Ilya Kravtsov: Inside Indonesia’s Startup Meltdown, eFishery’s Hidden Fallout & How Real Founders Survive – E590

"So you wanna depict a good picture, but you also wanna be realistic and say, 'Look, there could be this and this that can happen.' I'm doing that a lot more than I used to, and then admit that a lot of things you don't know. Say, 'Look, I don't know, and we'll experiment and see if this works, but it just might not work.' But to be more honest in that sense, I think, is a sign of maturity as a founder, right? Mm-hmm. And I've seen this in some other founders that are talking openly about their mistakes. They don't know, they're trying these things, and they hope it will work, they'll do their best, but it might not work—versus younger founders saying, 'Oh, we know what needs to be done. We're going full steam ahead, and this is gonna work out, this is gonna be massive,' right? You can immediately see the two more different types of founders." - Ilya Kravtsov, Co-Founder of Ringkas

"Founders should really be very clear on that. One thing is legal and the other one is illegal. You never wanna cross that line, right? But even what you do to try to hack your numbers, you also need to be transparent about that. As long as it's clear, people will take the risk. In that case, there were two lines crossed. Mm-hmm. First line crossed—that it was illegal, which you cannot do. The second line is that whatever was happening was not fully disclosed in a transparent way. So I think every founder should never cross one line for sure—and the second one as well. Only in that case you can boost your business or whatever you have to do, right?" - Ilya Kravtsov, Co-Founder of Ringkas

"But again, are you scaling for the right reasons? Are you scaling with the right methodologies? For me, it's not only about fake it until you make it. I think you need to, as a founder, take a step back and try to seek the truth. Seek the truth means, are you doing it just to boost your numbers, or are you doing it because you really believe that long term it's gonna work? And I think at a certain point, more and more—as a younger myself 10 years ago—I would be hungry about pushing the numbers and getting to that next milestone. But now I look at things differently. It is gonna explode—yeah—and it's gonna waste my years—mm—of effort, because boosting numbers takes a lot of effort. So that's why I think it's very important to seek the truth and be very honest with yourself. First of all, with yourself. Secondly, with your team, right? And that's why having a culture where your numbers are quite transparent and people know what's going on is very important." - Ilya Kravtsov, Co-Founder of Ringkas

Ilya Kravtsov, Co-Founder of Ringkas, joins Jeremy Au to unpack the rise and fall of Indonesia’s lending wave, the ripple effects of the eFishery scandal, and the hard lessons founders must absorb to build sustainable startups. They examine how early hype misaligned business models, how fraud damages more than just a company, and why radical transparency is key to long-term leadership. Ilya shares how Ringkas scaled without lending, why developer partnerships unlocked bank adoption, and how he carefully built a diversified cap table to preserve founder control.

03:00 Indonesia’s VC ecosystem matured: In 2012, only three VCs wrote 20,000 dollar checks and most people used BlackBerrys. By 2021, founders raised 5 million dollar pre-seeds with no product. 

05:24 Lending distorted metrics: Startups wrongly recorded loan disbursements as revenue and used inflated valuation multiples on their loan books.

08:27 Growth hacks vs. fraud: Ilya draws the line at legality and disclosure. He says growth hacks are common and acceptable only if transparent.

13:32 Ecosystem fallout from eFishery: Ilya dismisses the defense that fraud was standard practice. He says many founders now face reputational damage, blocked financing, and collateral damage from one high-profile failure.

14:10 Ringkas avoided lending: Rather than lend directly, Ringkas built infrastructure between banks and developers.

17:38 Banks adopted due to volume: Traditional banks opened up to Ringkas under pressure from digital banks and low mortgage penetration. 

20:41 Cap table strategy: Ilya capped investor ownership below 10 percent, preferring a wide base of angel and neutral investors. 

(01:02) Jeremy Au:  Hey, Ilya, good to see you.

(01:04) Good to see you. it's been two years since our last episode, I think we've done two episodes. One where you're doing your prior startup. Then we've done another one where you've, built a new company in the real estate tech space. Obviously a fantastic journey, but now we're gonna update and see how things have been changing. Could you introduce yourself for those who don't know you yet? 

(01:20) Ilya Kravtsov: So my name is Ilya. I'm the co-founder of Ringkas. A little bit of my background.

(01:24) Grew up in Italy. I finished my business school in Milan. I graduated during the financial crisis, so I was supposed to work for an investment bank in London. But decided that was not the place to be in 2008, 2009, I started my career in management consulting and moved from Italy to South Africa where I was based for a couple of years.

(01:44) Mainly advising telecom operators. my consulting firm opened an office in Singapore, and this is when I ended up in Asia for the first time. I was around 2011. spent a few years in Singapore doing the consulting job. And then decided to start my entrepreneurial (02:00) journey. Kicked off my first company in 2012, and that's where I moved to Indonesia. I've been based there for about 13 years. now I'm at my third venture. first one failed. Second one I sold, and now the third one. 

(02:11) Jeremy Au: what's been interesting and I know asked you that last time around why did you decide to build your third startup? You could, go back to consulting. So why, a startup? 

(02:18) Ilya Kravtsov: I always, reflected quite a bit when I started the third one because my daughter was just born my first child. Doing a startup, also becomes like a profession in some way. They say that you always want to invest where you have compounding growth. I felt that, building businesses is where I have that compounding effect, so I should do more of it rather than, switch to something else.

(02:40) I felt that I've been doing it for 10 years before I've, raised funds from investors. some companies failed, some I exited. I felt that the third one is where I can use all the knowledge and learning from the previous to make something better and also probably generate a bit more impact towards society. So that was another driver of doing something (03:00) yourself. 

(03:00) Jeremy Au: what's interesting is that, between then and now, a lot of things have happened, the world has changed, Indonesia has changed, your business changed, two years ago. my child was born and I became a vc start up. You went to another company. during that timeframe, I was very surprised because I was told it was gonna be quite a slow VC industry and then Yeah. Became super hot. In 2021. 2022. Could you explain the difference between that boom time of Indonesia, back then, versus today and. Why you think it has driven that difference? 

(03:26) Ilya Kravtsov: I think even I would want to step back, right? when I started my first company in Indonesia in 2012, what is happening now is still probably better than it was 2012, right? Because when I started in 2012, there was only three VC in Indonesia, and they were doing like $20,000 checks, the VC size was like 5 million each. at that time there was not even, smartphone adoption, right? So majority of the people using Blackberry,

(03:51) I still remember those times quite well. for me, the ups and downs of the cycles is not a big change compared to where I started, for (04:00) founders who started in 21, their baseline is crazy investment rounds, Crazy valuations for pre-seed, right? No product, 5 million pre-seed rounds and all that, now a lot of things have corrected. it is a lot more difficult to raise funds. It is more difficult to scale companies because you don't have infinite amount of capital.

(04:19) So you need to be very, I say prudent on your choices. So all that have changed, but having said that, the fundamentals of the country haven't changed much. It's still one of the largest countries in the world by population and still rapidly growing. Probably one of the largest markets in Southeast Asia in many aspects. So that hasn't changed, it's a matter of where the tech is right today, where the tech industry. yes, of course less funding, we have to look at it long term. But for founders, we see a lot less, I call them tourist founders.

(04:52) they start the companies not necessarily for the right reasons, as a founder, there's always pros and cons. the process that you have less (05:00) competitors, it's more rational, The cons is that you have less money to play around with, So you need to be very conscious on every decision you make, and try to build a more sustainable business and really pay attention on your runway, because raising in six months is just not an option at the moment.

(05:15) Jeremy Au: Most people didn't even realize there's a 10 x difference. The GDP per catheter. But like you said, the willingness to pay disposable income is even an order magnitude smaller than that, right? Correct. So I think people lost track of that. Yeah. And let's talk about that lending piece because you are somebody In tech space. let's talk about lending in a context of a business model in the Indonesia context. That. I think it was compelling because when you lend to your own customers And know, we'll call it buy now pay sum of credit. First of all, when you lend them. A hundred dollars.

(05:42) You get a nice operational metrics saying, Bing, I've led the a hundred dollars. Two is they take a hundred dollars and they buy you inputs. And so you get a hundred dollars of revenue back. So you're like, wow. Fantastic. The tricky part is that, your loan book gets valued at a certain multiple. Which is wrong. but that's how they were doing it. I saw (06:00) those claims that our loan book is this big, so we need to be valued on this value.

(06:04) And then we have this amount of revenue but if you deducted how much you lent out from the actual purchasing. Then it gone down. But then of course, first you have to remove the 1 cent on the margin. And then you shouldn't be valuing at a giant. Software as a service multiple. Those are the errors.

(06:17) what's also interesting is that, like you said, it's about risk, right? Because instead of valuing based on how much you lending, you should be valuing it based on the net interest margin, I always remember, I was working with a bunch of Indonesia startups and I was complaining.

(06:28) we collected $20. so there's revenue. that's a repayment out of a hundred dollars loan. That's not revenue. That's a repayment of a loan. You still have $80 And then you gotta make it up to a hundred. You gotta collect $110.

(06:39) To get back to that point of, profitability. And then also, what was the cost of that borrowing? Just because you took that money from the private vc Doesn't mean that there wasn't a cost to that so I don't know, but I always felt like a bad person. For, destroying the dreams of an innovation founder building a FinTech Business. But I'm just curious because you saw so many founders build out that 

(06:58) Ilya Kravtsov: Yeah. 

(06:58) Jeremy Au: Lending in all of (07:00) the businesses.

(07:00) Ilya Kravtsov: I think it was the era of the peer to peer, right? So I think it was a wave founders start businesses where they see. Money being invested. They're founders, they're investors. So we cannot completely detach founders from investors. if founders do certain things, it is because they see the appetite on the other side. funding is a key driver for people to actually start something in a certain space.

(07:22) I know at least a few businesses that probably would never have become lending businesses if there was no so much hype around it. So it was driven first by government introducing a license and trying to regulate traditional loan sharks. There was always saying that, there is under penetration of lending in Indonesia, people are underserved in that sense. every business. needed to put a lending story inside their business to attract investment.

(07:48) Similar, you would now probably see with AI, right? If you don't have AI somewhere in your business, it might not be as interesting to investors, So I think that was the lending era, at least in Indonesia. a lot of businesses that didn't (08:00) really need the lending piece we're adding it just to make the story bigger.

(08:04) But efficiency in particular, helped improve the numbers not all businesses had that, but if you are also landing, it's easier to bring that fuel into the equation. So to a certain degree it's easier to scale. And by definition, all founders, want to scale. To reach their next milestone, next valuation, et cetera. But again, are you scaling for the right reasons? Are you scaling with the right methodologies? for me it's not only about fake it until you make it.

(08:27) I think you need to as a founder take a step back and try to seek the truth. Seek the truth means are you doing it just to boost your numbers? Or are you doing it because you really believe that long term is gonna work?

(08:37) And I think at a certain point more and more as a younger myself 10 years ago, I would be hungry about pushing the numbers and getting to that next milestone. But now I look at things differently, 

(08:47) It is gonna explode. Yeah. And it's gonna waste my years of effort because boosting numbers takes a lot of effort. So that's why I think it's very important to seek the truth and be very honest with yourself, first of all, with (09:00) yourself, secondly, with your team, right?

(09:02) And that's why having a culture where, your numbers are quite transparent and people know what's going on is very important. And thirdly with your investors or whoever external party you interact with, I think that the more you try to seek that truth, the more you are eventually gonna get to a point where you want to be.

(09:19) It might not be that hyperscale but it will eventually be something that long term will be sustainable and you'll be happy about personally. So that's how I look at it. And that's what I think was missing at that time people were trying to catch that wave, which was fueled a lot by investors, 

(09:34) Jeremy Au: I think investors are not blameless and they're not doing enough. 

(09:37) Ilya Kravtsov: Because it's self-inflicted, right? If you throw money on something that by nature should not grow exponentially and lending should not grow exponentially, because if you read a manual of every bank and every risk manager, that's what they're gonna say. If he sees lending growing exponentially, then means that you're lending to the wrong people or you're not, doing properly your risk policies. That's why banks (10:00) move slow. 

(10:00) Jeremy Au: All these startups learning why banks have a risk management department, that's so huge. One interesting you said about boosting numbers, right? when you look at Bloomberg, the founder confessed that he was doing fraud, but he said that everybody else in Indonesia he consulted Said that growth hacking. Or boosting numbers Fraudulently is, market norm. What he was doing was, just doing what everyone else was doing, fiddling with the numbers. What do you think about that statement of his 

(10:25) Ilya Kravtsov: I think it's bullshit, right? it's easy to justify your behavior by saying, that's the norm, but in reality, there are people who actually suffer to get certain numbers there. And it's so hard, right? It's true that in startups you always try to grove hack, but that doesn't mean you need to have two different books. there is a big difference. And of course there needs to be. A certain transparency in your growth hacks.

(10:46) Jeremy Au: Yeah. 

(10:47) Ilya Kravtsov: If you're doing growth hack, you need to be transparent about it. And you say, look, this is my growth hack. This is how I did it. It's totally legal, but you need to know about it. you need to be honest on certain things that you do. Investors, see growth hacks, (11:00) And they might be fine with growth hacks, and they will discount that growth hack for whatever factor they want, as long as they know all founders try to boost their businesses, try to find growth hacks, try to scale in not traditional ways, but it doesn't mean that it's illegal, right? So I think it's very important to highlight what is legal, what is not legal, right? And founders should really be very clear on that, 

(11:20) One thing is legal, the other is illegal, you never want to cross that line, right? But even what you do to try to hack your numbers, you also need to be transparent about that, As long as it's clear, people will take their risk, in that case, there was two lines crossed, right? First line crossed that it was illegal, Which you cannot do the second line. Is that whatever was happening was not fully disclosed in a transparent way So I think, every founder should never cross one line, for sure.

(11:46) And the second one as well. only in that case you can boost your business or whatever you have to do, right? But I think those two lines never should be crossed. fraudulent cases, they're everywhere. Fraud cases are everywhere, but it doesn't mean that it is the norm or should be the norm, (12:00) whatever happened to the industry is good because, even if there were, people trying to think that way, now it's a red flag for them. whatever happened is for good reasons. It has corrected the industry. It made sure that people understand they need to build the hard way, the proper way. That is overall good for the future. 

(12:17) Jeremy Au: Yeah, and I think what's interesting is that these founders, everybody's making decisions, and I love what you said about seeking the truth, if you, as a founder are doing fraud, your team does not understand the truth of the business and they cannot work on the right things.

(12:33) Ilya Kravtsov: Correct. So it's a vicious cycle. Whatever you do, growth facts, also require a lot of effort, but the effort is being channeled to the wrong thing. you would rather, solve the real problem and really work hard on it. Rather than try to, boost the numbers that it's not gonna help you eventually. That's why I'm saying very important to, first of all. For yourself, understand what is the real truth, do you really believe in what you're doing? Secondly, being transparent with the team, and thirdly, being transparent with your investors 

(12:56) Jeremy Au: I agree with you. Because if the numbers show we're losing money in the lending program, (13:00) then the people in charge of lending would be like, let's slow down the lending.

(13:02) Ilya Kravtsov: It's normal. Like your employees would be the first one said, oh, hold on guys, let's sit down. This is not working. Let's try different things. maybe they would have tried something else that would have worked, right? They would have been open for the investors saying, guys, this is not working. Then they must say, look, forget about lending. Let's build another type of business. 

(13:18) Jeremy Au: There's so many other business you can do. 

(13:19) Ilya Kravtsov: many things you can do and I believe it could have worked out, right?

(13:22) Because it's not like everything was rotten, again, I think, this type of behaviors are very toxic in general, not only for the community. In his interview he's saying that he wanted to be the Robin Hood. So get from the rich, distribute to the poor. But in that, there is a problem There's hundreds of founders in Indonesia, and they're getting hit by that. 

(13:44) Jeremy Au: I've seen it. 

(13:44) Ilya Kravtsov: everybody who has been running their businesses now, they're marked as Indonesian founder and then, fraud case, they cannot get financing. Their employees are affected. They need to shut down businesses. the ripple effect of that is huge. even the Robin Hood story doesn't work, Because you're hurting the whole (14:00) community that's been created there, 

(14:01) Jeremy Au: Yeah. It's horrible. I think there are so many people who actually look at him as an inspiration role model. And now they're so devastated that. He screwed them over. And the whole ecosystem over really. you are also in the lending business, but not in the same way. You're not directly lending so I'm curious, how has your business changed? Because you're in the, real estate side. How has your business changed over the past few years? 

(14:23) Ilya Kravtsov: Look, in our case, we are not a lender, We don't have the license to lend. And to be honest, it's not our ambition. And I think lending and tech businesses, it's two very different animals, right? So if you start combining tech and lending, it becomes very dangerous. And we've seen many examples of that. This also taught us that is not the route that we want to go. So we define ourselves more what we call embedded FinTech infrastructure business, right? Where we created pipes from different channels of, property developers. And the banks, we try to digitize that process and channel customers. I think our business changed. every business evolves, right? back in the day, the (15:00) objectives were simple. get the banks to use our product, get the developers to use our product. channel customers from one side to another, right? I remember our metric was get one customer End to end, right channel from origination to getting the mortgage approved, That was our first goal. We are processing close to a billion USD per year. And that part is working. So we managed to scale the volume. Then the second battle was, how can we monetize on that volume? We realized that even though having contracts in place, it doesn't mean that you can collect. we had to build a whole product around collection we managed to increase our collection rates from our bank partners. How do you grow? And then you start thinking of the cyclicality of the business. We started with mortgages, Mortgage is a business that is subject to, cyclical cycles, when the economy starts, softening, if there's any downturn, then people buy less houses.

(15:48) That's quite normal. So now you start thinking, okay, what can I do to counterbalance that, right? And that's where we started launching more type of products. So now we have refinancing, we have home equity loans, the (16:00) market is maybe slowing down.

(16:01) People want to refinance their mortgages, Because they don't wanna pay the high floating rates. When market is slowing down, people maybe don't need a mortgage, but they want to use the house. They have to get a loan for their business as working capital, I think the evolution there is that you wanna start thinking how you can protect yourself against the cyclicality, And slow down. So that's number one. Number two is you start thinking multi-channel, Inevitably we started mainly with large developers. That's our main source of origination. And I think we, different type of loans require also different channel, right? So something that we've been pushing recently is what we call embedded channel.

(16:39) So where we embed our technology in third party websites. It could be listing sites, it could be other FinTech companies. So anybody who has a large amount of customers that would require any of our loan products, partnerships with fintechs or listing sites have been quite successful. That opens up new origination channels. I think we (17:00) haven't drastically pivoted the business in the last three years. We're just doing more of what we've been doing, solving different challenges increasing the volume, increasing monetization.

(17:09) Now really focusing on margins. our business is, high volume small margin business. So now we are, really focusing on how can we get that margin to improve, by upselling more products, by getting tiering from the banks for extra volume I think trying to solve every piece of the business and going down the PnL to reach profitability. And of course looking at how can we at the same time increase our time by doing more products, more channels, and eventually more geographies.

(17:37) Jeremy Au: Yeah. it's been interesting to expand products but I think you're one of the few people who have really unlocked banks. As a customer. I've seen so many companies fail. Because they've never gotten the banks to adopt. Supposedly you get parked under the innovation sandbox. You know what I'm talking about. And so many companies have really died and failed in the, emerging market banks because these never (18:00) become true customers or partners. What do you think has been that secret sauce or approach that has worked for you? 

(18:06) Ilya Kravtsov: I think this is a very good question. I was just talking to Dave and an investor and I actually said that I think our main achievement was to really unlock the relationship with the banks and have the banks using our software, we have about 700 branches logging into our software To accept customers. In general, if we look at the market, the market saw a lot of fintechs, five years before we started the business, right?

(18:27) a lot of fintechs in the lending side, digital banks, payments companies, right? for the traditional banks to see, young tech startups, entering their space is not completely unusual, right? I think that is definitely one, our business would be probably impossible five years before, a lot of it is the FinTech wave that started to shape the mentality, the traditional players. The second one is of course the era of digital banks started putting more pressure on traditional players to evolve, innovate, and digitize, 

(18:58) Because their BOD says, look, hold (19:00) on, there five digital banks are taking our customers. We need to defend, Our territory. that's why they started to be more open to work with third parties if they cannot do it themselves, a lot of the banks needed to go more mass market, 

(19:14) So if you look at mortgages, the mortgage to GDP penetration ratio very low, below 3%, right? And the reason why is that a lot of the traditional banks, are focusing on the premium segment, right? But if you wanna, basically grow your loan book, you cannot only focus on premium segment, which is of course the best one because you less effort, high loan amount, and so on, right?

(19:33) So they needed to go to the mass market. going to the mass market in Indonesia is very challenging, right? Because you just look at the geography, all the islands and the remote areas, mortgage is a very localized type of product. traditionally using salespeople is very difficult to scale. 

(19:47) So that's where they started looking at other digital solutions on how they can penetrate that mass market, at least on the origination side. the combination of the whole. cycle of FinTech, the pressure from the digital banks (20:00) and the natural limits of what the banks were doing to go beyond and attack that middle class where the volumes are very high and it's difficult to do it traditionally.

(20:08) The growth fact that we did is mainly, being able to secure large developers, that was the final catalyst that shifted the behavior and said, okay, the bank said, we'll work with you because you have that big volume, because you have the large developers working with you. But the whole other context was also very important. large developers unlocked the banks because of this history behind it that it helped. it's a kind of unique combination. I believe in other markets would be very difficult to get to that point where you have all these factors lining up and then suddenly the banks say, okay, let's do it.

(20:41) Jeremy Au: No, I think one thing you reminded me of, is that, when we were talking in the early days, because this was your third time being a startup and your experience in Indonesia, you were very intentional about who are the investors. Very intentional for sure. If I may share, 

(20:54) Ilya Kravtsov: yeah, 

(20:55) Jeremy Au: I thought there were two things you did very differently. One was you were very focused on building a broad range (21:00) of investors. And secondly, you were very focused on neutral investors. 

(21:04) Ilya Kravtsov: For sure.

(21:05) Jeremy Au: I don't know if you mind explaining that strategy from your perspective, because I don't think there's a strategy 

(21:09) Ilya Kravtsov: So investors very important, right? Yeah. Because I've seen many companies that, have a decent business, but then the cap table is just wrong and the whole thing collapse, right? And then there's so many cases of that. So the cap tables something that you really need to think and preserve And this is like your. best kept secret to a certain degree on how you construct it. So I think from the beginning there's different strategies you might follow.

(21:31) We knew that we are in a market where We need help. It's four of us co-founders. Two of us are Indonesian co-founders. Two of us are not Indonesian co-founders, but I lived there for a long time. So we knew, we need all the help we can get. The initial strategy was to get a lot of angels and other founders to really get us help. Get us their insights, get us their learnings and that we kept right. But then of course as we went along, we never wanted to have one investor be over dominant.

(21:59) (22:00) Because the moment you have one investor dominant it becomes very tricky If that investor disagrees with you, then it's a problem, right? So we always wanted to have more investors, but smaller stakes, And we build that cap table like that. we have a large amount of investors and good investors, and we try to get value from everybody, but nobody in our cap table has more than 10%. that is how we wanted to construct it. Some people say, having too many investors is a headache because you need to deal with that, It's true. But they are, positive and negative about it. If you have one investor that owns 30% of the company you better make sure you never have a big conflict. Because that could drive the company in the wrong direction. some early investors will want to exit and we will consolidate that. But at the beginning we wanted to build it in a very narrow way. 

(22:44) Jeremy Au: I think your approach to Angels and having a broad network is probably one of the best case studies, I've talked to so many founders and they're like, I want to talk to a cvc. I'm always like, you gotta go for Angels because they're the ones that are gonna help you the most. everything in Asia is based on relationship, (23:00) connections, introductions. for startups in Southeast Asia who skip the angel phase, they're really missing out on that. 

(23:06) Ilya Kravtsov: you learn so much from everybody. everybody has a slightly different perspective. if you really want to seek the truth, you need to make sure that you talk to everybody, understand each side. Your investors want to give you the best advice because, they care. But you need to have multiple opinions. It's very important. the risk is that you get somebody you don't agree with and the person has a completely different view that's where things can go wrong. The importance of being a founder and keeping that as long as you can is very important because the moment you lose that field, this is your business, your company, it's very different.

(23:37) Jeremy Au: How have you changed as, a leader and founder over the past few years from your perspective? 

(23:43) Ilya Kravtsov: I think it's a good question. in the past, if I would see somebody who's very talented and would not perfectly fit the culture, I would still, keep that person. my tolerance towards that has gone the other direction, for me, attitude is everything. (24:00) Skills can be learned, right? if I feel that somebody doesn't feel the culture is the wrong attitude it's immediately a red flag. And I'm a lot less patient in handling those cases. in the past I was a lot more willing to, okay, let's give him a try.

(24:15) I think the level of patience. went down right? Because you're fighting against time, the level of patience is less but not in a negative way. making choices you would make anyway just earlier, That's more in handling cases of misfit with the culture, for example. More on the internal side. I think a lot more transparent internally before, if you have like issues with runway or this, or company maybe not doing it as well. You still want to keep motivated so you don't share the full story with them which is very tough.

(24:45) And I know many founders do that. They don't want to burden their team when they have issues, but I think it's wrong. I think if you have issues, you should be open about it. you'll realize that people who work for you are a lot more mature than you think. if you are more transparent, they will (25:00) take away some of the weight and actually help you. That's something else I was not doing enough. as I said I'm forcing myself to, as much as possible not oversell. As a founder, you're always in a sales mode, right?

(25:10) Either with your clients. investors, or the team. One of the learning is, we want to be positive and by nature, founders are always optimistic, but you also wanna make sure you don't oversell, that can be dangerous territory so you wanna depict a good picture, but you also wanna be realistic and say, look, there could be this, and this, that can happen. I'm doing a lot more than I used to and then admit that a lot of things you don't know. say, look, I don't know, and we'll experiment and see if this works, but this might not work.

(25:38) So to be more honest in that sense, I think a sign of maturity as a founder, right? I've seen this in some other founders that are talking openly about their mistakes they don't know they're trying these things and they hope it will work they'll do their best, but it might not work the words like more younger founders saying no, we, we know what needs to be done. We're going full steam (26:00) ahead and this is gonna work out. This is gonna be massive, right? But you can immediately see the two more different type of founders. I think the second one shows a sign of maturity. And then doesn't necessarily turns off investors when they talk to you because they realize yeah, I've seen a lot of problems and I know there will be a lot of problems. The person already anticipates that those problems can happen. Maybe he'll do more about thinking about it rather than just going like a blind horse.

(26:24) Jeremy Au: I think that's an interesting part because founders are scared to talk to investors about their problems.

(26:29) Ilya Kravtsov: Very scared. Fundraising is difficult because you need to find that balance, right? if you are saying, look this could be total disaster, and you don't have certain reputation, then people will never invest in you, in our case we had a fairly senior group so the credibility was there. what we were trying to do was also quite new for the country, so that helped, attract interest, because nobody was really trying to solve that problem before. So I think that helped. So I think also depends what you do, right? if you are doing something that is a hard sell (27:00) already, And then you are trying to really push something that is already difficult to sell, you'll most likely be not very honest, but if you're solving a big problem that nobody has solved, and the reward could be very big, you can allow yourself to be a bit more honest and say, look, I don't know if this is gonna work out, because it is a big problem to solve.

(27:17) So let's put it this way, if we are, building a restaurant let's say more predictable business, then, you need to give that very positive outlook. Oh, my restaurant is gonna be, the best on the other hand, if you're building something entirely new a dish that nobody ever tried, then you'll say, look, I don't know if these people are gonna that dish and if it's gonna work, but I want to try it because it's something very new. there you can be a bit more honest.

(27:38) So I think it's also what type of problem you're solving, right? the expectation is if you're solving a problem that many people already solved, they want to see something more, the advice to founders is If you are really solving a big problem, don't be shy saying this is a big problem and there's many things that can go wrong. And if you wanna raise money, you better solve a bigger problem, than the smaller problem. (28:00) Yeah. 'cause if you're solving a small problem, then don't go ask money VCs. If you're solving a big problem, admit that there will be a lot of things that can go wrong and VCs will be fine with that. 

(28:08) Jeremy Au: I always remember that, we were looking at this company, and they were basically saying we are tech powered, AI native, cloud kitchen platform. then I got the WhatsApp message the other investor was like, is this a restaurant chain? 

(28:21) Ilya Kravtsov: Correct. It's when you have a restaurant chain and you're trying to pump it or something like that, And then you also cannot be really honest, right? But then you probably don't go to VC investors to raise money, right? Yeah. For a restaurant chain. But that happened a lot, right? Yeah. So that's where the whole problem starts. But then if you're really trying to solve something really big, then you can be, for example, I have a close friend who is raising money for a deep tech startup. he's very honest. He says, look before I make any money, there will be two, three years. And he's raising his seed round. He was telling the investors that. So don't expect any revenue in the next three years because it is deep tech. If it comes, it can be very big. And that's being honest, really upfront. managing expectations and not trying to (29:00) oversell. 

(29:00) Jeremy Au: And I agree with you because if you're lying to other people, you're also lying to yourself. Buy restaurant chain. And if you succeed getting money. There's bad news for you because you start delivering a promise you can't deliver. But the truth is, if you rightsized opportunity, you say, okay, this is restaurant chain. But we are better at margins. We have better control. We're gonna be more digitally native. Then I'm gonna raise a small amount of money. But I'm gonna be profitable earlier. And then if it works well, you can raise more later on. you also attract the right investor because instead of attracting an investor who can get suckered by those words, you can go talk to an investor who's I understand opportunity. That's the right size of opportunity for me, and I'm willing to do it with you. 

(29:34) Ilya Kravtsov: I think, what we want is an ecosystem, right? We have founders, we have investors. from an investor point of view, it's important to give feedback for founders, it's difficult because you hear so many pitches and usually you never want to give feedback or why it's a no, But in reality I find that whoever gives feedback is very valuable because that helps that kind of ecosystem work better. Yeah. So the investor will give them the expectation of what he's expecting, so the founder can (30:00) adjust and be more realistic and the whole system will work better. I think the opposite starts when people are saying big words, trying to make it bigger than it can ever be. And then investors are giving money to that. And then that's where it becomes wrong. I think we're experiencing a downturn to a certain degree because of that.

(30:18) Jeremy Au: I became a VC 'cause I had a kid I remember as a founder, I really valued direct feedback. But when I became a vc, and obviously I give direct feedback. I can tell you right now that I got a lot of shit. And then they'll go around saying Jeremy is a horrible VC because he told me. Actually I had some of my best friends from this time period. one of my friends was like, Jeremy was great. It was really good feedback and it helped me get better. So I some really good friends from that. But I can tell you that from that experience my key takeaway after several years of VC, is it's quite scary to give direct feedback because very sensitive people take it. It's like the company is me and I'm the company. My job is to prove that you're right and I'm wrong or I'm right and you're wrong. but once it becomes that competitive thing. 

(30:56) Ilya Kravtsov: No, I agree with you. it would be interesting to find a way to give (31:00) feedback in a way that it doesn't become personal. if there would be a platform where people can give anonymous feedback, It becomes very personal then end of day because founders, is their baby and you are like, basically you're hurting their baby, right? Yeah. By saying something that they don't agree. But especially for the first time I think what can help is not the investor. Because I've been doing a lot of mentoring. I have a portfolio of startups I mentor regularly. I have two or three startups I usually actively mentor per year. Not more because I don't have time. if you are a mentor, then it's a bit different. People take it because they feel you are on their side and giving them feedback. I think there needs to be more of that. 

(31:34) Jeremy Au: I agree with you. I think the tricky part for VCs, and I'll just say this, 'cause now on both sides of it, Now I'm back at the startup side. I want the feedback ' cause it's important I think expecting VCs good feedback. When the truth is that so many founders shit on VCs or give feedback, it's just not not rewarding. Everybody's default and they say, thank you for presenting. It is too early for us. Some generic email that comes out at the end of the day. For the rejection. I think where the ecosystem really benefits is (32:00) if we have strong mentors or coaches who can provide that direct feedback 

(32:05) Ilya Kravtsov: Yeah. 

(32:05) Jeremy Au: But doesn't have the power position of being the one writing the track. That's so key. Because once that comes up, then everyone's gonna be like, okay.

(32:13) Ilya Kravtsov: I don't think there's enough mentors out there. I don't think that all the accelerators are doing a good job in offering enough mentorship. we really need more of that because this whole ecosystem is very fragile. we talked about FinTech lending Indonesia, how we went through these waves. it's very fragile and can be easily distorted. the perception can be easily wrong. we need to balance and our job being part of this ecosystem as founders or mentors or investors. to really contribute to make sure that doesn't happen, for example, in my view the narrative towards Indonesia is too negative, right? As you were saying, like the article of Bloomberg that, all the founders Indonesia, doing fraud is not true, right?

(32:50) It's definitely not true. There are people doing proper businesses that are suffering to get their numbers out So I think it's important that now it's our job to also steal the narrative back, saying, (33:00) look, actually, Indonesia, it's a big country. It's still growing the long term, it's actually very positive. Sure there might be short term issues between transition of the government. Slow down, it all happens, right? But if you're a long-term investor, you should still consider it as a great place. And, people are very welcoming.

(33:16) People are very open towards innovation. There's a great tech story still being built in Indonesia, and a lot of them will IPO and will be big exits and then things can reverse. I think we need to speak up about that more. as founders, investors, whoever, we need to show that there is the other side, because sometimes media, they like the big stories and they like to talk about those.

(33:35) Jeremy Au: On that note, I think that's a great way to conclude. Let me summarize the three big takeaways. First of all, thanks so much for sharing about the Indonesia story. Our first company in Southeast Asia to 2021, the all time high. And now I would say somewhere in between, but it feels like the pendulum has swung too far in the other direction.

(33:51) At one point it was too bullish. Now it's too bearish. there's a reality where a lot of good founders doing good work can be realized better. So I think that's one. Secondly, thanks so much for sharing. (34:00) I think the fallout from e fishery, 

(34:01) But I think also dissecting a little bit about, from our perspective as founders, what was going through and what were the lessons that can be learned from it. And I think it's not just about the fact that every other founder is doing and all this other stuff, but talking a little bit more about, for example, the lending business and how that was probably not just a straw that broke the camel's back, but probably the giant thing, 

(34:21) Ilya Kravtsov: the catalyst.

(34:22) Jeremy Au: The catalyst that really broke the entire company as well. I think the lessons that can be learned for so many Indonesian startups that were there. And we also talk about the role VCs and the signaling effect that funding has on good versus bad ideas. Lastly, thanks so much for sharing about, the evolution of Ringkas and your own self as a leader over the past few years.

(34:42) I thought it was really interesting to see some of the tips and advice that you have around, securing banks and large stakeholders as customers. From your first startup, your second startup, but even today in your third startup, you've evolved to become a leader who does a lot more straight talk, seeks out the truth and tries to be (35:00) pragmatic in that conversation with the teammates and investors. And I think there's so much that people should learn from you. thank you. On that note, thank you so much for sharing.

(35:06) Ilya Kravtsov: Thank you for having me.