Highlights

1. “We are also excited about market dynamics. I think 2021 will be a recovery year for most sectors in Indonesia…Specific to the property sector, the Indonesian government emphasizes the importance of the real estate sector that contributed to 14% of GDP in Indonesia and absorbed a 9 million-strong workforce, and some strong multiplier effects to another 174 domestic sectors..”
2. “…the reception from the market has been great across all stakeholders in the property sector. So this has given us even more insight into the needs of each of our stakeholders and this has been really the main driver of the growth of our team, especially across engineering, product, and design.”
3. “The key to building a great Automated Valuation Model is to have comprehensive, accurate data behind the model.”
4. “The pandemic and living in lockdown has made the home more important than ever. We are seeing an influx of millennials buying their first home.”
5. “Property financing is an extremely important element of property transactions because 85% of property transactions happen through mortgages…So we help property seekers match with the right banks and really streamline the process of mortgage applications which otherwise is a very tedious, cumbersome, offline process to be fully online, integrated, and streamlined with clear SLA, and this all happens through one platform: Pinhome.”
6. “It’s important for us to constantly be close to [our customers] as the organization grows larger and you have teams who are addressing each of the sub-journeys.”
7. “The indication [of success is] bringing a significant portion of the 80 to 90 million homes and properties in Indonesia online, this data makes or builds the largest home database or home repository for Indonesia…on the intermediary side bringing a significant number of the 10 million property agents and property service providers online…on the demand side, bringing a [double digit percentage] of the three to four million property transactions that represent US$365 billion worth of property value also online.”
8. “There’s one misconception is that it’s done, there’s no more innovation left to be made in the space…we believe that the next sets of innovation will be around transactions. It’s about owning not just the supply side but actually owning the demand side and matching supply and demand together.”
9. “So I think our value add was to tell you to do your second idea instead — still in property space, but a very different vertical with a larger [scope].”

Today we have on-call Dayu Dara Permata and Ahmed Aljunied, CEO and CTO of Pinhome, Indonesia’s largest property transaction platform. They are both Gojek alumni, and have been on our show last season. Last time, they introduced Pinhome and lessons from Gojek they’ve brought into the business. 

Now Pinhome has grown into Indonesia’s largest property marketplace and expanded into other related services as well. This time around, they’re going to share a bit more about the company’s phenomenal growth over the past few months, Indonesia’s property market, and their thoughts on the exciting developments in Indonesia’s tech startup scene this year. 

Let’s dial into their call with our founding managing partner Yinglan.

Timestamps

01:05 Dara and Ahmed reintroduce Pinhome and share outlook on Indonesian economy and property market recovery;

04:39 Dara shares the mechanics of their AVM Pinvalue and Ahmed compares it to Zillow’s Zestimate;

08:41 Dara and Ahmed on impact of pandemic on consumer behavior around property;

11:48 Dara shares Pinhome user story and the importance of property financing;

15:57 Ahmed on things he wish he knew building Pinhome;

17:03 Dara on the next five years of Pinhome;

18:25 Rapid Fire Round;

21:23 Misconception people have about Indonesia’s property sector;

23:13 Why Insignia invested in Pinhome pre-product and pre-revenue;

Transcript

Yinglan: Hey, thanks Paulo for the kind introduction. Hey Dara and Ahmed, thanks for coming back on call with us.  I still remember the first time when we sort of brainstormed on the idea. Now, you have a few hundred people already in the company growing by leaps and bounds.

So we are super privileged to have partnered with you since the start of the journey. Since we have an audience of investors and entrepreneurs on our show, I thought we should give a quick update on what’s happening with Pinhome because I think the progress has been quite phenomenal. What’s new with Pinhome?

Dara: Hi Yinglan, thanks, glad to be back on On Call with Insignia with you! Our last podcast with you was in September 2020, six months ago. Since we last talked we have doubled the size of our team and we have tripled our traction across topline & bottom-line metrics. So we closed 2020 strong. We overachieved our own aspirational targets. We initially thought it was impossible to achieve given the pandemic. And now that we are in 2021, we are quite confident that 2021 will be another victorious year. So this year, we are excited about our internal goals and our aspirations as well as external market dynamics.

So our goals revolve around making property transactions journey more seamless for the 4 key stakeholders in property: property seekers, property developers or property owners, property agents, and property mortgage lenders. In 2020, all efforts were exerted to ensure that property seekers could discover their dream property owned by Pinhome Property Developers partners, facilitated by Pinhome Property Agent network, then get matched with direct mortgage products from Pinhome Bank Partners, and once all these processes are concluded, property seekers could proceed to do these transactions. All of those, from discovery to delivery of property ownership happen on the Pinhome platform. In 2021, we are excited to go a few steps further. While of course we will continue to improve transaction journeys for all stakeholders, we have also started working on post-transaction experience.

Hopefully some services around post-transaction we can reveal sometime mid-year this year. We are also excited about market dynamics. I think 2021 will be a recovery year for most sectors in Indonesia. The government has committed to allocate US$44 billion for COVID19 recovery for this year alone. GDP growth target this year is projected to be somewhere at around 4.8% to 5.8% versus -1.5% last year in 2020.

Specific to the property sector, the Indonesian government emphasizes the importance of the real estate sector that contributed to 14% of GDP in Indonesia and absorbed a 9 million-strong workforce, and some strong multiplier effects to another 174 domestic sectors, and hence has put in place numerous fiscal incentives such as tax holiday for VAT (PPN) on houses with the maximum price of Rp2 billion so that’s about I think US$150,000, which represents 70-80% of property sales for last year, 0% downpayment for selected properties, and various subsidies like mortgage provision subsidies, interest subsidies, for affordable housings. 

Overall I think 2021 looks very promising.

“We are also excited about market dynamics. I think 2021 will be a recovery year for most sectors in Indonesia…Specific to the property sector, the Indonesian government emphasizes the importance of the real estate sector that contributed to 14% of GDP in Indonesia and absorbed a 9 million-strong workforce, and some strong multiplier effects to another 174 domestic sectors..”

full stack is class

Yinglan: That’s great — Ahmed any thoughts?

Ahmed: Echoing Dara’s sentiment, the reception from the market has been great across all stakeholders in the property sector. So this has given us even more insight into the needs of each of our stakeholders and this has been really the main driver of the growth of our team, especially across engineering, product, and design. So this year will be leading to new launches of products and features for our buyers, agents, and other stakeholders to streamline each of their individual journeys so that the process of purchasing a home becomes more seamless. So we’ll have an exciting announcement later on in April that we’ll share with some of the important stakeholders in the property industry. 

“…the reception from the market has been great across all stakeholders in the property sector. So this has given us even more insight into the needs of each of our stakeholders and this has been really the main driver of the growth of our team, especially across engineering, product, and design.”

Yinglan: Looking forward to that announcement. Around the time that we spoke last in the last six months, you also launched Pinvalue. What was the response from the users and how did it change conversion and engagement?

Dara: Pinvalue is one of our features built on machine learning which provides the ability to estimate a fair market value for a property. It is a fairly new concept for the Indonesian market. It is within a category of tools called Automated Valuation Model or AVM. As the term explains, it is an automated pricing model used in the real estate market to value properties. It’s definitely more efficient than a human appraiser, but being efficient is not enough. And the key to building a great AVM is to have comprehensive, accurate data behind the model.

In our view, there are different levels of AVM. The lowest level of AVM is an AVM that is efficient, but with low level accuracy because the data behind it is limited or because the model allows calculation and provides output despite many data fields that are critical to the accuracy of the prediction are not available. A level higher to that is an AVM that is efficient and also somewhat accurate but won’t be able to capture changes in fair market value estimate due to a certain real estate market dynamics i.e. if there’s newly built mall in the neighborhood that might affect real estate price, this model might not be able to capture that.

Now we built Pinvalue with the highest level of accuracy, with the ability to capture changes in fair market value estimates due to certain real estate market dynamics. Pinvalue has machine learning capabilities embedded in it. It covers 100+ different attributes per each property (e.g. property specifications, POIs, neighborhood characteristics, risk score). And for many properties that’s covered by the model, those attributes are required or necessary. And it pulls comparable data of sold properties in a certain km2 clusters, it trains itself, allowing more tailored fit results in different neighborhoods. 

For example, depending on the type of the properties, different POIs affect positively or negatively the price of a property. Proximity to POIs like bus terminals, or bus stops would likely affect commercial property price positively, but would affect residential properties negatively. Interestingly enough, our data tells us proximity to different types of transport stops like MRT stops might affect positively residential properties more than it affects commercial properties. So Pinvalue accounts for these differences and all these dynamics, it trains itself to capture these dynamics & produce more accurate fair market value estimates of properties.

So current coverage for Pinvalue today is still limited. It’s been on the market for about just a shy four months. We covered 220,000 properties in greater area Jakarta, that represent around 19 to 21 million different data sets. have external API integrations. You know, would be Google Maps POIs, of course, but we also have systematic data mining to enrich its capabilities.

“And the key to building a great Automated Valuation Model is to have comprehensive, accurate data behind the model.”

Yinglan: Great — Ahmed, any sort of areas to add?

Ahmed: Yes. In the context of an AVM, I personally use one extensively. So this was when I was in the Bay Area. So in the form of Zillow’s Zestimate, and I used it a lot while searching for a home and comparing prices of homes in the same neighborhood. But one interesting use case was that my wife and I would use it extensively, when dreaming about properties that we aspire to own. So we’re driving around the Bay Area, maybe in Los Altos, we’ll see a very nice house and we look it up. And any property that we looked up, always had a Zestimate. So that was always very impressive, anywhere we were — in San Francisco, in San Jose and San Diego or in the East coast.

So I felt like Zestimate had a really complete inventory, anywhere and everywhere. However, the interesting thing was that Zillow was never part of our transaction. It was not part of our home transaction. And it was not part of any of the transactions of our friends and families who were buying or selling properties, so that, you know, [we’ve] identified that there’s this very interesting gap to fill of how to push a transaction through from top of the funnel all the way to the end.

“I felt like Zestimate had a really complete inventory, anywhere and everywhere. However, the interesting thing was that Zillow was never part of our transaction. It was not part of our home transaction.”

Data, not hotdogs

Yinglan: Great. yeah, certainly, you know, I think with the Indonesia market being quite nascent I think this will be a great tool for users to price their property and it’s a lot of data applicability if you can capture that comprehensively. Let’s shift gears a bit, last time we talked about a lot of your background from Go-Jek, and I’d like to shift gears to focus more on, Indonesia’s property landscape, obviously, last year, you know, COVID happened, but I must say, you know, being an early investor, I was very impressed by how resilient you guys were. 

But I want to get your thoughts on how you’ve seen this evolve over time, the landscape evolve over time moving into 2021? And what’s your game plan for Pinhome, occupying this space going forward?

Dara: Despite a slight 1-2% contraction in the real estate sector in 2020, with a baseline of US$365 billion value of property transactions every year in Indonesia, it is still a massive segment. It is the largest asset class in the country. US$ 3-4 Bn contraction is considered little if the baseline is US$ 365 Bn. So the outlook going forward is positive. We have previously mentioned that the GDP growth for Indonesia blended this year is expected to be somewhere around five, even up to 5.8%. 

So I think that’s the same story for property. We hope that property is going to be one of the sectors that is going to pull up the economy, with a growth of more than 5%. There are 180 Mn Indonesians in the workforce (or of productive age), there are only less than 80 Mn property owners which mean 100 Mn productive consumers are yet to buy their first property. The pandemic and living in lockdown have made the home more important than ever. We are seeing an influx of millennials buying their first home. Last year, we saw 40% of our homebuyers are younger than 35 years old. Going forward, we expect this percentage to go up to the majority of 1st-time homebuyers who are younger than 35 years old.

The home you grow up in defines the quality of your livelihood and property is the largest asset class for the country, also for a community, and a family. It represents the largest type of loan an individual could ever take, and could also mean the most valuable collateral one can use to get access to financial services. Going forward, we see Pinhome play a similar role to that of e-commerce for property transactions. 

“The pandemic and living in lockdown has made the home more important than ever. We are seeing an influx of millennials buying their first home.”

Yinglan: That’s great — Ahmed any thoughts?

Ahmed: So while we did have that, you know, pure shock in April and May of 2020 from COVID, that was very paralyzing. Fast forward to today, I think we see a level of acceptance of the presence of COVID and most people are just one degree away from someone who has already contracted COVID and has recovered. Two, I believe that we’ve already accepted this new set of constraints. And even the stakeholders in the traditional industries have also accepted these constraints. So this presents us with opportunities to help get these stakeholders in the traditional industries, get back to their previous level of productivity, and then even beyond that. 

Got to start young

Yinglan: Yeah, no, I think we are seeing a lot of sectors get tailwinds of this digitalization, especially during COVID and I’m very impressed with what you guys have done, using technology to digitize the whole industry. Maybe you can walk us through a user, you know, what are some of the innovations or tech implementations you have done that have facilitated or duplicated the sales process?

Dara: From a user perspective, with Pinhome users will experience a journey that is different from the status quo. In the status quo, the discovery of property and first touchpoints with the property agent(s) might happen online through online listing portals, but the rest of the journeys all happen offline with overwhelming levels of friction.

With Pinhome, the journey of property ownership starts at Pinhome and ends at Pinhome, at the delivery of property ownership. Users could discover properties from our Website & soon-to-launch Consumer App. Once a user inquires about a property, we will assign a knowledgeable, available Property Agent to facilitate the viewing. Once viewing is done, the user could proceed to price negotiation benchmarking to Pinvalue, the fair market value estimate of the property.

In parallel, users could start looking & applying for a mortgage to 35+ banks that have partnered with Pinhome. We have partnered with Indonesia’s largest banks which represent >US$ 60 Bn annual mortgage disbursement capacity. So imagine having a mortgage option attached to the actual property being transacted & having the ability to submit applications and track the status of the mortgage application from the same platform, and eventually then making payments online. Payments are usually done in tranches, from booking fees to downpayments and full payments. Property developers will get the payments real-time through a secured payment backbone integrating with Indonesia’s largest payment gateways.

Yinglan: That’s great. I think we have a lot of founders in the audience, so I’m going to make it more useful for them. Two of you are very seasoned executives like this, looking back at the Pinhome journey like the past year or so, what has been some of the learnings so far? And I think Ahmed has some interesting user stories also from your platform. What are some of the learnings Dara, and Ahmed maybe you want to share some user stories from the platform?

Dara: I’ll share the user story if I may, and Ahmed can share the learnings. There are many unexpected user stories from our platform. One memorable user story was a property seeker, a freelance gig worker, trying to buy property in 2020, in the middle of the pandemic. And he almost gave up on his dream of buying a property because his mortgage application got rejected seven times by seven different banks. Pinhome has 35 different banking partners.

So the different bank categories from general bank book four, book three, two, one and different books represent different risk appetites and also different disbursement capability but apparently, the freelance gig worker did not know which banks to go to given his profile — the fact that he’s part of the freelance workforce. We helped him find the right banks. With the algorithm we recommended him to apply to two banks with eligibility criteria that fits his profile and he got approved with a mortgage and finally, his dream to own property came true. 

Property financing is an extremely important element of property transactions because 85% of property transactions happen through mortgages. There’s 92 million Indonesian who lack access to financial services. From that number 47 million we can call as underbanked. So these are the people that have bank accounts but not necessarily have access to credits. Our user, the freelance gig worker I mentioned he’s part of the underbanked. 

And the remaining 45 million have no access at all. They don’t even own bank accounts. It could be overwhelming for users knowing that there are 85 different banks with mortgage facilities. But when it comes to the moment of truth which bank should I apply for a mortgage to, they might not have the best answer and it might be a hit or miss.

So we help property seekers match with the right banks and really streamline the process of mortgage applications which otherwise is a very tedious, cumbersome, offline process to be fully online, integrated, and streamlined with clear SLA and all happen through one platform, the Pinhome platform. 

“Property financing is an extremely important element of property transactions because 85% of property transactions happen through mortgages…So we help property seekers match with the right banks and really streamline the process of mortgage applications which otherwise is a very tedious, cumbersome, offline process to be fully online, integrated, and streamlined with clear SLA and all happen through one platform, the Pinhome platform.”

Yinglan: Got it. No, that’s super helpful. Ahmed, any learnings so far looking back, what are some of the things you wish you knew? 

Ahmed: Yes, absolutely lots of learnings. And one may seem a cliche, which is to know your customer, and this particularly applies to engineers, who are always sitting at the computer. Although it’s cliche, I feel it’s something that we have to constantly remind ourselves. Any product engineering organization has to constantly remind itself. But just to take an example, there are multiple archetypes for each of our stakeholders. So just taking a look at agents, various property owners, there are at least four different archetypes of each of those stakeholders.

And there may be overlaps, but each of them faces unique pain points. So it’s important for us to constantly be close to them as the organization grows larger and you have teams who are addressing each of the sub-journeys. There’s a tendency to move away from the customer, so it behooves us to constantly keep close to them so that we can continue to identify opportunities to address their pain points, but in a natural way, that is not too disruptive to them.

“So it’s important for us to constantly be close to [our customers] as the organization grows larger and you have teams who are addressing each of the sub-journeys.”

The bigger the company the more important it is to hold on to this

Yinglan: Got it. That’s super useful. What does success look like five years from now for Pinhome? Where do you think your company will be in five years from now? And, what are some of the sort of milestones that you hope to achieve?

Dara: Yeah, aligning with the vision to make property more accessible, we provide technology platforms that help organize this property information facilitate interactions between buyers, owners, agents, and property intermediaries. I think success is when those visions and missions are realized. The indication of that could be on the supply side, for example bringing a significant portion of the 80 to 90 million homes and properties in Indonesia online, this data makes or builds the largest home database or home repository for Indonesia, the way it’s now built for example in China by the largest player in China or in the US. On the intermediary side bringing a significant number of the 10 million property agents and property service providers online and on the demand side, ultimately bringing a significant number of the three to four million property transactions that represent US$365 billion worth of property value also online. And when we say significant, any double-digit penetration more than 10% or as to the 30% FMCG commerce penetration I think that this is a real success.

“The indication [of success is] bringing a significant portion of the 80 to 90 million homes and properties in Indonesia online, this data makes or builds the largest home database or home repository for Indonesia…on the intermediary side bringing a significant number of the 10 million property agents and property service providers online…on the demand side, bringing a [double digit percentage] of the three to four million property transactions that represent US$365 billion worth of property value also online.”

Yinglan: Yeah. Let’s move on to our usual, quick fire round, but this time we have a different set of questions. 

Top 3 skills a startup CEO must have? 

Dara: For me, number one would be strong empathy especially towards end-users. And the only way to build genuine empathy towards users is by living the life of a user yourself. I do feel that as founder-CEOs, you need to use the product you’re building and experience the pain and pleasure of the user while using the products. You need to be your harshest critic. I think the second one is excellent execution skills. Ideas are cheap, execution is everything. The CEO needs to roll up their sleeves, and get their head down, focus on execution, but understand the details because the devil is always in the details. Don’t always try to delegate everything and you don’t what’s on ground zero cause you’re always 30,000 feet above. And last but not least is solid entrepreneurial skills and I think that’s about not just catching opportunities but creating it, not to just be a player but to be a pioneer.

Top 3 skills a startup CTO must have? 

Ahmed: The first I think definitely is to be pragmatic, whenever developing solutions and architecting systems. It has to be aligned with what the business needs to grow. The second is to have that empathy and slight overlap into business and product management. There are just too many, too many interlinkages, so that empathy is absolutely necessary, for different teams to work well together. And then finally is to put some emphasis on organizational design, especially for startups that are growing quickly, you know, from 10 people to 50 people to 100 people, the needs of the organization change, the needs of the employees change, so it’s important to revisit that and make the necessary changes so that we can continue growing. 

Who is a leader that you look up to? 

Dara: I admire entrepreneurs who have built businesses with time-tested moats or defensibility and undefeatable network effects. So for example Bill Gates with Microsoft or Steve Jobs with Apple or Brian Acton with WhatsApp, doesn’t matter if there’s tough competition and left and right there are new players trying to come in but the products just maintain absolute winning position because of that defensibility and network effect.

Advice for founders raising their first round?

Dara: Well I think when racing your first round don’t just look for VC with money or the first check that comes in, but look for real partners who can work with you, work alongside you through many rounds to come. Your first check really determines the checks that come after.

“Your first check really determines the checks that come after.”

Biggest misconception people have about Indonesia’s property space?

Dara: I think there’s one misconception is that it’s done, there’s no more innovation left to be made in the space. We do feel that the first wave of innovation in proptech was necessary- so that was six to ten years ago – [where] the first wave of online portal players transformed and elevated the industry with their listing portals platforms. But fast forward six to ten years, we haven’t seen big breakthroughs especially in Indonesia, big breakthrough innovation and that was until last year. And we believe that the next sets of innovation will be around transactions. It’s about owning not just the supply side but actually owning the demand side and matching supply and demand together.

“There’s one misconception is that it’s done, there’s no more innovation left to be made in the space…we believe that the next sets of innovation will be around transactions. It’s about owning not just the supply side but actually owning the demand side and matching supply and demand together.”

Anything you’d like to plug or share to our listeners?

Dara: Yes, definitely we seek to double our workforce, Pinfam members as we call it, in the next one year, and then triple in next two years, and we have exciting product launches, in the next one to two months focusing on definitely mortgage and post-transaction. We have launched property home services or Pinhome home services. And that would also tackle the post-transaction journey of customers. More and more we will make sure that we create value for customers, just before the transaction and during the transaction, but also after the transaction. And we will follow customers throughout their lifetime ownership of property.

Anything you’d like to ask me? 

Dara: Just one simple question — why did you decide to write a check for Pinhome pre-product and pre-revenue?

Yinglan: Oh, that’s a simple one because both of you are unstoppable founders, but yeah. I mean, the longer version of that is that you know, we knew very early on that we wanted to be in business with you. We think property is a big vertical. And actually I remember I think your first idea was the, I think crowdfunding for property idea. So I think our value add was to tell you to do your second idea instead — still in property space, but a very different vertical with a larger [scope]. And I think that thesis has played out. So I congratulate you on the progress and on pursuing your vision. There’s a saying, “always be stubborn on the vision, but be flexible on the tactics.” So I think you’ve certainly achieved that.

So congratulations, and thanks so much. We are very happy to be partners with you and look forward to a great, next five years for Pinhome. Thank you so much for your time today.

“So I think our value add was to tell you to do your second idea instead — still in property space, but a very different vertical with a larger [scope].”

Dara: Thank you Yinglan, pleasure is ours to be here. Thanks for your trust.

About our guests

Dayu Dara Permata, ex-GoJek exec and co-founder and CEO of Pinhome

Prior to Pinhome, Dara was a Senior Vice President at Go-Jek where she led Gojek expansion to 100+ cities as SVP Regional Growth, co-founded and scaled Go-Life from concept into 15M users in 80+ cities in Indonesia & was responsible for Commerce Product Group in Gojek like Gomart & Goshop. She was also formerly a consultant at McKinsey before joining Go-Jek. Dara graduated with a bachelor’s degree in Industrial Engineering from the Bandung Institute of Technology, and was an honor student and full scholar.

Ahmed Aljuned, ex-GoLife CTO (GoJek) and co-founder and CTO of Pinhome

Ahmed is a veteran CTO with over 14 years of technical experience. He is well-versed in product development and building systems, and was previously VP of Engineering and Product at Go-Jek before starting Pinhome. He has also led engineering and product teams at startups like Jualo (acquired by Carro) and started a couple of startups in Singapore and Jakarta. Ahmed is a graduate of Computer Engineering at NUS and received his Masters degree in Computer Science from Stanford University.