Highlights and Timestamps
- (00:14) Paulo introduces Sara;
- (02:02) Transitioning from HSBC to entrepreneur and Wifkain’s origins in B2C; “The formula goes back to success in fashion business equals success in supply chain process.”
- (05:25) Indonesia’s textile and fashion industry 101; “The upstream side has the knowledge, the skill, the network, the resources, the history…But the industry is very opaque and it’s very untransparent.”
- (06:56) Finding their CTO co-founder and their approach to digitalization; “Throughout that integration of both the consumer side digitalization and also the merchant side digitalization, that would create enough transactions that presents a lot of rich data that can be used for other adjacencies as well.”
- (09:12) Where is Wifkain now; “In 2021, we grew 11 times more than them compared to previous year. This year, the focus for us is to digitize the merchants.”
- (09:48) Why does the textile industry need its own digital enablers like Wifkain; “Textile itself is a very different product than all the other generic products like FMCG and everything that currently is being scaled by other startups.”
- (11:50) Supporting textile merchants’ business and access to credit; “Once we engaged with the merchant, we kept on building up orders with them, connecting them into a wider distribution network…that actually unlocked an additional revenue of 25%, which is huge.”
- (13:38) Building Wifkain’s company culture and learnings on leadership from HSBC; “We also understand that people are always the key to success, and that sticks in a bundle are unbreakable.”
- (15:39) Why an ex-banker and serial entrepreneur joined Insignia Ventures Academy (IVA); “…I felt I needed to know to build a successful startup, to be able to fundraise in the right way, and also select the right investors by understanding how venture capital actually works.”
- (17:10) Highlight of Sara’s IVA experience; “IVA is actually a very amazing journey. and I think they gave us the tools to become a better leader, CEO, and also founder of our startup.”
- (18:11) Advice for current and future IVA venture fellows; “You should really hold onto the people in your group and the people [who are your] IVA colleagues…”
- (18:50) Data-first Playbook to Drive Digitalization in Indonesia’s Fashion Industry; “It must be the key to create this [holistic] ecosystem, and also once they get connected, it will present a lot of data, a lot of data such as a demand analysis, demand forecasting, so the merchants can actually produce the right fabrics.”
- (21:24) Looking to Baidu for What’s Beyond Textiles; “Our vision is always to become a supply chain enabler for the whole fashion industry. So after textile, what other adjacencies or other sides or stages in the supply chain of the industry we should kind of solve, and eventually enable the whole supply chain?”
- (22:32) Rapid Fire Round;
About our guest
Sara Sofyan is the CEO and co-founder of Wifkain, a pioneering Indonesian B2B marketplace platform for the country’s fashion supply chain. Prior to Wifkain, she was a B2C fashion entrepreneur through which she found the inefficiencies in Indonesia’s textile supply chain. Before becoming an entrepreneur, Sara spent nearly five years at HSBC where she became AVP for Global Banking and Markets. She received her Bachelors in Business Management from King’s College London.
Origins of Wifkain
Paulo: Welcome to On Call with Insignia Sara, how are you doing?
Sara: Good. Thank you so much. It’s always great to see you through various agendas.
Paulo: Yeah, since I also wear different hats with Insignia Ventures and I also help out with Insignia Ventures Academy, where I’ve also had the pleasure of meeting Sara through these different ways as well. So to kick things off, I just wanted to really for our listeners get to know you a little bit more and get to know Wifkain a little bit more. So maybe you can share with us how you started Wifkain with your co-founders Chindera and Rudy as well.
Sara: Sure. Thank you so much Paulo So to provide a picture of how we started it, as you mentioned before, I started in banking, so I was working in HSBC for four or five years, right after university. HSBC is one of the biggest global banks in the world, and it’s very structured. As we call it, everything is always played by the global procedure book. So everything has its kind of fence and rules to play with.
And I think at the end of the five years, when I was working as a banker, I felt that I wanted to create something and create an impact. I want to create my mark in the world. All of the founders have that kind of gut feeling or dream that they want to do. And I started to look into the fashion industry.
At that time, the Indonesian fashion industry had just started to boom and so I looked deeper into the industry. It’s very interesting because there are a lot of things [that come with it]. There’s creativity, there’s art, there are designers, there’s science, there’s the supply chain, calculations, maps, and everything, and so it creates a lot of a labor force.
And it’s an industry that I decided that I want to create an impact within. So I picked up the phone and called Chindera. Chindera is my sister-in-law by the way. So I called her and I said, “Hey, do you want to tap into the Indonesian fashion industry? This is going to be big soon, right?”
Paulo: And she had also a background in that as well, right?
Sara: She’s actually the master of fashion. She’s a lot better than me, so she’s actually my first teacher in fashion. So we started by ourselves back in the day. We haven’t had the resources to hire anyone. So it was just the two of us. So we decided to launch a B2C where we work with fashion brands of Indonesia and we help sell and market their products online across the Indonesian consumer market.
And throughout that time we found something very intriguing all of our brand partners have that one single problem that nobody has actually solved yet. And it was actually the supply chain.
Reading and studying all the big conglomerates like Zara, H&M, and Shein, they actually have a very strong supply chain foundation. And hence the formula goes back to success in the fashion business equals success in the supply chain process. Looking into those insights, we kind of did the journey by ourselves.
So we see that the Indonesian fashion brands are procuring textiles in the wrong way. They go through the offline convention market. They’re buying textile from tier-3 and tier-4 traders whose prices are very, very uncompetitive. And hence they cannot price their products attractively to different consumers and the SLA is far too long. It takes them like two or three weeks to actually [deliver] fabrics.
And hence, it is the main reason for this inability of optimizing for a lot of the fashion brands industry in Indonesia. So, looking at that we just started to walk around to a lot of merchants, first-year distributor factories, and we gathered so many samples and we did a small pop-up. and we just invite everybody we know who has a brand.
Paulo: That was like the MVP.
Sara: MVP but no employees. So we just invited everyone and they ended up buying it. So we decided, that this might be a real product-market fit solution. That’s the story of why we started the business.
“The formula goes back to success in the fashion business equals success in the supply chain process.”
Paulo: So clearly you’re not just running a small pop-up anymore, but really a digital platform that scales. What you discovered in the market, all these like different pain points, when it comes to SLA, when it comes to the quality, when it comes to the sourcing for these fabrics, you mentioned a couple of them. I wanted it for us to enlighten our listeners a little bit as to the market for Indonesia, when it comes to textiles, you mentioned a couple of pain points that I would suppose are specific to Indonesia, but maybe you can give our listeners bit more context as to why these pain points are there and why, up until now, as you mentioned, nothing has really been done in terms of addressing these issues.
Sara: The textile industry is very interesting. Indonesia has been one of the strongest manufacturing hubs in Southeast Asia if not in the world. In the textile manufacturing industry, the upstream side has the knowledge, the skill, the network, the resources, the history — it goes a long way in this industry.
But the industry is very opaque and it’s very untransparent. And hence we see that the ecosystem is not integrated from upstream and also downstream and that is what makes the ecosystem not integrated in a holistic way and not optimizing both of the upstream and also the downstream side.
It’s an interesting way to do it, and we looked into the landscape that a very limited number of companies or startups are trying to solve this market practically because of some challenges like localization and also the need to be on the ground, to actually get engaged with the merchants and try to transform them through digitalization, but it’s a necessary thing to do to actually transform the industry from conventional to industry 4.0.
“The upstream side has the knowledge, the skill, the network, the resources, the history…But the industry is very opaque and it’s very untransparent.”
Paulo: You thought about bringing these businesses through the digital way of doing things. And you ended your story where you and Chindera set up that pop-up store and saw that there was a lot of demand for that type of service. And so now you’re thinking about how to scale it, to incorporate that tech to really make it more efficient. And so maybe you can tell us how you transitioned from that offline MVP to what you have now with Wifkain and how you also connected with Rudy Hartono, your CTO and co-founder.
Sara: When we actually started, we realized we obviously need a tech guy, right. So we started to participate in all the tech gatherings pre-pandemic, and as you know, there were so many of these gatherings every week or every other week. And that’s how we found Rudy and fate came in and we just got along really well and asked him to join in and he just agreed.
Consumer side digitalization + merchant side digitalization = Data
I think for the digitalization part, our strategy first is to win the consumer first. So what we did was get a lot of products onto the platform and get those varieties of fabrics to be able to provide fast sourcing and also the convenience and guarantee to the consumer. So we wanted to be the consumer-first platform, once that has built up in terms of volume and sales orders we want to slowly go into the merchants.
What we are seeing in the merchants is that the Indonesian textile suppliers are very [conventional]. They are still doing things in an old [school] way, where they’re still doing pen and paper. The most digital-savvy users probably use Excel, and hence we are providing them with an order management system and warehouse management system where they actually operate a lot more efficiently to help them to scale the business at a much lower cost and also get access to wider distribution channels and getting customers much easier as well.
Throughout that integration of both the consumer side digitalization and also the merchant side digitalization, that would create enough transactions that present a lot of rich data that can be used for other adjacencies as well. We see that the tech is coming along quite popular in terms of both the consumer and merchant side. The interest is there and hence information such as transaction volume captured by the platform is used by our fintech partners to get richer credit assessment for our partners to get easier working capital facilities as well. So I think that’s how we kind of want to slowly widen the services to ensure that it will become a [holistic] ecosystem.
“Throughout that integration of both the consumer side digitalization and also the merchant side digitalization, that would create enough transactions that presents a lot of rich data that can be used for other adjacencies as well.”
Digitalizing Indonesia’s Textile and Fashion Industry
Paulo: Given that whole trajectory and where you are now, maybe you can share with our listeners, it’s been two years since March 2020, I mentioned earlier when you guys launched, where is Wifkain now and how are you guys doing in terms of, how you managed to build out the platform?
Sara: Last year has been a growth year in terms of the consumer side for us. In 2021, we grew 11 times more than them compared to the previous year. This year, the focus for us is to digitize the merchants. And [to do that], we capture a lot of data and grow the merchant side as well. That will create support in terms of faster growth of SKUs that will get those retention rates, in terms of customers as well, and provide enough data with other adjacencies as well.
“In 2021, we grew 11 times more than them compared to previous year. This year, the focus for us is to digitize the merchants.”
Paulo: So really focusing on the suppliers, because they ultimately provide what the fashion brands want, which is again, like a lot of variety in SKUs. And speaking of digitalization, we see a lot of this happening for SMEs across different industries. So maybe you can talk to us about how that would be different for the textile industry or fashion industry in particular in Indonesia and how it’s may be doing things differently from other SME digital enablers.
Sara: Textile itself is a very different product than all the other generic products like FMCG and everything that currently is being scaled by other startups. I think the complexity and also the detailed information in textile is very, very important, to be captured, for the consumer’s consideration to buy the items as well as for the merchant to actually manage their warehouses.
And that detailed information they’re very different from the generic products and provides a very limited available platform or technology in the market for us to use. And hence the challenge for us was to actually customize and build things that will be used and suitable enough for the merchant and the textile product itself.
The next challenge is the adoption level, because the textile suppliers are very, very, comfortable in terms of the old way of doing business, the conventional way of bookkeeping, recording, and order processing. And it becomes the strategy for us to actually onboard and activate the merchant in a progressive stage.
It’s very difficult to push them to adopt or digitize things from zero to something that is very advanced and hence the strategy will be to get the right, progressive stages, for them to be unlocked into a more advanced feature at the right time and at the right point of the usage behavior as well.
So I think that is most important. The technology itself is the enabler, but the core and also the important [thing], as well as the challenge, is to get that adoption level from the merchant side, looking into their comfort level into the old way of doing it. Once we actually get successful in digitizing them, then hopefully we also get that stickiness in terms of having comfort in using our technology.
“Textile itself is a very different product than all the other generic products like FMCG and everything that currently is being scaled by other startups.”
Paulo: We’ve been talking about sort of the business of Wifkain from a very high-level point of view, but looking at the business model and the trajectory that you guys are on, but we’d also like to maybe go on the ground and see what it’s like for merchants and fashion entrepreneurs and our listeners really love, when the guests share on-the-ground stories of how the lives of customers have been changed by the platforms that they use. So maybe you can share with us a story perhaps from a textile merchant or a fashion brand that has been impacted by Wifkain.
Sara: We worked with one of our key merchants for over a year now. And before the first order when we actually worked with them, their factories were very underutilized. It’s not really good for their financial books and also the growth of the factory itself.
Once we engaged with them and we kept on building up orders with them, connecting them into a wider distribution network, now we actually already contribute almost 25% over their full capacity. So that actually unlocked an additional revenue of 25%, which is huge.
What is also interesting is that we recognize that the factories already use ERPs that can provide transparency to all parties, such as the suppliers, us at Wifkain, as well as the consumers. What’s really interesting is that the data and also the recording of information are being optimized by us and also our FinTech partners to actually provide a much richer credit assessment.
So it’s not only that the data can provide pre-approved or easier access to financing to the buyers. It also provides the opportunity of getting a lot easier working capital for the factories. So as we’re currently speaking, the fintech is currently undertaking an assessment to provide the working capital facility to the factories, which previously had very limited access to funding from any financial services companies.
“Once we engaged with the merchant and we kept on building up orders with them, connecting them into a wider distribution network…that actually unlocked an additional revenue of 25%, which is huge.”
Paulo: Increasing that efficiency again goes back to more data, which allows for easier access to working capital as you mentioned. And I wanted to also touch on, apart from the business, apart from the customer experience, and apart from the trajectory, you guys have, also the culture that you’re trying to build and the organization you’re trying to build.
How would you describe Wifkain’s company culture? What do you look for in terms of people to bring into the team since it’s a very specific industry, as you mentioned, right? There are very specific things that customers look for. And I guess that you need to understand that before you jump into Wifkain as well.
Sara: The main characteristic that we always look for in a team member is a growth mindset and grit because I think all the technicalities such as textile, the fashion industry, and the supply chain, everything can be learned and it can be learned quite fast, but having the ability to have that growth mindset and the grit is really what can drive the whole team and the positive energy that can contribute [holistically] into achieving our main goal.
And also what we also love is working in a collaborative manner as well as an open mindset. because I think the culture with us is that we also understand that people are always the key to success and that sticks in a bundle are unbreakable. So those collaborative traits and an open mindset are really important for us.
One thing I also learned during my days at HSBC, when I was a banker, was that HSBC invests and they really train all of the employees very well, from all different angles on the financial and technical side, as well as the qualitative side becoming a very good leader.
And I think during my days at HSBC, the reason why I also stayed here for five years, which is quite a long time for a banker, is that they really place a huge value on the people and also train well on how to create a leader from within and not [depend on getting] a leader from outside.
And I think, having the right culture, the right goals, and the right way to communicate these things internally can drive every single one of us who actually work the extra mile. That is the key to actually achieving a successful company.
“We also understand that people are always the key to success, and that sticks in a bundle are unbreakable.”
Paulo: Yeah, I really love how you were able to tie in your past experience in HSBC with regards to how you were leading Wifkain today. And if anyone out there is listening, if you guys are interested in joining Wifkain, I’m going to leave a link in the episode description, so you guys can check that.
Now I want to shift gears a little bit, and as I mentioned in the introduction, you had encountered Insignia through more than one way. One way being a founder, and Insignia partnering with your company, but you also joining Insignia Ventures Academy (IVA), which is the venture capital accelerator started a year ago and you joined the first cohort.
So coming from that founder perspective, by that time you had already launched Wifkain, so what was the motivation for you to decide to actually try and join IVA and how did you end up joining it?
Sara: I came from a financial background and banking industry, right? So venture capital is very, very different from banking and right after banking, I jumped to entrepreneurship from zero. So venture capital is something that I know nothing about and being in a startup and being a founder, it’s something that I need to know about to be successful in [this] business.
So I found that it’s very important to me to know how venture capital actually works. what are the tier-ing of the people who worked within it, how the flow within venture capital [firms] are actually being communicated, and what types of metrics I should focus on as a founder to make it attractive enough to venture capital, etc.
So I think those are the things that I felt I needed to know to build a successful startup, to be able to fundraise in the right way, and also select the right investors by understanding how venture capital actually works. So that is actually the reason why I [joined] IVA, which was a very, very interesting experience.
“…I felt I needed to know to build a successful startup, to be able to fundraise in the right way, and also select the right investors by understanding how venture capital actually works.”
Paulo: And it’s an interesting reason as well, because I mean, Insignia Venture Academy caters to a lot of different backgrounds. So you being a founder also found value in leveling up your fundraising muscle as well. What is the highlight of the program for you?
Sara: The highlight of the program is the people. I love the people [in the program]. They’re awesome. They’re amazing. They’re really smart, and they are also very, very just awesome individuals as a whole, with their profound careers they’ve been working on thus far, their experiences with everything and also their personalities, how they’re handling everything, families, building the right support system, and becoming a very good leader, in work and elsewhere.
I think that is the highlight of my experience in this IVA. And I learned so much from that as well. I also like to highlight the LDG program, which is amazing. And we learned so much from it, being forced to reflect on ourselves, and it gave us that slap in our face to ourselves to actually kind of dissect ourselves: what things we should do better, what we should improve as a person, be it as a leader at work, family, or friends. It’s actually a very amazing journey. and I think they gave us the tools to become a better leader, CEO, and also founder of our startup.
“IVA is actually a very amazing journey. and I think they gave us the tools to become a better leader, CEO, and also founder of our startup.”
Paulo: And speaking of that, what’s your advice for — we’re now, by the time this comes out, halfway through, or nearly halfway through Cohort 3 of the program — so what advice do you have for venture fellows of Insignia Ventures Academy?
Sara: I think you should really hold onto the people in your group and the people [who are your] IVA colleagues, because they will present a lot of endless opportunities to come and a lot of lessons to learn from each other. Even now I talk to a lot of them on a random basis and also on a specific basis. They are very helpful and really helped me in terms of my startup, and also as a person as well. And I also found my tech advisor from the program as well. The network is amazing.
“You should really hold onto the people in your group and the people [who are your] IVA colleagues…”
Thinking Data and Beyond Textiles: The Future of Indonesia’s Fashion Supply Chain
Paulo: You never know who you’ll meet and how they’ll be really helpful for you in the long run. So great advice.
And going back to Indonesia’s textile industry. Even if you guys have just launched in March 2020, it’s clearly a huge industry [where a lot] remains to be tackled. There’s a lot more work to be done. So how do you see the space and this landscape evolving in the next five years with respect to that, and how do you see the role of Wifkain in this sort of digitalization wave coming into Indonesia’s textile and fashion industry?
Sara: The focus will be to integrate and connect the upstream and also the downstream side. I think digital is key. It must be the key to creating this [holistic] ecosystem, and also once they get connected, it will present a lot of data, a lot of data such as demand analysis, demand forecasting, so the merchants can actually produce the right fabrics.
So [the data] really helps them in terms of inventory risk and also optimize sales volume from the consumer side, so they can actually get a lot of cheaper products and they can actually sell very competitively, and also, it helps them get a really fast SLA to procure and hence they can restock things very fast and optimize their sales revenue there as well.
I think in the future this ecosystem [approach] has to be played, tackling very crucial adjacencies such as fintech, both towards the supplier side, as well as the logistic partners so that they’re enabled to bring those very effective and trusted logistics services as well.
(3): Group buying
And also group buying, because I think once the transaction reaches a very clear volume and the data already presents what [particular] fabrics are being purchased or ordered by the Indonesian fashion businesses, they will enable the group buying [service], and hence the merchants can produce a lot more efficiently, with a very minimum operational [costs]. Meanwhile, every brand in Asia can get access to cheap textiles, at a very low minimum quantity. So I think that will be the playbook that we are going to see in the next five years.
On the adoption side, we’re actually quite confident because we see that on the supply side, the suppliers are actually being dominated by younger players now. And hence they are very, very, much more open to digital transformation as opposed to the previous players that are still very sticky to the conventional [methods].
“It must be the key to create this [holistic] ecosystem, and also once they get connected, it will present a lot of data, a lot of data such as a demand analysis, demand forecasting, so the merchants can actually produce the right fabrics.”
Learning from Baidu to think beyond textile in Indonesia’s fashion supply chain
Paulo: One thing I noticed throughout our conversation is really the emphasis on data. We kept going back to data and I think it’s really [important], even if it isn’t necessarily the main business, but it is a key that unlocks a lot of the growth for Wifkain. And it is really sort of like a virtual cycle, shall I say: make [the transactions] efficient, get that volume, get that data, which then makes [the transactions more] efficient, so on and so forth. It’s really interesting how you’ve just laid that out for us.
And also interesting that you mentioned that there are a lot more suppliers or more people within the industry who are becoming more digitally savvy which is just good for the industry overall.
Given the business model of Wifkain and its trajectory and what it’s doing in Indonesia, are there any companies globally that you look at as a model or take inspiration from or learn from? How are you doing things differently from say those players in other markets?
Sara: We looked into the model of Baidu, which obviously reached a [similar] point in China [because] they also started textile-first.
But I think Baidu reaching unicorn is something that we always try to learn from, their journey and their business model as well, [especially] where to go next after textile, because our vision is always to become a supply chain enabler for the whole fashion industry. So after textile, what other adjacencies or other sides or stages in the supply chain of the industry we should kind of solve, and eventually enable the whole supply chain?
I think what is different is the localized approach. The behavior of the merchants, consumers, fashion entrepreneurs and businesses in China is very different from Indonesia. Indonesia has that very localized challenge that we need to tackle in terms of adopting them into a digital world.
“Our vision is always to become a supply chain enabler for the whole fashion industry. So after textile, what other adjacencies or other sides or stages in the supply chain of the industry we should kind of solve, and eventually enable the whole supply chain?”
Rapid Fire Round
What are the top 3 traits a startup CEO should have?
Sara: Visionary, Agile, Empathy
What’s one interesting thing that not many people know about Indonesian fashion?
Sara: The quality is as good as what you get in international brands in America as well, because most of them are actually produced here.
Most memorable day/moment at work?
Sara: We have game nights every month. So we have a mini OKR tracker, but we made sure to [play games] so everybody’s awake. And we always found every time we have game nights, the tech guys always win. So either they kind of hack the system or they are [lucky], and they always win, but game night is something we do on a monthly basis. And we give amazing prizes as well.
What’s the biggest advice that you have for people who are like you, came from a corporate or banking sector and are jumping into entrepreneurship?
Sara: Making mistakes fast and learning fast, because I think being an entrepreneur, you cannot succeed without making any mistakes. You can make small mistakes, but if you make them fast and you can learn it fast, then you get more bullets to actually succeed.
Favorite activity to de-stress?
Sara: I like the same thing with the kids, but I feel like sometimes it might really be a distressing activity, really depending on the situation. I like to take them outdoors because we live in Jakarta. So it’s such a metropolitan city and everything is very [crowded], a lot of traffic, as you know. So I like to take them outdoors, at least once a while, once a week, during the weekends, to get them to feel more open.