How to build a $30 billion business with Kevin Aluwi

Hey friends,

I’m excited to share our next edition of The Wisdom List: the series in which extraordinary entrepreneurs share the lessons they’ve learned from building great businesses.

This week, we’re learning from Kevin Aluwi, co-founder and CEO of Gojek, an Indonesian super-app spanning ride-hailing, food delivery, financial services, and beyond. Over the past thirteen years, Aluwi grew Gojek from an idea into one of Southeast Asia’s largest tech companies. In doing so, he’s had to contend with scaling pains, cultural clashes, real-world networks, and even a merger with e-commerce platform, Tokopedia. The combined entity, GoTo, is valued at roughly $30 billion.

Whether you’re a founder, operator, or investor, I think you’ll find wisdom in hearing Aluwi’s experiences.

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THE WISDOM LIST: KEVIN ALUWI

Actionable insights

If you only have a couple of minutes to spare, here’s what investors, operators, and founders should know about building a great company, according to Kevin Aluwi.

• Do the hard things. To build a great startup, you have to move fast. But you shouldn’t let urgency distract you from tackling big, thorny problems. Doing the hard things is one of the most effective ways to build true defensibility.
• Protect your principles. Having clear company principles helps your team make faster, better decisions. It’s easier to act autonomously when you have a clear framework to follow. Failing to protect these values can shift your company towards an “exception-based” culture.
• Pay your debts. Every time you make a sub-optimal corporate decision, you create a “debt” that must be paid. This is true across engineering, product, and marketing teams. To avoid debts spiraling, keep track of them and proactively pay them down.
• Build a brand. If you’re building a good business, you’ll inevitably attract competition. For consumer companies, it’s essential to create an impactful, differentiated brand. If you do it well, you’ll outcompete better-capitalized opponents.

***

In April of this year, super-app GoTo debuted on the Indonesian Stock Exchange (IDX). It represented the country’s largest IPO of all time and one of the most significant listings of 2022. By the end of the first day of trading, GoTo had surpassed a valuation of $31.5 billion, making it the third largest company on the IDX.

For Kevin Aluwi, it represented the end of one chapter and the beginning of another. After co-founding the ridesharing platform Gojek in Jakarta in 2009, he drove its maturation into a regional super-app spanning food delivery, financial services, and small-business software. Significantly, Gojek established itself as an economic engine, creating thousands of jobs and contributing more than $7 billion to Indonesia’s GDP.

In 2021, Aluwi also oversaw the merger between his company and e-commerce player Tokopedia, creating GoTo, the entity that entered public markets this year. (The Generalist correctly predicted this merger several months earlier.)

Gojek’s scope, scale, and success have given Aluwi a unique constellation of skills and experiences that make him an ideal contributor to The Wisdom List. In getting to know Aluwi over the past few months, I’ve also found him to be a particularly thoughtful, expressive business thinker capable of cutting to the quick of thorny issues and articulating solutions. Our discussions have improved my thinking and how I seek to grow The Generalist. I am sure that many others will benefit from his words.

Here is Kevin Aluwi’s hard-won wisdom.

Lesson 1: Do the hard things

Startups often prize speed above everything else. While fast execution can be a moat, over-optimizing for it might distract you from constructing stronger defensibility. As a CEO, you want to build a company that tackles really, really hard problems head-on – even if they take more time. There’s a good reason for this: hard things for you are also likely to be hard for your competition. You want to stack so many solutions to hard problems that when your rivals look at what you’ve constructed, they retreat or look for shortcuts instead of trying to compete head-on.

We didn’t embrace this for the first two years of operating GoFood, our food delivery product. Like Postmates in the early days, GoFood was a delivery service that relied on humans more than technology: when you ordered something, a Gojek driver went to a restaurant, stood in line, paid with their own money, and then delivered it. We didn’t integrate with kitchens or offer payments. It was a good enough product, built during a period in which we prioritized growth, but it didn’t solve the tough problems.

One such problem was that even though GoFood was growing fast, its reliability was mediocre; only 70% of customer orders were delivered. We needed to do better, which meant we had to do the hard things.

Over the next one and a half years, we did exactly that. We connected GoFood’s service directly to restaurant cashiers and, in some cases, directly to kitchens. This helped us save cashier time and get better data on which meals were available. We integrated online payments so drivers wouldn’t have to pay upfront and get reimbursed. We even created machine learning models to help us anticipate when drivers should arrive for pick-up, improving the network’s utilization and reducing customer waiting time.

Making these changes was not easy. It involved significant engineering time, customer research, and onboarding and educating more than 500,000 restaurants across Southeast Asia. But it made a difference, significantly improving GoFood’s reliability and raising our conversion rate from 70% to more than 90%. We turned the difficulty of delivering a very reliable product (now a customer standard) into a moat.

When competitors came to try and win this market, they saw we not only had a lead from a customer perspective, we had gone through the pain to build a sophisticated product. They’d have to be ready to commit years of engineering time to offer a comparable service. Doing the hard things pays dividends in the long run.

IN A MEME
​​​​​For the pictorially inclined, here's the whole piece — all 2,000 words of it — in a single meme.

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PUZZLER
​​​All guesses are welcome and clues are given to anyone that would like one. Just respond to this email for a hint.

The race to answer quickest is getting tight. Last time around, Jim W acted first, narrowly frontrunning a quizzical coterie. In hot pursuit: Keshav J, Greg K, Robert H, Austin V, Joe H, Krishna N, Thomas K, Ankit J, John G, Aila O, Steven R, David P, Kaitlyn R, and Nancy X. All provided viable answers to our previous puzzler.

The answer? Day and night. Day breaks but does not fall and night falls but does not break. Good stuff and well played to all.

Wherever you are in the world, I wish you a lovely rest of your day.

Until next time,
Mario