Achmad Zaky of Bukalapak

Dimitra Taslim:

Today on the show we have Zaky, the founder and CEO of Bukalapak, one of Indonesia’s eCommerce unicorn with 5 million merchants and 50 million monthly active users. The name Bukalapak literally means open a market stall in Indonesia. It reflects the vision of the three founders of the company building an online marketplace for SMEs in Indonesia.

Hans Tung:

Zaky founded the company with two of his college classmates. Born and raised in a village, Zaky developed a passion for computer and science from a very young age. Following that passion, Zaky graduated from Bandung Institute of Technology with a bachelor’s degree in computer science. Welcome to the show, Zaky.

Achmad Zaky:

Thank you.

Dimitra Taslim:

So Zaky tell us a bit about Bukalapak. What does it do and how does it work?

Achmad Zaky:

Bukalapak is an eCommerce platform. So we have a mission to empower small business in Indonesia, because Indonesia is the country where we have the biggest percentage of small business and micro business. So the idea is how can we open up the market to them to hundreds, millions of customers to Indonesia. That’s the basic idea of Bukalapak.

Hans Tung:

In Indonesia, online eCommerce is growing fast, but it’s still a low penetration. How do you try to tap into the other 95%-96% who are not shopping online？

Achmad Zaky:

The first wave of eCommerce, we use television. We provide a lot of creative promotion to all over Indonesia. And right now, we have 50 millions of active user. And the second wave right now we’re building an O2O network. We call it in Indonesian “warung” where this is 95% of Indonesian, usually in daily, they transact offline through the “warung”. It’s like mom and pop store, but I think it’s smaller than mom and pops up in other countries. It is very independent, very small.

Hans Tung:

Very fragmented, very local.

Achmad Zaky:

We have 5 million in Indonesia. And I think there is also potential that we can capture. So this is kind of transit for 95% of population. They can use Bukalapak to interact before they use the real eCommerce. That’s the thing right now we’re pushing that initiative.

Hans Tung:

So there are two Bukalapak, one is a C2C online.

Achmad Zaky:

Yes, that’s already established. That’s growing really fast right now. And this is even faster.

Hans Tung:

What specifically do you do? What service do you provide for the warungs?

Achmad Zaky:

The first one is digital products, the phone credit, and electricity etc. It’s digital product because so many Indonesians right now use prepaid for mobile phone and electricity, and they needed to use app to pay. Secondly, we provide products like water, cigarette and so many things. Basically, any kind of product that they sell, we provide at a cheaper price, faster distribution and better quality of product. And then the third, we provide loan because we already capture the transaction and we know which warung or mom and pop store performs very well, and then we provide them loan. And the forth, we can provide service to the brand. For example, if the brand wants to advertise in the warung, it’s much easier now than before. Because before, they have to organize it, starting from zero again and again. Right now we already established infrastructure, it’s easier for them to tap into the warung right now. The fifth is that we use the data to provide analytics to the brand. And it’s really helpful for them. Because before, the brand cannot see the data, they cannot see what is my selling in this area in this area or in this product. It is very hard to capture the product of this mom and pop store.

Hans Tung:

That sounds very sophisticated, like what Alibaba does in China.

Achmad Zaky:

Yeah, hopefully better.

Dimitra Taslim:

For our listeners who’s not from Indonesia, we have listeners from all around the world. Can you paint a picture, tell us more about how many warungs are in Indonesia? Where the warungs are? Who shops in this warungs? Just paint a bit of a picture around the community and around this warung?

Achmad Zaky:

If you look at Indonesia, it’s totally different than other developing countries. We have warungs actually capture 70% of offline retail. And this is the largest percentage, especially in Southeast Asia. And usually in developing markets, the percentage of warungs is slowing down, but in Indonesia, it is not. It’s still growing actually. And they are more agile, usually they don’t need a lot of money to establish, and they are usually close to the neighborhood. If you are a commute a lot, using the car, usually you buy in much more modern convenience stores. But if you are close to the neighborhood, the closest one actually is like 10 meters from your house. You can walk and then grab the product. It’s much more convenient and faster. And then the price is cheaper, and they are much nicer and  friendlier. So it’s like your neighborhood. You have to help them something like that.

Hans Tung:

Sounds like you provide both B2C solution and  B2B solution for the warungs. On the B2C side, what do consumers get? What benefits do they get for using the App?

Achmad Zaky:

We use the application to the C2C platform, because we have 50 million users, we provide promos, so these 50 million users can come to the mom and pop stores. So we’re much more like traffic generator for them. So we don’t just provide the product alone, but also we improve their traffic, something like that.

Hans Tung:

On the B2B side, it sounds like you help warungs with a SaaS product to help them to order better?

Achmad Zaky:

Yeah, they can order better, analyze better and also, of course, this is like giant co-ops when millions of warungs together, to negotiate with the brand so they can get a better margin. I think that’s the idea.

Dimitra Taslim:

Earlier in this season, we interviewed Udaan, a company in India, that’s similar to what you’re doing on the B2B side for the warungs. In India, they call it kirana stores, and about 10 to 12 million of them in India. And we were very enamored by the founders, because like yourself, they came from small villages in India, second/third-tier cities. So I would love to get your point of view, as as the small guy who’s always fighting against competitors with more funding, more money, what does it feel like? How have you stayed on in this fight for so long?

Achmad Zaky:

I think at the end of the day, the key is the productivity and efficiency. And I was very inspired with Rockefeller when he started the oil companies. Efficiency is key. Actually, Rockefeller was the smallest one, the other guy is much bigger than them. But the other guy is not efficient and not productive. Rockefeller keeps productivity. He worked very hard to push the productivity, to push the efficiency until he come to buy everyone else and he become a monopoly. So this is kind of very inspiring story especially for startup, and I believe in there is no winner cycle.

Usually winner cycle makes the second player or the third player afraid actually, if you’re not afraid, you fight, you keep productive, I think you will survive. Even some of my investors say that they make better multiple to me instead to the number one. Because number one keeps fundraising. We do less fundraising so it makes the multiple higher and higher.

Dimitra Taslim:

You recently raised a round from GIC, one of the world’s most active sovereign wealth funds and also Ant Financial from China. How has that change you, change the culture of the company? Please tell us a bit more about the company post investment.

Achmad Zaky:

When you were a child, you can do anything basically. You can play around, fail a lot. But right now with the very reputable investor and shareholder, we have to be more prudent. We can still try, fail and try again. But we are better. It’s like marathon. If you do a marathon a lot, you can keep running fast but also not get the injury. So that’s the key. We have to train a lot. We have to learn a lot, especially from them. For example Ant Financial, we learn a lot from them. That’s the good thing that we got from this kind of investor.

Hans Tung:

What was it like when you guys first started and how do you grow with no money?

Achmad Zaky:

I really like to talk about it because some people say this is the worst time, but for me, for us, it’s the best time, the most efficient time. Because we started with only two people. I, with my co-founder, just graduated from ITB, computer science. We love to code. We just love to code and we want to make impact with the code. And we started from a very small room, 3*3 meters, and we lived there together. We bought domain of Bukalapak with $8 or $5, and hosting is maybe only $10 a month. We started to work very very hard to start Bukalapak, and you can imagine that was the time where we had no PC, and nobody believe in internet. And I remember my proposal. The first year after I started Bukalapak, actually the traffic is quite high, I got like 10,000 a day.

Hans Tung:

How do you get people interested in what you guys do and come?

Achmad Zaky:

I do anything. I come to them, I spam everyone in the Facebook. We create the code to spam everyone, nicely. It’s not like spam, it is a nice one. Among 100, there were maybe five coming and signing up to the platform and selling. That’s how we grow. And we also did SEO hacking something like that, and the traffic goes to 10,000 a day in one year. It was not bad at that time, but still no one believe in internet.

Hans Tung:

What were people buying or selling?

Achmad Zaky:

At that time, there was a trend of bicycle. At that time we started from bicycle category actually, because in Jakarta bicycle is so hot, so many people buy bicycle and we tap into that. And Bukalapak was known as the bicycle marketplace, we are the largest. After the bicycle, we started from the closest category of bicycle, which is actually camera, because it’s hobby-related category and also fishing and running. So we started one by one. We were much more like hobbies-related category, but right now we cover everything. But we did start from very niche category.

One year after I started Bukalapak, I started looking for funding. And my first proposal was 10k USD, I started looking investors who can fund myself because I don’t have money anymore at the time, so I started fundraising. And no one accepted that, only 10k. But one year after that, at the end of 2011, we got funding from a VC finally. And on and on afterwards.

Dimitra Taslim:

So it seems like the company has changed a little bit after the investment from Ant Financial and GIC. What are some of the biggest challenges that the company is facing right now? And how are you going to use that capital to solve some of these problems?

Achmad Zaky:

I think the big difference is we used to be like a child, we can try anything and play around. But right now, because so many people look at us. I remember that we used to have three-day down time, and we still did nothing. The website was down, and we didn’t do anything. I think it was the first year. It was like a child, if you make a mistake, it’s okay.

But right now, one hour of downtime will be crazy. We will lose millions GMV in USD. That’s the difference. Now we have a much bigger responsibility, not just for the investor, but also to customers. Yesterday, Google blocked our App in the Play Store, and everyone talks about it in the media. It’s crazy. Because we sell something that Google didn’t approve. It happened for maybe one hour, and then everyone talked about it. That’s a crazy, that’s one example that right now we cannot make a lot of mistakes.

Hans Tung:

So how do you curate sellers what to sell?

Achmad Zaky:

Right now we build an AI keyword, something like that. Actually we already build it, but we need to improve it a lot. So we build an AI, and we even built the image recognition. If you sell something that are not appropriate, we can automatically block it. But that’s the toughest job for open marketplace like us.

Hans Tung:

You have five million merchants. How many SKUs?

Achmad Zaky:

Almost 1 billion.

Dimitra Taslim:

In 2016, you published a blog titled ‘Less is more’. In the blog, you said that the more businesses they have, the bigger the opportunity for profit. What do you mean by that? And how do you balance the idea of diversifying versus staying focus particularly in the business that you’re in?

Achmad Zaky:

We still really focus on the SME, anything that we add on the platform is actually for the sake of to create a network effect on the buyer side, so they come and buy products from sellers. That’s the core of Bukalapak, the seller side. And what I mean with the ‘Less is more’ is that, I think when you are professional in the company, actually that’s my note to my employees, you have to pick up one, the most important thing that you need and you do every day. I think that’s the key. Keep your work simple and only one focus is really important, because it make you sharp and you can reach the goal. Because in a startup, especially once you get bigger, there are so many things and you start looking around and you’re not focused because you have so many opportunities, especially if you got the funding. I mean people can be greedy, if you get a lot of money, you start to looking something else. So that’s the basic idea of my article, how can we really really focus on one thing you do.

Hans Tung:

What’s it like to grow from very little when there’s not much going on in Indonesia in the startup scene, the tech startup scene to what it is today? Can you kind of compare and contrast how the tech startup scene here in Indonesia has changed over the years?

Achmad Zaky:

I think there is a big difference compared 10 years ago with now, we didn’t have so many competitors at the time, and that’s the positive side. We started alone and nobody came in, and once we are getting bigger and someone is coming in, it’s already late, We are already big. But right now what happened is so many investors. When you start a company, you have to be ready that the competitor can catch up you immediately, copy and then start and then fight. It’s harder. That’s what happened now. There is also good thing. The good thing is you have much more money and more support.

Hans Tung:

For people who are not familiar with Indonesia, where you’re one of the pioneers, what can you share with them? What’s it like to build a startup here now?

Achmad Zaky:

If you are from China, Japan or Australia, I think Indonesia is different. Just embrace Indonesian culture, I think it’s very important of Indonesian’s locality. That’s why Bukalapak itself use that a lot. Our campaign is very local, you even cannot understand if you are not an Indonesian, which is very local, and everybody love our brand, because it’s like a proud. It’s a homegrown brand, and It’s very close to them. The community that we build is very hard for foreign players to build that community, because you have to be close with them. We have to even live with them. Come to their house is very hard for foreign players usually. But Indonesian player usually use that local knowledge.

Hans Tung:

What was a famous example of a campaign you run that really touched your users?

Achmad Zaky:

There was a Harbolnas day, which is like a single’s day in Indonesia. Our bonus is like single day in Indonesia happened in 2015. We ran just three-day campaign onTV show, and the ads is really funny, really touching the heart of all Indonesians. And our traffic and GMV grew like three times after that. That’s one of the example.

Hans Tung:

How much money did you spent on that campaign?

Achmad Zaky:

Only around 500k USD. It’s not that expensive, but the multiply can be really high. That’s the key of creative campaign.

Dimitra Taslim:

We’d also love to learn more about the culture. You come from ITB, which is often known as the MIT of Indonesia. So for a lot of people who don’t understand, this is where a lot of the engineering and technical managers come from. How did you meet your first two co-founders in that college, and the link between that particular college and the startup ecosystem?

Achmad Zaky:

I met my co-founder, the CTO, actually in high school. We were friends in high school. We competed with each other in science score or Olympic something like that. And we went to the same college in ITB, and also the same class. We used to be rivals. When I started Bukalapak, nobody believed, only he believed. So,  you don’t have friends, I don’t have friends. Let’s start building things together. So that’s how we met, we have already known each other for a very long time.

Dimitra Taslim:

And tell us a bit more about the college. How does the college tightly link to the tech ecosystem?

Achmad Zaky:

I can say that ITB is the most entrepreneurial, at least in Indonesia. If you look at the first president, he comes from ITB, Sukarno. Actually, he was also an architect, and is kind of entrepreneur. And also Habibe, the president just passed away, is the inventor of the plane. If you look at Indonesia, so many top entrepreneurs graduated from ITB. So that kind of inspired me when I went to ITB. So many entrepreneurs come to the campus, and it’s very inspiring. I used to have a dream, not being entrepreneur actually, just be an engineer and work in the big company with high salaries something like that. But after four years in ITB, my dream changed.

Hans Tung:

It’s amazing as you grow, you didn’t use a lot of money. You make people feel like this is their home. And it seems like you do a lot of offline events to make that work, again without spending a lot of money. I’ve only seen very few companies who can do that, like Xiaomi in China, Poshmark in the US, and Airbnb, how did you do it?

Achmad Zaky:

Since 99% of our talents are local, and they already know the behavior. We’re really close with our customers. I, myself, sometimes come to the sellers community events, and they really appreciate it when we come to them, encourage them, motivate them to sell more. And also we listen to them about their problems. And they appreciate it, and they become evangelists for us. They work for us and we don’t pay a lot.

It’s kind of like evangelists because we transfer the value. We’re not just transactional, but also build emotional value to them that we are tradition brand, we grow here, homegrown together. We grow together with you, and they really love it, appreciate it, and they start to promote Bukalapak. And they also invite many of their friends to sell more in Bukalapak. That’s the local value.

Dimitra Taslim:

To understand his partnership with the agents more, do you provide goods for the agents to sell to other people? What’s involved in his partnership with the offline agents?

Achmad Zaky:

We partnership with the local distributor, and they ship the product directly to the these warungs. So our model is much more empower model that’s why the small business believe in us, because they believe that Bukalapak will not eat them because we have a reputation to be empowering company. So in the shipping to the Asia, we also empower this big giant local distributor, we don’t want to kill them. And that’s the Bukalapak brand. We connect the small business with each other and help each other. That’s the the main value of Bukalapak. It’s not like Bukalapak or you’re a big giant coming to us and gonna kill us, disrupt us. No. We are empowering brand. We want to help you with the technology and make you more prosper.

Hans Tung:

Indonesia is so vast with so many islands. And you build the C2C marketplaces across the nation and you’re helping in trying to help 5 million warungs here over time. How do you build an organization that can scale effectively over time?

Achmad Zaky:

We have a very strong value and culture. I think organization only have two parts. The first one is culture that I mentioned, culture controls everyone. And then secondly the people. So we select the best people that match with our culture. I think this is a very important. Once you get the culture and doctrine that culture to all your people, they start working amazingly. It is amazing how my team work very hard for the company and make impacts even I almost don’t do anything. I just give a direction. They work hard for the company. And I think that’s the key to grow scale. Because when you are big, especially right now I have 2,000 people. And usually when you grow, the company and the productivity per people go down. But we try to make sure that the productivity is consistent since the day one, like I mentioned, when we were two people we were very efficient. We try to design organization to be like it’s still day one, like we were two people.

Hans Tung:

What are the key attributes of your culture? And how do you instill that into your team with 2,000 people?

Achmad Zaky:

I think the key is the data driven performance. Transparency is the key. So we distribute all the metrics to each person in the company. So we are quite transparent in the company so they can learn how to improve their metrics, if that do not happen, how the leader can help them something like that. So I think the data driven performance is really the key to drive the organization. If we already know that someone is not performing well, then we can help them.

Dimitra Taslim:

You said that computers and you are inseparable from a very young age, so being an engineer is probably more in your comfort zone. So how has being an entrepreneur shaped you or changed you?

Achmad Zaky:

I think it’s same, actually organization is like, I mentioned culture, culture is like a mission. It is a mission learning actually. If you code the program, the program used to be very manual, but right now we have machine learning. So we have to design the organization like machine learning, how can we train them a lot with the data, with the experience. Once they expose with so many experiences, the organization can be better. It’s like machine learning. So the organization can be smarter, better, and then adapt to change to any disruption. I think that’s the similarity between when I was a programmer and I was entrepreneur. I try to design the organization to be like machine learning. So I build machine learning, but it’s people now. It used to be program code, but right now, it’s still the same thing.

Hans Tung:

How do you develop training for your employees? How do you empower the managers to know how to train their staff?

Achmad Zaky:

Training happens but not just by teaching in front of the whiteboard, but facing them with a problem. And direct experience is very important. That’s why we the second value other than the data transparency, which is try fail and try again. So if you have an idea that have no cost just try it, you don’t ask permission, you don’t need to ask permission to your leader. Just do it because it has no cost. When you train a lot and you try a lot,  you can understand, oh, this is wrong, this is right, something like that. And your mind will be sharper and sharper, and you will execute better. That’s how human body works like machine learning. Same with organization which is multiply of people. So it’s multiplier of machine learning, and it is big giant machine learning.

Hans Tung:

As you scale a business, how do you make sure that when people do experiment and try things that the error doesn’t come back and affect the entire company because you said that you have more responsibility now, how do you balance that?

Achmad Zaky:

That’s what we learn. We are already nine years old and our traffic is much much bigger and we learn from many mistakes. For example, someone forget to secure the password, and attacker can come in. That’s a very simple mistake that can ruin the company, and we try to build structure and rule of game, and it’s very rigid. That’s why I believe when the company is big, you should adopt corporate a bit, because the corporate have a very good culture of security. And that’s how we can survive. Still with startup style, but we adopt a bit especially the security part which is very important. Make no mistake in security.

Hans Tung:

So the first attribute of culture is that data driven and transparency. Second attribute is always learning and trying new things. That’s how you can have machine learning. And don’t be afraid to make a mistake but do in a somehow more secure way. What will be the number three?

Achmad Zaky:

Number three is we call it Gotong Royong, an Indonesian term popularized and raised by the first president of Indonesia. It is actually the general culture or Indonesia. Indonesia is a very social country. We are like a big giant family. And what that means is we cannot survive only by us. We have to work with other friends, and we have to multiply, one plus one is three, something like that. So by working together, hand in hand, with the whole team is very important. Communicate transparently, that’s the third value of us. And the fourth value is actually customer obsessed. We have to really be close with the customer, come to them and listen to them.

Dimitra Taslim:

We have a series of quick-fire questions. Zaky, are you ready? The first one, what’s your guilty pleasure?

Achmad Zaky:

Dance in front of the people.

Dimitra Taslim:

So what keeps you up at night?

Achmad Zaky:

Impact for many small people.

Dimitra Taslim:

Help the small guy find the big guy.

Achmad Zaky:

Yeah. Because I believe it’s like Spider Man. With great power comes great responsibility.

Dimitra Taslim:

The last one, if you could invite three people, dead or alive, to a dinner party, who would they be and why?

Achmad Zaky:

Bill Gates, Elon Musk, and Steve Jobs if he is alive.

Hans Tung:

Sounds good. You sure you don’t invite Rockefeller?

Achmad Zaky:

He’s doing great in business but some values, not…

Hans Tung:

Okay. Very thoughtful. Great. Thank you very much.

Rita Yang:

Hello, Zaky. It’s great to talk to you again. How have you been?

Achmad Zaky:

Great. We are under lockdown for three to four months now.

Rita Yang:

Wow, three to four months. And actually your role in Bukalapak has already changed since the last time we spoke. How different is your day to day now?

Achmad Zaky:

Yeah, I’m moving from the founder to funder, investing in startups now. I think it is an interesting journey. I hope I can help many founders. Since I have experience in building unicorn, hopefully my experience will be useful for next generation founders.

Rita Yang:

And now you are an investor and looking for the next generation founders. What type of founders are you actually looking for?

Achmad Zaky:

We are very agnostic, but typically, we invest in very technical founder, very grounded founders. Because we ourselves are like that. And we believe more technical, grounded and numbers driven, can make a better result. So that’s our hypothesis.

Dimitra Taslim:

And I see that you still have your Bukalapak email. So how are you still involved with Bukalapak these days?

Achmad Zaky:

I’m the largest shareholder, personal shareholder, so I’m still the largest shareholder in Bukalapak, and I’m very supportive for the success of Bukalapak. Meanwhile, I’m still advising the CEO and the C-level there. But not an active role in Bukalapak now.

Dimitra Taslim:

Understand. Could you tell us a bit more about how COVID-19 has changed the situation for Bukalapak? How is Bukalapak adapting to COVID-19? And also now you are also investing in smaller startups, how are the smaller startups coping with COVID-19?

Achmad Zaky:

Bukalapak so far is still growing. I think Bukalapak is very lucky because it’s in the eCommerce. As you already know, eCommerce maybe even more strive in the COVID, everyone using eCommerce to buy things. But I think the demand in eCommerce shifting from non essential to essential, and this is also that Bukalapak is very strong in the FMCG (fast moving consumer goods), knowing that Bukalapak has mitras (micro-entrepreneurs). More and more and more people are looking for essential goods like food, tissue or any kind of stuff in home. People really need it and the demand is still there. And I think this is also happening in other eCommerce, too.

So regarding the startup, how they deal with COVID, I think, some sector I believe, impact a lot by COVID, I don’t know maybe P2P or even O2O, which is something that would have offline, things maybe got impacted. But that’s why we also invest in EdTech, because EdTech  growing even more faster in the COVID era. That’s also one of our hypothesis. In this COVID, we also believe there will be more and more great founder and great ideas. And this is kind of a test for startup, which startup will pass the test. I think the startup will be great business in the future. So we invest in startups that can thrive in this COVID.

Rita Yang:

Got it. I think it’s very consistent with some of the things I hear our partners like Jixun has been talking about. In every crisis, there’s a lot of opportunities. And if we look at some of the most prominent companies in the world right now, like Alibaba or JD, they all got started after SARS in 2003. So let’s talk a little bit more on that. So what are some of the big bet you’re currently making in Indonesia now you are an investor. You mentioned EdTech as an example, what are some other areas that you’re looking at?

Achmad Zaky:

We’re still looking, we have a few in the pipeline, we will release it soon. But I think I believe in your statement that great startup will emerge from this COVID era, because Bukalapak itself, for example, and I believe also Traveloka and Tokopedia start in 2010, where there were no investment. What I mean with that, when there were no investment, no investor, even no ecosystem, we didn’t have a product manager role at that time. It’s very hard to find a product manager, UIUX, and it makes founders more creative, they have to find a new way to do things more efficient. That will be the the mentality of COVID founders. Yeah, I call it COVID founders. They will be maybe 10 times more creative than previous founders that are not facing this COVID. So this is the founder that we are looking for. And we already found a few. But we are trying to looking more and more this kind of mentality. And this is will be great for startup ecosystem. I think I’m very excited to waiting for this COVID founders’ graduation. We will have good characters who are very efficient in operation.

Dimitra Taslim:

That’s an interesting point that you made. It’s like when I always said the difference in consumers. If you look at people who grew up through the Great Depression, and you look at the financial data actually, relatively their savings rate is actually a lot higher than millennials. So the baby boomers who grew up through financial depression, their savings rate is a lot higher than millennials consumers. And then I also suspect that Generation Z right now who’s growing up through COVID, their savings rate may be higher as well, because they realized what it’s like to go through tough times without a job and with decreasing productivity and also salary. So it’s funny that you say that by the founders because I actually agree with you. I think that when it’s during times of crisis like that, when the opportunity costs of entrepreneurship is lower, then more people will go start companies. And those who start companies, the survivors will be the most creative and the most resilient and the one who’s the most efficient with their cash. So we agree on that.

Rita Yang:

I love how much optimism that I have been feeling since I talked to all the Indonesian founders for the past few days, it’s really great, maybe it’s the weather. So in terms of the advice that you have been giving to a lot of the other startup founders that in your network, how are you helping them navigating this COVID time?

Achmad Zaky:

I think this COVID will be good. The first thing is that they have to really look at their metrics, for example, like CAC (customer acquisition cost), I think the CAC will be maybe two times more expensive in COVID, because the demand is drop, the purchasing power also impacts the business. And I think the retention will also be a bit lower, so the LTV will be lower. So adjusting and look at these metric is very important. And then also looking at the cost. After looking in the metric, of course, preserving the cash, lower the net burn, I think it is also very important, because right now cash is the king. And preserving cash is one of the most important things.  Because no guarantee now, you can’t get funding in the next round because your metric maybe slows down or flat because of COVID, maybe investor worry about the situation. So I think preserving cash is very important and that makes you have to review your fixed costs. Maybe you have to cut down your people costs or office costs, any kind of cost that you can cut, I think better to preserve cash.

And of course preserving sash, I mean also raising as much as money if possible, but if not, plan for profitable. That’s my advice for many startups here. And that’s why it’s also relevant, like I mentioned, founders will, there will be more and more great founders who create the more profitable companies because this is COVID founders’ mindset has to be profitable.

And also the third, I think this is also most important is also the act. What I mean is sometimes people have a plan but they worry too much, do I fire my people because I am so nice, I’m worried that they will blame me, and my relationship with my ex-employee will be very bad. Some leaders or CEO will be very worried with that decision. But I guess act is more important. Tt this time, make a tough decision and save the company is more important than being nice and please everybody. You cannot please everybody, you have to save your own company. So, this is including negotiate your leasing, if you have debt to the bank, you have to negotiate with them. If you have too many employees, you have to cut your people unfortunately. So right now, the great founder have to decide this tough decision, and the people that you fire, I believe maybe they will be great founders, maybe they will find a better job aside. So again, this is not ideal situation, but I believe this not ideal situation will make people stronger, and they realize that previously before COVID, I take it for granted. And right now, not anymore. COVID exposed many inefficiency, many things that actually we don’t need. Like this Zoom, it’s so efficient. And I find that when we do a zoom meeting, everyone is on time and efficient in this one hour.

Dimitra Taslim:

No Jakarta traffic jam.

Achmad Zaky:

No traffic jam, I even cannot spend my time eating food. One hour after another one hour. So I think I can make eight meetings in this COVID era, compared to previously only like maybe maximum four to five. So I feel like it’s more efficient. This is a different era. That’s three of my advice to many founders, including my portfolios.

Dimitra Taslim:

Interesting. Thank you so much for those advice. And then I guess my next question follow up on that is what have you learn from yourself as a leader, and as an ex-founder, and now the founder of a new VC fund in Indonesia. What have you learned about yourself during this COVID period that surprised you?

Achmad Zaky:

I think with this COVID, like I mentioned, this COVID-19 is exposing many inefficiency. And I realized that actually, to create a startup, maybe this is just my hypothesis. Before it, because we have so many investments, I mean so much money throwing into the tech sector. I feel like it’s not always good money. And that’s what I learn. And with this situation, I think we are back to like 2010 or 2004, 2001 or 2002, where the situation is very ideal for people to start a business because it’s really founders driven but not money driven. You have to be really great founders, you have to find solution that are very creative, not just pouring money, because it cannot be like that. The global economy has to be changed by the disruptive idea that founders’ decisions not not just putting money and growing. I think I really want the startup community moving back to this situation, and I think this COVID-19 makes that possible, back to 2010 or 2004 when Google started.

Achmad Zaky:

So the point is fewer fundraising, I hope it’s better for startup because the value creation can be maximum and for the investor itself, the return will be very good, I believe.

Rita Yang:

Yeah. We’re gonna have more creative founders.

Achmad Zaky:

Right now for us, I believe for investor, it’s very hard to generate high return or finding a great jackpot like Facebook, Google, because right now, money is everywhere. And I really hope many many more founders have this kind of mentality. Don’t really focus on finding investors, focus on building great product, spending efficiently, creating many multiple of growth with fewer amount of money. So you can be rich but also make the investor also richer, too.

Rita Yang:

I think that’s all very encouraging to talk to you. The optimism, I hope it can be helpful for people who are listening.

Achmad Zaky:

Yes, it is my pleasure.

Rita Yang:

Thank you very much.

Dimitra Taslim:

Thank you.