Ryan Manafe: McKinsey to Founder, Indonesia Infrastructure Bottlenecks & Hub-and-Spoke Business Model - E339

· Founder,Start-up,Indonesia,Podcast Episodes English

“The field is different from the concepts. When people spend their time in Jakarta and other big cities, they suddenly think that they’ve already seen all parts of Indonesia, but they only spend time in the four biggest cities of the country. They haven't realized that outside these four or five big cities, it's a different world. That's why they think it's easy to replicate. It ends up with a lot of businesses, startups, and e-commerce, the consumers are concentrated in the big cities only because since the beginning, the solution has been tailored for the urban people who live in the big cities, not for people living in the rural areas.” - Ryan Manafe

“When I worked for an ad hoc government body, I found huge discrepancies between people living in the urban areas and those in the rural areas. That’s why after McKinsey, my first startup’s purpose was to bring electrification to rural areas, but then I found out that the best solution for them might not be energy. A lot of areas got electricity after we put up solar energy, and worked together with natural resources industries like plantation and mining, but then, the welfare of the communities is not changing significantly. I learned that electricity is not a game changer. I found out that a lot of daily necessities or staple foods are priced 30%-50% percent higher compared to the goods that we purchase in the big cities in Indonesia. At that moment, I thought electricity wasn’t the main thing that would transform the lives of the people, so I started thinking about democratizing the people in the rural areas, so they could access daily necessities as cheaply as we do in the urban areas.” - Ryan Manafe

“Hubs are simply micro fulfillment centers. They’re a depot from where we will deliver the products to our users. For the suppliers and distributors that we work with, the depot is simply a drop-off point. So they don't have to serve the individual users or buyers in the rural areas separately. They just drop off their goods in our depot and it's very helpful for them because if you work with a lot of distributors, they will have this term called MOQ, or the minimum order quantity to justify their logistics cost. A depot helps them to fulfill the MOQ. We don’t build a hub from scratch or acquire it from someone else. We utilize the existing ones. It can be a small house, a shop lot, or an unutilized warehouse. We work with the owners and the local entrepreneurs who own the properties and connect them to our warehouse management systems. The cost is as cheap as putting in a laptop to help them manage the goods.” - Ryan Manafe

Ryan Manafe, Cofounder & CEO of Dagangan, and Jeremy Au discussed three main themes:

1. Indonesia's Infrastructure and Supply Chain: Ryan shared the infrastructure and supply chain dynamics beyond the major islands of Java and Sumatra and the disparities in development and access to resources in those remote areas. He delved into the interaction between urban centers and rural areas and how infrastructure bottlenecks often impede the transportation of goods from rural production areas to urban consumption centers, leading to inefficiencies, increased costs, and potential losses. He also explained the often-overlooked challenges faced by middlemen in the country’s supply chain and how they play an essential role in connecting producers with consumers.

2. Dagangan's Business Approach: Ryan highlighted their innovative approach to working within the supply chain, aiming for a win-win situation for all parties involved. He explained that businesses can leverage a hub-and-spoke model to efficiently reach rural customers, with the first and mid-mile logistics handled by the brands and manufacturers. He also discussed the key performance indicators for their investors, brands, and users: for investors, to showcase progress toward profitability through unit economics and operational efficiency; for brands, to expand their reach across regions and outlets, increasing product delivery; and for users, to increase their revenue significantly and even expand their business premises.

3. Ryan’s Founder Journey: Ryan shared his transition from being a McKinsey consultant to an entrepreneur deeply committed to impacting rural areas and contributing to Indonesia’s progress. He recounted building his first successful venture, only to bravely venture into founding a second company, Dagangan, with a revamped and innovative approach. He emphasized the weight of this decision, especially considering his familial responsibilities, as he navigated these waters while supporting his pregnant wife.

We also discussed the significance of maintaining strong ties with rural communities, maintaining operational discipline, the role of technology in bridging the urban-rural divide, and the importance of work-life balance.

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(02:03) Jeremy Au:

Hey, Ryan. Really excited to have you on the show. You are such an experienced and thoughtful founder that I thought this would be an incredible journey to share. Could you share a little bit about yourself?

(02:13) Ryan Manafe:

Thank you, Jeremy, for having me. So I'm Ryan, CEO and cofounder of Dagangan. I started my journey in a semi-military high school years ago, and then it's my long-time dream to be in the army. I was accepted into Air Force Academy as well, but then I didn't continue because I didn't get the blessings from my parents. So, I went to college, but then, I think the dream is there. After I graduated from college, I continued to Master's and then worked for the government for a while. When I met McKinsey and then, long story short, I shifted to become a McKinsey consultant for years and then built my first startup, which is a renewable energy company. But then, during my time in those startups, I found out that electrification from renewables is specific because we are rectifying the remote areas. It's probably not the game-changer. What's the game changer for the poverty, for the welfare as the cheap, affordable, high-quality daily necessities for them? And that's the very reason why we built Dagangan four years ago.

(03:09) Jeremy Au:

Amazing. So I remember that in your early days, you were a consultant at McKinsey, a couple of years there. I'm so curious. Why did you choose to be a consultant and what did you learn there?

(03:18) Ryan Manafe:

Well, because I think my dream was to be in an army and it's about doing something for the nations. And when I didn't end up to be in the army, I thought, there should be something else I could do other than the army, and becoming a consultant and really opening my eyes and widening my network. And then I can pinpoint which industry, which segment, and which profession can be a very good substitution for becoming an army. That's why I joined McKinsey, and I feel like making sure consulting is the place for people who haven't really detailed out what they want to do in life is a very good transit point.

(03:55) Jeremy Au:

Sounds like me as well. I was a consultant as well, at Bain and I had to figure it out from there. And so what's interesting is that then you chose to go from consulting and then you decided to eventually become a founder, right? So you described the problem and what you're trying to solve. But how did you decide? Was it like you wanted to become a founder first? Or did you encounter the problem first? How did you get your way towards eventually founding a business?

(04:14) Ryan Manafe:

When I was in McKinsey, I knew that to be able to deliver impact other than army and politics, which is, it's going to take some time to be able to go to the politics, but the businesses are making impacts but you have to reach a point to be able to really drive the business to make the impact even more effective for the stakeholders.

So if you join big companies, that is going to take time for you to be able to climb up those later and become the decision-makers. So I think that the fastest way is to build startups. That's why I jumped to be a founder right away after the vacancy and at that time, I met stakeholders that feel they also have an interest when we do renewables, so I think it's a mutual interest, then you set up that company.

(04:54) Jeremy Au:

Right. So how did you encounter this problem? Were you seeing this in your McKinsey decks, Tier 1, Tier 2, Tier 3 cities, you know, those kinds of slides, or is it something that you're encountering yourself? How did you come about and think about the problem?

(05:05) Ryan Manafe:

I think it started from my government days. So when I worked for this ad hoc government body, I found out that there is a discrepancy. It's a super big, huge discrepancy between people living in the urban areas and people living in the rural areas and that's the reason why, after McKinsey, my first startup is to bring electricity to the rural areas. So, I think rural areas was there since the beginning since military day government days, but then I found out that the best solution for them might not be energy. During my 1st startup, I found out that a lot of areas are electrified after we put solar energy working together with the industries, with the natural resources industries, like plantation and mining, but then afterward, the welfare of the communities are not really changing significantly. And then during those times I learned that electricity is not a game changer. When I found out that a lot of daily necessities or staple foods are actually priced way higher. We're talking about 30, 40, 50 higher compared to the goods that we purchase in the big cities in Indonesia. So that moment when I thought, okay, so electricity. It's probably not the 1st main thing that will help transform the lives of the people. And that's the 1st moment I I started thinking about democratizing the people in the rural areas so they can access the staple foods and daily necessities as cheap as we do in the urban. areas.

(06:33) Jeremy Au:

What is the problem of that? I mean, there's always differing levels of costs depending on how far you are, how far the supply chain is. So why is that a problem from your perspective?

(06:43) Ryan Manafe:

So, I think number 1 of course, the fundamental problem is the infrastructure. So I think without infrastructure development, of course, Dagangan's business model will not work, but then, since 10 years ago, infrastructure development was very massive, especially in Java and Sumatra, the two most populated islands in Indonesia. But then after those massive infrastructure development, nothing really changes. And then afterwards, the second thing we have to think about is even if the infrastructures are massive, the supply chain is not optimized yet. And when we talk about the supply chain, it takes time for the brand to build the supply chain. So it ends up only the big brands. And I'm talking about only one or two big manufacturers that are able to reach the rural easily.

But then the problem is the other brands, like a lot of brands are also willing to penetrate rural areas and they can provide better and cheaper goods, but they are not able to do it because they don't have representative, they don't have clarity. They don't have feasibilities. They don't have arm and leg and what we are doing is we are building all of them for these brands. So we are combining the concept of sub -distributorship and group buying. And then we built the last mile capabilities as well. And we also provide them with visibility. So they know their users, they know what products they have to develop. That's what we are doing. And then when we are doing that suddenly we can make sure these products are available in the rural areas with the same price because I think that's the idea.

(08:05) Jeremy Au:

Yeah. You mentioned that there was a lot of investment in Java and Sumatra. So obviously there are more areas. So for someone who's not familiar with Indonesia, how do you think about the different geography areas obviously within Indonesia, but also how they differ in terms of infrastructure and supply chain?

(08:20) Ryan Manafe:

So when you go outside Java and Sumatra, you will find out the population is centralized in the capital city of the province. So by the way, Indonesia consists of 33 provinces, and every province have their own capital city. In Java, if you go outside the capital city of the province, you will still see a lot of people.

And then you will see a lot of houses, a lot of even buildings located outside the capital city of the province in Java. But then if you go outside Java Island, you go to the Kalimantan Island, Sulawesi Island, or Papua Island, for example, when you go outside the capital city of the province, you will find out it's like totally different world, like, the distance between one house and another house is like kilometers, and then you will hardly see buildings. So I think that happens because the infrastructures development in those island is not as massive as Java yet.

Another proof, for example, is if you're talking about train route train railways in Java, all even almost all of the cities are already connected with the train railways, but it's not happening in islands outside Java. However even Java is already, much more developed compared to other islands, the discrepancies I'm talking about is still happening. So I think in Java, the problem is no longer infrastructure development. It's about end to end supply chain platform that can connect the brands with the people that is living in the rural areas. And then for the other islands, I think once infrastructure is developing, which is happening right now, then the platform should follow as well, because if not infrastructure, which is without this clean and integrated supply chain for rural areas are nothing.

(09:50) Jeremy Au:

Yeah. I mean, infrastructure, of course, is very important, and that's a fundamental piece that where the politics and the local governance is making those investment decisions. But what's interesting is that you see a lot of startups are kind of like. You know, I see a lot of startup decks, and they put all 33 provinces and it feels very similar . They make it seem very simple. We're going to cover Java, Sumatra and all of the other provinces in three years. And I'm like, whoa, that's a lot. So why do you think people don't understand the difference there?

(10:15) Ryan Manafe:

Well, I used to be in a semi military high school and in one of our activities is we went through jungles to visit people living in remote and the selected areas. I used to be in a renewable energy startup that focus on electrifying. It's only an area. So I spend a lot of time there days, probably weeks. So I know the field is really different from the concepts and probably, when when people spend their time in Jakarta, and in other big cities like Surabaya, Makassar, like Medan, and then they suddenly think, I already see all parts of Indonesia, but actually they only spend time in the four biggest cities of the country, and they haven't realized that outside these four or five big cities, it's a totally different world. So I think that's why probably they think it's easy to replicate. And the consequences, it ends up all of those businesses, a lot of startups and a lot of e-commerce the consumers are concentrated in the big cities only because since the beginning, the solution is tailored for the urban people who live in the big cities, not people living in the rural areas.

The simple example would be we who live in the cities can casually buy our daily necessities from e-commerce, from those existing solutions because it's free shipping. But then if you leave a dip in the rural areas for every one kilogram of goods, you have to pay two to three bucks. So if you are ordering five kilograms of rice from the platform, then you have to pay 15 bucks, which the price of the item itself is probably only one buck.

(11:35) Jeremy Au:

Yeah. I think that's such an interesting dynamic, which is that I think the certain cities and certain countries obviously, it feels like it's seamless, right? It's like free shipping. But then the cost of shipping itself is just a known, inherent costs, that just happens to be subsidized by some platforms for some areas and there's this kind of like brutal reality of the fact that, hey, you move a package from one place to another place, it takes money, takes time, takes effort, right? How do you see that pace of change happening? Is it accelerating? Is it declining? Is it staying the same? How do you think that change of the cost of shipping or the logistics? How is that improving across Indonesia?

(12:09) Ryan Manafe:

Yeah, I think, if I'm a shipping company, I will make sure I first focused on the highly dense population cities. And that's the reason why if you your companies are operating in the big cities, I think that the wisest option is to work with the existing logistics company or shipping companies. But then if you operate outside the spec cities and then you rely on them, it would be tough because probably some of them don't have any operations in this remote isolated rural areas. And even some of them have, then they're going to charge you a very expensive cost. Then after they charge you a very expensive cost, then you have two options. Either you subsidize it, meaning it's very difficult for you to reach positive unit economics or you ship it to your users, which most of them are middle of people who live in the rural areas, which they end up not using your services. That's the complication happening right now.

And I feel like, it doesn't mean that is the solution because like what I mentioned previously, a lot of brands are actually targeting the people in the rural areas, and they already have kind of the existing distributorship in the back cities. What they cannot do is covering the last mile, which is from those big cities to the rural areas. So instead of you try to solve all of the shipping problems only with the shipping companies. You probably want to work with the existing distributors of the brand as well. So, they can help you cover the first mile and mid mile and you can focus on the last mile delivery only. That's why we built hub-and-spoke because the idea of hub-and-spoke is taking care of the last mile, and then the first mile and mid mile will be covered by the manufacturers, the brands and the receivers.

(13:39) Jeremy Au:

How do you think about the different steps of that? Because, in some obviously dense areas, that chain of handoff to one another is pretty short. But obviously, across these different provinces, province to province and then city to city, how long and how complicated do you think this chain becomes for those who aren't familiar with supply chains?


(13:56) Ryan Manafe:

So, for some brands that only have disabled to ship in the back cities, they have to rely to the third parties to make sure their products are delivered or their product are sold or distributed in the rural areas. The problem is they cannot control the third parties. And they cannot control a lot of things. Number one, they cannot control the availability, meaning the third parties probably choose to put on hold the products until they see there is a scarcity and then the price goes up and they are able to take more margin which will also ruin number two, your price. So not only the availability, you cannot control the price in the rural areas as well because of this third party. And the people in the rurals are very price sensitive. So if you couldn't price your products at the same level with the product they're used to, then it's very difficult for you to penetrate the market. Now, what we offer differently is you can control us, meaning like, you know where we are going to distribute the products.

We are not going to sell it to the random places outside the island. We will continue the distribution to the rural areas within the province because we have the geographical location. By the way, you can always open Google Maps and type Dagangan Hub and you will see our dots on the islands right away.

And number two, you can't control the price. So. If you are the brands, you can always open our platforms and we give you special access and then you put the price of your products that you want to sell through our platform. So you type in the price yourself so you can control it. And on top of it, even with some brands, we give you even more data. So we let you know who are the buyers. And what products they are buying other than your products. And you can start to think of the profile and then what kind of product you should develop and what kind of promotion campaign programs you probably want to launch. And it is very hyperlocal, meaning it's not like one data, but it's a compilation of data coming from different regions that we serve.

(15:44) Jeremy Au:

Well, now we're talking about Dagangan. You're building out hubs. Aren't hubs expensive? Aren't they capital intensive? What's the point of building a hub anyway? Can't we just share with somebody else? Can we just trade? Why are we setting up these hubs? What is it is the point of these hubs anyway?

(15:59) Ryan Manafe:

Well, so hubs are simply a micro fulfillment centers. So, it's a depot and from where we will deliver the products to our users, and for our suppliers and for our distributors that we work with, The depot is simply a drop off point for them. So they don't have to serve the individual users or buyers in the rural areas separately. They just drop off their goods in our depot. And it's very helpful for them because if you work with a lot of distributors they will have this term called MOQ, minimum order quantity. To justify their logistics cost. So I think depots help them to fulfill the MOQ and when you say we build hubs, it's probably a bit too much because we don't build from .Scratch We don't even acquire it from someone else. We just utilize the existing ones.

So, in the rural areas, there are a lot of buildings. It can be a as small as house. It can be a shop lot. It can be an unutilized warehouse. And then we work with the owners, the local entrepreneurs who own the properties and then connect them to our warehouse management systems. So when we say about the cost, it's as cheap as putting a laptop and some racking to manage the goods. That's it.

(17:11) Jeremy Au:

So I think what's interesting is what do the hubs do? I think that there's a lot of different models out in the space that have gone for asset light. Some people have gone for more asset intensive. When you think about this, what is the overall strategy here from your perspective of how the service and serve this underserved population?

(17:27) Ryan Manafe:

Number one is the deepest penetration. So what we offer to the brands is you can penetrate deeper. And based on that we quote unquote charge them for incentives for us. That will help them to penetrate deeper. And the main reason of this is it's going back to both making sure the price that is given to the rural areas or the rural people is the same with cities. So we don't have to charge too much margins. We charge just enough margin because on top of those enough margin, we already get incentives from the brand and the incentives and the additional margin is important for our profitability. And that's the reason why we have economics and that differentiates us with others. So, that's the main ideas. However, to be able to do it, we cannot rely with the existing stakeholders. If we rely with the existing distributors, it's going to be tough for them because most of the distributors are located in the cities they are not located in the rural areas.

And then if we ask them to deliver to rural areas they have a calculation called minimum order quantity. So we cannot just ask them to send one piece, two piece to the rural areas, there is a minimum order quantity. And that's the reason why we need to have a stock point or a depot. And that's the idea of the hub. So the hub is basically a stock point to making sense the delivery from the area distributors located in the cities to the rural areas we are covering, to meet or fulfill the minimum order quantity. And then this depot, then we'll do the last mile to the users. And I think it depends when we talk about asset light, if you mean asset light is we are not controlling physical assets, I think even the big platforms, they are controlling the physical assets. But if you mean asset lights, meaning not owning physical assets, I think we are also asset light because we don't own it because it is basically owned by the local entrepreneurs and we just work with them.

(19:14) Jeremy Au:

So what's interesting is that, as a vertical, we've obviously seen both some emerging successes, but also many failures emerge over the past couple of years. From your perspective, what are some of the learnings that we should take away from this time?

(19:26) Ryan Manafe:

I think number one, you cannot do it alone. Like, even on the deck, it looks simple. But as you mentioned when we say about scaling up outside Jakarta, scaling up outside big cities it's a big things and we cannot do it alone. We should work with the existing stakeholders. It can be a rural people, the entrepreneurs already own houses or they own shop lot, or the brands. We should work with them because I think the the objective to penetrate rural areas is not only our objective. It's also the objectives of the brands that want to market and distribute their products to rural areas so we should work with them. But then the problem is in the cooperation or in the collaboration, it should be a mutual benefit thing. So it's not only they help us. We should be able to help them as well. We should justify our value add to them. And I feel like lot of players end up operating in the cities or the areas surrounding the cities, because it's very difficult for them to go outside those areas to really go to rural areas.

And then when they are not really operating in the rural areas, it's very difficult for them to convince the brands to help them, because from the brand's perspective, if you don't help me penetrate, if you end up operating in the cities and then cannibalizing my distributors is going to give me problems. So I think that alignment should happen among the stakeholders and how it's not only about how they can help us, but how we can help them. I think that discussion probably didn't really happen. Meanwhile we try to make it happen since the ,beginning.

(20:49) Jeremy Au:

Yeah. So I think what's interesting is that there's always that discussion about whether to work with existing system and make it win versus kind of replacing them, right? Because I think there's been a lot of conversations, which is saying like, you know, middlemen are inefficient. Middlemen are low productivity, middlemen are redundant and duplicative, right?

So I think there's that perspective that you can just take out one or two of them and then that gives you your margin and so forth. So how do you think about that? Does that actually play out in your life or is it more situational? How do you think about it?

(21:17) Ryan Manafe:

Yeah, I think the idea of replacing the existing players because we want to take the margin and put it on us because we feel like that's how we take margin. But then, instead of replacing them and then take the margins, how about if we think it like we help multiple stakeholders on the accessing ecosystems and because we make their job easier, because we help them to get bigger margin, then we share. We basically shared that additional benefits. So that's how I think about it. Practically, it's not going to be as easy as I say it because, every stakeholders have their different interests and have their different problems. What What I can say now is after four years building and operating Dagangan, it's doable.

(21:57) Jeremy Au:

Yeah. And I think one thing I actually really respect about you is that, I like that there's the theoretical, but also the practical. And I think one thing you've done very well is that everybody kind of knows that building a strong kind of operating margin business is important, making sure it's efficient and effective. Everybody knows it's important, but it's very hard to do right and put in practice. So I'm so curious, how do you go about doing it? How do you maintain the discipline, at a company level to be effective?

(22:21) Ryan Manafe:

Well, I still remember when I when we went to the brands at the first year and even second year of our operations. No one care about us. So I think there was a moment, like the first 2 to 2. 5 years when we built in silent. And then only on the 3rd year, brands start to recognize us and want to work with us. And during the first 2 3 years, we felt like probably we did something wrong. Probably we didn't do it the right way, but sometimes, even we do the right thing with the right method, we just need to wait until we can really see the result kick in and until we can really see other people are convinced by it.

I think there is a delay and lag time in those mechanisms So before rushing to change the method, changing the objective, changing the way, why don't we wait for a while and see, and make sure whether we are doing it in the right way or not.

(23:10) Jeremy Au:

Right. And as you scale the operations, I think a lot of companies, as we've seen in the space, unfortunately have become very capital inefficient. So you must end up burning a lot of money, but for yourself, you've been able to maintain that operational discipline. So as a leader, what do you need to do in order to make sure that you're on the right track?

(23:27) Ryan Manafe:

Well, to start with, We have covered 20,000 villages in 40 districts in five province in Java Island, and then we serve 30, 000 active users and also serve 100 brands. And all of this happened with the amount of funding that probably one of the least in the sectors. So I think convincing the team to focus on the right metrics is very important. Some founders of the startups, some teams will probably focus on the funding amount as the thing that defined the success, or some of them will think revenue growth is something that define their success. For us, I think it's only two. Number one is profitability because we have to be responsible to our investors. Number two is the impact we deliver to the users because it defines the thesis of the business. And by seeing with our own eyes, that the lives of people change. It will gives us a psychological energy to continue moving on.

So I think those two things are the metrics that we focus since the beginning. And sometimes things go up, sometimes things go down, the revenue go up, revenue go down. Sometimes we get funding, a lot of money in the bank, and then sometimes it's tough, but what kept us moving is we get the buy in from our investors because they know this is a profitable business. And we get the buy in from the values objectives users through the impact that we know this business is providing value to our stakeholders.

(24:47) Jeremy Au:

Could you share about what the right metrics you think are for a company in this vertical? What do you think they are?

(24:53) Ryan Manafe:

Well, I can map out the stakeholders into three groups. The first one is our investors for sure. Number two is the brands that we're working with. Number three is the users. And I think it's pretty straightforward. For investors, at the end, they want to see that we are reaching or getting closer to profitability. So we show it through the unit economics, through the margins, through how we can run the business more efficiently. And then from the brands, they want to see they can cover a bigger areas. They can cover more provinces, more villages. They have more outlets that buy from them. They have a more products that is delivered. So I think those things, we always update the brands we work with and we monitor it closely and for our users there are always stories that encourage us, like, some of the users can increase their revenue from 500,000 rupiah, around 30 bucks to 2 million around, 100, 150 bucks. So it's like two to three times increase.

And some of them, when we start serving them, they're only selling from their living room. And then after three years working with us, some of them are able to not only rent, but buy another building for their own stores and selling more things. Those things we don't really measure it for every single users, but typically we take some samples and see their journey after working with us. And it is very fulfilling.

(26:12) Jeremy Au:

Yeah. Talking about fulfilling, could you share about a time that you personally have been brave?

(26:16) Ryan Manafe:

Well, the moment when I leave my first startup to second startup is the moment, the first moment that I think I was brave because the first startup is supported by conglomerate, and then I think it's already becoming a big business as we start acquiring. But because I feel like this is not a game changer for the rural areas I need to move on to the game changer because probably I will regret in the rest of my life if I didn't do it.

So I did it and during that moment I just recently married and my wife just gave birth. So, you know, a lot of questions how if it's not succeeding and a lot of things, but I think I say to my wife, rather than regretting for the rest of my life and I also don't know, don't want to blame it on her later on, if I didn't make this decision. And she understood and then we agreed to move on. It was tough at the beginning. But then, I thanked her because she's supportive. It ended up that we can continue with Dagangan and pursue my long-term vision and passion to serve the rural areas and really provide a game changer for their welfare.

So I think that's the moment that I feel brave and I think during that moment as well, I learned that projecting the worst case possible and communicating it to my significant others, which is my main stakeholders that time is very important. And we plan out if that really happened, then what were we going to do? And if we don't take the steps which is like, if I stayed in that company, I probably end up never make any effort to build Dagangan, then what's this going to happen? It's probably worse to our relationship. Financially probably good, but then it's not really good for the relationship. So I think that's the first moment.

The second one, probably when we define Dagangan, because I think back then In the startup world people try to mimick the story from the successful startup outside Indonesia and bring it to Indonesia. So, during that moment a lot of people are asking, " Is Dagangan a B2B commerce? Is Dagangan is a social commerce?" We sometimes fell to that trap to also mimic the story from successful startups by saying ourself, actually, B2B commerce and social commerce. But then in the last one and one and a half years, we clearly declare we are different. We are not one of them. We are rural commerce. It's not easy because it's going to take us more time to explain to the potential investors and to people, but then we have to stay true with who we are.

(28:23) Jeremy Au:

So, I'd love to hear a little bit more first about you mentioned about having to have those conversations with your significant other, and you said that you structured the worst case scenario. You communicated that, so how would you advise somebody who's thinking about being a founder, but also has big personal family commitments and a loved one? How would you advise that person to structure that conversation or get ready for that conversation?

(28:46) Ryan Manafe:

I think number one, it's to measuring how important it is for you to pursue your dream. How significant is it for your life? And what is going to happen if you choose to not pursue it? Can you imagine your life without pursuing that dream? So I think sometime s, we say something is a dream. Meanwhile, it's not really our dream. We're just mimicking others. We're just jealous with our our friends who are doing startup but it's not really our dream. So I think that's why the conversation cannot happen because it's not your dream. And if it's really your dream, then you can feel it and you can't imagine it if you end up spending the rest of your life without really doing anything about it.

(29:24) Ryan Manafe:

However, if it's your dream and you can imagine how miserable your life is if you don't do anything about it, then I think it's going to be easier for you to share your feelings to your significant others. and I think if you're transparent enough with them, it should not be the first time they heard it from you because you probably talk about it during your date or first meeting.

(29:42) Jeremy Au:

Can you imagine going on a date and then you're like, tell me about yourself. And it's like, I have a dream to be a founder. Let me tell you about all my dreams. I mean, it's kind of cute, but also I can imagine it doesn't work for every date.

(29:55) Ryan Manafe:

But I think in my case with my wife during our dates, she knows that I think I always have passion for the rural. And it's not, I want to build startup. I want to build dagang. I know it's just my heart and my, my, my passion for the rural areas.

(30:08) Jeremy Au:

Yeah. And that's amazing. That's attractive for sure. And I think what you're also implying is there's also sacrifice and there are trade offs. So from your perspective, what are those sacrifice or trade offs that you should be aware of or that you need to articulate? You mentioned some of the worst case scenarios, there's an element of risk, but what are the trade offs do you feel should be communicated or discussed with in advance?

(30:26) Ryan Manafe:

Yeah, because once we are married, we are no longer one, but we are one pickets with our wife and probably our kids. So I think it's such a self centric movement. If we just say this is my dream. This is very important and I want to do it. It should not be coming from someone that who is married and especially they have kids. So I think What we should think about is what's going to happen to the family if I end up pursuing it and then when I pursue it, it's not 100 percent guaranteed it's going to be a success. If I fail, what's going to happen to the families? And then laying out this, worst case scenario is very important.

And number one, can we do something to avoid that or to minimize that? And if not, or if we can, but it's still, there is still probability it happens, then what we can do together as a spouse, as partners. It has to be super clear. In my case, I give time one and a half years during starting, if we cannot get funding, if we cannot reach the specific milestone we want to reach, then I have to stop doing this and going to go back to work. Why 1. 5 years? Because that's our savings. So our savings is enough for 1. 5 years. So if we cannot get anything out of it in 1. 5 years, I have to go back to work. I'm going to get any job as long as I can feed my family. And my wife is very supportive and she's saying if that happened she will also go back to work because during that time, she just gave birth. She's not working. She's working now.

(31:43) Jeremy Au:

What's it like becoming a father? Does it change the way you are as a founder? Does it change who you are?

(31:48) Ryan Manafe:

Founder, you know, when we are a founder we have an objective, we have a drive to make things happen. And we are really focused on that. We use like that, that narrow glasses and only seeing the objectives without really thinking about the impact of what we do to people surrounding us, the impact of what we do to other communities and stakeholders. But now after becoming a father, even if I become very thoughtful because I still remember when I go home very late and then my son running at me, hugging me and asking me, why are you always working? It means a lot to me. And I think like, okay if that is a very important work to do, if I can do it at home, better I do it at home. So I can spend time with my son as well. And it trained me to actually think about every single action I do in life whether this probably have impact on others.

Like the fact that that I work outside home and work inside home, back then, I didn't really think through it. It means a lot for my son. So, probably, in other parts of life, there are things that I think like, this is a simple option. I just do it because I like to do it, but then probably choosing A or choosing B will impact other people's feelings. And now, I learned to be more thoughtful about it.

(33:01) Jeremy Au:

Well, thank you so much, Ryan, for sharing. I really enjoyed what you shared. I think there are three big key takeaways I got from this conversation. First of all, thank you so much for sharing about Indonesia and infrastructure and the supply chain. I thought that was a masterclass for someone who's not familiar with Indonesia as a market, but especially the deeper structural aspects of it, about not just Java and Sumatra, but also how to think about the 33 provinces and how the cities and rural areas interact with one another. I think that was a really fascinating conversation not just of the chain, but also the problems faced by the middlemen as well as customers as a result.

The second thing that I really enjoyed was you sharing about what makes Dagangan different. I think I've definitely seen you operate that and it's so nice to hear you share it in your own words about what you're doing differently, which is, in terms of your approach to work with the supply chain, to make sure it's a win, to really be focused on operational efficiency, but also thinking through deeply about the metrics that's needed for investors, but also for your customers as well as your suppliers and brands. So that was really interesting to have that conversation. And I also appreciate what you shared about following the trend around social commerce, but being able to say, Hey, we're willing to do the hard work here and you know, take the work of educating investors about what that means.

Lastly, thank you so much for sharing about your own personal experience, being a founder. I love that journey, obviously of being a McKinsey consultant. But how I think underlying all of that was your passion for rural areas, for improving the country no matter what domain it is. And I thought it was interesting to hear about how you built your first company and then it was taking off and you said, no, I want to build a second one with a different approach. And I really appreciate that throughout this, you talking through how you approach that conversation with your family and your then pregnant wife, I can't imagine it's super difficult. I mean, I have had that conversation with my pregnant wife and my decision was to stop being a founder. So I think you went you went the braver path than me. So, I really appreciate you sharing all of that. On that note, thank you so much, Ryan, for sharing your journey.

(34:54) Ryan Manafe:

Thanks, Jeremy, for having me during your weekend. Say hi and also sorry to your family because I'm taking some of your time.