Story of Tokopedia and Hard Earned Lessons On Building A Startup
Only last year, Tokopedia, one of Indonesia’s leading online marketplace sites, received US$100 million in fresh cash from two venture giants SoftBank and Seqouia Capital. This not only brought Tokopedia in limelight but also caught the attention of potential investors from all over the world in the Indonesian market enabling the Indonesian entrepreneurs to dream big! But like Rome, Tokopedia wasn’t built in a day. It took as long as 5 years for this venture to attract the investing giants as SoftBank and Sequoia and bag the largest round of funding in the Indonesian tech startup history. There must be something that founders of Tokopedia did so correctly which helped them pulling in such a large investment! Read on to find out more about the journey, strategy, obstacles and future plans of Tokopedia.
Launched back in 2009, Tokopedia is Indonesia’s largest e-marketplace that provides a customer to customer (C2C) retail by providing a platform for individual entrepreneurs and small/medium businesses to open online stores maintain their online store easily, while facilitating better and convenient online shopping experience.
Back in 2007, when there was no proper online marketplace in Indonesia. People used social media platforms, online forums as well as blogs to buy and sell products/ services. Those websites were begun to be known as classified ad e-commerce model in Indonesia. However they were not exactly serving the e-commerce purpose. Moreover, these websites lacked scalability, thus having no potential or long term growth and security, as there were no online payment system that protected both the buyers’ and sellers’ interests. To solve this problem, William Tanuwijaya and Leontinus Alpha Edison started Tokopedia on February 6, 2009.
Tanuwijaya does not belong to a wealthy family providing him with financial support to kickstart his dream of Tokopedia. So he had to wait for a couple of years to raise some capital before he could build Tokopedia. At that time, there were hardly any incubators or supporting networks for Indonesian startups. Tanuwijaya continued giving fundraising pitches to traditional companies who did not actually understand the potential of internet business. What made the situations tougher was the absolute lack of success stories in the local internet industry. But the tough times proved to be worthwhile when finally Tanuwijaya managed to raise funds from its first funding from PT Indonusa Dwitama, and then there was no more waiting! In the following August, their website was launched, and Tokopedia continued growing and attracting more and more investors.
It’s said that the rough times make the good times better. In its journey of becoming better with each day passing, Tokopedia had to overcome a surge of hurdles other than raising fund. It had to compete with tough competitors with serious backers like Telkom-eBay’s Plasa.com, Rakuten, and Naspers’ Multiply and prove themselves of their standard, if not better. Also, when Tokopedia was launched, users were not used to the new system as the market had already absorbed the idea of classified-ads model by then. Tanuwijaya acknowledges team building as another big obstacle that Tokopedia faced. He still remembers, right after Tokopedia had its first appearance, he opened a booth in his campus’ Job Fair Event. Sadly, no one good was interested to join a start-up.
The Turning Point
For Tokopedia, the turning point must have been the additional funding from East Ventures and also under the mentorship of Batara Eto. Batara’s experience ranges from building start-ups to getting listed on the stock exchange. William believes that Batara has given Tokopedia a lot of pointers and led them to new opportunities.
In October 2014, rocking the entire startup scenario over the world, Sequoia Capital, which has previously backed companies delivering world class products that molded the decade like Apple, Yahoo, Google, Linkedin, Zappos, Airbnb, WhatsApp, and Instagram, made its debut investment in Indonesia through Tokopedia. Tanuwijaya believes that such investments will drive more giant investors to the Indonesian market encouraging the local entrepreneurs and as for Tokopedia, he can now see it growing as big as Alibaba and may be even bigger!
Referring to what helped him bag such a huge fund, Tanuwijaya says that keeping his product consistent was the overall key. He also spoke about the value of not focusing on revenues, but rather creating products that will make people’s lives easier.
The Culture of Tokopedia
Tokopedia has 3 DNAs in its culture:
1. Focus on Customers: At Tokopedia, they believe that to be successful, they need to sincerely wish for every consumer to be successful, and grow together, and by consumer they mean buyers, merchants, and nakama (employee).
2. Growth Mindset: At Tokopedia the founders and employees are trying their best to build a culture of performance, and encourage everyone to have a sincerity to share like a teacher, and humility to learn like a student. Continuously learning is a very key value in Tokopedia.
3. Make it happen, make it better: Whenever a new idea or a new approach that can benefit Tokopedia, everyone there will focus all of their energy to make it happen first. And after that, they take a step back, and think on how they can make it even better.
Every employee is trained to build their character into: (a) staying humble like a tree root to the earth, (b) determination like water, flowing relentlessly, (c) passion like fire, blazing furiously, (d) speed like wind, swift and gusty, (e) courage like bambu runcing, challenge the status quo against all the odds.
For Tokopedia, the measurement of being successful is by helping others be more successful. So, the biggest impact will come from a network effect on the top of Tokopedia platform. Millions of new jobs are created by their merchants. As Tanuwijaya goes ‘I want Tokopedia to be able to achieve in future is producing world-class leader as a legacy to the next-gen company.’
It’s easy to see that Tokopedia is in the trajectory of Alibaba or Amazon but yet it has a long way before it can join their rank. Having India-based Sequoia Capital and Japan-based SoftBank as strategic partners, Tokopedia will surely need to start thinking globally and enter unmarked territories and navigate regulations in neighboring countries.