Gojek’s move to shut down all but two services from its separate lifestyle division and app, GoLife, is a “statement that the company is going to be more disciplined about things that don’t work or scale,” the decacorn’s co-CEO Andre Soelistyo told DealStreetAsia in an interaction.
Gojek spun off its lifestyle services as a separate app in 2017.
The Indonesian ride-hailing giant shut down GoDaily (delivery service) and GoLaundry on 31 December 2019, while GoFix (home appliance repair service), GoGlam (beautician booking service), and Service Marketplace were discontinued mid-January.
“This builds a mindset of learning from mistakes, and then building a much better product. If we don’t shut down things that aren’t scaling, then our limited technical resources are going to be split across too many different services. We’ve retained GoMassage (home spa booking) and GoClean (house cleaning service) as these are very scalable,” Soelistyo said.
He also added that the Indonesian ride-hailing giant was reviewing all its products and services on a monthly basis, and had adopted a “rigorous process to prioritize services that need to be retained and built upon”.
Gojek’s move to review some of its businesses is in line with global trends, with several of the unicorns being forced to change strategies and arrest cash burn following the WeWork debacle.
While acknowledging that fundraising had become tougher, Soelistyo said the conservative approach from both startups and investors was good for the ecosystem as it would level the playing field.
“Earlier, there were a lot of different asset classes that you can actually tap into like PE, hedge funds and even pre-IPO funds. With people being more risk-averse, the pool of capital is actually limited. A lot of companies should be at a stage where they can naturally generate internal capital to support growth, and the reason why it has not happened is that a lot of investors had the mindset of growth at all costs,” he said.
In the case of Gojek, its co-CEO said the company had been forced to maintain financial discipline as it was “always undercapitalized against its biggest competitor”.
According to him, being undercapitalized also forced Gojek to be more innovative over the last 4 years, so that its “30 cents could be competitive against $1”.
“So it’s actually a bit more of levelling the playing field now, where a company that has better product and execution will eventually win,” he added.
His comments come even as Gojek is set to wrap up its ongoing Series F fundraising round. The company, in the past, has maintained that it is on track to raise up to $2.5 billion.
Soelisty declined to comment on the market buzz that Gojek may opt for a second close (at around $2.5 billion), and keep the round open, in a bid to raise at least $3 billion or more for its Series F.
“A lot of the work we are doing (on the fundraise) is to progress the company to sustainability,” he said.
When asked if prices needed to be hiked for companies offering ride-hailing and food delivery to be profitable, Soelisty said that doing away with subsidies was key to being sustainable.
“Today’s prices are good enough. It is the level of subsidy – there are still a lot of incentives being offered on the consumer side. There is still a lot of improvements to be made to bring these services to market-clearing price,” he said while adding that companies were now in a position to use technology and data to drive efficiencies and reduce costs further.
“We are not just a just ride-hailing company. We have layers and layers of value-added services that can be monetized on a per user basis – things like payments financial services, advertising – these can help bring profitability to the system,” he said.
According to Gojek’s Co-CEO, the company’s expansion strategy outside Indonesia will revolve around offering the full platform experience of ride-hailing, food delivery and payments, rather than launching standalone services/verticals in new geographies.
“Vietnam is a perfect example. We’ve launched transport, food, logistics, and hopefully, we will be doing payments soon, as well as other things there. A lot of the efficiency comes from being able to offer the full-platform experience,” he added.
In Singapore, the company currently offers only car ride-hailing services. Soelistyo said the city-state is different from other geographies as it lacked a motorcycle-based supply base.
But Gojek may launch other food-related services, apart from food delivery, in the city-state.
“We’ve kind of launched payments, but in a partnership model with DBS and other payment providers, as building a prepaid wallet is probably not necessary here,” he added.
Without divulging details, Soelistyo said the company planned to expand its cloud kitchens business to other markets in SEA.
“The great thing about food is that everyone likes to eat – the growth of the food delivery industry is rapid. I think cloud kitchens are a very big solution to some of those opportunities. I think it’s a very interesting business model,” he added.