How Indonesian Go-Jek outplayed Uber in its own game
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An Indonesian startup Go-Jek that not many know about has grown into the country's leading ridesharing service and managed to take the market away from Uber.

Sometimes it is hard to look beyond the famous Silicon Valley startup-hub that gave birth to such groundbreaking companies as Uber, Netflix (NASDAQ: Netflix [NFLX]), AirBnb and many others. But in Indonesia, the market where "unicorn" companies are a rather rare phenomenon, a local startup Go-Jek that started as a tiny call center in Jakarta has managed to pose a serious competition to Uber. How did Go-Jek do it?

From the first sight, Go-Jek looks quite similar to Uber but, if you look closer, it is not hard to realize that Go-Jek takes what Uber does best in its traditional markets and pushes it further to fit special needs of Indonesian local market. The main difference between the two companies is that Go-Jek does not only offer the same ridesharing service as Uber but also tackles the biggest problem of the Indonesian taxi industry: severe traffic congestion.

Go-Jek's main means of transportation in Indonesia and Jakarta, in particular, are motorbikes. So what Go-Jek did to disrupt the taxi industry is hire thousands of motorbike drivers that take people from A to B anywhere in the country much faster and cheaper than a normal car taxi. Jakarta's road traffic is one of the worst in the world, so making your way through the city on a two-wheel taxi turned out to be much more efficient than being stuck on the road in a car for hours.

Go-Jek was founded back in 2010 by Nadiem Makarim, a Harvard Graduate, but the service didn't really take off until 2014 when the company released its mobile app allowing to book rides on the go, reports Tech In Asia.

“I started out with a call center, and recruited the first 20 drivers. Then they became recruiters. I started marketing just to friends and family, and it basically just kind of grew from there, organically, very slowly. The probability of you succeeding in a startup is already one to ten. If you’re not full-timing it, it’s zero […] we got lucky because it didn’t die, but it sure didn’t grow in the years prior,” Makarim said in an interview with Tech In Asia.

Today, the company claims to have 200,000 motorbike drivers across the country and this number is still growing to meet the needs of Indonesia's 250 million inhabitants. TechCrunch adds that the service is particularly popular in Jakarta as Indonesia's capital was repeatedly named one of the most congested cities in the world, with a population of 30 million. There, motorbike taxis are often the only way to get through the heavy traffic.

Another key to Go-Jek's success is that it started innovating from the very beginning. According to The Conversation, the startup quickly jumped in the ridesharing domain and integrated a number of additional services into the app. In today's version of the app, users can order a pick up by both a scooter and a car, if preferred, book a truck, get groceries delivered from a local shop or market, book cinema tickets or even book an appointment with a masseur or a beauty therapist at home. Go-Jek's is years ahead of Uber on these fronts as the famous Silicon Valley startup is only slowly starting to introduce new services like food delivery via UberEATS launched earlier this year.

Ridesharing services are not welcomed

As we know, Uber has been having problems with the local governments in a number of countries and Indonesia was not an exception. Here, Go-Jek and Uber took completely different paths as Uber came to Indonesia with an "army of publicists and lawyers" to dispute over the local governmental rules whereas Go-Jek managed to gracefully navigate the Indonesian regulatory environment and avoid a conflict with the taxi industry, says an expert Nick Walles. All thanks to the startup's strong local connections.

One tactic Go-Jek used was securing a partnership with Indonesian taxi company Blue Bird, whose drivers went on a strike against Uber and Go-Jek in March this year. Thousands of public transport drivers protested against the ridesharing services by claiming that their pricing strategy offering rides for far less than a normal taxi was seriously hurting their incomes. The competition was also unfair, they said.

“Usually I would pick up passengers from train stations or bus stations. Now, they order through the app. There is a long line of Bajajs who are not able to get customers,” said a three-wheeler driver Suwito, as reported by Tech In Asia.

Shortly after the protests, Indonesian ministry of transportation went as far as to ask the IT ministry to completely block access to the apps of Grab, a Malaysian-based ridesharing, and Uber. Yet, Go-Jek was not mentioned in the request as it only offered motorcycle rides that still remain a largely unregulated area of the transportation industry in the country. However, says Tech In Asia, conversations with the protestants made it clear that motorbikes are exactly what hurting the income of the public transport drivers the most.

Nadiem Makarim's company seems to perfectly fit in a complicated regulatory environment in Indonesia that, just as the Chinese one, makes it increasingly hard for the overseas companies to enter the market. In August, Go-Jek run its latest fundraising round that yielded more than $550 million, reports TechCrunch. According to TechCrunch experts, prior to the fund raise, the startup had approximately $104 million in cash and about $73 million in spendings over the last 6 months.

This means that the lucrative fundraising round was critical for the company to continue expanding its business, especially in the situation when the emerging rivals like Uber and Grab are very interested in eating into Go-Jek's market share. With funds like this, Go-Jek has all the chances to dominate the industry not only in Indonesia but in the entire ASEAN region, which is a highly mobile-centered market with a population of 650 million people.

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