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Nadiem Makarim and Gojek’s runaway success: What you need to know

Saskia Rizqina Maulida
Saskia Rizqina Maulida

Public administration student at Airlangga University

Singapore  /  Thu, October 24, 2019  /  01:29 pm
Nadiem Makarim and Gojek’s runaway success: What you need to know

Gojek's Nadiem Makarim visits the State Palace in Jakarta on Oct 21. (JP/Seto Wardhana)

Gojek’s cofounder Nadiem Makarim has recently resigned from the company to join President Joko "Jokowi" Widodo's Indonesia Onward Cabinet as the education and culture minister for the next five years. Makarim rose to fame thanks to the platform’s runaway success in Indonesia and is currently well known as the face of Gojek.

While many people might think that Gojek is the country’s equivalent of other ride-hailing platforms such as Grab and Uber, the platform is much more than a transportation-based app. The platform’s remarkable journey from being a fleet of only 20 ojek (motorcycle taxi) drivers to one of the biggest super apps in Southeast Asia offers some valuable lessons for the rest of the world.

Since 2013, Indonesia has experienced a rapid growth in the number of sharing platforms such as Gojek, which remains one of the leading on-demand multi-service platforms in the country. According to a recent survey conducted by Southeast Asian market research firm ecommerceIQ, Gojek is the most popular ride-hailing app and the most-used app in Indonesia. Working under the slogan of “Karya Anak Bangsa” (made by the children of the nation), the homegrown unicorn came in first position with 56 percent, defeating Grab, which is often seen as a second choice for many Indonesian customers despite having the largest reach in the country.

Read also: Can Nadiem live up to the hype? Cabinet post sparks hope but structural hurdles loom

Founded in 2010, Gojek started off as a call center in Jakarta that enabled people to order an ojek by phone. The initiative was meant to solve the difficulties ojek drivers faced finding passengers and for passengers to find available drivers. On top of that, drivers usually charged unreasonably high fares. The value that Gojek initially wanted to offer was to provide efficiency as well as information about the availability of drivers upon the requests of passenger with a standardized pricing mechanism. As a result, Gojek could charge a reasonably low fare compared to conventional ojek drivers and attract many customers in return. The ease of finding customers, on the other hand, also attracted many drivers, resulting in a broad network of drivers that served as Gojek’s initial capital before finally launching as a platform. Unlike other ride-hailing players in the market such as Grab and Uber, which operate within a well-established taxi industry, there was no prior major industry for motorbike taxi services.

Later in 2015, the founder, who was also inspired by the success of Uber and Grab, officially launched Gojek as a smartphone application. Unlike the two online transportation platforms, which started off by providing one kind of service, Gojek launched its platform with three sets of services, including motorbike ridesharing, delivery and shopping. In this case, the founder thought that ride-hailing services alone would not generate sufficient network effects for the business to scale up, as it would slump outside rush hours when the demand is not as high. Establishing such a big network effect, Gojek has undergone rapid and massive growth since it was founded. According to data released by Crunchbase in 2019, it has successfully attracted huge amount of funds from 28 investors, including Visa and Mitsubishi Motors. As of July 2019, the platform has raised a total of $3.1 billion in funding over 12 rounds with a market valuation reaching $9.5 billion. With this vast amount of money, Gojek has gradually evolved into a gigantic business network beyond its original range of offerings. The platform currently provides more than 20 services, ranging from transportation to food, lifestyle, entertainment and digital payment. On top of that, the platform has also significantly expanded its regional market in Vietnam, Thailand, Singapore and the Philippines, filling the void left by Uber’s exit.

It does not seem like Gojek’s staggering growth will stop anytime soon. The platform’s market valuation is poised to follow its close rival, Grab, by reaching $10 billion in the near term, marking its way to becoming Indonesia’s first decacorn startup. Its growing number of services increasingly adds to the value of the platform, as they open up various means that enable users to exchange a wide variety of goods and services. This also signals the platform’s ambition to become a super app that serves as a one-stop platform with multiple services that can help people in addressing their daily needs. Given the platform’s various services, which are deeply embedded in Indonesians’ everyday life, it is not impossible that Gojek could transform into the country’s version of China’s WeChat in the future.

Ongoing controversies and unfinished homework

Despite Gojek’s remarkable growth in the past few years, the platform has been heavily criticized for its alleged unfair treatment of drivers. Recently, hundreds of Gojek drivers rallied and staged a protest in front of the platform’s headquarters in South Jakarta. It was not the first time. As with other transportation network companies, the common problem derived from this kind of sharing platform is the absence of a minimum wage and job security. By using the rhetoric of freedom and flexibility in work, these companies profit off their drivers’ status as independent contractors, leaving them with no certain amount of wages and no access to full-time employment benefits such as insurance and retirement plans.

Read also: The gig economy and skills traps in Indonesia

In the case of Gojek, the platform uses the term "driver-partners" to maintain the impression that the drivers are not employees who work for the company. As a consequence, the company has no legal or contractual duty to control compliance with the existing employment and labor law, resulting in a legal loophole for worker exploitation and other unethical practices. While Gojek has recently launched a new benefits scheme for its driver-partners in Singapore as an attempt to attract new drivers and attain regional growth, little effort has been made in the country where it was first launched, leaving over 2 million registered driver-partners with job uncertainty.

In spite of all the promises of greater economic opportunities, Gojek, as well as other gig economy platforms, also brings unprecedented societal consequences that require policymakers and regulators to keep up with the inevitable challenges of digital change, which is one of Jokowi’s tough pieces of homework for his second term. (wng)

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Saskia is a public administration student at Airlangga University, who is currently studying at the Department of Economics, National University of Singapore, for an exchange program.

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.