Author: admin heyokha

Most of us are surprisingly wrong about the world. We must have a correct world view in order to make a judgment about where the world is headed. Unfortunately, this is where most of us already go wrong.

 

We are wrong! This, we found out while reading the eye-opening book Factfullness, in which author Hans Rosling exposes that when we are asked simple questions about global trends e.g., “where does the majority of the world population live?”, we systematically get the answers wrong.

So wrong that chimps choosing answers at random would consistently outguess teachers, journalists, Nobel laureates, and investment bankers. In particular: 12 multiple-choice questions with three options were asked to around 12,000 people in 14 countries. The results? About 80% scored worse than chimps would have.

Only 10% scored better. Rosling writes that most people think they are getting it kind of right – until they get tested (click here to test yourself). However, the contrary is true. In respect of some matters, it even seems that the more educated you are, the more ignorant you are.

 

Why? Rosling points to 10 human instincts (like fear and generalisation) that impact our “information filter” and judgement to explain why we are so ignorant.

At the same time, the media is exacerbating matters by painting a distorted and dramatised picture as their coverage is dominated by the negative and the exceptional. As such, positive changes don’t find you. You need to find them (in statistics or by traveling, for example).

To see the world as it is, we need to refresh our knowledge more regularly and change our attitude.

Rosling closes his book with some suggestions to obtain a more fact-based world view which have much to do with our attitude:

1. be humble enough to recognise that (1) knowledge does not have an unlimited shelf-life and needs to be updated regularly, (2) our instincts impact our information filter and judgement, (3) we should be prepared to change our opinion, and

2. be curious enough to (1) be open to new information and actively seek it out, (2) embrace facts that do not fit our world view and (3) let our mistakes trigger curiosity instead of embarrassment.

In short, by being actively open-minded and committed to self-improvement, investors will have a more factual view of the world, which will help them make better decisions.

Admin heyokha

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With the growing global internet penetration rate, the proliferation of smart devices, and the democratisation of knowledge, long-established barriers to business are lowering across industries around the globe. This is especially prevalent in developing markets, like Indonesia, where access to knowledge, skills, markets and funding have been limited. Let’s dive deeper into how this has improved.

Access to Knowledge

Technology has significantly improved the accessibility and affordability of information through (free) online content, ranging from simple how-to video’s on YouTube to courses on advanced topics like Machine Learning on platforms like Coursera, Audacity and Edx. Companies are opening up, too, with some sharing their learnings both online and offline, and even contribute to the coding community by publishing coding projects on online platforms like GitHub.

 

Indonesian ride-hailing firm Go-Jek publishes numerous videos on Youtube, covering a variety of topics from learning data science to surviving in the workplace.

Access to Talent

The rise of gig platforms like Upwork and GetCraft provide entrepreneurs access to highly skilled talents that may otherwise not be available to them locally, or for which they would not have a budget to hire on a full-time basis.

Large share of freelance work through platforms comprises higher-level skills
Source: BCG Future of Work 2018 worker survey.

Access to Markets Across the Globe

Tech has also levelled the playing field for small businesses by giving access to markets through online sales channels. Not only does online direct access to consumers reduce the dependency on distributors and retailers, but it also allows the seller to retain significantly higher margins.

Having an online presence has become very cheap nowadays – if not for free. Shopify, for instance, enables merchants to set-up and run their own customisable e-commerce platforms for only US$29 per month with no coding skills required.

Access to Business Infrastructure Without Capital

Major online marketplaces are evolving their ecosystems towards infrastructure-as-a-service, offering additional business services to their merchants such as logistics, fulfilment, payment and financial services. Examples are China’s Alibaba and Indonesia’s Tokopedia. These services cover areas that are normally capital intensive to perform in-house, lowering the barriers to doing business for many entrepreneurs.

Alibaba’s long-term vision is not to increase the number of merchants, but to make them more profitable.

Access to Funding

Limited access to funding has also been a critical barrier to growth for small businesses. In Indonesia for example there are estimates that about 51% of the adult population has now access to bank credit, resulting in a huge SME funding gap of $165 billion, according to SME Finance Forum.

But things are changing thanks to fintech ventures offering options for funding. Currently, Indonesia’s fintech industry has 88 registered platforms. In 2018, total loans allocated by Indonesia’s fintech industry in 2018 reached US$ 1.6 billion according to Indonesian Financial Services Authority.  It’s a small, but fast-growing number.

Welcome to the golden era of entrepreneurship

We at Heyokha are convinced that due to technology, we now live in a golden era of entrepreneurship. A time where anybody has the chance to pursue an idea and challenge the status quo. We can’t wait to see this creative potential be unleashed and are convinced that this Zeitgeist of entrepreneurship will drastically speed up innovation, especially in developing countries like Indonesia.

Admin heyokha

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Influenced by watching the tv-show Shark Tank every day, we have recently been writing a lot about “tech enabled” entrepreneurship and how we believe tech is lowering the barriers to doing business. However, we did not really substantiate the importance that entrepreneurship has. In this article we dig deeper.

Academics see entrepreneurs as the innovators, driving productivity and economic growth
Economic studies from around the world have linked entrepreneurship with rapid job creation, GDP growth, and long-term productivity increases. Indeed, in the academic explanation of modern growth – the period in which the per capita wealth generation went ballistic in the West after the 1700s – much weight is placed on the innovating role of the entrepreneur as the agent of “creative destruction” and “organiser” of capital and labour.

Many academics believe that such innovation on the back of entrepreneurship becomes especially more important as economies move from being resource-intensive to knowledge-intensive – a stage many developing markets currently find themselves in.

SME’s as vessel of entrepreneurial activity, play a major role in employment and productivity
In the study of economic development, SMEs are seen as the vessels for entrepreneurship. While their label may not signify great magnitude or prestige, one cannot overemphasize the importance that small and medium-sized enterprises (SMEs) play in the global economy.

They contribute up to 60% of total employment and up to 40% of national income (GDP) in emerging economies, according the World Bank. Seeing the essential role of SMEs in a nation’s development, the World Bank approved more than US$ 10 billion in SME support programmes over the period of 1998-2003.

The above stresses the important role entrepreneurs play in contributing to employment and adding to the greater well-being of society, especially in developing countries.

Emerging Markets Leapfrogging into the Future
In the book Why Nations Fail, the M.I.T. economist Daron Acemoglu and the Harvard political scientist James A. Robinson make a strong case for entrepreneurship. However, they also argue that in many developing countries, entry barriers are playing a crucial role for aspiring entrepreneurs. Powerful groups often stand against economic progress, in fear that their economic privileges will be lost.

With their history characterized by authoritarianism and cronyism, developing countries can benefit enormously from the equalizing power of entrepreneurship.

These nations are in an advantageous position to innovate. For example, leapfrogging – using the lack of existing infrastructure as an opportunity to adopt the most advanced methods – has been an effective approach for developing markets. Instead of developing their own technology from scratch, they can adopt technologies created elsewhere.

Often used examples are how low-income countries that never established a telecommunications landline infrastructure or a retail banking system, bypassed those development stages with the use of mobile phones and the innovative financial services now made readily available.
Some examples of technologies that are expected to be used in emerging markets to leapfrog are blockchain, cloud computing, and solar power.

Empower the entrepreneurs
History has shown that countries that allow the whole entrepreneurship process to happen – from having an idea, starting a firm, and getting a loan – tend to see more rapid growth. Emerging markets are well positioned to let technology drive their economies forward. In Indonesia we see things are starting to take off. We are excited to see how things will play out.

Admin heyokha

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The rise of ride-hailing applications has transformed the commuting habits of millions of citizens around the world. But its effects have been greater felt in developing countries where the amount of traffic has been increasing at an alarming rate; public transportation has become inefficient, inadequate, or too expensive; and populations continue to grow but public infrastructures remain lacking.

In Indonesia, ride-hailing company Go-Jek has partnered up with over a million of drivers. To compare, Astra International, the biggest Indonesian conglomerate, only has 226 thousand people working full time across its 226 subsidiaries. Within just a few years, the Go-Jek has created a super app with enormous economies of scope, offering numerous services such as food and parcel delivery, cleaning services, repair & maintenance services, etc.

The company’s digital wallet, Go-Pay is widely considered to be the biggest e-wallet in the country and is expected to play an important role in providing credit to Indonesia’s unbanked population.  The economic and social impact that Go-Jek is having in Indonesia is immense.

Looking at the success story of Go-Jek in Indonesia, we saw opportunities in ride-hailing apps in African countries and Bangladesh. These countries have similarities to Indonesia: such as cogested traffic, high population density, and an attractive economic backdrop.

Being Safe(boda) in Uganda

Safeboda started out in Kampala, the capital of Uganda, which has 1.4 million people and is plagued by heavy traffic. The city has 10 fatalities per day due to road traffic accidents – the highest level in East Africa. The solution for its heavy traffic, like Jakarta, exists in conventional motorcycle taxis called Boda-boda. According to Uber Africa’s General Manager Alon Lits, there are nearly 2 million weekly motorcycle taxi trips happening in Kampala per week.

Ricky Rapa Thomson, one of the co-founder of Safeboda who used to make a living as a motorcycle taxi driver.
Source: PC Tech Magazine

However, conventional motorcycle taxis are often unsafe, require the client to negotiate prices and drivers often (claim to) have no change. The emergence of digital ride-hailing services has created a massive opportunity in the city.

Safeboda started in 2018 with only 1,000 drivers. By end of the year, they had more than 8,000 drivers registering over 1 million rides a month. They’ve also expanded to neighbouring country Kenya, with plans to expand to East Africa.

Carving a Path(ao) in Bangladesh

Meanwhile, Bangladesh, home to 165 million people and the fifth largest mobile market globally, is another attractive market for a ride-hailing platform. In the past decade, the Bangladesh economy has consistently grown and beat most regional peers; their GDP growth averaged at 6.6% and is expected to record an impressive 7.8% growth in 2018.

Ride-hailing Pathao has had the first mover advantage in this area and has financial backing from a strong strategic partner.

Started by three graduates from a local university in 2015, Pathao’s journey wasn’t easy considering that before the company began, Bangladesh had no culture of motorcycle taxis. They went on the ground and pushed this concept to the market. Eventually, they found success.

Hussain M Elius, co-founder of Pathao spoke at TED. Click here to watch (left), Pathao’s drivers (right)
Source: tedxdhaka.com.bd, Thedailystar.net

In November 2017, Go-jek participated in their series A round which helped them expand to multiple services such as Pathao Food and Pathao Cars. According to Techcrunch, Pathao is valued at over US$ 100 million based on their pre-series B US$10 million round led by Go-Jek.

Aside from being in a good position to become the leading ride-hailing platform in the country, the company, has provided opportunities for millions of Bangladeshis. According to its founder and CEO, drivers on its platform are able to make more than twice the average salary in Bangladesh.

Jumping on the ride-hailing wagon

We wonder whether Pathao and Safeboda can change South Asia and Africa the way Go-Jek and Grab have changed Southeast Asia. So far things seems to be on the right track.

 

 

 

 

Admin heyokha

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There must be something in the water in Indonesia. Because in the span of just three years, the country managed to produce four unicorns – startups the have reached at least US $1 billion in valuation.

Young people creating new businesses at scale is relatively new in Indonesia, as for decades, Indonesia’s formal economy was dominated by few incumbents. After the country’s independence in 1945, cronyism ruled as the prosperity of individuals remained highly dependent on personal relations with leading members of the government.

The shift from oligarchy to unicorn maker is remarkable, driven by the unique combination of a supportive government, the public’s increased access to technology, and the youth’s growing desire to launch their own business ventures.

Power in the Hands of Few
During the era of President Soeharto, the South East Asian nation saw the rise of politically connected companies who, together, came to control most of the formal economy.

Despite deregulations that had monopolies and privileges revoked in the late nineties, the political and economic systems of Indonesia still have features of an oligarchy today.

In 2014, for example, the four largest privately-held Indonesian conglomerates that have assets listed on the Indonesia Stock Exchange (IDX) are the Astra Group, Salim Group, Lippo Group, and Sinar Mas Group. Combined, all listed companies controlled by these four groups accounted for 17.50% of total market capitalisation on the IDX.

In addition, with 25.84% of total market cap, state-controlled listed companies (SOEs) also remained dominant players in the country’s economy.

Because of all these factors, middle-class hopes for a stable income and secure future have typically rested on a job as civil servant, which guarantees life-long employment and an early pension – not exactly an environment that cultivates innovation. However, things are now changing in Indonesia.

Tech Offering Opportunities to Many
Not only is the country’s current president, Jokowi, the first president who doesn’t belong to the traditional political, religious, or military elite; Indonesia’s tech scene is also rapidly transforming the playing field for aspiring entrepreneurs.

Young entrepreneurs are breaking through barriers on the back of tech, connectivity, and a supportive government. The proliferation of smartphones and the creation of digital applications has enabled young entrepreneurs to by-pass the existing SOE- and conglomerate-dominated market structures and spawned four unicorns in just three years’ time.

We’re talking about ride-hailing company Go-jek, travel site Traveloka, and market places Bukalapak and Tokopedia. New unicorns are expected to rise in the underdeveloped education and healthcare sectors, with the potential to leapfrog Indonesia’s development.

With Help from The Government
This, of course, could not have happened without a supportive government. While governments in other countries like Hong Kong prohibited ride-hailing companies under the pressure of incumbents, the Indonesian government resisted such pressures and tried to balance the needs of both the public and the drivers.

To further support Indonesia’s digital ecosystem, the government also developed several programmes. These include SMEs Go Online; Farmers and Fisherman Go Online; and Nexticorn, which aims to provide start-up founders with access to suitable investors. The government also pledged to strengthen its e-commerce roadmap and digital certification this year.

76 year old muslim scholar, Jokowi’s Vice President-elect, Maruf Amin mentioned that Indonesia soon will have a decacorn (a start-up valuation with over US$ 10bn).
Source: Tribunnews

The role of Indonesia’s government has shifted from being just a regulator, to now more of a facilitator.

Looking to the Future
The success of tech in the country has inspired many, initiating a positive feedback loop. In economic literature, entrepreneurs not only bring new goods to the market, but also generate information about the profitability of new activities. And in Indonesia, the four mentioned unicorns have fueled optimism over the digital economy, inspiring the Indonesian youth and attracting investors in the process.

Mobile commerce start-ups now rank as the best companies to work for among millennials. In addition, according to a 2018 survey by IDN Research Institute, a staggering 69.1% of millennials want to be entrepreneurs. And according to the Ministry of Cooperatives and SMEs, Indonesia’s entrepreneurship ratio doubled from 1.55% in 2014 to 3.1% in 2017.

All of this means good news for aspiring entrepreneurs with innovative ideas looking to launch, as well as existing business owners hoping to expand. For us as investors this implies that we need to carefully consider the vulnerability of indonesia’s incumbent conglomerates and SOE’s, as well as the opportunities that Indonesia’s youth are bringing to the table.

Indonesian Millennial Superheroes: William Tanuwijaya (Tokopedia), Diajeng Lestari (HijUp), Jonathan Sudharta (Halodoc), and Nadiem Makarim (Go-jek)
Source: Kalimat.id, Moneysmart.id, Otcdigest.id, vbprofiles.com

Admin heyokha

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