This company accounts for 2% of Indonesia’s GDP.
Hopefully one day we’ll contribute to 5 to 10%.
Has superstar ambassadors.
Congratulations!
And is vying to become Southeast Asia’s most valuable start-up.
But you may never have heard of it.
So what exactly is GoTo, and how did it get so big?
GoTo Group is an Indonesian tech company formed in May 2021 in a blockbuster merger between
two of the country’s largest start-ups: Gojek and Tokopedia.
In some sense, this is a long history in the making.
The main product of the merger, a powerful super app you can use to book a ride,
buy something or make a payment, is today used by tens of millions.
But the road to this landmark union started more than a decade ago.
Founded a year apart in the capital Jakarta, Tokopedia started in 2009 as an e-commerce
marketplace to connect small merchants with buyers, while Gojek launched in 2010 as a
ride-hailing platform for motorbike taxis.
Both companies were created by a group of friends in their twenties, who were responding
to an emerging wave of internet connectivity taking hold of the country at the time.
So in 2007, we at Tokopedia see the opportunity where Indonesia is already the king of social media.
And we believe that if we can build a platform, an online marketplace, where we can connect
these strangers across the island, with the power of internet we should be able to democratize
opportunity and democratize commerce to everyone.
There was kind of this inflection point where people were seeing the potential of the internet there,
especially with the rise of mobile.
In a sprawling country with the world’s fourth-largest population and a rapidly growing
middle class, the founders were onto something.
In the years that followed, both businesses ventured into digital payments and other services.
Tokopedia doubled down on adding new market segments such as parents, couples and small
stallholders to its ecosystem.
Meanwhile, Gojek expanded its ride-hailing platform regionally and grew its domestic
superapp, offering users on-demand services from food to massages and even manicures.
From day one, we offered multiple different services.
So we never saw ourselves as a ride-hailing company or a delivery company.
We saw that the ojek driver could do many things.
A human being on a motorcycle could do many things, and could be trusted to do many things.
And so, when we launched, we already had these multiple different services on the same base of drivers.
Then, in 2015, the two began working in partnership, using Gojek drivers to provide same-day delivery
for Tokopedia products during their off-peak riding hours.
We were the first in the world to bring together a partnership between an on-demand platform
with an e-commerce platform.
With that true collaboration, we uniquely create the first same-day delivery.
Both companies have grown to become juggernauts, boasting an impressive list of investors such
as Softbank, Alibaba, Tencent, Facebook and Google.
Their $18 billion merger, Indonesia’s largest ever, comes amid fierce competition from Singapore-based
Shopee and Grab.
There was speculation they may merge with other regional start-ups.
I know there were a lot of rumors.
But in reality, we were under no pressure to do anything.
And, you know, when we looked at our futures, we actually realized that a lot of the things
that we’ve done together we really amazing but could be so much more if we actually were
under one company.
Under the new structure, GoJek’s Andre Soelistyo takes over as CEO of GoTo Group and GoTo Financial,
Tokopedia’s Patrick Cao becomes president, while Kevin and William will remain CEOs of
Gojek and Tokopedia, respectively.
The combined entity counts over 100 million monthly active users, more than 11 million
merchants, and over 2 million drivers in an ecosystem that represents 2% of Indonesia’s
$1 trillion GDP.
Imagine that Amazon, DoorDash, Uber, PayPal, Stripe is combined together.
There’s a saying that if you want to go fast, you go alone; if you want to go far,
you go together.
So GoTo, basically, is go far, go together.
GoTo is hoping that will help them capture a greater chunk of the market in Indonesia
and beyond.
Indonesia’s digital economy is expected to be worth $124 billion by 2025 as the wider
Southeast Asian online market triples in value to more than $309 billion.
Florian Hoppe, a partner at management consulting firm Bain & Company, co-authored the research.
He told me more.
Indonesia obviously remains hugely exciting because population in Southeast Asia, huge
economic growth forecasts for the next 10 years or thereabouts, really turning into
a consumption-based economy as well.
And a big part of its story has been this quick adoption of digital services.
But in order to expand, Florian said businesses need to target their services at the 120 million
Indonesians who live outside urban areas across the 17,000 island archipelago.
Indonesia is now facing that next level of growth challenge.
A lot of the early growth was driven by key urban centers, was driven by Java.
That captures about half the population or thereabouts.
The next half is going to be the really interesting story.
How do you reach them?
Establishing logistics services there, onboarding them for payments, really starting to integrate
them in the digital economy.
For GoTo, that includes providing payments and financial services in a country where
47 million adults lack access to mainstream financial services and products.
92 million have never used a bank.
When you have 17,000 islands, to credit score everyone, it’s so difficult, right.
But with this technology everyone has a mobile phone, and with this, you can capture and
actually build credit score to everyone.
It’s these individuals who are underbanked or unbanked where falling sick or economic
shocks can really mean the difference between being in the middle class and falling back
into poverty.
And so this is really both a huge business opportunity but also an area where we really
think we can deliver a lot of impact.
To date, neither Gojek nor Tokopedia are profitable.
The company is said to be planning another round of fundraising before publicly listing,
likely in Jakarta and the U.S.
On timeframe, not only for the IPO, but on all product development, my timeframe is always
yesterday.
But to be realistic to the team and so on then it’s as soon as possible.
We hope that we can aim to list by hopefully the end of this year.
The merger of GoJek and Tokopedia comes weeks after rival superapp Grab completed a Nasdaq
listing through the world’s biggest special purpose acquisition company merger, valuing
it at almost $40 billion.
Goto is said to be seeking a public market valuation target of $35 billion to $40 billion.
In many ways, our story was the underdog story.
We were for a very long time, the smaller, less well capitalized player going against
global or regional giants.
And we’ve managed to thrive and succeed in spite of that.
The IPOs will also serve as a litmus test for the region.
If successful, it could pave the way for more tech start-ups to emerge as investor appetite
grows.
Southeast Asia, historically, has had a bit more challenging time getting on the radar
next to China and India, which are obviously much easier to digest.
Southeast Asia, with different countries, different local regulations and, actually,
a fairly fragmented geography as well has been a bit harder to grasp.
And, in fact, I think many international investors probably had trouble figuring out how much
potential is there.
If anything, the last few years have shown that now the digital economy is actually rivalling
at the very least India.
But the potential’s clearly there and I think international investors have woken up
to that.
With their combined resources and business thriving in the new landscape, what about
GoTo’s plans for the future?
Goto comes with a big responsibility.
We try to provide solutions for a problem that we figured out a decade ago.
But this solution will also create another problem.
With millions of drivers, the emissions, with so many merchants, the packaging and so on.
So we have a commitment by the year of 2030 how we can really drive zero waste, zero emissions,
and to become a company that can be a legacy for the next generation.
The bold aims imply the GoTo of 2030 could look very different to today.
But as far as the leaders are concerned, they’re just getting started.
There’s no doubt that our ambitions are global.
We have operations not just in Indonesia and we do believe that the future for our combined
group is one that goes beyond just one country.