Gita Sjahrir: Indonesia TikTok Shop Ban, Cloud Kitchen Shutdowns & Founder Market Adaption - E338

· VC and Angels,Indonesia,Women,Southeast Asia

“When it comes to emerging and more nascent markets like Indonesia and Vietnam, your fundamentals matter because it's very hard to cover that up with. In the US where you can spend a lot of money and have high customer acquisition costs, in the end, it's also a country with a really high GDP per capita. It's also a country where the economy of California itself is already bigger than the economy of the entire Indonesia. Their probability of creating liquidity and making money out of that situation is a little bit higher. There are more people who can spend how much they need and people who spend to make up for all that cost, which we have a really hard time doing here. That's why fundamentals and newer markets really matter.” - Gita Sjahrir

“Learn how to design better questions. Finding better ways to learn about reality. Look at both primary and secondary data, look at how people live their lives, and be a neutral observer. If You're dealing with entrepreneurs in the food space, observe how entrepreneurs in the food space live their lives. What is taking up the majority of their time? What are the things that they keep complaining about? You also have to think that just because people complain doesn't necessarily mean they're ready for that solution yet. It's a question of prioritizing people's problems and finding out which market problem is truly worthy of solving because, in emerging markets, the answer is rarely as straightforward as doing a Stanford thesis. They're usually a lot of systemic cultural types of other issues surrounding it that you have to understand as an entrepreneur, and also as a VC.” - Gita Sjahrir

“If you're in the building stage looking at the market from a scientist's point of view. Scientists always have a thesis. They're experimenting. It's a Lean Startup Model at one point. Build and learn. You have to constantly realize that every time you learn, that's a small win for you. That's a win and you better celebrate that because, in the end, there's not going to be many people who reach a stage when they’ve built a company with a billion-dollar revenue and up. That's very hard to do. See it like you’re a scientist trying to find solutions, and taking every small win as you can, because the road to entrepreneurship is also very long. Come at it with humility but also with curiosity and thirst to find the solution.” - Gita Sjahrir

In this discussion, Gita Sjahrir, Head of Investment at BNI Ventures, and Jeremy Au talked about three main topics

1. Business Model Localization: We dissect why Grab, Gojek with Rebel Foods, and DishServe have closed over 100 Indonesian cloud kitchens over the past year. Gita and I discuss the criticality of tailoring the model to fit local dynamics, highlighting factors like GDP per capita, time availability, food distribution, and urban design. We discussed that the driving factors were not the destruction of demand, but instead the misalignment of the business model with consumer behavior. For example, Indonesia's cloud kitchen prices and margins were highly competed by current food models, like ordering food for delivery from local restaurants, cooking at home, or going to a local eatery.

2. Indonesia TikTok Shop Ban: We talked about TikTok Shop’s ban in Indonesia and the scrutiny it faces worldwide in the USA, India, and Vietnam. Gita highlighted the need for understanding the nascent political landscape of Indonesia and policy decisions in response to viral issues. She stressed the importance of fostering win-win relationships with regulatory bodies rather than falling into adversarial dynamics, thereby safeguarding startup enterprise value and helping local communities. We compared this to the Airbnb bans in Singapore and NYC, and the differing outcomes for Uber and Didi's relationships with their USA and China regulators.

3. Founder Adaption to Market: We discussed the importance of founders, both local and immigrants, to approach the local markets with humility and how it should not be mistaken for lack of confidence, but rather be seen as a strategic advantage and a means to ensure that innovations brought forth by startups are received positively by the community. We agreed that founders must be willing to learn from the market, and iterate their approach in a way that both respects and leverages the local context, ensuring their value proposition is both clear and compelling.

We also touched upon the impact of cultural understanding in shaping business strategy, the necessity for founders to view their journey through a scientist's lens, the role of leadership in turbulent times, and the evolution of consumer behavior in the region.

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(02:18) Jeremy Au:


(02:19) Gita Sjahrir:

Morning, Jeremy.

(02:20) Jeremy Au: I

t's like, good morning. And then you and I have been like figuring out to make sure the technical stuff is all settled. So it's always such a fun time.

(02:27) Gita Sjahrir:

You're ushering me into the 21st century.

(02:29) Jeremy Au:

It's okay now. Everything's all nice and updated. And so I think you are amazing because people were sending me photos of you talking at She Loves Tech the conference that was organized by Leanne Robers. She was previously on Brave Podcast as well. Can you share a little bit more about what you talked about and why people were interested to snap photos of you and be like, Hey, do you know her?

(02:50) Gita Sjahrir:

First of all, my talk was at nine-something a.m. So I was very surprised that people even wanted to go. It was also the second day and the first day was super hectic. So I was I'm really surprised that people went. I was really happy about that. It was really sweet and kind of people and we talked a lot about the VC model. So the one triggering question that I got is the V. C. Model dead for Southeast Asia. To be fair, it was also asked by a venture capitalist, one of my friends, Virginia from Teja Ventures, and she had some very good arguments about it, should we be playing the Silicon Valley game if our reality of the market is very different from Silicon Valley? Our GDP per capita is very different in Indonesia versus the U. S. Our depth of market is also very different than the U. S. So should we be playing the exact same game and my answer to that is you shouldn't be playing the exact same game because the beauty of catalyzing capital should be to localize it with the market. So you should find ways to create product market fit, including as a fund. So that you find different ways, different methods of getting your return that makes sense with the current market that you're in. If you know that you can't monetize from the majority of the mass market yet, then you find other ways to create your product and find companies that work best in that situation as you continue to look at a longer time horizon. So overall, it was really interesting to just hear different ways of looking at the situation. So there was also a fund of funds. There was IFC, there was me, there was another VC. I'm a CVC. So to have all the different ways of looking at investing in Southeast Asia without going into replicating full on Silicon Valley model because in the end, we are here. So how do you make the game ours?

(04:45) Jeremy Au:

Yeah, and I think it resonates a lot with how I think about it as well. The truth of the matter is that Southeast Asia is a difficult ecosystem to be part of because of so many reasons we've talked about in the past. And so, that's the crux of it, right? So I think, you know, being, but there is a risk premium for it, right? Because People understand it's hard. So if you're willing to be that catalyst capital. But I think the tricky part is that I think a lot of capital players, I'm sure when they're new to Southeast Asia, they think it looks like the Silicon Valley game except pickier.

If that makes sense, right? It's the same game, but smaller and it's not, you know, and so I think that's the tricky part of it. And I think based on that, I mean, an example of that was that we recently saw cloud kitchens, for example, right? So there's a recent dynamic where Indonesia's major cloud kitchen chains closed shop and that's reported by Tech in Asia.

So talking about how Grab Kitchen closed all its Indonesia branches. Dish Serve which is by Rishabh. And I unfortunately had to wind down. And so talked about different factors. So from your perspective, Gita, what do you think about Cloud Kitchens and what's happening in that sector?

(05:46) Gita Sjahrir:

This better not be generalized one day to say Gita hates all cloud kitchens, which is absolutely not true Okay, but on the other hand in the end, in this world of venture capital, or actually just in the world of business in general, it doesn't really matter if you're a VC or not. The real question is, have you attained product market fit? And for me, as I learned in my Kauffman Fellowship, there's only one heuristic to product market fit, which is if your product doesn't exist tomorrow will your market scream? Like, you know, kind of like when WhatsApp was down for two hours and we all probably screamed. And will they come and pay you and ask you to bring back your product? And I think the thing with Cloud Kitchen is actually the concept itself makes total sense for the market where there are a lot of these homegrown brands. There are a lot of new up and coming entrepreneurs, especially in, I would say the SME. Not really MSME, but maybe more the small medium enterprise type of size. So in itself, it makes sense. But I think that's when we have to start getting gritty about for that market, how much are they willing to spend? Like, how much do they value you? That becomes the question. And as we saw in a lot of these models, they just didn't find the right pricing.

I mean, it sounds like such a simple problem, but it's really not. I mean, there are literal PhD thesis on pricing. And it really just goes back to fundamentals, which I've talked about before and which I'm very passionate about because when it comes to emerging markets and more nascent markets like Indonesia, Vietnam, your fundamentals really matter because it's very hard to cover that up with funding, actually, because let's say in the U. S. where you can spend a lot of money, you have really high Customer acquisition costs. I mean, in the end, it's also a country with a really high GDP per capita. It's also a country where the economy of California itself is already bigger than the economy of the entire Indonesia. So their probability of creating liquidity and just making money out of that situation is a little bit higher. In the end, there are more people that can spend how much they need people to spend to make up for all that cost, which we have a really hard time here doing. And I think that's why fundamentals and newer markets really matter. Things like pricing, things like being very realistic with the market, like, can you accept that the market just can't meet your pricing? Does that mean you have to change the way you do your business, your structure? Does that mean you have to perhaps not offer as many services as you say you want to offer and just offer the bare bones part but the ones that they actually value? It's kind of like that question of, you know, if everyone just wants scissors, are you sure you're going to give them a Swiss Army knife? You know, they really just want scissors though.

(08:36) Jeremy Au:

Do you want a super app?

(08:37) Gita Sjahrir:

Yeah, basically they really just want scissors and if they really just want scissors and they're willing to pay let's say a dollar and you're saying but the swiss army knife is a dollar fifty, then maybe you're better off just giving them scissors that they're really Not looking for your swiss army knife at all.

And I think that's How I look at a lot of these business models just being super realistic with your market and Rather than blaming the market and saying the market is not ready. You knew that going in you've realized that the market is nascent. You've realized that the market is $4, 800 GDP per capita you realize all of these things and the probability that there'll be $10, 000 GDP per capita is not in three years. So if that's the case how are you going to do it as a business knowing full well that this is the reality right now? Because I heard a great video by Y Combinator. And they said, you know, you really need to answer two things and lots of people can't answer these two things, which is one, why now? And two. What makes you so different?

(09:36) Jeremy Au:

Yeah, I think that one interesting part is that, when Cloud Kitchens came, and I remember lots of pitch decks flying around about Cloud Kitchens, a lot of the decks kind of opened up with the perspective that it was already happening elsewhere, right? And it's happening in the US, it's happening in Europe, and let's talk about Yeah, and like you said, you know, let's be real, like I said, it's a U. S. versus Indonesia and like you said, the GDP per capita. It's also the distribution, like the availability of food, like, you know, if you're living in New Jersey, what's available at that time, what's the diversity of food that's available. And, you know, from my perspective, when I was in the U. S., I was living in Boston and I was, obviously an income well, but I was also very time starved and I would come home pretty late. And so I eventually bought a food from a company called Tovala, which is basically airline food. So basically it's a smart oven and they give you prepackaged food.

You put it in and it does the whole airline thing, which is steamed, but it basically gives you like a 10 minute, a 20-minute cook process like a single button push, right? But if you look at the price point of what I was doing, it made no sense for me to do that in Singapore because there's 24 7 availability of food in Singapore. Food delivery is also really easy. At the day, I just want to eat, and I just want to eat at 11 p. m. or 7 a. m. And so that's an interesting dynamic. And so I think it's not a surprise to hear that Grab closed the 48 kitchens, to hear Dapo Bersama, GoFood, the joint JV between Gojek and India's Rebel Food to close the other 73 outlets. But they're not saying no to food. They're just saying, we're just going to do food delivery. Right? Which is a better solution, in his approach, than the cloud kitchen.

(11:09) Gita Sjahrir:

Right. That's the thing. Also, it's super easy to look at a situation, generalize it, and go, this means Asians don't eat food. But, that's really that's really not the thing. And a lot of people like saying that, right? A lot of people like looking at a situation and go, Oh, that means Indonesia is not looking for education, or it means Indonesia is not looking for logistics. It's like, absolutely not. Like, that's not the point. But I also encourage a lot of investors and also entrepreneurs, whoever's trying to solve the market to realize that when you're looking into nascent market, and I have very good friends in other emerging markets, such as Latin America, the African continent to see the reality of the market as is, see the inefficiencies, and then question deeper. Why does it even exist ? So a lot of problems with Indonesia is actually a systems question. It's a systems issue. The system literally doesn't exist, or it exists, but horrifically administrated and executed, or it is inefficient by design.

And if that is the case, then your next question is, who benefits? Because sometimes things are inefficient and they're kept inefficient because people benefit from it somehow. And it's not as simple as saying, oh, the government, the Illuminati, or whatever, because you also have to think about how many informal players exist because of this inefficiency.

So, no, it's not just the people working in ivory towers, but it's also normal, regular people that are finding ways to benefit from such inefficiencies. And that is the question you really need to figure out. And in order to figure that out, you need to do the really unglamorous job of talking and learning about the market, asking the right questions. So not asking questions like. If there is this solution, would you pay for it? Because that's the kind of question where most people will say yes, and then come reality time, they don't. So learning how to design better questions, find better ways to learn about the reality, maybe not look at just primary data, but secondary data and physically looking at how do people live their lives being that neutral observer fly on the wall and really understanding, for example, if You're dealing with entrepreneurs in the food space. How are entrepreneurs in the food space living their lives? Like, what is taking up the majority of their time? What are the things that they keep complaining about, but maybe they're still hesitant to find a way to solve it? Sometimes you also have to think about, yeah, just because people complain doesn't also necessarily mean that they're ready for that solution yet.

And if you force them to pay, that they will, right? So it's a question of... Prioritizing also people's Problems, finding out which market problem is truly worthy to solve, because in emerging markets, the answer is rarely as straightforward as doing a Stanford thesis and going, ha, I found the answer to the unbanked immediately. No they're usually a lot of systemic cultural type of other issues surrounding it that you really have to understand as an entrepreneur. And also as a vC.

(14:11) Jeremy Au:

On that note, talking about the overall market as well, there's also the dynamic regarding TikTok shop, where the ban happened. And basically they were given a week to off board as millions of users. So kind of curious what you think about that.

(14:27) Gita Sjahrir:

Okay. I hope the government doesn't watch this. Okay. Look, I think also when you're dealing with nascent markets, including Indonesia, Indonesia is a very new electoral democracy. Again, like 25 years old and an electoral democracy since 1998. And what happens when you're dealing with very I would say a newer system is that you're also dealing with a system that's probably needing a lot of small wins too.

And so, so much of that move seemed more as a reactive stance, rather than something proactive that was thought out for years and created in order to make a more thriving ecosystem, et cetera, et cetera. This seems more like a reactive stance, which is actually quite common in Indonesian government policies, which is, there is a problem it went viral, so now we have to make Executive decision or a new legislation to deal with that particular problem and I see it from both sides, which is, yeah, that's not necessarily the most thorough and deep way of looking at an issue, but also I see it from the other side, which is, you're also dealing with a country with a lot of systems not in place yet.

Like we literally don't have a lot of infrastructure in place for lots and lots of sectors, not just entrepreneurship, not just that, but everything else. And so there's a lot of firefighting, and I think any entrepreneur can totally understand this situation, which there's a lot of firefighting, right?

Like, there's a lot of oh, there's a hole here. Let me plug it. There's another hole. Let me plug it. And as much as we wish it were different, but then again, it also wouldn't be an emerging market with tons of opportunities and a lot of possibility for change and growth and especially with the growth of our economy and then possibly benefiting in the long run. Then we wouldn't be this. Then we'd be a completely developed market that is ultra efficient and that's really not where the game is at right now.

(16:22) Gita Sjahrir:

So I think again, TikTok shop and possibly any type of other legislation in the future where VCs and entrepreneurs would go, what, how could you make my life harder? But honestly, that is the reality of an emerging market. And then better question is more, what can you do to shape the conversation, but also just really understand like what the market's about. How are people making these legislations? When you're talking about Indonesia, it's not a place where there's one key of power. Key of power is actually pretty spread out in different places. There's a legislation, there's the ministries, there's this. So then for your business and for what you're trying to do. Who and what kind of sectors in the, public service area, should you try to understand? Should you network with? Should you learn to see what their challenges are? Because sometimes it's also, again, not as straightforward as people think. They would go, Oh, they're doing it because they're mean and evil, but humans are rarely one dimension, right? okay, who are not just funding them, but who are pressuring them? Are there civil societies that can cause major, major protest demos that will wreck the society tomorrow if they rebel? What are the factors here? So I think that's the important part.

And for the TikTok ban, I can see other reactive policies moving forward that are similar to this. So just always being on the lookout and really understanding all the factors and learning not to simplify it all the time. Not to go, because they're bad. Because you're stupid, because this is a bad market. But really understanding, okay, if it's that person, or it's that ministry, or it's that legislation what are the pressures, like, who are who are affecting that decision?

(18:07) Jeremy Au:

Yeah, I think what's interesting is that you reminded me that this is actually part of a broader pattern of legislation that involves ByteDance and TikTok, right? So obviously had the U. S. Congressional hearings where they almost wanted to ban tick tock, but eventually ended up not going with it. So that's one side. So I think it's a successful defense, I would say, by ByteDance and TikTok. And of course, there was the India ban on TikTok that did go through. That was very much driven by the geopolitics of the countries. And I think this, in Southeast Asia feels a little bit more like it should have been resolvable but maybe that wasn't the dynamic where, honestly, from my perspective is, I think for a lot of startups, it's starting to realize that if we're really in this age of policies, I was at a talk by Josh, you know, and by two days ago, he called it "the age of the great fragmentation" and I was like, the implied piece of it is that if you really believe that the world's continuing to de globalize or that there's going to be those pressures, then investing in a proactive approach with legislation and local governments is really important, because the truth is, right after this Indonesian news came out, Vietnam recently just issued a statement saying like, Hey, Vietnam has found TikTok guilty of breaching information security and e-commerce laws.

So it's part of a broader pattern where a lot of work has to happen. And the truth is, ASEAN is very different countries, very different governmental structures, which is a bit different to how New York and New Jersey and Boston, for example, those are different entities, but frankly, much more similar in terms of the approach and the markets and who you need to talk to in the regulator side. So I think there's an interesting learning for a lot of folks, actually, is that a lot of startups that are scaling now are going to start thinking a lot more proactively about having a strong regulatory team that's able to proactively work with regulators and skate to where the puck is going instead of being surprised.

(19:52) Gita Sjahrir:

I Really like your insight on the U. S. because, again, Indonesia was not the first country to have any problems with ByteDance, right? But that's what with almost any innovation. We need to understand that technology and digitalization often move faster than legislation. For example, even fintech in Indonesia or, forget Indonesia, just, look at the U. S. and All the other countries, oftentimes, just the way technology runs, because it's able to replicate faster, because it's able to scale faster. Literally, people in public sector just haven't moved fast enough to accommodate that. And so, rather than seeing it as opponents, or I don't really like the concept of, enemies just because why are you making your life harder, but like every time people say let's beat that or like, let's win, that always, sounds to me that's going through a harder life.

So what's so wrong with finding the common values or the common interests? Rather than positions so interests because there are interests underneath all those positions and what's so wrong with finding common interests and really seeing how you can align that and make it work to your advantage because It's because otherwise you're just gonna fight an uphill battle, especially if you're an entrepreneur or you're a VC working in really large countries. Like I wouldn't dream of entering, another emerging market and saying that this has to be my way and if this legislation or this politician is against me, I will fight them.

Like you probably will lose. And that's also not the point and it benefits Not a lot of people.

(21:29) Gita Sjahrir: So I think when we think about product market fit and, we always talk about finding the solution. No, really do find the solution because your solution is supposed to affect not just, your consumers, but it's affecting the greater ecosystem as a whole. And sorry to say, public sector is part of that. And I think there's, Sometimes such a bad binary that people make. Oh, I don't want to deal with public sector. And then public sector thinks the same thing the otherwise. Oh, private sector just wants money. And they don't realize sometimes how our worlds are just so united. It's supposed to be like, you exist within the same environment. Public sector literally cannot keep going without private sector. Private sector also cannot keep going without public sector. And I'm talking about very simple stuff sometimes. Like, okay, if you're in Indonesia, who do you think provides Electricity, what do you think, provides very basic needs same in the U. S. too. Yeah, think about waste management, just stuff like that. And just being very aware that you're living in a world that is shaped by a lot of other people. So, the challenge isn't to fight those people, but is to bring those people along with you on your journey as you solve problems in the market.

(22:45) Jeremy Au:

Yeah, the interesting dynamic is that at the end of the day, this is a wake up call for folks to really work closely with civic society and regulators and government. I think, it's a good difference. For example, in the U. S, the difference between Uber and Airbnb. I mean, Uber and ride share model has not been banned anywhere in the world effectively but Airbnb has been banned, in Singapore, in New York. And one interesting thought that I have is that, both of them tried to mobilize their customers to basically advocate because, there's proposed legislation that are winners and losers for every technology, right? And so, if you are losing out because of ride hailing, if you're losing out because of people renting out their apartments as places for tourists to visit, those losers are going to feel the pain and so they're going to, as a result, mobilize and become a coalition to lobby for a regulation, which is Understandable, because the truth is technology is about creating a future, but the people in the present will go through change. But I think the interesting dynamic is that Uber is able to mobilize the customers because the customers are people who live in those cities. They are voters, but Airbnb, the people who benefit from Airbnb are tourists and not citizens and the local people who benefit any legislative zone for Airbnb are primarily landlords who have multiple apartments, they had the most benefit for Airbnb. So they're not a natural voting group in a sense that you know, it's not. So if you are someone who's frustrated about rising rent, which is 99 percent of people in life, then you're just going to be like, I also don't like Airbnb. And if you want to buy a property, but some landlord is buying, you also would be like, I don't like Airbnb. And then if you're a local legislation and you're not getting tax or significant tax from them anyway, as well, the way the hotel industry is. Then you're like, what's the pros and cons of this letting Airbnb move forward?

And so I think New York city is one example, but Singapore, so it was a pretty early ban actually and so I think basically, it's a wake up call for startups again, invest early. I think it also gives VCs as well, who are operating, a better sense of like, hey, you're on a board, you are a bridge, you have that institutional history with the government, you have to be that, you have a role to do that as well.

(24:52) Gita Sjahrir:

I completely agree. I think it's the same as investors too. I know oftentimes investors will go, well, I feel like I've done so much. But I always question how proactive are you with the way you approach a lot of the sectors that your companies are in when you're putting in money into a company, other than I'll connect you with people, but also really think about how well protected is that sector? How is that sector been legislated so far? What are the things? And what are the movements macro wise that can affect that positively moving forward. So not just thinking about, oh, GDP per capita, but even more so for that sector. Let's say that sector is logistics. Are there going to be higher? State budget in the future to build better roads, better infrastructure is that in the plan? Like, are those part of the campaign for the next presidential election? Are those in the vision and mission for the larger political parties? Like, I think these are questions you can ask, not just for Indonesia, but pretty much for a lot of markets.

I have more of a say on emerging markets because I'm here, but I think these are some of the things that you can think about. Just constantly thinking about the macros, because the macros really matter. Oh my gosh, I don't even know why I have to keep saying this. But it's true. It's not as simple as also knowing that one big quote unquote big person in politics or three or five, but also knowing how the people play.

The fact is Indonesia is not the kind like, I know a lot of people think it should be like this or it's probably like this, but no, it doesn't mean if the president says a. Literally, every single person will do a like, he will have to still go against the legislation legislative bodies and a lot of other players.

So just really understanding where everything works, unless, of course, you're working in a market that is an absolute monarchy. That's completely different question, right? But I think a lot of times when we think about the web and the social networks of people in the public and private sector, oftentimes it's easy to just generalize it or just assume that you might need to know only a handful of people, but really understanding the interaction and just the complexity of the private sector and the public sector in those markets.

(27:06) Jeremy Au:

Yeah, it's interesting because, this means that if I was a founder, and I was like expanding to Indonesia or to Vietnam, I think it does mean that if you are a VC, that Has a little bit more of an understanding of what these regulations are, but also able to serve as a bridge. Then I think it gives you more of that value add, gives you more of that from a startup perspective, you're more likely to pick a VC that can do that. Now that we're all aware that a consequence of that is not, it's like it's pretty big. I mean, you're busy scaling. You're hiring everybody, and then suddenly, your enterprise value is like close to zero because you got to off board millions of sellers when we're in a week. It's very painful.

(27:45) Gita Sjahrir:

Right. Yeah, I think VCs definitely in emerging markets should be able to offer founders a lot more value in that sense, giving them more of 30, 000 foot view of how things are unfolding and also giving them like a history lesson of how things unfolded before in that sense. It's also important that as we see is we look at companies that are at least already doing their homework, at least they got their fundamentals, right? At least their corporate structure, if you're investing at a later stage or their governance they have those basics done right and if they're still trying to find product market fit at least they got their thinking and their methodology done well because the thing is if you're an emerging market and you know the probability that you become a first mover in lots of sectors are actually pretty high because we still don't have answers to a lot of common problems then You just don't want to put in more money to scale more problems you're trying to scale solutions.

So just also us being more aware. And again, that's what I said, like, are you sure you want to play Silicon Valley games if you're not in Silicon Valley? Because the cost for that can be much higher in emerging markets, where the probability that you benefit in the end, and it all makes up for the previous cost, it's actually a little bit lower because of the depth of our market and the reality of it. I think that's also the responsibility of the VC. Find companies that have done their homework so that you, with your 30, 000 foot view, hopefully together can find better ways to address a problem holistically.

(29:17) Jeremy Au:

Yeah. And I think it's such a key part, right? Because, if you are in the U. S. and you are just building a startup and you decide to beg for forgiveness rather than to ask for permission. Because you can push back the customers, you can mobilize voters, there's a lot, and maybe the penalty takes a long time, there's a court case, there's a fine, so these are all the dynamics that happen in the U. S. But, as we saw in China, for example, when Didi wanted the IPO and then they would have to delist from the IPO because it was not in accordance with what the regulator had previously communicated with them all the way to arrest and detention, right? It's also viable scenarios that happen outside the US. And so I think as a founder it's just got to have that, like, awareness, right? And obviously, I think if you're a local founder, I think you're excluded naturally to this, but I think for obviously every country has immigrant founders, right? And so, if I was a Southeast Asian in America, I would have played by American rules. And if I was an American in a Southeast Asian economy, I'd play by that local economy rules. And I think that's underappreciated.

(30:17) Gita Sjahrir:

Yeah you really nailed it there. That is something I deal a lot with. I think having foreign founders in different markets are a great thing because you add a completely different viewpoint. You might bring something fresh to the market, but that's why it's still so important to stop trying to make the market more than what it is, or try to say, why aren't you like, insert a different market? Why is Indonesia not like the U. S. ?Because we're not the U. S. And really, is , it's true. It's true. I deal with this a lot, or trying to go you should be try to liberate yourself from the shoulds because if you're working in a new market, you really do have to see the market as Is and just stop trying to impose any like moral judgment or whatever judgment you have on it because it just doesn't matter because as an entrepreneur, you're supposed to solve the problems of the market, whether or not you think the market is bad or good or basic or not, or, complicated.

It doesn't matter. You have one homework that homework is to solve the problems of the market. And I think, Coming in with curiosity rather than judgment is going to be very big for foreign entrepreneurs here to just Look at an issue and go, fine, this is the reality. Here are the pros, here are the cons. This is where it can take me realistically. In the past things haven't worked out. And rather than saying, in the past things haven't worked out, because no one's smarter than me, actually be very realistic that there's like, 7. 8 billion people in the world. You really believe you're the absolute smartest? Then question. What are the factors that are keeping these systems in place? Like, what are the factors that are keeping the current inefficient solution going? Someone must be benefiting. Who are these people? As you said earlier about civil societies. Get to know civil societies. Get to know people on the ground.

Be very unglamorous. Don't just go to cute coffee shops all the time because, especially if you're trying to solve, , the mass market issues or you're trying to solve things that are in outer Jakarta or outer inner cities, you really have to start questioning. Thank What are the variables and factors that are keeping these things in place and rather than judge them, get to know them with curiosity so you can solve it.

(32:37) Jeremy Au:

That's the tough part because you've got to build, and then You have to learn. And so it's so hard. And you just don't have time for everything. I mean, I totally empathize with those of you, like it's hard to juggle, but I mean, that's why being a founder, a successful one is on a big level spot.

It's not varsity, games and so forth. It's a elite spot and that's tough. You had to do it all right. And I can imagine like so many founders, like you spend all this time all these years building like crazy. And then suddenly, you realize at some level, like, that winners that loses from what I'm building. And obviously, the way you think about is like, I have customers. So you think about people who are winning from your service, the people who don't have that service yet, yeah. Who benefit from the future? Probably the customers in five or 10 years will benefit you from this service at scale. But yeah, like you said, the current folks in the system that benefit from the way things are today, or they do not yet understand how they will benefit in 5 10 years, and that's why I think crafting that vision and being able to communicate that with that, like you said, humility and local connection is really important. Otherwise, you know, it kind of all slips away.

(33:38) Gita Sjahrir:

I think also just to keep people sane, because just like you, I was also founder for like 13 years is. Rather than see it purely as a sport where you can obviously clearly win or lose, if you're in the building stage, just to keep yourself sane looking at it from a scientist's point of view. Scientists are always having a thesis, they're experimenting, basically it's honestly Lean Startup Model at one point and really just looking at it from a scientific point of view So, thinking about, Hey, I built and then I introduced a market and turns out it's still not product market fit. Okay, fine. doesn't work. And then just going, building and learning, constantly realizing that every time you learn that's a small win for you. That's a win and you better celebrate that because the thing is, In the end, there's just not going to be very many people who reach the I've built a company with a billion dollar revenue and up like that's very hard to do. So rather than seeing that long term that might not happen for most people, you really see it as, hey, I'm here as a scientist, I'm trying to find solutions and I'm just going to take every small win as I can. Because the road to entrepreneurship is also very long. I think people really underestimate how long, tedious, and very boring it can be.

It's you're doing often just very small things, done right, hopefully, over time. Sometimes you don't see the results for years. Like literal years. So just coming at it, like you said, with humility but also this curiosity and just this thirst to find the solution. And I think, hopefully, that'll keep people sane as they go on this freakishly long and rough journey.

(35:19) Jeremy Au:

On that note, I'd love to summarize, I think, the three big takeaways. First of all, I think it was interesting just to hear about what we need to do in terms of localizing and thinking through the local business models. And so we talked very much about cloud kitchens, being one of those phenomena where it was very much like, okay, this is happening elsewhere, so it should work here, we just got to localize it tailor it. And I think it works for some models and doesn't work for other models, but I think you have to be diving deeper. We talked about some of those assumptions, right? So GDP per capita, time availability, food distribution networks, even the urban design of where people live. These are all dimensions that factor into cloud kitchens and leading to hundreds of kitchens being closed because. They were not destroyed. You know, people are still eating. Like you said, Indonesians do eat. It's just that they're going to order them by food delivery. They're going to cook at home or this is going to eat at a nearby store, right? And so I think it's interesting learning about, all that model while also looking at the cloud kitchen model as a piece of news.

Second was, thank you so much for sharing about, TikTok shop. And I think it was nice because we're not just talking about TikTok shop because it's actually part and within. a broader pattern of regulatory action and debate around TikTok across the whole world. So, we see that in the U. S., India, Indonesia, and Vietnam. And so I think it's an interesting dynamic where I think it's a wake up call for Southeast Asian founders, as we discussed, to really be thoughtful about building regulatory early and being able to nurture those relationships and being able to frame up how it's going to become a win relationship instead of a win lose dynamic that it may be portrayed to be.

Lastly, I think it was really interesting to talk about, I think how all founders have to be humble about, the local economy, the local situation, the local reality. So we talk about the context of like immigrant founders, but also talk in the context of local founders that, you just have to be aware that your product brings a lot of benefit, but it also brings a lot of change, right? And change is scary, right? For so many folks. I mean, I don't like to change either as a human person, let alone, society is as difficult to absorb. So I think it's just interesting just to talk about how we can continue to be humble and work hard and craft narrative as well for time.

(37:20) Gita Sjahrir:


(37:21) Jeremy Au:

Thank you so much.

(37:22) Gita Sjahrir: Thank you so much.