“I didn’t have a track record so it was very difficult to find anyone who trusted me. At that time, it was a struggle to raise capital,” Tanuwijaya told GGV.
Today, gross merchandise value at Tokopedia exceeds US$1.3 billion and business is estimated to drive more than 1% of the Indonesian economy alone. What’s more, some 89% of sellers on the Tokopedia marketplace do not own a physical store while 86% are first-time entrepreneurs.
Tokopedia is not the only startup that has risen to become one of Southeast Asia’s most storied unicorns. Founded just two years ago, Telio is today Vietnam’s largest B2B fast-moving consumer goods e-commerce platform, with sales growing 70% month on month in December 2019.
Now, Telio’s founder and CEO Bui Sy Phong is planning to expand into other categories of goods, with the aim of becoming “a unicorn of impact in Vietnam, which means making every single one of our customers happy,” he told GGV.
As one of the most successful startups in Southeast Asia, Grab started out as a taxi-booking app in Malaysia back in 2011. Today, the company is now the region’s first ever decacorn. Its president, Ming Maa, is gunning to position Grab as the go-to super app in the region, providing everyday services that matter most to mass market consumers.
How did they do it? What were the formulas for growth and success?
Through conversations with each firm’s founders and leaders, we uncover three key factors that propelled Tokopedia, Telio and Grab to success.
1. Set a clear vision
Setting a big and long term vision for your startup will give you a clear picture of where you are headed and help you scale your business with greater speed and scale.
This may well have been Grab’s secret formula for success. “In a region as diverse and heterogeneous as Southeast Asia, one of the core things that we [established] when we started was to be a regional company from day one,” said Ming.
The way he tells it, that vision helped Grab expand much faster than other companies. “Typically speaking, the second city that a company would open would be another city within Malaysia. We took a very different tactic. Our second city was Manila, in the Philippines…and then we expanded across the region.”
For Grab, setting the vision of being regional from the get-go helped the firm establish a mindset of creating products and services for different markets instead of one, allowing it to aim much higher than its competitors from the very start. “To really grow to scale, you need to have a regional-first mindset from day one,” Ming said.
2. It’s not about what you want
It was only after watching two previous startups fail and meeting with Jack Ma during Alibaba’s eFounders program in Hangzhou, China, that Sy Phong realised he had been doing business wrong all along.
“After meeting with Jack and seeing the Alibaba ecosystem, our mindset changed. I came back to Vietnam and told my team: we need to do the business our customers want us to do. All this while, we had been doing business from our perspective,” he told GGV.
It was a home run for Telio from there.
In Vietnam, typical mom-and-pop stores sell 85% of the country’s consumer goods, which is estimated to be worth around US$17 billion per year. Such shops have an average size of 20 to 30 square meters and sell about 500 to 600 items. For them, having a reliable network of trusted suppliers is essential.
Price transparency is also important for small retailers, who often find it hard to get the best prices from wholesalers. The other problem is delivery, which is costly and time-consuming. Meanwhile, unpredictable and irregular deliveries also make it difficult for small retailers to manage their inventory.
Price transparency is also important for small retailers, who often find it hard to get the best prices from wholesalers. The other problem is delivery, which is costly and time-consuming. Meanwhile, unpredictable and irregular deliveries also make it difficult for small retailers to manage their inventory.
It was clear that a platform was needed to help these retailers find reliable suppliers for their goods while enjoying flexible delivery and transparent pricing.
That’s how the decision was made to build a platform addressing all the needs of Vietnam’s small retailers, said My Linh, head of strategy at Telio. Instead of managing multiple contact points and multiple deliveries within a day or across different days in a week, retailers can now do it all on Telio, she said.
Sy Phong added that the environment for startups also has a role to play. “Today we are in a more advanced state where the government is supportive and open to investments. Regulators are also more open-minded right now,” he said.
3. Championing local
Despite the technology, funding and talent foreign competitors bring into the market, the value of being local and understanding local preferences and cultures should not be overlooked. In fact, that advantage was what helped propel Tokopedia to the top.
“Some of the international players needed to take a business or technology from Singapore, from the US, from China, and then try to translate and localize it for Indonesia. For us at Tokopedia, we have one app, one set of customers, and one language. We don’t even have an English version of our app. That kind of focus and localization has been a big advantage for us,” said Patrick Cao, president of Tokopedia.
That advantage will stand you in good stead with investors, especially when raising capital. “For any new founder thinking of starting a business, I’d say 9 times out of 10 local champions win because the advantage that they have is localization and being obsessed over their customer, which means that every dollar that they raise is more productive and has higher yield,” Patrick said.
He added that it is more important for the firm to approach fund raising as partnerships rather than trying to optimize valuation. “When you think about the core principles or the foundation you need to be successful, it’s always going to be finding a partner that has the same culture and values and the long-term perspective in terms of building businesses and growing teams.”
