Indonesian tech entrepreneurship: Where we are now

photo © 2008 Ted | more info (via: Wylio)

I read an email from Ron Ishak at the StartupLokal mailing list. Ron met with Alec J. Ross, the Senior Advisor for Innovation to US Secretary of State Hillary Clinton, whose job is to “maximize the potential of technology and innovation in service of America’s diplomatic goal.”

In the mailing list, Ron shared Alec J. Ross’ questions for the Indonesian tech entrepreneur community, and I thought I’d answer them here. I wanted to share my answers in a public forum (rather than in the closed nature of a mailing list) and I hope to get a good discussion out of it. Below are my answers.

1. Why are there so many startups in Indonesia when there is almost no Venture Capital for IT? 

Indonesia has a high number of startups, but on the other hand Indonesia also has a very big population. That being said, the tech entrepreneur community in Indonesia is definitely growing fast, and I believe it’s because:

• There is a big domestic market. This is perceived as a low barrier to entry for Indonesian entrepreneurs because they believe (right or wrong) that they know their own market better than the Googles and Facebooks of the world. Contrast that with Singapore entrepreneurs for example, who most likely need to think about global strategy from day 1.
• The population is tech savvy. Indonesia wouldn’t have the second largest Facebook user base if it’s not. Maybe it starts with the gregarious nature of Indonesians, or maybe it’s the relative low cost of internet. One thing for sure, the telco operators do a good job in recognizing the demand and provide mobile internet, especially with BlackBerry. The high number of people online and on social networks makes it easy for communication and collaboration to happen.
• Koprol serves as a role model for other entrepreneurs. Not only is the Koprol acquisition by Yahoo a great success story, it also made the world look at Indonesia more closely. Sarah Lacy and TechCrunch paid special attention to Indonesia then, and it continues to build up, creating more excitement in the Indonesian tech community.
• The grassroots movement recognize the opportunity and kept the ball rolling. The momentum from Yahoo-Koprol would die if it’s not picked up and continued forward by events like #StartupLokal meetups and SparxUp Award.

2. How is corruption affecting the way we do business? 

I can’t speak for other startups, but at FunCrowds we are targeting the consumer/retail internet and we have not been affected much by corruption. Entrepreneurs seek the opportunity given by the market. If corruption is a big hindrance in one area, entrepreneurs will just seek elsewhere. For example, I don’t think there are any tech entrepreneurs targeting the Indonesian government as customer.

3. What is the role of failing (or bankruptcy) towards entrepreneurs? 

This is an area on which I haven’t done much comparative research with other countries. I do know that for failed Indonesian startups, high severance pay for employees means very heavy obligation. I’m interested to hear other people’s take on this matter.

4. How is the Indonesian Government contributing to entrepreneurs? 

I really don’t think the Indonesian government has a role at all right now. In fact there are signs that the government could contribute negatively to the community. So far in the tech entrepreneur community, the growth has all been from grassroots. As for the role of the government, based on this World Bank ranking, there is still a lot of room for improvement. I think, at the very least, the government should have a hands-off approach to tech entrepreneurship. If we are fortunate, the government could take an active role — even by doing simple things like providing good and low-cost infrastructure. 

5. How can America help web Entrepreneurs in Indonesia? 

For Indonesia at this stage, I believe we need seed investors and incubators more than venture capitals. The big funding will come as long as there is proof of success and Indonesia maintains a free economy. But to grow the tech industry, Indonesia needs entrepreneurs to grow their own companies first. It’s not easy making startups to be big companies and there are not a lot of role models domestically in the tech industry. I believe outside perspective and guidance from seasoned entrepreneurs will help greatly. 

My other posts about Indonesian tech and entrepreneurship:

What I learned from Foursquare’s fast growth in Indonesia

Challenges for Indonesia post Yahoo acquisition of Koprol

Why self-reliance is important for Indonesian startups