Leontinus Alpha Edison of Tokopedia
15 September 2020
Welcome everyone to the 15th episode of Indo Tekno, and the very first instalment of "Hari-Hari Awal", which in Bahasa Indonesia means the "early days." Through this new series, we seek to piece together the origin stories of some of Indonesia's earliest and most iconic tech companies. Although the Indonesian tech and ecommerce scene is by most measurements quite young, we can already identify the first generation of tech unicorns in Indonesia, and what will definitely be a proud tradition of entrepreneurialism for years to come. Our very first guest in this series is Leontinus Alpha Edison, Cofounder of leading Indonesian ecommerce platform Tokopedia. It's an absolute pleasure to have you join us today. Leon.
Thank you for having me, Alan.
Well, without further ado, let's dive into it. Leon, to begin with, exactly when, where and in what circumstances was the concept of Tokopedia created?
Well, I have known William since the end of 2003. We worked in the same software companies. So at that time, we always had spare time, so we can share ideas with each other. What we found is that both of us came from small cities, not Jakarta or other big cities. In small cities, they are less opportunities. For example, for business owners, there is not much opportunity. If we look at our parents' generation, most of them start mom and pop stores. But why are some of them economically better than the rest of us? Because they have the opportunity to go to the big cities so they can meet with principals, and they can meet with nationwide distributors. Then they become distributors in our own town. And if we look at it from a buyer's perspective, it's kind of the same: less opportunities. There was not much product available in our hometown. Even if it is available, the price is very high. So that's why we see that the opportunity gap is always there. So that's why, when we start Tokopedia, we want to create a platform where anyone can start and discover anything. "Start" means starting a business. "Discover" means as a customer, I can discover anything. So that's how Tokopedia started. And that's how we think about our vision. And our mission, of course, is to democratize commerce through technology. Again, based on our personal experience, we want everyone in Indonesia to have the same opportunity as entrepreneurs or as customers.
What do you recall being the state of ecommerce back then?
It is hard to say if it exists or not. But for me and for William, what we saw back then, is a very different form of what we have today, right? So previously, the story of a lot of people was that they didn't have an opportunity. Previously, we play a lot in online forums. So in online forums, what we found out is that there are dedicated sections for buying and selling. And then we were amazed. We found out that actually, there are a lot of people without many resources. They are not based in traffic hotspots in shopping malls, or in a place where there are a lot of crowds, but they can still survive because they sell something online through an online platform. So it was there, but it was just scattered, distributed across a lot of forums, sometimes a general forum, sometimes a niche, a specific forum. At that time, not many transactions happen in the famous ecommerce platforms. A lot of platforms only offer a reference. When you know the pricing when you know the product information online, then you will go offline to buy. So I think the answer is that it was just scattered and distributed across a lot of websites.
So it sounds as though Tokopedia was really the first to introduce a real mission-built ecommerce platform. As you say, ecommerce was quite fragmented. It was being done through bulletin boards and I assume, messenger applications, but Tokopedia was really the first to aggregate ecommerce as a single mission. Is that correct?
There were several ecommerce websites back then. There are also a lot of niche and general forums. But Tokopedia was the first one to really introduce a marketplace where the website owner is not the one who sells, but we are managing the platform. We're creating a super ecosystem. And then everybody all over Indonesia can become our merchants. They are the ones who sell, they're the ones who own the product. So we are the first platform that offers this kind of business model back then in Indonesia.
Gotcha. And so that was the state of ecommerce in Indonesia back then. Maybe just for the benefit of our foreign listeners, what were names like Alibaba, Amazon and eBay offering back then? And were there any features and functions that you guys were able to bring into Indonesia from those platforms?
Actually back then they are already famous companies and inspiring companies. We learn a lot from these tech companies outside of Indonesia. William always likes to say that sometimes we have benefits like "looking at a crystal ball", so we can learn from the best of the best. We are inspired a lot by Alibaba, by their stories, and by their journey. We are also inspired a lot by Amazon and Jeff Bezos. A lot of his statements and his stories are very inspiring. And they were there. It is just back then, cross border is still not easy to do. Personally, we have some not-so-good experience buying some things cross border from outside of Indonesia. And also most of them still don't really look at Indonesia and Southeast Asia in general back then.
And so Leon, what do you remember of the very first year of Tokopedia's existence? What can you share with us?
Well, we were facing a lot of problems. And some of the problems involved a "chicken-and-egg" phenomenon. Like, what should we do first? Should we onboard merchants? If we onboard merchants first without buyers, probably they will not want to join our platform. And then another thing is that we got some of the feedback saying that we should offer an easy payment platform. Another thing is: how should we connect with banks? When we were small, banks probably didn't want to look at us. So, in order to connect with banks, you need to be a big company. And then also we are facing a lot of technology limitations. We had never worked for a big tech company. So this is the first time we are really facing and building a website this big. But what I also can remember is that, at that time, we were a lean team. Everyone has a sense of ownership. We have to work smart. We have to work hard. So, no complaints. We just do anything that we can.
Very interesting. Now Leon, what are the two most important breakthroughs that you remember over the years? Was it a certain new revolutionary feature? Was it accomplishments on the payments or logistics side? Was it the achievement of a KPI that you thought you could never achieve? What are the two biggest breakthroughs that you like to reflect upon?
It's hard to pick two. I remember, for example, William and I both are the "desktop generation", so we were late adopters of mobile. And we are also late adopters of cloud computing. We were too much focused on our on-premise infrastructures. But if I need to pick two, I think the first one would be that there was no COD (collect-on-delivery). At the time, especially in forums, trust is very low. COD is one of the most famous ways of doing online transactions. But we didn't offer COD back then. Why? Because COD involves a lot of stakeholders, and a lot of operations. And then in the end, sometimes it could really hurt the ecosystem. Sometimes it could hurt buyers, it could hurt sellers, it could hurt the operator and it could hurt us. The second memorable thing is the story of William and Nadiem. Both of them were talking. At the time Nadiem said that their drivers only work in the morning, bringing people to the office. And then in afternoon buying lunch for them. And after office hours and in between, they don't really have much to do. And then William came up with an idea, saying "what about, in between, your driver helps us to deliver the products?" Then we start to connect with them. Back then, I think we were the first two tech companies leveraging ecommerce and also ride hailing services in delivering products. It was amazing, I think until now, people value a lot of the ride hailing cooperation between the ride hailing and ecommerce companies.
Fascinating. So for those of you who are not familiar, Nadiem is the founder of ride sharing giant Gojek. I didn't know about that part. That's very fascinating. Moving on now. Leon, on the other side of the coin, what were the darkest days of Tokopedia's 11 year history?
It's related to our technology limitations. And like I mentioned before, personally, I have never worked for a big tech company. So I didn't really know how to scale. We did a lot of learning by doing. So one of the darkest moments was that, once we had problems for almost one month. For two to three weeks, the first problem was that, at that time, we were using GlusterFS as our storage. We managed it by ourselves. And then, I think one or two of the servers were having problems. So that for more than a week, I think one and a half weeks, Tokopedia didn't show any pictures at all. It was crazy at that time. GlusterFS is open source. So we went to the community, we learned online, and then we find the best way to do it and how to solve it. And then the second is that, just right after resolving our GlusterFS problems, we had a database problem. So our junior DBA made some mistakes relating to some production data. So that was also crazy. So two of the biggest problems happened in just three weeks. But we learned a lot from them. So we learn how we can work together. Our investors came and assigned a lot of engineers to help us solve the GlusterFS problems. And the DBA part; I remember that she was a junior DBA. She told me early on, "I'm so sorry. So you can revoke my access." I told her "I cannot revoke your access. If I revoke your access, how can you work?" But what is amazing is that after that problem, see became more one of our best DBA's at that time. She has since resigned, but at the time, she was one of our best DBA's after the hard learning that she did in Tokopedia.
It's a fantastic example of "snatching victory from the jaws of defeat," right?
Yep. Still can't believe what happened back then.
And what year was this?
If I'm not wrong, early 2015, I think
Leon, what is the most surprising discovery you have made about the behavior of the Indonesian ecommerce customer over the years?
I think first of all, our customers are unstructured, in a good way, not in a bad way. So actually, this is where local knowledge and local experience really really play a big part in building companies, especially tech companies in Indonesia. Because they are super unstructured. It's very hard for us to introduce something that is structured, but we just need to keep talking to them. We just need to keep listening to them. So that we can offer some things better and better. And the second thing is that it is easy to gain trust from Indonesian users. Actually, they trust new things, and new technology. It is easy for them to trust. But on the other side, if you trust something, there could be fraud problems. There could be some security problems. So that's where we introduce our marketplace. We are introducing a platform where we will hold the money, and then we will release the money to the sellers if all of the transaction has happened without problems. I think those are two of the things that I remember most about Indonesian users.
Very interesting. Now Leon, we can paint the western ecommerce customer at one extreme of the ecommerce spectrum, being purely transactional ("I jump on the platform, I buy, I immediately jump off".) So that's one extreme. And maybe the Chinese customer is much more social in his or her behaviors: they don't just go on to buy. They go on to browse, to discuss products, to chat with the vendor. And that's the other side of the spectrum. Where is the Indonesian ecommerce customer on this spectrum? And can you give us examples of this view?
I think Indonesians are also more social. This is across Indonesia, especially in small cities. In small cities, a lot of mom-and-pop shops sell things not only to do transactions, but sometimes to serve the community. So they're not only buying things; most of the people know each other. So when they do transactions, they are talking, chatting, telling stories. So I think that's a habit, even though a lot of people are now living also in big cities. But the roots of the culture are still there. So that's why, since back then, before Tokopedia, when transactions are still scattered across different forums, we just want to chat. We just want to ask questions. We want a deeper engagement with each other before we really decide to do transactions. That's how we understand it, because we experience it ourselves. That's how, when we built Tokopedia, we also incorporated that kind of features and functions so that it will be suitable for most of the Indonesians. Up until now we have private message sections, we have discussion sections and other functions. So I agree Indonesians are more social.
...and therefore much more engaged on, for instance, Tokopedia than my family might be on something like Amazon in the States. Very interesting. Now Leon, nearly every company that has joined us here on Indo Tekno has complained about the scarcity of relevantly trained talent, particularly in R&D. What has Tokopedia's recipe been for success.
You need to know the problem statement. You need to know what you're going to solve, where you are going to go. And then when you are inspired, you then mix with your local knowledge, mix your personal experience and our "family" experience. Then I believe that we can brainstorm together to find very, very good solutions. Sometimes a quick hack can offer real breakthrough solutions to our users.
And I guess part of that is R&D teams in other markets like India, correct?
Yes, we have an engineering office in Delhi. We also have a small engineering office in Singapore.
Leon, a question about corporate culture: I noticed that Tokopedia continues to garner some of the highest employee reviews in the ecommerce sector in Indonesia, according to platforms such as Glassdoor. What have been the most important factors in maintaining this relatively desirable workplace for your employees?
We have several values. We really value employees. First of all, one of the key values that we have as senior management, William as a CEO: we give opportunity to our leaders below us. Good employees and good talent: you cannot tell them what to do. They can use all of their creativity. They can design all of the details. They have their own decision-making processes. So we give them the opportunity to really execute, not only accepting command from the top. Good talent have their own way of thinking. They can write their own problem statement,. They can brainstorm and effectively solve a problem. That's one of our key beliefs. And another key thing is that we really need to communicate our belief and our core and our DNA. We need to write it down. We need to write a handbook: the most important thing is giving examples. Me personally, William, everyone, we really need to give examples so that people can see it's really embedded in ourselves.
Understood. Now, the face of competition in ecommerce seems to have evolved over the past several years. Where did competition focus on in the early years before the era of big balance sheets, and what will drive competition going forward in your mind, Leon?
For us, competition is good because they keep pushing us forward. They keep challenging us. We will not be always in our comfort zone because there's always a threat that they can do anything. A lot of underdogs and a lot of unknown companies can suddenly rise up. A company needs to really focus on its vision and mission and on its DNA. For example, let's take Android and iOS. For customers, sometimes both of them appear the same. These days, the screen is good. The camera is good. The memory is good. The speed, the processors; everything is good. But Android has a different mindset. It is more open compared with iOS, which is more closed. It shows a different result. That's why we keep saying with our competition; different visions, and missions and DNA are very important. A company can really really stand out compared with the rest of the competition.
What has been your single biggest learning in the 11 years that Tokopedia has been around?
When we built Tokopedia for the first time, me included, we were super excited. We would do anything to make Tokopedia a success. Even though I'm a more technical person, I also do everything else. But again, along the way, we start to realize that doing everything is not good. It is always better to do what we do best, to do what I do best. William is an amazing person. He always focuses on what he does best. That's my biggest learning, because if I haven't accepted that fully, I would always want to contribute more to Tokopedia. I always want to contribute to marketing, contribute to strategy, contribute to operations, to technical, to everything! But again, the result is that I don't really contribute anything, because you cannot do everything. The result will be that you do everything "half-way" here, "half-way" there, and then nothing gets done. You don't really fix anything. So that's my biggest learning. When I start to accept that, I do what I do best, I feel more happy and then I also feel that Tokopedia progresses much much better than before.
Gotcha. So basically really focus all of your energies on your core competencies.
Right now we have a lot of great leaders. And these leaders, they have their own skill set, they have their own leadership style, they have their own experiences. They all can contribute for the sake of Tokopedia. Now, I understand why, for example, with a lot of big companies, we see the founders and we see management keep changing. A good company is a company that can really nurture; they can do leadership succession very, very well. So I'm very happy that Tokopedia has a lot of great leaders right now.
So that was your biggest learning in the first 11 years of Tokopedia's existence. What is your vision for the next 11 years?
The next 11 years; we keep discussing this. I discussed this with William, and William expressed to me and to all of our people at Tokopedia: if we look back, when we built Tokopedia, we built a platform. We built a platform so that Indonesians can become ecommerce merchants. We ourselves are not an ecommerce company. We are a technology company that is building a platform and building a super ecosystem. In our first 10 or 11 years, we were a technology company that enabled Indonesians to become ecommerce merchants. What we are going to do for the next 10 or 11 years: we want to be a technology company helping others to also become technology companies. And hopefully we can really do it. We are progressing in that direction.
So are you saying that not just enabling companies to come online but also really assisting them in cultivating their own technological capabilities?
That is one of our dreams. Yes, it will be like that.
Gotcha. Now, coming up to present day this pandemic has hit the Indonesian economy quite hard. Physical distancing, and other measures, for instance, have caused many businesses, big and small, to close down. How does the pandemic affect Tokopedia?
Unfortunately, we are facing this unprecedented situation. But I think technology can really help a lot. For example, we can support our government's program, which is large scale social distancing; because all of Tokopedia, 100%, we work from home. Even though we work from home, technology can enable 100% capacity, so none of our services degrade. We also talk with our logistics partners, discussing how can we keep serving our users? How can we do contactless delivery? It runs very, very well. We also keep supporting our merchants so that, even though this is a hard time for them, they can still be productive. In the early part of COVID, we helped them by waiving some of the commissions. We are also helping buyers a lot. We are creating campaigns. We also have campaigns with the government for example. Their campaign for "Big Bad Wolf" was offline previously. They had a "Big Book of Fun Bazaar". Now they do an online bazaar. It shows amazing results. We are also helping our FMCG merchants. For example, we are creating a campaign for a lot of coffee shops. We call it "SatuDalamKopi." This is also with the support of our government. So, we will keep doing this. Tokopedia and technology really can keep helping a lot of our merchants. And in the end, we are also helping the Indonesian economy.
Now, the silver lining of this awful COVID pandemic has been an acceleration in the migration of retail from offline to online. Will any of this growth stagnate or even reverse once the worst effects of COVID 19 dissipate?
We believe that online and offline should be a synergy. Online is just one of the ways a business owner markets a product. It's a new funnel. There are a lot of new funnels for on-line. It could be desktop, could be mobile, could be social commerce. Will they be stagnant? I don't think so. I believe that more and more business owners realize that they need to transform themselves. They need to follow all the new technology developments. So, it's the same business owner, just a different way of doing business; a different funnel. There will always be something that cannot be online. But with the mindset of accepting that online and offline can be a synergy, I believe a lot of good things will happen in the future.
Now, what is your own personal focus at Tokopedia these days Leon?
My personal focus right now is learning from other big tech companies. I think a lot of big tech companies are similar to a university. The founders graduate leadership. I use the word "graduate" because we want to build Tokopedia similarly to a university. With the university, sometimes you graduate people internally. These days I am also brainstorming with our people. I play the role of brainstorming partner to a lot all of our next generation leaders: our SVP of Technology, our SVP of Product our VP of Business and everything. Creating brainstorming partners I think is very important. I can voice my concern and I can voice my idea. But also when I do brainstorming with them, I also learn a lot. Also, I think they are some things previously considered as "nice to have" now have become "must have." I really want to focus on that "must have" because these are some of the things that can really bring Tokopedia to the next level. For example, risk and fraud, data governance, security, and a lot of government and compliance. That's my focus right now, my personal focus at Tokopedia.
This has been a tremendous set of stories that you've shared with us Leon about one of Indonesia's most iconic tech companies. I hope that our listeners have found your tales and anecdotes from the "Hari-Hari Awal", or "Early Days", as enlightening and inspiring as I myself have. This concludes our 15th instalment of Indo Tekno. Thanks so much once again for joining us today, Leon.
Thank you Alan.
The podcast was translated from English to Bahasa Indonesia by Alpha JWC Ventures. Terima kasih untuk mendengarkan. Sampai jumpa lagi!