What Foreign Startups Can Learn via Go-Jek’s Business Strategy

Grab in addition to Uber continue to play catch-up while Foodpanda pulls out of Indonesia – how does Go-Jek continue to stay the market leader?

In August, Rocket Internet’s Foodpanda announced This particular was selling its operation in Indonesia in addition to which This particular would likely also take time to evaluate the success of its business in Southeast Asia as a whole. Considering which less than half a year ago, Foodpanda also pulled out of Vietnam by selling its operation to local food delivery competitor Vietnammm.com, a similar fate may be on the horizon for different Foodpanda units inside region.

At a glance, This particular might be easy to attribute Foodpanda’s retreat via Indonesia to its inability to take on fierce local rival Go-Jek, however there’s more to This particular story.

Peng T. Ong, managing director at Monk’s Hill Ventures, a venture capital firm based in Singapore in addition to Jakarta, says This particular’s important to note which there are big structural differences between Foodpanda’s parent company Rocket Internet — which is actually an online startup builder — in addition to Go-Jek, a home-grown Indonesian startup. While Go-Jek is actually an entrepreneur-led business which has grown under traditional startup methodology by raising seed capital via investors, Foodpanda was a business created by a corporate venture builder.

“This particular’s a product issue. This particular’s a ‘how do you build a startup’ issue,” Ong tells Indonesia Expat in reference to Foodpanda’s untimely demise in Jakarta. “Foodpanda is actually actually not a startup, This particular’s a corporate business unit via Rocket Internet. There are completely new ways to build tech businesses these days in addition to Rocket is actually innovating, saying: “We don’t need This particular traditional entrepreneur-venture capital product of doing startups. We’re going to think about what could be an interesting company to start, then we will hire people in addition to let them build.”

While Go-Jek was built with the Indonesian market in mind, Foodpanda was conceived with plans to go global via the very start. Today, Foodpanda is actually active in 500 cities across a few continents. Go-Jek, a startup run by Indonesian entrepreneur Nadiem Makarim, has the home court advantage as This particular is actually focused solely on the local market. This particular makes innovating in addition to implementing completely new business strategies much easier.

Although Foodpanda hired local ‘co-founders’ to run its Indonesian business, the top-down corporate product which Rocket Internet uses likely slowed the flow of knowledge in addition to communication between Indonesia’s team leaders in addition to Rocket’s headquarters in Germany.

The difference between a corporate business structure in addition to a startup operation is actually often the speed at which they’re able to iterate their products. Pure startups can typically iterate faster than their corporate counterparts. Delivery businesses like Foodpanda require a great deal of localization in addition to the freedom to pivot quickly to find product-market fit. This particular depends on what the local market is actually demanding at a given moment, in addition to calls for speedy, on-the-ground strategy tweaks. With This particular in mind, the firm which has fewer hoops to jump through in its decision-producing process will ultimately grow faster.

Apart via Foodpanda, behemoth foreign competitors inside ride-hailing space such as Grab in addition to Uber have also entered Indonesia in addition to launched their own variation of motorcycle taxis. however Go-Jek is actually still arguably leading the pack. This particular recently added US$550 million in fresh venture capital to its war chest. Ong thinks This particular might have something to do with Go-Jek’s ability to become the one-stop-shop for Indonesian users.

“I would likely say Go-Jek, given which This particular’s just focused on Indonesia, is actually traveling vertical integration with its business. You open up the Go-Jek app in addition to there are 11 or 12 businesses in there, beyond food delivery, payments, massages, manicures, in addition to pedicures,” says Ong. “If you look at This particular objectively, Grab in addition to Uber have been a bit slower on which, as they’re focused on their cars in addition to taxis. What Nadiem did, which was definitely smart, was to ask: ‘If I had a platform which has a lot of users, what else can I do on This particular besides transport?’ This particular is actually also what the WeChat folks in China did.”

To illustrate why Go-Jek is actually winning Indonesia’s large market of 250 million, Ong compares its success to China’s well-liked WeChat. Initially developed as a simple messaging app, WeChat has since grown into a one-stop-shop where users can do anything under the sun. WeChat users in Beijing can order food, pay for their meals, hail a taxi, in addition to much more. This particular ‘one app to rule them all’ mindset which WeChat in addition to Go-Jek have adopted works well because This particular addresses the diverse needs of the users, even beyond social in addition to transport.

With fierce competition between foreign competitors like Uber, Grab, in addition to local operators like Go-Jek in mind, Ong cites China as an interesting example. WeChat is actually among several Chinese tech giants which have flourished under the protection of the “Great Firewall of China,” which has kept out big players like Facebook, Google, in addition to Twitter.

“I saw This particular all happen. A lot of American companies were complaining which ‘the Chinese government is actually blocking us.’ I would likely say at some level, some of those companies were just sore losers. They came into a country which features a different set of rules in terms of government relationships in addition to requirements, however they wanted to play by US or international rules in addition to didn’t have enough leaders on the ground. Then they were surprised when they lost,” says Ong.

He adds which This particular’s essential to look beyond simply blaming local businesses when discerning why foreign companies in China or Indonesia fail. According to Ong, one of the main reasons why foreign businesses are unable to take on their local rivals is actually because executives generally lack a deep understanding of the market they’re trying to penetrate.

“Things are not as black in addition to white as ‘the government is actually blocking us’ or ‘the locals are fighting unfairly.’ Local companies are fighting by a different set of rules, which’s all,” says Ong. “The problem is actually which the leaders of foreign companies are refusing to go native.”

When Ong says “go native”, he’s referring to taking the plunge, in addition to basing yourself inside target market to understand local culture, as well as the big, fat, hairy problems which need solving. Ong’s advice to foreign companies interested in entering Indonesia in addition to attempting to take on local tech giants, like Go-Jek, is actually simple: immerse yourself in addition to tap into the local talent pool.

He says, “Don’t take a lot of time to understand This particular intellectually, however just get on the ground. Go eat in addition to drink at the local warung, hire lots of locals, understand the culture in addition to try to understand economic in addition to day-to-day pain points. You’ll figure things out a whole lot faster This particular way.”