Digital economy is currently huge economy contributor for United Kingdom. In 2015, this sector contributed 97 billion pounds and provide more job growth than any other sector in the country (Tech City, 2017). Majority of UK digital economy activities is concentrated in London, specifically in the area called Silicon Roundabout. The cluster is the home of more than 3000 digital media and internet companies, most of them are newly-established and small-sized.

This essay will discuss the development of Silicon Roundabout cluster and how public policy have impact on that process.  Short overview on the cluster will be discussed first as the starting point. After that the evolution of cluster will be described followed by discussion on the cluster policy impact. In the later part of the essay, challenges facing the cluster will be explained and then closed by essay conclusion.

Overview of Silicon Roundabout

Located in Hoxton and Shoreditch area, Silicon Roundabout is tech cluster in the middle of east London area.  The cluster is the home of nearly 3000 startups in IT, digital media, and mobile application business including some of the big names such as Uber, Google, and LastFM. Most of the tech companies are concentrated in the district surrounding Old Street roundabout hence the origin of the colloquial cluster name. Google Campus London, seven stories tech incubator and co-working space also located in this area. The internet giant is one of several big companies which established themselves in the cluster to setup partnership, foster innovation or maybe acquire some of them (BBC, 2011).

Majority of firms in the Silicon Roundabout are small startups working in creative and technology sector. Based on the report by Centre of London, 62 percent of the companies were less than five years old while 59 percent of them have less than 10 employees (Nathan, et al., 2012). Despite of this demography, almost a third of the startups in Silicon Roundabout operate in a global scale. This is due to the nature of digital firms which leverage the internet to deliver their services.

It is estimated that there are almost fifty thousand workforces in the cluster with majority of them are in ICT and Digital Content jobs (Nathan & Vandore, 2014). This number of workforce was growing more than double from 1997 to 2010 compared to the 44% total digital economy job growth elsewhere in the city. Number of digital startups firm in the area also double than the rest of London (Nathan, et al., 2012). This indicates that growth in Greater London’s digital economy were concentrated within Silicon Roundabout boundary, a defining trait of an industrial cluster (Porter, 1998).

Evolution from Fringe City to Tech City

Prior to Silicon Roundabout, Hoxton and Shoreditch has been associated with creative activities since the early 1990s. The area has lengthy history of arts and crafts production in watch, furniture, clothing, and jewelry (Bagwell, 2008). It is also known for lively music scene, gay clubs, and hipster bars (Pratt, 2009).  Several prominent of British artist which then officiated into Young British Artist (YBA) often held impromptu market and exhibition in the streets (Pratt, 2009). Due to this artsy scene, during the period the area was known as City Fringe area.

What were the factors which makes Inner East London attractive to creative entrepreneurs? Hoxton and the surrounding areas was always deemed as “bad” areas by the administration due to prostitution and public drinking (Pratt, 2009). This condition made rent price considerably cheaper than the rest of London. Landlords in the area also had flexible contract hence one space can be shared with multiple tenant. City rules were not harshly enforced hence artist were free to use the streets for market and exhibition. Lack of regulation and affordable space attracted many of musicians, artist, and crafters to setup workspace in Hoxton. According to Florida, creative cluster tends to happen in an area which tolerates “unconventional” people such as gays and bohemian (Florida, 2003). Affordability, high degree of freedom and tolerance made City Fringe cluster such a magnet to creative entrepreneurs in London.

From the beginning of post-dot-com boom in 2000s, web design firms and new media agencies began to fill in the area (Foord, 2013). This was deemed as natural evolution since the artist and graphic designers started to get contract from advertising companies who want to utilize the internet. The influx of new media companies introduces high technological capabilities within the cluster. By 2007, increasing numbers of companies in internet business, software development and web design started to set up shop in the area (Foord, 2013). Matt Biddulph, founder of travel website Dropplr, came up with the terms Silicon Roundabout as an inside joke between startup community in the area (GigaOm, 2012). Several news media then used the nickname when they started covering the cluster (Financial Times, 2008) (TechCrunch, 2008). Following the media attention, more startups then settled into the area hence the Inner East London transformed itself from arts and craft into tech startup cluster.

The rationales for the startups moving into Silicon Roundabout was similar in the City Fringe era which were networks, affordable rent, flexibility to shared space and inflows of ideas and human resources (Foord, 2013). It can be argued that cluster characteristics in the current Silicon Roundabout was shaped primarily in the City Fringe era. This is in line with Duranton’s urban evolution theory, cluster generally evolved from the earlier version of themselves (Duranton, 2007). Warehouse and sweatshops which the artist converted into workshops has been converted again into startup office and co-working space with minimum effort due to the similarity of its landscape. Rent flexibility which benefitted artist also suitable for startups because they can share one office for multiple firms. These factors become increasing returns for Silicon Roundabout to build upon.

Tech City Initiatives and The Problem Within

In November 2010, Prime Minister David Cameron introduced regional policy initiatives called Tech City UK (Gov.uk, 2010). The initiative was launched in the heart of Silicon Roundabout in front of industry leader, startup founders and representatives from global tech giants such as Google and Facebook.  Leveraging the rising popularity of the cluster and drawing similarity to US Silicon Valley, the administration declared ambitious target to develop Inner East London into one of the top global technology cluster. Tech city policy has three strategic objectives (Nathan, 2011):

• Supporting startups and SME in the Silicon Roundabout cluster
• Attract foreign direct investment into the area
• Utilization of post-Olympic infrastructure such as the media center for startup accelerator space providing flexible office space and other facilities

As an expansion of this strategy, several policy instruments were established and executed under the banner of UK Tech City. Description of these instrument can be seen below.

1. Mentoring and Advice: National business mentoring scheme and 200 million pounds grow.
2. Entrepreneur Visa: Special visa for individual with business idea and 50K committed funding.
3. Financing: Various investment scheme and tax relief for startups such as Entrepreneurs Relief, Enterprise Investment Scheme, UK Innovation Investment Fund etc.
4. Workspace: Empty public buildings will be converted to co-working space.
5. Connectivity: 100 GBP Mio investment in broadband for ten UK cities including London.
6. Government Services: Digital platform for government platform and business-related services.

At first, the policy evoked quite an excitement. Tech City strategy fit into the government bigger agenda to foster innovation, support entrepreneurship and rebalance the economy (Nathan, 2011). Tech industries embraced the attention and the opportunity to address market failures with open arms. London municipality also delighted by the initiatives. Tech City was an opportunity for the city to develop its emerging economic potential and further regeneration engine to utilize post-Olympic 2012 investment in the area. The launched of Tech City initiatives by the prime minister himself also increase national and international attention to Silicon Roundabout which in turns brings more startup into the area (Nathan & Vandore, 2014).

However, several studies argued whether cluster policy would be beneficial to the development of Silicon Roundabout (Foord, 2013) (Nathan, 2011). By definition, cluster policies are means of governmental effort to support the development of the cluster (Hospers & Beugelsdijk, 2002). The most common cluster policy is Porter-style program which highlight physical location as a vessel for firms, networks and supporting institutions while developing area-wide strategy as an alternative to sectoral intervention (Nathan & Vandore, 2014).  Scholars has been arguing that such implementation is generally ineffective and vague (Martin & Sunley, 2003). According to Duranton, clustering mechanism is very complex hence it is nearly impossible for policy makers to pull the right level (Duranton, 2011). His study also postulated that cluster policies tend to specialize the cluster even though economic diversification brings more benefit to the cluster (Duranton, 2011).   In conclusion, there is big doubt on the capacity of public agencies to develop cluster however this policy model is still preferable model for policy maker around the globe to foster innovation and increase competitiveness (Uyarra & Ramlogan, 2012).

In the case of Tech City Initiatives, it seems like the government were pushing Silicon Roundabout to be many things at the same time. Three strategic objectives conflicting with each other especially the first and second one. Within the limited spaces of the cluster, decision to invite big tech companies into the cluster will drive out indigenous local startup in the area. Landlords and real estate agents will grab the opportunity to gain profit by rising rental price. Introduction to foreign direct investment in the cluster also bears a risk of increased competition which can be detrimental to local startup (Markusen & Venables, 1999). However, one can also argue that influx of foreign investment can bring benefits in terms of knowledge and capital spillover (Javorcik, 2004). In their public report, Nathan et al suggested that foreign direct investment in Silicon Roundabout should be selected based on what is complementary for the cluster long term development (Nathan, et al., 2012). Both Nathan et al and Foord hence suggested to maximize its impact, Tech City policy intervention should just recalibrate its focus on supporting local startups and everything else will fall into place (Nathan, et al., 2012) (Foord, 2013).

Another criticism of Tech city was it seems like the strategy was driven by market success rather than the intention to address market failure (Foord, 2013). Rather than developing initiatives to help the region catchup, Policy makers and politician were jumping into the of Silicon Roundabout bandwagon. The promise of economic growth from tech startup was attractive for UK Government to take advantage with. As displayed in below graph, direct policy intervention was developed on the peak of Silicon Roundabout popularity.

Third argument against Tech City is how the initiatives didn’t take account the local knowledge and wisdom in developing the initiatives. The term Tech City itself was disjointed because the cluster was known as Silicon Roundabout for several years before. This choice of term resulted branding confusion regarding the area due to Tech City-brand is Government-owned while the community much prefer to refer the area as Silicon Roundabout (Nathan, et al., 2012). Another point to this argument is Tech City initiatives try to widen the scope of the cluster up into the Olympic park even though it was beyond what the community perceived as its natural boundary. The Olympic park area is around three miles from Shoreditch however it is a little bit hard to access the area using public transport. Even if the government offered free spaces in the Olympic media center, several startups raised concern that whether their clients of staff would move there (Nathan, et al., 2012). This is aligned with Mccann and Sheppard theory that cost of transportation is a crucial aspect in determining the boundaries of cluster or industrial complex (Mccann & Sheppard, 2003).

Despite the pros and cons, Tech City initiatives continued to be revamped and revised by the government. One year after the launch, new initiative was added to setup linkage between the cluster and nearby universities such as Imperial and UCL (The Telegraph, 2011). Tech City program was then widened its scope to Greater London, Manchester, and other major cities around the UK (Tech City, 2017). Started from Silicon Roundabout, Tech City initiatives are now nationwide policy effort targeted to advance the country digital economy turnover.

Challenge Ahead for The Cluster

Seven years after Tech City initiatives, Silicon Roundabout currently faced several challenges. Number of companies around Old Street roundabout declined drastically from fifteen thousand in 2014 to only three thousand in 2017 (Business Insider, 2017). Declining startup activities mainly caused due surging rent which drove out many startups from the area.  The condition further worsened due to Hackney council decision to gentrify the area by replacing office building with student apartments (Guardian, 2014). The area affordability which is a major attractiveness since the period of Fringe City could be gone forever.

However, even though firms in Silicon Roundabout was declining, other parts of London were getting increase in new business formation. City Road area which located just north of Silicon Roundabout increased its startup formation rate by almost double within the same period as Silicon Roundabout decline (Business Insider, 2017). Many believe this indicates that startup concentration in London is decentralizing.

Expansion of Tech City initiatives also somewhat brings competition for Silicon Roundabout from around the country. Even though currently London is still the biggest contributor UK digital economy, second tier cities such as Bristol, Reading, Manchester and Edinburgh were growing up rapidly (Tech City, 2017). Since the policy instruments is accessible nationwide, UK tech startup have more attractive options in terms of where they should locate their business.

All is not lost for Silicon Roundabout however. Nathan and Vandore believed that the emerging financial technology trend could kickstart new growth for the cluster (Nathan & Vandore, 2014). Due to its historical concentration of banking industries, many believed that London will be the fintech startup capital of the world (KPMG, 2016). As the current de facto startup cluster in the city, Silicon Roundabout have the potential to be the home of next wave of fintech startups coming into the city.

Conclusion

Silicon Roundabout is tech startup cluster in the heart of East London area. The cluster experienced exponential growth in the past decade and currently major contributor of digital economy jobs in the whole Greater London. The area itself has a long history of entrepreneurship and creativity due to its affordability compared to other areas in London. The cluster evolved from arts and cluster based City Fringe into tech startup hub of Silicon Roundabout. From the evolution, it can be concluded that the cluster grow organically with minimum policy intervention. In fact, the lack of policy and rule implementation is the reason many artist and crafters moved to during the City Fringe. Some of the characteristics from City Fringe era such as flexible rental contract then become increasing returns for the cluster when its transformed into Silicon Roundabout.

Cluster policy intervention in Silicon Roundabout came only after growing popularity of the area. Tech City initiatives brought investment and spotlight while the policy mix was criticized due to lack of coherency between one and another. The initiatives also bring unintended consequence of rising rental price and gentrification. For Silicon Roundabout to grow, it is suggested that policy intervention should focus on preserving the growth of its natural inhabitant: the young and nimble digital tech startups.

References

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Duranton, G., 2011. California Dreamin’: The Feeble Case for Cluster Policies. Review of Economic Analysis, Volume 3, pp. 3-45.

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Javorcik, B. S., 2004. ). Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages. The American Economic Review, p. 605–627.

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Mccann, P. & Sheppard, S., 2003. The Rise, Fall and Rise Again of Industrial Location. Regional Studies, Volume 37, pp. 649-663.

Nathan, M., 2011. East London Tech City: Ideas without a strategy?. Local Economy, Volume 26, pp. 197-202.

Nathan, M. & Vandore, E., 2014. Here be startups : Exploring London tech city digital cluster. Environment and Planning , Volume 46, pp. 2283-2299.

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Pratt, a. C., 2009. Urban Regeneration: From the Arts `Feel Good’ Factor to the Cultural Economy: A Case Study of Hoxton, London. Urban Studies, Volume 46, pp. 1041-1061.

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I did comparison of total number of employees of all Indonesian tech startups listed in Crunchbase and employment numbers of other major business sector.

Several interesting points :

• In country level, startup employment is still miniscule which is not surprising. However in Jakarta level, it already surpassed banking, construction, education and enterprise support services sector
• Still in Jakarta level, Startup employment is already nearly half Real Estate sector, nearly third of Transportation and Warehousing and quarter of Manufacturing
• Jakarta hold 60 percent of total Indonesia startup employment. Compared to the ICT sector which Jakarta only contribute 2% of total country employment. I guess startup ecosystem is still very Jakarta centric ?
• Startup employment probably can be used as proxy for Digital Economy contribution. However its still need average wage data points in Startups to see how the contribution related to other business sector.
   

Also couple of notes regarding the data

• This is a pre-eliminary analysis, did it in my spare time so please do comment if i made mistakes or something doesnt felt right
• Number of employee data in Crunchbase is in estimated range. I used the maximum estimation.
• Out of around 900 Indonesian based startups listed in Crunch base, 270-ish doesnt have employee data. So the number could possibly bigger
• Techinasia listed around 3000 Indonesian startups however they didnt parse it by city and also i believe they didnt offer access to the raw data. However, just by looking at the number of startups disparity compared to Crunchbase, again the number of startup employment could possibly much bigger

Heres the tableau link to get better view of the graph : http://bit.ly/startupEmploymentIndo

Data source : Crunchbase, BPS Sensus Ekonomi 2016, Self-analysis

PS: Kudos for Badan Pusat Statistik Indonesia for the quality and the granularity of the data.

So couple days ago i applied for a job opening at Traveloka. Im still working on my dissertation but reading the job description got me interested. Unfortunately i didn’t pass the analytic test. Got bad history with this kind of test. A little bit disappointed but on a bright side this probably a sign that i should gave 100% focus on finishing my thesis.

Since Ive been using their services for quite some time, i had several improvement ideas which i plan to develop inside the job application. I thought this might be useful if i get called for interview. However since it is not my luck this time rather waste the ideas, it might be better if elaborate it more here. Writing it can serve as means to stretch my “idea machine” while also a way to embrace my failure. Hopefully it will be useful in some ways for anybody who read this.

So here we go.

Product Integration / Cross-selling

From tabbed options on the home page, i can see that Traveloka sell flight, train, hotel, mobile phone top up and attraction tickets. Looking at this list, we can quickly deduce it might be better to integrate all or some of them together in one menu. By putting these product in one sales process,  it might be easier to do cross-selling in order to increase Average Revenue per Order. 

However as we can see in the picture above, the only one that is integrated is Flight and Hotel. Even that, it still has dedicated flight menu on the left. My assumption is flight tickets is the primary cash cow for Traveloka hence to the two separate menu for it.

So what is the rationale for this design choice ?

Integrating multiple product might be a way to increase revenue. But bear in mind, integrating multiple product will probably increase complexity to the sales process. User will be given more steps or prompted more options hence more hassle. More hassle means increased risk of cancelled order. Cant have that for your cash cow because too much revenue at risk. If lets say 70% of user came to the site to primarily search flight tickets, bothering them with hotel options would annoy them.

I noticed that Kayak also does this similar design while on the other hand, EasyJet cross sell everything if you buy directly through their site.

Despite the benefits of no-hassle approache, I believe there is some missed opportunity to not do integration with less risky product. Either with Attraction and Activities which i assume is the least bought product due to its menu placement or maybe even the Hotel one.

As you can see in the image above, within the Attraction and Activities sales menu, there is a page frame on Transportation and Venue info but the information is not that useful. I think this part is better replaced by info on nearest Hotel or available Flight within that date AND the options to book it.

Similarly, in the Hotel menu, there is even information on nearest Attraction however the info is just static text even though Traveloka also sell tickets to that attractions. Might as well put an option to put in the shopping cart.

Looking from the user perspective, i feel like the frame and the content is there already, hence to develop cross-selling approach shouldn’t cost that much. The challenge is to test this gradually using variety of approach within low-risk product  both to ensure minimal annoyance to the user and optimal revenue gain.

The ability to cross-sell multiple products will be the stepping stone for my next idea, which is…

Itinerary Builder

Since Traveloka sell flight, hotel and attractions and also data package for international roaming, i wonder why they didnt bundle it up into itinerary. Since Traveloka have the elements already, the next step after enabling cross selling different product is to combine multiple products into one bundled itinerary. User can pick and choose their flights, where they stay, what to do, add data roaming on the top and then charged it under one price.

Itinerary represents total expense of a traveler. I cannot find the data on Indonesia, but from the EU tourism statistics, transport and accommodation account for 60 percent of domestic trip and 74 percent international travel.

Traveloka already aimed for two-third of travelers budgets anyway so why dont make it easier for user to spend the budget 100 percent on the site. Convenience for the user and profitability for Traveloka.

I kept coming back for Easyjet reference because i used them recently. They had this kind of product called Holidays. It has nice filter options where you can choose what type of holiday product you want to get. However it only bundled Flight and Hotel which kind of the same like what Traveloka right now. Moreover, the combination of those two options is fixed.

Local startup TripVisto offer similar package-trip product. However their product mostly doesn’t include flight tickets and yet again, the itinerary options are fixed. With advantage in Flights and Hotels and developing menu where users can combine multiple product in one basket, Traveloka can complete the missing piece of this itinerary product. As far as i know havent been offered by other online travel provider hence it has potential to solidify Traveloka dominance in this space. Tiket and Nusatrip havent even combined Flight and Hotel at this point of writing.

The itinerary product should also leverage Traveloka apps. Once users create their custom itinerary, all of the tickets, schedule and other useful information will be pushed to the app. The app then become one-stop-travel companion with real time information on that itinerary. This is similar like what TripIt does.

In the current app of Traveloka, i can view all of my tickets but its separated by product (flights, hotels, attractions, internet). If the various tickets from flights, hotels and attractions are grouped in a trip, arranged by time, its already pretty similar to TripIt . Hence i assume the development cost wouldnt be too high because all the elements are there. I believe by doing this, it will increase the app usage and stickiness since currently the app is geared more to conduct sales. Having complete itinerary information, user will constantly open the app while travelling not just when they try to plan their trip.

Yet again, the challenge is to ensure the new features developed in the app is essential for users. Putting too many functions will risk making the app bloated.

The third ideas is the culmination of the first and the second one, which is…

Recommendation Engine

Apart from revenue increase, bundling multiple product into itinerary could bring crucial benefits which is inventory correlation data. By enabling users customise itinerary, Traveloka could unlock interesting data points such as:

1. Average duration and spending per each customer trip (e.g Single traveller who goes to Jogja typically spends 4 mio and 2 nights)
2. Correlation between flights and hotel ( e.g User who fly using AirAsia to KL is more likely to stay in Tune hotel, Business class travellers are most likely to stay in hotel close to airport)
3. What kind of activities that different users are most likely to do (e.g Families who go to Singapore for more than 2 days are most likely to buy Universal studios tickets, Single traveller staying in a less than 3 stars hotel in Vietnam are most likely to go to Ha Long Bay )
4. Multi-mode transport and hotel connections (e.g Traveler who arrive in Cengkareng and depart to Bali in a 7 day interval is more likely to buy Jakarta – Surabaya train tickets)
5. Propensity to use data roaming (e.g Single traveler who buy ticket to Disneyland Paris is more likely to buy higher data package for Instagram stories, Business class traveler is more likely to buy pulsa for calling back home)

This is what i can think of the top of my head right now, im sure there is more interesting stuff can be explored.

With their current scale of inventories, i assume some of this correlation can already be done inside Traveloka. However by offering customised itinerary product, the user will do the item clustering themselves. Hence Traveloka can capture not only customer preference on one product but multiple combination of product within one purchase in a specific time.

This inventory correlation data can be used in a simple way by providing Amazon-like “User who buy X also buy Y” recommendations both within the purchase process or through email newsletter. I also believe that this correlation data could enable something more sophisticated such as intelligent recommendation.

Imagine having the urge to go for holiday but you’re not sure where to go. At this point of time one thing you’re sure of is your budget. You have around 5 to 7 million budget and cant afford to spend more than that. So what do you do ? you consult with Traveloka.

As depicted in the image above, I imagine users can type their budget (e.g “7 million” or “7 mio”) added by specific destination keyword such as “Tokyo” or even just “domestic” or “international” into text box. Traveloka then recommend relevant product such as attraction, flight and also the most common itineraries.

Well, the design could be so much better than this though.

To judge the value of recommendation engine, theres no better example than Amazon. Back in 2011, Fortune reported that successful implementation of integrated item-to-item recommendation increased 30% of the company sales year-on-year.  On the other hand, in this classic marketing / forecasting paper by MIT’s Ben-Akiva and Gershenfeld, user-customised-bundling can potentially increased total demand of products significantly given that the bundled-price is reasonable. From both this empirical and theoretical reference, i believe there is big potential in developing itinerary which further improved by intelligent recommendation.

However one could also argue that total development cost both in time and resource will be significant. In this prominent paper developed by Amazon’s Personalization Group, even though item-to-item recommendation brings lot of benefits, the cost of computation is also expensive. It also correlated by the order of magnitude with number of inventories as well.

Hence the key to develop this is by spreading the investments and development into multiple stages (as proposed by this blog post). By doing this, risk will be lower and development team can have gradual feedback which spark further improvement when developing the more advance stage. Ideally, the benefits from the first stage can be harvested while the next stage development starts hence the development cost and revenue gain can be balanced nicely.

Conclusion

Considering the current scale of Traveloka users and inventories, there is huge opportunities in offering personalised travel recommendation services. I believe this services not only could increase average order value but also become an unique value proposition to further solidify Traveloka dominance in Indonesia online travel space.

To lower the risk and spread the investment, this services should be build in stages starting with simple cross-selling mechanism at the start, improved by offering custom itinerary and then developed further into full blown recommendation services.

It has been more than a month since i submitted my dissertation. This was my first proper academic project which i have been working since June this year. With this submission, i have completed Innovation Management and Entrepreneurship MSc program in University of Manchester. I havent got my final grade yet but hopefully it wont be too shabby.

This dissertation project has been both exciting and exhausting at the same time. I deliberately chose the topic that i most interested with . However, there were still many times during the work that i became so fed up and wanted to get it done as quickly as possible. In the end, the project made me learn a lot about how to do scientific project, building arguments, critically reviewing academic papers and executing research project.

We did it! – picture by @okymauludany

Along the way of working this dissertation, i’ve been getting a lot of help both directly and indirectly. Hence this post serves as thank you note for everyone who has been supporting me in finishing this work.

Proposal of my research can be seen here. Ill post summary and conclusion of my dissertation in the upcoming post, hopefully. I was proud of my work before submission but after reading it again after getting good night sleep, i realised it was shit haha. 

I would like to dedicate my first thank you to my dissertation supervisor, Dr Elvira Uyarra. Reading Elvira works on innovation policy  was one of the trigger that made me chose Innovation Management and Entrepreneurship program in Manchester. I even referred her works in my scholarship application to convince Indonesian government that Manchester is the place to be to learn about innovation. As supervisor, Elvira has been helping me a lot in shaping my ideas, building theoretical framework and even fixing my grammar.

I want to also thank my Research Method professor, Frank Boons. He designed his class in order for students to make step-by-step research progress every week hence it was very useful for me which never done any proper scientific research. On top of that, he was also very responsive and thorough in giving feedback which further support me in shaping rough ideas into research proposal. I once gave him draft at 2 in the morning and before 8, Frank wrote a page full of detailed revision.

I was also get support from my other professors and faculty members in the brainstorming phase. Hence my thanks to Kieron Flanagan, Bruce Tether, Marcella Miozzo, Jonathan Pinkse for the advices.

Next on my thanks list is the founders, activist, journalist, managers, developers and enthusiast in Jakarta digital startup scene which was the topic of my dissertation. These are the good people which helped me in various ways. From agreeing to be respondent,  providing raw data, introduce me to people and support me in navigating the ins and outs of the industry.  For that, i will be forever be grateful

So lets start!, i would like to say my gratitude to : Yasaka Rani from Blibli, Oky Mauludani from Traveloka, Muhammad Ihsan from Tokopedia, Nalendra Wiryawan from Blibli & XL Axiata, Berlian Agusta from Airy Room, Christa from Womantalk, Janet Valentina from IDN Media, Leontinus Edison from Tokopedia, Rama Mamuaya from DailySocial, Aulia Halimatussadiah from Zettamedia & StartupLokal, Robi Baskoro from Duniaku, Aditya Saputra from Tripvisto & Tamasia, Yoga Nandiwardhana from Google Indonesia, Gery Azriel from Youtube Indonesia, Nadine Freischald from Techinasia and many others which gave comments or reply on my questions in Twitter or Linkedin.

I also getting lot of help from my classmates in Innovation Management and Entrepreneurship MSc 2016 – 2017. For the feedbacks and chats during late night word count grinding in Alan Gilbert Learning Commons, my thanks to Kai, Camilo, Aisha, Shresta, Phing, Hilde, Farah, Andrea, Hector, Ravi, Nishant, Stoyko, Danai and Chiara.

Then, i would like to give my special kudos to Indonesian-IME group: Mira, Tera, Faiz, Jojo, Derian. A support group, a home away from home and best study group I have ever have.

My masters degree program and dissertation research project was funded by Indonesian Education Endowment Fund Scholarship (LPDP). This is a great program which enabled thousands of Indonesian to pursue Masters and PhD overseas. If youre planning to apply or have questions regarding the program, drop me an email (kiki dot ahmadi at gmail ) and i will gladly help you.

Lastly, to Sari and Ghazi. My raison d’etre. Thank you for accompanying me in this wonderful journey. The works is for you two.

Following up my last post, in this post i will put the abridged version of my master dissertation. At first, i hesitated to put this in blog because after reading it again after submission, i realized it was total shit. However, several days ago i received my final grade from the university and it way over what i expected. I got near perfect grade for my dissertation hence i was officially graduated Master of Science with distinction.

Msc Dissertation

Due to those result, i decided to post the dissertation on my blog. I hope that it can be useful somehow especially for someone who wants to pick Indonesia / Jakarta / Slipi start up ecosystem as a research topic. 

The whole document 21 thousand word long which i think is too overwhelming if i copy paste everything here. Hence i will post only certain chapters such as research background, context introduction, analysis, conclusion and limitation in order to be more digestable.

If youre interested in the full document, you can download it here.

If you just want to read the broad overview of my research and dont want to be bothered by this 6000 word post, check out this slide. 

As an acknowledgement, this dissertation was written by me, Kiki Ahmadi , and supervised by Dr Elvira Uyarra. This dissertation was submitted to The University of Manchester for completion of  MSc degree in the Faculty of Humanities in September 2017. 

Abstract

In recent years, there is an increasing trend of internet startup creation in Indonesia driven by favorable macroeconomic indicator and infrastructure development. Majority of this startup are founded in the capital city of Jakarta with specific agglomeration happening in the area called Slipi. Drawing similarities from US tech cluster, the area was colloquially known as Slipicon Valley. Success of initial startups brought nationwide attention to Slipicon Valley however there is little information on how the cluster formed and what are the factors that influence them.

This dissertation is a study on Slipicon Valley cluster formation process. Using Feldman’s entrepreneur-led cluster formation theory, this dissertation aimed to build narrative description on how Slipicon Valley evolve overtime and examine the role of each supporting factors. The study also determines in which phase of cluster formation the Slipicon Valley currently is. Mixed-method analysis was used in the study, combining both spatial analysis using firm-level data and semi-structured interview with Slipicon Valley founders and managers.

The study identified rising trend of internet business and corporate spin-off as exogeneous events which sparked entrepreneurship activities in the cluster. Responding to emerging opportunities, actions by both individuals and corporation then influenced the development of supporting resource and institutions. The role of public policy in this process however is little to non-existent. This dissertation also argued that current Slipicon Valley has exhibited characteristics of a forming cluster. Nevertheless, it still lacked institutions and resources to be defined as mature, innovative, and adaptable cluster.

Keywords: Cluster, cluster formation, startup, entrepreneurship, regional dimension of entrepreneurship

Research Background

In recent years, Indonesia has been experiencing rapid growth in the digital economy. Driven by enormous middle class, increasing broadband penetration access and widespread infrastructure investment, Indonesia digital economy forecasted to grow from nearly 8 USD billion in 2015 to almost USD 80 billion by 2025 (Google & Temasek, 2016). This huge market potential has attracted homegrown and foreign entrepreneurs to build technology start-up to capture this opportunity. Tech start-up rate in Indonesia has grown by almost tenfold from 2010 to 2015 as indicated by number of funding and investment (Tech In Asia, 2016).

Out of around 800 identified tech start-ups in Indonesia, more than fifty percent are Jakarta-based start-ups (Crunchbase, 2017). This is not surprising considering Jakarta status as the capital of the country which enjoy the advantages of better infrastructure, higher internet penetration and faster economic growth compared to other cities in Indonesia (Financial Times, 2014). However, within the city itself, several tech start-ups are centrally concentrated in the urban area called Slipi. More than 40 start-ups are collocated here along with several venture capitals, business incubator and co-working spaces as reported by local news media (Jakarta Post, 2015) (Tech in Asia, 2015). Most of these start-ups are working in e-commerce, online travel, and digital media. Even though slightly different, the start-ups could be lumped into bigger categorization of internet and tech start-ups. This fits into the definition of cluster which geographical and sectoral concentration of similar firms (Porter, 1998).  Because of this, the area was colloquially known as Slipicon Valley or Slipicon, a word play of Slipi and Silicon Valley (Jakarta Post, 2015).

The aim of this dissertation is to analyze the formation of Slipicon as emerging tech start-up cluster in Jakarta, Indonesia. Studying this process is crucial to understand how this cluster evolve and what are the factors influencing tech startup cluster formation in the context of Indonesia as a developing country. Outcome from this dissertation can be used as basis to develop policy program both to develop current Slipicon Valley further or another startup cluster within similar context.

The study will use cluster theories, regional dimension of entrepreneurship and cluster formation theories as theoretical lenses while also synthesize empirical data to gain comprehensive view of how Slipicon valley emerge. The research will use mixed-method analysis and the nature of the research will be exploratory.

Research Questions

The main research questions which will be pursued in this dissertation is:

How cluster formation happened in Slipicon Valley tech start-up cluster?

Since there is no prior research regarding this cluster, several analyses will be conducted to get a better overview on the context. Both quantitative and qualitative analysis will be used in the attempt to answer the main research question.

This will include spatial mapping analysis to obtain an overview on cluster, narrative-building to see how the cluster evolves overtime, and semi-structured interview to get primary information from Slipicon Valley cluster actors. In the later chapter of the dissertation, both conclusion of the study and limitation which came during the execution of this study will be explained.

Slipicon Valley Overview

Slipi is an area in the Palmerah district in the West Jakarta municipality. The area can be described as a growing urban sprawl filled with contrasting combination of big shopping malls and luxury apartments on one side, while on the other side are the universities, student houses and small business. The Slipi area is crossed by two main highways, the Jakarta-Merak Tollway and Tol Dalam Kota (Jakarta Inner Ring Road). The Jakarta-Merak Tollway connects Jakarta city to Tanjung Priok port, while the Jakarta Inner Ring Road gives direct access to the capital city’s main international airport, Bandara Soekarno-Hatta. As a result, people who travel both from the seaport and airport will always pass the Slipi and Palmerah district. Apart from the highways, the Slipi area is also well-connected by public transport both by bus and train.  The city bus rapid transit network, TransJakarta, has three stops in the Slipi area through Corridor IX (TransJakarta, 2017). The commuter train network is also easily accessible from Slipi from Palmerah train station (Coconuts, 2015).

Jakarta Map with Slipi area highlighted in red while central business district is in blue

Recently, Slipi has been associated with the emerging technology start-up trend in Indonesia. The Jakarta Post, the most prominent English language paper in the country, reported that there are over 30 start-ups, digital companies, and venture capitals who have setup office in this area (The Jakarta Post, 2015). Tech publication, Techinasia, also said Slipi has the most population of start-ups, tech companies, venture capital and co-working space in the city (Techinasia, 2015). Drawing similarities with Silicon Valley in the US, the area is then colloquially known as Slipi-con Valley. Among the start-ups that are in Slipi-con Valley, several of them became very successful, thus further the popularity of the cluster as well. Two examples of these are Tokopedia and Traveloka which are the top 5 e-commerce companies not only in Indonesia but also in South East Asia (TechCrunch, 2016). The concentration of start-ups in the cluster has attracted overseas investors to set up a business presence and try to leverage the area’s potential in Slipi-con Valley. An example of this is Japan-based Cyber Agent Ventures which set up new office and co-working spaces in Slipi to be able to tap into the Indonesia tech start-up scene (Techinasia, 2015).

Illustrative map of Slipicon Valley and its prominent start-ups (Techinasia, 2015)

The name Slipi-con Valley started as an internal joke between the founders and an employee who worked in the area (The Jakarta Post, 2015). However, there is no official source or information which describes how the term or the cluster first started. From Google Trends data which is depicted in figure 11, the terms Slipi-con Valley started to emerge in Google search results somewhere between end of May and early June 2015. Both articles which cover Slipi-con Valley in The Jakarta Post and Techinasia were posted during similar period (The Jakarta Post, 2015; Techinasia, 2015).  This could be attributed to the growing trend of e-commerce in Indonesia in 2015 (TechCrunch, 2015; World Economic Forum, 2015). Slipi-con Valley is the home of several big local e-commerce players (Traveloka, Tokopedia, Blibli, Berrybenka). Consequently, the rise of this sector might increase the popularity of the cluster as well.

Historical google search data on “Slipicon Valley” term (Google Trends, 2017)

The origin of the Slipi-con Valley cluster might also closely tie in with the growth of the Indonesia and Jakarta tech start-up scene in general. The seed of the ecosystem can be trace back to post-dot-com-boom era of 1998 to 2001, which the first generation of Indonesian start-ups such as Detik.com (news site), Kaskus (community forum) and Bhinneka (e-commerce) first founded. However due to lack of business ecosystem and poor internet infrastructure, the scene went dormant (E27, 2012).

Number of start-ups founded each year in Jakarta (Crunchbase, 2017)

As depicted in figure 12, the second coming started again circa 2008 – 2010, until today where there is a rise of newly-founded Internet start-ups mostly in news media, social network, and e-commerce (Techcrunch, 2010). The rising trend was attributed to an increasing development of the internet, personal computers, and mobile phones (E27, 2012). Tokopedia, one of the earliest and most prominent e-commerce business in Indonesia, moved into the Slipi-con Valley cluster during this era. In 2010, the US internet giant Yahoo acquired local social networking apps Koprol which put the Indonesian start-up scene into the global spotlight (TechCrunch, 2010). These start-ups attracted foreign investors and venture capitals to invest in Indonesian start-up hence incentivising more start-ups to flourish in the upcoming years. Two of those venture capitals (CyberAgent Ventures and Mountain Kejora Ventures) are in Slipi-con Valley. Many of the start-ups they invest in are in the cluster as well’ (Techinasia, 2015).

Slipi area is considered affordable in Jakarta. The average rental cost in Slipi and West Jakarta in general is cheaper than the CBD area in South Jakarta. However, Slipi is not the cheapest; there are many areas in Jakarta which are more affordable. In Figure 11 below, West Jakarta, where Slipi is located, is in the middle tier, while on the other hand, the East Jakarta rental price is almost half that of Slipi.

Comparison of office rental cost in Jakarta areas (Colliers, 2017)

Within the Slipi area, there are three high-ranking private universities: Bina Nusantara University (Binus), Trisakti and Tarumanegara (The Jakarta Post, 2015). Binus particularly is well-known for their computer science programme. Every year Binus produces more than 3000 computer science graduates (Wartaekonomi, 2017). This is helpful for tech start-ups in the Slipi-con cluster which constantly needs software and hardware engineers. Binus graduates are also known to be entrepreneurial. There are currently eight successful tech start-ups founded by Binus graduates, including the founder of Tokopedia which is also one of the earliest tenant in the Slipi-con valley cluster (E27, 2017).

Venture capital businesses are also plentiful in the Slipi-con valley cluster. Out of sixteen listed venture capitals in Indonesia, five are in the Slipi-con Valley cluster: Mountain Kejora, Cyber Agent, GDP Venture, Merah Putih and Ideabox (Inc42, 2017). Mountain Kejora and Cyber Agent are foreign investors while the other three are local companies. GDP Ventures are spin-off founded by Djarum Group, the biggest tobacco company in Indonesia. The Djarum Group office complex are in Slipi hence GDP venture use their office building. Some of the venture capital companies, such as Mountain Kejora, have co-working space for their start-ups to use in their premise. Consequently, these venture capital businesses are actively adding new tenants to the cluster, especially in the early stages of a start-up, because they benefit greatly from lower rentals’.

In terms of a social network, there are specific organisations or communities tailored for the founders or employees in Slipi-con Valley cluster. However, there are several communities which routinely hold events in the cluster. Most of the events are free and they become meeting points for individuals from various background who are interested in tech start-up movement in Jakarta. There is StartupLokal, which is the first tech start-up community in Indonesia. It was founded in 2010 and they hold monthly free-for-all sharing sessions events with an average attendance of 200 people each time (Meetup, 2017). Another one is Girl in Tech Indonesia which is a community specific for tech start-up female founders and employees. It was founded by Ollie Salsabeela, a serial entrepreneur. Her current company is in the cluster, and community meetings are often held at her office.

One thing the cluster lacks is government support. Even though the cluster has been covered several times in the media, and foreign investors are already coming in to the cluster, there is no support in terms of policy or funds. There are no known initiatives or intentions yet from public sector bodies to support Slipi-con Valley, despite the rising popularity of the cluster.

Quantitative Findings on Slipicon Valley

There have been several attempts to map the Slipi-con Valley cluster before, however these were done in a very simplistic way (Techinasia, 2015; Qerja, 2015). This dissertation will attempt to remap the cluster in a more comprehensive way using the location data of 453 Jakarta-based start-ups listed in CrunchBase.

Initially, the mapping of all the start-ups for the whole of Jakarta will be shown. This is to see the concentration of start-ups in the Slipi-con Valley cluster compared to other areas in the city.

Mapping of start-ups concentration in Jakarta based on 2017 Crunchbase data

As depicted above, the locations of start-ups in Jakarta was quite scattered all over the city except for two noticeable agglomerations in the Central Business District (CBD) and in the Slipi-con Valley Cluster. The concentration of firms in CBD is not surprising, considering most of the business, financial and political establishments are in the area. It is the number one top office spot in Jakarta with the highest office space demand (Colliers, 2017). Slipi however is quite new and unique because the area was not traditionally seen as business areas especially for technology companies.

Zooming in to Slipi-con Valley, the cluster is currently the home of forty-one start-ups. As depicted in figure 13 below, most them are co-located mainly in three main locations: APL Tower, Wisma 77 and Wisma Barito Pacific. All three of them are prime office building areas located strategically along the Jakarta Inner Ring Road. A possible explanation for this is because of the venture capital businesses, GDP Venture and Kejora, which are in Wisma 77 and Wisma Barito Pacific respectively. Kejora specifically have co-working space in their office hence most of their investment is also located there. The APL tower however does not have venture capitalists in their premises. Nevertheless, the building is part of Central Park shopping mall complex which attracts many visitors daily.

Slipicon Valley cluster map with information on the concentration area of start-ups

In terms of the business sector, the bulk of start-ups are in the e-commerce business. The three biggest start-ups in Slipi-con Valley (Traveloka, Tokopedia and Blibli) are all e-commerce services. Apart from e-commerce, start-ups offering software development services and venture capitals are also prevalent in the cluster. In terms of operating age, half of the start-ups in the cluster are less than 3 years old; only two firms have been operating more than 7 years. In terms of size, almost 60 per cent of Slipi-con Valley start-ups have between 50 to 200 employees. In addition, there are significant small and micro-sized small firms, while there only handful of big start-up with more than 200 employees. From this composition, it can be concluded that the typical start-ups in the Slipi-con Valley are mid-sized e-commerce companies with less than 3 years operation.  A detailed composition chart can be seen in figure below.

Composition of startups in Slipicon Valley Cluster

The earliest record of a tech start-up located in Slipi-con Valley cluster area is from 2008. It was Dinomarket, one of the early Indonesian e-commerce start-ups which was located there. Tokopedia, which is currently the biggest e-commerce website in the country, moved in to the cluster not long after, however there were no meaningful increases in the tenancies held in the cluster at that time’. The first spike happened in 2008 to 2010 following the rise of internet start-ups in Indonesia (Techcrunch, 2010). During that period, the number of start-ups doubled and Djarum group, the biggest tobacco company in Indonesia, started their first tech start-up venture Blibli.com (Techinasia, 2011; Wall Street Journal, 2012).

The tobacco company doubled down their investment in tech start-ups by creating their own venture capital arm GDP ventures (Techinasia, 2013). The Djarum office is in Slipi, and consequently both Blibli and GDP venture is located nearby. The establishment of GDP venture contributed to the second spike in the Slipi-con Valley start-ups was in 2013 to 2014.

In the following year, Indonesian tech start-ups started to become internationally recognised. Many foreign investors saw the potential in the country start-up scene and started investing in the country. Two of the most successful tech start-ups in the country were in the cluster. On the other hand, a couple of venture capitals also setup presence here. This led to an increase in media coverage on Slipi-con Valley, which helped the popularity of the cluster to develop as well.

Slipicon Valley Evolution

There are three defining features of a cluster: geographical concentration of firms, social network, and shared values (Porter, 1998; Cruz & Teixeira, 2010). In the case of Slipicon Valley, some of the feature are clearly shown while the others are vague. As described in figure 12 and 15, there is an obvious concentration of technology start-up compared to the rest of the city with further specialization in E-commerce. Existence of social network is exhibited even though not strongly. Majority of the interviewee stated that their start-up did not have regular collaboration with another firms within the cluster (see chapter 4.3.4). Regular collaboration happens only between start-ups within the same VCs and it is centrally coordinated by them. The prevalence of this type of relationship is a common trait of an emerging cluster (Menzel & Fornahl, 2009). However, there many knowledge sharing sessions which facilitate people from different background meet in the cluster. Some of the founder in Slipicon Valley also initiated couple of start-up community even though it’s not exclusively for entrepreneurs in the area.

The third characteristics, shared values, is not yet visible in Slipicon Valley. There currently no community organization, government policy or social institutions which cater specifically for firms in Slipicon Valley. Hence start-ups in Slipicon Valley didn’t have access to supporting public goods commonly found in a cluster (Porter, 1998). There is also no sign of investment by private sector to create joint-facilities which can be used collaboratively by cluster firms. For example, several venture capitals developed co-working space in Slipicon Valley however they can only be used by start-ups under their investment (Techinasia, 2015).

Slipicon Valley is a relatively new cluster and has only been around for less than a decade. As described in the findings, earliest sign of tech entrepreneurship was recorded in 2008 however increasing trajectory didn’t happen until 2011 and 2014. Both quantitative data and interview results pointed out that the cluster started getting popular around 2015 where success of several start-ups within the cluster attracted media spotlight. From then on, public become aware of Slipicon Valley as tech start-up cluster as signified by its regular appearance in Google search term (Google Trends, 2017).

Evolution of Slipicon Valley cluster

In the beginning of a cluster, a region may have couple of entrepreneurship-supporting factor however start-ups are limited (Feldman, et al., 2005). As an urban area in a capital city, Slipi has ample latent entrepreneurship potential. For starters, three universities in Slipi area provides steady pool entrepreneurs since they tend to start in location which they’re familiar with (Sternberg, 2009). Universities also help entrepreneurs to recruit skilled labor (Bresnahan & Gambardella, 2012). Digital creative business grows better in a big and diverse urban economy where variety of ideas and people are widely available (Duranton & Puga, 2001). Affordable rent and its proximity to Jakarta central business district (CBD) also attractive features for entrepreneurs. Both features are the known driving factors in the growth of other tech start-up cluster such as Silicon Alley in New York and Silicon Roundabout in London (Hutton, 2008; Nathan & Vandore, 2014). Findings from the interview results also confirms the importance of affordability factor (see chapter 4.3.2 and 4.3.3). Considering all of this, the next question is to find out how does latent entrepreneurship sparked into active entrepreneurship seen in the current Slipicon Valley cluster.

Cluster formation process started when there is an exogenous shock events which shifted latent potential to active entrepreneurial activities by creating a crisis, industry discontinuity or arising opportunity (Feldman, et al., 2005). In the case of Slipicon Valley, I identify two events which sparked start-up activities in the cluster: rise of digital business in Indonesia and spin-off activity by big corporation located in Slipi (Djarum). How these two events sparked latent into active entrepreneurship and kickstart cluster formation process in Slipicon Valley will be described in the next chapter.

Role of entrepreneurs

Starting from 2010, Indonesian digital economy was growing rapidly due to increasing enormous middle class, increasing broadband penetration access and widespread infrastructure investment (E27, 2012; Google & Temasek, 2016). Combination of both favorable macroeconomic indicator and infrastructure development opened new opportunities in the area such as e-commerce, social media, and varieties of another internet business. Entrepreneurs is a person which able to perceive new opportunity and acting upon them (Blanchflower, et al., 2001). Many individuals reacted to this new opportunity by founding tech start-up.  Considering Jakarta status as capital city with better internet and spending power than the rest of the country, most of these entrepreneurs are based in Jakarta (Techcrunch, 2010). Slipi become prime location of choice for this newly established start-up due to its many favorable conditions as described in previous section. Even though digital economy is growing nationally, it influenced cluster formation locally in Slipi due to entrepreneurship-supporting factor that the area has.

On the other hand, this trend not only attract individual entrepreneur but also big companies to venture into this market. One prominent example of that is Djarum, biggest tobacco company in Indonesia which has been operating since 1950s (Djarum, 2013). The company founded ecommerce company called Blibli.com in 2011 (Techinasia, 1120). Djarum is based on Slipi hence Blibli was located nearby both to save cost and facilitate coordination with parent company (see chapter 4.3.2). In 2013, Djarum then setup their own venture capital called GDP venture which also located nearby their office.

From this, the decision of Djarum to setup Blibli.com and later GDP ventures can be both entrepreneurial response to exogenous events while also becoming another exogenous event by itself. It is an entrepreneurial response because like individual founder, Djarum as a company see the opportunity emerging from this new internet trend decided to setup business entity in this sector (Techinasia, 2011; Techinasia, 2013). However, Djarum actions is also exogenous shock events by itself because it lowered the opportunity cost for subsequent tech start-up founders. When they started Blibli.com, Djarum status as a big company gave legitimacy and positive signaling to this new digital economy sector which are still rife with uncertainty. When they started GDP Venture, Djarum further decrease opportunity cost for new entrepreneur by offering financing, mentoring, connections and (Ferrary & Granovetter, 2009).

In the later stages of Slipicon Valley, the success of early entrepreneurs shaped the cluster. For example, two e-commerce companies Tokopedia and Traveloka were established in the cluster prior to 2012. In 2015, these two start-ups achieved magnificent growth and considered first Indonesian start-up who reached valuation of one billion US dollar (Techinasia, 2015). Increasing media coverage on both start-ups and the fact that both located in the same place hence popularized Slipicon Valley terms (Jakarta Post, 2015). Finding from Google search data (see figure 11) and interview results (see chapter 4.3.1) confirmed this argument. Success of the initial start-ups also attracted more physical and human capital to the Slipicon Valley as exhibited by string of foreign venture capital setting up presence in the area (Techinasia, 2015).

Entrepreneurs also played a role in creating new resource to protect or promote their interest. This can be seen in the form of community and sharing session which often held in the cluster. From the interview result, one of the respondent (Salsabeela from Zettamedia) stated that she initiated two start-up communities to facilitate idea sharing and collaboration. Another respondent also mentioned that their start-up held sharing session both to share ideas and promote their start-ups for potential hires.

Role of local environment

A cluster is a group of multiple firms and institutions with aligned interest (Maskell & Malmberg, 1999). In the cluster formation process, local environment is both influence and being influenced by actions of entrepreneurs (Feldman, et al., 2005). In this chapter, several evidences how these dynamics played out in Slipicon Valley will be discussed.

From the interview results, one of the important institution which influenced entrepreneurs to move to Slipicon Valley the proximity to venture capital (see chapter 4.3.2). This is an example of entrepreneurs being shaped by the environment. As described previously, heavy presence of VCs were the result corporate entrepreneurship actions and success of early Slipicon start-ups (Techinasia, 2013; Techinasia, 2015). From this point of view, it’s the early entrepreneurs which influenced the development of the environment.

Furthermore, some the VCs developed co-working space as a low-cost space options within their Slipicon Valley office (E27, 2014; Techinasia, 2015). This action created additional institutions which influence location decision of potential entrepreneur even more. One of the respondent stated that they decide to locate in a co-working space because it facilitate potential collaboration with other start-ups (see chapter 4.3.2). Following this argument, the more start-up in the co-working space increase the attractiveness of the place and more likely to influence another start-up to locate in the same space. Hence, collaboration potential is another resource which are born from interaction between entrepreneurs and environment. In conclusion, back and forth dynamics between founders (as entrepreneur) and venture capital (as local environment) shaped the development of both as depicted in Figure 18 below.

Illustration on how entrepreneurs and local resource influence each other’s in Slipicon Valley cluster

Role of public policy

Public policy is unseen in the development of Slipicon Valley. Findings from both quantitative and qualitative did not find any interaction between Slipicon Valley entrepreneurs and its local resource with public policy instruments. In a cluster formation, Policy can play a role as the cause for exogenous shock in the early stage or as incentives to spur development in the later and more mature stage (Feldman, et al., 2005). Exogenous shock in Slipicon Valley cluster was caused by combination of both improvement in economic indicators and local corporate actions rather than specific policy changes. Lack of support from either local or national policy-maker in Slipicon Valley might be an evidence that the cluster economic contribution is not yet significant enough. One of the interview respondent also commented that the lack of government support is understandable considering the rapid rise of tech start-up scene while on the other hand Indonesian government in infamously slow (see chapter 4.3.5). This is not surprising considering inefficient government is the top inhibiting factor of doing business in Indonesia (World Economic Forum, 2017).

In 2016, central government initiated a national programme promising 1000 start-ups by 2020, with a total valuation of USD 10 Billion (Techinasia, 2016). The initiatives consist of various programmes, from mentoring to incubation in several of major cities in Indonesia including Jakarta. There is also another incubation program lead by another government institution, Creative Economy Body of Indonesia, called BEKUP (Techinasia, 2017).  However, both initiatives did not leverage or involve the Slipi-con Valley cluster directly, even though the cluster is the home of several very successful start-ups in Indonesia.

Current stage of Slipicon Valley in cluster formation process

First stage of cluster formation process is Dormant stage where an inert area with latent entrepreneurship potential suddenly shifted to active potential due to exogenous event (Feldman & Francis, 2004). Slipicon Valley is passed this stage as the latent potential, multiple exogenous event and the sign of active entrepreneurship is clearly evident and it has been described thoroughly in previous chapter.

Next is a Formation stage where entrepreneurial activities were increasing, interaction between entrepreneurs and environment started to happen and the entrepreneurs started to build resource to protect and promote their interest. All of this is also shown in Slipicon Valley. Both emerging tech start-up trend and Djarum investment in GDP ventures increased number of start-ups in the cluster. The sign of entrepreneurs and environment interaction has already occurred in the form interaction between founders and VCs as described in section 5.3. Lastly, start-up communities and sharing session events which initiated by in Slipicon Valley entrepreneur themselves is an evidence of how start-up founders develop resource for promoting their interest.

The last stage is Established stage. A cluster which have reached this stage have fully-functional resources and institutions to be an innovative and versatile entrepreneurial environment (Feldman & Francis, 2004). Examples of institutions commonly found in this stage are network of entrepreneurs, policy makers and firms offering secondary industry service to cluster start-ups. In the current Slipicon Valley, network of entrepreneurs is prevalent but formal partnership is still limited. Policy makers are still non-existent and secondary industry is also not significantly visible. One of the respondent mentioned that there is one start-up in the cluster which offer lunch delivery services which several Slipicon Valley start-ups are subscribed to. However, it is only one firm and their target market is more to general population rather than specifically targeting start-ups (Techcrunch, 2015).

Another feature of cluster in an established stage is reputation for specific technology (Feldman & Francis, 2004). This reputation was built on combination of initial start-up success and critical mass of firms. Having a reputation, a cluster will be able to attract external investors and government policies.  Reputation will also signify reduction in opportunity cost hence activities such as spin-off, merger, and acquisition will often be seen in Established cluster.

Slipicon Valley reputation for tech start-up is starting to establish.  This can be seen in how success of Tokopedia and Traveloka raised the cluster fame and already invited foreign capital into the Slipicon Valley (TechCrunch, 2015; Techinasia, 2015). However, public policy involvement is not yet seen. One might argue, Slipicon Valley still hasn’t reach critical mass of start-ups or its reputation is still not sufficient. Spin-off, merger, and acquisition are also not yet evident from Slipicon Valley initial start-ups.

Description of current Slipicon Valley within Cluster Formation Process framework

As depicted in Figure 19 above, I believe Slipicon Valley is currently still in the Formation stage. Several characteristics of Established stage has occurred however many important institutions which are crucial in developing innovative and versatile cluster is not there yet.

Conclusion

Main objective of this dissertation is to explore how cluster formation process happened in Slipicon Valley. Using theoretical model of cluster formation as the basis, three analyses have been done in the process of fulfilling this objective. First, narrative description of the Slipicon Valley has been established to see how the cluster evolve overtime. Second, the role of entrepreneur, local environment and public policy has been examined to see each factor contribution in the development of the cluster. Lastly, by comparing latest condition of the cluster with features of each cluster formation stage, Slipicon Valley current position in the whole formation process has been determined.

Within its relatively young age, Slipicon Valley has exhibited most of the characteristics of typical industrial cluster. Slipicon Valley possess latent entrepreneurship potentials due to its location in the capital city urban area, steady supply of university graduates and cheap rental cost. Early footprint of tech entrepreneurship has been showing since 2008 however spike in entrepreneurial activities didn’t happen until 2011. Rising trend of internet business in Indonesia act as an exogenous event which attracted many entrepreneurs into the area. Djarum decision to invest in this business also further shaped Slipicon Valley. In 2015, huge success of early start-ups brings media spotlight and subsequently foreign venture capital into the area. This development further increases number of start-up in the cluster.

During the cluster formation process, entrepreneurs both individual and corporation played key role in influencing how the cluster adapt and evolve itself. Djarum actions to develop start-up and venture capital within their existing office not only shaped early form of the cluster but also influenced the development of local resources. Initial e-commerce start-ups such as Tokopedia and Traveloka which founded as a response to emerging new opportunities, managed to grow successfully which in turn raised the popularity of the cluster. Both entrepreneurial actions lead to the concentration of venture capital which is the top reason start-ups move in the cluster. Following the cluster evolution over time, there were no sign of public policy contribution in Slipicon Valley development. The cluster economic contribution and reputation might not yet big enough for to warrant attention from policy maker.

Slipicon Valley is currently in a formation stage in the entrepreneur-led cluster formation framework (Feldman, et al., 2005). It already exhibited some features of the established cluster however it still lacks some of the defining features to be defined as fully-functioning, innovative and adaptable cluster as described in the theoretical model.

Limitation and Further Studies

First limitation acknowledged in this dissertation is cluster formation process analysis was done using in one cluster (Slipicon Valley) within specific local and national context (Jakarta, Indonesia). Insights from this study might not simply generalized into different cluster even if it is within the same city.  As described in the findings, within Jakarta itself there are other agglomeration of start-ups in the CBD area. Further studies comparing these two clusters might be beneficial to develop better generalization of cluster formation process within the capital city of an emerging country.

Second limitation is the number of firm data used in quantitative analysis. Crunchbase have around 400 entries on Jakarta tech start-ups however there are other database which have larger data sets such as Techinasia (~3000 data) and E27 (~1800 data). However, data in those two databases are in unstructured form hence significant effort on data extraction need to be done before it can be used for analysis. Considering time limitation, Crunchbase data was used in this study because its already structured and can be downloaded in excel format. Hence, data analysis can be done faster and easier. Further development of this dissertation using more data from the two databases could paint more comprehensive picture on Jakarta and Slipicon Valley start-up agglomeration. Bigger data pool might also valuable in analyzing Slipicon Valley in a longer period since the earliest data points in Crunchbase is only from 2008.

Third limitation is the number and composition of the interview respondents. Due to distance and time limitation, this dissertation only managed to get 10 respondents which consist of 7 managers and 3 founders. Even though I have tried my best to look for senior people in the start-ups, questions regarding location decision might be better answered by the founders of the company. There is also potential bias since the respondents were selected starting from my personal connection and then snowballed from there. Further studies involving wider number of start-ups and more balanced number of founders and managers might produce more comprehensive insights.

Lastly, public policy study is a crucial part of this dissertation. However, in this dissertation, existence of public policy related to Slipicon Valley is probed only using desktop research of secondary data in news media, report, or academic publication.  I believe more exhaustive research can be done by getting policy maker as interview respondent in the next studies. Current dissertation conclusion that public policy played little to no role in Slipicon Valley formation can be tested and challenged further.

Been a while since i wrote something music related and i believe there are no better time than now. End of the year where many blog pick their best 2017 list and Spotify year-end summary is prevalent all over my friend pages in various social media.

I felt like i didnt listen to as many music as previous year. Bit of growing up (or getting old) probably. I seldom listen to music when im working now because it throw my focus out of the window. However as an effort to be, referring to Seringai’s credo, generasi menolak tua i still constantly and consciously explore new music regularly. I felt that it makes me more creative and keeps me from being boring. I dont want to be that guy in their 30s which still put Hybrid Theory on pedestal of great music and whine about kids these days.

2017 also the year i switch from free Deezer to premium Spotify. Mainly because the change of status from poor scholarship student into a salary man again. Spotify is great however Deezer often get overlook, the free version is better than spotify in my opinion. Protip: use Deezer web player and install adblock.

So without further due, here are my pick for great albums released this year. Click the header to listen the album on spotify. Also, i compile the tracks on the album and several other tracks i really enjoy this year in below spotify playlist. Listen to it while reading this for maximum experience!.

Logic – Everybody

I used to categorize Logic as a “middle-class hiphop” along with the likes of Mac Miller, Watsky, Classified and Macklemore. Emcees which rap less about the struggle, violence, braggadocio and more about positivity, love and other first world problem. However this album changed that because in this joint  Logic goes political especially about race relations in the US and how he relate that with the struggle of growing up as a mixed race kid.

This is a really enjoyable album, both musically and lyrically. Its first on my list because thats how much i enjoy this album. Check the track ” Take it Back “, “Everybody”,  to learn how Sir Robert Bryson (Logic real name) hall grew up in a mixed-race parents. If youre more into old skool and hard hiphop,  youll enjoy “America”. Sharing  verse with Black Thought from the Roots and Chuck D from Public Enemy its the last thing i expect Logic to do, and its turn out awesome. Awesome and hard!.

And lastly, the highlight of the album is the lead single “1-800-273-8255” which is soft public service advertisement for suicide hotline. I think this is a really good introduction song if you never heard Logic before. For more about Logic, check out his hearfelt performance in VMA 2017

Listen to this if you like : Mac Miller, Macklemore

Recommended tracks : America, Take It Back , 1-800

Year of The Ox – Yox EP

2017 is the year where Asian hiphop is on the rise, thanks to Sean Miyashiro and 88 rising gang. I couldnt be more proud as my boi Brian Chigga is doing amazing this year as part of that wave. But im not going to talk about 88 rising gang in this post, i recommend if you like them you should also check out Year Of The Ox (YOX).

YOX is old school no bullshit boom-bap emcees helmed by JL and Lyricks. Both of them are Korean-American rappers. I found them after watching Bad Rap, documentary about Dumbfoundead, and been a fan ever since. Listening to their sick beats, lyrical prowess and towering level of braggadocio, they are the Koreatown answer to Run The Jewels.

Stampede is my highlight of this album. Cant stop bobbing my head to the beat while on the other hand, there is this bar :

Your chick call me Rich Chigga
Plug it in the background
Shout out to Indonesia
[Breaking seizures
Make your whole crew spit Felicia?]
J’s Goku, ‘rick’s Vegeta
I’m a silky tofu fried kimchi eater

Meet your leader
The OX arrived
If you cross the line
I’ma kill you lying motherfuckers
The same way Mufasa died

YOX!

Listen to this if you like : Run The Jewels, Wu Tang Clan

Recommended tracks : Stampede, Seven Rings

Brockhampton – Saturation 3

Brockhampton is a collective consist of various rapper. Several music blog compared them to Odd Future a.k.a Tyler, Earl, Frank Ocean and the gang. This year only the collective release three full albums, Saturation 1, 2 and 3. I pick the last one in this list because in my opinion its the most easy listening out of the three.

Since they are collective, each track in Saturation 3 (and also their previous 1 and 2) can sound really different. Brockhampton beats can be really absurd yet banging in some tracks but suddenly smooth on the next track. Listen to “Sister/Nation” then skip to “Hottie” and then closed by “Team” to get Saturation 3 sonic roller coaster ride in full effect.

If you want to listen to the whole Saturation album, i recommend these sequent tracks which is also how i become a fan of them :

Saturation 1 : Gold -> Saturation 2: Gummy -> Saturation 3: Zipper

Listen to this if you like : Odd Future, Tyler The Creator

Recommended tracks : Stampede, Seven Rings

We Came as Romans – Cold Like War

I didnt listen to Metal as much as i listen to hiphop this year so maybe i miss some important release this year. For Metal, i prefer to listen into more millenial-friendly genre (Metalcore) rather then the old school ( Thrash, Speed, Heavy) hence why We Came As Romans – Cold Like War is one of the 2017 highlights for me.

Cold Like War album and WCAR as the band in general is a nice amalgamation of metal and hardcore genre for me. Combination of clean and growl vocals, mosh-pit inducing drum breakdowns and Djent!. Also since listening Bring Me The Horizon last year release Thats The Spirit, i am fond of metal band which incorporated electronic sounds. Cold Like War has both good and bad example on how to do this. Badass like “Vultures with Clipped Wings” , “Foreign Fire” and “Cold Like War” or cheesy like “Encoder” and “Promise Me”. The latest sound too much like Avicii EDM Pop with growls.

Still, its an enjoyable modern metal album. You should check it out.

Listen to this if you like : Bring Me The Horizon, Killswitch Engage, Of Mice and Men

Recommended tracks :  Cold Like War, Wasted Age, Foreign Fire

Pallbearer – Heartless

I will instantly contradict my last statement of how prefer modern metal over classic ones by putting Pallbearer album in this list. Pallbearer is a heavy metal quartet from Arkansa which play metal with long melody, slow tempo and reverb-heavy vocals (doom metal). It feels like listening to Metallica’s Unforgiven or Helloween’s Forever One

Heartless is a beautiful metal. Slow, majestic and progressive with no tracks under 5 minutes. I dont normally like this kind of metal but after finding out from several metal blogs, i like to put this album on the background while i do other stuff. Sudden epic air guitaring will usually ensues.

Listen to this if you like : Black Sabbath, early Metallica

Recommended tracks : I Saw The End

Code Orange – Forever

Code Orange latest record, Forever is unbelievably dark and heavy. I dont know what effects that they used but this records is a wall of sound of concrete heaviness. Two of Forever opening tracks “Forever” and “Kill The Creator” will introduce you to what Code Orange is all about by kickstarting your ear with balls-to-the-walls distortion. Theres a nice break in “Bleeding in The Blur” but the rest of the records will floor you down with high-volume sound of Marshall amps getting raped by downtuned guitar.

What fascinates me  more is that Code Orange started as a punk hardcore band. Somewhere along the way probably they probably found salvation and enlightening from Lucifer and Forever is the result.

Code Orange also introduce me to my new best girl in metal, Reba Meyers. Check her out in this Bleeding in The Blur video. Mind you, this song very different from the whole album. If you want to test whether youll enjoy this album or not, go see Forever first.

Listen to this if you like : Cannibal Corpse, Gojira

Recommended tracks : Forever, Bleeding in The Blur, The New Reality

Our Last Night – Selective Hearing

I had this conception that starting you career as a cover band especially on youtube is bad idea for a band. Youll stuck in a box and many of them which release original song ends up dissapointing (looking at you PTX and Boyce Avenue). But this band prove me wrong, Our Last Night albums is as badass as their pop cover tracks.

Our Last Night gain popularity as a youtube cover band which make post-hardcore / metalcore covers of popular tracks. Similar to Me First and The Gimme Gimmes, only heavier. My favorite cover is this, they’re pretty funny too.

Apart from these cover, the band constantly releasing albums since 2008. I just knew them this year, but man i really enjoy Selective Hearing and also their 2016 release, Prisoners. I really recommend to listen both of the album back to back especially if you enjoy bands like Story of The Year or Saosin.

Listen to this if you like : Saosin, Story of The Year or Sleeping With Sirens, Circa Survive

Recommended tracks : Broken Lives, Ghost In The Machine

Liam Gallagher – As You Were

Oasis have been influencing at least two of my key decision in life. Which football club should i support ? MCFC because the Galagher brothers. Where in the world should i take my masters degree ? Manchester because where else. Whats The Story Morning Glory was playing back to back in the first month of my life in Manchester. Waking up in cold winter ? Morning Glory played, Looking at the Manchester old factory building ? Wonderwall played. Walking passed an old man in a suburb in Didsbury ? Rockin Chair played. Reading a book on a Platt Field grass ? Cast No Shadow played. In short, im an Oasis fan.

Hence, listening LG’s As You Were release is like chugging fresh water after long awaited drought. Noel’s High Flying Birds didnt satisfied me. Beady Eye also didnt feel Oasis enough. But this records is, undoubtedly bringing back fresh memories of watching Stand By Me videos on MTV. Im listening to first 5 tracks of this album with eyes closed and man, is this 1998 all over again ? wheres Blur ? i need to play FIFA 98 on PSone.

Special highlights in this album is For What Its Worth. Id like to imagine LG dedicate this song for his old band mates and his brother. Hope someday Liam, Noel, Bonehead, Guigsy and Alan can kick it one last time for the kids. One could hope Liam assholishness could be reduced with age.

Listen to this if you like : Fookin Oasis, mate!

Recommended tracks : Wall Of Glass, For Whats It Worth, Chinatown

Harry Styles – selftitled

Who wouldve thought that pretty face Harry Styles which debuted cheese-pop-guilty-pleasures with You Dont Know Youre Beautiful will come up with majestic ballad such as Sign of The Times. I couldnt stop listening to that song, it so beautiful. If i could describe it in a more word, i might as well go gay for Mr Styles.

Talking about the album, i could say that this is rocknroll album for an old soul. The kind of album your dad (or grandad) played in a worn-out vinyl. Listening to tracks like Carolina, Only Angel, Kiwi makes me feel like digesting Guardian of The Galaxy Mixtape, 60-70s sounds galore. This is a very enjoyable album which prove Harry Styles has a sophisticated taste in music. Go listen to it.

Listen to this if you like : James Bay

Recommended tracks : Sign of The Times, Kiwi, Ever Since New York, Carolina

In the midst of block chain hype, i read an HackerNoon article which reminds us that one (or plenty) dose of healthy skepticism regarding the technology is necessary.

Kai Stinchombe elaborates many points on why blockchain characteristics (distributed, encrypted and anonymous ledger) might not be best suited to “revolutionize” many of the hypothethical use cases of this technology.

Image credits

Really enjoy this article. I share some of the pessimism regarding this technology. One of my team mate is really excited to research block-chain on one of our business problem, but i still havent convinced yet because i felt like that is merely a ledger problem which will be overkill to solve it using distributed ledger.

Read the full article here, do make sure to read the comment discussion as well since there are many contrarian points which adressed nicely by Kai.

Here are some of the highlights :

On payments and banking :

– For processing payments, Visa currently can handle 60k transactions per second while blockchain-enabled Bitcoin current maximum is 7

– With 0.01% performance, Bitcoin estimated to use 35 more electricity than VISA

On Anonymity and freedom from government overreach

– Government-backed banking system provide guarantee, reversibility, identity verification, audit standards and investigation system. Bitcoin on the other hand has none hence Bitcoin is akin to banking institution in the middle-age

On Smart-contracts

– Smart-contracts are self-executing contracts which can be encoded in block-chains

– Theoretically, Smart Contracts are more cost effective than “dumb contract” because they will execute the clause automatically with no ambiguous interpretation

– Dumb contract are better and safer because of their “slow” nature. it makes it possible for human intervention and leave room for debate from both-sides of contract

On blockchain as distributed storage, computing and messaging

– Blockchain as distributed storage seems make sense : break document up into “blocks”, encrypt, and put them in a distributed ledger

– However current common solution for this (Dropbox, GDrive) is better in many ways : multiple factor authorization instead of private keys, price and features

On blockchain as stock issuance (ICO)

– Primary role of government-backed stock exchange (e.g Nasdaq) is compliance and security provider. Taking these factor out of stock-issuance is a recipe for daylight robbery

On blockchain as authenticity verification

– Other usecase for blockchain is to make public, unalterable, undeletable statement published publicly

– However, in blockchain, there are no way to delete the records or override the transaction

– Adopting block chain technology makes theft or impersonation more likely rather than less

 Conclusion

– Advantage of existing existing human and software systems surrounding transactions outweigh promised benefits of blockchain as well as hidden costs, of irrevocable, automated execution

– With all the hype, nobody currently asking questions whether current user of existing system (payments, credit card holder) are seeing the benefit of blockchain

I wrote a post about being a skeptic in this particular technology called blockchain a while ago. Apparently, this bite me in the ass because just one day after writing that post, Andi Taufan (our CEO in Amartha) stated in our yearly plan townhall that he would like to start exploring how blockchain could benefit our business in the upcoming years.

Well, that leave me no choice but start diving  because as skeptic as i am into blockchain, who doesnt want the opportunity to work in something the whole fuckin world goes bonkers about. Besides its always exciting to learn something new.

Studying in midnight. The only quite time a parent with a high energy toddler can have

So here in this post i share some of things i read or watch to help me understand the hypebeast that is blockchain. I am by all means a complete rookie so do help me by recommending better or more comprehensive source in the comments below.

Lets go!

Understanding Basic Concept

The easiset way to get basic understanding of this technology is by watching explainer videos. You can find tons of them right now in Youtube. I personally recommend explainer made by Savjee Channel. It has good visual, detailed enough to be educating yet still easily digestible even for non-technical person.

From watching the video, several basic things about block chain can be learned.

• Blockchain is basically a data structure in which you can store information.
• Blockchain has three unique characteristics : Immutable , Distributed and Anonymous
• Immutable : data stored in blockchain cannot be changed and deleted
• Distributed : data stored in blockchain is synchronized over the whole network
• Anonymous : data stored in blockchain is uniquely-identified by hash code

In each block in a blockchain, there are usually three basic elements : information stored in the block, its own hash code and the hash code of previous block. Illustration can be seen in the image below :

A block of information + chain of hash identifier = blockchain

Note that the first block in the chain has no previous hash. This is called genesis block. The integrity of data stored in individual block is validated using its own hash. While the integrity of the whole chain is validate through chained hash code from one block to another. These are the reason why blockchain is so secure and virtually tamper-proof.

But wait there is more. Since blockchain is distributed ledger, each person or institution connect to a particular blockchain peer-to-peer network will have the exact copy of the chain. If someone create new information / new block, this block will be synchronized to all users.

Blockchain is distributed through  p2p networks

If someone want to add something in a block chain, the change will need to be communicated to all parties involved. In block chain, this is called a consensus. 

This is the end of my summary on basic blockchain knowledge. Since its very enjoyable, I recommend watching Savjee’s other explainer on Blockchain and other cryptocurrentcy technology ecosystem.

• Blockchain Hard Fork : Explain separation between blockchain and bitcoin protocol. Also explain what is hard and soft fork which resulted in the creation of Bitcoin Cash.
• Bitcoin Lightning Network : Explain transaction limitation of bitcoin and the technology to overcome that
• Smart Contracts : Programmable software to distribute cryptocurrency automatically which can be stored in a blockchain. It is the key technology behind second famous cryptocurrency, Ethereum.
• Iota’s Tangle : A cryptocurrency implemented not in blockchain but DAG (distributed aciclic graph)
• Cardano : Another increasingly popular cryptocurrency which have several features to improve scalability of blockchain

Another series of explainer videos that i recommend is from Blockgeeks. Their videos are more focused to Ethereum ecosystem which i wont cover much in this post because it is a whole another beast to digest. So before diving into these videos, make sure to read or skim Ethereum explanation on wikipedia first.

• History of bitcoin: brief explanation of Satoshi Nakamoto original paper, how bitcoin works and the weakness of this technology
• How to create ethereum accounts : simple step by step how to join Ethereum network
• Introduction to decentralize application (Dapp): Ethereum has their own programming language called Solidity to develop smart contracts. Smart contracts can be used as a backend for web application and these application are called Dapp.

One more thing before moving to the next chapter, yet another fantastic resource to learn the basic of blockchain is Khan Academy course on bitcoin . Its comprehensive and you can follow the comment discussion and ask the question yourself. It is however in my opinion, a little bit too academic.

Going a little bit technical

Next step after understanding the surface, i want to know the stuff under the hood. How does the high-level concept actually implemented ? video explainer comes to the rescue once again. Savjee has two part video demonstrating livecoding blockchain implementation using java script. These videos really help me to understand how blockchain works in step-by-step manner

In the first part below, we can see :

• how to initialize single block and block chain object with basic parameters
• how to create hash code
• how to check validity of one block and the whole chain
• what happened if the data / parameter stored in a block is edited

As mention in the narration, the video only show simplify version of blockchain. Complex mechanism such synchronizing blockchains over the multiple user and how to verify blockchain in a p2p2 using consensus is not shown. The code however is simple enough to follow as long as you have basic understanding of java script

The second part of Savjee blockchain is a bit trickier. It introduce and show the concept of proof of work (PoW).

PoW is a method to check validity of a new block created in blockchain. Once it pass through PoW, a block will then added to the chain and distributed to the whole blockchain networks. Bitcoin use this method to check validity of each transaction. This process is what people called as mining.

As decribed in the video, proof-of-work is implemented by trying random number one by one and calculate the hash of that random number until it satisfy certain condition. In bitcoin, the condition is certain amount of zeros in the first x digit of the hash. The random number which satisfy that condition is called nonce value and it serves like a receipt which proof you have the rights to add new block to the blockchain.

This is a bit complicated to explain, so i draw simple diagram below. Hopefully it helps.

Simple illustration of mining process

Since hash code generation cant be predicted, searching for nonce value require brute force iteration. Checking hundreds or thousand of random numbers against the satisfying condition. This is why mining process require huge computing resource and power.

PoW is just one of the several ways to implement consensus in blockchain. It is deemed unsustainable because it cost massive electric consumption. Proposed alternative for this is proof-of-stake which is planned to be implemented in latest version of Ethereum. High level comparison of both can be read here. 

If youre interested to know more on the technical specification and detail regarding blockchain, i recommend checking this Cloud Foundry summit talks.

Frameworks, libraries and developer tools for blockchain

So far i have cover both basic and technical understanding on blockchain. So the next step is i want to know if i want to start developing or at least building proof of concept application using blockchain, is there any tools or library that i can use ?. Here are some them which ive read so far.

Quick note, all of these are skewed to financial services because i want to see whether we can use it in Amartha.

Chain Core – Blockchain framework for financial services

Chain Core is framework designed to build blockchain infrastructure in a financial industry setting. It is designed from the ground up to be scalable, secure and better yet it is open source. In the website Chain Core claimed to be used by giants in financial industry such as Visa, Citigroup and even Nasdaq. This is very impressive. However i cannot find in their website any study case document showing how these companies use chain core in their product.

Chain Core proposition

High level overview of Chain Core can be read in their white paper while complete framework documentation can be accessed here. Chain core can be downloaded via Docker.  It has also comprehensive development kit for Java, Node.js and Ruby.

Sequence – Cryptographic ledger cloud services

Sequence is a cloud services which provide managed cryptographic ledger. It is designed to manage “balance” information in a application. For example, you want to develop payment wallet where user can deposit, store, withdraw and even send payments to one another. Rather than developing you own ledger to store and record these transactions, you can use Sequence to do this for you.

How Sequence API works

In Sequence documentation there four example use-cases: mobile wallet, ride sharing, lending and crypto exchange. Each use-case has snippet of code (Jave, Ruby and Node) showing how you can implement various features using Sequence. In my opinion, this is the best way to understand the value of Sequence frameworks because both the code and the documentation is well-written and easy to understand.

Sequence is not officially launched yet, but you can register to get their developers preview.

Truffle Frameworks – Various tools for ethereum development

one tools to rule them all

Truffle is a compilation of various tools to develop application which use Ethereum-base tech such as Smart Contract and Dapp. Truffle is developed on Node.js hence it can be installed via npm. Included in the Truffle suite is :

• Solidity (smart contract programming language)
• Truffle Boxes ( various boilerplate code for dapp development)
• Ganache (Ethereum local networks to test and develop smart contract)
• Geth (official Ethereum client written in Golang)
• and other libraries.

It is a very impressive tools i must say. It already includes all things needed for smart contract and dapp development hence setting up development is only the matter of typing “npm install -g truffle”. Not only that, Truffle documentation also include best practice to test smart contract, setting up build process and deploying into main Ethereum network.

Bloom – Ethereum-based decentralized credit scoring system 

Bloom is a decentralized credit scoring system developed using Ethereum and IPFS. IPFS stands for interplanetary filesystem, a decentralized storage which also closely associated with ethereum. Bloom’s mission is to make decentralized credit scoring by putting financial transaction and credit history into a blockchain network.  Bloom protocol consist of three parts : BloomID ( hash identification of all lenders ), BloomIQ (storing current and historical debt into blockchain ) and Bloomscore (credit score which calculated in real time).

decentralized credit scoring protocol

Even though the premise of Bloom seems exciting, it is still in a very early phase. The only public documentation shared on their site is their whitepaper. There are no use case, no API documentation and no downloadable library or SDK yet. Hence it still a question whether this protocol is as good as its website

Thats all for todays post. Do you have another good learning resource to learn blockchain related stuff ? do recommend me by writing in the comment below. Thank you!

Since coming back home to Indonesia, ive been working in a fintech startup called Amartha. Amartha is a peer-to-peer lending platform targeting unbankable populations in rural Indonesia. Inspired by Grameen Bank, loan was disbursed through group-lending mechanism and all of Amartha’s mitra (lender) is exclusively women.

My time here has been great so far, the company value resonate with me , i have a good team and im learning so much day by day. However the business model, the industry and startup environment is completely new to me hence i need jam lot of knowledge just to stay afloat.

Amartha’s field officer (Anis) and operation analyst (Icha) was testing Amartha Go android apps for one of lender a.k.a mitra

Another thing that forced me to learn many things at once is my double role in Amartha. I am currently responsible for Amartha Go, initiatives to optimize our loan-collection process using combination of agency model and android apps. At first, I was responsible for business direction of this initiatives. However, the product manager resigned, hence i took those responsibilities. Hence not only i am managing a strategy team, i also need to manage team of developers as well.

In this post, i will share several resources which have been helpful so far in speeding up my adaptation process. Hopefully it will be useful for you as well.

On Group-lending, Social Business and Grameen-Bank Model

If a family member must starve in Bangladesh, often it is the mother. Any children she is breast-feeding starve with her. Moreover, women tend to focus on improving their children’s lives. In contrast, men tend to spend borrowed funds on  themselves – Mohammad Yunus

My main reference for micro-lending, group-lending and social business is from the works of Grameen Bank founders himself, Muhamad Yunus. i read Creating The World Without Poverty years ago and before i join Amartha, i digested his first book Banker of the Poor.

Both of Yunus works

The first book is more of a auto-biography of Yunus chronicles leading to Grameen bank conception. From this book, i learned :

• The context of Bangladesh at that time
• Evolution of Yunus ideas (giving micro-loan through group-lending) leading to the conception of Grameen
• Why Grameen is catering exclusively for women?
• Grameen’s development and operation challenges and how Yunus navigate through them
• Scaling up Grameen from academic experiment in University of Chittagong to a small startup and finally became a nationwide bank

His second book deals with the concept of Social Business. Compared to first book, this one is more conceptual and high level. Some of the interesting learning points in this book :

• Drawbacks of aid as means to reduce poverty
• The idea and concept of Social Business as an alternative to profit-making business

I recommend both of these books if youre interested in topics such as micro-credit, poverty alleviation and social innovation.

If you want to know quick summary of both books, check out the link below

• Columbia Business School Study Case on Grameen Bank
• The Economist’s summary of Banker for the poor

On Fintech Landscape in Indonesia

From approximately 60 mio micro enterprises in Indonesia, only 12% got access to lending due to inability to provide financial statements, credit history and collateral. – KPMG

Since Amartha is also part of emerging fintech wave in Indonesia, i need to learn the landscape of this industry as well. Luckily, DailySocial has been releasing annual report on this sector since 2016. The report is easy to understand and filled with sweet infographics hence its useful to get wide overview of the sector.

Fintech Industry Player overview (Dailysocial, 2017)

Another report which are useful for me in understanding Amartha’s business context is KPMG 2017 report  : Finance in Indonesia – Set for a new path.  This report is about finance sector in general not only fintech howeverthis report has more depth and more quantitative data compared to the dailysocial one.

Some of the bits of interesting pieces that i got from this report :

• Indonesia has the lowest penetration of loan to private sector in SEA. In other words, we have the best growth potential in this business
• 41% of total combined lending in Indonesia is held by big four banks : BCA, Mandiri, BRI and BNI (no surprise there but still interesting)
• In terms of point of presence, BRI lead in ATM (23% of 100k) while BCA is the king of EDC (38% of 1 mio)
• Almost 60% of total loans in Indonesia is distributed in the Java Island only. This could be both be a signal of diproportionate development but on a positive note, lot of financing business potential on outside Java
• From approximately 60 mio micro enterprises in Indonesia, only 12% got access to lending due to inability to provide financial statements, credit history and collateral. On the other hand, micro enterprise contribute 37% of total Indonesian GDP
• Despite the moslem majority population, sharia lending is still very small. Only less than 6% compared to total lending, Malaysia on the other hand is almost 30%

How fintech can play a role to drive financial inclusion (KPMG, 2017)

Theres one other report from Ernst and Young which i recommend if you want to know about the fintech landscape on a global scale, check out the link below

• EY Fintech Adoption Index 2017

On Product Management

There’s no better way to explain product management than entrepreneurship. Product Managers are salaried entrepreneurs that need to do anything and everything to make their product successful – Hacker Noon

This is the area in my job that completely new to me is being a product manager (PM). I was accidentally fall into this shoes because one of our PM resigned. Hence i need to learn this role fast while the deadlines were still rolling. I really sucked at first naturally. However i found that being a product manager makes me develop various new skills both technical and managerial. It is really exciting yet exhausting at the same time, which perfectly describe working in Amartha in general.

The best introduction i can find about being a product manager is this talk by Jay Clouse. It really describe the day in life, responsibilities, profile of a PM, skillsets needed up until common tools for this job. Jay’s tone of voice could be a little bit boring, but the content quality makes this talk very useful. So do check this video if youre also new to product management.

Another material which is useful for me to start understanding this role are Josh Elman’s medium post on the definition of product manager’s job. Josh is a partner at Greylock Partners and his extremely popular post is basically template for many startups to define PM job desc.

Summary of Josh’s post can be seen in the presentation below :

For more practical day-to-day PM stuff, i regularly watched and subscribed to AJ&Smart content on Youtube. AJ&Smart is a berlin-based product design firm. They made content centered on product design, design sprint and other product related stuff. They made their content in a hip “youtuber” style and in a bit-sized 5 to 15 minutes length which is very time friendly. I can watch it over lunch or on the way to somewhere.

Heres one of my pick for their insightful videos on how to conduct design sprint /  brainstorming session with minimum amount speaking.

Recently i just found out about Getting Real, a completely free product management from 37 Signals. If you havent know, 37signals is company behind Ruby On Rails, productivity software such as Basecamp and productivity books such as Rework and Remote.  This book contains condensed advice on product management from the experience of 37signals itself. Im still on progress reading it but so far i felt the book is very practical and useful to find ideas on product management best practice.

Best part of it is the book is completely free, so i can just forward it to all of my team member.

Other materials of product management which i recommend is from Y Combinator How To Start a Startup

• Y Combinator and Homejoy’s Adora Cheung on Building Product, Talking to Users, and Growing
• Y Combinator Kevin Hale on How to Build Products Users Love, Part I

On Software Development

Want to learn to code? There is no better time to start than right now – Code Burst

I was a software developer by education. I started my career as one but i pivoted to various technical and business position over the years. I still have passion for this area hence i read software development articles from time to time. However, it has been nearly a decade ago since the last time i fired up an IDE (The last coding-related blogpost ive wrote was in 2010).

As a product manager, i am responsible on the software development side as well. Amartha Go currently has a web dashboard and two android applications for the field officer and the agents. The development team consist of 4 developers and 1 QA. Thus, In order for me to do my job effectively and driving productive discussion with them, i need to speak their language.

On of my favourite resource to update my coding-sense in a friendly way is Flavio Copes’s Write Software blog. This website, as written in the title, provide non-coder-friendly summary (TL;DR) of various technology frameworks and tools. Flavio has ways to explain complex concept in a short and simple sentences which make his article very easy to digest.

Check out how Flavio explain what Progressive Web Apps (PWA) is all about.

In his personal blog, Flavio also write regularly on software development. I recommend checking that as well.

Another materials which i found really helpful is this 2018 developer roadmap by CodeBurst. So many developer frameworks, tools and lingo right now and this diagram at least help me categorize which one should i know more about and which one should i ignore.

The 2018 Web Developer Roadmap by Codeburst.io . Full-size image can be seen here

Currently right now i dont have to write code (yet), hence what i do to update my skills in this is read articles regularly and discuss it with Amartha Godevelopers. Some of the software dev blog which i recommend :

• Code Cartoons : visual guide to various development frameworks. Its really good but sadly rarely updated
• Hacker Noon  : Developer-related medium publication
• Hacker News : Y Combinator software related blog aggregator

On Startup, Innovation and Being Disruptive

An entrepreneur seeks to test a series of unproven hypotheses (guesses) about a startup’s business model: who the customers are, what the product features should be, and how this scales into a hugely successful company – Steve Blank

I work in big companies in my whole career before Amartha. Since i work in a startup i need to learn various knowledge surrounding startup management, strategy and how to be disruptive. Luckily, popular books covering these topic has been in my reading list for quite some time hence ive already read and own several books on this. What i do usually is re-read some of these book or if i have issues on specific topics, read the related chapter on that.

Startup books

Here are some of my go-to books on this topic :

• Startup Owner Manual by Steve Blank : manual on how to start company in modern era. Covers basic understanding on what is startup, the purpose of a startup, strategy and tactics of running a startup.
• Hello, Startup: A Programmer’s Guide to Building Products, Technologies, and Teams by Yevgeniy Brikman : This book discuss the topics of building products, technologies, and teams in a startup  from a perspective of software developer. Suitable to read if youre currently an engineer aspiring to build your own startup or aspiring to be a manager.
• The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries : In my opinion this book is a natural sequel to Steve Blanks book. Eric Ries describe the new approach on how to build companies or product (lean startup method). This method introduce the concept of build-measure-learn,  MVP, validated learnings, pivot and many other things. Must read!. Summary can be read here.
• The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail by Clayton Christensen : This book discuss why great companies can and prone to be disrupted even though they do everythings right by conventional management standard. It also introduce the concept of disruptive and sustaining innovation. It is written very academically which probably makes it not-so-easy to digest.
• Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel : serial entrepreneur / venture-capitalist Peter Thiel advise you to abandon competition and start building monopoly by setting up four things : great brands, network effect, economies of scale and proprietary technology.  Summary can be read here
• Making Things Happen: Mastering Project Management by Scott Berkun : Ariya Hidayat of PhantomJs recommend this for me. He said this is the only book you need to read in order to be great in project management in a tech startup. Who am i to say no ?. Go read this if you want tips and trick on how to get shit done collaboratively.

Apart from books, there also couple of podcast on this topic which are really insightful as well. Listen to this in itunes or chosen podcast app in Android (i use Podcast Player). I listed also my recommended episode in below list

Freakonomics Radio

• How to become CEO
• “I Wasn’t Stupid Enough to Say This Could Be Done Overnight”
• It’s Your Problem Now

How I Built This by Guy Raz

• Instagram: Kevin Systrom & Mike Krieger
• Airbnb: Joe Gebbia
• Dell Computers: Michael Dell

Masters of Scale by Linkedin’s Reid Hoffman

• Peter Thiel – Escape The Competition
• Brian Chesky – Handcrafted
• Tristan Walker – The Beauty of Bad Idea

Startup Grind

• Fighting Giants with Noah Everett of Twitpic
• Partner With Your Disruptees with Aaron Levie of Box

And lastly, i can never highly recommend what i think is the best tech and startup strategy blog right now : Stratechery by Ben Thompson. Ben dissect what companies do and why, putting the actions in a broader context and sometimes try to predict what they really want to achieve. Its really insightful and useful especially if youre a strategy guy in a tech startup world.

Thats all for today. Its been quite a long post but hopefully, it will be useful for you.

Do you have any other recommended reading, watching or listening materials that i should know ? do drop the link in the comment.

Have a nice day from all of us here in Amartha!

P.S : Were currently hiring several tech and business position. Do check our career page! DM me if you want to know more about the positions

Ive spent the whole last week working in Surabaya. The project that im working on is on expansion mode, hence i went around several areas in East Java to monitor and support that implementation. I had spare time on Friday afternoon, so i linked up with my senior in college, mas Nisfu, which is currently department head of my almamater. After few chit chat, he invited me to guest lecture in Leadership  and Communication Class. Offered such a great honor and opportunities, i didnt wait a second to say yes.

To keep my topic relevant to the class, i decided to talk about how students can better prepare themselves for job hunting. I wrote about this couple years ago here hence i just need to make slides out of it with updated content and context.

In summary, i talked about how the rising of digital ecosystem in Indonesia made these current and upcoming years the best time to be IT students. However, there are also thousands of IT graduates which will be competing for a job hence by graduation, they need to be already “job-ready”. Then i described the concept about “job-ready” (inspired by Joel Spolsky post ) and several things students can do in college to setup themselves to be job-ready.

The class was amazing. It was probably the most enjoyable teaching experience i had since god know when (i teach class occasionally, so its a hyperbole). All of the student are still in their 2nd semester (2017 class). I was little bit pessimistic at first because material about jobseeking preparation probably wont be exciting for freshman students. However, i was blown away by the enthusiasm and quality of questions they asked.

These are some of the questions they came up with :

• What is the difference between working in established companies and startups ?
• Is this rising digital trend going to last ? what happen with job prospects when the trend fades ?
• If i want to work for Tesla, what should i prepare right now ?

This is pretty amazing coming from second year students. Couple of times i was taken a back and need couple of seconds to digest and think for the answer. These ITS Information System millenials really exhilarates me, cant wait to meet them again someday.

Also, since i went to Surabaya on a company’s dime i also did not forget to slip in some messages from my corporate startup overlord.

were looking for cool interns!

Were looking for students from any background who wants to experience working in fintech startup and contributing to a positive social impact. Interested ? send your cv to that email address or you can just contact me by commenting in this blog. 

In the end, teaching is really fun, i should do more of these. . Thank you mas Nisfu for the opportunity to teach. Thank you Information System class of 2017 for the enthusiasm and energy, you guys rock!.

My presentation for this class is available for download here. 

In Indonesia, access to basic financial service such as saving and lending is a priviledge. The country with more than 250 million people has only less than 40 million recorded bank account according to World Bank. The country stands at the top of  Asia Pacific in terms of unbanked population with three quarter of total population are still outside of conventional financial system.

At glance, these statistics looks bleak. But for entrepreneurs and startups, it means massive opportunity fintech. Indonesia is currently a fintech hotbed with more than 150 startups and record-high investment of USD 57 million in 42 deals by last year alone. Half of that deals went to lending and payment startups.

Picture of shallot sellers in Jogja, one of the many millions unbanked population in Indonesia. Photo by Andy Al Mesura on Unsplash

I work as a product and business development guy in a peer-to-peer lending startup. Our startup focus is to provide microlending to millions of unbanked and underbanked women entrepreneurs in Indonesia. In this post, i will share three challenges that i have to deal on a daily basis. The challenges will slightly skewed to lending business model but i try to make it relevant for other fintech as well.

Lets start!.

Assesing credit worthiness

Targeting unbanked population means serving people who doesnt have history in conventional financial system. This is a challenge for lending startup because they need to assess risk and repayment capabilites for each customer. Credit history is also major barrier for getting credit in Indonesia (only 12% of 60 million micro-SME could provide this according to KPMG). Eliminating this can be huge leverage for startups especially against old-school banks.

Alternative way to asses repayment capabilities is data aggregation. This method collect various non financial data such as mobile phone usage, social media, utilities bill. These data then used to build models for determining both ability and willingness to pay.  Ayannah, one of the leading fintech company in the Philipines, developed credit scoring engine based on electric bill payment. Partnering with electric utility company, Ayannah analyze historical payment data as a proxy for household revenue. Another company, Singapore-base Credo Lab, offer credit scoring solutions by extracting multiple data points from customer’s smartphone. Prospective lenders need to download their mobile app, the app will transfer multiple data points into Credolab servers then they will calculate the credit score

Credit scoring services,  Lenddo, combine both nonfinancial data and psychometric assesment

But how about when customer doesnt even have phones or utilities bill ? When its difficult to collect data, another way to do credit scoring is by doing psychometric evaluation. Pioneered by Entrepreneurial Finance Lab (EFL), this method use questionnaire to measure behavioural and psychological traits associated with willingness to repay. The test can be delivered face to face through manual form, back and forth using sms or using mobile apps.

BTPN, one of the Indonesian big bank, used this method for their sharia group-lending product which targeted unbankable micro entrepreneurs. BTPN partnered directly with EFL to asses credit worthiness of  hundred-thousand lenders across 600 branches in Indonesia.

More information on this topic : 

• McKinsey – New credit risk models for the unbanked
• World Bank – Psychometrics as a tool to improve screening and access to credit

Managing cash operations

Serving unbankable populations means dealing with cash-heavy operations. Cash is still the number one payment method in Indonesia where non-cash only account for 10% of total (according to KPMG). In rural Indonesia, cash become the only choice due to the lack of financial infrastructure.

Dealing with cash can be a challenge both from logistics and risk perspective for startups. For example, last-mile payment services such as Kudo or Storeking collect huge amount of cash in each of their presence point. Within certain period, these cash will need to be regularly recorded, stored, transported and deposited to bank account. The bigger the cash amount, each of these steps are more prone to fraud and theft.

One way to reduce risk and simplify operations is to use pick up services. Several conventional bank offer service where they pick up cash, count it on site and deposit it to customer account. During transport, the cash will be insured and its included in the cost of service. Pick up period is usually agreed upon before hand and it can be every couple days or every working days.

The catch for using this, especially for startups, are the service require minimum amount of cash for every pick-up (varied between banks and contract negotiation). To make it cost-efficient, startup can aggregate collection from several points into one and the bank will collect from that one point only (hub and spoke model). For example, cash from every payment agents in one kecamatan (district) will be transported stored in branch office vault. The bank will then collect from branch office every 2 days. Risk will be only partially transfered to service provider but its still better than to do it end to end by yourself.

Almost all major banks offer cash pickup services. More about this service can be read here (All link is in Bahasa Indonesia):

• BNI Pickup Service
• Danamon
• Mandiri

Dealing with limited internet connectivity

Indonesia is a mobile first nation. There are more phones than people in the country and mobile data is the primary internet infrastructure due to poor cable internet availability. For fintech startup ( or even any tech company), mobile application is central for delivering services to customer or supporting day to day operations.

Serving unbanked population especially in rural areas has high risk of bad 3G or 4G coverage. Product managers have to consider this in mind when developing software to ensure business continuity and high service level.

One way to tackle this challenge is to leverage SMS. Using sms APIs such as Telerivet or Twilio, startup can develop services to reach even the most connectivity-challenged areas. For example, micro-lending company Kiva offer sms-based loan application process. With only a feature phone, prospective lender can fill forms and apply for loans without having to walk into nearest agents.

But what if the need of mobile apps is unavoidable? Offline-first design can be the solution. In offline-first paradigm, mobile apps is designed from the ground up to be working offline. Lack of connectivity is treated as a feature rather than an error. The app will also developed to be able to detect if there is available internet connection to do data synchronization.

Overview of offline first development. pic by hanno.co

So lets say we have an Android app for field agent to register new user. While field agent go around canvassing the area, the app  is able to store data for many users offline. At the end of the day, they come back to the branch office with working wifi and the app will seamlessly upload all the new user data into the cloud.

The most popular implementation of this concept is progressive web application (PWA). PWA enable website to be available offline and treated as mobile apps. This concept has been evangelized by Google and currently gaining traction amongst web developer.

More about offline-first and PWA : 

• Techbeacon –  Top frameworks and components for offline first
• Why offline-first matters, and what developers should know about it
• Offline Camp 
• Google Developer – Progressive Web Apps

Fintech startups in Indonesia are sitting on unbanked population gold mine. Extracting value from this potential however, wont be easy. Conventional bank such as BRI, which have the biggest asset and widest rural accessibility , still couldnt fully penetrate these segment.

Startups will have to constantly find smarter and more inclusive ways to capitalize these massive potential.

Thats all for this post. Do you agree with my essay ? do i miss something ? do you have any questions ? do drop comment here or you can also reach me in twitter. Thank you for reading!

Jumat minggu kemarin, saya bertemu dan ngobrol dengan salah satu junior di kampus Sistem Informasi ITS dulu : Diaz Permana. Pertemuan ini sebenarnya random sekali diawali dengan saling mereply di grup Ikatan Alumni Sistem Informasi dan kemudian Diaz mengajak untuk ketemuan offline. Kebetulan, seminggu kemarin saya sedang di Surabaya untuk keperluan ekspansi Amartha. Kebetulan kedua, saya juga penasaran dengan Ternaknesia, startup agritech tempat Diaz bekerja sekarang. Maka ngopilah kita berdua di sebuah cafe di Manyar.

Yang menarik, Diaz mengajak untuk merekam pembicaraan dalam sebuah vlog. Diaz sedang membuat vlog tentang Ikatan Alumni Sistem Informasi. Dia ingin membuat konten untuk memudahkan mahasiswa SI berpikir dan merencanakan karir setelah kuliah nanti.

Ini adalah kali pertama saya merekam vlog, kegiatan yang sangat milenial, dan saya khawatir diskusi menjadi canggung. Namun Diaz berhasil membawakan sesi tanya jawab ini dengan luwes sehingga obrolan kita berdua tidak berbeda dengan diskusi  seperti biasa tanpa kamera. Wajar sih, Diaz semenjak kuliah sudah berpengalaman menjadi host dan moderator.

Simak obrolan kami berdua seputar alumni Sistem Informasi ITS, hal yang dilakukan pada saat kuliah dan hal hal lain di youtube link dibawah.

Berhubung diskusi ini terjadi secara spontan, ada beberapa tambahan informasi yang saya gatal ingin tulis disini. Tonton dulu videonya, lalu sila menyimak beberapa poin tambahan jawaban atas pertanyaan-pertanyaan seru yang di lontarkan Diaz di vlog.

Q : Perjalanan karir dari lulus SI ITS sampai sekarang ?

Jawaban detailnya sebenarnya bisa di cek di Linkedin.

Sebagian besar karir saya, dibangun di industri telco Indonesia. Pekerjaan pertama setelah lulus ada lah sebagai operations engineer di Tech Mahindra dan ditempatkan di operator Axis. Kemudian pindah ke Celcom dan XL.Di XL pada awalnya network engineer, kemudian ditawari kesempatan untuk pindah ke sisi bisnis di tim Corporate Strategy & Business Transformation.

Di tahun 2016, saya berkesempatan untuk belajar manajemen inovasi di University of Manchester, pulang ke Indonesia setahun setelah itu dan kemudian nyemplung ke ekosistem startup . fintech Indonesia.

Q: Pekerjaan sekarang ?

Business development di Amartha. Penjelasan bagus tentang model bisnis Amartha bisa dilihat di video NET TV berikut 

Q: Perbedaan kerja di startup dan perusahaan yang established ?

Menambahi yang sudah ada di vlog. Beberapa hal yang berbeda sekali experiencenya sekarang dibandingkan kerja di XL dulu.

Multiple Hat : Di startup, terutama yang early, timnya kecil. Sehingga seringkali satu orang memegang banyak role. Di Amartha, role utama saya adalah business development. Tetapi paling sering, ngedouble job jadi product manager. Atau misal ketika misal butuh report, tetapi load tim Business Intelligence lagi penuh, ya oprek SQL dan bikin dashboard sendiri. Jobdesc ? apa itu jobdesc ?

Tanggung jawab dan kebebasan yang luas : Masih efek dari tim yang kecil, saya merasa mempunyai kebebasan lebih besar. Satu obyektif diberikan, terserah bagaimana cara eksekusinya. Prinsip lebih baik minta maaf daripada minta izin menjadi kredo saya di Amartha. Seringkali tugas yang diberikan sangat ambigu, sehingga kita harus mengerjakan sebari coba untuk mengerti.

Eksperimen dan Tes : Setiap ide produk atau ide aplikasi, langsung kita tes ke user. Misal untuk membuat draft konsep produk dibutuhkan 5 hari kerja, 2 hari akan dihabiskan untuk validasi ide di lapangan dengan real user. Pengalaman saya di korporate dulu, ini jarang di lakukan karena berbagai hal.

Kalau ditanya mana yang lebih baik ? tentu ada pros dan consnya. Semua kembali ke selera. Ketiga faktor diatas juga bisa diartikan sebagai kerja serabutan dengan arahan yang gak jelas. Tidak semua nyaman dengan itu.

Q: Gimana caranya shifting dari pekerjaan yang technical ke bisnis ?

Jurusan Sistem Informasi sedikit banyak memberikan bekal sebenarnya. Karena dulu, selain belajar pemrograman atau database, saya juga harus mengerti akuntansi dan manajemen karena mata kuliah itu diajarkan. Beberapa mata kuliah “utama” jurusan SI juga amalgamasi dua sisi ini seperti ERP atau SCM. Kuliah di SI menurutku didesain agar lulusannya ambivalen dengan engineering dan bisnis.

Yang juga membantu sekali ketika pindah dari Network Engineer ke Corporate Strategy adalah membaca buku. Berikut beberapa buku yang saya rekomendasikan untuk engineer yang ingin belajar tentang

1. Business Model Generation by Osterwalder : Framework BMC essensial sekali untuk mengerti apa itu bisnis dan gambaran besar bagaimana sebuah bisnis dijalankan.
2. Freakonomics by Dubner and Levitt : Buku yang membahas tentang fenomena sehari hari, dijelaskan menggunakan lensa ekonomi. Dengarkan juga podcastnya, sangat menarik.
3. Delivering Happiness by Tony Hsieh : Cerita Tony Hsieh dalam membangun startup toko sepatu online Zappos. Buku ini membantu saya memahami tantangan dalam membangun bisnis online serta pentingnya sebuah culture dalam perusahaan.
4. Lean Startup by Eric Ries : Baca untuk tahu apa itu startup, MVP, product-market fit, pivot dan bagaimana merealisasikan sebuah ide menjadi product dengan filosofi lean startup.
5. Sprint by Jake Knapp : Segala hal tentang design sprint, format brainstorming kelompok yang sering kami praktekkan di Amartha. Buku ini berguna untuk mengetahui bagaimana mengubah ide abstrak menjadi sebuah prototype yang bisa ditest langsung ke user.

Q: Tips untuk yang masih kuliah? Apa saja sih hal hal yang harus dilakukan ?

Saya pernah menulis panjang tentang ini disini dan sempat saya presentasikan juga di kampus SI ITS.

Tapi sebenarnya, kalau dipersingkat, saran saya sih adalah temukan faktor pendorong kamu secepat mungkin. Faktor pendorong ini bisa macam-macam, bisa ekonomi (e.g harus cepat lulus dan dapet kerja untuk meringankan orang tua) atau bisa sekedar hal trivial (e.g gue gak mau jadi orang yang membosankan ). Pengalamanku, kalau faktor pendorong ini sudah ketemu, terasa rugi banget kalau menyia-nyiakan waktu sih.

Demikian recap dan tambahan konten dari vlog KomunIKASI kali ini. Kalau ada pertanyaan, silahkan tulis di kolom komen dibawah. Terima kasih dan semoga harimu menyenangkan!

Seperti dijabarkan di artikel business insider dan nytimes ini , mayoritas penikmat musik berhenti mencari hal baru untuk didengarkan di usia 30. Well, di tahun ini, usia saya tembus kepala tiga dan saya bisa mengerti sekali ketika teman teman seangkatan playlist spotifynya adalah album Appetite for Destruction atau Hybrid Theory yang diulang-ulang. Di tahun ini, secara karir (Alhamduillah) saya juga mengemban sebuah tanggung jawab baru yang membuat saya sibuk lebih dari sebelumnya (seriusan, mendengarkan musik di jam kerja pun susah).

Beruntungnya, masih ada sebuah kenikmatan kecil yang saya rasakan ketika menemukan band atau album baru yang lagu lagunya enak untuk didengar. Ketika ada waktu senggang di antara meeting, tab New Release dan Discover di Spotify adalah pilihan untuk rehat sejenak. Menemukan musik musik baru adalah hal yang menyenangkan sekaligus mungkin sebuah usaha perlawanan untuk menjadi tua dan membosankan.

Dan untuk membagikan perasaan itu, berikut album rilis 2018 yang menurut saya nikmat sekali untuk didengar. Mayoritas album di list ini bergenre hip-hop dan metal.

Semua lagu yang saya sebutkan di artikel ini bisa didengarkan di spotify playlist berikut

Eminem – Kamikaze

Saya adalah fans kambuhan Marshall Maters. Album The Eminem Show adalah kaset rap pertama yang saya beli, di Aquarius Polisi Istimewa Surabaya ketika itu, delapan belas ribu. Album inilah yang membuat saya gatal ingin menulis tentang musik lagi di blog.

Kamikaze adalah album yang istimewa. Pertama karena disini, Marshall kembali menjadi Slim Shady yang tidak memberikan senggama (dont give a fuck!). Kamikaze menambah senarai panjang orang-orang yang dihancurkan Slim melalui lirik multi-syllable dan double-entendre yang keras. Sebut saja Joe Budden, Machine Gun Kely, wakil presiden Mike Pence, segumpulan mumble-rappers dan banyak lagi, disebut di 13 track album ini baik frontal atau subliminal.

Dan kedua, saya merasa Slim menemukan equillibrium antara menampilkan rap rumit berseluk-beluk dengan tetap menampilkan beat-beat yang renyah untuk didengarkan. Tidak terlalu pop seperti album Revival atau bahkan super-cheesy seperti MMLP2.

Ghost – Prequelle

Seperti layaknya Kiss, Ghost adalah band yang visualnya lebih horror daripada musiknya. Melihat poster atau cover albumnya, saya pada awalnya mengira musiknya akan terdengar deathcore seperti Slipknot, horror seperti Dimmu Borgir atau menghitam seperti Gorgoroth. Nyatanya musik Ghost adalah rock catchy dengan vokal bersih dan halus.

Di album prequelle, Papa Emeritus (berganti nama menjadi Cardinal Copia kali ini ) dan kroni kroninya membuat musik yang jauh lebih catchy dan danceable dari rilis sebelumnya, Meliora. Highlights saya di rilis ini, Dance Macabre adalah track rock disko dengan reff ear-worm luar biasa, melodi gitar. Sebuah effort berdisko band rock yang jauh lebih bisa diterima ketimbang (lagi lagi) Kiss ketika mengeluarkan single I Was Made For Loving You. Menyembah lucifer rasanya tidak pernah seceria ini.

” just wanna be, just wanna be with you ,all night!”

A Perfect Circle – Eat The Elephant

Menikmati album A Perfect Circle adalah upaya menerima dan mengikhlaskan bahwa mengharapkan Maynard James Keenan untuk membuat album Tool sama absurdnya dengan mengharapkan Gaben merilis Half Life 3. Supergrup ini kali ini di gawangi MJK bersama Billie Howerdel (yang mirip vokalis Smashing Pumpkins), James Iha (yang benar benar dari Smashing Pumpkins) dan dua personel lainnya yang saya tidak terlalu ingat. Mereka bukan band jelek, saya pertama mendengar The Hollow di sound track film Constantine lalu kemudian melihat Paz Lechantin memainkan bass dengan kombinasi tank-top dan hotpants di video clip Judith

tapi ya kembali lagi, ini bukan Tool.

Semua tidak selamanya hilang. Dua lagu di album ini, TalkTalk dan By And Down The River, menurut saya membawa atmosfir album Tool klasik Aenima.

Terima kasih Eat The Elephant untuk sedikit mengurangi dahaga akan materi Tool baru. Setidaknya saya tidak harus mereplay video bocah SD mengcover 46 and 2 ini lagi

Hollow Prophet & Scumfuck – Scumprophet

Saya tidak pernah mendengar dua band ini sebelumnya. Tapi ketika playlist Deathcore di Spotify merujukkan split EP berjudul Scumprophet ini, holy shit, jatuh cinta pada hentakan blastbeat yang pertama. Saya sesekali mendengarkan Cannibal Corpse dan Napalm Death, tapi grindcore bukan gelas teh yang saya minum reguler. Namun, di album dan lagu self-titled Scumprophet ini ada sebuah intensitas menarik antara shrieking vokal, distorsi dan double-pedal bass drum yang terdengar seperti getaran mesin genset saking cepatnya.

Scumprophet adalah rilisan paling brutal yang saya dengar tahun ini. Nilai tambah juga karena band ini masih benar benar dibawah radar. Penikmat musik ekstrim metal saya sarankan untuk segera mendengar split EP di spotify terdekat kesayangan anda.

Noname – Room 25

Selanjutnya, dalam list ini, adalah 180 derajat berbeda dari scumprophet. Fatimah Nyeema Warner, lebih dikenal sebagai Noname , adalah emcee yang membawakan hiphop halus selembut sutra. Cocok sekali didengarkan di malam hari, sebari duduk, menghembuskan nafas, melepas lelahnya bekerja seharian.

Jika kamu suka musik dari Chance The Rapper, Mac Miller atau Andersoon Paak, Noname cocok untukmu. Coba dengarkan track Regal sebagai tester apakah album ini layak untuk kamu konsumsi

Chelsea Grin – Eternal Nightmare

Saya akui, saya lemah terhadap band metal dengan sound modern, growl yang terdengar penuh, gitar djent dengan breakdown dan double-pedal berkejaran tak henti. Oleh karena itu playlist utama saya di Spotify adalah New Core. Di playlist ini juga saya menemukan Chelsea Grin, kuartet deathcore asal Utah yang menghentak di tahun 2018 dengan album Eternal Nightmare. Suara vokal Tom Barber sih yang membuat band ini menempel sekali di telinga saya. Terutama setelah melihat video live mereka di Warped Tour berikut, gila sih kalau live musik bisa sekualitas ini soundnya

Album ini menempatkan Tom di tempat keempat vokalis metal terbaik di list saya setelah Howard Jones ex-Kilswitch Engage, Randy Blythe dari Lamb Of God dan legenda hidup Max Cavalera dari Soulfly.

Honne – Love Me / Love Me Not

Honne adalah definisi untuk selera musik anak selatan jakarta di tahun 2018. Sedikit pop, sedikit elektronik, sedikit jazz, literally complicated and sophisticated. Tipikal band yang akan muncul di line up We The Fest.

Di album Love Me Not, duo produser asal London Selatan,  James Hatcher dan Andy Clutterbuck membuat lagu lagu cinta berkelas dengan beat elektronik hasil olahan Ableton Live yang danceable.

Dua lagu pilihan saya di rilis ini adalah Location Unknown dan Crying Over You. Para pejuang LDR akan menyanyikan bait ” i dont care how long it takes, i know youll be worth the wait. im on the first flight, back to your side” dengan penghayatan sempurna. Lebih mengiris lagi kalau mendengar versi live yang ini sih.

Crying Over You lebih untuk ke pejuang move on sih. Dan gue prediksi ini lagu ini bakal menghiasi karaoke bar di sekitaran Kuningan, Gatsu, SCBD terutama di jam sepulang kantor. Dinyanyikan oleh mbak dan mas kantoran yang di ghosting gebetan yang bertemu setelah swipe right di tinder.

And I don’t know why I’ve been crying over you
For the life of me, I wish that I knew

Dibuang sayang…

Selain yang ditulis diatas, ada banyak album bagus rilisan tahun ini dalam backlog yang saya ingin dengarkan dengan seksama.

Dari sisi rock alternative ada Arctic Monkeys yang meluncurkan Tranquility Base . Semakin tahun Alex Turner membuat sound yang makin jauh dari Whatever People Say I Am. Kembalilah ke sound garage rock kasar yang kita semua suka om Alex!. Interpol juga mengeluarkan Marauder, yang saya kurang suka dan membuat kembali memutar El Pintor. Kodaline meluncurkan Politics of Living yang belum sempat saya dengar, karena benar benar rilis H-1 dari saya mengetik artikel ini. Sayangnya, dari reviewnya sepertinya semenjana, tapi ya band ini pasti tetap akan saya dengar.

Penikmat hiphop juga sangat dimanjakan tahun ini. Dalam 3 minggu pengerjaan artikel ini, iya nulis begini saja butuh waktu saya 3 weekend, sudah rilis Brockhampton dengan Iridescence, Lupe Fiasco dengan Drogas Wave, Pusha T dengan Daytona dan yang paling hangat, Lil Wayne dengan Tha Carter V. Dari semua ini, so far yang paling saya enjoy adalah Daytona. Untuk mengelabui rating di era striming banyak artis hiphop mengeluarkan album dengan jumlah lagu yang naudzubillah banyaknya. Daytona cukup pas dengan lagu lagu enak dengan durasi yang padat.

Sementara dari ranah metal, yang sedang mainstream sekali adalah Deafheaven. Ini genrenya aneh dan hipster banget sih, Black Metal Shoegaze. Coba dengarkan lagu You Without End atau video live Worthless Animal, seperti mendengarkan band instrumental Explosions In The Sky tetapi ditengah tengah terdengar rintihan iblis dengan microphone lo-fi.

Selain itu, Soulfly mengeluarkan single Ritual dan akan merilis album penuh beberapa bulan lagi. Ritual terdengar primitif, tribal dan ganas, seperti semua album awal Cavalera di era 2000an (Primitive, 3 dan Prophecy). Patut ditunggu!

https://open.spotify.com/embed/user/kikiahmadi/playlist/3BOpr1jkAtDYgfHK3WhxDQ

I cant believe how fast 2018 have been going for me. I went lot of new challenges, good thing most of them turn out quite well. In 2018, I’ve ventured into new areas at work, managed bigger team and took terrifying steps into the big financial commitment (i bought a house on mortgage). Been hell-a-lot of personal developments which was exciting and scary at the same time.

Speaking of personal developments, ill share top three great books that I’ve read last year with interesting points from each. These books helped me find perspective and calmed me down during roller coaster ride. I hope this list give you ideas on what to read to start your 2019 right.

Lets go!

Hard Things About Hard Things – Ben Horowitz

For someone who currently works in a tech startup, ive never read books who are as relatable and insightful as this one. Ben Horowitz is one-half of Andreseen-Horowitz , one of the super venture capital in Silicon Valley. Name any tech unicorns and most probably a16z has investment in that. Prior to investing, Ben Horowitz started his career in Netscape and this book chronicles his career from founding startups called Loudcloud up to selling it to Hewlett-Packard. 

Whats interesting about this book is Horowitz write a lot of insights on how to navigate your way as a tech startup. A startup is a different beast than corporate and understanding the nuance of each is crucial anybody who wants to switch career from either side of the pond. One of my favorite bits in this book is Horowitz advice on the difference of expectation for managers / executive on working in a startups and corporate and how to screen this early in a interview session. I made summary in a table below

Horowitz wrote this book very honestly and you can feel his struggle and hardships as a CEO. If other business book makes you want to be at the top of corporate chain, this book made me feel the opposite.

It Doesnt Have To Be Crazy At Work – Jason Fried and David Heinemeier Hansson

After Getting Real and Remote, this is the third book from what-used-to-be 37 signals that ive read. Jason Fried and DHH has very distinctive writing styles which carry around on all of their books. Their books are written in short chapters, very direct and less wordy hence its comfortable to digest.

In this book, Fried and Hansson, propose the idea that work doesnt have to be hectic, exhausting and crazy. The Basecamp Duo argues that long hours at work and highly stressful work place its not normal and there are lots of decision that can be taken to reduce that.

Two reasons why craziness happens at work: (1) constant physical and virtual distractions which encouraged to happen in the office; (2) harmful obsession with growth at any price. Fried and Hansson then elaborate how they reduce both of these in the daily operations of Basecamp.

Several tips that piqued my interest :

• Eliminate costly status meetings. Eight people in a room sharing updates do not cost one hour but eight working hour just for updating. Replace this by daily or weekly updates in written format hence any member can read the updates at their own pace.
• Major distractions at work mostly came from inside such as wandering managers constantly interrupting team members. Office should be made as distraction-free as possible to enable each member have long uninterrupted work hours. Workplace should have similar rules to library, with quite as the default condition and rooms are provided to facilitate noisy collaboration.
• Sleep is crucial in any creative work that needs high-order thinking. Its never worth trading sleep for a few extra hours of work. Sleep-deprived person not only become more stupid but also less patience which prone to create toxic environment at work.
• Group chat (e.g Slack) should be treated asynchronously. Participating in a group chat is like being stuck in a never ending meeting with random agendas. Two rules regarding chat : (1) Asynchronous most of the times, real-time sometimes; (2) If its, important, slow down and write it up.
• Rather than spending 100 percent effort on every single thing, try putting less effort for things which less important. Being clear which product / feature / project needs to be perfect and which can be bare-minimum reduce unnecessary pressure in workplace

This book offer great alternative views to the common wisdom that work hard all-the-time and at all cost is the only way to be successful. My only criticism is all of the examples are based on their own companies which they have complete control (Basecamp is famous for not taking VC money). Hence not all tips can be practiced in common workplace settings.

Blood, Sweat and Pixels – Jason Schreier

This is a great books if youre an avid gamer like me. Jason Schreier, game journalist and editor at game publication Kotaku, gave a behind the scene insights on how various popular games are made. In this book, he covers various games from blockbuster AAA games up to popular indie game which coded by a single guy.

The book perfectly captures the complexity of making video games, the drama surrounding development and the pressure of each person along the process. Each chapter is dedicated to one game and it is such a roller coaster ride, i feel like reading a fiction novel. It is very entertaining books even though not much business insight that i can get from this reading.

Key takeaways i can write here is there are 3 reason why game-development is the hardest type of software development :

1. Video games are interactive. Games dont run in a fixed linear way. Players can do variety of actions and developers need to consider the impact and logic for every actions (and reactions) that the player makes.
2. Game engine and technology are constantly changing. Developing games is like making movies but you have to build camera from scartch every time you start shooting. Computing technology level up every year, and game are pressured to have higher quality image, bigger worlds and complex game play every time the technology evolve. On top of that, game designers are expected to work with plethora of specialized software and engine which differ from studio to studio.
3. Scheduling is impossible. In tradition software life cycle, schedule can be determined based on how long task have been developed in the past. But in video games, games is measured by how much fun is the gameplay and this can be measure only when the game are finished. Developers can predict but until players are experiencing the games, theres no way to tell whether each actions such as simple jumping up to opening inventory menu bring joy to the players. This is why every video game development is almost always late and crunch time (working 10-15 hours every day to meet the deadline) is the norm in game development.

Ini sebenarnya adalah thread Quora yang saya jawab beberapa waktu lalu Karena responsnya cukup bagus, saya menambahkan beberapa materi dan memposting ulang disini.

Platform Quora ini cukup menyenangkan dan saya aktif disana. Cek kesini 
untuk melihat semua jawaban yang saya tulis.

Menurut saya, ada beberapa faktor yang menyebabkan teknologi finansial (fintech) menjadi sektor hangat dan punya potensi yang besar sekali kedepan untuk Indonesia.

Populasi nirbank yang masif

Pengguna layanan perbankan konvensional masih minoritas di Indonesia. Dari 250 juta populasi, hanya sekitar 30–40 persen saja yang mempunyai akun bank [1]. Kurang lebih seratus delapan puluh juta orang di Indonesia belum tersentuh oleh layanan perbankan. Indonesia menempati posisi pertama di Asia Pasifik dan ketiga di dunia untuk populasi nirbank.

Ada 3 faktor penghambat utama yang menyebabkan masifnya popukasi nirbank ini [2]

1. Ketidak-tahuan akan manfaat layanan perbankan itu sendiri (Awareness)
2. Layanan perbankan konvensional yang membutuhkan banyak dokumen, ribet dan mahal (Inconvenience)
3. Tidak adanya cabang atau perwakilan bank yang bisa dijangkau terutama untuk masyarakat rural dan yang tinggal di luar pulau (Access)

Penyaluran kredit perbankan yang asimetris

Nilai dan pertumbuhan ekonomi di Indonesia mayoritas di kontribusikan oleh usaha kecil menengah dan mikro (UMKM)[3] . UMKM berkontribusi 90 persen terhadap total jumlah tenaga kerja dan 60 persen terhadap total PDB negara [4] .

Meskipun begitu, dari total 5 ribu trilyun rupiah pembiayaan yang dikeluarkan oleh industri perbankan Indonesia di kuartal 1 2017, hanya 20 persen saja yang disalurkan ke UKM. Untuk segmen mikro, persentasenya lebih mengenaskan lagi, hanya empat persen saja.

Selebihnya kredit tersebut di serap oleh sektor komersial (korporasi dan perusahaan besar lainnya).

Cuplikan gambar dari report KPMG – Finance In Indonesia

Walaupun punya nilai ekonomi yang besar, sektor UMKM seperti tidak ditarget secara serius oleh industri perbankan konvensional. Ketiadaan pencatatan finansial yang lazim terjadi di UMKM menjadi penghalang terbesar sektor ini dalam mendapatkan kredit

Yang menarik dari report KPMG juga, 70 persen kredit disalurkan hanya di Pulau Jawa saja.

Dapat disimpulkan, Bank-bank di Indonesia bertarung mati-matian di lautan merah kredit komersial, personal dan korporasi bernilai besar di Pulau Jawa. Sementara lautan biru kredit UMKM dan non-Jawa masih sedikit sekali yang bermain.

Penetrasi internet dan ponsel pintar yang terus meningkat

Dengan penetrasi yang melewati 100% populasi, telepon seluler adalah produk teknologi paling inklusif di Indonesia. Hampir seluruh lapisan masyarakat dapat dijangkau menggunakan teknologi ini. Kemudian seiring dengan semakin murahnya harga handphone android dan paket internet, pelan tapi pasti pengguna ponsel terkonversi menjadi pengguna teknologi yang canggih yaitu smartphone. Dari total semua pengguna ponsel, penetrasi smartphone sudah mencapai setengah [5] . Ditambah lagi, dalam 5 tahun terakhir, pengguna internet naik lebih dari 2 kali lipat.

Grafik dari survey APJII

Smartphone dan internet menjadi platform krusial yang memungkinkan layanan finansial dapat menjangkau lebih banyak orang Indonesia dengan lebih mudah dan murah. Contoh paling gampang, layanan perbankan digital seperti Jenius memungkinkan pengguna untuk membuat rekening tabungan baru dengan hanya mendownload aplikasi tanpa harus datang dan mengisi form.

Kesimpulannya, yang menjadi faktor fintech menjadi hype saat ini adalah potensi pasar yang besar dengan status quo yang rentan untuk terdisrupsi dengan teknologi digital. Seperti layaknya E-commerce di tahun 2011 – 2012 dan ride sharing 2–3 tahun setelah itu.

Jika tertarik, saya menulis lebih lanjut tentang tantangan yang dihadapi startup dalam menyasar populasi nirbank di artikel dibawah :

Three Challenges Startup Faced in Serving Indonesia’s Unbanked Population

Catatan Kaki

• [1] All eyes on e-money: The race to reach 180M unbanked Indonesians | Think With Google
• [2] Indonesian Fintech Industry: Serving the Unbanked – Datarama –
• [3] Government, marketplaces team up to encourage SMEs to go online
• [4]  Finance in Indonesia: Set for a new path?
• [5] Internet penetration in Indonesia reaches 143M people: APJII Report

Ini adalah thread quorayang saya jawab beberapa waktu lalu. Platform Quora ini cukup menyenangkan dan saya aktif disana. Cek kesini untuk melihat semua jawaban yang saya tulis.

Di satu konferensi, saya berkesempatan mengobrol dengan Pak Jefrey Joe dari Alpha JWC Venture. Seorang venture kapitalis yang portfolionya bisa dilihat dilink dibawah

Portfolio | Alpha JWC Ventures

Pertanyaan saya senada dengan ini :

“ Bagaimana menilai probabilitas kesuksesan seorang founder, terutama jika startupnya masih early sekali “

Jawaban pak Jef mengena sekali :

“ Lihat saja orang orang di sekelilingnya (tim manajemennya), jika founder secara konstan merekrut orang orang yang lebih kompeten dari dirinya sendiri, peluang suksesnya semakin besar “

Di awal startup dibentuk, seorang (atau 2,3 orang) founder harus mengerjakan semuanya sendirian. Semakin besar perusahannya, founder harus menyerahkan sebagian tanggung jawabnya kepada orang lain. Untuk perusahaan besar, mungkin ini bukan masalah besar.

Di startup ini menjadi challenge karena :

1. Sedikit orang yang mau kerja di perusahaan tidak jelas
2. Gaji mungkin tidak bisa terlalu besar karena keterbatasan modal ketika seed funding saja belum dapat. Lebih sedikit lagi yang mau.
3. Karena ini startup, setiap orang yang di hire harus bisa mengerjakan diluar scope pekerjaannya alias palugada. Seorang CTO di startup yang kurang dari 10 orang akan mengurus coding fullstack hingga pasang internet kabel di kantor. Semakin kecil saja populasinya.

Dengan tantangan seperti ini, founder yang buruk akan menurunkan standar dan menghire siapa saja yang mau. Founder yang bagus akan mengejar orang terbaik yang dia tahu dan menggunakan segala cara untuk menjual mimpi kalau startup ini 2–3 tahun lagi akan menjadi besar.

Di buku Hard Things about Hard Things, Ben Horowitz dari venture capital Andreesen-Horowitz menulis satu chapter tentang bagaimana founder harus menghire orang yang bisa mengerjakan pekerjaan jauh lebih baik dari dirinya

Hiring Executives: If You’ve Never Done the Job, How Do You Hire Somebody Good?

Jika di fase awal saja, founder bisa merekrut orang orang berkualitas yang cukup gila untuk percaya. Seiring dengan perkembangan startup , orang berkualitas yang tertarik masuk akan lebih banyak lagi. Ini meningkatkan probabilitas startup tersebut akan sukses di masa depan.

Sebaliknya, menghire tim yang tidak kompeten adalah penyebab kegagalan startup no 3 paling umum, menurut lembaga riset CBInsights

The Top 20 Reasons Startups Fail

This is series of study case analysis that i like to write from time to time.  I am a big fan of Ben Thompson’s Stratechery and this series of essay emulate his style of writing. Check out my first post on Traveloka.

This week in fintech, T-Cash state-owned e-wallet provider announced that they will transform into LinkAja. Not only the name change, the new T-Cash will be backed not only by Telkom group but also six other state-owned enterprise (SOEs) : Bank Mandiri, BRI, BNI, BTN, Jiwasraya and Pertamina. The change will be implemented late February and current T-Cash users will only need to update their app once LinkAja launched.

Couple of interesting points from this.

First, this is a clear synergy attempt by SOE’s (BUMN) for holding ground against the hyper-growth Gojek-owned Gopay and Lippo-backed Ovo. To tap bigger market, Telkomsel has been planning to spin-off and making T-Cash agnostic regardless of mobile operator. However, Gopay and Ovo have been engaged in cashback wars since late last year which successfully earning them top-of-minds leaving T-Cash behind. Facing high waters, Telkomsel apparently need all the help they can get.

Second, apart from BTN, each of four state banks that support LinkAja already have their own e-money system. Mandiri have E-moneyand E-toll, BRI have Brizzi and Tbank, BNI with TapCash and Yap!. Most of them are card-based e-money which probably can complement the server-based T-Cash. However, integrating between each legacy system can be a challenge.

Last, Pertamina stuck out like a sore thumb in the list of LinkAja backers. This might be Pertamina first foray into Indonesia digital ecosystem. Im not sure what Pertamina brings to the table or what they stand to get in this coalition. LinkAja might be utilized as their loyalty platform similar to Shell’s Clubsmart. Their gas stations can also be used as cash-in-cash-out (CICO) points for LinkAja.

However, Pertamina only have 5000-ish gas station with half of it in Java. Compare it to your friendly neighborhood Alfamaret and Indomaret, T-Cash existing CICO merchant, which combined have 30 thousands points nationwide.

T-Cash Position in the E-Money Space

So what are the key driving factors for this Alliance ? Most probably is the big and lucrative potential in the growing e-money landscape.

According to Bank Indonesia data, electronic money is growing industry with recorded 3 million transaction reaching 47 trillion rupiah in 2018. As you can see in the chart below, the growth hockey-sticked last year with transaction grew 3 times and the amount grew four times. This might be the result of heavy promotion, payday and discount campaign by major players last year.

Number of instruments issued (accounts and cards) also almost doubled last year. Average amount per-transaction is still small, less than 20 thousands IDR. But it is steadily increasing for the past 4 years. This could signal growing trust of Indonesians in using non-cash payment method.

So where is T-Cash position in this ocean ?

Based on public information, T-Cash seems to lead in number of accounts with 25 mio for now. Having 150 million Telkomsel subscriber as their captive market really help T-Cash to have ample user-base. Gopay claimed to have 50% Gopay users out of their 20 to 30 million users while OVO numbers ranging from 6 to 10 mio.

However, based on recent public surveys on fintech by DailySocial, T-Cash is lagging behind Gopay and Ovo in terms of popularity. This could be a stern warning sign for T-Cash as both Gopay and Ovo are very aggresive and willing to burn tons of money in order to gain foothold.

The Lack of Growth Engines

What Gopay and Ovo have which T-Cash are lacking is growth engine.

Gopay is an internal currency for all Gojek services on both side of the platform : end-users and mitra (partners). For end users, theres an immediate benefits in price (discount) and convenience (no need for spare change) if you use Gopay to pay Gojek services. On the other side, mitra are forced to use Gopay if they want to onboard in Gojek ecosystem, either as drivers or as merchant. By design, the growth of Gojek users and partners will also boost Gopay adoption. On top of that, theres also network effects at play. The more services and partners Gojek have, Gopay will become more valuable as end users will have more reason-to-use.

Ovo also have this with their partnership with Grab. Albeit lesser due to low variety of services in their ecosystem. Also, OVO leverage Lippo group assets ruthlessly such as forcing you to pay using OVO in their widespread malls in Jakarta. Another growth engine that Ovo have is TokoCash which can potentially tapping into 150 million monthly visitor of Tokopedia. They are tightly integrated, cashback or refund from every Tokopedia purchase will automatically goes to OVO. As Tokopedia grow, OVO user and usage will grow as well.

TCash, as far as i know, doesnt have these kind of growth engines. Even as Telkomsel user, using T-Cash doesnt give you immediate benefits or better experience. Based on current information on LinkAja so far, there are no signs either to address this. This will become their Achilles heel in the upcoming wars of e-money.

Opportunities in State-owned Space

Combining multiple SOE’s asset, there are opportunities that LinkAja have advantage over other e-money players : public sector. If they can tap this, the cake is almost untouchable by other e-money operators.

One of it is conditional cash-transfer program called Program Keluarga Harapan (PKH) . On average, every target household will retrieve 2 million rupiah annually and in the span of 7 years recipient have been growing tenfold up to 10 million household.

PKH currently are delivered through SOE banks but in my opinion, e-wallet is better medium to deliver social program due to better inclusivity of mobile number (more than 100% penetration compared to 30% bank account). This is where LinkAja might come to play. Besides, T-Cash is also accessible via USSD hence recipient dont need smartphone to have account (unlike Gopay and Ovo).

LinkAja also offer better capabilities to deliver current card-based social program such Kartu Indonesia Sehat or Kartu Indonesia Pintar. Since all these card can be used as payment method, LinkAja can leverage their current features to improve the experience such as QR payment and ability show historical transactions. Server-based e-wallet is also better in terms of transaction monitoring and control compared to card-based. For example, government / related-ministry can centrally track, limit and also freeze balance on an individual level in real time.

An important capabilities in a social program where it is prone to be misused.

The Seven Elephants In The Room

The LinkAja alliance is not without drawbacks. According to KataData, each SOEs will have equal share in LinkAja. This can be problematic because every strategic decision that LinkAja make will have to go through seven state institution each with their own layer of leadership. On top of that, LinkAja might also have to report to SOE Ministry. This can be their crutch while they facing swift and agile unicorns such as Gojek.

Conclusion

By joining forces with other SOEs, T-Cash or LinkAja might amass bigger warchest and plethora of important assets in their ongoing war with Gopay and Ovo. However, i believe this Avengers-like initiative not directly solve their lack of growth-engine problem. Having multiple heads with equal stake also come with burdensome bureaucracy which hinder LinkAja to run as fast as their competitors.

However, still this is good news for end-customer as the competition heighten, operators will be racing to give better service. Better competition will also drive overall e-wallet penetration even more.

This is series of study case analysis that i like to write from time to time. I am a big fan of Ben Thompson’s Stratechery and these essays are inspired by Ben’s work. Check out my last post on LinkAja.

On second week of April, Dealstreetasia broke the news that Indonesian payment wallet provider OVO has acquired online mutual fund startups, Bareksa, for 20 mio USD. This news came just merely a month after OVO acquisition of P2P Platform Taralite. Taralite acquisition has enabled OVO to offer credit-card-like Paylater which at the moment only available in Tokopedia. Bareksa on the other was used to power OVO Invest feature which can be accessed after user do advanced KYC by submitting their E-KTP.

As a country with massive unbanked population and asymmetric banking industry , Indonesia is a lucrative ground for fintech. These recent developments is a clear attempt to expand into wider financial services and having Lippo and Grab as their backer, OVO have ample warchest to start landgrab in multiple fronts.

In this essay, i will share my analysis on rationale, challenge and predictions on OVO next step in Indonesia financial industry.

Massive Yet Vulnerable Grounds On Wallet

Electronic wallet market has been growing significantly last year. Total transaction value in 2017 to 2018 rose up from 12 to 47 trillion IDR. With its increasing presence in Indonesian modern merchants, E-Wallet has become convenient cashless payment options. This function is traditionally filled by credit cards in other developed countries but in Indonesia less than 7% of population have access to it. Wallet providers also start to penetrate into traditional market which makes it even more ubiquitous than conventional credit cards.

For more data on Indonesia wallet market space, check out my previous articles on LinkAja

In this market, OVO gained strong foothold in 2018 by signing up to 115 million users and winning top of minds.

Despite massive growth last year, there are two challenges in the current wallet space which OVO and other wallet operator have to face:

• Transaction Amount is Still Small
• High Acquisition Cost with Low Switching Barrier

Main revenue model for digital wallet like OVO is taking percentage commission from each transaction. Based on Bank Indonesia statistics on payment system, average amount per transaction of electronic money still around 23 thousand rupiah. If OVO charged 1 to 3 percent, this is still minuscule meanwhile they have fixed cost to pay for each transaction served. The whole industry is new hence people still use wallet in a small amount transaction such as paying meals. To boost revenue and reach profitability, OVO has to incentivise user to increase their transaction amount in higher value purchase.

One of the reasons why last year digital wallet users spiked so much is because OVO and other wallet operator fueled their growth through cashback wars. Cashback sometimes can be up to 60%. The problem is, with such steep acquisition cost, there are no strong benefits to keep using one wallet over another apart from some loyalty points. User can easily make multiple wallets and just top up whoever has better cashback deals that day.

Lending to Boost Revenue

Main reason for OVO to offer lending is to move into higher transaction amount. They did this by acquiring P2P lending Taralite. By offering lending and installment services, OVO can slowly nudge users to spend more without asking big commitment upfront. Lending also provide additional revenue for OVO in shape of interest fee.

OVO Paylater launched first exclusively in Tokopedia last February. As follow-up, Paylater also available in their own app and can be used in more than 20 thousand merchants. The mechanism is similar like credit card with fixed 30 day cycle, fixed deadline and minimum payment mechanism. With both installment and payment mechanism already in place, OVO just need to launch physical card to offer full-fledged credit card experience.

Since they acquired Taralite, OVO can pursue other potential lending products such as :

• Financing for OVO merchant
• Tiered credit-lines based on usage for OVO users
• Cash loan

One of the low-hanging fruits is to offer loans for merchants. OVO as payment system store historical transaction of each merchant payments. This can be used as income proxy for credit scoring. By offering credit lines, OVO can incentivise merchants to advocate their usage over other wallet. Similar mechanism can be used for end-user as well. Credit lines for Paylater can be increased based on their usage or similar to credit limit in an conventional credit card. Other riskier options will be cash loan. High usage OVO users can be offered cash loans facilities which can be transferred through bank account.

Investment for Stickiness

After Taralite, OVO also reported to have acquired leading mutual fund marketplace Bareksa. Bareksa have mutual fund agent license and currently carries 192 mutual funds product on their marketplace.

Whats the play behind this move ? its stickiness. I mentioned above that OVO has burnt a lot of cashback money to get users on board. Since every other operator are doing the same , OVO need ways to make users stick to increase their lifetime value. Getting users to invest might be a good way to tie them down. Mutual fund is also good investment instrument because it can be purchased as low as 10 thousand IDR per unit, align with 23k industry average of amount per transaction.

Investment is also huge untapped market in Indonesia. Registered investor ID, a mandatory requirement to invest in Indonesia capital market, as per March 2019 is still less than 2 million. Half of that number are contributed by mutual fund (reksadana). In the nation of 250 million that is less than one percent. Whats interesting is year on year growth on the number of mutual fund investors 2017 to 2018 is 50%, from 600 to 1 million. Out of 300 thousands new investor, 210 is millenial investors. Driven by fintech trends, investment market are growing double digit with younger population.

Millenial and fintech are exactly what OVO is. Going forward, investment not only can solve OVO stickiness problem but it can also become their lucrative playing field.

Right now, OVO invest feature only provide one mutual fund product with minimum order as low as 10 thousand IDR. This feature only available for users who already do advanced KYCs in the app.

Savings for Profitability

According to Global Fintech Trends report by CB Insights, majority of fintech who expand from single to multi-services in 2019, most of them branched out into savings and deposit. By offering saving features with interest, fintech can incentivise user to store funds with bigger value and longer period.

I believe this a logical step that OVO should do in order to drive revenue per users. Having bigger average funds will make it easier for OVO to develop new financial services down the road because the experience will be seamless. Savings also open new revenue stream with interest income. Furthermore if OVO can channel user savings through Taralite P2P system, they can also get lower cost-of-fund for their Lending features. Seems like savings the key for OVO to achieve overall profitability.

To offer savings, OVO need bank license but they can circumvent this by doing integration with banks. Right now they are heavily supported by Bank Nobu which also part of LippoGroup. With this asset at hand, OVO can seamlessly make their balance transferable to Nobu savings with better interest as carrot. Going forward, with OVO having bigger user base and better brand equity, its not possible that OVO will takeover bank Nobu to get full bank license.

Insurance for Nice Cherry on Top

Albert Lucius, OVO Chief of Product, has stated that insurance is one of the services that OVO plan to venture. The opportunity for this i think is in selling specific and micro insurance which still align with average transaction value. For example device and travel insurance ranging from 50 to 100k IDR. Slightly on higher value is motorcycle insurance which generally come at 150 to 300k IDR price. Health insurance might be hard due to 81 coverage of BPKS Kesehatan.

Value proposition which OVO can offer is convenient access inside their app from selecting, purchasing and also claim management. Fastest way to do this is by collaborate with insurance aggregator such as Cermati, Qoala or PasarPolis. Ovo then can charge leads fee for every sales happening at their platform.

In my opinion, Insurance have lesser strategic value to OVO compared to other financial services. Insurance can be valuable to give stickiness similar to investment. Leads fee from insurance sales can also be additional revenue source but amount might be small. However, by providing insurance on top of other financial services, OVO can claim that they offer one-stop digital financial services platform.

Conclusion

The utopia of majority of fintech apps is to capture the whole financial aspect of their users. Companies or startup might start from one financial services while slowly expanding into other services as they grow. OVO as a prominent digital wallet operator has started their second act towards this goal by doing multiple acquisitions. By having multiple financial product will give OVO not only diversified revenue source but also a bigger share of their users income.

Their conquest however wont be without enemies. Gopay as their competitor have already Findaya as their lending portfolio under Gojek. Gojek also have asset in insurance through their investment in PasarPolis. With these portfolio at hand, Gopay can engage OVO in whichever financial services they choose to expand.

And finally, another potential roadblock for OVO ambitions is regulatory. As digital wallet, OVO is being regulated by Bank Indonesia. However other financial services such as Lending, Investment and Insurance falls within responsibility of OJK. Dancing with these two big regulatory bodies might cost OVO significant effort and focus. 

Yesterday, Facebook launched its own global currency called Libra. It is built on blockchain and it carries Facebook ambitious bet to redefine how money works in the internet (you can see it in this video). Theres lot of interesting aspects of Libra, from its underlying technology, the management model and privacey features. TechCrunch explain it beautifully in this 4000 words explainer.

My key takeaways from Facebook Libra are these :

1. Libra is crypto-based digital currency. It is a cryptocurrency hence decentralized, open and secure. However, unlike other cryptocurrency, it is blazingly fast (1000 TPS compared to 7 in Bitcoin and 15 in Ethereum) and financially stable due to the backings of real-money reserve. To use Libra, you will need Calibra, its digital wallet. You can cash-in, store, send and cash-out in Calibra similar to Paypal, Gopay, OVO and other digital wallet. However, Calibra will seamlessly handle multi-currency remittance, available around the world and integrated with FB Messenger and Whatsapp. Calibra itself is built by Facebook however since Libra is open infrastructure, in the future other companies might built other wallet apart from it.
2. Libra is mainly targeting unbanked population. In the intro video, Libra is designed to be fast in Lagos, simple in Manila and convenient to send money to Mexico City. To use Libra and Calibra, user only need feature phone, internet and any kind of government-issued identification. It doesnt require smartphone hence highly inclusive. Libra also claimed to utilize blockchain to drasticly reduce fees.
3. Libra is backed by lots of prominent organization. Apart from Facebook, Libra is supported by giants and whales of global institution. Visa, Mastercard, Paypal, Stripe are onboard. Theres also telco (Vodafone), venture capital (Andreesen-Horowits) and non-profits (Kiva and Mercy Corps). Full list of Libra backers can be read here.

This is an interesting slash scary things for fintech and crypto development going forward. If you work in wallet or digital money business, Facebook is eye-balling your lunch. Every penny that went into Calibra wallet is a penny less from other wallet. If youre in fintech focusing on unbanked, like me, this could be potential to do cashless financial service delivery. If you work in blockchain, Libra could be the key use case to bring the crypto to the masses. Global bitcoin users currently is 35 millions while Facebook itself has 2.3 billion userbase.

So considering this development, what can we do to anticipate? heres my initial thoughts :

Selling things online ? Learn how to use Libra / Calibra

Libra / Calibra is backed by Facebook. It will be integrated with FB Messenger, Whatsapp and probably on Instagram as well. Even on a less-than-best case of not disrupting digital money, Libra might still be a payment method accesible to billions of internet users. If youre in the business of selling stuff online, you might need to take closer look. Observe whether Libra / Calibra could bring more business to your store.

If youre a developer, technical explanation on how to do transaction in Libra can be read here.

This could get big in Indonesian specific context as well. Facebook is the first contact to the internet for majority of Indonesians. Before e-commerce marketplace like Bukalapak and Tokopedia became unicorns, Indonesian netizens buy and sell things mainly on Facebook pages, Instagram comment section and Whatsapp groups. Imagine if there is a way to do that transaction seamlessly across social media.

Fortunately (0r unfortunately), Libra / Calibra development will focus on peer-to-peer transfer first. Merchant payment and other integrations will be developed later. Plenty of times to strategize.

Cash-in and Cash-out (CICO) Hurdles

All the best features in the world means jack shit if there are no easy way for user to add and redeem Libra balances. In the West developed nations and China, this might be less problematic due to most people have money in bank or fintech accounts. Libra / Calibra would only need to integrate with financial companies. But in countries with low financial inclusions, the ones Libra aim to capture, they need to be available in existing intersections where hard cash converted into some kind of balance.

In Indonesia, this could means being available in cornerstore such as Indomaret / Alfamart which has around 30 thousands spot nationwide. Telco sellers can also be good CICO points. Telkomsel alone has 400 thousands registered sellers but since they have their own wallet, LinkAja, slim chance to collaborate. Hence, would be good move to approach XL and Indosat as the next options leveraging their connection with Vodafone.

CICO availability in my opinion will be good indicator whether Libra make or break in this country.

Blockhain Skills Might Get Hot

Like i mention before, due to Facebook and other backers. Libra could be a potential blockbuster use case for blockchain. Companies which are aiming to benefit from OR in a threat of getting razed would be wise to get to know Libra under the hood. This means getting and developing blockchain capabilities in the organization.

If you are a developers and working in financial services, its a good time to arm yourself with blockchain 101. If Libra succesfully getting into global disruption, demand will skyrocket.

Libra have its own programming language called Move which enable developers to build custom transactions and smart contracts.

Apart from the fanfare, one should also look Libra with healthy skepticism. There are major privacy issues regarding Facebook which could spiral deeper if they handle financial data. Libra being global wallet will also bring major attentions from finance regulators around the world.

Libra / Calibra is currently in testing mode and will be publicly available in early 2020. So will this be an upcoming revolution or countdown to extinction? Well see in 6 months.

In current Indonesian context, when somebody talk about fintech they mostly refer to lending. In DailySocial surveys, more than half of respondent associated fintech with online lending services with payment as a close second. Number of fintech funding activities also skewed toward this direction with 60% of total 14 deals in 2018 went to P2P lending startups. If you browse through fintech list in OJK website, only P2P lending are listed even though insurance and investment fintech falls under OJK supervision. There are currently 113 registered lending fintech as of June, far more than any other types of fintech combined.

Two things from this: Indonesian fintech growth so far still contributed by lending thus other financial services is underutilized. This leaves lots of room to grow for fintech ecosystem going forward. Second, with lending companies already reach hundreds, fintech players need to think hard what will be the next play.

So what could be the next phase for Indonesian fintech ? my take is on investing. Of all the financial services, it is the least inclusive with less than 1% registered investors in a 270 million population. Number of investors has been growing double digits for four years straight and most of the growth are contributed from younger segments.

In this article, i wrote overview on investing landscape in Indonesia, challenges and how this sector has big potential to drive further fintech growth going forward.

Investment Overview in Indonesia

Capital market is in growth stage in Indonesia. Jakarta Stock Exchange (IDX) is one of the fastest growing markets in the world and it has been outperforming other markets in ASEAN and APAC in the last decade. From 2015, market capitalization grew almost double from 4.5 up to 7.5 thousand IDR trillion. However despite the growth, challenges still lies in penetration and access for general population. Registered investor in the stock market is still 1.6 million, less than 1% of population. Investing in capital market is still a luxury for majority of Indonesian.

There is a positive trend in this last four years. Number of investors are steadily growing double digits since 2015. Last year there were nearly 500 thousands new investor registered which is a new record. Growth also contributed by younger segment which signal that millenials are apparently potential segment for investment product. My assumption that this might be contributed by the rise of millenial-focused financial consultant business such as Jouska and BigAlpha which primarily use social media. Jouska is very big in Instagram with half millions follower while BigAlpha is building their 25 thousand follower base in Twitter.

Major barrier for investment in Indonesia is literacy, its is not an easy product to understand. Before investing, one should have understanding of financial terms (inflation, value of money), know the concept of risk and have basic business knowledge. All of this require university-level education which only 20% of Indonesians have access to.

To tackle this barrier, IDX have been actively pushing investment literacy using Yuk Nabung Saham (Lets Save in Stock) online campaign. Apart from that, IDX also held regular offline short course called Sekolah Pasar Modal (SPM). Its a two days intro to stock or mutual funds investment course which include registration to stock broker. IDX held SPM not only in Jakarta but also in other cities as well. To further drive investment literacy, program like SPM need to be delivered to wider audience in a more scalable way.

Players in Investing Fintech Space

I divide players this space into three big categories : Stock, Mutual Funds and Gold. Even though they are all investment instruments, each have distinct players and user experience. However, there are also two Indonesian unicorns, Tokopedia and Bukalapak which aggregated multiple investment instruments in their platform

First one is Stock Investing, chart below are overview of top 3 stock brokers based on their 2018 performance.

As we can see, dominating players in this space are investment brokers and conventional banks. Old guards in finance business which recently starting to build their digital footprints. Mandiri Sekuritas, subsidiaries of one of the nation biggest bank, dominated on two fronts : Amount and Transactions. The only startup operated in this area is Stockbit. They are backed by East Ventures and recently they ventures into mutual fund by acquiring other local startup, Bibit.

What surprise is most of brokerage app are still requiring to send paper document for registration. Archaic in this day and age. The only app that offer fully digital registration process is Indopremier’s IPOTGO hence they are gaining significant grounds this past year.

Next one is Mutual Funds or reksadana. Startups are more prevalent in this area compared to stock investing. Leading in this space is Bareksa which have been operated since 2013 and just recently acquired by OVO. Bareksa powered both Bukalapak and Tokopedia reksadana platform. Not a small feat to have both Indonesian unicorns integrated with their platform. Another prominent players in this space is Tanamduit which also powered Tokped’s reksadana platform. Tanamduit is backed by RND Capital and was injected 3 USD mio funding in late 2018. There are also new entrants which building popularity recently : Stockbit’s Bibit and Ajaib. Ajaib was Y Combinator alumnae and recently got funding from Softbank.

Investment experience in mutual funds are much better than stock. You can open account and transact in 10 minutes by downloading any of the app from players mentioned above. Mutual funds also have lower barrier to entry. Both Tokopedia and Bukalapak offer reksadana product starting from 10 thousand IDR compared to most stock investment app which required mandatory deposit ranging from 500k up to 10 mio. On top of that, Indonesian government charge 0% tax on mutual funds.

Last one is Gold-based investment app. According to Jakpat Survey, Gold is investment instruments of choice by Indonesian millenials. It it the easiest instrument to get into. it doesnt require finance and business understanding to invest in gold. You just have to mind the price difference. Gold is also shariah-compliant which is compelling for moslem-majority country like Indonesia.

Top incumbent in this space is Pegadaian, state-owned enterprise whose core business is pawning. With 5000 retail offline presence and 10 million users, Pegadaian in recent years shifting their business to gold-based finance product. Bukalapak and Tokopedia is also selling in this space. Tokopedia powered by Pegadaian while Bukalapak is partnering with Indogold. On startup side, there are Tamasia, E-mas and also Pluang.

Opportunities

In my opinion, Top 3 challenges in investment landscape: literacy, high cost to entry and complex UI / UX. Here are some ideas to overcome these and hopefully useful to drive investment inclusion.

Sekolah Pasar Modal Online

As discussed above, IDX Sekolah Pasar Modal (Capital Market School) is good avenue for would-be investor to understand investment 101. Registration fee is also automatically deposited to investor account. Hence after completing the course, participant can start buying stocks immediately. The challenge however is to make this highly scalable since right now its only available in-person.

E-learning Platform like RuangGuru can do wonder to push this to wider audience. People can participate from their smartphone and on their own pace. It also needs to integrate with online broker app, hence all the KYC and registration forms is embedded into the course material.

Spare Change Investing

The concept is made popular by US-based fintech, Acorns. The app help you invest by rounding up transactions and automatically invest that in various investment instruments. This significantly reduce cost to entry while also tricking yourself to subconsciously invest.

Tokopedia has similar feature where they prompt to round up purchase with micro-gold transactions as low as 1000 rupiah. Personally i think this is a great feature which could significantly change how people dip into investing. Since Tokopedia also offer mutual funds from 10 thousand IDR, this mechanism could grow into full-fledge investment platform. Hundred millions Tokped users could be nudged into investing without them realizing about it.

Beginner-friendly UI / UX

Take a look at these sample screenshots from two online stock app, IPOTGO and Stockbit :

Imagine if you are a beginner in investment or just curious, IPOTGO UI will be very intimidating because you suddenly shoved bunch of stock codes in a spreadsheet format. Stockbit have better design because at least you get info on what the ticker means in the same view. The problem is most stock apps are designed for expert traders hence there are almost no hand-holding for newbie investors to get into.

Mutual funds app has better beginner experience. Bibit app for example has investment portfolio recommendation based on your risk profile. This make the app more welcoming and drive register-to-purchase conversion higher.

Investing from Mobile Banking App

From all three mobile banking app that i use (Mandiri, Jenius and DBS), i cannot buy investment product from any of them. Is it such a crazy ideas that i want to invest from the same account that i use to receive my monthly salary ?. Closest to this is Jenius who can seamlessly transfer current account to fixed deposit but they didnt offer stock, mutual fund or gold product. Even Mandiri which is market leader in stock trading does not offer investment in their Mandiri Online app.

From m-banking apps, i can pay bills, top-up my phone balance and register for new account. But somehow to invest is still not possible using these.

Conclusion

Investment is the most un-inclusive financial service in Indonesia. Potential is huge but most app experience is still tailored to seasoned investors rather than newbie masses. With better economic growth, investment fintech might be the next growth market in the near future.