Agung of Warung Pintar: Indonesia’s Micro-Retail Tech Startup

TRANSCRIPT:

Dimitra Taslim

Hi, everyone. Today on the show, we have Agung Bezharie Hadinego, Co-Founder and CEO at Warung Pintar. The name literally means smart kiosk in Indonesian. It is a micro-retail tech startup aimed to digitalize the street vendors in Indonesia. Launched in January 2018, it currently empowers 3,000 warungs in Jakarta and Banyuwangi, whose income has increased by 41% since  adopting the system.

 Hans Tung

Agung started Warung Pintar as a special project. He was a investment analyst at a VC firm called East ventures or EV for short. He holds a bachelor’s degree in intermedia and an MBA from Bhutan Institute of Technology. Welcome to the show, Agung.

Agung Bezharie Hadinegoro

Thank you. Thank you for inviting me.

Hans Tung

Well, it’s been a year since we last met you.

Agung Bezharie Hadinegoro

Yeah, I thought it’s just like couple months ago.

 Hans Tung

Yeah, what’s up? What is it like to work as an investment analysts for EV and how did you get the idea to do this startup?

Agung Bezharie Hadinegoro 

That’s like the fastest three years I’ve been for EV. So I’ve been working for Wilson, things are going fast. Seeing startup growing, working out with all the startup founders and entrepreneurs, it’s a really, really interesting way for me to learn and to grow myself. And how I came to the Warung Pintar actually coming from my investment thesis back in East Ventures, where we are really looking at SMEs, how Indonesia could grow their SMEs, and how Indonesia’s economy itself could be pushed by the SMEs, so the Warung Pintar came in as one of the side projects, we never actually intend them to become a company at first. When we first started, it was just a few experiments, somehow nobody have done this back then. And we experimented with all the tools and all the systems, experimented with the users and end up getting in love with the world of what I’m doing. So then me and Wilson, we decided to jump in full time and make it as my own startup.

Hans Tung

Good, any surprises so far?

Agung Bezharie Hadinegoro 

Wow, it depends on how you define surprises. I have no experience in building any business. This is my first time running a company. And while growing up, especially right now, we’re scaling our team, growing our team, starting hiring even outside of Jakarta, They all have been the new surprises for me, like working with hundreds of guys in our office and on the field, working with thousands of entrepreneurs, these micro entrepreneurs. It’s really exciting, sometimes it’s really gives you… I wouldn’t say that it’s bad, but sometimes you just always worry that probably our product is not there yet. Because you keep asking is it really going to help them? What can I do to do it more? Oh, now it’s like 30%, 40% and how we could do 50%? How could we acquire more? How could we make them? How we could improve the business? How we improve the unit economics? So all these things are always happening inside my head 24/7, and it’s exciting. But on the other side, it’s pushing me to learn so many things all the times, coming from working with our users and working with our shareholders, investors, partners and everyone that I met. We are almost two years old right now. And I think these last few years I have grown so much, I learned so much in my lifetime. So it has been really great, right? And hopefully I can grow more.

Hans Tung

But you mentioned the micro-entrepreneur. Expand on that.

Agung Bezharie Hadinegoro 

Many micro entrepreneurs in Indo means that it’s gonna be new, but I think these entrepreneurs who have revenues under $40,000 a year.

Hans Tung

Yeah, so these are quote unquote “store owners”.

Agung Bezharie Hadinegoro 

Yes, this has been one of our main target users. And what happened in Indo was there’s almost 50 million SMEs and 98% are micro entrepreneurs. So one of the big problems that we are addressing is how we could grow these micro entrepreneurs, because what we see is actually a huge amount of micro entrepreneurs. And because somehow culturally, Indonesia always sees that entrepreneurship as something positive, but access to growth is very limited. I believe that internet is one of the ways for us to help them out to create an access for these micro entrepreneurs to grow. So that’s the reason why we build Warung Pintar.

Dimitra Taslim

For our listeners who are not from Indonesia, I think they would love to learn more about what Warungs are. What are Warungs and tell us a bit more about the community around the Warungs.

Agung Bezharie Hadinegoro 

So Warung itself have a very wide and fluffy definition, so we have different kinds of Warungs. It doesn’t always stop at your mom and pop shop. It could be a place where you could eat rice, get coffee or just hangout. So the Warung itself goes beyond that, but it’s always a micro business. So how you see a Warung is those small stalls in somewhere industries are in the middle of their communities, and what’s really interesting about Warungs is always attracting communities. Because somehow, it’s your neighborhood shops where you buy things and you’re getting close to them. And most of the time, the owners are your neighbor. So what’s really interesting about Indonesia is that we have a very tight community driven culture. So Warung itself has become one of the community centers for Indonesia? One of the really interesting parts is I will come into this Warung later tonight, because it has these events, because this Warung has transformed itself to become a hangout place for card players. Even though they’re not just sitting around playing cards. Now they’re playing, you know, mobile e-sport games. It’s still a Warung, it’s still a community gathering place, and it’s still your neighborhood friends.

Dimitra Taslim

So help us understand a bit more about what you do, if I’m a street vendor in Indonesia or on the streets of Jakarta, how do you help me earn more money?

Agung Bezharie Hadinegoro 

So actually, we start with solving your problem. The first problem that you might have, and you always have is access, access to items inventory. That’s the main product that we’re offering. So we built this app where we aggregated all the demands from all the Warungs, and tried to connect them with the brands and the principals and suppliers. Therefore, we create this supply chains where we could help the Warungs to procure their inventory, and therefore it’s sort of becoming an e-commerce for a Warung. And the second step is on the B2B side, the sourcing. And the second part is actually how we could optimize and create efficiency in the business operations. Because most of the Warungs would operate traditionally, they would use pen and paper, write their sales on the back of cigarette carton, and therefore it’s very unbreakable and traceable. So what we did was help them out with our very simple POS machines where they could start tracking what they’re selling and do some inventory management. And we also have what we call city partners. So this field operations like freelance field agents would help the Warungs, because they have the dashboard understanding of the business that they could help how to grow the Warung. And last but not the least, is access to financing.

Dimitra Taslim

Great, if you go one step further and explain to us. You have a lot of brands, so if I’m a beverage brand like Coca Cola, or Pepsi in Indonesia, tell me why we would want to work with you to supply the Warungs.

Agung Bezharie Hadinegoro 

I think one of the biggest things that you have to understand is, 70% of the consumer goods still goes through the traditional channel in Indo. And it means that it’s very dark and untransparent. So what happened is they would try to sell to a distributor and there’s also a chance for the distributor, and most of them are lost somewhere in between. So why they really see us as a big value is because we have the transparency. Because right now we work with more than 50 brands today. And we gave them some sort of like a report on what’s happening in Warung. So this is very, very, very important for them because right now they really want to move to actually have more fuse on how they could control their supply chains, and also a way for them to introduce new items. This is the reason why most of their brands are very happy working with us. And they also have these problems of black market, big items and all these things that actually could be easily fixed by our system.

Hans Tung

Two months ago you were building your own stores, and make sure they look really pretty and modern. Has that model evolved?

Agung Bezharie Hadinegoro 

Yes it does. So we have evolved it up and down as well. So right now how we see the Warungs is actually how we could build a product that actually fits each complexity of the business process. So we see that each Warung have different levels of complexity. So for example, if you just need the access to items you could use our maps, if you just need your inventory management you could use our POS, if you need to improve your stores and upgrade the stores, you could use our hardware, and we also start doing this shop upgrades where we work with contractors and finances, do remodeling for Warungs. So it has been evolved.

Hans Tung

A lot more sense, more flexible. And of all much better for scaling.

Agung Bezharie Hadinegoro 

It is. That’s what that’s the reason why we scaled from 1,500 to 3,500 in last three months.

Hans Tung

It makes me very glad to hear that. As a founder that are doing this for the first time, obviously you’re learning something new every day. What were some of the lessons that you can share with other first-time founders for what you have gone through?

Agung Bezharie Hadinegoro 

I think one of the biggest things that I learned this year is actually about leadership. When I was working for the East Ventures or working before even like building my own product, I never thought about like building my own leadership style. So I never knew that it would be very important until we have the team. So I guess one of the biggest mistakes that I’ve been earning for the last one year is actually that I didn’t build up enough leadership capability. I think when you build a startup, it’s not just about building a product, it’s building an organization. So therefore people expect you to be a leader. In the meeting rooms they asked for your opinions even though you don’t know anything. So what happens a lot to me and what’s really interesting is actually because I never have much of experience in HR. And then last year, I think we grew especially on our blue collar workers, from just like 50 people last year to 150 this year. And it has been a lot of HR problems that I have to face and I’ve never faced before, so then you just somehow have to Google that overnight and start calling your lawyers, and start reading all these policies about workers and everything. I gues in the end, one of the biggest learning for me is about being vulnerable. As a leader it’s very important because people would see you up and you don’t want to be seen as a boss. You always want to be seen as a leader. So you have to show your vulnerability. But when you do it on a first time, you always think that, oh, I have to look strong. But in the end it’s very important that you actually show to your people that you’re also learning, you’re also facing a hard time, you also need someone to actually give you advice.

Hans Tung

Wow, you grew up a lot in the last year or two when Dimi and I met you last time.

Agung Bezharie Hadinegoro

I learned it the hard way.

Hans Tung

Yes, you did. Very fast.

 Agung Bezharie Hadinegoro

Hopefully, hopefully, that’s great.

Dimitra Taslim

You’re kind of the third or the second generation of startup founders in Indonesia. The first, you know, the GoJek’s Tokopedia and Traveloka. Tell us a bit more about what lessons do you take from the first generation.

Agung Bezharie Hadinegor

I see. One of the biggest lessons that I learned this year is how the talent market is bubbling. Everyone was like fighting for talents, like you cannot have people stay in your company for more than one year. And it’s very hard. And then like all these companies are fighting with benefits, salaries, ESOPs and everything. But in the end, one thing that I learned from those big guys is actually your culture is what’s really matter, it’s what makes people stay. And learning from all these guys, I think the biggest learnings is actually customer loyalty. So because all the previous first generations of startups are doing a huge, huge sales discount and all these things to capture the market. But in the end, they realized that loyalty is beyond that discount. And users’ loyalty is actually very important. And it’s one of the biggest things that we put a lot of efforts because beyond giving you cheap prices, beyond having a good UX, it’s about the relationship with your users. And how your product brands and company and your people. It has to be aligned and very helpful towards them.

Dimitra Taslim

Yeah, exactly. There are so many options there right now for these micro entrepreneurs. If they leave you they can go to a myriad of people out there. My next question is, how do you acquire these Warungs? So are you riding around in motorbikes talking to these Warungs, telling the listeners a bit more about how you go around acquiring these micro entrepreneurs to your platform?

Agung Bezharie Hadinegor

Yeah, I’ve done that a lot in our first year, motorbikes going around, knocking on doors, asking all the Warung owners like,” Babu can you join us?” Just try and most of them would think that I want to trick them out. That’s the reason why I dropped the shirt and started wearing more t-shirts. But then over time, we realized that success story is what matters for our users. So one of the biggest approaches that we do today is actually how we could do referral programs, and how we could amplify the success story. So we have a couple of successful stories from early days of all the partners, the owners. And we try to crystallize that into a good story, making it easy to understand for more and more people. Because especially if you already own a business for decades, trying something new is very scary for you. It’s easier for you to jump in if your friends or families is the one who actually convinced you. So I guess that’s one of the biggest approaches that we’re doing today. And when you mentioned that, because there’s already all these products that going to the Warungs, but if in reality when you go to the market, you won’t hear much, right? Most of the Warungs still don’t know about of these products, they only knew GoJek. So it’s still a huge market, especially if you go to the second and third tier cities, you would see none of them have ever heard about this. And I think that’s really important and it’s a really good market because what is really changing today is actually people. In general, Indonesian are really seeing us very positively because they really see technology and startup as a way for them to grow their economy, because they have already seen what’s happening with Grab and GoJek. And they see their friends driving for GoJek and Grab, and they see they make more money, so why they cannot make more money from other tech companies? So basically, it’s good for us.

Hans Tung

So when you do your customer survey, what are very specific sort of top two or three things that the Warungs appreciate you for?

Agung Bezharie Hadinegor

I think the number one would definitely be the availability and the price of the items. That’s the first gate that we have to open. Because more SKUs cheaper, you make sure that it’s available. That’s somehow sounds very easy, but it’s very important in Indonesia, especially our logistic is somehow is very hard to come by. And then the second part is actually the support It’s sort of like this after sale kind of thing. So even after you onboard them, make them use your products, they would have questions and they would really appreciate. So we are doing monthly gathering of the users. We also do some sort of like re-onboarding process. If you want to really learn about what you do, you come to this class. We also have like 24/7 call centers to help you out. So they really appreciate this. And this is the thing that they care most today. And I think that’s something that we find out, because previously these segments are very untouched and underserved. They are very insecure, moving around. So for example, we have this offline mode in our POS, and somehow, not many of the Warung owners are very comfortable changing it to offline modes just because there’s like a couple of buttons that they have to push. So you have to onboard that slowly. And you cannot just expect them to explore. So I think this approach is really needed and therefore we need to find a way to make it scale as well, because educating them is not a very scalable way to do it. So what we do today is trying to push it through video, through applications, through customer service, through visits, through events, through gatherings. And it has been very good. And having this community approach is really importan, it’s very close to what Indonesian culture is, and that’s really important.

Dimitra Taslim

These offline to online strategies are quite familiar to the retail giants in China, who often collaborate but also compete in this space with big e-commerce players like Alibaba, Taobao and others. If you have to distill it down, what are the one or two key success factors in building a mode around this business? What would your mode be? Is that the network of merchants that you have? Is that your product design?

Agung Bezharie Hadinegor

You mentioned that the network of Warung is one of the biggest values right? But again, when you drill down the networks, it’s also important to see how deep is your network. You could say, oh we have 3 million or 2 million connected Warungs, but what could you do with two millions, right? So that’s the reason why we try to have this, we try to see it from loyalty point of view, how to make them have a deeper connections with us. Because in Indian, you cannot just do 3 million apps installed in their phones, but you could do most of the things if they buy things from you every week and you have your supply chains going to their Warungs every week. So we’re trying to dig deeper and see from the different perspective. So how we could see, usually because when you play that game, you played wide, right? But we see that if we just played wide, we cannot find the good unit economics, and we cannot find a good way to actually utilize these Warungs, because in the end, supply chain is a small margin game, and what’s really interesting is what could you do after that. You cannot do much after that if you don’t have a deep relationship.

Hans Tung

So our experience with China, India, and most recently, Vietnam is that building up supply obviously is the key. Because you have that supply, and it helps with your network of neurons. You want to have the best kinds of skill and the best pricing. How difficult has it been for you to develop supply chain in Indo, and what’s your strategy of doing that?

Agung Bezharie Hadinegor

It’s very hard. So we ended up building our own supply chain products last year. So last year, I think when I met you, we just decided to build our own supply chain product. So right now we have, I think we operate four warehouses across the island. And we have like hubs, and we connect to 3PLs. We also built this warehouse management system, because that’s what needed to be done, because nobody actually do it in Indo. And we ended up having to do it. So this is one of the biggest challenges, and that’s the reason why don’t Pindar has evolved ourselves from transforming the mom and pop shop to supply chain game, where we currently are scaling our warehouses by working with asset owners and working and logistic companies, 3PLS, tried to connect it together. Because basically we are very frustrated by the conditions of the supply chain in Indo. And we work with multiple players we work with, even some companies who always think that they have this capability. But in reality, it was our supply chains in industry is very underdeveloped. Therefore, we have to build that up. So that’s what happened today.

Dimitra Taslim

Right. I want to kind of close the loop back to the personal side. In an interview that you have given, you said that in measuring the value of what we do as people, we need to go beyond using happiness as a reason. Because what we need isn’t just happiness, it’s also usefulness. Describe a bit more about that and how that links your mission with Warung Pintar.

Agung Bezharie Hadinegor

Because I grew up with my grandparents and something that they’ve been teaching me is about how to be useful. Not to just be you know happy by your own, but how to be useful. That’s a reason why I joined East Venture and that’s the reason why I started Warung Pintar, because I believe that being useful is beyond being happy. And I think that’s why Warung Pintar as a startup have our social impact DNA, because we are trying to solve a social economic problem, and therefore, by building this business we are automatically creating social impact. And this is the definition of being useful is actually how we could lift up our Warungs to enable them to have more money, to have more disposable income. We also have this idea of sharing our social impact report. I think that’s something that we do on the site, because we really love to see what impact that we made to our users. And we found out that most of our users now could afford education, medical surface, and even savings, which is actually very good and which is actually as a part of how we could feed our souls. You’re not just feeding our stomach, so I guess that embedded in Warung Pintar’s visions and values as well.

Hans Tung

One of our biggest takeaways from being an early investor in Alibaba since 2003, it’s that, you know, if you’re a company of investing in the companies themselves, are making positive impact on society and helping nation building efforts, then new economy gets more efficient and grows faster, then the whole economy changes, everyone’s life changes. Now we’re seeing that happening in India, in Vietnam and in Indo and then in Brazil and Mexico, and that’s fantastic.

Dimitra Taslim

And one more question for you, we dig deep, so this shows our research skills. In a LinkedIn recommendation that you received, you are described as a blatant person, always frank and critical and very good at saying no. And first of all, is that true? And how do you decide what to say yes to and what to say no.

Agung Bezharie Hadinegor

Wow, I think always being blunt is always being my traits from my family, because they always tell me that you just have to be honest. So because I grew up with both of my grandparents, and they were educated in the West. So they’re very Western minded, and therefore because they’re very close with the government related work. What they always say is that always to be honest and always says what you think. Because it’s easier that way. I think probably that’s the reason why people see me as someone who would easily say no, and would easily say what I’m thinking. So I guess that’s where the recommendations came from.

I always try to make your time as important as possible. So I wouldn’t just drag you out to say yes. And to decide to say no, I think it’s as simple as I try to project myself in your positions. I don’t want you to waste my time as well. So I guess that’s the reason and that’s how I could come by to say no to do something that I don’t believe.

Dimitra Taslim

Great. And now run of a quickfire questions. What app consumes most of your phone battery?

Agung Bezharie Hadinegor

You know, it will be funny. Because it just came out to me last night. There’s enough modification, this app is draining your phone battery. And you know what that is? It’s 9GAG.

The last few months I’ve been trying to lessen the time I spent on social media. Yeah. And then I tried something else. So it just really helped, because you know, in Indo you stuck in traffic, you’re awaiting some meetings and something. So you might end up like opening up something. And I think having some humor and having some laugh are good for your brain.

Dimitra Taslim

What activity instantly calms you?

Agung Bezharie Hadinegor

Oh, instantly. I don’t think there’s any activity. I mean, I’m a person who would like focus on one thing and try to do one thing. And I believe that sometimes it’s stressed out a bit, I think I haven’t found any ways, like any single ways come to me every time. So it’s always something different. But right now I’ve been trying to have some short vacations, and try to do some meditation, some readings by myself, and not meeting too many people and stuff.

Hans Tung

What are the most interesting or useful books or what things you have read or content you have come across that’s worth sharing. It could be any format.

Agung Bezharie Hadinegor

I got this questions from my interns couple months ago, and I actually gave her this book called The Art of Happiness, written by Dalai Lama. I think it’s really interesting how he sees everyone, how he sees things with compassion, and how he sees everyone by the end of the day as a human being, and you could project yourself to everyone. So I guess it’s really important when you’re building a business, because for me, building business is about building values, and building values for other people. So you have to really going not selfish, and that means that you have to understand other people. It’s really easier for me to start understanding other people with that, you know, compassion contacts in my head, and that’s the reason why I really like that book. And I think it’s just one of the things. Because personally, I’m not a very empathetic person. I’m more of a logical person rather than a feeling person. And I think it was really hard for me to understand other people. So I start to read more and more books and contents about understanding other people about, teaching me to learn about compassion. It’s one of the very valuable things that I learned.

Hans Tung

Where would you be 10 years from now?

Agung Bezharie Hadinegor

Hopefully somewhere nice in the side of beach bed. Hopefully be more useful to other people, giving bigger impact with something that I really love and I know the most, which is technology. And I think what I dream of is actually how we can make Warung Pintar’s vision bigger and create bigger impact with this product and with this organization.

Hans Tung

Sounds good.

Agung Bezharie Hadinegor

Thank you. Thank you very much, guys.

Rita Yang

Hi, Agung. It’s good to hear from you again. How are you doing these days?

Agung Bezharie Hadinegor

Good. I mean, thank you. We are staying safe. It’s I cannot say it’s tough, but it’s different than me.(36:36) It’s been quite a journey for me for the last three months.

Rita Yang

So how’s your daily life impacted by this, you know, staying at home, work from home?

Agung Bezharie Hadinegor

I guess a lot. I think definitely business is changing, customer, user behavior, everything changed. And I guess people also have different attitude towards what’s happening from the economy point of view, house point of view. People are different, and I guess because most of your daily job as an entrepreneur is at certain size of a company, it’s like managing stakeholders, like you’re managing your team, then you also have to manage expectations and the plans and everything from your shareholders, and then we’re also managing the expectation from your users. So I guess since everyone are changing themselves, changing in terms of behavior, changing in terms of their feels of their daily life that changed my life a lot, my daily job, apart from all the technical piece that you have to face because of the limitations that cost by the pandemic. So that’s probably the biggest changes that we found today.

Dimitra Taslim

Agung, just to follow up one real question, I guess, beyond your daily life, what do you notice has changed about the daily life of your merchants?

Agung Bezharie Hadinegor

That’s right. That’s a good one. That’s like the very first questions that we asked ourselves and we asked them, what happened? What would the small shops do in this time? In reality, they are coping quite well. So it’s really interesting that in the last couple months, we’ve been introducing and trying to find a way to improve the business for them and creating new ways for their users to do transactions for them and it has been quite a good reactions from them. So I guess during this time people have in their mind that they have to change somehow or they have to move on and learn something or do something. If not, then the world would eat your live, and especially if you’re a small entrepreneur, where your cash flow is very limited. And then I guess there’s always a push for them to try something new, do something else or even learn something that they are not easily to learn. So I guess that’s really interesting. And ever since we’ve been launching a couple of new initiative, we’ve been bringing them to e-commerce and marketplace, we’ve been helping them do more home delivery, we’ve been helping them manage orders from text messages. We are also helping them in managing their inventory better. We are also trying to understand there’s a shift in the in the consumers need from a macro perspective as well, you can see it in the ground that people are more likely to buy more daily necessities rather than the previous, ready to consume items. So we really think that it has been quite a journey for us because from the Warungs from the user perspective, they are really willing to change and it has been quite good for us. Though all the things are really exhausting, and during thess conditions, we cannot hire a lot of people, but it has been quite an interesting journey, especially from the user perspective.

Rita Yang

It’s a pretty dumb question for me to ask. So you were saying the merchant or the Warung owners are actually more open to new technology that they can’t get their hands on. How are you delivering that to them? Do you have field agents going to them wearing a mask? How does that actually operate from your team’s perspective?

Agung Bezharie Hadinegor

We have many things actually, we try so many things and we have people coming in, we have online engagement, we have semi online, some of our sales agent are still doing sale but not personally, and this has been quite different. I mean it seems like they are very open these days and we have a different shades of users, so it’s like there’s a lot of spectrums of different users. And I think different users have different ways to acquire different ways to know about our products, so far from all these spectrums, majority of them are very open towards finding out or trying out new things, and we are also giving them options to check out our other products as well. There’s a lot of you products on your play stores or on the internet that could help you as a businessman, try it out and see which one is better for you, and we’ll be very happy to go through to our products and why it could benefit you as a micro entrepreneur. And all in all, I guess by the end of the day is about how is your product being tested? Not just the sales process, but how good is your product by the end of the day. Because the interactions of products and the users itself has become more in intense during this time.

Rita Yang

That’s very interesting. So how will this impact the way you iterate your product based on the more interaction you have with your merchants?

Agung Bezharie Hadinegor

A quite broad answer is that basically we still going to try and we are spending money. There’s some costs incurred in operating because now we have to equip our operation teams and ground operations teams with a lot of productions and so on. But I guess that’s part of the changes that happened with these new things that coming up. And I guess it’s just how we can deal with, we can also receive from the perspective of productivity as well. Because what we are doing with technology is that we want to improve the productivity of the whole things of the supply chain ends and the goods from manufacturers, all the way to the small sellers in your neighborhood. And what’s really interesting here is, since there’s a lot of barriers, we see also a lot of opportunities for efficiencies. Efficiencies means that in the past, you have to do offline sales a lot in this kind of game. But during this time, there’s a lot of opportunities because users are more open and people are also more open to learn about how you operate new technology and so on. Then I think our sales people has become more efficient in a way, our operation teams in the warehouse and in the fleets is also getting more efficient because of the current situations. And I think, for us we are quite fortunate that most of our items that we are selling is the basic necessity, so consumers are still looking for that items. so sure. So most of it is just a way of doing transactions that slightly shifted but it’s a matter of how we could help the users and how their supply chain to shift out a bit. I know that there’s a lot of entrepreneurs are facing a much bigger problem than we are. I just feel I’m blessed that we are not as impacted, probably. But on and on we still got impacted here and there, and I guess it’s about how we deal with that. And also, I think what’s important is like, you’re asking iterations right? What I found interesting during this time is that internal communication and corporate communication are become very important. You know, making sure that your team is on board about your decisions, changes are very important.

Dimitra Taslim

That’s really interesting. I guess I have a question for our Western listeners, you know, people in Europe, in the US and who don’t live in emerging markets. When we went around to look at some of the Warung Pintar Warungs, we could sense the energy was in the value of the community, because you could sit in this Warung and you could buy a drink, or you could sit down and have a cigarette, or have a glass of coffee or tea, or even have something to eat while you’re chatting with the Grab and a GoJek drivers around you, we’re also sitting down in a Warung to take a 10 minute break between the rides. And so, again, my question to you is what’s going to happen in the community interaction, how is that community interaction going to change in the period of time before we find a vaccine?

Agung Bezharie Hadinegor

That’s a good one. I think we find out that the community kind of shift the boards like group messages and on social media a lot. So I think essentially our market, our user consumer behavior is really social base. So I think, yeah, there’s going to be a lot of changes. And before there are any ways for us to get out from this situation, I think it’s just shifting towards something else. But essentially our consumers are the same people, right? They still have the same behavior of discussing things or having a lot of needs in socializing. And it’s just somehow things are shifted, and that’s why we are encouraging and shifting some of our products to empower and amplify this kind of situations with the social media and with group chats, and so on. So right now not many people would go to Warungs anymore, but the Warung owner would go to people’s houses every day to deliver their order. That’s They start building WhatsApp groups and Facebook groups. You guys know more about other companies grouped by any kind of startup in Indo that finding this as a good moment to grow. I guess that’s what’s happening today because Indonesian still have the needs of socializing. And I guess the offline work has moved to online. I wasn’t sure about the data, but probably you could see how social media and how group messaging has gone up in the last couple month. We’ve been riding on that momentum as well.

Rita Yang

That’s so interesting. When this Warung owners deliver to people’s home, is that most cash on delivery or they’re actually paying through some types of digital payment tool that it’s innate to WhatsApp.

Agung Bezharie Hadinegor

For this kind of transaction is still cash. There’s some concerns about cash is a bit scary, more during this time. But when we look at the ground, cash is still a very popular way to transact, to do transactions here and officially in our market there. So I guess we’re not seeing much of the change in terms of that behavior, probably in other segments, but in our segments is not as much. People still prefer paying cash. And probably if they are buying in a bulk, then they probably would transfer, but probably bank transfer will be more popular. But I think on and on we were still not seeing that, even though like we are equip them with all these digital payments, if we look at the ratio, it’s still very small especially compared to other markets.

Rita Yang

Got it. We actually want to ask you about this, as an investor, you were born in Indonesia, do you see this as an opportunity for FinTech firms to digitalize part of that payment system, given that we also hear the big news of Facebook and PayPal investing in GoJek this week.

Dimitra Taslim

If you look at the market cap of the public payment companies like PayPal over the past couple of months. It has gone through the roof, it has increased so much. And I don’t think payment will take off in just emerging markets, but even in developed markets, in certain pockets of the economy, people are adopting. People who have never adopted this, like our parents, our grandparents are learning how to use PayPal. So they take that lands and apply it to emerging market like Indonesia, where Agung and Warung Pintar operating. I think that’s an opportunity, but it just depends on how you tackle it. But right now the Warungs are sort of like the darlings of the Indonesian taxi, where everybody is trying to target them you know from the likes of Payfazz, that’s also why Warung Pintar now is speaking to them, and there are many, many, many others who are trying to do this, and everyone has a different angle, right? You have Warung Pintar angle. I guess it’s sorted out with procurement and attracting both new mitras, new entrepreneurs, and also targeting the install base, the current people who own their Warungs to modernize their stores. We have the likes of PayFast whose angle is more of a FinTech angle. And then you have a few other folks as well who are doing procurement and whatnot. So I guess the question is, you know, what will this firm evolve to become, is it possible that in the future there will be a company that is sort of like Micro bank, or a super app for these micro entrepreneurs? I think that’s a real possibility. What do you think, Agung?

Agung Bezharie Hadinegor

I think we don’t see much of this because our data says that although we have that options, our consumer still not picking that up and why I’m seeing that is probably because, to be honest, I don’t know why but it’s a matter of market penetration. And then during this time, I think a lot of promotions and discount has been cancelled. So like, probably lots of people would know about it and be interested to try it out and because we are serving a middle low segments, probably it’s also been harder to penetrate there with the digital payments. I didn’t know about the fintechs. We work with couple of banks who have digital bank, micro lending platform and everything. And I think the point in that is actually how could you actually create the product that are trusted by the people, by the grassroots, and that’s kind of tricky. I mean in the past that project has been doing very well in different ways with wide hailing and service providers and everything, but probably in payment parts and FinTech, lending and everything. I would say there’s a lot of room for people to tackle. Still Yeah, yeah.

Dimitra Taslim

A few interesting points that I really want to bring up for the audience and the three things that I’m expecting from what you just said. No.1 is with this group of people and micro entrepreneurs, we cannot assume that the adoption will be as high as people that we see in more developed markets. Because I feel like sometimes the use case is very specific to emerging markets and to Indonesia. And sometimes, digital payments don’t bring that much value into their life, it doesn’t have the right use case. So I really like that point that you raised. And then the second point that you raised, which I think is a very crucial one for startups, like yourself to understand as well is that the cost to serve, even for banks, when it tries to hold this Warung, the cost of service Warung might be so high, it’s higher than the margin that it can earn from them. So it may not actually be super profitable in the beginning to try and serve this Warung with the digital finance product. And then the third point is the trust. I think, trust is so interesting that we haven’t really seen. I guess we have seen a couple of startups, but no one has done it really well. Because trust is a currency in this Warung that people sometimes buy things on credit. So they walk through the Warungs. So at the end of week, the Warung owner will text them and say, “Hey, you owe me two sacks of rice and a bottle of Coca Cola”. And how do you digitize that trust, both between the Warung owners and the people who are buying no Warungs and also between the Warungs and whatever lenders is lending any kind of working capital to the Warungs. So how do you digitize cross is something that I think we’re very interested in. So those are the three things that you raised, which I thought was very interesting.

Agung Bezharie Hadinegor

Yep. You got it. I think Indo is still very, very new. But one of the interesting use cases I would say in under market would be what I think Khatabook did in India.

Dimitra Taslim

It was brought in the best order company.

Agung Bezharie Hadinegor

Yeah, you know, it’s really interesting. Because I think we have similar features. But I think what’s really interesting is how you can bring a bigger audience due to the capability of the payments in India. Because the UPI and everything, and in Indo there’s a lot of barrier sake. I mean, like if you are doing what a book did in Indonesian market, there’s more barriers to do that and I guess if you are asking about payments and everything. I think trust is also need to be supported by a valid in infrastructure. So again, like the current conditions, there’s a lot of priorities, especially the in a infrastructure part. Because our main business is the supply chain, and for us having a digital payment would like ease our live a lot. So I think we’d be very happy if someone could come in and do that for us. And we’ve been partnering with all the players that doing this, and I guess in Indo, it’s collaboration. In this time it’s really important because you don’t want to build everything by yourself.

Dimitra Taslim

Yep. Got it. And Rita, any final question for Agung?

Rita Yang

Yeah, maybe just one last question for your piece of advice or anything that you want to say to other founders who is in Indonesia that are going through the current time? Would you want to say to them?

Agung Bezharie Hadinegor

Well, it’s a really tough one. I don’t know. I don’t think it’s an advice.

Dimitra Taslim

You can share how you have grown as a leader and founder.

Rita Yang

Yeah, or some reflections you have had in the past few months.

Agung Bezharie Hadinegor

Probably something that I learned in past few months is actually… Because there’s a lot of barriers in communicating, there’s a lot of barriers in working together. Communication becomes very important, right? I know that a lot of companies, a lot of startup founders in Indo see this. I just want to do the business, probably this could be done later on. But then at this point of time, it becomes very important to have a good communication line to your team. You just have to make sure that your team actually know where you’re going. And when you kind of shift the steering wheel, then you have to make sure everyone knows that you are going to somewhere else. And there’s a lot of teams, and then you have to answer all their questions because they’re also people who have some needs and also people who have costs. They’re following you, they’re following you in your company, not just because they want to work but also there’s some costs that they really want to follow. And then like a lack of internal communication, especially at this time could really impact the company really bad. This sense of purpose has to be maintained. Yeah. So I guess that’s the thing that also like letting them know, for example, you’re cutting costs because the traffic has dropped or there’s a lot of your clients are not paying on time and so on. And then I think being transparent and letting them know what’s happening and also making sure that if you’re doing cuts, you’re also taking cuts. It’s also important, this is the sort of thing. So I’m very thankful that a lot of our investors lecturing me about this, when this happened, we try to push transparency to our team and letting them know what’s happening with the business. Even like all the way through, like how long do you have the runway, or how’s the company cash flow looks like. It doesn’t have to be very detailed. If you’re afraid about the delegation, people could actually earn a lot of faith. And then actually, you could tell them that during this time, it’s a good time to shine. So I guess again, it’s also a good time for you to look at all your teams and look at which one is actually your future leader, someone who could grow very fast and good, ride the wave during this time. So yeah, the communication is really important.

Rita Yang

Don’t be afraid to over-communicate.

Agung Bezharie Hadinegor

Yeah, let your team know about it. I know there’s amount of expense that you cannot just do one on one to like hundred people. In your company, you could at least do a townhall every quarter, share sort of like company reports, do one on ones to your direct reports every week or whatever. Then spend a lot of more time with them, especially this time especially because you also hearing the news of companies that have to shut down. Don’t let them to be terrified.

Rita Yang

Thank you so much for sharing.

Agung Bezharie Hadinegor

Thank you for having me here. I hope you guys are doing well at this time.