In a country where the traffic is among one of the worst in the world, Go-Jek and its founders have tried to alleviate the pain that commuters feel every day. Nadiem Makarim (HBS class of 2011) and his co-founders have been a first mover in aggregating the motorcycle taxi (called o-jeks) service and providing a platform in which o-jek drivers can register to provide services to customers whom are signed up on the platform. Potential users of o-jeks have traditionally shunned away from using the taxi service because the irregularity of quality of service from individual drivers and the potential that some may be dangerous. However, through the company systems such as education/vetting of drivers and GPS tracking on smart phones, it has opened up a huge market.
The company has been able to grow the business through indirect network effects. Hailed as the Uber of Indonesian motorcycle taxi industry, the company has been able to attract over 30,000 riders (Aug 2015) and accumulating over a million orders. As the number of riders increases, users will benefit from fast on-demand service. As users and service requests increase, riders will be more incentivized to register on the platform. They have recently went on a hiring spree of 16,000 riders to add value to potential users. The company has also used direct networking effects to increase user sign-ups. Go-Jek incentivizes users to recommend to other potential users by awarding them with points that will add up to free rides.
Go-Jek has also captured value from these network effects by offering different services through o-jeks. Although personal transport was the initial customer value proposition, they have added courier and food delivery services on top of the platform to expand user base capturing value from the customers that would not have used the service for personal transport and the customers that will use all the services offered. They have also captured value from the vendors that provide food and groceries in the process diversifying revenue streams. They are in the process of expanding services so that they can capture value in many different ways. For example, they have also partnered with an energy company to provide the delivery of gasoline and diesel.
The success they have enjoyed however, has attracted competitors to move in to the market. Earlier this year, South East Asian unicorn, GrabTaxi launched in Indonesia under the name, GrabBike. Founded by Anthony Tan (HBS class of 2011), GrabTaxi is a well-funded Malaysian-based company that is a major player in 6 countries and 21 cities across Asia. It has been interesting because the two founders Makarim, and Tan are close friends from Harvard Business School turned business rivals. Since GrabBike’s launch, the two platforms have been engaging in price wars and marketing for both firms have increased. Because GrabBike was a late mover in the market, they needed to offer lower prices to compete and provide promotions for free rides to take away market share from a price sensitive user base. Go-Jek seems like they are in control for now with 80% market share but with GrabBike’s deep pockets, it is safe to assume that they are threatened as GrabBike has dipped its prices to practically free. It seems Go-Jek will need to focus on customer service and value added through their experience in the market. Understanding customers gives them a huge advantage in creating value for customers and riders on their platform.