Episode Eight

Worker Financial Health & EWA:

Vidit Agrawal of GajiGesa

2 March 2021


ALAN  0:12  
Welcome back to Indo Tekno podcast, Season Two, Episode Eight. I'm Alan Hellawell, founder of Gizmo Advisors and Venture Partner at Alpha JWC Ventures. Selamat datang kembali. Kami harap Anda menikmati podcast ini. Now the horrific impact of the Covid-19 pandemic has featured prominently into our coverage here at the Indo Tekno podcast over the past year. Lives have been irrevocably altered as a result of its rampage throughout Indonesia's various communities. Those that have been lucky enough to keep their jobs still encounter a range of financial and other pressures, that we will hopefully see only once in our lifetime. One area of FinTech that as a result of these acute pressures has assumed particularly urgent focus involves Earned Wage Access (EWA), being the ability of an employee to access his or her salary between monthly paydays in order to cover urgent expenses. The founding team of GajiGesa is focused on just that; enabling employers to cover payroll between cycles in order to improve their employees' short term financial health. We are very pleased to invite on to the Indo Tekno podcast GajiGesa Cofounder, Vidit Agrawal, to discuss the company's focus on addressing these issues. Great to have you joined Vidit.

Thanks, Alan, for inviting me. I'm a big fan of your podcast.

ALAN  1:33  
Vidit, you're quite a veteran of the Southeast Asian tech scene. Can you share with us your background?

Alan, I've been around for a while. For my last role. I was leading partnerships for Stripe for Asia Pacific. I did that for about two years. Before that I was the COO of Carro, which is a used car marketplace, and is pretty big in Southeast Asia. And before that, I spent multiple years at Uber. I was the first employee of Uber. Later I was leading partnerships. And I started my career in investment banking on the "dark side".

ALAN  2:03  
Thanks for that, Vidit. Okay, so connect this background to how you founded GajiGesa.

Actually, GajiGesa was my cofounder and my wife Martyna's idea. Martyna's last role was product director at Standard Chartered Ventures. But before that, she spent five years at LenddoEFL, where she spent a lot of time in factories in Indonesia, Cambodia and the Philippines. And she got firsthand experience of the challenges people face in these factories. Access to capital was an ongoing issue which a lot of the unbanked customers faced as a common challenge. And that's when, last year, Martyna and I were discussing what we wanted to do and what problem we wanted to solve on the ground. Access to responsible capital was something we really wanted to work on. And that's how GajiGesa was born.

ALAN  2:53  
Okay, I understand the connectivity there. Now, GajiGesa literally means "rush salary" in Bahasa Indonesia. Can you share with us the basics of what you call "earned wage access", and how GajiGesa offers this service within Indonesia Vidit?

Sure, Alan. So, when it comes to earned wage access, we partner with the employers in Indonesia who want to create value for their employees, and help employees withdraw their earned wage access, which is the wage they've already worked for, to withdraw before their salary. If you think about how Asia has worked, salaries have been paid on a monthly basis. So you work for 30 days, and only then do you get paid. And now we are working with employers to allow their employees to get access to capital whenever required. And that's the change of model.

ALAN  3:42  
Gotcha. Now, can you paint a picture of how blue collar employees currently deal with cash crunches in Indonesia?

So before we launched GajiGesa, if a blue collar employee needed access to capital, either he would: a) go to a loan shark that's down the street and often he would end up paying one to 2% per day (think about it, that's 30% to 60% a month), or 2) they would go to traditional lenders who would charge them 15% to 18% a month. So often this became a very vicious cycle, a very predatory experience in which the blue collar workers got stuck. And they have been stuck for a long time. So that's the problem we are trying to solve.

ALAN  4:22  
But Vidit, doesn't offering much easier and more timely access to wages trigger myopic behaviors in employees that use EWA?

Yes, we get this question quite often. Now when you think about it, there's an effect called the "Billionaire Effect". This is a human behavior, which means that whenever you get a lump sum amount of money, whenever you get a huge amount of money, there is a tendency to go and spend it. And that's what happens with blue collar workers in Indonesia. Once they get paid at the end of the month, they would go for buffets, they would go shopping, and there is a huge expense that happens on that particular day or the next two days of salary. Whereas, If you have access to your capital throughout the month, whenever you need it, that urge to go and spend when you get your salary at the end of the month reduces. So in a way, we're creating a good habit where the employee does not end up spending a lot when he gets a salary at the end of the month, because he can get it whenever in need.

ALAN  5:19  
Gotcha. Now, there's two types of EWA. There's Early Wage Access, and then there's our Earned Wage Access. Vidit, can you discuss the differences between the two?

Yeah Alan, the model is actually quite different. When you talk about early age access, it's probably similar to a loan, where an employee can withdraw either the full salary at the start of the month or multiples of salary at the start of the month, or the middle of the month. Whereas the earned wage access is more of a flexible payroll solution where an employee can withdraw whatever they have earned up till that date. Think of the cycles of payroll which used to be 30 days, and now they've become on a daily basis. So it's a very different product. You partner with an employer and the employer provides this benefit for all their employees.

ALAN  6:09  
Crystal clear. Now, who are the global leaders in EWA, and what scale have they achieved such that we have such strong confidence to grow GajiGesa?

Earned wage access has been a very successful model globally, especially if you see the US. There is "Even". There is "PayActiv". Both are unicorns and cover huge populations, especially the blue collar population of the US. There is WageStream in Europe. But there are also interesting companies like "minu" in Mexico, or Advance in Colombia, that are solving the problems like we are solving and are much closer to the challenges of Indonesians in their own market. So this model has been very successful globally, and is creating value for millions of people across the world. 

ALAN  6:55  
Understood. Now what are the measurable benefits for a company implementing EWA?

So when you think about earned wage access, there are a few value creations that happen. And the first one is that, if the employees have access to their wages whenever required, and that flexibility is provided by the employer, they tend to stay with the company a lot longer. So the attrition rates are low. And the data supports this. We've seen this across the world; companies in the US, Europe, companies across various verticals, different sizes. They may be blue collar, white collar, or semi-blue collar. Employees benefit, and therefore they tend to stay with the company a lot longer. Secondly, what used to happen in the old days was that an employee would go to a loan shark and would not be able to pay, and then the loan shark would show up in the company, in the factory, and would create a lot of nuisance for the employer. With GajiGesa, the whole process is digitalized, and automated and in the control of the employer. And lastly, there were a lot of cases where the employer would help the employee out with on wage access informally. But that also meant that there was a lot of process that was created for the HR, the payroll and the finance teams. And today with GajiGesa, everything's automated. There's no additional work and it's a seamless experience for the teams. So there is value-add at multiple levels for the employer with GajiGesa.

ALAN  8:17  
Gotcha. And what is the current scale of GajiGesa in terms of enterprise customers and number of active employees?

Alan, we went live in October last year, and we're growing at a very fast pace. We are live with more than 30 companies at the moment, and working with 10's of 1,000's of employees. And we're very excited about growth in Indonesia. We've just seen a great start.

ALAN  8:42  
Wow, very impressive set of achievements over such a short period of time Vidit. Extending this question into the future: what are your goals for the end of 2021?

Yeah, so as we think about a growth last year, 2020 was all about product validation. We wanted to make sure that we launched earned wage access in Indonesia. But at the same time, we respect the local nuances. The product needs to have cultural understanding. And we've been able to achieve that. Now, 2021 is an exciting year and I divid it into two parts. One, it's a year all about growth. We would like to partner with as many employers as we can, and provide the value of GajiGesa to their employees, but at the same time, improve the GajiGesa experience and add more features like financial education for the blue collar workers, and continue to build an ecosystem that is going to help the employers. So a lot of our 2021 goals are focused on great product experience, as well as growth this year.

ALAN  9:41  
Great to hear. Now Vidit, the service was launched well into the COVID pandemic. How will use of GajiGesa change, assuming that the pandemic dies down at some point in the future?

Alan, we call ourselves "COVID baby" because we launched in the middle of a pandemic. And in a way that has helped us because there were a lot of employers who were struggling. There were not many benefits, and retention was somewhat a problem. So when we came in and when we partnered with the employees and their employers, we saw great uptake of the product, and a lot of value creation on the ground. So we've had a good start. As long as people are getting salaries in Indonesia, and employers care about their employees, and want to create value for them, we feel that GajiGesa has the right fit, and a continuous market. There are certain employers we partner with in Indonesia today, who have great financial standing, and they love the product. So we feel that we've had a good start in the COVID world. But even after COVID, GajiGesa will continue to grow at a very fast pace. 

ALAN  10:43  
Vidit, can you discuss the role of collaboration with other HR and payroll solutions in the success of GajiGesa? Would you say that integration is the trickiest part of the EWA model?

Alan, our whole business is all about collaboration. Our first step of collaboration is with the employer, where we partner with the employer, understand their needs, understand the challenges their employees face, and customize a product for them. So it's all about collaboration and partnership. And as we grow the business, it's also very important for us to collaborate with HR and payroll providers in the market, because then it is a very seamless, low touch experience for the HR and payroll teams of the company. So those partners remain strategic. We have partnered with quite a few who have been great partners and collaborators as we grow in Indonesia. But that is going to be very important for GajiGesa's growth this year.

ALAN  11:34  
What is the biggest challenge to the business at this point Vidit?

There are challenges all around as a startup. We face quite a few every week. But one of the interesting ones is that we were born in the middle of the COVID environment, we call ourselves a "COVID Baby"; and building a team, hiring a team, building a culture; a lot of it has happened on Zoom. So how do we continue to build a team, grow a team together? Now my cofounder Martyna and I spent a lot of time in Indonesia in the last few months. But at the same time, a lot of the operation runs online. And how do we build that culture and grow our team is our biggest challenge. And I would pick this as even a bigger challenge than external challenges we face on a daily basis.

ALAN  12:17  
Gotcha. Now, I assume a lot of your growth will eventually come from SMEs, and even "mom-and-pops". What are the most common barriers to adoption with this customer profile?

Actually, Alan, as we are growing in Indonesia, we're seeing growth coming from all sizes of businesses. We're working with enterprise segments. We're working with textile factories, huge factories. We're working with production companies. At the same time, we're working with retail stores, where the employees are benefiting from GajiGesa. We're working with restaurant chains today. We're working with technology companies, which have white collar engineers who are often higher paid. So we're working with companies across the board, of all scales. At the same time, very different salary brackets, and with each company we work with, we can see that we have to be really agnostic with our partners as we grow because whoever wants to pay in Indonesia and want to create value for their employees, GajiGesa is the right solution.

ALAN  13:14  
Interesting; and what other ancillary services can we consider going forward Vidit?

That's a good question, and 2021 is going to be all about that. As we think about our product, one of the things which we are realizing, especially for blue collar workers, is financial education. There is an intent from the employer and the factory owners, of building basic financial education for their employees, so that they can plan their rent, they can plan their child's education. They're able to save a bit. And using GajiGesa as a platform to communicate that education, very basic modules from which employees can really learn and understand their spending habits is going to be our "Step One". Also, as we think about our growth, adding other features that are going to increase engagement on the platform (it could be either daily usage products like pulsa or any other product around continuing to build on education) would be our focus this year.

ALAN  14:08  
Now a more personal question, Vidit: what has it been like to build the company from scratch with your wife?

That's a great one, Alan. It's been challenging. I think as a spouse, you have to create the right amount of balance where you see your spouse as a spouse at the right time as well as as your cofounder, but it's been a very good experience because I think Martyna and I have very complementary skill sets. She runs the product and engineering function. I run the commercial side of the business, and we have very clearly defined roles as well as ownership structures. So it's been a great experience as well as a trust factor which has helped us a lot to grow.

ALAN  14:45  
I'm looking forward to reading the tell-all book that you two write post-IPO. 

Very kind, Alan. 

ALAN  14:52  
Really interesting to hear the "in between paycheck" cash flow problems that Indonesia's lower and middle income workers face currently, and what GajiGesa is doing to address these challenges. Thanks so much for joining today's episode, Vidit.

Thanks for having me.

ALAN  15:07  
We hope our listeners have enjoyed today's episode. As always, please consider sharing any feedback that you have about the Indo Tekno Podcast with us. Terima kasih telah mendengarkan.  Sampai jumpa lagi!