Meet the Indian startup founder trying to digitise small business in Indonesia

After graduating from BITS Pilani, one of India's premier tech institutes, Krishnan Menon did not follow his batchmates to the United States or local tech hub Bengaluru. Instead, he bought a flight ticket to Jakarta. But this was not to be a vacation. Instead, Menon decided to seek his fortune with one of the fastest growing ecommerce ventures in the far East, the Lazada Group.

A couple of gigs later, he decided to settle down in the island-nation to fuel his startup dreams. He began with Fabelio, an online furniture retailing startup, exited the company in 2019, and then started Bukukas with an aim to create a one-stop online shop for ‘Indo’ as he fondly refers to his current home. 

Menon went to Indonesia in 2013, at a time when the rapidly growing Asian economy was at the cusp of the startup revolution, and seized on the opportunity to build tech-based service solutions for the country.

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If Fabelio was trying to help middle-income Indonesians buy furniture online, Bukukas - which means cash ledger (Buku in the local lingo means book, and Kas is cash)  - seeks to solve accounting problems for micro merchants.

"There are 60 million micro merchants in Indonesia, while almost all of them use WhatsApp for social commerce, their businesses are still run manually, " said Menon, speaking with Moneycontrol over the phone from Jakarta.

 “I sensed an opportunity where all these small businesses could be digitised and prepared to sell online, that is how Bukukas was born,” he said.

What Menon is trying to do in Indonesia, is being attempted by multiple startups in India too. For instance, players like Khatabook, OkCredit are trying to digitise micro retail businesses, Bengaluru-based Open is trying to become a neo-banking platform for small businesses and JioMart is trying to leverage WhatsApp to enable local kiranas to accept orders digitally and deliver them at the doorstep of consumers.

Menon, however, does not sweat about the competition as much. Indonesia is not a hyper-competitive market like India. Indonesia gets a clear winner and a runner-up in every sector, said Menon. Since the economy is concentrated around the capital Jakarta, most of the technology startups chase a specific consumer base and it is easy to select a winner, he said.

 A Digitised South East Asia

The first wave of tech disruptions came to Indonesia through successful startups like GoJek, Tokopedia, Bukalapak, Traveloka. Now is the time for the next generation of disruptions in the economy. Players like GoJek and Grab might have together digitised a million merchants, mostly in the food and beverages space, but Menon believes they will have to bring in digital solutions for the next 59 million merchants.

Bukukas has close to a million merchants registered on the platform, with 250,000 daily active users. It helps them track their sales digitally through the app, know their profits, track their dues and manage inventory. All these will help a merchant digitise his or her stocks, and eventually start selling online. Bukukas could also go the neo-banking route for these businesses, creating bank accounts for them and enabling digital payments. That's the long-term plan.

 “We get compared to Khatabook a lot, but for Bukukas we are tracking all sales for the customer and not only ‘udhaar’ like few of my peers in India,” said Menon.

Bukukas has raised $12 million over two rounds, since its inception in December 2019 with fundding from Russian investment fund S7Ventures and SpeedInvest, an European venture fund. This year it also got into the accelerator programme, Sequoia Surge. 

Menon’s Journey 

After landing up in Indonesia seven years ago, Menon worked with the Lazada Group for a year. He then joined Freecharge and helped expand its operations in this region, working closely with founders Kunal Shah and Sandeep Tandon on this project. After Freecharge was acquired by Snapdeal, Menon moved on and founded Fabelio with three others.

“I still have my family in Bengaluru and I keep travelling there for work as well as to spend some time with my mother and sister,” he said. Menon was born and raised in Kerala, but now calls Jakarta 'home'.

His years and experiences in Indonesia have taught him a lot about the market and the system there. The country's middle-class is massive, and the per capita GDP is very high which drives consumption there, Menon said. Fabelio was a learning experience, and during his time there he interacted with a lot of local furniture makers, and realised the huge amount of manual processes involved in these businesses . He saw that there was a massive opportunity in digitising these small businesses.

Menon is building Bukukas with Lorenzo Peracchione, his ex-boss from Lazada. Peracchione was the regional ecommerce director for South East Asia and Australia New Zealand at French personal and beauty chain Sephora.

 “We are yin and yang with very different personalities,” said Menon, describing his cofounder.

Bukukas has its entire technology team in India. The startup has around 15 people in Bengaluru and another 20 in Indonesia and few other countries. For the core tech and product he relies on engineering skills of Indians, and has people from multiple nationalities across his other teams.

Way Ahead

Unlike India, only 30 percent of people in Indonesia have a bank account. The economy is largely cash-driven, and so the country presents a massive digitisation opportunity. Further, the ongoing COVID pandemic has affected the amount of walk-in customers a typical Indonesian store would be getting daily.

 “Businesses never shut down here due to the pandemic and the economy is still growing, albeit at a slow pace,” Menon said.

This forced a lot of businesses to look for options online. That is where players like Bukukas have an advantage -  and are also seeing demand. They were adding 15,000 businesses on the platform in March 2020 which jumped to 100,000 in July, Menon said. But the slowdown could be felt as the average transaction value per merchant did not grow at the same pace.

While they have started with a digital ledger, Menon said there could be a lot of solutions that can be built on top of it. Once the merchant starts tracking his or her profits, post that there could be savings, lending, payments all built on top.  Bukukas wants to be poised at the right place where they can leverage the data on merchants to emerge as the digital banking platform for these businesses, he said.