Gojek founder Nadiem Makarim on Monday announced he was stepping down from his CEO role and joining Indonesia president Joko Widodo’s cabinet. Here is a breakdown of the significance of the move.
Why is this important?
Gojek has been a trailblazer not just in Indonesia, where it is the largest unicorn, but also across Southeast Asia. Makarim is not the company’s first co-founder to depart — Michelangelo Moran left the company in 2016 — but he has been the company’s public face.
This is further evident from how Gojek’s rivalry with Grab is seen by many as a personal feud between Makarim and Anthony Tan, who co-founded the Singapore-headquartered unicorn. Their friends-turned-rivals (they studied together at Harvard Business School) story is interesting but perhaps, an oversimplification of two billion-dollar businesses trying to outdo each other. However, it goes on to show how strongly Makarim is linked to brand Gojek.
What stake does Makarim own in Gojek?
While no official figures are available, it is understood that Makarim holds around 2-3 per cent in the company. He will retain his undisclosed stake in Gojek as a “passive shareholder”, a company spokesperson told Reuters.
Was his move unexpected?
Yes and no. There was a buzz in the Indonesia market over the last few months about Makarim joining President Widodo’s government but the confirmation did take quite a few, including employees of the startup, by surprise.
However, those who have watched Makarim over the years say it was always a question of when, not if, he will make the switch to politics.
“The announcement did not come as a surprise. Nadiem has always been looking at pursuing a higher calling,” said an executive at an Indonesian unicorn at the condition of anonymity.
So, who runs the show now?
Gojek on Tuesday offered a clearer picture of the roles and responsibilities of its new co-CEOs. Soelistyo will focus on corporate functions and capital allocation, international expansion, payments and financial services, while Aluwi will focus on product development, marketing, organisational development and the transportation and food delivery businesses.
Industry watchers point to the fact that Soelistyo, a former private equity executive, was running the show at Gojek even before Makarim’s departure. In this, Gojek is no different from rival Grab, where president Ming Maa is seen as the operational chief.
Some argue that it is imperative that founders rope in professional managers when their startups reach a critical size and scale. Among his many missteps, Uber founder and former CEO Travis Kalanick’s inability to hire professionals – including a CFO for three years – was definitely one that didn’t sit well with his investors.
In Southeast Asia, e-commerce and gaming major Sea Ltd had roped in former General Atlantic executive Nick Nash to run its operations and pave the way for its 2018 IPO on the New York Stock Exchange.
The timing of the move
Makarim’s departure comes at a time when Gojek is battling increased competition at home and overseas.
In Indonesia, the unicorn is fighting for a share of the local ride-hailing market while in the more lucrative payments space, Grab has been rumoured to be in talks to merge OVO, a digital payments firm in which it owns a stake, with Ant Financial-backed Dana, which could pose a bigger threat to Gojek’s Go-Pay.
The Indonesian firm has also experienced hiccups in its regional expansion as it has expanded to Singapore, Vietnam and Thailand. An expansion to Malaysia is on the cards, while in the Philippines, it is yet to bag a ride-hailing licence. Gojek’s acquisition of Philippine payments startup Coins.ph early this year helped it get a foot in the door and there have been rumours of a tie-up with local conglomerate Ayala Corp to meet the country’s foreign ownership laws.
How could this affect Gojek’s fundraising plans?
The startup on Tuesday issued a statement, demonstrating support from some of its prominent investors – Tencent, Google, Warburg Pincus and KKR – for its new leadership.
Speaking to DealStreetAsia separately, a prominent Gojek investor, who preferred to remain anonymous, said, “New investors were all aware and totally comfortable with it. This was in the works for a while.”
“Nadiem, Andre and Kevin are the triumvirates that have led Gojek since its inception. It’s natural and reassuring that Andre and Kevin take over the torch to lead the company as co-CEOs,” said another early investor.
That said, any leadership transition at a large business is bound to cause hiccups along the way. We don’t expect Gojek’s fundraising to be stymied but there could be a push back in terms of timelines.
At the same time, the current WeWork fiasco is likely to slow down any significant capital raising exercise, especially one involving SoftBank, at this point. This could also affect the ongoing fundraising efforts of rival Grab.
How is the startup, investor and driver community reacting to the news?
A startup is not the same without its CEO: “Technology startups around the world are often dependent on their founder and CEO to drive their vision, culture and business operations. Without their [founder] CEOs, I suppose they would be totally different companies since the CEO is the driving force that creates the culture and spirit of the company,” said a top executive at a Southeast Asian unicorn, on the condition of anonymity.
Motorcycle-taxi driver union expresses displeasure: The Two-Wheel Action Movement (Garda), a union that claims to represent ojek, or motorcycle taxi, drivers across the country, has threatened to stage protests if Makarim becomes a minister.
“There are two reasons we reject Nadiem as a minister. Firstly, although he has stepped down from his position at Gojek, he remains the business owner of the company. He still enjoys Gojek’s income/revenue,” said Garda leader Igun Wicaksono.
“Secondly, Nadiem is now in the top position because of the company’s driver-partners. The driver-partners are yet to achieve a prosperous life because of the paltry income they earn through bonuses or fees that are often cut,” he added.
Good for the ecosystem: “It’s not easy for VCs and startups to deal with government officials who have lots of vested interests to protect traditional industries and pressure to protect local interests/prioritise local industries. Jokowi needs more such people in the government who can understand the tech ecosystem in order to really move things forward,” said Donald Wihardja, a partner at venture capital firm Convergence Ventures.
“[Makarim] has been an inspiration for the nation and the startup world and him joining the cabinet, it’s a big positive for us… Bringing somebody from the business or a professional to the government is a great move. We are really looking forward to the change,” said RedDoorz Indonesia head Mohit Gandas.