Last year, Indonesian ride-hailing decacorn Gojek started to see the fruits of its efforts to instil a strategy of efficiency into its business, which it had been pushed to do over the years due to its “underdog” position, according to the CEO of the company’s payments arm.
“ was a good year in terms of growth but it was also the year when the bets that we made earlier on about efficiency, about focusing on how to maximize every dollar, every engineer’s time, has paid off. That’s actually one of the benefits of being the less capitalized player in this market,” said GoPay CEO Aldi Haryopratomo at the Indonesia PE-VC Summit 2020 in Jakarta recently.
Since it was founded in 2010, Gojek has raised a total of just over $3 billion in capital in 12 rounds. While the figure would be seen as enormous by almost all other tech companies in the region, it pales in comparison to the amount raised by its arch-rival Grab, whose total funding amounts to over $9 billion in 29 rounds.
The financial backing it received has spurred Grab to aggressively embark on regional expansion early in 2013, both organically and inorganically through its acquisition of Uber’s Southeast Asian operations. Gojek, meanwhile, chose to largely focus on the Indonesian market and did not expand to a new market until late 2018.
According to Haryopratomo, Gojek’s mindful eye on efficiency comes, in part, from some of its investors, which include private equity firms like Northstar, KKR and Warburg Pincus, who push the company to run in a prudent manner.
“We don’t have one gigantic mega balance sheet that gives us unlimited support. We have more than 50 different shareholders, some that are blue-chip investors like private equity firms that grill both of us on a regular basis to make sure that we are efficient and that creates a sense of discipline that is different,” he said.
Gojek, like many other tech companies, is now, more than ever, expected to show a clear path to profitability as investors have started to increasingly scrutinize business models in evaluating tech companies following the failed IPO of loss-making US tech company WeWork and the drastic correction in its valuation from an estimated $47 billion to $8 billion.
For Gojek, proving a solid business model and path to profitability becomes doubly important given the fate of US counterparts Uber and Lyft, which have flopped since they debuted on Wall Street last year, as investors seem unconvinced that the loss-making companies will be able to turn a profit any time soon.
When asked a question on the matter of profitability for Gojek, Haryopratomo assured that, as the underdog with less capital, it is something “we have never not focused on.”
Gojek chief food officer Catherine Hindra Sutjahyo, who heads the firm’s food delivery arm GoFood, said that the demands from investors have helped place the company in good stead in its pursuit of profitability.
“This discipline from investors forces us to go to the next level every time, starting from transactions, moving on to the GTV [gross transaction value], and then on to the revenue. So we are on the right track, that’s what I can share. The progression has been moving as we planned,” she said.
Sutjahyo’s GoFood and Haryopratomo’s GoPay are known to be the two biggest drivers for Gojek in terms of revenue. Last year, GoFood generated $2 billion in annual transactions for Gojek, while GoPay contributed $6.3 billion. In 2019, GoFood grew by 2.5x, Sutjahyo said, while Haryopratomo declined to disclose figures on GoPay’s growth.
Although both businesses have each played an integral part in Gojek’s growth, Sutjahyo emphasized that much of their success has been brought about by an interplay between products.
“We are not separate products working in silo. So what we are able to do is provide services to the merchants that is a more holistic solution. I think that is really what differentiates who we are as a company,” she said.
Dubbed a super app, Gojek has over 20 services on its consumer app. To add to that, the company also has multiple services and products in two other separate apps, for its drivers and merchants. The services offered within the interconnected ecosystem has allowed Gojek to cross-sell various different products to its users, which becomes an efficient way of making money for the company.
“I believe that this key DNA of us being focused on the users as a whole and moving their entire friction will be beneficial not only for food payments and ride but for every use case that the user has. And so we have this ability to be efficient because we are working together as a group,” Haryopratomo said.