Why Go-jek Will Win in the End
Go-jek's coming domination of Southeast Asia is how deeply it is embedded into its market
The success story of the Southeast Asian "super app" and decacorn, Go-jek, is already the stuff of fairy tales. Even so, the US$10-billion company's best days are ahead of it. There are four reasons why Go-jek will win in the end against Grab and become the dominant player in Southeast Asia.
Solves a Real Problem
Airbnb founders, Brian Chesky and Joe Gebbia, struggled for years to figure out just what their business should do in the world. Should it help people find an air mattress to crash on when attending a convention in another city, or should it sell Obama O's breakfast cereal?
Go-jek has never had that kind of existential cluelessness. From the beginning, it has focused on, as the company writes on its website, improving "the welfare and livelihoods of the Indonesian people". That means solving real problems.
Anyone who has ever been to Indonesia knows that one of the biggest challenges that people there have to overcome on a daily basis is the most basic: getting from one place to another within crowded cities like the capital Jakarta. Spread as they are across some 15,000 islands, Indonesia's 269 million consumers are reluctant to order things online because inter-island transport for deliveries can be slow and expensive.
The traffic nightmare in the capital city of Jakarta, according to the government, costs the city's residents US$5 billion per year. Congestion is so bad that motorcycle taxis – called ojeks – now far outnumber automobile taxis, which more easily get stuck in traffic.
Go-jek takes its name from these motorcycle taxis. It has become a huge success by tapping into the need for a ride-sharing service to make it easier to find and pay a driver and then by expanding into 18 verticals. Consumers now turn to Go-jek for services that include food delivery, on-demand massage, courier services, ticketing, cleaning and bill payments.
The company claims to process over three million orders per day and has more than two million drivers. It is expanding beyond Indonesia into India, Thailand, Vietnam and the Philippines.
Indonesian consumers have by now downloaded Go-jek's app 130 million times, give or take a few, but things didn't always go so smoothly. When Go-jek launched in 2010, all it had was a call center and 20 drivers listed on an excel spreadsheet. Customers would call, the operator would scan the spreadsheet and try to find a suitable driver for the pick-up.
Despite its lack of early sophistication, Go-jek made getting around Jakarta easier. The fact that it solved a real problem was the key to its success. Even though it has expanded, the company is still laser focused on making things easier for its users.
Understands the Local Market
A second key to Go-jek's coming domination of Southeast Asia is how deeply it is embedded into its market. Go-jek thoroughly understands Indonesia and tailors its services to the market.
That's fine as far as it goes, but hubris and ignorance often cause national champions to fail when they try to enter other countries. Go-jek has carefully planned its international expansion to avoid these problems.
For its new businesses in Vietnam and Thailand, the company has let the local teams choose whether or not to use the parent's brand name. They settled on Go-Viet in Vietnam and Get in Thailand.
The companies will run independently of the Indonesian mothership. They will, of course, have the backing and mentorship that only an established leader like Go-Jek can provide. But they will also work with local partners and design their businesses around local needs.
Go-jek CEO Nadiem Makarim told CNBC that he expects each of these expansion businesses to "craft a unique market-led strategy."
Enables an Ecosystem of Entrepreneurs
Anything that increases the profitability of micro and small businesses in Indonesia is going to
have a massive impact on living standards and economic growth. Smaller businesses, according to ASEAN, contribute more than 50 per cent of Indonesia's GDP.
Go-jek plays the same role in Indonesia as eBay, Etsy and Amazon does in other countries, but with more impact. It has created a platform that entrepreneurs and individual operators can use to reach new customers, build new skills and increase profitability.
Ojek drivers before Go-jek would have been limited to ferrying people from place to place and could only find customers in their immediate vicinity. Their income was capped.
Now, drivers can use the app to find ride-hailing customers from a larger area. During the lunch hour they can deliver food. If they have a slow period, they can deliver a couple of parcels. Go-jek gives drivers access to cashless payments and online banking.
Go-jek considers its drivers as another form of customer. The company doesn't officially employ the drivers, but does give them full accident insurance, an option for inexpensive private health insurance and even safety training.
Drivers aren't the only micro-entrepreneurs that Go-jek empowers. The company hopes to train 35,000 small business people this year in basic finance, management and marketing skills.
The food delivery service, Go-Food, makes it easier for aspiring restauranteurs to get into business as well. They no longer have to rent street-front space with room for tables and chairs. A delivery-only model is viable and lets them reach customers within 25 kilometers of their kitchen. Go-jek reports that small businesses that join Go-FOOD increase their sales by 350 per cent on average.
Go-jek has even gotten into GoFundMe-style fundraising. During Ramadan in May this year, the company raised more than US$350,000 for the medical needs of sick children and other good causes. Go-jek driver Bang Tabrani and his family received donations totaling nearly US$2000 to provide medication and care to his three-year-old daughter Dalisha. The girl has already undergone five surgeries for her spina bifida and hydrocephalus.
Management is Humble
One final advantage that Go-jek has is humility. This is strikingly exhibited by co-founder and CEO Nadiem Makarim, who turned 35 in April of this year. Despite its successes, Go-jek's management displays none of the self-centered self-importance that led to the downfall of Uber's disgraced former CEO Travis Kalanick.
Makarim is more than willing to admit that luck has played a big role in his success. In fact, he said in an interview on Managing Asia that lucky timing is a "core strength" of Go-jek's.
"When you start thinking about the mathematical probability of a company growing as fast as Go-Jek," he told The Jakarta Post, "then that probability approaches zero very rapidly."
Focusing on the role played by serendipity adds a huge amount of gratitude, Makarim believes, and forces one to be constantly alert, grateful and aware of your limitations. These are attributes of a successful leader.