After months of speculation, Gojek is reportedly merging with Indonesian eCommerce platform Tokopedia to form GoTo and Gojek's co-CEO Andre Soelistyo will lead the new entity, Bloomberg reported quoting its sources. Following the merger, Gojek's shareholders will control 58% of the new holding company while Tokopedia's owners have the rest, Bloomberg said.
The new entity will allegedly have three business units - Gojek, Tokopedia, and payments and financial services known as Dompet Karya Anak Bangsa (DKAB). Tokopedia's president Patrick Cao will retain his title at GoTo, while Soelistyo will reportedly head DKAB. Gojek's co-CEO will continue to lead the ride-hailing unit. Meanwhile, Tokopedia's CEO William Tanuwijaya will head the eCommerce arm, Bloomberg said. Gojek declined to comment on MARKETING-INTERACTIVE's queries. Meanwhile, Tokopedia's VP of corporate communications Nuraini Razak said: "Unfortunately, there is nothing we can share at this moment. Should there be any corporate action, we will definitely inform the public accordingly."
Gojek was founded in 2010 as a call centre to optimise the service of motorcycle taxis in Indonesia, also known as ojeks. The company first started with a fleet of 20 motorcycle taxis and eventually launched its app in Indonesia in 2015, offering motorbike ride-hailing, courier, and personal shopping. It now has 170 million users in Indonesia, Singapore, Thailand, Vietnam, and the Philippines with over two million driver-partners and 500,000 GoFood merchants.
Meanwhile, Tokopedia started as a C2C marketplace in 2009 and eventually raised US$100 million funding from Softbank and Sequoia in 2014. Two years later, it entered the digital goods and fintech businesses. Tokopedia once again raised US$1.1 billion in funding in 2017 and 2018.
Soelistyo first joined Gojek in 2015 as president, according to his LinkedIn. He later took on the role of co-CEO alongside Aluwi in 2019 when co-founder and former CEO Nadiem Makarim resigned to take on a cabinet post under President Joko Widodo. He was previously the executive director at Northstar Group and head of corporate finance at Delta Dunia Makmur.
Based on Soelistyo's background and track record, Lau Kong Cheen, senior lecturer at Singapore University of Social Sciences' School of Business, said he could bring his strong innovative vision and ability to raise funds to elevate the merged company even further.
"In terms of innovative business vision, Soelistyo seems to come across as someone who is strong in thinking of relevant business ideas coupled with a strong appetite to accept failure and correct them," he said. Citing Gojek's venture into GoLife service that included several features such as GoAuto, GoGlam, GoDaily, GoLaundry, and GoFix, Lau said this business initiative initially seemed promising but went south due to COVID-19. As a result, Soelistyo had to pull the plug.
The new company needs someone with such characteristics to encourage creativity and to lead convincingly. Successful business leaders such as Steve Jobs and Richard Branson tends to portray similar traits.
Additionally, Soelistyo's ability to find the right strategic partners and to raise funds to fuel the growth of the merged company will be invaluable. He is armed with the experiences of working for a private equity investment company and has a track record of successfully raising US$5 billion from the likes of Google, JD.com, and Tencent. According to Lau, all these attest to his credibility.
"This capability is really crucial for arming the company’s war chest as they braise themselves for greater growth – be it in the domestic or international markets. Furthermore, Soelistyo's connections with the right strategic partners will be instrumental for Gojek and Tokopedia to form new alliances and develop a more comprehensive business eco-system," Lau explained.
With the merger of three core business entities, Lau said Soelistyo's vision will be able to help these entities find synergy and fill the gaps which they faced as individual entities in the past.
Challenge of creating a culture and earning belief
One of the biggest challenges in a merger of such proportions is the creation of culture. When two entities combine, Anish Daryani, founder and president director M&C Saatchi Indonesia, said this also involves two cultures combining and while there are factors that would blend, there are also factors that would be conflicting.
"Perhaps Soelistyo's challenge would be to sift out and discard the latter, ensuring a smooth transition towards the new entity," he added.
Also, while Soelistyo might have been an able leader at Gojek, he is still "an unknown entity" to those from Tokopedia. Hence, Daryani said Soelistyo will have to appeal to Tokopedia employees as their leader and earn their dedication and belief.
The largest factor that might be make or break for Soelistyo is how he creates his core management team, which needs to be based on fair representation from both individual entities and needs to be balanced in terms of diversity and inclusion.
Daryani explained that these are people who will be tasked with implementing his vision, so they need to be joined in the hip. "Managing the board of the combined entity will be another challenge. When you create an enterprise valued at over US$40 billion owing to the merger, expectations are bound to be high. Managing these expectations is key to success," he said.
Other friction points that can be ironed out through the merger
Meanwhile, partner at Quest Ventures Jeffrey Seah said Gojek has always been the surrogate benchmark for Indonesia's tech ecosystem coming of age. "The narrative on it has always been the alpha lead, from talent, funding, expansion and govt support. Gojek will bring this outsized 'first and foremost' mindset to Tokopedia," he added.
Seah explained that previously, the fight centred around the vertical space - Gojek versus Grab versus Uber. With Makarim's elevation to the government has an added sense of national duty and Indonesia's Pancasila state ideology to Gojek's role in the Indonesian society beyond tech, he added. Pancasila was formulated by former President Sukarno and comprises principles that include the unity of Indonesia and the idea of being governed by wise policies.
"Grab and Gojek's tense merger dance - and the supposed desire of Grab to acquire - has built up a siege mentality mindset in the Indonesian tech ecosystem. With the merger, how far the merged entity should grow with this siege mentality and the speed to achieve the progress markers might be a source of friction," Seah said. This will be especially evident in the expansion plans outside of the Indonesian diaspora into the burgeoning Southeast Asia market of which Indonesia is the foremost market. "The new company will eventually go global but it will push through via the Indonesian diaspora and expand," he added.
One of the key issues Tokopedia faces is its on-time fulfilment, given the large volume of deliveries it handles, Lau said. Soelistyo can tap on Gojek's transport and network capabilities to solve this issue to improve consumers' eCommerce experience. Another issue the eCommerce company faces is integrating micro, small and medium enterprises onto its platform as more consumers shift to online shopping.
"Tokopedia's challenge is the disparate infrastructure found in the cities of Indonesia. With Gojek’s involvement and its digital payment services, this may solve the integration issue and thus bring more merchants and customers on board to Tokopedia’s platform," he said. According to Lau, this will strengthen Tokopedia’s position in Indonesia and curb Shopee’s aggressive expansion into the domestic market.
That said, GoTo should be looking further into the horizon and leverage on its combined strength as a super app. Lau said GoTo should be developing a regional or even an international expansion plan instead of depending on the domestic market and resting on its laurels while facing competition from foreign brands such as Grab and Shopee.
Given Gojek’s poor record experiencing regional success, and Tokopedia’s weak regional expansion appetite, the new management needs to change its business expansion mindset.
"If it intends to focus on the regional market, it also needs to be shrewd in collaborating with its investors and even larger regional rivals such as Alibaba, Tencent, and Grab," he added.
In addition to international expansion, GoTo will also need to rationalise its product brands such as GoPay, GoSend, and GoBox, for example, particularly those that will be used by both Tokopedia and Gojek consumers. Two years ago, multiple media outlets reported that Tokopedia invested in Lippo Group-backed e-wallet platform OVO.
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