ATM, handing money to them in order to top up your balance.

For the future, it would be natural for GoPay to follow GoJek in to Vietnam, though it has not yet done so; that is the clearest fit in Asia, with a high population, similar demographic and even greater adoration of motorbikes. For the moment, the focus of the whole operating is the individual, millions of them, creating a bigger ecosystem.

Aldi, very much a patriot and an optimist, also believes there is a spirit of community that is distinct to Indonesia. “We’re not just going to use what happens elsewhere and put it here,” he says. “We always focus on: What is unique about Indonesia that we can put together and scale?”


First published in the October edition of Euromoney

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