How to Build Unicorn Startups: Lessons from Tokopedia and Traveloka
5 November 2019
Back in 2010, East Ventures met William Tanuwijaya, the co-founder of Tokopedia. The VC immediately believed in his vision, and Tokopedia became East Ventures’ first portfolio.
Two years later, Ferry Unardi, a Harvard University dropout, pitched a convincing idea of a travel startup called Traveloka. The founders’ strong will and resolve convinced East Ventures to become its first investors. Fast forward to today, both Tokopedia and Traveloka have attained the unicorn status.
At East Ventures’ 10th Anniversary event, both founders shared the humble beginning of their entrepreneurial journey.
Worked and lived in a leaking house
Willson Cuaca surprised William by showing an old deck of Tokopedia. The deck revealed that, in just one month after getting investment from East Ventures, Tokopedia spent US$1,200 on ads. William then shared how most of the processes in Tokopedia, back in the early days, many of the processes are still done manually, with bank transfer verification being one of them.
“I still remember that every weekend, William told me that he couldn’t go out,” Willson said.
The old deck has shown that Tokopedia was already focusing on its users when it was established, and explained on how to serve the customers right and how to keep them longer on the site. One of the reasons why William has set such metrics is because of the heated competition with other e-commerce.
“At that time, we only raised US$250,000, but we need to compete with eBay (Plasa.com) and Naspers (TokoBagus). We can’t fight dollar by dollar. That’s how we develop the underdog spirit,” he said.
William also recalled how he lived in a house with a leaking roof, with an annual rent of US$1,200, even after Tokopedia raised US$100 million from venture capitals. After his wedding, William and his wife continued to stay in the leaked house for a couple of years. “But that’s true love, right?” He said.
However, hard work and struggle finally paid off. Eight months after launching its website, Tokopedia only has 27,000 users, 3,000 merchants, and 50,000 products. Right now, it already has 90 million users, 6.4 million merchants, and more than 200 million products.
According to William, the key to Tokopedia’s success is the quality of its people. “Build the right team, the right culture, and the right mission. Since the day one until now, Tokopedia has been driven by its people.”
Minimum salary for founders
Willson Cuaca also surprised Ferry Unardi by showing an old deck of Traveloka from 2012. Back then, Ferry only asked IDR1.5 million (around US$100) as his monthly salary in the early days of Traveloka (it is the regional minimum wage in Jakarta).
According to Ferry, he did it to delay gratification and set the correct culture for the early employees. On the other hand, he also believed that he could still live okay with that salary at the time. “It all starts with the founders. Every single thing that you do will be imitated and amplified by others,” he said.
The old deck actually contained a long term plan that Traveloka would do. However, Ferry admitted that he had to change the plan because his early assumptions about the business were wrong. According to him, he unintentionally made assumptions based on conditions in the US, where Traveloka’s founders worked and lived for several years.
“We found out what we had to do when we actually execute. We observed everything from customers, competitors, and partners. We also continuously learned from all of the feedbacks and signals,” he said.
When talking about the change of its business model from metasearch to Online Travel Agent (OTA), Ferry explained that he initially thought that metasearch will be more efficient, because he wouldn’t have to handle transactions and customer service. However, it turns out that the infrastructure in Indonesia is still very early at that time.
“In a couple of months, we realized that we have to handle pretty much everything. We did benchmarks on competitors, and they were not doing such a good job anyway,” Ferry explained.
Biggest challenge as unicorn startups
Tokopedia just celebrated its 10th anniversary in August this year. William said that the journey was a privilege for him. However, at the same time, he felt that the journey was still very short.
“We have contributed 1% to the Indonesian economy. Whereas, Taobao has contributed around 6% to China’s economy. So, even though Tokopedia is 10 years old, this is still the beginning for us,” William said.
William also emphasized the importance of not being complacent after a startup becomes so big or even becomes a unicorn. In the early days, the biggest challenge for a startup was how to convince potential investors, venture capitals, talents, and business partners. Right now, the biggest challenge for Tokopedia is how to align the company’s vision among talents and how the company can continue to evolve.
History has shown how big technology companies like Yahoo, Blackberry Messenger, and Friendster, which once had around 80% market share, can lose everything in just a short time.
“The big challenge for us right now is how we continuously remain the underdog. If you look at Amazon today, it is different from Amazon three years ago. If you look at Alibaba today, it is different from Alibaba three years ago,” William explained.
William realized that several tech companies are pretty much the same as 3 years ago. That’s why he didn’t want Tokopedia to fall into a similar trap. He wanted the company to continue to feel hungry and keep fighting. “It sounds simple, but when you have the capital and resources, sometimes you no longer have that fighting spirit.”
Ferry also suggested that all founders in the event to be ambitious with their goals but keeping a pragmatic mindset on how to get there. “Dream as if you will live forever, but execute like you gonna die tomorrow,” he said.
At the end of the session, East Ventures presented William and Ferry with a newborn unicorn statue. It is a reflection of how East Ventures had a leap of faith in their early days and believed that there was “something” (might or might not be a horn) in Tokopedia and Traveloka.