Starting a new business always challenging. The odds are stacked against you from day one. On top of that, starting in infrastructure business is to a certain extent, also even more challenging in the early days, because infrastructure takes time, it takes relationships, it takes integrations, it takes a lot of investing upfront without immediate results coming back to you. So the product cycles tend to be much longer. Being in the B2B space also doesn't really allow you to have a half-baked solution when you deal with people money, people data, when you have the top three banks and so on. So you need to have a certain degree of professionalism around it. - Jakob Rost
Jakob Rost is founder and CEO of Ayoconnect, Southeast Asia’s largest open finance API platform and the only licensed open finance player in Indonesia. Founded in 2016, Ayoconnect makes open finance accessible for businesses in Indonesia, the world’s fourth most-populated country.
Under Jakob’s leadership, the company has become a pivotal player in the Indonesian economy. Ayoconnect is building critical infrastructure which is making it easier and faster for businesses of all sizes to launch new financial products and services, and in turn helping to drive both financial inclusion and greater access to innovative solutions. Ayoconnect serves more than 200 API customers, including some of the region’s largest banks, financial institutions, tech unicorns and fintechs, and offers more than 4,000 embedded finance products. Originally from Germany, Jakob began his career with JP Morgan and Boston Consulting Group, helping organisations navigate the challenges related to financial infrastructure limitations. Before founding Ayoconnect, he was a Director at Lazada, Southeast Asia’s largest e-commerce company at the time, now wholly-owned by Alibaba Group. Jakob is an active angel investor, an advisor to early-stage startups and a respected mentor in the Indonesian startup ecosystem.
Jeremy Au: (00:29)
Hi, Jakob, really excited to have you on the show to share your experience. Could you share a little bit about yourself?
Hi, Jeremy. Great to be here. So my name is Jakob. I'm the founder and CEO of Ayoconnect. Ayoconnect is a B2B Fintech. We operate in Indonesia. We're one of the largest API platforms down here. So we basically are on a mission to build financial API's on the payment side, data side and insights and help on the federal financial inclusion. We've been around for seven years. So excited to be here and share with more.
Jeremy Au: (01:01)
So how did you get started as an entrepreneur? Because I know you first started out as an operator and consultant. So did you always have an interest in being a founder or being in doing business?
Good question. I admittedly started out on the more boring sides. I was a banker, very briefly in investment banking in Germany, where I grew up, and then did a lot of banking and financial institution projects, which helped to really understand how financial institutions work, what the challenges are, and so forth. And then decided to move to Southeast Asia. And still on the employment side. I was one of the early employees for Lazada, Indonesia. I was the managing director over here taking care of marketplace. And then finally, seven years ago with Ayoconnect, decided to take the leap of faith, build something on my own. And that really always was the plan. As strange as it sounds considering all the stations that happened before. But I think I got very early, fascinated by Entrepreneur stories. Back in the days, I was a big fan of Richard Branson, I read all his books, and he started out very early. And he did was an entrepreneur who did so many things. The thought of having an idea, and then coming up with something and then seeing it through all the way and being your own boss was always something that fascinated me. So I think being where I am today, I would never want to go back. So pretty happy of what we're doing and where we are.
Jeremy Au: (02:26)
Amazing. You said that you were inspired by these stories. How did you come across this book or articles or headlines? Was it about it that appealed to you so much?
So I always had a very entrepreneurial, let's call it element inside me. When I was 16, I started the school newspaper, there wasn't any. So I was like, let's build something there, put the team together and actually put a tiny profitable business around it going from door to door on micro businesses in town asking for it at generating or the revenue stand. That continued towards various smaller projects. But then I also realized very early that you need a proper toolkit around it. And I thought that banking and particularly consulting gave me that toolkit to be very versatile and well rounded. And I think especially as an entrepreneur, you're just always firefighting and problem solving. And having a structured approach to problem solving is definitely going to help in the journeys. I think that's where I took a cautious decision, learn from other companies, learn from people around me before I finally took the step to build something on my own. And last but not least, but the time during Lazada really helped was almost like being an entrepreneur. That's how it felt building a business from the very early days, getting a lot of freedom, a lot of responsibility to try certain things out. So that's basically how it all came together.
Jeremy Au: (03:54)
Credit your time to Lazada for being a key moment for you. And this also coupled with the fact that you move to Southeast Asia at the same time. So could you share a little bit more about what was it to decide to join Lazada in Southeast Asia with a rocket banner. It was a surprise beginning to join and just walk us through that a little bit?
I would say I had a really good life when the call from Lazada came. Everything actually went quite fast. They were looking for people on the frontier and that was almost 10 years ago. So there wasn't any ecosystem at the time. Ecommerce was a very new radical concept that this was even before the days of Fintech and the wallets and so on. So interesting early days. They basically told me, Look, we need to hear ASAP and we're operating in seven countries. So pretty much we will call you back in one hour and you tell us which country you want to go to. When they called back one hour later, and I told them I would really like to see Indonesia. They were surprised but happy at the same time surprised because they said no one wants to go. This is a very exotic choice. Most people want to be based in Singapore, even Thailand, Vietnam, but we're struggling finding people that actually want to go to Indonesia. And for me, it was the challenge of biggest markets in Southeast Asia. But personal side, my best friend in Germany actually was a half Indonesian. So that helped as well on a decision making side of things. And just the opportunity ahead, starting with a white blank paper and going after very big vision, and seeing how that will turn out was just something that really attracted me to actually do it.
Jeremy Au: (05:25)
A lot of people were attracted by that vision, and then they moved and it was like a change from as a geography but also a change in terms of company culture, because it's a different vertical from consulting to startup. So what was it arriving in Lazada in Indonesia, in market or any good horror stories about what's it like to build at a time, like you said, in a very young ecosystem?
Tons of horror stories, I would say. Obviously, a crazy experience, a crazy culture shock as well. I mean, one is just building the business. The other one is underground in Southeast Asia for the first time. I think I approach it with a very open mindset. So I was just like a sponge, sucking everything in pricing all the views. On the business side, essentially, this challenge was to educate people about ecommerce, but also convert users to a trust digital transactions in first place. So I was the Director for Lazada marketplace, which meant opening up the platform for third party sellers going to businesses out there, convincing them to try and ecommerce and the trust level was just very low. The feedback I got at the time was more like ecommerce will never work in Southeast Asia, people like shopping malls, they like touching for simple things, they don't trust the stranger on the internet. I’ve seen the journey in other markets, I was pretty convinced that eventually it'll happen when there would be a turning point in Southeast Asia as well. But perception was very different. So building the trust and the user experience and the convenience and all of this together was a big task at the time. Now, it's second nature, it's just so normal but it's just phenomenal to see how the market has come along. And ultimately, also the ecosystem in itself. When I mentioned earlier that there weren't really a lot of people that wanted to be based in Jakarta in Indonesia at a time, Indonesia wasn't known for unicorns. People didn't know what a startup was. When I tried hiring people in the early days to just continue to interview after 10 minutes after they found out that this is six months old company to go to mode was still working for established big conglomerates, type of family companies and so on big, big friends names. And that was fun, I would say, very tough, very challenging. I think I've worked definitely a very special time in my journey here.
Jeremy Au: (07:41)
What else did a special I think during that time, while you were there?
I think what was really unique was the people that you surrounded yourself with. In a way, everyone was crazy enough to jump onto similar opportunities. So the mindset of the people that you had around you was very intoxicating in a positive way. There was a lot of high energy, everyone was extremely young, early 20s, mid-20s. And we just had this big dream of building something, I think we were all builders at heart. I think that's also where the term Lazada mafia comes from. It's not an organized system. It's more like loose touch points and overlaps that you have. But that was such an interesting, intense, short time, you got to know a lot of people that are still around and went on to build amazing other companies. So we spent 14, 16 hours at work together, and then we hang out in the evenings together. And obviously a lot of friendships and good bonds shaped during that time. And it still exists today.
Jeremy Au: (08:40)
That sounds like so much fun. Obviously, you did three years building an executive level across Indonesia. And then you went to build Ayoconnect, which is open finance. And this is something that was built one year or two ago, and I was really popular to open API's and so forth. But that was actually a really long time ago, actually. So how did you come up the idea? How did you first get started?
So I stayed in Lazada from the super early days, all the way until we sold the business to Alibaba. I felt like a chapter closed and another chapter opened post acquisition. That's basically when I met my co-founder Chiragh Kirpalani. We both wanted to build something he came from a product and tech background, I came from a commercial business, financial background, were really complementary, or he had been involved with building companies before and scaling them successfully. Very quickly, we realized that Fintech is something that is very close to our heart. And there's certainly a lot of issues, a lot of things that are broken in payments and financial transactions in the consumer journey among different things. And that's basically where we basically started with our first use case, which was utilities in digital products were actually effect the first ones in Indonesia who put this on a mobile platform before there was a wallet when smartphone penetration was still less than 30% in Indonesia. So that's how we essentially started, we came actually from a user journey being used as ourselves having pain points ourselves. And then very quickly realized that the more exciting opportunity is actually the infrastructure layer below. We realized Indonesia leads a lot of consumer facing platform and businesses, and we see this to whole to until date, what's needed is sort of a toolbox to enable entrepreneurs to build their businesses and scale their businesses very quickly. Cloud architecture is similar example there. No one building a new company today would think about putting some servers into the office. Obviously, you use cloud servers. We realized that needs to be something like this when it comes to embedded financial services, payments, data stack, and so on. So I think that's where the big vision initiated from but then obviously, we had to start somewhere at the time. So we started small with one use case, and only over the last couple of years, we were able then to plot the use case. And that's ultimately then where we ended up in open finance and open banking and still even feels for everybody today, being honest.
Jeremy Au: (11:03)
What was challenging about that early days? Because I don't think that was very clear even back then and even now, as I think people are still? So was that skepticism around from folks at a time, and what color did that skepticism take?
So a couple of layers there. Starting a new business always challenging. The odds stacked against you from day one. On top of that, I think starting in infrastructure business is to a certain extent, also even more challenging in the early days, because infrastructure takes time, it takes relationships, it takes integrations, it takes a lot of investing upfront without immediate results coming back to you. So the product cycles tend to be much longer. Being in the B2B space also doesn't really allow you to have a half-baked solution when you deal with people money, people data, when you have the top three banks and so on. So you need to have a certain degree of professionalism around it. But that takes time and then trying to juggle all of this having a small team. So being in the market for fundraising, trying to get early results was an extremely challenging time. And as time moves on, I think it's getting easier, you're being known for something, you're having the relationships and so on. So that's there. I think the other component is, as you mentioned, there was a lot of skepticism. Because when you're trying to improve something, you basically ultimately have to tell people that something is not working in the first place, or that something is broken. And that's not very comfortable message to banks or ecosystem, things are not really working and so on. So, in hindsight, we've come a long way that early clients realized what we meant by that. But I think that was one of the early challenges as well.
Jeremy Au: (12:38)
So how do you go about messaging that in a nicer way/more diplomatic way?
I think, luckily, the ecosystem has changed. I think there's a lot of awareness, especially when it comes to open banking. Two, three years ago, the term open banking wasn't known in the ecosystem, all of a sudden, it's everywhere. It's part of white papers, report, studies, it's being discussed at conferences. That is crazy to see how far we've come on this side. But I think what we need now is actually real solutions that make an impact, going all the way to actually customers having easier financial access through open banking, getting products cheaper, more seamlessly. And I think there's still a long way to go. That's where we are early. So we're somewhere in between, there's awareness, there's positivity around it, but there's still a long way to go as well.
Jeremy Au: (13:28)
And you became a founder, was there any differences between being an operator and being a founder things that you had to learn to be different or skills going to change?
Absolutely. If you're an operator, you're sort of restricted to certain areas. So don't look left, don’t look right, just focus on one KPI. And I do this and that's great. Having that focus, becoming a founder, that vision extends it's more 360 approach to things. Obviously, fundraising, talking to investors is a big part. But building a brand is another component, convincing people internally and externally what the mission is, what the opportunity at hand is, why what you believe make sense there? So the communication side of things is very important compared to operating. Company culture reflects your values. And having everyone aligned on a vision and just leadership in general, are some of the elements I think that even till date, I'm still learning. You'll never get perfect, or can get better.
Jeremy Au: (14:26)
As the company grew in size, what are the things that you have learned about how you to change your style as a leader in terms of what you practice?
We are now almost 300 people in our Ayoconnect. And that's an interesting stage because it's by no means small. It's not like in the early days, when you sit down with your five first employees around the table, founding team, it's still a challenging stage nevertheless. When you go from 5 to 20 people that's a certain stage, and when you go from 20 to 50 people, once you cross 250 people you reach another stage where you realize, you don't know anyone in the company anymore directly. Even though we have town halls and various channels, direct communication to the rest of the team is not really there anymore. Like, how do you overcome the communication side of things? On top of that, we're also abroad first business. So we have people working out of eight countries, different languages, cultures, backgrounds, and so and so on. So we have a lot of people actually building technology for Indonesia that are not based in Indonesia. So we need to actually theoretically explain the concept of what we practically want to do.
Jeremy Au: (15:32)
Is that lonely, less and less more people, even though you know more and more people in the company? I'm wondering how you feel about that?
I think lonely is not the right word. Absolutely not. I'm fortunate enough that we have a strong founding team. So the same people are the borrower and shortcut baloney that we started the business with, they're still there today. That's a great core element. I'm not a solo founder. I think that's another level of challenge. We had a great team from the beginning. And I think on top of that, we're fortunate enough to have a really strong leadership team around us. We make sure that we get to know each other on a personal level as well, we spend enough time outside of the office as well. We fly people in if they’re not in Jakarta, there's a lot of support there. It's the opposite of lonely. I feel there's a lot of support coming from different directions also from the ecosystem as a whole. I think Southeast Asia has a very inclusive ecosystem for entrepreneurs, everyone is in the same journey. Support is passed on to a new generation of founders. Fortunately, it's not lonely at all. And I hope it stays that way.
Jeremy Au: (16:33)
Some myths and misconceptions about Indonesia and Fintech/banking system.
Overall, I feel regulatory side is very supportive. I think they're putting in place a lot of good frameworks that help companies like us actually navigating the space. On the demand side, there is a lot of willingness to learn about the solution that we provide, and how that can help businesses to monetize better or track customer retention, or provide more value to their customers. I'm more excited than ever about actually the way Indonesia is going. And especially Fintech in Indonesia is going. Things work differently here than in developed countries. But I think there is good opportunity here too.
Jeremy Au: (17:14)
Open banking, industry and Fintech’s are highly dependent on regulatory action. Because if without regulator incentives or action, then every bank is continues being a walled garden. So is it fair to say that regulator desire to push the maturity that ecosystem is one of the biggest macro tailwinds, you think, for the ecosystem to grow, obviously, in Indonesia, but also across Southeast Asia? Or, do you think there are other factors that drive open banking in Southeast Asia?
I definitely prefer if there's a good regulatory body in place that actually can drive an agenda. Because at the end of the day, we need to know what that agenda is? It helps put a framework in place that basically puts certain rules in place of what you can do and what you cannot do. But then there's always guys needed that basically built the technology to stack and operate with address guidelines. So the alternative to that is you have to push the boundaries, and you have to basically go into new territory. And more often than not, that is gray area of what you can do and cannot do. And I think what happened in Indonesia in the last 12, 18 months, has really helped passed away on getting clarity and even comfort, that's where we see banks now taking more comfort in collaborating with API platforms and opening themselves up. Because they understand that they are acting as for the regulatory framework and they’re decreasing essentially, they're the last ones that want to try certain things or that are not clear there. Having said that, there will always be areas where the regulatory side plays catch up and that's normal. I think we are at a stage now where we understand the roadmap very well, for the next coming months and years ahead, we're actually even getting to a stage where, to a certain extent, be involved in the discussions or being consulted on some of the ideas, like half a voice in policymaking or decision making process as well. That's, I think, extremely exciting. So if you're able to shape the future of the country, and to do things affect hundreds of millions of people, for the next decades to come, you’re understanding the impact just a small play and in that overall ecosystem. But nevertheless, it's super exciting.
Jeremy Au: (19:23)
What advice you have for founders who are building in the gray?
I think communication is the key. Like, it's okay to push boundaries, it's okay to do things that are not written out in detail somewhere else. But you need to be very transparent about what you're doing, why you're doing and let the right people know about it. So discussion is the basis for everything really, that's number one. I think number two is also a little bit your personal risk appetite to a certain extent. So some are just a bit more comfort pushing. There is no general advice. It's like different approaches probably also sometimes lead to the same outcome, but having a feeling for the market helps have like, where are sort of the lines, the lines are sometimes a bit blurry. But understanding how the regulatory side things, what their KPIs are, what the epic mandate is, definitely helps it and also understands how they might think about certain things.
Jeremy Au: (20:15)
On that note, could you share with us about a time that you personally have been brief?
I think it's coming back to your earlier point, just taking the decision and the leap of faith to come to Indonesia in the first place. Taking any job offer in a country that you've never been before. Indonesia is home right now. I've been here for 10 years. My wife is Indonesian. We have two kids. I probably becoming Indonesian from the inside. I'm always saying, it's a fascinating place to be. I love the people. I love the culture. I love where it's heading and all those different little data points and being part of that journey, compared to Germany, where I'm from and what I'm used to. I haven't seen any of this rapid change. It's not for everyone, you need to be up for it. But if you embrace it, then it's a very rewarding journey overall.
Jeremy Au: (21:04)
Leap of faith, that big phrase here. Could you share more about the emotional aspects about why it was a leap of faith?
Just really boils down to a bit of a gut feeling, an emotional Trifa. I always love traveling. I spend a lot of my time outside of Germany. I lived in the US. I lived in the Caribbean. I lived in eastern and southern Europe. I spent time in China before that. So I was just always very open minded. When I did the decision, by no means thought that I would spend the rest of my professional career in Indonesia. I mean, you don't know to that extent when you made the decision, you're like, let's give it a chance. Let's try out it feels good, something new, something exciting, chance to prove yourself. So that was sort of the driving factors at the time and that was good enough. Also having the comfort of always being able to go back to what you're used to and what you no. And there's also an interesting concept, if you ask people on their deathbed about the biggest regrets in life, it's always like, “I wish I would have tried this, I wish I would have done that, I wish I would have gone out of my comfort zone”. So that regret of not doing anything always a big driver for my decision making as well, unconsciously. And maybe that's where the entrepreneurial passion comes from. Because building a business is, I do see a repeating pattern there in some of my decision making both on personal side and on the business side.
Jeremy Au: (22:22)
That's amazing. And you mentioned that you're now have two young children. Would you really go ever become founders? What advice would you give them on a career? What would you say?
I would probably love that. My parents always gave me a lot of freedom, and they trusted me and my decision making. And that's, I think one of the most rewarding feelings of growing up. That's definitely something I want to pass on to my children. So I'm always there to support or be of advice if asked, but it's their journey at the end of the day.
Jeremy Au: (22:52)
I noticed that becoming a dad has changed my outlook on life as well. I'm curious, has it changed your outlook on life as well, and how so?
I think definitely, priorities have changed. I talk to a lot of partners and consulting and investment banking companies, and one of their biggest regret is that they weren't there when their kids were growing up. And they're not getting that time back. How to prioritize, how to organize, how to plan, where you're getting better over time? At the end of the day, as planned as it sounds, kids having family is just another project as well. Don't get me wrong, I mean it for the right reasons. Like, you need to become very honest with yourself about managing your time and priorities and so on. And that means you're actually more sensible with your time.
Jeremy Au: (23:35)
Do you have a To-Do lists? Do you have a Gantt chart or those have planners for family as well?
So weekends are sort of really family time. I think it doesn't always work out 100%, but times are very supporting. Being an entrepreneur gives you the freedom to actually build the company and the culture around it. So it's not just me who values those kinds of things, I see a lot of our leadership team, our employees that have similar values, very important as well spread priorities that are important to us to the rest of the organization as well.
Jeremy Au: (24:10)
Amazing. On that note, I'd like to wrap things up by summarizing the three big themes for this conversation. The first, of course, is thank you so much for sharing your wall stories, moving to Lazada, from your time as an investment banker and management consultant, and at the same time moving geography from Europe to Indonesia and Southeast Asia. So it's amazing to hear what you learned on the ground and how you get yourself used to the culture, but also learn rapidly. And built up to the second thing, which is how you came up the idea for Ayoconnect, and what you learned as a founder, but also as the scaling CEO. So that was a really interesting set of learnings about what it means to be knowing less people that showed up people, but also how you managed to handle that with across the team. And lastly, I really enjoyed. I think this segment around like we call the personal leap of faith. So obviously you meant that in a professional scientist, moving geography and moving cultures. But also, I think you mean that in the context of your personal life in terms of family, some of the learnings that you have had as a new dad, so thank you so much for coming on the show.
Thank you so much for having me. I really enjoyed the conversation. It was a lot of fun. Thank you so much.