Quick commerce. E-groceries. Sectors that saw investors pouring millions in 2021, but for Ivan Darmawan and his team at Radius Groceries (YC W22), building quick commerce for rural Indonesia amidst the pandemic is about more than just riding on a bandwagon. It’s about solving long-standing economic development gaps in second-tier and third-tier cities worsened by the pandemic. The CEO and co-founder of Radius goes on call with us to talk about balancing sustainability and hypergrowth, Radius’s Y Combinator experience, and more. 

Highlights and Timestamps

1. (00:43) Paulo introduces Ivan;
2. (01:20) Long-Standing Pain Points Leading to Radius’s Quick Commerce Opportunity (Meeting co-founder Stephanie, meeting Insignia, and what makes Indonesia rural quick commerce different); “What we found, after jumping into this business, and after talking to founders from other startups, quick commerce startups in other countries as well is that different regions have very different behaviors… you cannot just copy and paste a business model think it will work, right. You need to make a lot of adjustments and tailor it [to] specific needs.”
3. (05:02) Y Combinator Afterthoughts; “Despite all the investors and the money floating around in the market, we need to really focus and building a good business…you will need to understand the customers better, and not really swayed by a lot of burning of the money…”
4. (06:36) Balancing Hypergrowth and Sustainability (Learnings from Grab and Traveloka, Building Radius’s Leadership); “In our business, blitzscaling doesn’t mean we only need to open like a lot of new locations and warehouses and expect it to grow. We need to really balance our operations and tech; they need to develop hand in hand with our business or it will collapse.”
5. (10:52) Beyond Convenience: Long-Term Impact of Quick Commerce; “…because we exist locally in the cities we’re  employing all these people from the local citizens as well to support the operations, which means we are supporting the economies of this people…we’re trying to support the local small and medium enterprises as well and provide better access for them to our customer pool.”
6. (13:53) Rapid Fire Round;

About our guest

Ivan Darmawan is the CEO and co-founder of Radius (YC W22). Before he co-founded Radius, he was previously an operations and business development leader with well-established unicorns in Indonesia and Southeast Asia. He was country business manager at Traveloka and business development strategy at Grab. He received his Bachelors in Industrial Systems Engineering from the University of Southern California. 

Transcript

Long-Standing Pain Points Leading to Radius’s Quick Commerce Opportunity

Paulo: So I’d like to kick things off by getting to know a little bit more about Radius since it’s the first time that we’re [talking about] Radius on call. How did you and your co-founder Stephanie come together and decide to actually start up a quick commerce company in Indonesia?

Ivan: First of all, thank you for the opportunity to jump into this call. I really appreciate it. And the pleasure is ours. Stephanie and I both grew up and Jakarta, but our families came from cities outside of Jakarta. They came from Samara in central Java.

And during the pandemic itself, when we went to those cities, it just saddened us to see the journey for [people there] to buy groceries and their daily [items], because the landscape is very different from Jakarta versus other cities, wherein Jakarta you have so many options, and so much convenience from the online providers, but in central Java or even other cities, there are [not enough] options for them to buy daily needs conveniently. 

They need to go to offline supermarkets or even traditional markets just to get their groceries, even in the midst of the pandemic. And this has saddened us and we wanted to make a change. Stephanie and I both had a lot of experience in retail and FMCG, and we decided we wanted to go into this business and provide these convenience services, not only in Jakarta but other cities as well. That’s how we started this business.

“…in Jakarta you have so many options, and so much convenience from the online providers, but in central Java or even other cities, there are [not enough] options for them to buy daily needs conveniently.”

Paulo: Definitely, we’re seeing a lot of businesses coming out of specific pain points that may have existed a long time ago, but became exacerbated or worsened by the pandemic. 

And you talked about one specific pain point in terms of access to FMCGs

and also all of these basic goods, especially in rural Indonesia. Although we saw a lot of quick commerce startups that emerged in places like Jakarta, it wasn’t democratized enough and not all places in Indonesia were able to access this. And so guys started Radius which is really great.

And I’m sure our listeners would love to know how you met Insignia. 

Ivan: Actually Insignia is one of our very first early supporters. We [reached out to] Yinglan. We had a brief talk with him and we just knew at that moment of time that it’s an instant click with them, so we pursued this partnership with them and it’s been an amazing ride.

Paulo: You’ve talked about really solving a local problem and your backgrounds, you and Stephanie, both your families coming from rural Indonesia and seeing firsthand the pain points there.

Especially for our listeners who aren’t from Indonesia and they might not quite understand, what are the key learnings from quick commerce that you picked up to be able to execute and start this business in rural Indonesia specifically?

Ivan: In the last one to two years, there [have been] so many quick commerce startups popping up across the world, not only in the Asian market, but also in the US, Europe, and practically like all over the world.

But what we found, after jumping into this business, and after talking to founders from other startups, and quick commerce startups in other countries as well is that different regions have very different behaviors. 

And in order for us to grow, we need to be able to relate with our customers better. And that not only happens in-between countries, but also in Indonesia where the behaviors and the customer’s needs are very different from Jakarta and the rural areas. So we need to really talk to our customers. Do we understand what they need? What kind of service do they really want from us to be able to grow our quick commerce business?

Paulo: And I think that this was also something brought up in last season’s podcast with Aplikasi Super’s Garret Koeswandi where they talked about — Southeast Asia is a region, but it has many different markets, so it’s hard to paint with a single brush, and it’s the same thing with Indonesia. There are many different provinces, you really need to sort of dig deep and really get to know the culture and nuances of different locations.

Ivan: Because you cannot just copy and paste a business model and think it will work, right. You need to make a lot of adjustments and tailor it [to] specific needs.

“What we found, after jumping into this business, and after talking to founders from other startups, quick commerce startups in other countries as well is that different regions have very different behaviors… you cannot just copy and paste a business model think it will work, right. You need to make a lot of adjustments and tailor it [to] specific needs.”

Y Combinator Afterthoughts

Paulo: And speaking of tailoring and meeting different customer needs, I want to get into [your] YC experience since you’ve been through the program. I can’t not ask about it. What was the experience like getting into YC? and what did you say was the biggest lesson from that program that you’ve taken away and got into use with Radius.

Ivan: Getting into the YC program, it’s been one of the best decisions ever. It’s been a very great experience for us, and I think during this program itself, what we found it’s really important. Despite all the investors and the money floating around in the market, we need to really focus and building a good business.

And what I mean by that is that you need to focus on building a sustainable business. And not only that because during the time [when you raise] investment money, you will be enticed to throw a lot of promotions and all those [cash-burning activities] to entice customers. But what they emphasized is that you will need to understand the customers better, and not really swayed by a lot of burning of the money and just build a really good sustainable business.

“Despite all the investors and the money floating around in the market, we need to really focus and building a good business…you will need to understand the customers better, and not really swayed by a lot of burning of the money…”

Paulo: Yeah, really focusing on the fundamentals, and I think that’s all the more important, in the current environment that we have and so it’s good that even early on, you already have focused on that. What advice would you give to fellow Indonesian founders who are looking to join Y Combinator?

Ivan: Actually, I’ve gotten a lot of questions and messages about this as well. I think for you guys who are really looking to join YC, do a lot of research about this program as well. There are so many publications about the program and learnings, and for sure take the opportunity and be confident when you’re about to take it.

“For you guys who are really looking to join YC, do a lot of research about this program as well.”

Balancing Hypergrowth and Sustainability 

Paulo: Definitely there’s a lot of preparation involved coming into the program. 

My next question is since you were talking about really catering to local needs, but at the same time, you want to be able to really capture as many market segments and, penetrate as many different locations as possible, because obviously, pushing the envelope in rural Indonesia, you sort of have this pressure as a first mover to actually reach as many places as possible. 

So how do you balance that out with, again, you mentioned earlier building a sustainable business and really making sure that the customer experience of Radius is standardized and really quality level as well?

Ivan: For us, in terms of blitzscaling, we really need to balance out the operations capacity and also our tech development, because, in our business, blitzscaling doesn’t mean we only need to open a lot of new locations and warehouses and expect it to grow. We need to really balance our operations and tech; they need to develop hand in hand with our business or it will collapse. Like we cannot continue to open up hubs if there is no team to support all the operations and logistics, and we need to make sure that our tech is ready to handle all the traffic. We need to make sure that is in place before deciding, “Okay, we’ll penetrate a new location.”

“In our business, blitzscaling doesn’t mean we only need to open like a lot of new location and warehouses and expect it to grow. We need to really balance our operations and tech; they need to develop hand in hand with our business or it will collapse.”

Paulo: It’s not just an operations decision. It involves all these other different aspects, people, tech, and making sure all of those things are aligned as well when expanding. 

And speaking of platforms and marketplaces, prior to Radius, you were a leader in Traveloka and Grab as well. And I’m curious to know, what are the lessons from having worked at those hyper-growth companies that has shaped the way that you’re currently leading and growing Radius today?

Ivan: Actually working in these unicorns really gave me a different perspective from working in conventional companies. The biggest experience that it exposed me in understanding better how agile and flexible our startup really is because before entering this business and working for them, I didn’t really know how flexible they are or how they do restructuring in order to catch up with the hyper-growth that you mentioned. 

And during my time as well in Traveloka and Grab, I think I was quite lucky because I was in the revenue team and it taught me how to enter new markets, incubate new businesses, really build a team from the ground up and lead it. And actually, all those experiences were really relevant for me in building my own company right now. So I’m really thankful for all the experiences that I had before.

“During my time as well in Traveloka and Grab, I think I was quite lucky because I was in the revenue team and it taught me how to enter new markets, incubate new businesses, really build a team from the ground up and lead it.”

Paulo: You mentioned that you were specifically in the revenue team in charge of expansion and growth and that really applies to the fact that you’re starting a new company, which is Radius, and growing that company. At the same time, Radius is a model that’s very much built on consistently starting things from the ground up, especially in a market like rural Indonesia, where you are the first movers here in terms of really delivering quick commerce.

And speaking of one of the elements that we talked about that you really have to build from the ground up, it’s really the people in the organization and bringing on the right leaders. You obviously have great folks with you, like Stephanie as well, but you definitely want to bring in more leaders to your team.

So what are the considerations and how do you approach bringing on leaders who are as passionate as you are, when it comes to really democratize and creating access to quick commerce in rural Indonesia?

Ivan: Building a world-class team is really important for us in building the company. As much as we can do it ourselves, we cannot expand by handling all the things only between the two co-founders that we have. 

Hiring is actually one of the key aspects that we have in the business and looking for leaders. Of course, domain expertise is a very important thing in supporting our growth, but we actually enjoy mixing up leaders from various industries because we feel that we will be able to gain different perspectives not only from people from FMCG or groceries background, but people from all other industries will have different perspectives [and] that’s really beneficial in our business. 

So we like to mix it up in terms of our leaders’ background, but more importantly, not only their experiences, we also really focus on cultural fit to ensure cohesiveness in working with the team, because we have seen smart leaders who don’t really work well with the team and as smart as they can get, without teamwork, the results will not be delivered.

“…domain expertise is a very important thing in supporting our growth, but we actually enjoy mixing up leaders from various industries…people from all other industries will have different perspectives [and] that’s really beneficial in our business.”

Beyond Convenience: Long-Term Impact of Quick Commerce

Paulo: I think you really brought on a great point there about culture fit and you know, it’s not just about having, for example, in a quick commerce startup, commerce folks only coming in. You definitely want a wide range of backgrounds, since it is again, a very holistic operation that you guys have do roll out in order to efficiently expand your presence across rural Indonesia.

Now I want to shift gears a little bit and go into sort of the impact that Radius creates because we hear a lot about quick commerce as a trend and over the past year, a lot of investors were putting money into quick commerce startups globally.

But of course, the roots of Radius really are embedded in very specific pain points in rural Indonesia, so it’s not just about jumping into the bandwagon, but really trying to solve long-term problems. So maybe you can share with us and our listeners who would love to hear these stories of how tech startups are actually impacting the lives of different people across the region.

So maybe you can share an example or a case study that you have in terms of how Radius has or changed the lives of its customers.

Ivan: The background of why we started Radius is to help the people living in other cities other than Jakarta, right? Because we’ve experienced living in Jakarta and other cities and we feel a really big development gap between the cities and we envision with the assistance of Radius, we’ll be able to help our customers in living their life more conveniently, especially in the cities that were targeted, where before they need to go offline to their traditional supermarket or market to buy their daily needs. 

Now with Radius, they can get what they need for daily life in an instant click, from the comfort of their home, and it’s fast and affordable with us. So it’s really helpful for the customers using our application.

“Because we’ve experienced living in Jakarta and other cities and we feel a really big development gap between the cities and we envision with the assistance of Radius, we’ll be able to help our customers in living their life more conveniently, especially in the cities that were targeting…”

Paulo: Quick commerce will definitely be a part of how e-commerce will mature in Indonesia, as we see like, in a recent call that we had with the folks at Shipper, you know, they talked about they see logistics and e-commerce are maturing in Indonesia to Amazon-level efficiency and same-day delivery, and all those things speed, convenience, and still quality customer service. And so Radius is also definitely a part of that equation.

Speaking of moving things forward, you talked about really improving lives and making things more convenient for people outside of Jakarta. What’s the bottom-line impact in terms of economic value as well for Indonesia? How would you connect quick commerce, what you’re doing in Radius, to the Indonesian economy? 

Ivan: So we know how groceries contribute to more than 50% of our customers’ monthly spending in these cities, and for now they are spending so much time just going to the market, buying the products offline, and with us, they don’t even need to go out from their home to get their products.

And through our services, they can really allocate more time in doing more productive things than going to the markets every on a daily basis. But not only that, because we exist locally in the cities we’re employing all these people from the local citizens as well to support the operations, which means we are supporting the economies of these people.

And moving forward as well, from the product assortment perspective, since we support a lot of local suppliers as well, we’re trying to support the local small and medium enterprises as well, and provide better access for them to our customer pool.

“…because we exist locally in the cities we’re employing all these people from the local citizens as well to support the operations, which means we are supporting the economies of this people…we’re trying to support the local small and medium enterprises as well and provide better access for them to our customer pool.”

Rapid Fire Round

What are the top 3 traits a startup CEO should have?

Ivan: Confident, motivated, Reliable

What podcast / book / resource would you recommend to other startup founders especially when it comes to commerce? 

Ivan: For ecommerce specifically, I’d like to go for online publications to understand the global trends and commerce. I also found biographies about the company, or even the founders really exciting. For example, the book “The Everything Store”, the story about Amazon by Brad Stone, is really insightful. And I think it’s a really good read and shows you how Jeff Bezos built the company from the ground up, and now it’s the number one commerce company globally.

What digital technology/innovation or sector (apart from the tech you are working on) excites you the most today? 

Ivan: Apart from quick commerce, actually, the pharmaceutical industry really, really excites me. And during the Y Combinator program itself, I’ve met with these founders who are working on this cancer treatment, with older technology and I’ve found it really fascinating.

What is one thing you have learned from your co-founder, Stephanie? 

Ivan: She has the “just do it” mentality and that’s inspiring. But most importantly, as founders, we need to be upfront and understanding, in building a business together successfully. 

Most memorable day/moment at work? 

Ivan: When it comes to memorable work, there’s a lot, but I think the one that really hits me is when we started out the quick commerce business, we used to go around to hundreds of households just to try and talk to our customers to understand their needs. Looking back, we used to go around from 9:00 AM until like 3:00 PM in the afternoon. So we went around under the scorching sun and that was a really memorable experience.

What is your favorite travel destination in Indonesia / Southeast Asia? / What trip are you most looking forward to taking? 

Ivan: So my family came from Lombok, which is in West Nusa Tenggara. I think it’s 20 minutes away by flight from Bali I always look forward to going there because previously I tend to go there every year or once every two years.

But during the pandemic, I didn’t really go on a lot of traveling. So really looking forward there, the food and view are amazing there. It’s been getting more and more popular, but it’s calmer compared to Bali. There are fewer resorts in Bali, and I think the food is way more authentic and the view is still a lot better compared to Bali.

Favorite activity to de-stress?

Ivan: Yeah, I think the distressing is really important for you, to make sure your mental health is going well. For myself, I’m a big foodie, so I like to out with my friends and just socialize with them