What makes a pivot meaningful for a business? Pivots are part and parcel of a startup’s journey but some are more effective than others. Go behind the scenes of how a business evolved by following the data and their customers in this call with Bakool founders Ivan Darmawan (CEO) and Stephanie Wongsoredjo (COO). Not only do they share learnings from their company’s pivot from quick commerce to social commerce for fresh produce, but how their current approach is increasing household productivity for tier-two and tier-three cities in Indonesia. More recently Bakool announced raising an undisclosed seed round from Kleiner Perkins, Goodwater, Insignia Ventures, Global Brain, former minister of Indonesia Mari Elka Pangestu, and others.

Timestamps and Highlights

(00:43) Ivan and Stephanie introduce themselves;

(03:19) What’s in a Pivot: How Radius evolved into Bakool; 

“Basically, we are founders that always get back to data and when we saw which products our customers are really looking for, that’s when we made the pivot to Bakool…Our team has stayed with us from Radius to Bakool, so they’re pretty much professionals in handling crisis and also bringing the best service for our customers.” – Ivan Darmawan

(05:56) Perks of Building Outside of Tier-One Cities (Competition, Market Opportunity, Margins);

“…the cities that we’re targeting, the tier two and tier two cities, have a GDP per capita lower than $7,000. And the average income per month for the people living in these cities is actually 50% lower than in Jakarta, despite having similar spending on fresh produce and hundred groceries compared to Jakarta…And if we zoom in a bit more on what are they spending, actually almost 50% of their monthly income comes from fresh produce purchases.” – Ivan Darmawan

(08:55) How Group Buying for Fresh Produce Increases Household Productivity;

“We have thousands of agents who are serving their communities daily, and our customers…no longer need to go to the wet market and can save up to five hours per day. And our agents also have proven that they generate 3x their previous income.” – Stephanie Wongsoredjo

(10:36) How Data Makes Pivots Meaningful;

“From our data, we learned that different regions have different preferences in buying fresh produce and its specifications. For example, there’s a region that we’re serving that really likes these baby potatoes, while other regions prefer the big ones. And some other regions might have really high purchases on lemons and some other regions might rarely buy lemons.” – Stephanie Wongsoredjo

(14:00) #MinuteMasterclass: Making Meaningful Pivots;

“The most important thing is to just rely on data and really talk to the customers and really to see whether you are providing a service or product that’s really needed by the customers, and not getting too invested in your initial idea or hypothesis because sometimes that’s blocking you from making the jump.” – Ivan Darmawan

(15:40) #RapidFireRound;

About our guests

Ivan Darmawan and Stephanie Wongsoredjo have been friends for more than 15 years. They went to junior high school and studied abroad together and came back here to Indonesia with one vision: increasing the productivity of rural Indonesia. Both of their families came from tier-two cities, so they know how painful it is for people living in these areas to buy their grocery needs, and saw that they could improve the productivity of these people and also improve their quality of life.

Ivan Darmawan is the CEO of Bakool. Ivan previously graduated from the University of Southern California with a major in Industrial and Systems Engineering, with a focus on supply chain and logistics management. He also has 15 plus years of experience in farming, retail and tech, and previously worked in Southeast Asia unicorns handling the growth of three different markets. 

Stephanie Wongsoredjo is the COO of Bakool. graduated from UC Berkeley Haas School of Business. Growing up she had been helping her family retail businesses for more than 15 years. They had been doing this family business focusing on rural areas across Indonesia, managing more than 150 retail stores. She used to manage and expand large-scale teams and operations and also experienced running a huge supply chain across Indonesia. 

Transcript

What’s in a Pivot

Paulo J: For our listeners, especially those who tuned in to last year’s episode with Ivan, you may be wondering why we’re talking about Bakool now, and last year we were talking about Radius which was a different company, right? For this episode we wanted to share a little bit more about that transition, why you guys decided to move into Bakool and what are you bringing from Radius to Bakool as you are growing this business now. So maybe you can start off by dialing back to the very first decision. What made you guys decide to evolve Radius into Bakool?

Stephanie W: Back in the Radius days, more than 80% of our customers were asking us to provide online delivery for fresh produce, and as Ivan has mentioned, his experience is in farming. So he knows the exact details for the operation, as simple as the QC for picking vegetables and fruits. Therefore, we tried the pilot project for two months. And surprisingly in a month there were thousands of orders coming in. And at that time we realized that we were tackling huge pain points in these untapped cities.

Ivan D: Basically, we are founders that always get back to data and when we see which products our customers are really looking for, that’s when we made the pivot to Bakool. 

Paulo J: And speaking of pivots, pivots are, I’d say, part and parcel of a startup’s journey and they come in many different forms, but for Radius going into Bakool’s case, it was really a significant change or evolution. So I was curious to know what is the biggest learning for both of you making this change, especially from an operational standpoint.

Ivan D: I mean we previously did 15-minute delivery before, so we are very used to managing crazy fast operations and expansion. Our team has stayed with us from Radius to Bakool, so they’re pretty much professionals in handling crises and also bringing the best service to our customers. So I think that really helps in our business right now. 

Paulo J: How about you, Stephanie? Any learning as you went through this process of evolving into this new business, especially for yourself as COO? 

Stephanie W: In spending our money, we were actually very frugal back then, and this made us have stronger fundamentals for our business.

“Basically, we are founders that always get back to data and when we saw which products our customers are really looking for, that’s when we made the pivot to Bakool…Our team has stayed with us from Radius to Bakool, so they’re pretty much professionals in handling crisis and also bringing the best service for our customers.” – Ivan Darmawan

Perks of Building Outside of Tier-One Cities

Paulo J: Yeah. I think just really drives from the point that pivots are not just the sort of eureka moments, but buildups over time. And certainly, you guys have built up several advantages, even in Radius that have helped you now in Bakool. 

And now I also wanted to zoom in a little bit on the whole fresh produce market opportunity, right? Because I think it’s interesting that coming from commerce, you decided to zoom in on this particular type of SKU and tackle this specifically again for tier two, tier three, and rural Indonesia. 

So maybe you can describe a little bit about why fresh produce, apart from the fact that of course, Ivan has that background right, as Stephanie mentioned. Is there anything that you noticed, in terms of the SKU itself, like how it’s handled, the margins in this type of vertical, all those things, that make it a quite significant market for you guys to tackle?

Ivan D: As we know, the cities that we’re targeting, the tier two and tier two cities, have a GDP per capita lower than $7,000. And the average income per month for the people living in these cities is actually 50% lower than in Jakarta, despite having similar spending on fresh produce and hundred groceries compared to Jakarta.

This results in very minimal disposable income and spending power for these people. And if we zoom in a bit more on what they are spending, actually almost 50% of their monthly income comes from fresh produce purchases. And this is actually one of the main reasons why we are tackling fresh produce in tier-two cities.

It’s because we see many inefficiencies in the supply chain that result in an increase of price by up to 700% from farm to table. And the journey is still very painful because there are no online providers. They cannot experience delivery services from their home. And they also need to go to the wet market every night just to get their daily needs.

So we really do see very big pain points for us to solve. Especially as it contributes to half of their monthly income, I think it’s also a very big pain point for us to tackle. 

Paulo J: So you definitely have a market with high demand for this type of product. Plus the fact that the cost will tend to be very high getting to these areas, as you’ve mentioned. And I wanted to ask, given that we’ve seen a lot of egrocery, fresh produce type platforms, especially more focused on Jakarta and tier one cities, and now you’ve, you’ve been running Bakool already for more than six months. How does your approach differ because of the unique segment that you’re targeting?

Stephanie W: As you mentioned, other startups are actually focusing on the greater Jakarta area. But for us, we have our vision that we’re going to focus on second and third-tier cities outside Jakarta. And right now we’re using the B2A model, which is the business-to-agent model. And our approach to acquiring these agents is through offline [engagements], like the moms’ and communities leaders’ gatherings that we have.

“…the cities that we’re targeting, the tier two and tier two cities, have a GDP per capita lower than $7,000. And the average income per month for the people living in these cities is actually 50% lower than in Jakarta, despite having similar spending on fresh produce and hundred groceries compared to Jakarta…And if we zoom in a bit more on what are they spending, actually almost 50% of their monthly income comes from fresh produce purchases.”

How Group Buying for Fresh Produce Increases Household Productivity

Paulo J: So I wanted to zoom in a little bit on those agents and you guys can describe like what is in it for these agents to actually be a part of the Bakool ecosystem. How do you create that win-win situation also for the agents? 

Ivan D: Practically, our agents, they’re able to sell fresh produce products to their neighbors or communities. Since they’re the ones collecting orders from the neighbors and communities, they can purchase fresh produce from Bakool in bulk. And with that, they’ll be getting an additional discount from the purchase. And so far from the purchase, they can resell our products to their neighbors. Looking at the data, across thousands of agents that we have acquired, they’ve been able to generate three times the income that they have previously been making. So of course, this is a really big win for the agents as well.

Paulo J: I think it’s definitely one of the impacts that you guys are creating for these communities and economies in rural Indonesia. and I actually wanted to talk a little bit more about that impact. And I remember you talked a lot about household productivity. So maybe you guys can describe what exactly that means, not just for the agents, but even for the end consumers who buy from these agents. 

Stephanie W: So we have thousands of agents who are serving their communities daily, and our customers who used to go to wet market before at midnight to 2:00 AM in the morning before to get the best quality of fresh produce, right now, they no longer need to go to the wet market and can save up to five hours per day. And our agents also have proven that they generate 3x their previous income.

“We have thousands of agents who are serving their communities daily, and our customers…no longer need to go to the wet market and can save up to five hours per day. And our agents also have proven that they generate 3x their previous income.” – Stephanie Wongsoredjo

How Data Makes Pivots Meaningful

Paulo J: So I think we have a clear idea of the kind of impact that you guys are doing now I also wanted to shift gears and talk more about the learnings that you guys have had so far as you’ve built this business, specifically since both of you guys have had a background in farming and then also supply chain and retail.

Is there anything new that you learned as you were building Bakool over the past more than six, seven, or eight months? Anything new that you learned from these specific areas running fresh produce operations in rural Indonesia? 

Ivan D: I think from the past few months we are operational, we’ve really discovered that the supply chain from farm to table is very much still inefficient. And the ones who are bearing all the [costs] are actually the customers, which, [on top of] having a very painful journey to buy this fresh produce going to the wet market every night, they [also] still need to pay more than 700% in markups. [We] also [know] that the income of these people is actually way less than Jakarta. It’s actually half but the price for produce is still way similar. 

So with this group buying model with our agents, we are trying to solve all these inefficiencies and also make the lives of our customers better. With our agents, our customers will be able to buy from their nearest pickup point, who are the agents themselves. They can experience delivery service and no longer need to go to the wet market. And since we are buying directly from the farmers as well, we can provide the fresh produce at five to 10% cheaper than retail. It’s more towards really knowing the variety of what the customer wants in terms of the product quality and specifications, and just really understanding the customer.

Paulo J: Do you find that for fresh produce there’s a lot of specificity or differences or variations across like different areas? For one city in Central Java, how would it be different from the fresh produce needs of other cities in Central Java?

Stephanie W: So from our data we learned that different regions have different preferences in buying fresh produce and its specifications. For example, there’s a region that we’re serving that really likes these baby potatoes, while other regions prefer the big ones. And some other regions might have really high purchases of lemons and some other regions might rarely buy lemons.

Paulo J: So data is very important in your operations. And for Ivan, how predictable are these behaviors? Is it more of a seasonal thing or do you see it not changing as much over the years once you find out what that is? 

Ivan D: I think definitely for fresh produce, one of the key things to win in this market is to really understand the customers and their needs. And we have seen behaviors where different regions have different preferences for the top product and even the specifications. We are developing our own tech, integrated with AI capabilities as well, where it will learn where it will capture all the data from the customers and help us in forecasting the inventories that we need to stock up for our customers. I think data is really important for us in developing this business.

“From our data, we learned that different regions have different preferences in buying fresh produce and its specifications. For example, there’s a region that we’re serving that really likes these baby potatoes, while other regions prefer the big ones. And some other regions might have really high purchases on lemons and some other regions might rarely buy lemons.” – Stephanie Wongsoredjo

#MinuteMasterclass: Becoming a Data Company

Paulo J: So Bakool is not just delivering goods, but actually really also a data company in the sense of really understanding what the needs are of these really underserved communities in Indonesia when it comes to fresh produce. 

So on that note, I wanted to move into a second corner that we started here in season five, which is a simple, you know, advice-sharing corner, especially since many of our listeners are also entrepreneurs or are thinking about getting into entrepreneurship. 

And you guys have had, apart from Bakool and apart from Radius, past experiences managing and growing companies. So maybe you can share, what would your number one advice be for entrepreneurs undergoing a pivot or a change — like a wholesale change in their business — like what advice would you give to them to make sure that their pivot is actually meaningful and worth it as you guys have made it with Bakool?

Ivan D: So my advice for any startups facing a dilemma in pivoting or not: the most important thing is to just rely on data and really talk to the customers and really to see whether you are providing a service or product that’s really needed by the customers, and not getting too invested in your initial idea or hypothesis because sometimes that’s what blocking you from making the jump.

Paulo J: That also really ties into how Bakool started in the first place, noticing all the data about fresh produce and all that. So thanks for sharing that, Ivan. Stephanie, anything you wanted to add in terms of — what advice would you give to other entrepreneurs that are undergoing a pivot or finding it or deciding whether or not to pivot?

Stephanie W: So I think Ivan and I are on the same team where the founder [has to] always go back to the data. Just make sure one [more] thing that you guys need to do is always go to the ground and see what your customers are really looking for.

“The most important thing is to just rely on data and really talk to the customers and really to see whether you are providing a service or product that’s really needed by the customers, and not getting too invested in your initial idea or hypothesis because sometimes that’s blocking you from making the jump.” – Ivan Darmawan

#RapidFireRound

What digital technology or innovation excites you the most today?

Ivan D: Lately I’ve been seeing a lot of news about AI-driven chat bots like ChatGPT. It’s just interesting how benefits and contradictions have arisen around it. 

What is one thing that you learned from each other?

Stephanie W: One thing that I could say that I learned from Ivan as we worked together these past few times would be his high attention to every single detail that actually really helps us in managing risks and growing the business. So I could say like, [he is] well calculated. 

Ivan D: Stephanie and I both are a perfect combination for co-founders. As you know, I have more attention to detail whereas Stephanie is more focused on growing the operations. So yeah, really learning from her how to just expedite all the progress and the growth of the company. And on my side, I’ll just check on the details and manage all the risks. 

What’s your favorite activity to de-stress, or how do you take care of your mental health as entrepreneurs?

Ivan D: For me, typically I just do workouts. I think that’s the only sport I do right now, and it helps me to de-stress. 

Stephanie W: Same here. Maybe just different types — I do pilates. So it’s one of the best ways for me to really stress after a long, hectic day.

Any resource that you’ve read, a podcast that you listened to, or anything that you’ve absorbed or taken up recently that you’d like to recommend to our listeners? 

Ivan D: Actually I love this book by Richard Branson called “Like a Virgin.” It’s an information-packed book on how to build a startup or to become an entrepreneur, and it’s delivered in a very [digestible] way, so I totally recommend it to people.

Stephanie W: For me, I would say just read the book “Purple Cow” by Seth Godin. It’s about unique marketing [strategies]. It’s a very simple book, only a hundred pages but very insightful.