Join part 1 of our call with ⁠Dayu Dara Permata⁠ and ⁠Ahmed Aljunied⁠, founders of Indonesian proptech ⁠Pinhome⁠, Southeast Asia’s leading end-to-end property transaction platform for first-time home buyers.

As the CEO and CTO respectively of Pinhome return to the show this year, they share with us the latest on Pinhome’s growth, path to profitability, strategic partnerships, as well as their views on the wider property landscape in Indonesia. 

We also dive into how Pinhome has changed the lives of the underbanked home buyers and how Gen AI could further shape consumer experiences. 

Catch up on Pinhome’s journey from the very beginning in 2020 (Season 2), in 2021 (Season 3), and 2022 (Season 4)!

Highlights and Timestamps

(00:00) Highlights;

(00:45) Introduction;

(01:39) Pinhome’s 2023 Numbers Update: Globally The Most Comprehensive Service Offering for Everything Home;

“Globally, we have the most comprehensive service offerings for everything home-related, covering the full lifecycle journey of consumers when it comes to home search in primary property and secondary property, home transaction, home financing—with both conventional and sharia mortgage options available—home refinancing, and home services such as daily cleaning service, home maintenance service, home appliance repair service…” – Dayu Dara Permata

(04:25) Indonesia’s Property Markets: Between Opportunity and Uncertainty; 

“There are strong economic fundamentals, although we do have fluctuating macroeconomic trends. And as the election approaches and the outcomes become clear, the property market will respond accordingly. What’s important for us is to monitor government policies and regional variations to see how the market will evolve in the next year.” – Ahmed Aljunied

(06:53) Pinhome’s Path to Profitability; 

“While pursuing growth, it is essential to strike a balance between acquiring new customers and retaining existing ones. We do not want to underinvest…And when we cross-sell, we acquire users with lower CAC products, such as home services, and then cross-sell them and upgrade them to high CLV products, such as brokerage or mortgage refinancing.” – Dayu Dara Permata

(10:30) Pinhome’s Approach to Strategic Partnerships;

“Building strategic partnerships is key for sustainable, profitable growth. And strategic partnerships are how we build network effect and defensibility on our platform.”

(12:52) The Marketer, Content Creator, and Traditional Seller: Three Stories of Lives Changed by Pinhome;

“What excites us the most about building Pinhome is that the lives of our millions of home seekers are changed because of the impact that we’ve created…a 34-year-old digital marketer in Jakarta who embarked on a journey to find his dream property and then finally found a first home through Pinhome…a content creator who got her first mortgage with Pinhome…a 48-year-old traditional seller who is on the journey of owning his own home through our rent-to-own program.” – Dayu Dara Permata

(16:41) Gen AI Impact on the Indonesian Home Buyer’s Experience; 

“There are several key consumer use cases that can be made seamless by providing contextual guidance to those users. For example, in property discovery or purchase or rent, or in property selling. So anytime you need to input data, there are lots of opportunities in the mortgage journey as well…And this is all made possible by building on top of our data infrastructure.” – Ahmed Aljunied

“So this data infrastructure that we’ve built, what is needed now is that it needs to be adaptable and scalable, right…Specifically for the core Gen AI infrastructure, this really centers around the vector database, where you store vector representations of your data…interestingly, due to the constraints in the costs of LLMs, it results in a lot of unique and new techniques for us to work around those. So tapping into those learnings would be essential.” – Ahmed Aljunied

(20:43) Coming up on Part 2 of our call with the Pinhome founders;

Transcript

Pinhome’s 2023 Update: Globally The Most Comprehensive Proptech Service Offering for Everything Home

Paulo J: So, last year you were on the show around October. It’s actually almost exactly a year as of this recording. A lot must’ve happened. I’m really excited to hear from you guys about the milestones you’ve achieved and how Pinhome has grown even further over the past year. Perhaps Dara can bring our listeners up to speed on what Pinhome has been up to since then.

Dara P: Sure, Paulo. It has been a year, and we are now at the strategic inflection point of our growth. Pinhome is a home-seeking, home financing, home services platform for first-time homebuyers. 

Globally, we have the most comprehensive service offerings for everything home-related, covering the full lifecycle journey of consumers when it comes to home search in primary property and secondary property, home transaction, home financing—with both conventional and sharia mortgage options available—home refinancing, and home services such as daily cleaning service, home maintenance service, home appliance repair service. We have been and continue to be number one in Indonesia for primary property search. 

In secondary property, we have hundreds of thousands of “for sale by owner” listings coming from retail property owners, and it’s just the beginning for us. Our listing numbers crossed 1 million listings; now close to 1.2 million unique listings in all of Indonesia, covering more than 350 cities.

A property agent is at the heart of our business. We have the largest network of property agents, with over 22,000 professional property agents. 

As of mid-2023, and consistently now, our Pinhome website ranks number one in daily traffic in all of Indonesia for property search, according to Ahrefs. Our Pinhome app tops the chart as number one for the house and home category on Android mobile in Indonesia. 

Then a few other things: PinValue, which is Pinhome’s property value estimator, has full nationwide coverage in Indonesia’s 514 cities, with solid accuracy—90% accuracy in cities where we have a high density of listings and seekers.

The most exciting part of our journey now is that we are accelerating our growth efficiently with AI-powered capabilities, leveraging advanced LLM technologies, building AI chatbots throughout Pinhome’s home-seeking and home-financing journeys, making home search and home financing conversational, personalized, and delightful.

“Globally, we have the most comprehensive service offerings for everything home-related, covering the full lifecycle journey of consumers…”

Indonesia’s Property Markets: Between Opportunity and Uncertainty for Proptech

Paulo J: Thanks, Dara. And we’ll definitely get into that aspect of it, which I’m very excited to talk about—the whole AI LLM aspect of how Pinhome is really upgrading the consumer experience for property. 

But I think all of these aspects of the business that you’ve mentioned, where Pinhome is ranking very high, or if not number one, are great introductions for those learning about Pinhome for the first time. If you guys want to dive in deeper, I highly suggest you check out our past conversations. 

But I do want to move on to Ahmed and maybe talk a little bit, now that we’ve talked about Pinhome and how it has been over the past year. Maybe now we can zoom out a bit and talk about Indonesia’s consumer property market over the past year. 

Last year, both of you talked about how consumer confidence has remained strong in the property market despite the headwinds. Is that still the case today?

Ahmed A: Since last year, there have been some new events that are worth noting. Consumer confidence still remains strong, and the reason for that is that the fundamentals of the country are still very robust. 

What makes Indonesia an attractive market in the first place—those elements are still there. This includes a growing middle class, urbanization trends, and favorable demographics. 

From a macro perspective, there are trends and fluctuations—so a mix of positive and challenging indicators. The inflation rate has been declining from 2020 until today, which is an indication that the macro environment is recovering. There is some price stability and improved consumer spending. The interest rate has also been set by the Central Bank of Indonesia at 5.75% at this point in time. That ensures a stable cost of borrowing for businesses. 

But towards the end of 2022, there was a significant increase in fuel and electricity prices; for fuel, it was more than 30%, and for electricity prices, it ranged between 17% and 36% depending on the customer segment. So there are some implications from that.

And now, as we look forward to 2024, there are the upcoming elections, which inject an element of uncertainty into the market where government policies and priorities may change, and different sectors may be impacted, including the property sector. So investors and consumers may adopt a more cautious approach and wait to assess the post-election landscape. 

In summary, there are strong economic fundamentals, although we do have fluctuating macroeconomic trends. And as the election approaches and the outcomes become clear, the property market will respond accordingly. What’s important for us is to monitor government policies and regional variations to see how the market will evolve in the next year.

“There are strong economic fundamentals, although we do have fluctuating macroeconomic trends. And as the election approaches and the outcomes become clear, the property market will respond accordingly. What’s important for us is to monitor government policies and regional variations to see how the market will evolve in the next year.”

Pinhome’s Path to Profitability

Paulo J: Thanks, Ahmed. It’s good to hear that the fundamentals are still strong as a base on which to grow a platform like Pinhome. But at the same time, there are always these externalities, which you mentioned, and different kinds of fluctuations that need to be watched out for. 

And I think Pinhome, as a company—and I think Dara mentioned this in our last podcast—started out at a very uncertain period. That has built in this kind of DNA to be able to focus on what’s important, like focusing on profitability, which leads me into my next question for Dara: How has that journey been so far in terms of Pinhome’s path to profitability, balancing that with continued growth? 

And you did mention in our last podcast that Pinhome has been on its way. So we’d love to get an update on where the company is in terms of that journey.

Dara P: Absolutely, Paulo. So, our aims for balanced growth and profitability have been there since day one. That’s been the goal, right? 

Embracing an ecosystem approach to capture the end-to-end customer journey is not in contradiction with that goal. It involves a strategic approach that prioritizes sustainable expansion and customer satisfaction. In short, we are on track in terms of profitability. In a few months’ time, we’ll hopefully reach neutrality, and thereafter achieve profitable months. 

Working on home-related aspects, there are things that we’re doing right now to ensure that the pathway to profitability is there while we’re still growing. Especially with our ecosystem approach, one focus is monetization strategy. 

Our expansion focuses on high-net-revenue verticals that are solving key pain points of home seekers, while also serving other property stakeholders such as property developers, banks, and property agents. 

Because if we’re only focusing on consumers but we don’t serve the supply side, then we might need to invest or spend a lot on acquisition costs and operational costs on the supply side. We avoid and minimize monetization strategies that require either high capex or high opex. So that’s number one. 

Number two is building strong ecosystem partnerships. We engage with existing stakeholders instead of building everything from scratch, or competing with them, which could be very costly. Collaborating with the best players in the real estate ecosystem, such as agents, developers, contractors, and financial institutions, creates a seamless customer experience. 

This partnership can lead to a referral network, shared data, integrated platforms, co-branding, and the streamlining of the end-to-end journey for customers. 

The third thing is balancing customer acquisition and retention. While pursuing growth, it is essential to strike a balance between acquiring new customers and retaining existing ones. We do not want to underinvest. We want to continue to get fresh new customers, but at the same time, we want to make sure they are well retained. 

So we always measure metrics such as CLV to CAC ratio. We want to maintain a more than 4x customer lifetime value over customer acquisition cost. Retention efforts can include a lot of other things, such as loyalty programs and customer support, to ensure satisfaction and repeat business. 

We also cross-sell, right? And when we cross-sell, we acquire users with lower CAC products, such as home services, and then cross-sell them and upgrade them to high CLV products, such as brokerage or mortgage refinancing.

Lastly, we’re establishing a comprehensive cost management system. So regular audits of financial performance, tracking key efficiency metrics, operational streamlining, vendor assessments, and resource allocation reviews—all of that is conducted regularly. Not just on a quarterly basis, but even on a weekly basis, finding and identifying cost-saving opportunities to optimize resource allocation. 

We also perform scenario analysis. There are a lot of external factors that are very uncertain. And if one scenario activates and it turns out there are some external factors that change the whole set of assumptions we have, what we do is we basically switch or shift that scenario, and that guides us in day-to-day decision-making and execution, fostering a culture of continuous improvement and adaptability.

“While pursuing growth, it is essential to strike a balance between acquiring new customers and retaining existing ones. We do not want to underinvest…And when we cross-sell, we acquire users with lower CAC products, such as home services, and then cross-sell them and upgrade them to high CLV products, such as brokerage or mortgage refinancing.”

Pinhome’s Approach to Strategic Partnerships

Paulo J: I really like what you mentioned about the cost management system.

Another interesting point that you brought up is that whole flywheel of bringing in customers through home services and then upselling them on brokerage, which I think is pretty interesting. 

And you did also talk about strong ecosystem partnerships, right? And really focusing also on the supply side, not just the demand side. So for Ahmed, maybe you can talk a little bit about that aspect of the business. 

How does Pinhome view strategic partnerships, especially now that it’s a much bigger company than it was a few years ago, and how do you leverage that to grow the company further?

Ahmed A: Yes, absolutely. As mentioned by Dara, building strategic partnerships is key for sustainable, profitable growth. And strategic partnerships are how we build network effect and defensibility on our platform. 

And I’ll share a few examples. So we collaborate with the best agents and agencies to build our Pinhome brokerage marketplace. And while we have our own exclusive agencies, it’s essential that we continue to empower marketplace agencies, because they will help to expand our network of listings and home seekers. Every new agent that we add to the platform or onboard into the marketplace will benefit everyone else in the ecosystem. 

Next is, we do collaborate with all property developers as part of the marketplace ecosystem. So every new developer we onboard will benefit all stakeholders. The inventory will be in the system, all the product knowledge, documentation, and marketing attributes will be in our system, making the platform a lot more comprehensive. 

Finally, we also collaborate with the top banks in Indonesia to build out our mortgage marketplace. And every bank we onboard to the platform will benefit all stakeholders too. The home seekers, agents, and developers. Some of these partnerships are exclusive to us. 

So, for example, in our partnership, which is with Indonesia’s largest consumer bank, we have an offering that is unique and compelling to the home seeker. And this helps to elevate our brand position.

“Building strategic partnerships is key for sustainable, profitable growth. And strategic partnerships are how we build network effect and defensibility on our platform.”

The Marketer, Content Creator, and Traditional Seller: Three Stories of Lives Changed by Pinhome

Paulo J: I really find that whole partnership building, in terms of really building something that’s unique to Pinhome, and in some cases, almost like its own distribution, important for a business like Pinhome. 

And speaking of banks, I think in one of the previous podcasts we did talk about one example of how those partnerships have allowed folks like freelancers, maybe, or those who have been traditionally overlooked by the system, to be able to get access to mortgage financing, for example. 

So, we’d love to hear more of these customer stories. That was just one example from, I think, two years ago. So maybe Dara, you have new stories that you’d like to share with us that keep you guys and the whole Pinhome team going in terms of building this platform?

Dara P: Yes, what excites us the most about building Pinhome is that the lives of our millions of home seekers are changed because of the impact that we’ve created. 

Some recent stories include a 34-year-old digital marketer in Jakarta who embarked on a journey to find his dream property and then finally found a first home through Pinhome. The story is special because she was initially very skeptical. She thought that she could never afford to buy a home until she was in her fifties. 

She was so grateful that Pinhome helped her step by step to find her dream home. She started the journey on our app, pre-qualifying herself for a mortgage, defining the budget, narrowing down the locations of property that would be relevant, all done through the app, assisted by our virtual property consultant via in-app chat. 

Then that online process is followed by the offline process, and she was assigned automatically to a Pinhome agent. And then the agent facilitated the viewing process to multiple property projects, not just one, which she really appreciated. Because what she thought was, she had to deal with different agents in different projects. Once she locked in a property project and a unit that she wanted, the agent helped with the negotiations as well.

So at the end, she was able to buy that first property and make that transaction. The progress and payments were also made through Pinhome. 

Another story is similar to what you’ve heard before. Again and again, we’re seeing the underbanked being well served through Pinhome’s capabilities. 

We have a content creator who got her first mortgage with Pinhome after previously trying on her own multiple times and getting rejected to the point that she wanted to give up. Despite earning a good amount of money as a content creator, this type of career is what is considered by banks as a non-fixed income professional. 

Through our in-app chat with our virtual mortgage consultant, she was advised to use a mortgage pre-qualification feature. She pre-qualified herself in less than a minute. And our algorithm helped to identify the best bank with the right eligibility criteria that would accept non-fixed income professionals. 

Out of the 40 bank options available at Pinhome, one or two banks were relevant for her, and she submitted her application online, got confirmation that she was being processed, and within days received approval.

And a last story that’s quite interesting, also quite recent, is another customer impact story. We have a 48-year-old traditional seller who is on the journey of owning his own home through our rent-to-own program. 

This program is in collaboration with SMF, which is a special purpose vehicle under the Ministry of Finance with the mission to serve unbanked customers and help them get what was impossible in mortgage financing. It’s basically a secondary mortgage through that special purpose vehicle in partnership with Pinhome. Now, this gentleman is renting one of our home listings for only US$120 a month, which he can own after 10 years of rental.

“What excites us the most about building Pinhome is that the lives of our millions of home seekers are changed because of the impact that we’ve created…a 34-year-old digital marketer in Jakarta who embarked on a journey to find his dream property and then finally found a first home through Pinhome…a content creator who got her first mortgage with Pinhome…a 48-year-old traditional seller who is on the journey of owning his own home through our rent-to-own program.”

Gen AI Impact on the Indonesian Home Buyer’s Experience and Indonesian Proptech

Paulo J: Oh, that sounds pretty good. And really, the story about the content creator is great to hear. You’re expanding all these opportunities for segments that have traditionally been overlooked or unable to be financed by traditional institutions. 

And I think it’s a really great marriage of technology aspects, plus all these partnerships that you guys have set up, really making that work for these customers in getting a house and getting it financed as well. And there’s also this pretty interesting government program that you guys are partnered with as well. 

Even as you guys are changing the way property is bought and financed through Pinhome, the advent of Gen AI and LLMs is going to change that even further. Ahmed, for you, as CTO, how are you viewing these step changes in AI? How is it going to change these experiences that Dara just outlined for us?

Ahmed A: Yes, Paulo, absolutely. We are always on the lookout to improve the customer journey and all the different journeys that Dara had mentioned. And when we take a look at LLMs and Gen AI, of course, to take advantage of it, we need the right data and information structure, and we can jump into that if we have time.

But we really have to look at the intersection of the customer needs and practical applications of LLMs and Gen AI. There are very clear applications for the back office in terms of automating operations and customer service. Those are very clear. There are also many roles that can take advantage of Gen AI to improve the quality and speed of our work. So that applies to engineering, product, even product design, and business, of course, as well as in data analytics. 

For the consumer, now with LLMs and Gen AI, we have an additional toolkit to solve their pain points. It requires the same product rigor, if not more, when we are considering these types of solutions. And while it’s relatively new, thankfully there are so many new applications that are popping up every day. So there are lots of references for benchmarking. 

For us specifically, we do see a clear path forward. There are several key consumer use cases that can be made seamless by providing contextual guidance to those users.

For example, in property discovery or purchase or rent, or in property selling. So anytime you need to input data, there are lots of opportunities in the mortgage journey as well. We see opportunities to make that journey even more seamless, even given the example you know, with those users struggling with mortgage applications. We still see more opportunities to improve it. And this is all made possible by building on top of our data infrastructure.

“There are several key consumer use cases that can be made seamless by providing contextual guidance to those users. For example, in property discovery or purchase or rent, or in property selling. So anytime you need to input data, there are lots of opportunities in the mortgage journey as well…And this is all made possible by building on top of our data infrastructure.”

Paulo J: Just briefly, I wanted to touch on the length of all these use cases that you mentioned with what I think is really proprietary to pin home the whole PinValue valuation engine that you guys have built. 

Maybe you could briefly talk about what the implications are of Gen AI and LLM with regards to this engine that you’ve been building over the past few years.

Ahmed A: Yes, the right data infrastructure is a prerequisite to take advantage of Gen AI and LLMs. In general, for AI, yes, but even more so for Gen AI and LLMs, where you have to manage really large datasets with many different formats, and you need the capability to transform them to structures that are suitable for training.

So this data infrastructure that we’ve built, what is needed now is that it needs to be adaptable and scalable, right? Now, with the field moving at such a pace, there are tools and frameworks that are available, so we should definitely not reinvent the wheel, but take advantage of those tooling and frameworks where applicable. 

However, it is a very new field, so lots of tools are new. In some cases, they are not mature enough, and you do have to build some of those components or modules on your own.

Specifically for the core Gen AI infrastructure, this really centers around the vector database, where you store vector representations of your data. This is essential for contextual search and is a foundational component to serve all the various use cases for the end user. So, I would say that, yes, the field is moving so rapidly.

There are so many benefits to the AI community due to this large number of experiments that are running rapidly on a daily basis. Lots of new tools and libraries are coming up all the time. Lots of datasets are shared with the public. 

And also, interestingly, due to the constraints in the costs of LLMs, it results in a lot of unique and new techniques for us to work around those. So tapping into those learnings would be essential.

“So this data infrastructure that we’ve built, what is needed now is that it needs to be adaptable and scalable, right…Specifically for the core Gen AI infrastructure, this really centers around the vector database, where you store vector representations of your data…interestingly, due to the constraints in the costs of LLMs, it results in a lot of unique and new techniques for us to work around those. So tapping into those learnings would be essential.”

Paulo J: I really like this pragmatic approach that you have in terms of viewing Gen AI, and I’m really excited to see how those applications come to the forefront of the user experience in the coming years for Pinhome as well.