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tv   Bloombergs Studio 1.0  Bloomberg  May 26, 2018 5:30am-6:01am EDT

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♪ haslinda: hello. i'm haslinda amin in singapore. it began as a crude call center looking to harness the earning power of indonesia's 75 million motorcycles. then came an app. now go-jek's business covers ridesharing, logistics, food, and fintech. go-jek's ceo and founder nadiem makarim is today's highflyer. ♪ haslinda: still in his early
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30's and at the control of a billion dollar business, it has been quite the ride for nadiem makarim. go-jek has grown to become indonesia's leading mobile on-demand platform. from a ridesharing app, it now controls 95% of the online food delivery market. go-jek employs 300,000 riders, dominates the same-day logistics market, and it's indonesia's largest digital wallet, all achieved in just two short years. ♪ haslinda: nadiem makarim, welcome to "high flyers." good to have you with us today. nadiem: thank you for having me. haslinda: now, go-jek is a play
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on an indonesian word, ojek, which is a motorbike rider. how did that come about? it has to do with harvard? nadiem: yes, so i think when i was in business school, we had an independent study project. i had this idea that i always wanted to do, and so i did it first as a school project. and then in between the summers, i decided whatever, let's just try building a call center because at that time, we did not have money to build an app. so we built a call center, set up a few phones, recruited a few drivers, and i think that's how it all begin. i recruited the first 20 drivers of go-jek. then those 20 recruited the next hundred, 200 and so on. haslinda: it was slow going in the initial years though, right? for a very long time it didn't take off. nadiem: it was just a call center by phone. literally it took 30 minutes to get a go-jek because we had to call to order and then call the driver one by one to find the
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nearest driver, so it was a slow growth rate, but you know, it survived throughout those three years without any funding whatsoever. haslinda: is it true you started with six personal phones and basically you took calls from family and friends? nadiem: yeah, basically. yeah. we started marketing it simply on our personal facebook pages and to our friends and family. and they started using it, and it kind of spread organically from there. we did not have any money for online marketing, so it was all word-of-mouth. haslinda: and you didn't have any money. it forced you to work at other startups to keep your startup going. nadiem: yeah, because i had to make a living, so i could only do go-jek part time. those first three years, i had a full team on it, but a small team, and i was working at other companies, so i was the first managing director of rocket internet in indonesia. so i had to do other jobs where i learned how to build a tech
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startup, how to scale it up, so it was extremely pivotal that i had those other experiences. i also worked for a payments company, learned about innovation in the merchant payment space. and so, i think it was critical for me to get that exposure so that when i did come back and turn go-jek into a full technology company, that i was well prepared. haslinda: what changed that helped you scale? nadiem: i think what spurred the growth was really having the right product at the right time. it was just at that inflection point where mobile penetration and congestion was a serious problem. and i think that, you know, the product was just so convenient at the time that it struck a chord. it also helps that all the drivers were wearing green go-jek jackets, and so we didn't have to spend that much on marketing because everybody could see, what are these green jackets and green helmets running around? it was go-jek. haslinda: how did it start? how did you convince the early drivers, riders to come aboard? nadiem: it was a very simple
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proposition for them. it was like, here's how much you make. you work 14 hours a day, and you take three to four orders. ok, if we can double that amount of orders for you and take 6-7 orders, you would make 1.5 times because we will reduce the price and you will have a steady stream of revenue. do you want it? they are like, ok, sure. so the value proposition is very simple. i am guaranteeing you a much more stable and frequent number of orders. haslinda: the company is valued at a few billion dollars, but it started pretty small with $100,000 of savings and loans from family members. how did you convince them to part with their money? what was your proposition to them? nadiem: i basically said, listen, i'm doing this. i really need your help.
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i don't think anyone really thought it would actually be successful, but i basically said, look, this is something that's interesting. the market's very big, and to be honest, if i need it, i feel like a lot of people would need it as well. haslinda: what were some of the early challenges you had to face? and did it start in a garage like most startups? nadiem: a garage would have been nicer than our first office. our first office was a rundown house. it was probably the size of most people's bedrooms. and it was really, really decrepit, but it was super cheap, so i think the challenges when we first started was -- you know, convincing the first 20 drivers was a little bit tough. convincing the next 200 drivers was easier because we already had drivers in the system making more money than they would have otherwise. that was the first challenge. the second challenge was building the system ground up, even this dispatch center using you know, desktop computers and
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phone orders was actually super complicated when you don't have enough technology and resources and you don't have enough developers. so i thought that was really a challenge. and then the next challenge was actually in getting people to change their behavior to actually calling for a go-jek instead of hailing one on the side of the street. haslinda: essentially in the end, it is about technology because ojek has only been in indonesia and used by indonesians, so it was the technology that changed everything to make it more efficient. nadiem: yes. haslinda: to make it more efficient? nadiem: yes. that is what consumer technology does. it basically takes idle capacity and makes it productive, and therefore overall, now not only have we transformed the ojek industry in indonesia, we've reduced the price by one third
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to half of what it was before, but still earn drivers double of what they earned before, so that is a very fascinating dynamic. that's the typical positive effect of efficiency. drivers can earn more because you're utilizing more of their time, but at the same time, the price to the consumer drops, which in turn increases the market size of the product again, which is this kind of positive cycle increasing the market size. the market size for ojek rides since go-jek came, has like exponentially increased, and now, for example, the majority of our users are women, and that was not the case before. there is this added layer of safety and security in having a company behind the drivers. haslinda: what inspired the growth of the go brand, because it's not just go-jek, and you can get food delivered and so on and so forth. what inspired that thinking? nadiem: i think we got very lucky with picking the name
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go-jek, because go works perfectly with every other service, and so that was almost this serendipitous thing that led us to hyper diversified through the other segments. food is just doing incredibly well. i think we're one of the largest food delivery companies in the world now, and it's only in indonesia. and i think what spurred that was the fact that we have this asset called the driver and how to make this asset most efficient and most productive was our number one objective, so then what we realized is that if this driver today, a go-jek driver in the morning takes you to work, during lunchtime it is delivering food to offices, during afternoon it's delivering e-commerce packages and documents around. come rush hour evening, they are actually delivering you back to your home. and then while they are around your homes throughout the whole evening, they are actually delivering food to your home for dinner time.
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and in the time in between, they are selling go pay, so they are also a financial agent. so the diversification came first and foremost from, how do we utilize this driver in the most efficient way possible, and that is actually what makes our competitive advantage so strong, is because no matter what happens, our efficiency is highest because we can provide the most revenue streams to the drivers, and so our efficiency is much higher. ♪ nadiem: i wouldn't call us a success yet. haslinda: you have helped create a million jobs. that must be a success. nadiem: well, that part feels good, definitely. ♪
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♪ haslinda: nadiem, when you look at go-jek, it is an adaptation of uber. yet, when you take a look at uber, it's adapted and it's now providing services that go-jek is providing. how do you feel about that? nadiem: well, i feel like, first of all, it's interesting how things begin as an adaptation of something else, but then what initially inspired you in turn actually you can inspire it is a very interesting feeling for us as a management team. i think that what we are seeing is a convergence in the market itself towards multiple on-demand verticals that have synergy with each other. and i think that go-jek is a little bit ahead of everyone else in the world in terms of discovering that. that actually from
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transportation leads to food leads to logistics, and then now leads to payments. and i think that kind of foresight is what puts go-jek a little bit at an advantage now having accelerated so quickly towards those verticals. haslinda: so many verticals. nadiem: yeah. haslinda: which one going forward? payments? nadiem: well, i think we have four mega-verticals, human transportation, food, logistics, and payments, but we do believe that in the future, the biggest one will be payments. just by the nature of the business itself and the potential in indonesia given how many, like, the vast majority, 70% of the population are un-banked, and so we believe that this path from high-frequency transactions to becoming a ubiquitous payment while it is something that is the biggest opportunity to take go-jek to its next inflection of growth. haslinda: and given your success, do you envision more
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competition from elsewhere, from other startups? you have become an inspiration for indonesians. nadiem: i wouldn't call us a success yet. the app launched in january 2015. so i think we've -- haslinda: you helped create a million jobs. that must be a success. nadiem: well, that part feels good, definitely, and all the ecosystem that we support in terms of employment and providing jobs in the informal and formal sectors. but i think that part of what, what, you know, what drives that growth is also the structure of indonesia and how we've kind of leapfrogged towards mobile technology in such a powerful way, and i feel like indonesia is not alone in this in the sense that there are other large emerging markets making similar leaps towards mobile that is the wave that a lot of tech startups can ride towards creating basically every transaction going through your mobile phone. you know?
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go-jek's master vision is to kind of eliminate the need for a wallet itself, right, and eliminate the need to ever carry a wallet as you go around your daily life. so, that's kind of the aspiration. haslinda: you said before that you need to out innovate everybody else. how do you do that? how do you stay ahead? nadiem: a lot of people assume that innovation happens in like creative minds, out of individuals. that is not true. innovation is an output that comes out of a process of collaboration and debate between people who behave like scientists and are open-minded and curious and learning, and when you mix people up and they debate and they fight about ideas, concepts, etc., and they have the courage to execute, the output of that is an organization that creates innovative concepts and products. so innovation is a group activity, an output of a way a group interacts. we have two very important core values in go-jek.
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the first one is actually, it's not about you. that is our first core value. it's not about you. it's always either about either your team members or the customer itself. you always have to think from the other perspective. the other one is actually be a scientist. and this is where the act of experimentation in an almost playful sense is extremely important at go-jek and that's why we have been able to diversify so quickly. haslinda: you've been busy raising funds. the last fundraising came out to about $550 million. you've also been busy acquiring indian tech startups. what's the reason for that? why india and why is india so important to your expansion? nadiem: i think now at the scale that we are right now, one of the largest companies in the world, and in terms of the number of users and the number and frequency of transactions.
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we have to ensure that our access to talent is the most optimal, so we actually have a r&d center in singapore, and we also have one in bangalore and in indonesia, and now we have to tap into a global pool of talent, and so our acqui-hires in india were absolutely mission-critical in us being able to get talent that were exposed to doing things at a much bigger scale, right? because the indian startups were doing things already at a larger scale than some of the southeast asian startups. but we're not just restricting ourselves to singapore and bangalore, as well. we're now tapping into a global pool of talent of engineering, products, and data scientists. haslinda: so it is fair to say that we can expect more acquisitions then? nadiem: or hires. those acquisitions were
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basically more of an acquihire, a cultural fit that we felt towards a certain company that had great engineers, and we acquired the company so they could come in as a family, right? haslinda: you've made clear that indonesia is the key market. 250 million, you know, large enough for multiple players. that's not to say you are not interested in other markets. could india be the next market that you target? nadiem: well, i think first of all, whether we will eventually expand regionally i think probably, probably. whether we go into india anytime soon or ever is still a question mark. it's very interesting. if you just take our second largest vertical, go-food, and go-food alone does more transactions per day than the top four or five indian food delivery startups combined.
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so, what we're noticing is we are discovering that indonesia as an internet consumer market is such an attractive market because people like to spend. their mobile engagement is very, very high, and so i think there is so much more to grow in indonesia alone, and i think there are other countries around the world that may have similar dynamics to indonesia that we are always looking to explore and consider whether we should expand. so i think expansion is more of a question of when as opposed to if. ♪ nadiem: i was one of those kids that whenever i was asked what you want to be when you grow up, didn't really have an answer. i just like to do things i like to do. haslinda: what did you like to do? nadiem: i liked to build stuff. ♪
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♪ haslinda: nadiem, growing up,
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what was your ambition? i'm curious because dad is a lawyer and granddad was part of the independence movement of indonesia, so was there any political ambitions? nadiem: no, definitely not, not any political ambition. i think i was one of those kids that whenever was asked, what do you want to be when you grew up, didn't really have an answer. i didn't feel like it was relevant. i just liked to do things i liked to do. haslinda: what did you like to do? nadiem: i liked to build stuff. i was kind of obsessed with lego and never wanted to follow the instructions. so i think that is what my mom always told me, that i would refuse to follow instructions and built my own thing always. so i always liked building stuff. having said that, i think my mom, ever since a very young age, in my family you don't get brownie points for just going after money or like doing well
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financially as a career, you always have to contribute, like the heroes that she used to say are the people she respected of that were the people who give back to indonesia at some point in their lives, and so that was always in the back of my mind, to make my parents happy i had to do something that had some impact socially to the country, so i'm extremely fortunate that i am able to do well in business as well as have a very large amount of social impact. i think i'm very fortunate that way. nadiem: and you think education is important, and if you had a choice, you would undo the current education system. why, and what would you do? nadiem: i think "undoing" would be an extreme word to describe that, but i do think that we need to rethink and reimagine the education system as it is now. being in the technology industry, the level of change and disruption that will happen
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in the employment space is so, it's almost unpredictable what will happen, that the most important thing will be the agility, the ability of humans to relearn something again and again and again. and the current education system is not designed to do that. the current education system is fixated on standardized testing and memorization, i think, even in the top institutions. nadiem: you're a disruptor yourself. try and envision 10, 20 years down the road. i mean, what do you see as jobs which will be eradicated and what do you see as what the economy will be needing? nadiem: i think that automation of hardware and software, the dawn of artificial intelligence, is going to fundamentally shift where human value is placed.
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so, you know, where once safe-white-collar jobs that were highly analytical, highly quantitative, will be among the most vulnerable to, you know, algorithms that will do a far more better job than a human in taking into account all these variables, etc., so i think that, you know, this is not just, everyone is already understanding blue-collar jobs, i think robotics, manufacturing automation is a huge risk on that. autonomous vehicles is a huge risk, i think, for drivers even who do it professionally. but i think it's white-collar jobs that people underestimate the amount of that can be replaced with technology, and so, you know, i am optimistic that countries will pick this up, but i don't think they're doing it fast enough to actually retrain their workforce and understanding that probably,
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within 10 to 15 years, people are going to have to do something different every five years, so the concept of having a fixed education time period, 12 years of education, then 3 or 4 years of tertiary education, that format is no longer going to be optimal very soon. haslinda: coming back to go-jek. what's the vision for the company going forward? nadiem: i think that -- haslinda: will you ipo? nadiem: it is, it is definitely one of our aspirations, yes. yes. as a company, it is kind of what we all dream about, doing that. we don't have a time frame, a fixed timeframe, yet within which to do so, but that is definitely one of the high probability scenarios that we have. haslinda: nadiem makarim, all the best and we thank you for your interview. nadiem: thank you for having me. ♪ what's a gig of data?
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♪ yousef: you're watching the best of "bloomberg daybreak: middle east." the major stories driving headlines. the united arab emirates announces reforms to encourage foreigners to stay and apply more investment into the nation. will it work? yousef: iran threatened with the strongest sanctions of history unless it complies with all of americans demands. manus: and the saudi arabians reform programs are praised by the imf. but can the kingdom resist temptation to ramp up spending again as oil prices rise? first up, the rules governing

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