Wrapping Up

I’ve officially finished my internship and am headed back to the US today. Looking back, it’s been a great three months and I’ve learned a lot. I’ve gotten more experience with startup social enterprises and insight into impact, angel, and venture capital investing, development agencies, and a little bit of development consulting. I’ve managed to narrow my career focus a bit, and built up my qualifications to pursue it. I’ve gotten a strong understanding of entrepreneurship and social entrepreneurship in Indonesia, which I can hopefully leverage in the future. I’ve gotten to work with a few startups that have both clear social/environmental impact and a strong business proposition and (hopefully at least) helped them expand that impact.

I’ve met a lot of great people doing interesting things, had a lot of great food, and have explored a bit of Indonesia. All in all, a solid summer.

Borobodur Temple

Camping in the Thousand Islands

Cliff in Bali

Seminyak, Bali

Hiking through tea plantations in Puncak

Building the Entrepreneurial Ecosystem Part 2: Angel Investing

A major piece of the entrepreneurial ecosystem that has yet to be fully developed here in Indonesia is access to early stage funding. There is a gap between the funding provided by friends and family and the much larger investments most venture capitalists are looking for that causes issues for a number of entrepreneurs. Some VCs have been moving to earlier stage investments, but this comes with its own set of issues. Accordingly, one of GEPI’s biggest initiatives during my time here has been launching Indonesia’s first open angel investor network and two angel funds.

We had a big launch event in mid-July with 30-40 affluent prospective angels to teach them about angel investing, valuation, and structuring/negotiating a deal. Partially supported by the US State Department, we brought in two prominent angel investors from the US to hold a full-day workshop. It was an amazing learning experience and a great opportunity to see business tycoons go through a negotiation simulation similar to the ones in our MO class – I definitely still have a ways to go.

Panelists at the workshop

Pak Ciputra, the godfather of
entrepreneurship in Indonesia

I’ve also had the unique opportunity to structure two angel funds – one focused specifically on female entrepreneurs, and another more general one. Having no background in investing, it was really interesting to understand how an investment fund works, and then adapt that knowledge to an Indonesian context.

These angel investors are interested in all businesses, not just social enterprises. That being said, a number of the businesses in our pipeline that we’re preparing to pitch to our investors are social enterprises that have positive impact, but also compelling business propositions. I’ve prepared a workshop on presenting to investors,

Presenting to a group of entrepreneurs

 and spent my last day at GEPI working with 14 entrepreneurs on their investment pitches. The remaining challenge though for both investors and entrepreneurs is a lack of exit options. In the US, there is a robust IPO market and a lot of acquisition activity that lets investors earn multiples of what they invested to cover other startups that fail. However, here in Indonesia, an IPO is not a viable exit option and the lack of data on acquisition terms makes it difficult to determine whether it’s actually profitable to do angel investment. As such, entrepreneurs crutch together alternative investment terms that likely aren’t in the best interest of the business or investor (i.e. a 3-year profit sharing period with the full investment paid back at the end, almost like an income-based loan). I believe once this hurdle is overcome, the entrepreneurship scene here will grow even faster than it already is.

Building the Entrepreneurial Ecosystem Part 1: Business Incubator

One of the challenges GEPI (Global Entrepreneurship Program Indonesia) faces in having workshops, events, networking nights, etc is the effort and cost involved in renting a space. Entrepreneurs also don’t have a central place to gather in Jakarta and many entrepreneurs work out of cafes to avoid high office costs.

GEPI is aiming to address this by launching a business incubator/ co-working space a la The Hub where entrepreneurs can rent a desk, network with other entrepreneurs, and get access to mentorship and lower cost services (legal, accounting, etc). We’re partnering with Founders’ Institute Jakarta and Mandiri, the largest state-owned bank, and hope to have it launched in the next few months.

There are some similar spaces already, but most of them take an equity investment in the businesses and as a result are smaller. We’re aiming to house 50-100 entrepreneurs selected through an application process, hold regular workshops and events, and have a structured mentorship program to help them develop their businesses.

The goal of all this is to help bridge some of the major challenges of entrepreneurship here, specifically the lack of management knowledge and strong/ effective networks. In the past, entrepreneurship was the bastion of well-off individuals who could afford to take such a large risk and had access to knowledge and networks, but startups are being pursued by a much wider group now who need this type of support.

Organic Rice Farming

My internship is wrapping up this week, and I’m behind on my blogging! I’ll post on a few of the highlights
over the past months. 

Their product

My last post was a few weeks ago about our visit to a waste management business in Bali; just before that we went to visit a rice farming business on the eastern end of the island of Java. The company helps farmers increase their income by guiding them through the transition from farming conventional white rice to organic red rice and facilitating access to lower cost inputs and premium prices for their organic crop. The bulk of our time there was spent completing the due diligence with our investment partner by talking to the team and all of their stakeholders.

With the farmer's family

We met with one of their farmers/ farmer coordinators to talk about his experiences with organic rice farming and with the business. He was clearly passionate about organic rice and about the benefits of eating red rice instead of white rice (he specifically mentioned ‘keeping you regular’). It was great seeing his passion and how he had used his increased income to benefit his family.

The management team is a group of recent graduates from a top agricultural college here who are really sharp and committed to social impact, but could use help on the business side. One of the team members was in our car giving us some background on the board member we were about to meet. What he failed to mention, and what surprised us all, was the first line out of the board member’s mouth – that he was that team member’s father. The look of confusion and shock around the room were priceless.

Food wise, we had chicken and rice for almost every meal for 5 days – needless to say we were itching for anything else by the time we got to Bali.

With the team

One of their rice fields

Rice being dried

Rice milling unit

Mountain biking in Jakarta?

It has been a while now since I am interning in Jakarta. I never imagined this city to have a thriving adventure sports scene.

It was only during a casual lunch chat with my colleagues that I came to know about a multitude of options like paragliding, water sports, mountain biking etc. that are easily available in Jakarta. I got an invitation to join them to Puncak Highlands, a mountainous area about 65 miles southwest of Jakarta. I had never tried mountain biking before and I always perceived it to be a dangerous activity. Nonetheless, I reluctantly agreed not knowing what lay in store for me.

However, I must admit; it was an exhilarating experience and now it has become a staple weekend activity for me here.

It takes around 2-3 hours to reach Puncak from Jakarta city center depending on the traffic. But once there, it’s an entirely different feel. This place is an oasis away from the noise and pollution of the city. 


Generally the bike ride starts near the now popular Rindu Alam restaurant and goes downhill through tea plantations and villages on a 20 miles run to the start of the Puncak road at Ciawi. 

The rolling green hills with luxuriant tea plantations have been associated with Puncak for centuries, and they are a pleasant sight along the way up. The two biggest plantations here are Ciliwung and Gunung Mas. The route through the Ciliwung tea plantation comes with a small entry charge. Here other options like motocross bikes, 4x4 jeeps, and horses too are available for rent.

I have observed that mountain biking is the most popular outdoor activity here. Jakarta is the mountain biking hub in South East Asia. It has the biggest community of mountain bikers and also boasts the largest franchise and showrooms of mountain biking equipment and accessories.

And the best part is….this activity has given me an opportunity to meet some fascinating people from various walks of life who are brought together by a common thread. I have found an eclectic group comprising a computer engineering, an advertising professional, an economist, an entrepreneur and a taxi driver. We catch up every Sunday and venture out to Puncak.

I have had some great weekends so far and I have enjoyed every bit of my new found activity.

Progress out of Poverty Index

The poverty line is the minimum level of income deemed adequate in a given country. The poverty line is usually determined by finding the total cost of all the essential resources that an average human adult consumes in one year. At its most basic, the poverty line is a statistical exercise, an attempt to track poverty over time and across specific geographies. It can be used to assess progress in the fight against poverty. The common international poverty line has in the past been roughly $1 a day. In 2008, the World Bank came out with a revised figure of $1.25 at 2005 purchasing-power parity (PPP).

However, increasingly this exercise of assessing poverty is courting controversy as governments have been blamed for fudging data to suit their perspectives. If a reformist stance needs to be communicated, the line is lowered so more people seem better off. And if an international donor is being wooed, the line is raised so that more people seem worse off and in need of aid.

This branch of economics related to the measurement of poverty is anyways one of the most esoteric, and taps into a statistics realm beyond the grasp of most except the most technically savvy.

So what measure should the development world rely on….especially in microfinance….disbursing funds to the poorest of the poor? How does one assess the eligibility, the genuineness and most importantly evaluate the impact of lending?  

I have come across this relatively simpler and more accurate tool that measures the poverty levels of groups and individuals called the Progress out of Poverty Index^TM (PPI™) during my stint here at Grameen Foundation Indonesia.

The PPI is based on an approach developed by Mark Schreiner of Microfinance Risk Management, L.L.C. It is a user-friendly tool that estimates the likelihood that clients’ fall below the national poverty line or the international $1/Day/PPP and $2/Day/PPP poverty lines.

Using the PPI, Micro Finance Institutions can better determine their clients’ needs, the programs that are most effective, how quickly clients’ poverty get alleviated, and what elements help them to move out of poverty faster. Each country has a specific PPI that, while retaining a universal methodology, is based on a country's best nationally representative income and expenditure household survey.

Consultative Group to Assist the Poor (CGAP), the Ford Foundation and the Grameen Foundation endorse the use of rigorous poverty assessment tools and believe the PPI is a highly effective tool for those institutions interested in measuring the likelihood of client poverty.

For each country, the process starts with a nationally representative income and/or expenditure survey. The data from the survey is analyzed to rank indicators that strongly correlate with poverty. These indicators are then tested and vetted with local MFIs and their representatives. The results of the PPI allow an MFI to make informed decisions and improve their processes. 

By using the PPI over time, MFIs can:

• Improve mission adherence
• Improve scrutiny and selection of target clients
• Improve products and programs that are better suited to their target clients
• Increase their competitive edge, profitability, and ability to retain clients by responding more quickly and effectively to changes in their communities 
• Provide timely and accurate information to their investors

Android and development 2

2.   Ruma’s “Market Intelligence” in Indonesia

Ruma is a social enterprise that empowers the poor using mobile phone technology. It started as a pilot project of Grameen Foundation and Qualcomm and has now metamorphosed into an enterprise serving millions of clients. Ruma has recruited and trained over 10,000 low-income entrepreneurs in Indonesia, of which 85% are women, to sell prepaid airtime, electricity and other value added services. Now, Android powered tablets are helping these low-income entrepreneurs act as conduits for gathering market intelligence across Indonesia.

The low-income household market is probably the most difficult market to obtain  information. Goods are sold through 2 million plus warungs (small shops), scattered throughout Indonesia. The distribution of the goods goes through multiple layers of distributors, making information gathering very expensive.

Through the mobile survey product built on the Android platform and administered on smartphones and tablets, consumer goods companies like Danone and Nestle contract Ruma to obtain rapid market information from the Ruma entrepreneur network. Over 70% of Ruma’s entrepreneurs were already selling basic consumer goods when they were recruited to the network. The existing network of thousands of shops and over one million end consumers can provide market research professionals with valuable insights.

Surveys with a broad sample with only a select number of questions can be administered in real time via SMS or through Telesurvey. Whereas an in-depth study of products through focus group discussions or a pilot of the product can be conducted using a customized data collection application.

Ruma believes that by providing companies with better access information to the low-income segment, companies can create products that address the segments true needs.

So why GF prefers Android to other operating systems?

·      Open source - GF can customize the phones for improved use of power and to make applications usable when the phones aren't connected to the network

·      Fastest growing OS - Phone prices are bound to drop

Why GF uses smartphones / tablets when feature phones are cheaper and more popular (especially in the underdeveloped world)?

·      Location data and photographs are possible with GPS & camera

·      Large data can be stored on external memory cards

·      Input and storage of data on the phones is possible even when the user is out of range of a cellular network. This information is uploaded once the user moves within range of the network

·      Improved analytics capabilities (with salesforce.com)

Android and development 1

Development organizations and aid agencies have been struggling for a while now to use technology to improve their efficiency and thereby create an improved impact on the recipients. It is a well documented and researched aspect of development.

Fortunately with mobile phones and their rapid scale to ubiquity, the lengthy pursuit of the development world seems to have met fruition. Currently, no other technology holds as much promise for the development sector as mobiles.

With an aim to empower people in the underdeveloped world and to deliver maximum bang for the buck, increasing number of device makers, cellular operators and development agencies are now coming together to deploy feature / smart phones with text information services and applications on health care, weather, crop pricing, agriculture practices, population studies etc. What really is hastening this process is the availability of a multitude of device and platform options.

Android is one such platform (operating system) that is opening a lot of avenues for data collection and field research management specifically targeted to the development sector. It is a Linux-based operating system developed by the Open Handset Alliance for mobile devices such as smartphones and tablets. Google purchased it in 2005 and has since then led almost a movement towards creating a platform that’s free, open source and stable.

A few instances of successful implementations of technology especially Android in development sector:

1.   Grameen Foundation’s “Community Knowledge Workers” (CKW) in Uganda

400 CKWs in Uganda are using Android phones loaded with an open-source data-collection application that feeds data into salesforce. These phones are powered by batteries that can be recharged via electricity, solar and bicycle. GF offers farmers loans to buy an Android phone loaded with information about when and how to plant crops, care for farm animals and find markets for products.

Those farmers (CKWs) then serve as experts in their villages. Other people turn to them with questions about crops or farm animals, and the knowledge workers find answers in information loaded on the phones. The knowledge workers also gather information about the farmers they talk to.

The workers have interacted with over 25,000 households so far. 75 percent of farmers say they find the information offered by the knowledge workers to be very useful, and 80 percent said they acted on information they received at least once. Information from CKWs have helped them in timing their planting activities based on weather information, asking for better prices from traders, going to markets where they can get better prices and providing better care for their livestock.

The CKWs must buy the phones and charging stations. They can pay them off monthly, a process that takes about two years. They get paid for their work and can earn up to $25 a month.

GF is hoping to make the project self-sustaining and has partnered with other agencies that see value in the network of CKWs. The World Bank, Heifer International and others are now paying GF for data that CKWs collect by conducting surveys with villagers.

18 till I die....

Susi (left) with her mother Mida (right) outside their house.

I  am working with the Grameen Foundation (GF) in Jakarta, Indonesia these three months.  GF helps the world's poorest, especially women, improve their lives and escape poverty by helping to provide access to new ways to generate income, access to appropriate financial services (such as savings accounts, small loans) and important information on health, crops, and finances.  I was visiting some GF supported social enterprises in Tangerang outside Jakarta a week back. I observed that amongst all the women micro-entrepreneurs affiliated to the social enterprises, there was a young girl with quite a feisty demeanor. Her confidence and ideas intrigued me and I got talking with her.

I found that her name was Susi; she is 18 and a micro-entrepreneur who uses GF AppLab’s talktime credit app to conduct business. Essentially, she sells prepaid mobile minutes in her community and makes about IDR 15000 – 20000 ($1.6 – 2.1) everyday.

She chose to become a micro-entrepreneur about 2 years back after her father lost his job as a construction laborer. She had to give up on her education in order to rescue her family of 7 from sinking deeper into poverty. She is proud of her entrepreneurial skills and dreams to open her own grocery store. Thanks to her efforts, her father has been able to buy a motorcycle and he now operates as a motorcycle messenger.

I asked her what does she intend doing going forward…. does she want to get back to education…. does she want to stop now that her father has a stable income?

She promptly replied, “I want to be 18 till I die…. this way I can keep making good money  and I can keep supporting my family.”

Selamat datang di Indonesia!

It was approximately two months ago when I landed in Jakarta, the capital of Indonesia, also the city where I grew up and spent most of my teenage life. I am back in Jakarta for my 12-week WDI Internship with Endeavor, a non-profit organization that works with high-impact entrepreneurs in emerging markets and helps accelerate their businesses.

To give you a background of organization, below is a great story on Endeavor from the website:

“The story of Endeavor began fifteen years ago from a conversation between Linda Rottenberg and Peter Kellner who then wrote their vision in a tissue paper: Endeavor would be a new kind of non-profit organization dedicated to selecting and accelerating the growth of entrepreneurs in emerging countries that will create new job opportunities and improve societal welfare. People initially thought the concept of High-Impact Entrepreneurship in emerging markets was unrealistic. No one believed there were entrepreneurs in developing economies let alone mentors who would support them. However, Linda and Peter along with their small but passionate team ultimately convinced business leaders in Latin America to dedicate not only their money, but also their time and networks to Endeavor and its entrepreneurs. Endeavor then began its expansion to South Africa, followed by Turkey and a succession of countries in the Middle East. Currently, Endeavor operates in 15 countries, and has become an organization of, by, and for entrepreneurs. More than 80% of our entrepreneurs give back to their local affiliates by serving as mentors and members of worldwide boards. Over 100,000 jobs have been created with billions of dollars contributed back into local economies and hundreds of role models now exist for young people in rapidly developing economies The Endeavor Entrepreneurs continue to remind us that with the right resources, big ideas can happen and generate transformative change in economies around the world.”

When Jennifer Hsieh, my section 5 classmate at Ross and a former intern at the Endeavor office in NY, told me that Endeavor just opened its Indonesian office on February 1, 2012, I was really excited and applied immediately for a summer internship position. I talked with Sati Rasuanto, the Managing Director in Indonesia, through Skype several times to learn more about the opportunities in the Jakarta office. Our conversations confirmed my interest with Endeavor and here I am now back in my home country working with an exciting organization and great group of people!

More stories on my first several weeks at Endeavor next!

Facebook: http://www.facebook.com/EndeavorIndonesia

Twitter: @Endeavor_Indo

Three environmentalists walk into a bar...

Sometime in the early 1970s, three environmentalists were deep in debate about how to measure the impact humans have on the planet. One of the three, Barry Commoner, argued that the impact was purely a result of technological innovation following WWII. The other two, Paul Ehrlich and John Holdren, argued that the most important aspects of our impact were population growth and our increasing affluence. As all good environmentalists would they created an equation with which to codify this debate. The result was the IPAT equation. For the uninitiated, IPAT is an accounting equation (I = P x A x T) which states that human impact (I) is a product of our population (P) multiplied by our affluence (A) multiplied by our technology (T). Affluence represents our consumption and technology represents how resource intensive our affluence is to produce. I admit that I'm over-simplifying here. For a much more detailed analysis of the equation, its many adaptations, and its limitations, simply google "IPAT equation."

Just a few months ago this was nothing more than a theoretical concept to me. At the time, I argued that the most important factor fueling our impact was population. If you have fewer people, then OF COURSE! you will have a lower impact. My time in India has only cemented that idea. Despite our technological innovations and growing affluence, I believe more than ever that our main problem is population. For example, the city where I'm living this summer (Bangalore) has grown 200% in the past decade compared to the 3% growth rate of New York over the same time period. As I wrote in my last blog post, this growth has led to a number of problems: traffic, air and water pollution, low power quality, decaying infrastructure, homelessness, etc., etc. all of which has had a negative impact on the environment. Ehrlich and Holdren were right! It's population!

Or is it? What do you think? How has your WDI experience informed your perspective on this issue? If it is population, how do we deal with it? If it's not population, then what is it? And how do we deal with it?

Selamat Siang!

Hello folks!  I’ve been in Jakarta for just over two weeks now, and have been having a great experience so far.  When I decided to spend my summer with the Global Entrepreneurship Program Indonesia (GEPI), I never would have guessed how much exposure I would gain so quickly.

I’ve already had the opportunity to attend INSEAD’s Social Entrepreneurship Conference here in Jakarta where I met entrepreneurs and social entrepreneurs from Indonesia and beyond, sat in on a meeting with GEPI’s executive board consisting of prominent Indonesian business people, and met with the leadership of The Founder Institute Jakarta.  GEPI is definitely on the forefront of both the entrepreneurship and social entrepreneurship scenes here.  Its mandate is to promote entrepreneurship in Indonesia, and I’m excited to be able to contribute to that even for just a short while. 

GEPI’s three big initiatives are starting up an angel investor network, launching Indonesia’s first business incubator/co-working space focused on the creative sector, and supporting innovative social enterprises.  While I’ll be contributing to all of these, I’ll be spending the bulk of my time on this last piece.

I had the opportunity to meet with a member of the management team of one of the startups I’ll be working with, and am incredibly excited to be able to help them out.  The for-profit social enterprise is helping farmers transition to organic farming practices, allowing them to sell their rice at a premium while also benefitting the environment and consumers.  The team is a group of young, talented, and humble entrepreneurs who just need some help thinking about how to scale their business.  I’m hopeful that I’ll be able to use what I’ve learned at Ross so far to help them accomplish this goal.

Outside of work I’ve been spending my time getting acclimated to Jakarta.  I’ve learned enough Bahasa Indonesia to confidently tell a taxi driver where I want to go (until he responds or asks a question that is…).  There’s tons of great food here, and since all of it is Halal, I’ve been able to try out all sorts of food I can’t eat at home.  I’m planning on venturing out to other parts of Indonesia over the weekends, and will post some more pictures soon.