How Gojek and Tokopedia came together in Indonesia’s largest merger
Kevin Aluwi and William Tanuwijaya recently made Indonesian history.
As founding members of the GoTo Group, the 30-year-olds are responsible for creating Indonesia’s newest and most valuable tech company after merging their ride-hailing and e-commerce startups into the country’s largest business ever.
The combined company will contribute 2% to Indonesia’s GDP through its various business units, including a powerful super app, according to the company. And that is just the beginning.
“Hopefully one day we’ll add 5 to 10%,” Tanuwijaya, co-founder and CEO of Tokopedia, told CNBC Make It.
But maybe you have never heard of it. What exactly is GoTo and how did it get so big?
Founding of Indonesia’s largest technology company
GoTo Group is an Indonesian tech giant founded in May 2021 through a blockbuster merger between two of the country’s largest startups: Gojek and Tokopedia.
Tokopedia was founded every year in the capital Jakarta and started in 2009 as an e-commerce marketplace to connect small traders with buyers, while Gojek started in 2010 as a ride-hailing platform for motorcycle taxis.
Both companies were started by a group of friends in their twenties who were responding to an emerging wave of Internet connectivity that swept the country at the time.
Indonesian technology company GoTo offers on-demand, e-commerce and digital payment services.
“There was something of a tipping point where people began to see the potential of the internet, especially with the advent of mobile devices,” said Aluwi, Gojek’s co-founder and CEO.
In a sprawling country with the fourth largest population in the world and a rapidly growing middle class, the founders had plans. In the years that followed, both companies ventured into digital payments and other services.
Imagine that Amazon, DoorDash, Uber, PayPal, Stripe are combined with each other.
Co-Founder and CEO, Tokopedia
Tokopedia has doubled in size to add new market segments such as parents and small stallholders to its ecosystem. In the meantime, Gojek has expanded its ride-hailing platform regionally and expanded its local super app, which offers users on-demand services from food to massages and manicures.
The two then started working together in 2015, using Gojek drivers to deliver Tokopedia products the same day outside of rush hour.
“We were the first in the world to combine a partnership between an on-demand platform and an e-commerce platform,” said Aluwi.
A localized super app
Six years later, amid growing competition from regional and global tech companies, the two agreed to officially merge last month into an $ 18 billion deal – Indonesia’s biggest deal ever.
“Imagine that Amazon, DoorDash, Uber, PayPal and Stripe are combined together,” said Tanuwijaya. “There is a saying that if you want to go fast you go alone; if you want to go far, you go together. GoTo basically means going far, going together. “
The Indonesian technology company GoTo Group comprises three business lines, Gojek, GoTo Financial and Tokopedia.
In the new structure, Andre Soelistyo from GoJek will take over as CEO of GoTo Group and GoTo Financial, Patrick Cao from Tokopedia will become President, while Aluwi and Tanuwijaya will remain CEOs of Gojek and Tokopedia, respectively.
The combined company has over 100 million monthly active users, more than 11 million dealers and over 2 million drivers in an ecosystem that accounts for 2% of Indonesia’s $ 1 trillion GDP, the company said.
GoTo hopes to use it to capture more of the market in Indonesia and beyond.
Seize the opportunity in Southeast Asia
According to a recent study, Indonesia’s digital economy is expected to be worth $ 124 billion by 2025 as the value of the broader Southeast Asian online market triples to more than $ 309 billion.
“Indonesia remains because of the population in Southeast Asia, the enormous economic growth projections for the next 10 years or so and (and) a truly consumer-oriented economy,” said Florian Hoppe, partner at Bain & Company and co-author of the study.
This is both a huge business opportunity and an area where we truly believe we can make a big difference.
Co-founder and CEO, Gojek
In order to expand, however, companies must target their services to the 120 million Indonesians who live outside the urban areas in the more than 17,000 island archipelago.
“Much of the early growth was driven by major urban centers, was driven by Java,” he said. “The next half will be the really interesting story. How do you get there? Establishing logistics services there, integrating them for payment transactions, really integrating them into the digital economy.”
Southeast Asia’s digital economy is expected to triple in value by 2025.
For GoTo, this includes providing payments and financial services in a country where 47 million adults do not have access to popular financial services and products, and 92 million people have never used a bank.
“It is with these people, with or without bank accounts, that illness or economic shock can really make the difference between belonging to the middle class and falling back into poverty,” said Aluwi. “So this is both a huge business opportunity and an area where we really believe we can make a big difference.”
Target of the IPO in 2021
To date, neither Gojek nor Tokopedia are profitable.
GoTo is said to be planning another round of funding ahead of a public listing, likely in Jakarta and the United States. The company already has an impressive list of investors including Softbank, Alibaba, Tencent, Facebook, and Google.
“In terms of the time frame, not just for going public but for all product development, my time frame is always yesterday,” said Tanuwijaya. “But to be realistic for the team and so on, it’s as soon as possible. We hope we can try to get on the list hopefully by the end of this year.”
The potential is clearly there and I think international investors have recognized that.
Partner, Bain & Company
In April, rival super app Grab completed a Nasdaq listing through the world’s largest “blank check merger” – a special-purpose acquisition company valued at nearly $ 40 billion. GoTo has a public market valuation target of $ 35 billion to $ 40 billion.
The GoTo and Grab IPOs will also serve as a litmus test for the region. If successful, it could pave the way for more tech startups as investor appetite grows.
“Historically, Southeast Asia has had a slightly more difficult time getting on the radar alongside China and India,” said Hoppe. “The last few years have shown that the digital economy is now at least competing with India. But the potential is clearly there and I think international investors have recognized that.”
Prepare for global alignment
With the newly combined resources and thriving business in the new landscape, the company is now planning its expansion strategy, including an ambitious sustainability pledge.
“GoTo comes with a great responsibility,” said Tanuwijaya. “We’re trying to provide solutions to a problem we figured out a decade ago. But that solution will also create another problem: with millions of drivers, emissions, so many dealerships, packaging, and so on.”
GoTo is an Indonesian technology company that emerged in May 2021 from a merger of ridesharing giant Gojek and e-commerce platform Tokopedia.
“That’s why we’re committed to truly zero waste and zero emissions by 2030 and become a company that can be a legacy for the next generation.”
The bold ambitions imply that the GoTo of 2030 could look very different than it is today. But as for the leaders, they’re just getting started.
“There is no doubt that our ambitions are global,” said Aluwi. “We are not only active in Indonesia and believe that the future of our combined group is beyond one country.”
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