Dan Morrell: I’m Dan Morrell, host of Skydeck. Welcome to the second episode of our Skydeck mini-series “Out of the Valley.” Today’s episode starts in Jakarta, Indonesia, in the late 2000s.

The city looked nothing like Silicon Valley in those days. There were very few VC-backed startups and not much of an entrepreneurial ecosystem. It was what author and venture capitalist Alex Lazarow would define as a “frontier market”—a place where entrepreneurs face significant constraints on funding, infrastructure, and talent. A place where the Silicon Valley model of moving fast and breaking things—an early Mark Zuckerberg mantra—just doesn’t work. But that’s not necessarily a bad thing. Remember what Alex said in episode one about how these challenges shape frontier startups:

Alex Lazarow: As a result, entrepreneurs build their companies differently. It's this notion of building sustainability and resilience into the business model from day one.

Morrell: If you haven’t listened to that episode yet, go back and check it out, because it will give you a really good understanding of the environment Aldi Haryopratomo (MBA 2011) rode his motorbike into in the late 2000s.

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[Sound of motor bike]

Aldi Haryopratomo: Hi, my name is Aldi. I am the CEO of Gopay, and also the founder of Ruma, or now called Mapan.

Aldi Haryopratomo (MBA 2011)

Aldi Haryopratomo (MBA 2011)

Morrell: Aldi had the idea for Ruma in 2008 when he was working in Southeast Asia for a young Silicon Valley startup called Kiva, which is a microfinance lender.

Haryopratomo: I was on my motorbike traveling across Vietnam, Indonesia, and Cambodia, and I was giving out loans and I realized that the loans that were being given to these groups was helpful, but the communities needed a lot more than loans. The loans were just the beginning. They needed the ability to just buy things that weren't available.

Simple things like pots could cost twice what they would in another place. They didn't have the ability to make payments for utilities. They didn't have the chance to build their credit history other than the loan that they were being provided. So, it felt as if you needed to build infrastructure to actually help the village move up in their economic livelihoods and loans weren’t it.

Morrell: That insight led him to found Ruma in the villages of his native Indonesia. The first iteration of the company was a network of community leaders who sold “top-up”—or these additional cell phone minutes. The top-up industry was not unusual, but the network approach was. Ruma would train the community leaders, equip them with all the tech that they needed, and supply them with cheaper minutes that it had bought at a bulk discount. Because the buyers would purchase these minutes on credit, it made sense for their neighbors to sell to them, because they could more easily assess the credit worthiness of their customers.

A few years later, Aldi would stand on the stage in Burden Hall at HBS and present his business plan at the Social Enterprise Conference “Pitch for Change” competition.

Haryopratomo: Actually, that's why I went to business school—to raise money because I was having problems raising money. So, I joined to enter a business plan competition so that I could then win some money that I could use to fund the company.

Morrell: Aldi and his team won that competition and $25,000 dollars for the company. It was also their introduction to the Omidyar Network, their first big investor.

Haryopratomo: My dad was a civil servant. He spent his entire life building roads for the government. When I was in junior high, he used to take me to the villages on his four by four, and tell me that whatever you do in life, you should give access to those who need it the most. And in his day it was building roads. And in my day, it was giving loans and access to payments. Probably in my children's day, [it] will be something different.

I never really sought out to be an entrepreneur, to be honest. I just sought out to solve an access problem that many, many people had in Indonesia and ended up realizing that entrepreneurship was the best way to solve it.

Morrell: With this goal and the investments from Omidyar and others, Ruma pivoted and soon rebranded as Mapan, a word that implies something is “financially self-sufficient.”

Haryopratomo: What Mapan does is it solves a really clear cash flow problem for a lower-income family. So the problem that they face is this: If you want to buy a refrigerator, you want to buy a cooking stove, you want to buy a sofa... most of these people cannot afford to pay immediately in cash. And yet if they pay on credit, the interest that they pay is really high. The average we saw was about… You have to pay double the price in six months.

Morrell: It all started with pots and pans.

Haryopratomo: We were trying to find something new because the old business model wasn't really working out and one of the ladies, her name was Tayaya said, “Why don't you help us sell pots and pans?” Now from a company that used to sell top-up, I was super confused as to why we should be selling pots and pans. And she said, well, actually every time we have Eid, we have to take turns cooking because we can't afford to buy a pot to cook the curry.

Morrell: Purchased on a payment plan, pots in these Indonesian villages cost $6 a month for 10 months or $60. Aldi realized he could provide pots for $25 each—and he could do it without interest charges. He would formalize something that was already popular in Indonesian culture, the “arisan.” In low-income communities, arisans are both a social gathering and a way to pool financial resources.

Haryopratomo: I basically became a pot salesman.

[Sound of pots and pans]

Like, “Hey ladies, we have this new pot—it uses Teflon.” And this is a place where people never use Teflon. So when I wiped the Teflon clean, it was magic for them. And I had a lot of claps. It was pretty amazing, actually, that feeling.

At the end of it, they asked, how do I pay for it? And I said, well, you gather in groups of five and this pot costs you $25. So if every person pays in $5 this month, then at the end of the day, when you pull out that name, the person's name is the name of the person that will get the pot. So, it was a way to kind of give credit, but instead of having to pay interest, they were basically taking turns to save for the item that they want. And this idea was the one that eventually really took off.

Morrell: And just like Ruma, Mapan started by building a network of community leaders to establish and maintain these arisans, and share in the profit of any sales. It was another way for entrepreneurs in Indonesia’s villages to build wealth and savings.

It had been a years-long journey to building a sustainable, cash-flow-positive company—and Aldi had spent a lot of it on a motorbike, selling pots and pans.

Haryopratomo: It wasn't about the glamour of being in a startup because it wasn't glamorous to be in a startup at the time.

Morrell: Very few people in his home country understood why Aldi decided to become an entrepreneur.

Haryopratomo: I would describe people's attitude for entrepreneurship in Indonesia in 2010 as mostly unaware and confused. What are you doing? Why are you starting a company? It was very, very unusual for somebody who had potential to start a company.

Morrell: That attitude also made it difficult to attract talent. But there were positives to being a part of a very small ecosystem.

Haryopratomo: One of the benefits of working in a market like Indonesia, back in 2008 and 2010 was that there were so many problems that were really foundational. I mean, it really makes you wonder why so much talent is being used to solve first-world problems when you can create generational impact or wealth by solving a much lighter problem, as simple as, like, somebody cannot pay for their kid's education or somebody cannot save for a rainy day, or somebody can not build a credit history. It's something that is taken for granted.

Morrell: Alex Lazarow says this focus on deep impact differentiates frontier startups from their California counterparts.

Lazarow: In Silicon Valley, less than 20% of unicorns are in industries like financial services, health care, education or any of these kinds of delivery of impact services. In many emerging ecosystems, the numbers are flipped. In sub-Saharan Africa, it's over 60%. It's also how they think about offering the product and service, [and] to who, and that impact is really built into the fabric and the motivation for starting the business.

Outside of the Valley, the best entrepreneurs are not looking for an established industry and using technology to take it over and disrupt the inefficient incumbents. Instead, they are often creators. They are building an entirely new market themselves. They're doing three simultaneous things. One is they’re offering a product or service that was previously not available in the economy, or at least not the formal one.

Two is they are often offering a product or service for the mass market, not just the top of the pyramid, and three they’re often the shoulders of giants upon which others build.

Morrell: And other builders have arrived. Indonesia is now the second largest venture capital market in Southeast Asia, and more than one-third of Indonesians from age 15 to 35 say they want to be entrepreneurs.

Haryopratomo: My God, it's a bit too much now. I feel like everybody wants to be a CEO, like it’s a sexy thing. Everybody is like a CO-something and it’s really irksome actually. And honestly, we are one of the causes for that.

Morrell: By “we” Aldi means Gojek. Gojek was founded by fellow HBS alum Nadeem Makarim in 2010. The ride-hailing service took a very Silicon Valley approach to growth. It became the country’s first unicorn and is now Indonesia’s super app—connecting users with everything from transportation, to food delivery, financial services and even massage services—with a valuation near $10 billion.

In 2017, Gojek acquired Mapan—something Aldi never imagined possible when he launched the company. And today Aldi is CEO of Gopay, which is Gojek’s all-encompassing fintech solution, offers everything from a Paypal-like digital wallet, a Square-like digital online payment platform, and even consumer lending services.

At Gopay, Aldi has all the resources he didn’t have in the early days of Mapan, but his experience in a frontier market has revealed to him the pitfalls of the Silicon Valley scale-at-all-costs model.

Haryopratomo: There are a lot of fundamental issues that can be solved without an inordinate amount of VC funding. And sometimes actually the VC funding will make you sloppy and actually end up building a business that is not as robust because you were building the ship as you were sailing it.

Morrell: We’ll explore that idea in the next episode: What can Silicon Valley learn from frontier markets—in Indonesia, in the United Arab Emirates, in Sierra Leone? And what does the story of Detroit tell us about what will happen to the Valley if it ignores those lessons?

This episode of Skydeck was co-produced with contributor April White, with additional production by PRX Productions. It was edited by Craig McDonald. It is available at iTunes or wherever you get your favorite podcasts. For more information or to find archived episodes, visit alumni.hbs.edu/skydeck.

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