Indonesia’s Tech Startups Conundrum
In feudal ecosystem, the bedrock for sustainable business models will (always) need ordal.
Indonesian consumers (still) have low purchasing power and long sales cycles. Meanwhile, the adapted Silicon Valley playbook—burn money for user acquisition first, monetize later—only spoils consumers further.
Rather than encountering loyal customers who increasingly become invested in their products, tech startups in Indonesia are almost always abandoned as soon as the subsidies run out and prices start to rise (despite the fact that in many cases, the price is only normalized). Legal or illegal alternatives, Indonesian consumers will look for cheaper options.
The situation is even worse for the Indonesian B2B market, where businesses have the option of hiring underpaid labor that can be bargained down to the lowest rates. “Why should I buy software when everything can be done in Google Sheets?” is a common sentiment. Now, add AI into the mix, and you’ve got yourself a new competitor to race against.
Having worked for an Indonesian B2B SaaS startup for four years, I’ve learned that the real competition isn’t one SaaS vs. another—it’s SaaS vs. underpaid admins who manually handle their tasks using Google Sheets and Google Docs.
Ultimately, B2B sales cycle in Indonesia are largely built on “building relationships” with decision-makers who hold the power to approve any purchase.
B2C is slightly better since consumers tend to focus more on product quality. However, generating “decent” revenue stream is still an uphill battle. B2Cs in Indonesia have to bear small but frequent transaction fees (like uang rokok, calo, uang rokok lagi, taxes, etc.) that eat into profits, limiting the types of products and the scale of businesses that can be built.
And then, there’s the elephant in the room: Indonesia’s unstable business and tech ecosystem, plagued by inconsistent regulations and government policies. Building a tech startup in Indonesia feels like a masochistic endeavor. If it fails, socio-economic privilege is required.
Indonesian founders have to rely heavily on the power of insiders (read: ordal). Some politely call it “networking”, but networking should never be the bedrock of building tech startups or products. When they need to move fast and act strategically, startup founders in Indonesia are forced to waste their time on endless small talks—you know, basa basi building relationships—either with the potential customers or investors.
Unfortunately, improving ecosystem and addressing these systematic issues depend on regulations or policies. That means tech startups in Indonesia are left hoping for sensible action from their government.
And we all know how that usually turns out.