Forbes Indonesia - June 2013

Indonesia

www.forbesindonesia.com

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sandiaga Uno prepares saratogafor an ipo and new growth

SMART

private Money• east VentUres • endeaVor • ideosoUrce • Jd capital • QUVat+ U.s. midas list

9 indonesian firms in global 2000JUNE 2013 VOLUME 4 ISSUE 6

MONEY

MAYAPADA JUNE 2013 (DPS).indd 2 5/22/13 4:04 PM

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2 | FORBES INDONESIA juNE 2013

p PAGE 18

Smart moneyuNDER SANDIAgA uNO, SARAtOgA pIONEERED pRIvAtE EquIty AND wIll BE A pIONEER AgAIN AS thE FIRSt pRIvAtE EquIty FIRm tO gO puBlIc. By UlisAri EslitA

contents — june 2013 volume 4 issue 6

Indonesia

8 | FAct & cOmmENt // Steve ForbesIRS hiring freeze: impose it now.

10 | EcONOmIc hIghlIghtS // Prof. FirmanzahDomestic purchasing power: the engine of growth.

12 | FRESh thOught // Taufik DarusmanThe May 1998 riots: 15 Years on.

13 | REAlIty chEck // James KallmanGrasping the nettle.

pRIvAtE mONEy

24 | thE ANgEl FROm DARmAwAN pARkAs a successful entrepreneur, Januar Darmawan is now

helping the next generation of entrepreneurs. By ArdiAn WiBisono

26 | mAkE IDEAS wORkIdeosource aims to help its companies grow with a combination of venture capital and incubaiton.

By GloriA HArAito

30 | gREAt ENDEAvOREndeavor is helping entrepreneurs build great companies.

By sonyA AnGrAini

32 | guESt cOlumN // Andy Laver SiraitGrowing MSMEs.

34 | tAkINg pROFItS FROm thE mIDDlEQuvat private equity takes a “bespoke” approach to middle-market investing.

By GloriA HArAito

36 | EARly BOOStEREast Ventures is pioneering seed investments into Internet startups.

By yEssAr rosEndAr

38 | SERvIcE ON thE FlyFor a look at how private equity helps companies, consider Cardig Aero Services.

By JEffrEy HUttonCoVEr PHotoGrAPH By

toto sAntiko BUdi for forBEs indonEsiA


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juNE 2013 FORBES INDONESIA | 3

BNI JUNE 2013 EDIT REV.indd 1 5/27/13 3:30 PM


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p PAGE 68

return of the PaleiSjAkARtA’S hIStORIc kuNStkRINg BuIlDINg IS gEttINg A NEw lEASE ON lIFE uNDER thE tugu gROup.By Jim rEAd

p PAGE 60

Payment JuSt an SmS awayhENDRA SutANDINAtA’S SmS BANkINg App cOulD BE A mAjOR INNOvAtION FOR thE FINANcE INDuStRy.By ArdiAn WiBisono

pRIvAtE mONEy

42 | thE kINg wANtS hIS thRONE BAckJohn Doerr of Kleiner Perkins Caufield & Byers is now fighting to return

to the top of Silicon Valley’s greatest game.. By ConniE GUGliElmo And tomio GEron

48 | thE mIDAS lIStTech’s top moneymakers. Plus: the firms with the most deals.EditEd By tomio GEron WitH AdditionAl rEPortinG By ryAn mAC

cOmpANIES & pEOplE

50 | lENDER tO SmAll lENDERSBank Andara has found a unique microfinance niche:

lending to other microfinance lenders. By ArdiAn WiBisono

52 | thE NExt BIg thINgJapan’s Uniqlo has big ambitions for the Indonesian market.

By sonyA AnGrAini

56 | ultImAtE SpEEDMcLaren is coming to town, bringing competition to Ferrari and Lamborghini.

By yEssAr rosEndAr

58 | gROwth INSIghtS // Frost & SullivanIndonesia’s green car ambitions.

thE glOBAl 2000

59 | tOp 100Our 2013 ranking of the world’s biggest companies. 9 Indonesian firms.

ENtREpRENEuRS

62 | cROwDSOuRcINg EDISONQuirky lets consumers vote on inventions. Will they come to a store to buy them?

By J.J. ColAo

65 | guESt cOlumN // Leslie Gaines-RossSocially engaging CEOs in Indonesia.

66 | mARkEtINg INSIghtS // Hermawan KartajayaProgram versus movement.

67 | glOBAl vIEwpOINt // Jennie S. BevIs sustainability still possible?

FORBES lIFE

71 | hEAlth wAtch // Shanti ShamdasaniThe yoga connection.

72 | thE chImNEy vIllAgEKampung Kobong’s smokehouses have been producing Semarang’s popular

smoked fish called mangut for the last two decades. tExt And PHotos By AHmAd zAmroni

76 | thE hIgh lIFEAround the globe developers are taking luxury living to a new level.

78 | thE EyE // Yessar Rosendar

contents — june 2013 volume 4 issue 6


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FORBES INDONESIA

siDelines

Adaro, Bank Central Asia, Cardig Aero Services, Matahari and Tower Bersama. What do these companies have in common? All have been affected by the power of private money, some in the past (Bank Central

Asia) and some today (Matahari). This issue delves into the wealth creation that is unleashed when individuals—not banks or governments—are allowed to channel capital to entrepreneurs in the risky but rewarding activity known by various names, such as venture capital, angel investing or private equity. For simplicity’s sake, we’re calling it “private money” to distinguish it from funds that come from bank loans, capital markets or governments. What would Silicon Valley be today if there had been no venture capital firms to back the early growth of companies such as Apple or Google?

In this issue, we looked for as many examples as possible of the forms of private money. Our cover profiles Sandiaga Uno and Saratoga Capital, the first and most iconic private equity firm in the country. Yet we also have profiles of Januar Darmawan and his JD Capital and the tech incubator and investor Ideo-source. They operate on a much different scale than does Saratoga. Ideosource can invest as little as $50,000 into an Internet startup. Januar Dharmawan in-vests before a company even exists, asking only for a business plan and a deter-mined would-be entrepreneur. He then pays for starting the company himself, allowing the entrepreneur to buy him out if the company succeeds. If the com-pany fails, JD Capital may even give the entrepreneur a second chance.

Also included is a profile of Endeavor’s Indonesia operation, which is bringing a unique model of support to entrepreneurs. While it doesn’t give money, Endeavor does virtually all other types of support including helping to find funds for entrepreneurs under its care. Endeavor illustrates another dimension of private money—providing a helping hand to companies. Most of these investment firms will take an active role in assisting the companies in which they invest, they are in that sense “smart money.” Finally, this special feature includes the annual U.S. feature on the top venture capitalists, the Midas List, and profile of John Doerr and his legendary Kleiner Perkins firm.

To be sure, the goal of all the above firms is to make money for themselves and their investors—but they can only do that if their entrepreneurs and their companies also succeed. As Sandiaga wisely notes: “If we want the economy to grow, we need capital to make it happen. We have the stock exchange and the banks putting in money. Private equity is not only putting in money, but also hiring senior management to run the businesses, making strategies, and giving advice.” f

Private Money and Public Benefits

forBEs indonEsiA is published by PT Wahana Mediatama under a license agreement with Forbes LLC, 60 Fifth Avenue, New York, New York 10011. “FORBES” is a trademark used under license from FORBES LLC.©2010 PT Wahana Mediatama • ©2010 FORBES LLC, as to material published in the U.S. Edition of FORBES. All Rights Reserved.©2009 FORBES LLC, as to material published in the edition of FORBES ASIA. All Rights Reserved.FORBES INDONESIA is published monthly, 12 times per year. Copying for other than personal use or internal reference or of articles or columns not owned by FORBES INDONESIA without written permission of FORBES INDONESIA is expressly prohibited. ContACt informAtion forbes indonesia: Menara Sudirman 19th Floor Suite 19D, Jl. Jendral Sudirman Kav. 60, Jakarta 12190. Tel: (021) 522 6828, Fax: (021) 522 7208. Website: www.forbesindonesia.com

: Forbes Indonesia Magazine : @forbes_idsubscriber Enquiries: Please contact Circulation Division. SMS to 0817 0109 777, email: [email protected]. Or visit www.forbesindonesia.com to subscribe or advertise. Single copy price Rp 50,000, local subscription rate Rp 420,000 + postal fee (Jabodetabek) for 12 issues.

may 2013 • Volume 4 Issue 5

Indonesia

Justin DoebeleChief Editorial Advisor

[email protected]

EditoriAl dEPArtmEntChief Editorial Advisor justin DoebeleEditor-At-large taufik Darusmanmanaging Editor Ferry Irwanto senior Editor Ardian wibisonosenior Writer ulisari EslitaWriters gloria haraito, Renjani puspo Sari, Sonya Angraini, yessar Rosendar Art director mirna lidya Aprilla Photo Editor Ahmad Zamroni Executive Assistant Seli widiati

BUsinEss dEPArtmEntPublisher jusuf wanandi Associate Publisher grace wong Circulation & subscription manager Andriansyah Circulation Executive FitriyahProduction manager mudafid Riyanto senior Adv. manager tanti jumiati senior Adv. sales Executive hilman Ahmad Pr & Event manager Rafki Ismael Executive Assistant marketing Nancy heryana Accounting manager Indrawati SonjayaAccounting supervisor Inge Stephanie Accounting Executives tjhin Anna Administrative Assistant Dahlia komala Sari

Pt WAHAnA mEdiAtAmAPresident director millie Stephanie Vice President director victoria tahir President Commissioner jonathan tahir Vice President Commissioner maria lukito

forBEs mEdiA llCChairman & Editor-in-Chief Steve Forbes President & CEo mike perlis Chief Product officer lewis D’vorkin CEo / Asia william AdamopoulosEditor, forbes Asia tim Ferguson

CorrECtion:In our April edition, on p. 36 and p. 37, we wrote the Surabaya mayor’s first name as Tris. The correct spelling is Tri. We apologize for the error.


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BBG JUNE 2013 EDIT 1 5/21/13 5:37 PM


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FAct & comment — steve FoRBes

FORBES INDONESIA

“With all thy getting, get understanding”

The adminisTraTion should immediately halt any more hiring of agents at the IRS. If the White House won’t do it, Congress should and override the President’s veto. Under ObamaCare our tax-collecting “service” is set to bring on more agents and has already signed on a couple of thousand.

The idea that this agency will play a central role in enforcing Obam-aCare should send chills through everybody. That the government is going to have a superdatabase that holds all your financial and health care records in one central location is hor-rifying. Do you think Washington politicians and favor-seeking bureaucrats will, angelically, refrain from future abuses of this sensitive info?

Such a freeze, of course, is a stopgap. One good thing to come from the IRS scandal is that it will contribute mightily to the coming collapse of ObamaCare, which is clearly an administrative monstrosity. The idea that our central government, particularly in this high-tech era, can manage something so immense and wide-ranging as health care is beyond preposterous.

IRS hIRINg FREEZE:ImpOSE It NOw

By stEVE forBEs, Editor-in-CHiEf

Only Answer: Really Small governmentThe appalling revelations about the abusive behavior of the IRS underscore the wisdom of our Founding Fathers, who recognized that human nature is unchanging and that government is inherently abusive. The dilemma they dealt with was how to make a government strong enough to maintain internal order and defend us from external enemies but not be able to oppress us. They came up with the federal system of checks and balances, with power divided among the federal government, the states and the localities. In the late 19th century the Progressive movement rose up, espousing reforms to improve governance for the industrial age. Parts of the movement’s program were positive, but an underside was the belief that government had to be insulated as much as possible from “politics” so that trained experts could scientifically do what was right for the public, even if we were

The White House won’t like it, but a special counsel to thoroughly investigate the IRS will come to pass. The only question is when. Fearful congressional Democrats aren’t going to protect the White House on this one. Their only goal will be to delay the implementation of such a post so that findings will come after next year’s elections. After all, they know that several of their colleagues openly called on the IRS and

Special Prosecutor coming

the Justice Department to investigate conservative groups.

If the President was smart he would have taken the lead on this in-stead of looking like he’s dragging his feet, à la Richard Nixon and Water-gate. Just as Watergate tainted Nixon’s reelection in 1972, so, too, the actions of the IRS and other government de-partments in going after conservative groups put a cloud over Obama’s 2012 triumph, just as steroid use by the likes

of Barry Bonds and Mark McGwire has forever adversely marked baseball achievements.


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GOP—get Smart

not always enlightened enough to appreciate their ministrations. The notion grew that constitutional restraints on central government power was an anachronism in the modern era. Progressives were intoxicated by the enormous, often unrestrained authority Washington temporarily wielded over the economy during WWI. They asked, “Why can’t we have such powers to do good in peacetime?” They got their chance during the New Deal, which failed to end the Great Depression. But the virus was there, erupting again during the Johnson and Nixon administrations and, finally, in the current regime. President Obama has put this Progressivism on steroids, making it indistinguishable from an updated variant of socialism.

The IRS scandals—the income tax was a key goal of the Progressive movement—are the inevitable result of Big Government. The IRS’ history is loaded with scandal and abuse. After each episode new laws are passed—and the corrupt behavior returns. Why? Because Big Government needs a Big Tax Collector, and contrary to Progressive/Socialist notions about human nature being transformed when part of a government bureau-cracy, such an agency will be bent and twisted by power-playing pols.

Our Founding Fathers understood that pious hopes and laws won’t pro-tect us from overreach by Big Govern-ment. A downsized government is the answer. There are numerous ways to accomplish this.

With regard to the IRS we could start by enacting a flat tax, which would sharply reduce the powers and discretion of that agency. Some would advocate for a national sales tax as the answer, but that would entail major enforcement problems, which, in turn, would still necessitate a federal agency.

Three other areas of major gov-ernment power are education, Social Security and health care. There are a number of proposals that would return health care power to patients from third parties, such as permitting people to

Congressional Republicans should be thinking hard about how to handle the upcoming debt-ceiling crisis. The President is taking political haymakers, and he’ll relish the idea of battling Republicans on this issue, portraying them as trying to cut benefits for children, the elderly, the sick and our military. The GOP should have learned by now that the debt

ceiling is a pitifully poor instrument for achieving spending cuts, positive entitlement changes and tax reform.

Revenues will be higher this fis-cal year because of better economic growth and the 2012 year-end rush to take dividends and realize capital gains before taxes went up sharp-ly Jan. 1. The debt limit may not be reached until late summer, and the Treasury can play tricks to put off the reckoning until late fall. What should the GOP do during this time? The House should pass legislation re-storing budgetary powers the Presi-dent had until 1974, that is, the ability to impound spending. Republicans should also give the President en-hanced rescission powers and, third, tie spending to a certain percentage of GDP. The President could employ these tools when the debt-to-GDP ratio reaches a certain limit. If the debt were to go over that limit, then pay for top federal officials, including the President, members of Congress and their staffs, would be sharply cut. A critical part of this proposal is that there must be no increase in taxes, only restraints in spending.

And if the Democrats balk? As not-ed economist and Forbes columnist Da-vid Malpass has said, “The Republican leadership should allow a House vote on a small increase (say, three months’ worth) but only provide a few of the votes. The Democrats would have to provide most of the votes.” Democrats would find that increasingly uncom-fortable, politically, which would help the GOP in the 2014 elections.

Republicans will gag over the idea of giving Obama such discretion, but the man won’t be in office forever. Future conservative Presidents, in the mold of Calvin Coolidge, will have the opportunity to use those tools wisely and vigorously. If Obama or Senate Democrats balk at this House-passed legislation, then Republicans will be in the political catbird seat: They tried to help the White House control spending, and the White House turned them down. f

shop nationwide for health insurance, equalizing tax treatment for both indi-viduals and businesses and removing restraints on Health Savings Accounts (HSAs). Regarding Medicaid, give the funds back to the states and allow them to decide what works and what doesn’t. A new form of HSA for young people would put the Medicare program on the road to extinction, once the rest of us go to our ultimate reward. The same thing should be done with Social Security: Provide accounts with sensible rules for diversification for young people.

Most of the federal government’s approach to education is counter- productive and should be either stopped or sent to the states.

There are obviously many other areas in need of reform. But we should start with the ones that really count. If done right, they will evoke popular support, unlike the trench-warfare approach of trying to cut specific parts.

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for daring to investigate the forebearer of the irs in 1925, senator James Couzens (r–mich.) was publicly hit with a demand for back taxes. the feds not only lost the case but had to give him a hefty refund.


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economic highlightspRoF. FiRmAnzAh

20% over the previous year, from 60.2 million to 72.5 million. This makes In-donesia the fifth largest domestic mar-ket in the world after the U.S., China, Japan and Brazil. Indonesia is expected to see 100 million passengers by 2015.

However, in the first quarter of 2013, the Indonesian economy faced some challenges as prices of garlic, meat and chili sharply rose. These commodities were scarce due to a combination of poor harvest and lack of imports. Yet consumers seemed un-daunted by these challenges.

What Next?The quest for a more balanced source of growth is the next challenge for In-donesia. Sustainable growth could be achieved if the domestic supply-side balances the increasing domestic pur-chasing power. Otherwise, the Indone-sian economy will suffer from import pressures resulting in a negative net export that will affect the Indonesian currency as well as national reserves.

However, there is still room to transform Indonesia’s rich natural resources into value-added products. Investment in Indonesia could be the next engine for growth in addition to domestic consumption. The equilib-

rium between demand and supply side could be achieved not only by inter-national trade but also by boosting na-tional production facility and capacity.

The Investment Coordinating Board (BKPM) reported that in the first quarter of 2013, foreign and do-mestic investment rose 30.6% to Rp 93 trillion from Rp 71.2 trillion in the same period last year, thanks to im-provement in the investment climate. Central and local governments have been consistently improving the qual-ity of services, especially by simplify-ing procedures and accelerating the process of licensing for investment. These bureaucratic reforms have actu-ally been in place for some years and foster investment and job creation.

The encouraging data is also a product of higher distribution of in-vestment outside Java. The “Go Out-side Java” program has successfully attracted investors in the manufactur-ing, retail, infrastructure, mining, tele-communications, transportation and energy sectors. However, connectivity between Java and other areas is cru-cial to ensure production efficiency in Indonesia. Therefore, the government is implementing programs to improve port facilities, airports, shipping, lo-gistics, and other related areas.

In the end, improved production facilities and high domestic purchasing power would significantly bolster the Indonesian economy. Future challenges have been identified and national efforts have been mobilized to boost the na-tional production network. A combina-tion of natural resources, demographic dividends and availability of domestic market would upsize the Indonesian economy in the coming years. f

The Indonesian economy grew by 6.02% in the first quarter of 2013, slightly down from 6.29% in the same period last year,

according to the state-run statistics agency BPS, despite a global economic slump. By comparison, Malaysia was up 2.5%, Vietnam 4.9% and Singapore 0.6%. The global slowdown has also re-duced China’s growth rate to just 7.7%.

The major contributor to Indone-sia’s economic growth is household consumption, at almost 55% of GDP, while investment accounted for about 33%. Household consumption in-creased by 5.2% compared to the same period last year, reflecting the strength of Indonesia’s domestic consump-tion. The huge size of the Indonesian domestic market is reflected by, for ex-ample, data published by the Indone-sian Automotive Industry Association (Gaikindo): 18% growth in car sales in first quarter of 2013, or 297,785 units sold. Strong domestic purchas-ing power has managed to sustain the economy despite weak exports.

The optimism about the Indone-sian domestic market is also reflect-ed by the Nielsen Global Survey of Consumer Confidence and Spending Intention covering 58 countries. Indo-nesia led the global index at 122, up by five rungs from the fourth quarter of last year. This result shows high con-sumer confidence over the next few months, and intentions to indulge in renovating their homes, taking vaca-tions and enjoying entertainment.

Another figure showing the rise in purchasing power is found in the do-mestic aviation industry. In 2012, the number of domestic passengers grew by

DOMeSTic PuRcHASiNG POWeR: THe eNGiNe OF GROWTH

Prof. firmAnzAH PHd IS SpEcIAl StAFF tO thE pRESIDENt FOR EcONOmIc AFFAIRS. hIS twIttER AccOuNt IS @FIZFIRmANZAh.


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MAZDA6 JUNE 2013 EDIT.indd 1 5/21/13 6:05 PM


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FResh thoughttAuFik DARusmAn

ed that key players were in the field during the riots, including witnesses who saw “well-trained” individuals inciting crowds to loot and burn stores and houses. (Full disclosure: Marzuki is also my brother.)

The riots took place during a be-hind-the-scenes power struggle be-tween Gen. Wiranto, then the Armed Forces commander, and Lieut. Gen. Prabowo Subianto, the head of the Army’s powerful Strategic Reserves Command (Kostrad). It bore the hall-marks of a military operation, and only a handful of generals could have pulled it off. As such, Prabowo and Wiranto were shortlisted as the pos-sible masterminds.

TGPF concuded its 28-page report with a set of recommendations, one of which is a white paper detailing the roles and responsibilities of “every-one” connected to the riots when they took place. Habibie duly took note of the report and put it on the back-burner. In many ways the riots put an end to over three decades of Suharto’s autocratic rule and put Habibie in power—what possible benefit would

he gain from finding out who was be-hind them?

When in 1999 Marzuki became attorney general, he picked up where he left off and pledged a probe into the riots. The plan never gained traction; he had been moved to another Cabinet post while his successor mysteriously died not long after he took the job. In the meantime, Komnas HAM has ascertained that the riots were fraught with gross human rights violations and in 2003 submitted a report to the attorney general.

Joining the families of the Citra Mall victims last month were members the Commission for the Disappeared and Victims of Violence (KontraS), who noted that 15 years on the government has yet to follow through TGPF’s recommendations and Komnas HAM’s own findings on the riots. KontraS is pressing the president to set up an ad hoc human rights court, which legally must first be recommended by the House. The House, however, will only make a recommendation if the Attorney General’s Office (AGO) deems there is merit for such a legal move.

Putting the final nail on the coffin, the AGO has rejected Komnas HAM’s findings by citing lack of comprehen-sive evidence. If the mastermind of the riots has so far not been revealed, the prospects of exposing them now are even bleaker. With Prabowo and Wi-ranto today remaining political heavies as they were in the past, no government official or politician worth his salt can be expected of mulling an ad hoc hu-man rights court on the May riots. f

For the past 15 years sev-eral families would gather every May 13, as they did last month, to hold prayers and lay flowers at

the Citra Mall in East Jakarta, in mem-ory of their loved ones who died inside the shopping center. On that fateful day, in 1998, at the start of what is now called the May 1998 riots, a crowd that included children were incited to loot the mall by what witnesses describe as “well-built men with crew cuts.” Once they were inside, the “provocators,” the term used by an official probe, locked all the doors and set the build-ing on fire—no one survived.

Every year, the victims’ families repeat their demand that the government find the culprits behind the heinous act. Similar acts also took place in other parts of Jakarta during the two-day mayhem. Over 1,000 people are estimated to have died, leaving the capital city looking like a war zone: 5,723 buildings either torched or plundered and 1,948 vehicles burned, according to the Jakarta municipality. As Tempo noted, it was: “twenty times worse than the Los Angeles riots of April 1992.”

Three months later President BJ Habibie appointed a Joint Fact Find-ing Team, TGPF, to investigate the riots and issue a report in 90 days. In November, the TGPF, headed by Kom-nas HAM (human rights commission) chairman Marzuki Darusman, pre-sented not only facts but also an analy-sis of the riots: it was a power struggle within the political elite amidst a rapid economic deterioration. Marzuki not-

THe MAY 1998 RiOTS: 15 YeARS ON

tAUfik dArUsmAn IS ONE OF INDONESIA’S mOSt ExpERIENcED jOuRNAlIStS. hE hAS hElD chIEF EDItOR ROlES At Business Week indonesia AND investor mAgAZINES, AND the indonesian oBserver NEwSpApER.


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SMAILING TOUR JUNE 2013.indd 1 5/16/13 6:07 PM


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ReAlity checkjAmes kAllmAn

The number of people over 60 worldwide has almost tripled in the past 50 years and is forecast to hit nearly two billion in the next half cen-tury. That means a lot of money to be spent in caring for aging populations. In Japan, for instance, already nearly 40% of the population is 55 or older, compared to less than 15% in Indone-sia, placing a heavy burden on future Japanese workers as they look to sup-port their aging families.

With 60% of its population of

working age, Indonesia is in a fine position in preparing for the future. Currently, pensions are voluntary in Indonesia, while payment of past service liabilities and severance is mandatory. The problem is that these are unfunded, existing solely on paper and thus these liabilities provide no real security, it would be better to replace them with a pension actually funded on an annual basis.

If this were done and carefully managed in creating the right financial architecture by the government, this pool of long-term pension money could in part be utilized for funding the major infrastructure projects this nation badly needs. Good asset managers look to match long term liabilities with long term assets. Moreover, the

implementation of these projects would also boost the opportunities to bring many younger unemployed into the formal employment sector, both immediately and in the longer term.

In many ways, Indone-sia is indeed blessed in having such a wealth of young human resources to exploit its diverse riches for the ongo-ing benefit of generations both pres-ent and future. Yet the responsibility of using them lies with today’s lead-ers, and as the old saying goes, time and tide wait for no man. Our lead-ers should act decisively in grasping this opportunity. Yet should they fail to grasp the nettle, they will be more guilty than Socrates of misleading the youth of their time. f

When Socrates died at 70, it was not of old age but rather by drink-ing hemlock, his

sentence on being found guilty of cor-rupting the youth of Athens, together with impiety. Some suggest that he met his fate with some equanimity: he had little enthusiasm for the prospect of his advancing years.

While it’s called golden years, but in today’s world it’s a time of apprehension for many, with concerns about the costs of growing old and being a burden on their family. For much of human history, people rarely lived long enough to be considered elderly, and populations remained small and young.

In America, pensions got their start with promises made to veterans of the Revolutionary and Civil Wars but had then spread to employees at local and state government levels. In Europe, meanwhile, the first national scheme was introduced by Otto von Bismarck in Germany in 1889, and fol-lowed soon in many other countries.

After World War II, however, pen-sions really became popular in the U.S., to help retain workers during the enforced wage freeze years. Soon, ex-pectations of retirement and a pension were added to the utopian dreams of a house and a car. Today the worker’s right to a pension is enshrined in the national constitution of many nations.

Then came the massive population explosion in the last half century or so. It had taken 10,000 years from the first agricultural communities for the

GRASPiNG THe NeTTLe

JAmEs s. kAllmAn IS A SENIOR pARtNER OF glOBAl AccOuNtINg AND cONSultINg FIRm, mAZARS. A 30-yEAR vEtERAN OF EmERgINg mARkEtS, jAmES IS AlSO thE pARtNER-IN-chARgE OF mAZARS’ glOBAl EmERgINg mARkEtS pRActIcE.

today the worker’S right to a PenSion iS enShrined in the national conStitution of many nationS.

world’s population to reach 3 billion in 1960, and doubled in less than 40 years. Today we have already passed 7 billion and should add another billion or three by mid-century. In Indonesia, life expectancy has risen from 41.5 years in 1950 to 71.1 years in 2010.


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KTO.indd 1 4/16/13 3:41 PM


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private money

saratoga capitalThe pioneer of private equity is pioneering again.Page 18

J Darmawan Venture capitalJanuar Darmawan is now helping the next generation of entrepreneurs. Page 24

iDeosourceAims to help its companies grow with a combination of venture capital and incubation.Page 26

enDeaVorHelping entrepreneurs build great companies.Page 30

quVatTakes a “bespoke” approach to middle-market investing.Page 34

east VenturesPioneering seed investments into Internet startups.Page 36

Kleiner perKins caufielD & ByersFighting to return to the top of Silicon Valley’s greatest game.Page 42

The Power ofWhile it goes by different names—private equity, venture capital, angel investing—the basic mechanism is the same: private individuals investing funds raised from themselves or a small group of investors. as such this “private money” is another channel to supplement bank loans, the government and capital markets to support the groWth of entrepreneurial companies that ultimately benefit the local and even global economy, creating jobs and opportunities.

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UOB JUNE 2013 EDIT.indd 1 5/3/13 7:21 PM


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private money

SmarT money

This year will be a remarkable one for private equity firm Saratoga Capital. After 15 years of operations, Saratoga’s main vehicle for doing deals, PT Sara-toga Investama Sedaya, is scheduled

for an IPO this month, and is hoping to raise at least $270 million. While other private equity firms have gone public elsewhere, this planned IPO will be the first private equity firm traded on the Indonesian mar-ket, with an expected initial market capitalization of about $2 billion. Financial firms UBS and Deutsche Bank will manage the offering.

Saratoga has been the driving force of some of the country’s largest companies. It has funded coal miner Adaro Energy, cell tower operator Tower Bersama, motorcycle distributor Mitra Pinasthika Mustika, palm oil producer Provident Agro, Mandala Airlines and other investee companies. “This is the right time for us to transform after 15 years of operations, partic-ularly on the funding part. We aim to meet company’s financial requirement for the next three to five years, so we can keep expanding,” says PT Saratoga Investa-ma Sedaya President Director and Co-founder of Sara-toga Capital Sandiaga Salahuddin Uno.

Saratoga is one of the country’s oldest private equity firms, founded in 1998 by billionaire Edwin Soeryadjaya and Sandiaga, whose net worth is now well over half a billion. The name was suggested by Edwin, after the U.S. resort city of Saratoga in New York. In 2007, Saratoga Capital launched its first fund, Saratoga Asia II, raising $152 million fund and fully invested in 2011. Meanwhile, Saratoga Asia III, which closed in 2012, has about $600 million, of which around $135 million has been deployed so far this year.

Currently, Saratoga has 15 companies in its portfolio, employing more than 30,000. Saratoga itself has three general partners and 15 investment teams that are working together in order to generate a 25% IRR for a blue-chip roster of investors such as the World Bank’s International Finance Corp. “Saratoga has a good reputation and performance,” says Adaro President Director Garibaldi “Boy” Thohir. “Saratoga is the pioneer in this industry, and it has survived for the past 15 years, and it is growing. Saratoga has all the ingredients for greater success.”

Increased competition in private equity, however, is coming from the other big three local players in the country: Ancora, Quvat and Northstar (which is allied

Under Sandiaga Uno, Saratoga pioneered private eqUity and will be a pioneer again

aS the firSt private eqUity firm to go pUblic.

By Ulisari Eslita


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juNE 2013 FORBES INDONESIA | 19WorldMags.netWorldMags.net

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saratoga capitalprivate money

with global private equity giant TPG). Other international firms have also taken notice of the opportunities in Indonesia, including U.S. giants KKR and Carlyle. Gulf investor Abraaj has become active in doing Indonesian deals. U.S. firm CVC has taken control of Matahari, the largest department store chain. So the pressure is on Saratoga to raise its game. After it delivered Adaro Energy, Tower Bersama and Provident Agro for IPOs in 2008, 2010, 2012 respectively, Saratoga recently brought Mitra Pinasthika Mustika to IPO stage last month. The listing raised $150 million at price of Rp 1,500. “MPM is our new baby. After three years of investing in MPM, its total assets have tripled,” says Sandiaga.

The late William Soeryadjaya (Edwin’s father) founded MPM in 1988 while he was with Astra Inter-national. Early last year, MPM ac-quired car rental company Austindo Rent and a multifinance company Austindo Finance from palm oil ty-coon George Tahija. The acquisition transformed MPM into a diversified automotive company with four lines of business: motorcycle retail, mo-torcycle components, lubricant oils

and motorcycle financing. Presently, Saratoga controls 31% of MPM, while its private equity partner, Affinity Equity, controls 14% of the shares.

Sandiaga feels Saratoga has benefited from being early to capitalize on Indonesia’s emergence as a major economy. Indonesia is enjoying a period of political stability, economic growth is above 6.5% per year and the country boasts rising domestic consumption. It remains rich in natural resources, and credit rating agencies Fitch and Moody’s now rank Indonesia’s sovereign debt as investment grade, which is encouraging capital inflow.

“I am very passionate about in-vesting in Indonesia. We have done our homework to identify and exe-cute strategies that we have applied in our firm’s missions and visions,” says Sandiaga. This outlook helped mo-tivate Saratoga to buy the bankrupt Mandala Airline in 2011. Mandala was founded in 1969, a spinoff from an In-donesian military aircraft operation. Cardig International acquired the air-line in 2006 for $34 million and sub-sequently sold a 49% stake to Indigo Pacific Partners. After running up ma-jor debts, Mandala collapsed in 2011,

analyzing The PorTfoliosaratoga’s companies, now 15 in total, can be divided into three broad areas of consumer, infrastructure and natural resources.

Consumer mitra Pinasthika mustika* distributor for honda motorcycles in east java and east nusa tenggara

hotel dharmawangsahospitality sector

tower Bersama* country’s second largest independent tower operator

medCo Power power-generating company, focuses on clean energy

tri wahana universalpalm oil refinery

lintas marga sedayaan infrastructure company, constructs and operates cikampek-palimanan toll road

seroja investments*shipping company

iForte telecommunications

mandala airlines transportation

Provident agro*palm oil plantation with 11 plantations in sumatra, kalimantan, sulawesi

agro maju rayapalm oil company with plantations in aceh, south sumatra and south kalimantan

adaro energy*major coal producer

interra resourCes*oil and gas exploration

amara Plantationpalm oil plantation

FrP ProduCtsenergy

inFra-struCture

natural resourCes

Source: Saratoga Investama Sedaya*Listed companies


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BSD JUNE 2013 1 5/14/13 1:27 PM


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saratoga capitalprivate money

Big Birthday Presentand Saratoga and Singapore’s state-controlled discount carrier Tiger Air-ways came in with a turnaround plan. Saratoga took a 51% stake in the air-line, while Tiger got 33%, and credi-tors approved a debt-to-equity swap for the remainder. Mandala resumed operations in early 2012.

Currently, Mandala operates seven Airbus A320 planes and wants to buy 18 more worth about $1.6 billion in order to quadruple the size of its fleets by 2014. Mandala also is eyeing routes that another defunct airline, Batavia Air, left after it was grounded this January. “Buying Mandala generated a huge debate in our investment committee. We had until then only invested in areas we really know well, such as coal, nickel, telecom or consumer services. But Indonesia is an archipelago so having an airline is promising,” says Sandiaga. Saratoga has also been in the press lately for another foray into financial services. According to reports, Saratoga is keen to buy around 40% of listed Bank Bukopin.

Saratoga is currently committed to invest in three sectors: consumer products and services, infrastructure and natural resources, which they consider the key drivers of Indone-sia’s growth. Natural resources were the mainstay of the first fund. Unfor-tunately, coal prices have sharply de-clined after a major runup in the last few years. Adaro listed at Rp 1,100 per share in 2008, and hit a high around Rp 2,500 in early 2011. It now stands around Rp 1,000, virtually unchanged. Its palm oil producer Provident Agro listed last year at Rp 450 and now trades around the same level as well.

Saratoga’s infrastructure plays are the polar opposite. Tower Bersama’s share price is up 180% from its listing price of Rp 2,025. The firm has more than 8,000 telecommunication sites, serving more than 13,000 tenants and is the second largest tower company in the country after Sarana Menara, to

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sandiaga shoUld gEt a memorable birthday present this year. saratoga should go public around the time he will celebrate his 44th birthday on june 26. he comes from a middle-class family—his father razif halik uno was a former executive at cal-tex oil and his mother mien rachman uno operated a philanthropy and started her own for-profit school.

sandiaga, who goes by sandi, got his ba in busi-ness from the Wichita state university in 1990 and an mba from george Wash-ington university in 1992. in 1994, he worked for the u.s.-based mp group hold-ing ltd. as an investment manager. the next year, he moved to nti resources ltd. in canada and worked as the executive vice presi-dent. unfortunately, when the global crisis hit the company in 1997, sandy got laid off and he had to return to indonesia.

sandiaga says being unemployed was the turning point in his life. he decided to become an entrepreneur, and focus on investment. “i think failure motivates people,” he has said. the same year, sandiaga decided to set up his own business. he co-founded a boutique investment firm recapital advisors with his high school friend, rosan roeslani. then, in 1998, he and edwin soeryadjaya founded saratoga capital. at the time he says he had a lot of “credit card debt” to make ends meet. at one point, he had to

accept used cars as partial payment from one cash-strapped client.

these days sandiaga gets high marks as an investor. “sandiaga has a good personality, and he’s smart, particularly in finance-related things, yet also humble. i think there are only a few like him in the country,” says adaro’s garibaldi. sandiaga himself claims that saratoga’s success was not on his radar screen. “i never dreamt i would be on a Forbes list,” he said a few years ago at an international conference in Washington. (sandiaga, while on previous lists, was not included on the 2012 list of the 40 richest indonesians as his net worth, though over $500 million, was still below the $730 million minimum for the list.)

after succeeding in business, sandiaga has started to take a larger role in national affairs. he is a member of the national economic committee (ken) and used to lead the micro, small and medium enterprise and coopera-tives division of the indonesian chamber of commerce and industry (kadin)

from 2004-2012 and was also the former chairman of the indonesian young entrepreneurs association (hipmi) from 2005-2008. in 2010, he was in the race to become head of the kadin but lost to current head suryo sulisto.

he is known as a devot-ed marathon runner. before a big race, he employs a disciplined training regime, rising at 4:30 for morning prayers, then taking a run immediately afterwards before starting his workday. using this method, he was fit enough to complete the new york marathon in 2011, getting sponsorship for the run that raised over $100,000 for charity. in 2012, he was one of the torchbearers for the sum-mer olympics in london.


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E&Y JUNE 2013 SETENGAH HAL EDIT.pdf 1 5/27/13 10:37 AM

owned by the Hartonos, the wealthi-est family in the country. “We have benefited from having Saratoga as our major shareholder. It means we can easily get loans from internation-al financial institutions with a very flexible terms and conditions, and also at competitive rates. Also Sarato-ga also gives us good access to the in-ternational investment community,” says Tower Bersama President Direc-tor Herman Setya Budi. Herman adds that Saratoga contributed not only money, but also helped with manage-ment, installing key executives, and building a strong board of directors and board of commissioners.

Earlier this year, Saratoga ac-quired a majority stake in electricity producer Medco Power Internation-al for $112 million from its parent group Medco Energy. In addition, Saratoga is also in the process of

“this is the right time for us to transform after 15 years of operations.”

share swap deal with Surya Semesta Internusa (SSIA), belonging to Jo-hannes Suriadjaja, who is a cousin of Edwin (but uses a different spell-ing of his surname). Saratoga plans to swap a 20% stake in Lintas Marga Sedaya, which owns the concession to build and operate the Cikampek-Palimanan toll road, for a 35% stake in Nusa Raya Cipta, which is SSIA’s subsidiary focused on construction.

For the past three years, Sandiaga explains, Saratoga has tried to fulfill

the triple bottomline of people, planet and profit. “Each time we are planning to invest, profit is not the only point to be considered. We have to think about the social impact— how can this investment create jobs—as well as the environmental impact and the governance impact,” says Sandiaga. He is hoping this commitment will help Saratoga expand even further. He notes that the government would like to make Indonesia into one of the world’s 10 largest economies by 2020 from its current position in the top 20. “If we want the economy to grow, we need capital to make it happen. We have the stock exchange and the banks putting in money. Private equity is not only putting in money, but also hiring senior management to run the businesses, making strategies, and giving advice,” he says. F

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Now 80, JaNuar DarmawaN spends most of his days in his retirement home on his sixteen hectares of land known as Darmawan Park in Bogor. However, Januar is anything but retired: for the past six years he has been quietly head-ing an angel investor company and business incubator from this location. The company, named PT J Darmawan Venture Capital (JDC), is helping create young entrepreneurs.

“I always like to see people succeed and many would like to have their own businesses,” Januar says about what he does. “Many people become entrepreneurs because no company would hire them, while many smart young people who have the potential to be successful entrepreneurs tend to end up as employees. I want to change that.” His JDC is a unique blend of angel investing combined with startup incubation and mentoring.

Januar holds a PhD in Agronomy from North Carolina State University and has also taught at the Bogor Institute of Agriculture since 1960. Januar’s parents were both businesspeople—his father owned a textile factory in Juwana, Central Java, and his mother had a batik business. Januar worked in some clove plantations before joining his younger brother Hari Darmawan in his company Nutrifood. The company is best known for its brands such as Tropicana Slim, WRP and L-Men. Januar expanded his brother’s business by helping him relocate the offices from Semarang to Jakarta and his factory from Semarang to Bogor, so they could sell in Jakarta’s big market.

He also helped the company install a new management system that allowed it to become more efficient. He then went on to become the chief executive of Nutrifood from 1992 until he retired in 2003. But he was not the retiring type—with all his money and experience, he felt he should give back.

Januar says he likes to see people succeed. Even while working at Nutrifood he helped some managers set up their own companies. So Januar wanted to do a

The angel from Darmawan Park

Januar darmawan on his sixteen hectares land, darmawan Park in Bogor.

aS a SUcceSSfUl entrepreneUr, JanUar darmawan iS now helping the next generation of entrepreneUrS.

By ardian WiBisono

J Darmawan Venture capitalprivate money

similar thing. After a discussion with friends, he decided to establish an angel investment company to help fresh graduates set up their own business. Januar placed an initial capital of Rp 12 billion in JDC.

JDC does more than disburse funds. To get funding, would-be entrepreneurs first have to undergo a rigorous program. In the first year, trainees go back to school, such as learning about management and ethic and how to write a realistic business plan. The teachers are entrepreneurs who have their own businesses or are professional business instructors.

At the end of the year, the trainees have to submit their business plans for review. JDC picks the best ones for investment. In return, JDC takes 100% ownership for providing the training, funds and continued support


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down the road, although trainees get a 20% cut of any profits generated plus the option to buy shares in the company later on. For those who don’t appear to have entrepreneurial potential, JDC offers them a managerial position at an existing business. For those that make the cut, JDC invests an average of Rp 400 million per startup. To minimize costs, trainees can rent their office space and office equipment from JDC at discounted prices. The startups are located within the park.

A good number of these startups fail. If one does, JDC will give it second chance, after checking to see if the startup is worthy. If the business fails again, the founders are asked to leave the program. “Many fail not because the trainee is incapable. Sometimes there are other factors such as parents asking them to join the family business.

Some who left here still become a success in some other business,” Januar says.

However, Januar is tolerant if his trainees exhibit the right attitude. Ary Triyanto, 34, and his wife Uke Karyoke, 33, are one example. They founded and run PT Quindofood that produces food sold by other companies such as the L-Men energy bar for Nutrifood and some food for Amway. Quindofood had many failures before it became a success. First, it produced and marketed branded traditional food but was unable to maintain the standard and the quality. Marketing branded products also has high costs. “We did TV ads that cost Rp 30 million for 30 seconds,” Ary says. In 2008, he began changing the company’s business to contract manufacturing. The model worked and from there the company grew. Last year

Quindofood booked a couple hundred million rupiah in net profit but this year he’s optimistic to get at least Rp 2 billion. To reach this point, Ary’s calculates, if monetized, JDC has invested more than Rp 25 billion in Quindofood.

From each profitable company, Januar has a policy of returning 20% profit to the entrepreneur, as well as allowing them to buy

“many smart young people who haVe the potential to Be successful entre-preneurs tenD to enD up as employees. i want to change that.”

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shares as the business grows. JDC has an exit policy to let go of its ownership in the company after ten years. Januar plans to expand his effort with spinoff companies that will handle specific areas of the development process. For example, a new company PT JD Finance will deal with funding trainees and another spinoff PT JD Agro will work on all agribusiness-related companies. Going forward, JDC will focus only on training. A new venture capital company will provide funding to promising companies being developed by JDC. All of these companies will be managed under one parent company, PT Prisma, that will be run by Januar’s oldest son Herman Kwik. Soon, the next generation of angel investor will be helping the next generation of entrepreneurs. F


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iDeosourceprivate money

IN 2011, tech experts Edward Ismawan Chamdani and Andi Surja Boediman set up IT consulting firm PT Ideosource. Business was fine, but they wanted more. “Then we met some investors who suggested that we create a fund,” says Edward. That good advice led them to want to change their focus from consulting into one that both incubates and funds tech startups mid-year 2011. Its website proudly states: “Incubator and venture capital in Indonesia.” The firm’s tagline is: “Make ideas work.”

One of the first big hurdles for the two was raising funds. Many were reluctant to put money into a new and risky fund for investing in tech startups—where failure rates are high. However, after many meetings, they man-aged to raise $5 million. Today, Ideosource has become one of the leading incubation and venture capital firms for tech startups, with a portfolio of 10 investee companies. They encompass the digital industry, such as content, me-dia, e-commerce and infrastructure, and include compa-nies such as the successful online gamer TouchTen.

Ideosource has four members on its investment committee: Edward, Andi, PT Trikomsel founder Sugiono Sugialam and the former Yahoo Indonesia Country Manager Pontus Sonnerstedt. “We are open to investing seed money, funds for an early stage startup, expansion capital for a newly profitable company, even all the way up to bridge financing,” says Andi, who attended New York Film Academy and San Francisco State University.

ideoSoUrce aimS to help itS companieS grow with a combination of ventUre capital and incUbation.

By gloria haraito

make iDeaS work

toDay, iDeosource has Become one of the leaDing incuBation anD Venture capital firms for tech startups.

Ideosource takes an activist approach. It incubates some companies, and with others it is still very much hands-on, giving them advice and access to their network of contacts in the industry. It also helps in areas such as strategic partnerships, intellectual property and marketing.

One of the firm’s successful investee companies is TouchTen. The company’s Hachiko game was mentioned by Google Chairman Eric Schmidt as one of three Indonesia success stories in a 2011 speech he gave in Bali. The game was one of the top ten downloads in Apple’s App store in the U.S., Japan and Indonesia. The company now has revenues of about $50,000 a month. Ideosource committed up to $1 million to the firm.

According to Anton Soeharyo, co-founder and chief ah

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executive of TouchTen, he could have actually gotten funding from parents or relatives but preferred to get it from Ideosource. “We chose Ideosource to be our venture capital because they offered value added,” says Anton. Now TouchTen has 15 applications.

Last September to October, Ideosource held an “in-cubation audition,” probably one of the first such beauty contests held in the country. Some 122 companies made presentations to Ideosource during visits to five cities: Bandung, Jakarta, Malang, Surabaya and Yogyakarta. Out of that, the firm picked six companies—about one out of 20. The winners are able to get incubation from Ideo-source for three months plus an investment from Ideo-source, ranging from $50,000 to $100,000. Among the

winners were e-commerce firm Everindo, peer-to-peer media site KelirTV, online retailer Pasarminggu, foreign exchange site VeyronForex and fashion retailer WearFable.

Like other incubator and venture capital firms, Ideosource expects to exit from its investee companies, and use the profits to fund even more companies. Andi views venture capital as a fish pond. “We have to make the fish ponds bigger to accommodate more and more fish.”

Ideosource considers other private investors as partners in funding the company rather than competitors. “Typically, a lot of venture capital from abroad are looking for bigger investee companies. This is understandable because their cost to come here might be more expensive than smaller companies,” Andi elaborates. Fa

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andi surja Boediman and Edward ismawan Chamdani.


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SOHO JUNE 2013 PODOMORO CITY ( KIRI ) 1 5/21/13 5:35 PM


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SOHO JUNE 2013 PODOMORO CITY ( KIRI ) 1 5/21/13 5:35 PM SOHO JUNE 2013 PANCORAN ( KANAN ).indd 1 5/21/13 5:33 PM


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private money enDeaVor

endeavor iS helping entrepreneUrS bUild great companieS.

By sonya angraini

greaT enDeavor

to be successful, entrepreneurs need more than some pluck, luck and seed capital. They also need to develop virtually every other part of the business, from their own managerial skills to the technology for the company. For all but giving them the money part, the U.S.-based NGO Endeavor is dedicated to helping entrepreneurs turn a small startup into a major success.

Launched in Argentina in 1997, Endeavor now has spread to 18 countries, with Indonesia among the newest places in its network. Endeavor Indonesia office is

measuraBle imPaCt

endeavor keeps track of the impact on its entrepreneurs and economies where it operates.

endeavor entrepreneurs cre-ate jobs at rates five times faster than their non-endeavor peers. on average, endeavor companies have 39% job growth per year, while others posted 7% growth.

the average endeavor company grows revenues at a rate 2.5 times faster than the non-endeavor company.

opened in February 2012, and its first office in Asia. Why Indonesia? “Why not? It’s the right organization in the right place,” says Endeavor Indonesia Managing Director Sati Rasuanto, who previously worked as chief of staff to Gita Wirjawan when he ran the Indonesia Investment Coordinating Board (BKPM).

Indonesia fits the profile where Endeavor feels it adds the most value. It looks for growing markets where entrepreneurs are starting to emerge. Sati adds that entrepreneurship is taking off in Indonesia but challenges such as limited management expertise and access to capital are hindering its development. Endeavor wants to help overcome these challenges.

“There’s not really any organization that focuses on scaling up businesses. Most are focusing on giving awards to startups,” Sati says. Endeavor Indonesia is looking for what it calls “high impact” entrepreneurs, meaning a select few whose businesses have the potential of wide-reaching effects on the local or even global economy. a

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To get support from Endeavor, the entrepreneurs and their business are put through a rigorous screening process. First to be evaluated is the entrepreneur. What is the entrepreneur’s track record in terms of executing their business plan? Second is their potential as a role model. Does the entrepreneur have a good reputation? Is the entrepreneur’s business going to have a positive impact on its country and can the entrepreneur be a mentor and role model for other entrepreneurs in the future?

The business is also scrutinized, such what is its growth potential and long-term sustainability. “If an entrepreneur engaged in fashion design wants to be Indonesia’s answer to Zara then he’s the one we’re looking for,” says Sati. Even if he has great designs, if he is happy with one store, then Endeavor will take a pass.

enDeaVor picKs six to eight entrepreneurs each year, selecteD from an initial group that can incluDe 1,000 companies.

best for their companies.” Over the past 12 months, these mentors have spent a total of 110 hours mentoring the entrepreneurs, with another 40 hours coming from other mentors outside Indonesia. The four entrepreneurs under the program over the last year have each gotten an average of 38 hours of mentoring.

Endeavor Indonesia is not a private equity or venture capital firm. It asks for no money from their entrepre-neurs and makes no investment in the companies—it is dedicated solely to helping the entrepreneurs grow their businesses. It can, however, help entrepreneurs find fi-nancing, which sometimes can come from other Endeav-or entrepreneurs. To pay for its activities, Endeavor gets its operating funds from its board of directors, which includes entrepreneurs such as Ciputra group Chairman

Ciputra, PT Gunung Sewu Kencana Chairman Husodo Angkosubroto and Triputra founder Theodore Rachmat. Endeavor Indonesia oper-ates on a budget of $200,000 per year, with the biggest chunk of that for salaries for six full-time staff and expenses related to the search and se-lection process.

The board members are committed to fund Endeavor for five years, started from 2011. Going

forward, Sati hopes that some of the Endeavor Indonesia entrepreneurs will be able to “graduate” to take a position on the board, creating a virtuous cycle of support and then giving back. Indonesia is its first country in Asia but not its last, as Endeavor will soon expand to Malaysia, the Philippines, Thailand and Vietnam. F

3 // Vincent Iswaratiosoindomog

vincent’s firm is also working on solving the problem of secure online payments. it is working with the majority of indonesia’s game distributors.

here are the three other endeavor entre-preneurs and their companies. globally, endeavor has a total of 700 entrepreneurs and more than 3,000 mentors.

threesome

1 // Aldi Haryopratomorekan usaha mikro anda (ruma)

aldi created a way for 4,000 small, traditional shops to buy and sell prepaid minutes via sms. now expanding into bill payment and mobile banking.

2 // Niki Luhurkartuku

niki’s firm helps solve the problem of secure online payments, and can build “one-stop” end-to-end systems for merchants, banks and others to process electronic payments.

Endeavor Indonesia is already supporting four entrepreneurs. One of them is Sugianto Tandio. He owns Tirta Marta, a pioneer in biodegradable plastic that uses a proprietary technology that took Sugianto ten years to develop. With this technology, he quickly took control of 80% of the market for shopping bags used by major retailers. “The selection process is rigorous,” recalls Sugianto, who joined the Endeavor network early this year. Generally, Endeavor picks six to eight entrepreneurs each year, selected from an initial group that can include 1,000 companies. Endeavor Indonesia expects to have seven more entrepreneurs by the end of this year and it is now reviewing around 30 candidates. Endeavor has a stringent, multistep process to pick its entrepreneurs, and the selection process can take between three months to 1.5 years before the final decision is made. The process includes submission of company information plus many rounds of interviews conducted by Endeavor staff and mentors both in Indonesia and overseas, and even site visits to the companies.

After being selected as an Endeavor entrepreneur, they are paired with mentors, who are senior businessmen, entrepreneurs or other professionals. “Most of the problems are about company management, business rules and dealing with contracts,” says Cyril Noerhadi, president director at private equity firm Creador who is one of 30 mentors in Indonesia. “We share relevant information and experiences so each candidate can discover what’s a

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private money guest column

In 2011 there were around 55 million micro, small, and mid-sized enterprises (MSMEs) that absorbed around 97% of the workforce in Indonesia,

according to Ministry of Cooperatives and SME data. Despite MSMEs be-ing a major contributor to job creation and growth in Indonesia, it is estimat-ed that more than 60% of small busi-nesses in Indonesia are still not served by the country’s banking system.

Where do these businesses get their financing? Most are getting funding from friends, families and less formal lending institutions. Though these sources’ lending criteria may be less stringent compared to that of banks,’ these sources come with limi-tations such as higher interest rates.

To encourage more participation from banks in serving the MSME segment, the Bank of Indonesia recently issued regulations requiring banks to allocate 20% of their loan portfolios to MSMEs. The regulation will be implemented in several phases. From now to 2014, banks will be given time to build their capacity, and MSME lending can be conducted

growing mSmeS

Data from the BanK of inDonesia shows that loans to msmes haVe actually Been increasing in the past few years.

on a best effort basis. From 2015 onward, each bank will have to have allocated at least 5% of their loans to MSMEs, increasing by 5% each following year until the 20% target is achieved in 2018.

Data from the Bank of Indonesia shows that loans to MSMEs have ac-tually been increasing in the past few years. Total lending to MSMEs was around 552 trillion by December 2012, up 40% from around Rp 394 trillion as of December 2010. On the other hand, the Non-Performing Loans (NPL) ratio of MSME loans has actually fallen, to around 3.4% in December 2012 from around 4.2% in December 2010. These trends are an indicator that NPLs for the MSME segment are still at manageable levels and that they can be seen as a good driver of loan growth in the banking system.

The Bank of Indonesia actually allows banks to also provide loans to MSMEs through other eligible orga-nizations such as cooperatives or mi-crofinance institutions. By involving these partners, banks that currently do not have adequate infrastructure to serve MSMEs can reduce the costs

and mitigate risks on NPLs in satisfy-ing this new regulation from the Bank of Indonesia.

In addition to this new regulation from the Bank of Indonesia and hope-fully more pro-growth regulations from the government in the near fu-ture, Indonesia definitely also needs initiatives and innovation to support the rise of entrepreneurs. Technol-ogy-based innovation, especially through Internet, can be used to over-come time and distance barriers and play a pivotal point in providing im-portant support such as access to cap-ital and capacity building for MSMEs. Some examples of such enabling innovation are online peer-to-peer lending platforms, online market-places and online learning platform where the general public and relevant stakeholders can participate in sup-porting entrepreneurs. F

andy lavEr sirait is the investment and partnership

coordinator at the mekar entrepreneur netWork

(WWW.mekar.biz). his core is investment, strategic planning

and entrepreneurship.

creditworthynpl levelS have fallen even aS loan amoUntS have riSen.

nPl ratio:

MsME loans (rP Billion)

dECEMBEr 2012: 552,226

dECEMBEr 2011: 479,886

dECEMBEr 2010: 394,298

dECEMBEr 2012: 3.4%

dECEMBEr 2011: 3.6%

dECEMBEr 2010: 4.2%

Source: Bank of Indonesia


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INTEL JUNE 2013 EDIT 1 5/21/13 10:27 AM


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private money quVat

IN 2005, partNers Thomas Lembong, Bratanata Per-dana and Soegeng Wibowo set up the Quvat private equity firm, registering it in Singapore as Quvat Management Pte. Ltd. in 2006. While some private equity firms specialize in investing in one sector, say tech or mining, the trio are open to any sector.

Their focus, instead, is doing mid-market private equity, which typically take stakes in small to midsized companies. “We want to be as strong as possible in the mid-market space because we believe that’s what the industry needs right now,” says Tom, who at 42 is the founder and managing part-ner of the firm. Quvat’s smallest investment can be $5 mil-lion and go as high as $75 million. It also has a regional man-date, investing only in Indonesia, Malaysia and Singapore.

The trio—all Indonesians—have done a wide range of investments, including leveraged buyouts, control buy-outs, growth equity and greenfield. In some cases, they don’t invest in equity, but take a stake wholly in debt. For example, around the time of the global financial crisis of

Taking ProfiTS from The miDDleqUvat private eqUity takeS a “beSpoke” approach to mid-market inveSting.

By gloria haraito

thomas lembong and Bratanata Perdana.

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2008, Quvat bought Garuda Indonesia bonds paying 23%, and state utility PLN bonds that offered 18%. While others saw these as risky, the Quvat trio figured the chance of de-fault was small (and they were right). “We are really quite expert in lending and fixed income. Investing in distressed bonds can make you a lot of money,” explains Tom.

As with many private equity firms, they look to have a five to 10 year term for their investments, and usually don’t take majority stakes. However, Tom says Quvat is doing “bespoke” private equity, as every deal has a unique structure. Investments can often be a mixture of equity and debt. With this combination, Tom says Quvat can improve liquidity and payment to partners, from the debt repayments. They like to make regular payments back to the limited partners as much as possible.

Tom declines to give Quvat’s specific IRR but does say it is in line with the industry’s IRR of about 23% per an-num. It charges a fee of 2% of committed capital, plus 20% of profits—a standard fee structure for private equity. One of the most important elements, says Tom, is to control your risks. “We’re focused on the downside,” he says.

Tom and Brata first met while working at the Indo-nesia Bank Restructuring Agency (IBRA), when Tom was there from 2000 to 2002. Both had international degrees, Tom with an BA from Har-vard and Brata with BA in business from Queensland University of Tech-nology in Australia. Tom worked in the asset management division. In effect, his job was similar to private equity, helping sell off assets held by IBRA to investors. Tom and Brata later worked for U.S. private equity firm Farallon when it took control of Bank Central Asia in 2002. The third founder Soegeng Wibo-wo, a Brown University graduate with a math degree, had worked for consultancy McKinsey and coal firm Adaro be-fore joining with Tom and Brata in founding Quvat. Tom says that among the three, he is the “talker,” while Brata is the “doer,” and Soegeng is the “thinker.”

Quvat has two funds and a total of $500 million, with its first fund, Quvat Capital Partners I, established in 2006 and holding $150 million and Quvat Capital Partners II established in 2008 and holding $350 million. Quvat is currently invested in 15 companies, in which the firm has already exited from five of them. The firm has about 25 professionals, most based in Jakarta working for Principia, a portfolio servicing company that does research and other work for Quvat’s investments. This year, the trio intend to add one or two new companies and cash in some of their current investments, as the first fund is reaching maturity.

In its early years, the firm had five partners. In 2010, the partners had raised $205 million by June for a third

fund, only to suffer the loss in August when partner Tameen Ebrahim decided to retire—known as a “key man” departure. “We did not realize it at the time, but in PE industry etiquette, that is a serious blunder. We thus decided earlier this year to suspend our third fund,” Tom wrote in a published commentary in 2011. Another partner, Winston Batanghari, left in 2010 to manage Japanese financial firm Mizuho’s private equity outfit.

Given the risks inherent in private equity, Quvat has seen a few investments go sour. It invested in Cantara Global, an outsourcing company, set up around the time of the global financial crisis that started in 2008. As most of its revenues meant to come from the U.S., business dried up and Quvat later exited by selling Cantara to an Indian outsourcing firm.

The majority of the time, however, Quvat does well with its investments. One good example is a greenfield investment, in which Quvat helped launch Blitz Megaplex, the first cinema chain to compete with market leader 21 group. The experience was “incredibly painful,” says Tom, as ticket prices first plunged when competition was finally introduced into the market, while sales remained

stable. But soon lower ticket prices attracted moviegoers and sales rose to compensate for the lower margins.

Quvat placed its funds into PT Graha Layar Prima (the firm won’t reveal the actual amount) but Tom notes the structure was a mixture of equity and debt. Now movie ticket sales are growing at 20% a year, and Quvat claims to have made a very

healthy profit on its investment. Tom says consumer investments such as Blitz continue to look good as the growth of the middle class fuels domestic consumption.

The trio is also willing to be “bespoke” in its exits. Many private equity firms look to exit via an IPO or a trade sale, but Tom sees a third possiblity: sales to other private equity firms, possibly those new to the market. In April, U.S. private equity giant Carlyle hired U.S. citizen Rajiv Louis, the former head of Swiss banking giant UBS’s Indonesian office, to set up an office in the country. Others such as U.S. private equity giant KKR are scouting for deals. “I believe we can be a bridge for smaller companies to go to the bigger funds,” says Tom.

While Quvat has a head start in the private equity industry, Tom notes that many others are now being drawn to Indonesia’s attractive investment environment. For those looking at Indonesia, Brata has some advice: “In Indonesia, people are quite worried about the country and the legal structures. Indonesia is very difficult to get in but once they find the right partner and right vehicle, Indonesia is actually quite okay.” F

tom says quVat is Doing “BespoKe” priVate equity, as eVery Deal has a unique structure.

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private money east Ventures

east VeNtures pte ltD. calls itself the first venture capital firm to invest in Indonesian Internet start-ups. The company has a highly inter-national pedigree. It was founded by two Japanese and two Indonesians, although one of the Japanese was originally Indonesian (but had a Japa-nese grandfather) who took Japanese citizenship. The company is based in Singapore but invests its money here.

Established in 2009, East Ven-tures’s two Japanese partners are Batara Eto, the former Indonesian who became chief technology offi-cer and co-founder of Mixi Inc., the biggest social networking site in Ja-pan. Batara was later joined by Taiga Matsuyama, an experienced Inter-net investor. The two Indonesians are Chandra Tjan, a former banker at Credit Suisse and Citigroup, and Willson Cuaca, an expert in mobile application development with 14 years experience.

Their mission? To fund Indone-sian Internet companies with seed capital early in their growth when they most need the money and valua-tions are reasonable. “We saw that In-donesian startups have potential and there were no companies seriously developing Internet startups at that time,” says Willson.

Using this strategy, they have been able to buy up to 30% of 26 Internet startups for as little as $50,000 to $500,000, which implies that the firm has invested no more than $13 million (the firm declines to discuss its actual total investment). Compare those valuations with those of U.S. startups, where early valuations in the millions are routine. They established the company in Singapore because most of the founders were based there and it was easier to set up a company there, where it has three directors, Batara, Taiga and Willson. The ultimate shareholder is East Capital Growth Ltd., a BVI holding company.

eaSt ventUreS iS pioneering Seed inveStmentS into internet StartUpS.

By yEssar rosEndar

early BooSTer

Willson Cuaca

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their mission? to funD inDonesian internet companies with seeD capital early in their growth.

Aside from its current portfolio, East Ventures plans to add three more firms this year. Its first investments were in Tokopedia, an e-commerce website, followed by Urbanesia, and electronic magazine newsstand Scoop (which was founded by Willson)—those three investments were done in 2010 (Forbes Indonesia is a client of Scoop).

The firm has already had two successful exits. The first exit was discount site Disdus.com, which discount seller Groupon acquired for an undisclosed amount in April 2011, just several months after East Ventures invested in December 2010. That exit was followed by Urbanesia, an online city directory that was snapped by the Kompas

Gramedia group in January 2012 for an undisclosed amount. Of its remaining 24 firms, 18 are still in business and six have gone out of business.

In 2010, Willson on his own also founded the Apps Foundry, which developed Scoop. Currently Apps Foundry has total funding worth $3.4 million, led by East Ventures. Indonesia’s largest media group, Kompas Gramedia, early this year raised $2.4 million in a Series B round of funding for the company. This round of funding will go towards Apps Foundry’s expansion plans to the rest of Southeast Asia such as Malaysia, Thailand and Vietnam.

East Ventures only focuses its investment in Internet startups in the consumer, Internet, and mobile segments as it believes that it has the largest untapped potential market considering the country has the fourth largest population in the world, a growing middle class and increasing Internet users.

Indonesia’s boom is expected to create a large pool of Internet consumers. About a third of the population—or 73 million people—will have access to the Internet by the

currently one of east ventures’s portfolio startups, sribu.com, is starting to mull expansion outside indonesia. sribu.com is a crowd-sourcing company that provides designs for its clients, ranging from logos to brochures and t-shirts. established by ryan gondokusumo in july 2011, designs come from freelance designers in a contest scheme where the sribu.com client only pays for the design it likes, resulting in a project receiving as many as 100 potential designs.

last april sribu.com reached a milestone of attracting over 25,000 designers that had produced over 135,000 designs for sribu.com’s clients. the company also had paid $100,000 in total to the designers in its system.

east ventures invested in sribu.com in february 2012, and its revenue has grown over 400% since the investment (ryan declines to disclose the exact figure) and it has served over 600 clients. before east ventures came in, sribu.com had only 30 clients.

according to ryan, east ventures provided more than just money. “east ventures gave invaluable advice to make sure we went in the right direction in getting traction and growing sribu.com into an established company. in addition, east ventures has extensive networks across asia and introduced us to many regional companies that eventually established partnerships with sribu.com. this was extremely important for us in our mission to expand into a regional market,” ryan says.

end of this year. That penetration rate is expected to climb to 40% by 2016, accounting for 103 million Internet users, according to a report from U.S. Internet market research firm eMarketer.

According to Willson, investing in startups in Indonesia is harder than in other countries. The main reason? The Internet ecosystem is still in its own growth phase. In other countries such as Singapore where the market is relatively mature, a startup can grow faster. The life cycle of a startup takes longer in Indonesia, he says.

He also notes that mentoring can be as important as money, due to the absence of both Internet and entrepreneurial experience in the country. East Ventures’s portfolio shows that of its 47 active founders, about half are professional, nine are fresh graduate and only 12 have previous experience as entrepreneurs. Willson’s mentoring focuses on sharing best practices from overseas companies and key performance indices that should be maintained. A successful startup has to have three things right: people, product, and potential (of the market), he says. East Ventures always recommends its portfolio companies to focus first on the local market. F

design By sriBu.Com

how sribu.com works

Brief receive Choose

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INDoNesIa’s moNthly domestic air passenger traffic is growing at 16% a year—more than double the annual rate of the country’s overall growth. The number of those flying overseas is also climbing, on average 8% a year. Jakarta’s main international airport Soekarno-Hatta, is one of the ten busiest airports in the world, handling close to 60 million passengers a year, roughly double the passengers it handled in 2008.

One company is profiting mightly from this growth: PT Cardig Aero Services (CAS), which offers ground services including check-in, gate maintenance, and warehousing to many of the airlines at Soerkarno-Hatta and over 20 other major airports—as well as having a cargo and ground handling joint venture with Singapore Airport Terminal Services. It also has engineering services, in a joint venture with Singapore’s SIA Engineering. Its joint ventures with Singapore companies means it has some highly professional partners.

CAS is also a prime example of the benefits of private equity investments in the country. One of CAS’s two main shareholders is Baring Private Equity Asia. “CAS gives us exposure to the airline industry and to the country’s GDP,” says Rachmat Kaimuddin, vice principal of Baring Private Equity Asia, which has had a 42% stake in CAS since it sold shares in a 2011 IPO. Baring Private Equity Asia’s stake in CAS is its first investment in an Indonesian company since it was spun out of its parent, ING Baring in Hong Kong in a management buyout in 2000. Baring also placed a commissioner on the board. Another 44% of CAS is owned by PT Cardig Asset Management, a holding company for the family of CAS Chief Executive Diono Nurjadin, who started the company in 1984 when Soekarno-Hatta opened.

private money carDig aero serVices

for a look at how private eqUity helpS companieS, conSider cardig aero ServiceS.

By JEffrEy hUtton

Serviceon The fly

In the domestic market, Garuda Indonesia and local low-cost carriers tend to have their own inhouse firms, but for all international carriers, CAS is the default service provider. As such, the company will expand along with the overall growth of the sector.

One of its most interesting services is catering, providing inflight meals that are served aboard airlines as they come through Indonesian airports. It is now providing about 8,000 meals a day for air passengers, and operates at full capacity. But an even bigger number of meals, 21,000, are being prepared by CAS and served at mining sites. CAS is also looking now at expanding its catering operations into industrial estates, to feed all the employees working in them. The company is developing a kitchen in Karawang that will have the capacity to prepare 15,000 meals a day. Two more similar kitchens for industrial estate clients are in the works. As an OSK securities report on the company is headlined: “Growth powered by empty stomachs.”

Which is not to say its core airports business is a lag-gard. “Air travel is a necessity,” says Diono. “People need to travel. No matter what happens to the individual airlines, someone will be there to transport people and cargo.” Af-ter the company’s initial public offering in late 2011, its share price has nearly doubled to a recent Rp 830. From 2011 to 2012, its net income grew 31% to Rp 189 billion on revenues that rose 25% to Rp 1 trillion. CAS reportedly ex-pects a similar growth rate for this year as well.

CAS’s business model is not without some risks: its fortunes are in the hands of government bureaucrats. Even though CAS itself is privately owned and run, it does operate in Indonesian airports, of which all major commercial ones are owned by one or the other of the country’s two state-owned airport authorities: PT Angkasa Pura 1 and PT Angkasa Pura 2.

To lessen its dependence on the state-owned airports, CAS is mulling to grab a slice of a rapidly growing market in regional airliner maintenance business. The strict safety rules that all airlines operate under translate in huge expenditures on regular maintenance, testing and servicing to stay up to code. Diono says the company has identified a potential location at Hang Nadim airport on Batam for this business.

The proximity to Batam to Singapore makes this location ideal, especially for low-cost carriers, says Diono. “The venture is a high priority because we have the opportunity in Batam at the moment,” Diono says.“ We’re looking at an existing hangar that we’d like to acquire.” As Singapore is a relatively high-cost hub, CAS could offer similar services that take advantage of the lower costs in Batam—ideal for low-cost carriers always hungry to find new ways of saving money.


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Rachmat says that its new business venture may be a huge capital outlay and is not without risks. Even so, with the low cost carrier market expanding at a fast clip in the Asian region, CAS is betting there will be more than enough business to feed both incumbents and new entrants into the market. “If there’s a cake that’s not being eaten, then why not eat it?” says Rachmat. Fa

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“people neeD to traVel. no matter what happens to the inDiViDual airlines, someone will Be there to transport people anD cargo.”


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Australia ■ China ■ India ■ Italy ■ Malaysia ■ South Africa

According to The New York Times the world’s top CEOs are more likely to hire Monash graduates.* Find out why.

CRICOS Provider: Monash University 00008C

* The New York Times, 25 October 2012

monash.edu/why-monash

13P

-404

In a recent study published in The New York Times*, more than 4500 leaders from the world’s most successful companies rated Monash the best Australian university and number 32 in the world, from which to hire graduates. So it’s no surprise our graduates enjoy one of the highest rates of employment in the country, making a Monash degree your first step toward reaching great heights. If that’s an advantage you’d like, make Monash your first choice.

Find out why monash.edu/why-monash

facebook.com/Monash.University

twitter.com/MonashUni

MONASH IKLAN (1) JUNE 2013 .pdf 1 5/15/13 5:54 PM


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Australia ■ China ■ India ■ Italy ■ Malaysia ■ South Africa

According to The New York Times the world’s top CEOs are more likely to hire Monash graduates.* Find out why.

CRICOS Provider: Monash University 00008C

* The New York Times, 25 October 2012

monash.edu/why-monash

13P

-404

In a recent study published in The New York Times*, more than 4500 leaders from the world’s most successful companies rated Monash the best Australian university and number 32 in the world, from which to hire graduates. So it’s no surprise our graduates enjoy one of the highest rates of employment in the country, making a Monash degree your first step toward reaching great heights. If that’s an advantage you’d like, make Monash your first choice.

Find out why monash.edu/why-monash

facebook.com/Monash.University

twitter.com/MonashUni

MONASH IKLAN (1) JUNE 2013 .pdf 1 5/15/13 5:54 PM

special advertising section

Global opportunity

Monash is Australia’s largest university. With more than 270,000 graduates worldwide, campuses in Malaysia and South Africa, an education and research centre in Italy, and joint-research academies in China and India. Monash is a global university with the ambition and ability to address global challenges.

It enjoys strong links with seven Indonesian institutions including Universitas Pendidikan Indonesia (UPI), University of Indonesia, and Universitas Gadjah Madah. Activities include joint research projects, co-supervision of research students, a teaching and learning centre in Australian studies, and development projects in sustainability.

Significant research breakthroughs

Monash University researchers are leaders in areas such as IVF and reproduction, road safety, malaria and influenza treatment, and stem cell research. Monash researchers developed a single, oral-dose cure for malaria in 2004, effective in laboratory conditions. Today, the new drug is in the second phase of clinical trials on humans and promises to be cheap, easy to manufacture and quick to administer.

Reputation

Monash is in the top 100 universities in the Times Higher Education World University Rankings and ranked 61 for the QS World University Rankings.

Many Indonesians choose to undertake their university study in Australia due to high education standards and an appealing environment. They are joined by more than 400,000 international students from 200 countries each year drawn by Australia’s high quality of life and natural beauty.

Monash University in Melbourne is the youngest member of the Group of Eight (GO8)–a coalition of Australia’s most prestigious universities –has approximately 55,000 students enrolled at their Melbourne campuses. Over 13,000 come from overseas with 9000 from Indonesia–the largest group of Indonesian students among the GO8.

As well as undergraduate, postgraduate and research programs, Monash also offers pathway programs delivered through Monash College, which provide alternative ways to university enrolment.

Monash is located in Melbourne, recently voted the world’s most liveable city for the second year in a row. Students can safely pursue the learning that most interests them, and during their course gain valuable life skills from studying and living in a culture where they use English every day.

A Monash degree is recognised around the world, so graduates can explore career opportunities anywhere they choose.

MONASH ADVERTORIAL.indd 1 5/21/13 3:54 PM


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private money


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Once the undisputed master of venture capital, John Doerr of Kleiner Perkins Caufield & Byers got

burned in green tech and whiffed on social’s big hits. With a renewed focus on digital, Doerr is fighting to

return to the top of Silicon Valley’s greatest game.

Flipboard recently unveiled a new version of its successful tab-let magazine app as the entire staff stood around their Palo Alto, Calif. office gawking at the traffic numbers. As the needle starts moving, the room gets giddy, and the few dozen employees gather for a group snapshot. In the middle of the scrum: John Doerr, the

61-year-old billionaire venture capitalist who for years was the undisputed king of Silicon Valley, a Flipboard T-shirt over his button-down.

Doerr has been Flipboard’s champion. His legendary firm, Kleiner Perkins Caufield & Byers, is the company’s biggest backer, and Doerr went so far as to introduce Flipboard cofounder Mike McCue to Steve Jobs a few weeks before his product launched on Apple’s App Store, to great fanfare, in 2010. “I thought he was going to rip it to shreds,” says McCue. “But instead we got into a fascinating conversation about the state of journalism.” Despite Doerr’s trademark roll-up-the-sleeves advocacy, Flipboard is one of the precious few hits he’s backed lately. On this year’s Forbes Midas List of tech’s top investors ranked by the size and volume of big deals, Doerr has fallen from No. 12 to No.

By ConniE gUgliElMo and toMio gEronPhotograPhs By EriC MillEttE for forBEs

the Kingwants his

throne BacK


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26 (see complete list, p. 46). He hasn’t seen the top ten since 2009.

And Kleiner, a 41-year-old firm known for backing some of tech’s biggest IPOs, missed getting early into Facebook, LinkedIn, Groupon and Zynga. In 2012 it was virtually a no-show on the roster of firms with sales or IPOs of venture-backed companies worth more than $200 million. Sequoia Capital led the way with nine. Accel had six. Greylock, five. Kleiner? Only two, and not big ones at that.

When asked how the past year has gone, he goes into reflexive spin. “Fantastic, really fantastic,” he says. But Doerr can do the math—from Netscape to Google he’s racked up enough home runs over the years to swell his net worth to $2.7 billion. He pauses before continuing and recalibrates. “It’s also been a very challenging year.”

He’s referring in part to the sexual harassment and gender discrimina-tion suit filed in June of last year by Kleiner partner Ellen Pao, Doerr’s for-mer chief of staff. He also readily cops to the firm’s high-profile missteps in green tech investing. So he sat down with Forbes for what he says are his most extensive discussions ever about the firm, to discuss what’s gone wrong and how he’s righting the ship.

He also opened up his Rolodex, a raw display of power, as he quickly arranged for interviews with the heaviest of hitters, who stood ready to heap on the praise.

“I’ve known John 30 years, and he’s still the kinetic guy trying to find the next new thing,” says Bill Gates, who, Forbes has learned, is also a Kleiner limited partner. “And no, not with a 100% batting record. But better than most.” Gates credits Kleiner for introducing him to Aquion Energy, a battery company he’s subsequently invested in on his own.

“John always sees the future first,” says Google CEO Larry Page. “And he’s tenacious about pushing everyone to move faster and be one

order of magnitude more ambitious.”“Kleiner’s No. 1 competitive

advantage is John Doerr,” adds Intuit Chairman Bill Campbell, the press-shy consigliere to half of Silicon Valley. “He’s one of the great product-pickers of our time. It was what Steve Jobs was fantastic at, too.”

And so it goes, with similar kudos from everyone from Genen-tech’s Art Levinson to Google Chair-man Eric Schmidt.

But the most trenchant comment came, not coincidentally, from the youngest and newest member of this billionaire cavalcade, Jack Dorsey, of Twitter and Square.

Dorsey readily agreed when Doerr asked him to address Kleiner’s partnership in January. “John said, ‘Be extremely frank and tell us where we’re screwing up.’ ” Dorsey in turn cautioned Kleiner’s partners to be

careful about dismissing small ideas. “When you’ve only known these massive successes,” says Dorsey, “how do you know to look for these smaller things that could go big?”

The irony is that the man whose name has been synonymous with ven-ture capital throughout his 33-year ca-reer has to prove himself all over again.

John Doerr Doesn’t make many public speeches, so the few he’s given are memorable. Above them all: a TED talk in 2007 on the threat the planet faces from climate devastation. In it Doerr choked back tears, as he described a desire to create a better planet for his daughter to live in.

This fervent belief transferred to his investment strategy for the firm. Hoping not only to save the world with his personal dime, he also tried to position Kleiner to profit from it.

Trouble followed. Solar-power-

materials startup MiaSolé raised upwards of $500 million from Kleiner and others and was once valued at $1.2 billion. But the firm couldn’t make money in the face of cheaper imported panels from China. It was sold to a Chinese firm last year for just $30 million.

Still worse: luxury electric carmaker Fisker Automotive, which raised $1.4 billion in funding from Kleiner, U.S. taxpayers and investors, including actor Leonardo DiCaprio. The company was badly mismanaged and recently fired most of its staff. In March its founder resigned, and in April Congress grilled its executives, Solyndra-style, over how Fisker got its federal loans. (Doerr sits on President Obama’s jobs council, and Al Gore is a Kleiner partner.) PrivCo, a research firm that examines private companies, says Fisker may turn out to be the

“most tragic venture-capital-backed debacle in recent history.”

The other debacle for Kleiner is what it missed while focusing so heavily on green. Social, local, mobile—all were creating some of the biggest scores in the history of Silicon Valley. And just as success begets success—a fact that Kleiner has wielded to great effect for most of its history—sitting on the sidelines leads to more sitting on the sidelines. Paul Graham, founder of the Y Combinator incubator, was recently quoted as saying Kleiner is no longer at the “top” of founders’ minds, though he declined to comment for this story.

While Kleiner remains an elite firm, having to answer for itself is an unprecedented circumstance. Kleiner was founded in 1972 by part-ners with impressive tech credentials by Silicon Valley standards: Eugene

“John saiD, ‘Be extremely franK anD tell us where we’re screwing up.’ ”

private money John Doerr


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Kleiner was a founder of Fairchild Semiconductor, a pioneering chip de-signer, and Tom Perkins, who over-saw Hewlett-Packard’s early efforts in computing.

Doerr arrived at Kleiner in 1980 after a successful stint as a salesman at Intel. The St. Louis native grew up in a close-knit, middle-class family with five children. Doerr’s father, a mechanical engineer and entrepre-neur, pushed all his kids to study hard. Doerr excelled at science and got un-

dergraduate and master’s degrees in electrical engineering at Rice Univer-sity and an M.B.A. from Harvard. Soon after joining the Kleiner partnership he cemented his reputation as the Valley’s premier VC with a string of spectacular calls in tech, backing the likes of Compaq Computer, Netscape, Sun Microsystems, Amazon, Intuit and Google. He was either No. 1 or No. 2 on the Midas List from 2005 to 2009 and first appeared as a billionaire on The Forbes 400 list in 1999.

Thus it was an unusual scene in February, when Doerr and senior partner Ted Schlein went on a road show to reassure limited partners the clean-tech missteps were behind them. It was the culmination of a top-to-bottom introspection at Kleiner. After the Pao lawsuit, which “makes me very sad,” says Doerr, who stresses that Kleiner has more women invest-ing partners than any top VC firm in the Valley, the entire partnership came together off-site to define col-

WEn hsiEhKleiner partner Oversees KPCB

China and its green-tech portfolio there.

davE MorinCEo, Path

Its mobile social network is gunning

for Facebook.

John doErrKleiner partner

The mission remains the

same: funding big, disruptive ideas.

MiKE MCCUECEo, flipboard

Its magazine app for tablets aims to disrupt online

media.

tEd sChlEinKleiner partner In addition to

security deals, he helps oversee the firm’s operations.

daPhnE KollErCo-CEo, Coursera Rethinking online

education, one video at a time.

dan rosEnsWEigCEo, Chegg

Rents textbooks online and offers

other learning services.

BEth sEidEnBErgKleiner partner

Focuses on KPCB’s portfolio of life

science companies.

MiKE aBBottKleiner partner

Twitter’s former engineering boss

is among Kleiner’s new generation.

Mary MEEKErKleiner partner

The former Wall Street star leads the

$1 billion Digital Growth Fund.

the people you meet at 2750 sanD hill roaD


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lectively what Kleiner stands for and how it wants to work with entrepre-neurs and limited partners. The list covers big things (like how to do a better job servicing entrepreneurs) and small things (like not doing e-mail during meetings).

That meeting reinforced the message that Doerr delivered to the LPs: While Kleiner wasn’t giving up on green tech (its Bloom Energy fuel-cell startup could have a strong IPO later this year), it was refocusing on digital. Ask Doerr which are today’s quintessential Kleiner portfolio companies and he cites Flipboard, Square, social network Path, digital-thermostat maker Nest and online education platform Coursera, all of which he says are on track to redefine and create new industries the way

Amazon and Google did. The last four boards Doerr joined (those of Zynga, cloud-storage play upthere, Flipboard and Coursera) are all plays on social, local and mobile—the so-called SoLoMo megatrend that Doerr himself coined in 2010.

Doerr has backed this up with some key hires. Morgan Stanley’s star analyst Mary Meeker joined Kleiner in 2011 and runs its $1 billion Digi-tal Growth Fund, which has placed about 26 bets on high-profile startups, including streaming- music service Spotify, music-sharing service Sound-Cloud, online retailer One Kings Lane and Waze, a crowdsourced traffic tool. “If we’re the underdog, I like be-ing the underdog,” says Meeker. “It heightens one’s focus.” Kleiner hadn’t been dormant in this area—Doerr made an early bet on mobile in 2008 with the firm’s $200 million iFund, which returned half of its capital in 30 months thanks to the sale of portfolio

company ngmoco, as well as designat-ing $250 million for its sFund to back social companies, announced in 2010 with backing from Amazon, Facebook and Zynga.

Meeker moved quickly to play catch-up with the big social networks, buying into Facebook at a $52 billion valuation, Groupon at a $5 billion valuation and Twitter at a $3.7 billion valuation. The late moves highlighted Kleiner’s blown opportunities—early backers of Groupon have seen big appreciation, but Kleiner’s investment is already underwater, and it seems unlikely to pan out. Facebook is a modest win. Its market capitalization is hovering near $65 billion. The Twitter investment has the most promise: Doerr says Kleiner’s check to Twitter, reportedly for $150

million, was the largest the firm has ever written. “We’re going to miss some,” says Schlein, who joined the firm in 2006 and now runs day-to-day operations. “But if you can still figure out a way to make money on it for your limited partners, there’s nothing wrong with that.”

To ensure fewer misses, Doerr has made structural changes to his pipeline process. Kleiner built a system called Dragnet that tracks things like recruiting efforts and even the social media “noise” and app-store rankings around products and startups. In 2011 Kleiner lured away Mike Abbott, Twitter’s former head of engineering, to identify talented software developers. He’s helped to expand Kleiner’s recruiting database, which has surged past 20,000 names.

One of the beefs Jack Dorsey talked about to Kleiner partners in January was the need for a “simpler interface.” With 28 investing partners

spread across myriad groups, Kleiner had become too large for most entrepreneurs to navigate.

Doerr was already out to rem-edy this last year when he recruited Megan Quinn, the 31-year-old for-mer product director at Google and Square, to work the coffee shops and wine bars around SoMa, the South of Market neighborhood in San Francis-co that draws startups. The firm says its “coverage ratio,” or percentage of overall funded startups it got a look at, has risen by more than 50% in the past year.

Just as important, Kleiner changed how it greenlights deals. Around the time of its sidetrack into green tech, Kleiner decided to let working groups of partners vet decisions on invest-ments, based on the idea that smaller, knowledgeable teams could move faster. But speed didn’t necessarily turn into success, as the most experi-enced partners weren’t seeing all the deals, and the allocation mix became dependent less on planned intentions than on whether one group invested faster than another.

The solution was simple: Funding decisions are now vetted by the entire partnership, as they were for almost four decades, so that “every invest-ment is fighting for the same dollars,” says Schlein, who claims that Kleiner gets its target every four out of five times it pursues an investment op-portunity. “That’s a helluva win rate,” says Doerr.

While Kleiner has changed, this is still a firm that goes where John Doerr goes. And while he admits some of the bets on green tech were too big and too broad, he still talks bullishly about green (“the lemons ripen early,” he says of Kleiner’s failures there). In fact Kleiner tied with Draper Fisher Jurvetson in 2012 for having been in the most clean-tech VC rounds, with 25, according to the Cleantech Group.

Doerr may yet get the last word on green tech. For the $21.3 billion

“if we’re the unDerDog, i liKe Being the unDerDog. it heightens one’s focus.”

private money John Doerr


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entrepreneur in social networking hitch his startup to a firm that sat out the biggest consumer tech wave in a decade? “I asked ‘Where were you guys?’ and they were very honest,” Morin recalls. “I believed them. I guess I fell in love.”

It’s easy to fall in love with John Doerr, who, despite a mansion in the hills of Woodside, Calif. and a Gulf-stream at his beck and call, remains down-to-earth and accessible, spend-ing huge amounts of time personally coaching entrepreneurs. “We know what our strategy is,” he says, shar-ing the bowl of popcorn he enjoys at the end of each Monday at the office. “We know what our job is. We know that we’re here to serve entrepreneurs and to serve limited partners. And we genuinely like working together. I’m not going to say it’s all one great, big, happy family … but we’re all one team. And we’re all in.” F

invested in private clean-tech com-panies since 2000, there was a gross internal rate of return of 6.6% through the third quarter of 2012, according to an independent Cambridge As-sociates study of 408 venture capital and private equity funds. There was a gross total value of 1.2x on these investments. These are not terrific numbers, but they are in positive ter-ritory. Sources say Kleiner’s return on its green-tech portfolio is better than Cambridge’s numbers.

Doerr is arguably the most suc-cessful VC ever, so perhaps a more worrisome question is whether Kleiner is built to succeed past him. “The history of people doing succes-sion planning—righting the ship—is essentially zero,” says Paul Kedrosky, a senior fellow with the Kauffman Foundation and a noted commenta-tor on venture capital. Michael Kim, founder of Cendana Capital, which

invests in seed venture funds, wor-ries that there’s “no clear progression of leadership from legendary John Doerr.” Says Kim: “They have a lot of work to do on how LPs and entrepre-neurs perceive them.”

The investors are staying the course. David Swensen, Yale University’s chief investment officer, who handles $20 billion in assets, says that while Kleiner’s recent returns haven’t been as strong as in its heyday, the firm has generated more dollar gains than any other partnership in Yale’s private equity portfolio, with far fewer dollars committed. “It’s hard to argue that it’s been anything less than a great relationship,” Swensen says. “I’m not going to bet against them.”

As for entrepreneurs, Dave Morin was working on a new mobile service called Path when Kleiner came courting in 2010. Morin asked the obvious question: Why would an

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tech’s best inVestors

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1 Jim Breyer (last yEar: 1)

accel partnersdeals: facebook, brightcove, model n

breyer takes the midas crown again largely thanks to his firm’s early $12.7 million bet on a harvard dropout. accel’s 11% stake in facebook made it the second-largest shareholder (after zuck) at the ipo.

2 MarC andrEEssEn (2)

andreessen horoWitzdeals: skype, facebook, linkedin

andreessen is taking on the vc establishment as his 3-year-old firm elbows its way into the biggest deals. the former entrepreneur oozes street cred in attracting the brightest founders of today.

3 PEtEr thiEl (8)

founders funddeals: facebook, palantir, linkedin

the iconoclastic thiel sits on facebook’s board and is a key advisor to zuckerberg. seeking dramatic technological change, his firm, founders fund, decries the tech industry: “We wanted flying cars; instead we got 140 characters.”

4 Douglas Leone (18)

sequoia capitaldeals: meraki, servicenow, rackspace

the straight-talking leone has been leading sequoia capital with michael moritz for years and now takes over management duties.

5 rEid hoffMan (3)

greylock partnersdeals: linkedin, zynga, groupon

hoffman has been involved in nearly every major social media startup. he cofounded silicon valley’s best-performing social networking company, linkedin. last year he published a book, The Start-Up of You (crown business, 2012).

6 PEtEr fEnton (5)

benchmarkdeals: twitter, yelp, springsource

fenton backed twitter when it had 25 people and now serves on the board. also invests extensively in enterprise companies.

7 Jim Goetz (30)

sequoia capitaldeals: ruckus Wireless, palo alto networks, jive software

goetz helped incubate palo alto networks at sequoia. his other billion-dollar exit last year: ruckus Wireless.

8 sCott sandEll (14)

neW enterprise associatesdeals: Workday, fusion-io, nicira

sandell was an early investor in Workday, the largest ipo of 2012 not named facebook. he also invested in nicira, which sold for $1.26 billion.

9 JErEMy lEvinE (10)

bessemer venture partnersdeals: pinterest, yelp, quidsi

levine led the series a for pinterest, which was recently valued at $2.5 billion. bessemer is the largest outside shareholder.

money mastersThe Midas List, produced in partnership with TrueBridge Capital Partners, is a data-driven ranking of the world’s top venture capitalists based on all exits (IPOs or acquisitions) above $200 million over the last five years. We assess how involved an investor was in each deal and put a premium on newer deals and capital risked at the earliest stages. We also take into account public performance of VC-backed IPOs. Facebook put five investors into the top ten, but enterprise-tech firms like Workday and ServiceNow accounted for a lot of the big winners.EditEd By toMio gEron With additional rEPorting By ryan MaC

Data provided by Dow Jones VentureSource. For full methodology visit forbes.com/midas.

peter thiel marc andreeSSenJim breyer peter fentondoUglaS leone

the miDas List

reid hoffman


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Jim goetz

angel investor

biotech investor

5+ years on the list

returnee

athlete

brainiac

new

active on social media

billionaire

Works out of china

non-silicon valley vc

social investor

recent$billion exit

former entrepreneur

philanthropic

former Wall streeter

big mover up

big mover down

key to the midaS badgeS

top of the cropfirmS that Score big exitS pUt the moSt partnerS on the midaS liSt.

Exits >$200M in 2012PartnErs on list

aCCEl PartnErs 9

sEqUoia CaPital 6

BEnChMarK 5

grEyloCK PartnErs 5

nEW EntErPrisE assoCiatEs 5

4 Bain CaPital vEntUrEs

4 BEssEMEr vEntUrE

PartnErs

4 KlEinEr PErKins

CaUfiEld & ByErs

4 MEritECh CaPital

PartnErs

sEqUoia CaPital 9

aCCEl PartnErs 6

BEnChMarK 5

5 MEritECh CaPital

PartnErs

5 grEyloCK PartnErs

4 nEW EntErPrisE assoCiatEs

4 Bain CaPital vEntUrEs

4 BEssEMEr vEntUrE PartnErs

2 KlEinEr PErKins CaUfiEld & ByErs

13 Michael Moritz (13)

sequoia capitaldeals: green dot, kayak, first republic bank

legendary investor moritz announced last year he was stepping back from management at sequoia because of an undisclosed illness, but he’s still investing and working with startups.

14 anEEl BhUsri (25)

greylock partnersdeals: Workday, servicenow, sunedison

bhusri is co-ceo of Workday, which has been one of the best-performing tech stocks since its ipo in october 2012.

15 nEil shEn (24)

sequoia capital chinadeals: qihoo 360, autonavi, 360buy.com

shen is the founding managing partner of sequoia capital china, which has raised $3 billion since 2005. he led sequoia’s investments in more than a dozen companies that have gone public.

16 frEd Wilson (20)

union square venturesdeals: twitter, zynga, lending club

new york’s biggest vc has invested in zynga and twitter as well as upstarts like etsy and kickstarter.

17 Ben Horowitz (21)

andreessen horoWitz

deals: nicira, instagram, skype

horowitz is known for his investments in startups like nicira, which vmWare bought for $1.26 billion, as well as for his must-read blog.

18 KEvin EfrUsy (9)

accel partners

deals: facebook, groupon, bbn technologies

efrusy’s early role investing in facebook paid off big.

19 roElof Botha (61)

sequoia capital

deals: square, Xoom, instagram

botha scored a quick flip when facebook bought instagram days after he invested; he’s also betting on square, eventbrite, evernote and Weebly.

20 ashEEM Chandna (96)

greylock partners

deals: palo alto networks, imperva, Xsigo systems

chandna’s was the first money into palo alto networks (ipo 2012). he worked with founder nir zuk at rival security firm checkpoint software.

10 David Sze (4)

greylock partnersdeals: facebook, pandora, linkedin

sze led investments in facebook, linkedin and pandora, three of the most prominent recent consumer-tech ipos.

11 PaUl MadEra (7)

meritech capital partnersdeals: facebook, yammer, 21vianet group

madera made a late-stage investment in facebook.

12 Josh KoPElMan (6)

first round capitaldeals: bazaarvoice, linkedin, square

seed investor kopelman scouts startups from his perch in philadelphia.

ben horowitz


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bank andara

COMPanIES & PEOPLE

LENDER tO SmALL LENDERS

Bank Andara has found a unique microfinance niche: lending to other microfinance lenders.

By ArdiAn WiBisono

Financial inclusion is one oF the major challenges of development. The Banking Association (Perbanas) recently found that about one third of the population has no access to a financial system, especially those at the bottom of the pyramid in rural areas. Besides a potential market for banks, this unbanked group could also have their poverty alleviated if they had easier access to bank credit, such as loans to start or expand a business.

This is the problem that Bank An-dara would like to help solve, by pro-viding microfinancing. Yet others are ahead of it in doing this, such as Bank Rakyat Indonesia, which provides mi-crofinancing directly to consumers. So Bank Andara’s shareholders, which founded the bank four years ago, de-cided to take a different approach.

Rather than help individuals, they chose to have the bank work with mi-crofinance institutions (MFIs) such as rural banks (BPRs) and coopera-tives, which in turn have access to the unbanked market. “Instead of going directly to the end user, we get deeper and wider reach to the bottom of the pyramid,” says David Yong, president director of Bank Andara. As of last year, Bank Andara has worked with 736 MFIs, around 500 of them are BPRs, and booked almost Rp 1 tril-lion of loans, double from the previ-ous year. This market is also big, as it

is estimated there are around 44,000 cooperatives across the country. The bank claims to reach about 1.2 million customers through its model.

Aside from a special business model, the bank also has a unique set of shareholders. Bank Andara, whose name is derived from the Sanskrit word for light, has among its owners the World Bank’s International Finance Corp., German financial group KfW Bankengruppe and the Dutch Hivos Triodos Fonds, a microfinance institution.

The bank was originally a rural bank in Bali named BPR Sri Partha. The above group, along with the NGO Mercy Corps, bought it in 2009, using funds that came in part from the Bill and Melinda Gates Foundation. They then restructured the entire operation to its new focus (Sri Partha’s founder I Wayan Gatha remains a shareholder as well).

What Bank Andara offers is as simple as what MFIs offer their

“Instead of going directly to the end user, we get deeper and wider reach to the bottom of the pyramid.”

customers, such as saving and loans. It doesn’t offer ATM cards. Bank Andara benefits from the extensive network of the MFIs they work with, allowing less cost compared to normal commercial bank that has to open many branches to reach customers. Bank Andara will lend up to Rp 5 billion to each of these MFIs, which translates into an average of Rp 15.8 million to the end customer, although lending can go as low as Rp 500,000. Bank Andara also has its Andara Link, which is a network that connects Bank Andara to the MFIs as well to other MFIs that allow them to offer remittance services and pay bills.

On the social impact side, Bank Andara has what it calls its pro-poor program. Before lending to a MFI, Bank Andara ranks each of them on criteria such as where it operates, what kind of loans are given, what is the smallest loan offered, and other details. If the MFI is lending mostly in rural or poor areas, and giving small amounts, then the MFI is likely to score well on the bank’s ranking system. Currently 47% of the small lenders working with Bank Andara are considered pro-poor. “This year we like to see it grow to at least 50%,” David says.

However the market is not without a risk, every year there’s always one or more BPRs that close. This year there a

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are already three BPRs in liquidation. David notes the risk of MFI failure is one of the main reasons that commer-cial banks don’t lend to MFIs. Bank Andara tries to monitor its MFIs with assessments twice a year, and training programs for its MFI personnel. De-spite this, Bank Andara still had one of its BPR customers close last year, boosting its nonperforming loans (NPL) ratio to 0.15% from 0.03%. “In any business you have good and bad customers,” David adds. The NPL ratio is still well below 1%, which is relatively low.

Bank Andara’s business model on the wholesale side means MFIs trust the bank. “They (MFIs) have had bad experiences working with commercial banks because they can decide to go to the end customer. So our commitment shows that we do not engage in anything that would be perceived as entering into competition head to head with our customers,” says David.

This year Bank Andara aims to grow its loan book by at least 50% to Rp 1.5 trillion and book its first annual net profit (although privately held, the bank produces fully audited financial statements that are posted on its website). It will also continue to expand its network with the MFIs.

On the funding side, Bank Andara is seeking to expand its funding sources. Previously the bank mostly relied on foreign borrowers, now it hopes to partner with local lenders. It is also looking for wealthy deposi-tors who are willing to place a minimum Rp 400 million with them, who can get a competitive deposit rate and also know that their money will go to a worthy cause of microfi-nance. David says this program is generating plenty of interest since it was started last year, and now high net-worth savings already make up a quarter of the bank’s third-party funds. David says Bank Andara is also open to partnerships. “The more the merrier,” he says. Fa

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faSt rEtaILIng

COMPanIES & PEOPLE

Japan’s apparel company Fast Retailing Co., controlled by Tadashi Yanai, Japan’s richest man with an estimated net worth of $16 billion, will open its first Uniqlo outlet in Indonesia this month in a 2,700 square meter space. Fast Retailing has big ambitions to make Uniqlo the world’s number one brand, competing against its long-time rivals GAP, H&M and Zara. Naoki Otoma, group executive vice president at Fast Retailing, says this is achievable but first Uniqlo has to be the leading brand in Asia. To do so, Tadashi wants to expand Uniqlo in Southeast Asia, including Indonesia. The attraction here, says Naoki, is the country’s booming middle class. “If we don’t succeed in Indonesia, we will not succeed in Southeast Asia,” he says, during a soft launch in February.

Fast Retailing has 1,231 Uniqlo stores worldwide (the name is an abbreviation of unique clothing). As many as 854 stores are located in Japan, 355 stores in the rest of Asia, and 22 stores in Europe and the U.S. Fast Retailing has six brands in total but Uniqlo contributes roughly 80% of the company’s total of $10 billion in net sales, a 13% increase from

The NexT Big ThiNgJapan’s Uniqlo has big ambitions for the Indonesian market.By sonyA AngrAini

The indonesiAn AppArel mArkeT is predicTed To Be WorTh $57 Billion By 2030, up from $22 Billion in 2012.

the same period a year ago (for the fiscal year ending in August 2012). For the current year, the company estimates sales to reach $11 billion. The company is on track to achieve its target as it posted $6 billion in net sales for the first half of fiscal 2013.

A report by consultancy McKin-sey shows that the Indonesian apparel market is predicted to be worth $57 billion by 2030, up from $22 billion in 2012. This means more opportuni-ties for retailers. Anton Sitorus, head of research at real estate firm Jones Lang LaSalle feels the retail market can continue to grow in both the short and long term. “Local retailers are growing at good rates, and there are still only a few international players in the market,” he says, adding that mer-chants such as Malaysia’s Parkson and Sweden’s H&M will also soon enter the Indonesian market. “These new players will trigger growth of malls and trade centers, both in urban and suburban areas,” he says. c

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In Indonesia, Fast Retailing plans to open 10 Uniqlo stores over the next three years. For the first Uniqlo store, the concept and products will be the same as other Uniqlo stores worldwide but along the way, Fast Retailing will tailor its offering to cater to local tastes, Naoki explains. “The performance of our first store here will largely determine our next move,” he adds. The company will sell clothing for men, women and children at prices ranging from Rp 59,000 to Rp 699,000.

He also emphasizes that Uniqlo’s clothing are suitable for a wide range of consumers, as its clothing are meant to be basic everyday wear. Na-oki says he isn’t worried about rivals. “We don’t think other brands as our competitors,” says Naoki. For Uniqlo, he says, other brands will actually help broaden the market, which will help Uniqlo in the long run.

Instead, he says companies such as mobile phone producers are really

its competitors. “Consumers spend and allocate their money on many things and new gadgets have eroded our customers’ wallets,” he notes. To build its brand, Fast Retailing kicked off a campaign about Uniqlo through social media in March. “Indonesians are very attached to social media. So there’s no better way to campaign other than using social media,” he explains.

Aside from being a retail market, Naoki says Indonesia may also become a production center. Today, Fast Retailing produces Uniqlo products in countries including Bangladesh, China, India, Thailand and Vietnam. Nevertheless, Naoki notes that if Indonesia grows into a major market, that it would justify moving some production here to local companies. “As long as they can produce world-class products, we would be happy to work with them,” he says. F

from Top: uniqlo’s owariasahi’s store and naoki otoma, group executive vice president at fast retailing (above); uniqlo’s first store (below); Typical showroom and uniqlo’s global flagship store in shinsaibashi (left).

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FORBES CEO JUNE 2013 (SPREAD) REV.indd 2 5/27/13 6:11 PM


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FORBES CEO JUNE 2013 (SPREAD) REV.indd 2 5/27/13 6:11 PM FORBES CEO JUNE 2013 (SPREAD) REV.indd 3 5/27/13 6:11 PM


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MCLarEn

COMPanIES & PEOPLE

In one of the most coveted spots on the first floor of Pacific Place mall of Jakarta is now walled off as construction goes on inside.

On the outside the wall is covered with a banner that reads “Born on the track.” With a slated opening in July, the space will be the flagship showroom for McLaren Jakarta, the exclusive importer and seller of McLaren cars Indonesia. The two-story showroom will feature a real Formula 1 car on display. “The McLaren philosophy is to always be on the forefront of technology,” says Indradjit Sardjono, 53, chief executive of McLaren Jakarta. Innovation is a hallmark of the brand, as its racing team was the first to use a carbon fiber chassis in 1981 and today every single car in its Formula 1 team uses its standardized electronic control unit to control the engines.

McLaren Jakarta is a recent expansion for McLaren Automotive and Indonesia is the 23rd market for the brand. PT Mega Performa Indonesia has been selected to represent the brand across Indonesia late last year, owned by the Ivan’s Motor group and another partner. Ivan’s Motor itself is a car importer that has been in business for 13 years, selling ultra luxury cars. Last year it successfully sold eight McLaren MP4-12Cs in Indonesia. It then applied to become the official representative

ultimate SpeedMcLaren is coming to town, bringing

competition to Ferrari and Lamborghini. By yessAr rosendAr

of McLaren in Indonesia in April last year, and in November got the contract. “Mega Performa Indonesia has extensive experience in serving Indonesia’s luxury automobile market and has a reputation for delivering exceptional after-sales service, which were key considerations for us when selecting a partner” according to a McLaren press release at that time.


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“The McLaren philosophy is to always be on the forefront of technology.”

McLaren Jakarta will spend around Rp 15 billion to build its show-room in the Pacific Place mall and a repair shop in the Pondok Indah area. The brand will celebrate its 50th an-niversary this September and since its arrival to F1 races in 1966 it has won 182 races. However, the sports car market is untested waters for the brand, as the company begins produc-tion for an entire range of high per-formance sports, designed and built inhouse by McLaren’s new Automo-tive division three years ago. Around

4,000 sports cars will be built annu-ally by the middle of the decade in an advanced new manufacturing facility, the McLaren Production Centre in Woking, England. Realizing this, one of the biggest challenges for McLar-en Jakarta will be to increase brand awareness and product knowledge in the market.

Even though it doesn’t have a showroom yet, McLaren Jakarta has already started to get some orders but the company declined to disclose the exact figure and target for sales.

Indonesia and become its first chief executive, holding that spot for three years. He is also a motorsport enthu-siast active in racing for nearly two decades, retiring in 1993. Even after he retired from participating in the sport, he is still active as an observer for rally events in Asia for The Fédération Internationale de l’Automobile (FIA) until now.

The first model from McLaren Au-tomotive was the MP4-12C launched in 2011. The name of MP4 is the chassis designation for all McLar-en Formula 1 cars since 1981. In its price bracket the 12C has competition from the Ferrari F458, Lamborghi-ni Gallardo and Porsche 911 Turbo. McLaren cars have a price tag start-ing around Rp 5 billion with a delivery time to customers of up to 8 months. The brand also recently launched its McLaren P1 that has a hybrid engine that produces 903 horsepower, in a limited run of 375 units.

According to Indradjit, McLaren’s technology makes it possible for them to have brute performance but still have the practicality to be a comfortable daily ride. “McLaren has its own performance, I’m pleased that now there are more options to choose for these kind of cars,” says exotic car enthusiast Stanley Setia Atmadja.

Although McLaren Jakarta is confident about growth with its existing models, sales could be juiced by the introduction of a smaller and more affordable McLaren, as per rumors to that effect. “The market is there and we will aim to grow every year,” says Ferdy Santoso, chief operations officer of McLaren Jakarta. The car is an easy sale after all. “Every man always dreams of having a car like McLaren,” Ferdy says. F

To maintain its position, McLaren Jakarta’s strategy will be to have excellent customer service. “We want our customers to have the McLaren experience, so we can’t be anything less than excellent,” Indradjit says.

Indradjit has a vast experience in the ultra luxury car business. He as-sisted Indonesian company Megat-ech, controlled by Setiawan Djody and Tommy Su-harto, the son of former president Suharto, to ac-quire Automobili Lamborghini S.p.A. from Chrysler and become its chief executive in 1994. Later he assisted the MRA group in establishing Ferrari

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grOwth InSIghtS

that would include exemptions on the luxury tax but also duty free imports of machinery (pressing, stamping and welding) and raw materials. Currently, duties on machines are up to 15% of their value while the luxury tax on cars less than 1200cc stands at 10%. The ex-act tax relief may vary and is expected to be proportional to the fuel economy achieved by the car, degree of localiza-tion and technology transfer.

The LCGC program could well turn out to be the game changer for the Indonesian automotive sector, as it alters the landscape of the domestic market and boosts sales, both in the domestic and overseas markets in the long term. The net demand for cars could rise by as much as 45%. For the government, although various fiscal initiatives could result in potential losses of up to $80 million, these would be offset by a 13% increase in investments in the sector. Moreover, these additional investments are expected to add 8% to the sector’s workforce. Altogether, the LCGC policy is likely to boost Indonesia’s economic growth by up to 0.3%.

in a nutshell, the new LCGC policy should be a big boost to the local automotive sector. Being more affordable, car ownership should rise. The government would, of course, need to expand and upgrade the road network to support a boom in this sector. Also, it could be a golden opportunity to build an export and local vendor base as a precursor to attracting future investments. F

In recent months the Indone-sian automotive industry has been abuzz with news of the government’s new Low Cost Green Car (LCGC) policy.

The policy has no doubt caught the in-dustry’s imagination as a much-need-ed shot in the arm that would help Indonesia overtake long-time leader Thailand as the largest manufacturer of cars in the region.

While the ingredients for explo-sive growth are present—low car-own-ership levels, increasing disposable incomes and a growing middle class—the government’s recent tightening of automotive finance, brewing inflation-

ary pressures and the weak commodity sector put some damper on the market. On the cost front, the increase in mini-mum wages and basic electricity tariffs, and the weakening rupiah have put ad-ditional pressures on the auto industry.

In this scenario, the government’s bid to push up sales through a LCGC policy has been widely welcomed and touted as a win-win measure for all. As the government battles to manage the burgeoning fuel subsidies, high mile-age cars would help reduce the coun-try’s fuel consumption in the long run.

The “low cost” nature of the cars would make them more affordable

IndonesIA’s Green CAr AMBItIons

As The governMenT bATTLes To MAnAge The burgeonIng FueL subsIdIes, hIgh MILeAge cArs wouLd heLp reduce The counTry’s FueL consuMpTIon In The Long run.

frosT & sullivAn wORkS wIth cLIENtS tO LEvERAgE INNOvAtION tO ADDRESS gLOBAL chALLENgES AND gROwth OppORtuNItIES, AND pROvIDES SERvIcES Such AS RESEARch, ANALySIS, StRAtEgy AND INNOvAtION. It hAS mORE thAN 40 OFFIcES AROuND thE wORLD.

to the country’s middle class and the resulting increase in volumes would help counter the negative impact on demand of a possible fuel hike. Significantly, for manufacturers, accompanying incentives would ensure viability and profitability.

So, in the Indonesian context, what is a “LCGC” definition? It is sim-ply a car with efficient fuel consump-tion driven by a smaller engine and running on conventional fuel technol-ogy. Though the final specifications are yet to be released by the govern-ment, expectations are for a car with an engine under 1200cc, delivering a fuel economy of at least 20 km per li-

ter, with a local content of at least 80% and priced below Rp 100 million.

While Toyota’s Agya and Toyota subsidiary Daihatsu’s Ayla are the first cars to be unveiled for the program, other brands such as Nissan and Tata Motors are expected to join the fray soon. Through the LCGC, Nissan hopes to resurrect its Datsun brand and use Indonesia as a springboard for other emerging markets. Tata is likely to field the pathbreaking Nano as its green car offering.

To help make “green” cars more affordable, the Indonesian govern-ment is set to provide fiscal incentives


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2000The

gloBAlour 2013 ranking of the world’s biggest companies

446 Bank mandiri $6.3

461 Bank Rakyat Indonesia $6

613 Bank central Asia $4

685 telkom Indonesia $8

922 Bank Negara Indonesia $3.2

1188 perusahaan gas Negara $2.6

1378 gudang garam $5.2

1425 Semen Indonesia $2.1

1453 Bank Danamon Indonesia $2.5

The Top 100

indonesiA’s Top nine

au australia

as austria

bn bahrain

be belgium

bu bermuda

br brazil

ca canada

cs channel islands

ch chile

cn china

co colombia

cz czech republic

de denmark

eg egypt

fi finland

fr france

ge germany

gr greece

hk hong kong-china

hu hungary

in india

id indonesia

ir ireland

is israel

it italy

Ja Japan

Jo Jordan

kz kazakhstan

ku kuwait

le lebanon

li liberia

lu luxembourg

ma malaysia

mx mexico

mo morocco

ne netherlands

nz new zealand

ni nigeria

no norway

om oman

pk pakistan

pa panama

pe peru

ph philippines

pl poland

po portugal

Qa Qatar

ru russia

su saudi arabia

si singapore

sa south africa

ko south korea

sp spain

sw sweden

sz switzerland

ta taiwan

th thailand

tu turkey

ae united arab emirates

uk united kingdom

us united states

Vz Venezuela

Ve Vietnam

guide to country codes

AsiA-PAcific comPAnies Are highlighted in red. rePeAted rAnking numbers indicAte ties. All figures Are in u.s. dollArs. 1duAl-listed comPAny with heAdquArters in AustrAliA And the u.k. SourceS: InteractIve Data, LIonShareS, thomSon reuterS FunDamentaLS anD WorLDScope vIa FactSet reSearch. SyStemS; BLoomBerg; ForBeS.

RANK COMPANY sAles ($bil)

1 iCbC CN

2 ChiNA CONstRuCtiON bANK CN

3 JPMORgAN ChAse us

4 geNeRAl eleCtRiC us

5 exxON MObil us

6 hsbC hOldiNgs uK

7 ROYAl dutCh shell Ne

8 AgRiCultuRAl bANK Of ChiNA CN

9 beRKshiRe hAthAwAY us

9 PetROChiNA CN

11 bANK Of ChiNA CN

12 wells fARgO us

13 ChevRON us

14 vOlKswAgeN gROuP ge

15 APPle us

15 wAl-MARt stORes us

17 gAzPROM Ru

18 bP uK

19 CitigROuP us

20 PetRObRAs bR

20 sAMsuNg eleCtRONiCs KO

22 bNP PARibAs fR

23 tOtAl fR

24 At&t us

25 AlliANz ge

26 siNOPeC-ChiNA PetROleuM CN

27 Mitsubishi ufJ fiNANCiAl JA

28 bANK Of AMeRiCA us

29 ChiNA MObile hK

30 eNi it

31 tOYOtA MOtOR JA

32 Nestlé sz

33 vOdAfONe uK

34 ibM us

35 PROCteR & gAMble us

36 dAiMleR ge

37 PfizeR us

38 stAtOil NO

39 AxA gROuP fR

40 COMMONweAlth bANK Au

41 MiCROsOft us

42 itAú uNibANCO hOldiNg bR

43 bANCO sANtANdeR sP

44 bhP billitON Au/uK

45 bANCO bRAdesCO bR

46 JOhNsON & JOhNsON us

46 NiPPON tel & tel JA

48 westPAC bANKiNg Au

49 gOldMAN sAChs gROuP us

50 ROYAl bANK Of CANAdA CA

51 sieMeNs ge

51 suMitOMO Mitsui fiNANCiAl JA

53 fORd MOtOR us

54 bANK Of COMMuNiCAtiONs CN

55 bMw gROuP ge

56 COMCAst us

57 NOvARtis sz

58 NAtiONAl AustRAliA bANK Au

59 ROsNeft Ru

60 iNg gROuP Ne

61 sbeRbANK Ru

62 AMeRiCAN iNteRNAtiONAl gROuP us

62 telefóNiCA sP

64 luKOil Ru

65 PRudeNtiAl uK

66 ANz Au

67 bANCO dO bRAsil bR

68 gOOgle us

69 bAsf ge

70 geNeRAl MOtORs us

71 td bANK gROuP CA

72 sANOfi fR

73 CONOCOPhilliPs us

74 edf fR

75 zuRiCh fiNANCiAl seRviCes sz

76 ANheuseR-busCh iNbev be

77 iNtel us

78 MizuhO fiNANCiAl JA

79 COCA-COlA us

80 CisCO sYsteMs us

81 MuNiCh Re ge

82 MeRCK & CO us

83 PiNg AN iNsuRANCe CN

84 bANK Of NOvA sCOtiA CA

85 NissAN MOtOR JA

86 hONdA MOtOR JA

87 vAle bR

88 PePsiCO us

89 hYuNdAi MOtOR KO

90 uNitedheAlth gROuP us

91 bbvA-bANCO bilbAO vizCAYA sP

92 uNited teChNOlOgies us

93 ROChe hOldiNg sz

94 sAudi bAsiC iNdustRies su

95 gdf suez fR

96 bOeiNg us

97 CAteRPillAR us

98 stANdARd ChARteRed uK

99 e.ON ge

100 AMéRiCA Móvil Mx


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mvcommerce

eNTrePreNeUrS

Payment just an SMS AwayHendra Sutandinata’s SMS banking app could be a major innovation for the finance industry.By ArdiAn WiBisono

Mobile banking is a hot topic these days. The trick is having a system that is reliable, safe

and easy to use. Hendra Sutandinata of PT MVCommerce claims to have developed that system, along with his business partner Edgardo Castro. Hendra, 48, has developed a platform that allows anyone to send, receive and store money in their cell phones using SMS messages. Besides providing an easy cashless tool for transactions for the mass market, the platform, called PonselPay, could be used by Micro Finance Institution (MFIs) and Small and Midsized Enterprises (SMEs) to extend their service to those who don’t have traditional bank accounts—which is estimated to be at least one third of the population—as long as they have a cell phone with SMS.

The system is simple for anyone to use. After registering for the sys-tem (through SMS), the user receives a personal identification number that they use for each transaction. Through PonselPay, users can store, send and receive funds, pay bills, including tak-ing cash out of ATMs. The system is free for users (a small fee is charged to any organization or individual making a payment over the system).

“We want to help people and insti-tutions with the payment and transfer process,” Hendra says. Importantly,

Hendra has a track record of success in developing a similar technology for the Philippines. Today, a form of PonselPay is used by many of the major banks in the Philippines for mobile banking, in-cluding Banco de Oro, Metrobank and Citibank’s Philippine division. He also has mobile banking clients in Malaysia.

He launched his service in Indo-nesia in 2001. His first client was Bank Bali (now part of Bank Permata). Hen-dra adapted his system from Philip-pines, named ACE. The system was designed specifically for the bank, and was a big success, with a huge new volume in SMS-based banking trans-actions. He also built a mobile banking service for the ALTO network of banks, one of the leading interbank networks in the country. After these successes, Hendra decided to build a “white label” technology, one that could be used by any organization or any phone, irre-spective of operating system, which they can brand as their own offering.

Hendra started working on this sys-tem in 2008, and it took two years to get it ready for launch. In 2010 Hen-dra connected his PonselPay to several banks and four telecommunication pro-viders: Indosat, XL, Mobile-8 and Smart (Mobile-8 and Smart later merged). At the time, some telecom companies and banks were already offering mobile banking systems. “But the beauty of PonselPay is that it’s white label, so it interconnects better,” Hendra says. He


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“We want to help people and institutions with the payment and transfer process,” says Hendra. standing

in one of small photocopy shops that is a client.also built a mobile banking system for Permata Bank, one of the largest banks in the country, that has since become one of the leading mobile banking platforms and a profit center for the bank.

The dream Hendra has is that many MFIs will use the platform to extend their business to new clients. Since last year, he has had a pilot project involv-ing a MFI cooperative in Pasar Min-ggu, South Jakarta. The cooperative has 5,000 members and assets of Rp 32 bil-lion. PonselPay is used by its members to pay loans and for remittance. Hendra is also in discussion with the Ministry of Cooperatives and SMEs to roll out the technology to a large number of MFIs around the country, assuming this pilot project continues to go well. Once it rolls out on a national scale, Hendra hopes he would grow his PonselPay network fast. He is optimistic that it could reach one million users in less than two years after it launches. Hendra says his technology could also be used by the government to disburse more accurate subsidy and so-cial incentives. “Since it uses a cellphone, everything could be tracked,” he says.

Hendra came to his idea in a roundabout way. After getting an MBA at the University of Southern California, he started his career at PC maker Tandon in California back in 1988 as a product manager. He went back to Indonesia four years later and established PT Zeuscom in 1993, which produced PCs for Tandon and other brands. This company gave him his first exposure to banking, as some of Zeuscom customers were banks.

He saw a bigger future in banking technology than just producing PC clones, so Hendra changed Zeuscom into a banking technology consultant. In 1998, Hendra met his business partner Edgardo when he went to Manila to marry his wife, who is from the Philippines. Edgardo at the time was completing a mobile banking application for Philippine telecom Smart Communications. “I got the idea to bring and implement the technology to Indone-sia,” says Hendra. Something clicked and the rest is history. Fa

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reiNveNTiNg america

eNTrePreNeUrS

By J.J. CoLAo

Every Thursday night Quirky’s Manhattan headquarters turns into a television studio. On a recent April evening

the airy Chelsea loft is host to a buzz-ing mix of beer-sipping twentysome-things, businessmen in dark suits, a dozen 10-year-olds from the Concord, N.H. Young Inventors Club and six panelists. At the center of this Last Supperish array stands Ben Kaufman, Quirky’s CEO, dressed in his signature black T-shirt and jeans. “Ladies and gentlemen,” he booms, “welcome to Quirky product evaluation!”

“Eval,” as they call it, is the cen-terpiece of Quirky’s freewheeling brand of capitalist democracy. To-night Kaufman, 26, runs through 15 ideas submitted by the company’s 405,000-member online commu-nity of would-be inventors. Among the items: a coin-counting, app-con-nected piggy bank; a plastic overlay to turn a staircase into a slide; and a device to extract Popsicle-shaped chunks of watermelon. After a few minutes of debate the room votes. A simple majority kicks off a process: Quirky will design, manufacture and sell the product. Inventors, along with community members who contribute to a product’s design and branding, get a small cut of sales.

This is what industrial produc-tion looks like, American Idol-style.

Quirky lets consumers vote on inventions. Will they come to a store to buy them?

Crowdsourcing Edison

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“That was the hardest money i ever got”: Quirky founder and CEo Ben Kaufman.


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A week before high school graduation he flew to China to meet with manufacturers, knowing nothing about pro-duction, packaging, merchan-dising, logistics or sales. His parents’ cash disappeared “on the backstreets of Shen-zhen,” as the headphones went through five redesigns. Back in the States he expanded into iPod cases, having persuad-ed angels to invest $500,000. After winning a Best in Show award at MacWorld in 2006 for designs of iPod cases that were half-baked, mophie raised $1.5 million from a Ver-mont venture fund.

But Kaufman lost control of his company. Investors, smell-ing promise, hired an experi-enced CEO, and the 20-year-old founder left. Mophie, now based in Santa Ana, Calif., sold $150 million in iPhone and iPad accessories last year.

The experience wasn’t a to-tal loss: Kaufman took enough money out of the company to sow the seeds of Quirky. For a year and a half a team con-sisting of Kaufman and three others worked out of his apartment in Manhattan’s East Village, slogging through the details of building an online community for devising new products. They launched Web pages for contributors to pitch ideas, tested feedback tools, devised voting systems and selection criteria, and estab-lished rules for divvying up credit among the community.

Here’s how it works. Once a product is out of the chute, Quirky sells it to retail partners at wholesale. Ten cents of every revenue dollar is held as a royalty for those who contributed to a product’s creation. The inventor gets 42% of royalties; the community that tweaked designs, voted on names and responded to market research surveys splits the rest. For sales from Quirky’s online store, the group also divvies up 30% of sales. Quirky, meanwhile, makes a 20% to 60% margin on each item sold to retailers, as well as a $10 fee from those who submit ideas.

Today the company employs 140 people, split among design, branding, engineering and sales teams. The offices hold $2 million worth of 3-D printing and prototyping

Quirky’s crowd sourcing process has already created such hits as Pivot Power (a flexible power strip that bends to fit large three-prong plugs in each outlet) and Crates (modu-lar plastic milk crates used as shelving), as well as bombs like Silo (a dry-food container that pours premeasured amounts) and Travelstacks (mini-storage units that attach to car cupholders). Most of its items are kitchen gadgets, electronics accessories and home organizers.

Venture capitalists love the model. Since launching in June 2009 Quirky has raised $91 million, including a $68 million kick from Andreessen Horowitz at a reported $150 million-plus valuation last September. Last year Quirky launched 121 new products, selling 2.3 million units through retailers like Target, Bed Bath & Beyond and Best Buy. The company had revenue of $18 million in 2012, and, while it lost money, Kaufman insists that profits will be there whenever it chooses to rein in investment. Sales this year will reach $50 million, he predicts, without a hint of modesty, with “a huge chance of us crushing the s--t out of that number.”

That’s contingent, though, on Quirky solving its distri-bution problem. While retailers sell 95% of its inventory, the company’s idea machine churns out far more stuff than the pipeline can handle. “There’s no store big enough in the world,” says Kaufman, “that’s going to be able to launch three products a week.” So Quirky is moving quick-ly—and expensively—to build its own branded stores.

It’s an audacious move for someone who in school would’ve been voted least likely to succeed … at anything. With jet-black hair and a teddy-bear build, he grew up in Melville, N.Y., a terrible high school student (GPA: 1.7) who once scored a 4 out of 100 on a chemistry test.

But his cerebral cortex wasn’t dead. Struggling to listen to his iPod without tipping off his math teacher, Kaufman designed a hollow lanyard to conceal the headphone wires up to his neck. He demanded backing from his parents to mass-produce his furtive product. “They realized there was nothing they could do to stop me,” he recalls. “They knew I would’ve been calling up my dad’s friends asking for money if they didn’t give it to me.”

His mother, Mindy, a retail strategist, forced him to create a detailed business plan for the lanyard headphone startup, which he named mophie, a portmanteau based on the names of the family dogs. In return for $185,000, his parents took 90% of the equity, allowing Ben to regain ownership after he repaid the loan. “I’ve raised $100 million since then,” he says, “and that was the hardest money I ever got.”

VC rising?The exit signs have dimmed, thanks to the dismal post-iPo lives of Groupon and zynga, but West Coast vCs are still sanguine. so says the lat-est silicon valley venture Capitalist Confidence index, noting the third consecutive quarter of growing optimism. rea-sons: a macroeconomic uptick and abiding faith in tech, despite disap-pointments in green tech, life sciences and health care. vCs also like it that many startups have angel and seed money, which may be helping them place bigger bets in fewer funds. —Kelly Appleton

Founder’s Toolbox

In school he would’ve been voted least likely to succeed ... at anything.


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equipment. Twenty employees in Hong Kong oversee manufacturing in China. Inventory sits there in company warehouses, as well as in Ontario, Calif. and Allentown, Pa. Each week the Quirky crew combs through 3,000 submissions, settling on 15 to discuss at Eval.

Does the world really need another smartphone-con-nected pet food dispenser or mousetrap? Scott Weiss, a partner at Andreessen Horowitz and Quirky board mem-ber, thinks Kaufman’s could easily be a $1 billion company. “He’s disaggregating the entire process of invention,” says Weiss. “Could this be the next Procter & Gamble?”

But there’s a wide stretch between here and there, es-pecially given the grand plans to open up stores, starting with three—likely in New York, Los Angeles and Okla-homa City—perhaps next year. He does seem a whiz at packaging: Each product carries the Quirky logo, as well as a photo and bio of the inventor. But retail? “I will have this figured out by July 4,” boasts the ever confident Kaufman. He envisions a hands-on Sharper Image, where customers can either come in to pitch inventions or buy others.

Even in the best of circumstances, opening stores will drain capital and distract from the core business of making stuff; in the worst case it could end up another backstreets-of-Shenzhen-like disaster. “I don’t know whether it’s the smartest thing for them to do,” says Sucharita Mulpuru, a retail analyst for Forrester. “One of the scariest things about opening a physical store is that you get one shot. It’s very difficult to pivot or change.”

If that happens Kaufman risks repeating his mophie experience. While he refuses to discuss his equity stake, all that venture funding almost surely means he’s ceded absolute control.

Not that he seems concerned. Back at Eval night the clear winner is the large plastic overlay that folds over a staircase to create a slide. The Young Inventors whoop with excitement. “This is an insurance killer,” warns Charlie Kwalwasser, Quirky’s general counsel. Kaufman sides with the 10-year-olds. “The kids don’t care about how much our insurance costs,” he declares to laughter, “nor should they!” F

iT TAKEs A CommuniTyshake, a beach bag with an easy way to clean out sand, is the product of many hands (3,341 to be exact)—from the inventors to the designers, copywriters and commenters, a nine-month process. This is how Quirky products get made.

Two guys went to Quirky’s website and submitted a

rough idea for a beach bag with a mesh bottom.

first stab: a flap that wraps around a mesh bottom.

Quirky designers work on a few pull-down devices.

one of three prototypes.

a couple of weeks later Quirky staff and commu-

nity members in new york City held eval (evaluation) night, voted and selected the bag as a winner. next: months of development.

idEA suBmission

CommuniTy dEsign PHAsE

ConCEPT PHAsE rEfinE

sELECTing CoLors

CHoosing TAgLinE

ProduCT LAunCHnAming

ProduCT EvALuATion

D E V E L O P M E N T

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sHAKE!

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More fun. Less sand.

STraTegieS reiNveNTiNg americaeNTrePreNeUrS


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gUeST colUmNleSlie gaiNeS-roSS

CEO sociability is a stakeholder mul-tiplier. Social participation is the great democratizer. It allows CEOs to com-municate with multiple stakehold-ers. Indonesian executives with social CEOs believe that the top recipients of their CEO’s social communications are customers, followed by employ-ees. The emphasis on employees as an intended audience for CEO sociabil-ity should not be underestimated as a competitive advantage.

Highly Social CEOs Habits. To pro-vide a model of engagement for CEOs looking to get more social or even test the social waters for the first time, Weber Shandwick developed a profile of the most social CEOs. “Highly so-cial” CEOs were found to use a more expansive set of social tools, author blogs, leverage company websites and engage external stakeholders.

The research also reveals that some CEOs primarily communicate socially through company intranets and websites. Weber Shandwick believes that “social” needs to be redefined to include more than just social network pages. CEOs need to strategically select all those digital tools to advance their business. For some companies, being a social CEO might be only being online on the company intranet or homepage. Companies that are social and engage their employees and customers in genuine conversation on their intranets, websites or on social media will be recognized as the new corporate leaders. Social CEOs will be the next new thing. F

Chief executives are ex-pected to be the human face of the company. In this Internet Age, social media appears to be the

perfect medium for CEOs to not only personalize their companies but also serve as their chief content provid-ers. Social media is also perceived as responsible for improving corporate reputation, driving business results and increasing employee engagement.

Weber Shandwick has been ana-lyzing global CEOs’ use of social me-dia since 2010. This year we decided to ask executives themselves what they think about CEOs entering social waters. Our report, The Social CEO:

Executives Tell All, surveyed 630 pro-fessionals in 10 countries, including Indonesia, with KRC Research. Indo-nesia was included because it is one of the world’s fastest growing markets, is tech-literate and an estimated 100 million Indonesians are expected to be connected by 2016. This is what we learned about Indonesian executives’ beliefs about social CEOs.

Employees want their CEOs to be social. This is a powerful statement. Indonesian executives overwhelmingly believe it is a good idea for CEOs to be social (94%),

Socially Engaging cEoS in indonESia

IndOnESIan ExECutIvES OvErwHElmIngly bElIEvE It IS a gOOd IdEa FOr CEOS tO bE SOCIal.

LEsLiE gAinEs-ross IS thE ChIEF REPutAtION StRAtEgISt At glOBAl PuBlIC RElAtIONS FIRM WEBER ShANDWICk. ShE IS WIDEly RECOgNIzED AS AN ExPERt ON CEO AND CORPORAtE REPutAtION AND CAN BE FOuND At REPutAtIONxChANgE.COM OR @REPutAtIONRx.

and 76% of those with social CEOs want to see their CEOs participate even more frequently. Why would senior Indonesian executives favor CEO sociability? First, employees say

they themselves are social—all Indonesian executives in our study have personal social media accounts (100%) and 85% say that they use social media in their jobs. Second, CEO sociability instills positive feelings internally—it makes

executives feel technologically advanced (76%) and inspired (73%). The strong demand for sociability from within should put pressure on CEOs to start engaging more socially.

CEO sociability yields positive re-turns. There are payoffs to being social. The top benefits, the study found, are information sharing, better media re-lationship, and an improved company reputation. Since engaging employees can align them with company strategy, social CEOs in Indonesia are arming employees with news they can use to help spread positive word of mouth.


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markeTiNg iNSighTShermawaN karTajaya

Kuntoro and the Vice Chief of Police Nanan Soekarna were also present.

Anies admitted that this was the first time he gave a lecture in a mall, and I apologized to him for not tell-ing him of the setting earlier. I showed him the recent edition of Marketeers magazine portraying Jakarta Gover-nor Jokowi as a rocker, which under-scored the casual setup of the event.

Anies’s speech was inspiring: “The New, New Indonesia in 2014.” He envisioned Indonesia as a meri-tocratic society devoid of discrimi-nation. To achieve this, he argued that we need “movements” instead of “programs.” Programs limit account-

ability to a small group and limit resources to complete them. Movements, on the other hand, are everyone’s responsibility and therefore have unlimited resources to support them.

Notably, Anies started the “Teaching Indonesia” movement, which sends youths to teach all over Indonesia. Anies believes that only with a good edu-cation available to all can

a meritocratic Indonesia become a reality—in other words, a movement. Dahlan took note of the lecture and ar-gued that there are 130 million middle class in the country who wish to see progress. Dahlan agreed that Indonesia needs movements and subsequently asked all senior executives from state owned enterprise to teach at schools.

Besides Anies, I also invited Slank, not to perform but to talk. All the band members were there—dressed casually—and the discussion was hosted by MarkPlus COO Jacky Mussry, also casually dressed. In the discussion, band leader Kaka explained the “Slank Manifesto: 13 Not-Perfect Teachings” which, among others, argued that Indonesians must be critical, social-minded, and have dreams. They are trying to compile a “Love Revolution” list with 1,000 names of people who care about the nation. For me, the list represents a grassroots movement looking for credible leaders. Unfortunately, Slank has managed to collect only 33 names. Slank had come up with more names but had to cut them due to ties with corruption and other unsavory deeds. Not surprisingly, two on the list were at the event: Anies and Dahlan.

I concluded the evening by saying that Anies, Dahlan and Slank shared similarities. They agreed that move-ments are more powerful than pro-grams, as they allow greater involve-ment. That is why we held the event at a mall: to allow more people to be part of it. A mall is horizontal and inclusive, a social place for community. A mall was also the place where Anies Baswe-dan, Dahlan Iskan and Slank spoke on the same stage for the first time. F

Can you imagine Anies Baswedan, Dahlan Is-kan, and Slank on the same stage? Probably not, but that is what

happened at MarkPlus’s 23rd Anniver-sary on May 1 this year. I had invited Anies, a professor and the president of Paramadina University, and Dahlan, the minister of state owned enterpris-es, to meet Slank, the rock band from Gang Potlot, a small lane in Jakarta. And they met in a seemingly unlike-ly place of the Fashion Atrium, Kota Kasablanka mall.

During that week, MarkPlus was organizing the inaugural Jakarta Mar-keting Week. Throughout the week, two vice ministers, several high-rank-ing officials as well as 30 mayors and district heads showed up. As a Mark-Plus tradition, we have a respected intellectual to deliver a “Lecture of the Year.” We were honored to have the Head of the President’s Delivery Unit for Development Monitoring and Oversight Kuntoro Mangkusubroto and prominent economist Emil Salim to deliver the lecture in 2011 and 2012, respectively. This year, I invited Anies.

Anies came in business attire and said he felt overdressed. The guests, mostly CEOs, were in ca-sual dress. I myself wore jeans and a T-shirt with a baseball cap from Corruption Eradication Com-mission (KPK) that says “Ayo Berantas Korupsi!” (“Eradi-cate Corruption!”).

PrograM vErSuS MovEMEnt

HErmAWAn KArTAJAyA IS thE FOuNDER AND PRESIDENt OF MARkPluS INC., ONE OF SOuthEASt ASIA’S lEADINg MARkEtINg AND PROFESSIONAl SERvICES FIRM. IN 2003, hE WAS RANkED AMONg thE “50 guRuS WhO hAvE ShAPED thE FutuRE OF MARkEtINg” By thE ChARtERED INStItutE OF MARkEtINg IN thE u.k.


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global viewPoiNTjeNNie S. bev

have begun to see a state of emergency has arrived. In regions where ongoing violence and extreme poverty are ram-pant, “sustainability” seems a distant goal. Whether Indonesia has fallen into this category remains to be seen. University of Indonesia Public Policy scholar Andrinof Chaniago has offered a solution to Jakarta’s overpopulation: moving the capital city to Kalimantan.

As we currently live in the so-called anthropocene era—an informal geologic chronological term

that serves to mark the evidence and extent of human activities that have had a significant global impact on global ecosystems—we bear the highest responsibility to ensure that our species and nature are well managed and maintained. Corporations, naturally, bear some, if not larger, part of the blame for all these perilous changes in the environment now and in the future.

According to analysts’ consensus as presented by Johan Rockstorm of Stockholm Resilience Center and his team, seven quantifiable critical planetary boundaries are climate change, stratospheric ozone, ocean acidification, nitrogen and phosphorus cycles, biodiversity loss, land use change, and freshwater use. Incremental tweaking might not be sufficient to safeguard the earth from further deterioration—radical innovations are the answer.

At least three major shifts of awareness must be adopted immedi-ately. First, the linear exploitation of nature must be stopped immediately. Second, innovations should focus on potentially raising the quality of life for all humanity. Thus, large-scale high-tech innovations in IT, nanotech-nology, biotechnology, and energy systems must seriously consider this requirement. Third, destructive paths must be replaced by non-destructive and nurtured with self-replacement paths. Business executive must rise to this challenge now unless they want to see a global collapse of the “sustain-able” environment. F

More and more busi-nesses declare that they’re environ-mentally friendly, ecologically con-

scious, and sustainable. Ecofriendly signs have become a seal of approval that a product is good for the environ-ment, yet many questions remain un-answered. Still, many believe that it’s better to choose something with a seal of approval than without one.

Interestingly, corporate social re-sponsibility (CSR) programs often are publicity-oriented than truly provid-ing social values for stakeholders. In today’s business world, “sustainable” and “CSR” seem to have become over-used and it’s hard to separate hype

from reality. According to Ecological Footprint’s calculations, the world’s population currently consumes 1.5 times global capacity. The earth is now being asked to sustain 7 billion people. It took 200,000 years to reach a population of 1 billion in the 1800s. Scarcity has definitely taken center stage in the larger scheme of things: by mid-century the world’s popula-tion would reach nine billion. The world is unlikely to cope with the ex-ponential loss.

iS SuStainability Still PoSSiblE?

tHE EartH IS nOw bEIng aSkEd tO SuStaIn 7 bIllIOn pEOplE. It tOOk 200,000 yEarS tO rEaCH a pOpulatIOn OF 1 bIllIOn In tHE 1800S.

JEnniE s. BEv IS AN AWARD-WINNINg AuthOR, COluMNISt AND FOuNDER OF A DIgItAl PuBlIShINg vENtuRE BASED IN SANtA ClARA. hER WRItINg ARChIvE IS jENNIESBEv.tyPEPAD.COM.

Even with a population of 7 bil-lion, greenhouse gas emissions and natural resource consumption must be decreased considerably to be able to reach a “sustainable” level. Analysts


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Tugu KunsTKring Paleis

FOrBes liFe

Return of the PaleisJakarta’s historic Kunstkring building is getting a new lease on life under the Tugu group.By Jim Read

Despite a steady drizzle, a festive mood prevailed inside the beau-tifully restored Kunstkring in Jakarta on April 17, the exact day the building turned 99 years old, to celebrate its grand reopening as the Tugu Kunstkring Paleis. The 200 or so guests were treated to a raucous ondel-ondel procession (a Betawi folk performance)

to mark the start of the event. The guest of honor was Jakarta Governor Joko Widodo, who, despite arriving late, was serenaded to the strains of “Bengawan Solo” by a harp-violin duo (in honor of his previous post as mayor of Solo).

The Kunstkring building, one of the city’s iconic colonial jems, is now under the care of the Tugu group of hotels and restaurants, owned by the family of An-nette Anhar, 29, who runs the group’s restaurants in Jakarta. She helped restore the building to its former glory as a center of arts and culture in the city, as well as a place for eating and entertainment. Annette is no stranger to the Kunstkring building. “I passed it almost every day when I first came to live in Jakarta and noticed how beautiful and prestigious it was, and the potential it had as a heri-tage center,” she says. “Our mission is to return the building to its original use.”

The imposing edifice was opened April 17, 1914 to promote and raise awareness of the fine and decorative arts of the then-Dutch East Indies. Later on, Dutch museums lent the Kunstkring artworks and from 1934 to 1939 it hosted exhibitions of world-class artists such as Chagall, Gauguin, Picasso and van Gogh. In addition, one wing housed a popular café called the Stam en Weynes. After its golden era, the building went through a volatile period of owners and uses.

The Tugu group underestimated the amount of needed repairs. “We were thinking it required just touch-ing-up here and there but it was a pretty big renovation,” says Annette. The wiring, for example, had to be replaced completely as it did not have the capacity to handle the planned electrical loads. The Jakarta govern-ment helped out by providing docu-mentation on the original use and de-cor of the building to Annette.

Today, the Tugu group has re-opened to serve as it was originally intended, as center for the arts and a dining establishment. A gallery shop will offer selected high-quality handi-crafts and housewares. When en-tering the premises, every available space seems to be filled with furni-ture, artworks or handicrafts—most coming from the private collection of Annette’s father, Anhar Setjadibrata, the founder of the Tugu group. These artifacts were previously in storage, explains Annette, awaiting a suitable venue for display. The Kunstkring was therefore an ideal venue. “Some of the paintings in the main dining room were originally on display here during the period 1916 to 1940,” Annette adds.

Framed photos show the building’s appearance over the years. LeFT PaGe: The main dining room; The Suzy Wong bar has a Chinois feel.


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Colorful HistoryThe KunSTKRinG has passed through many hands over the years and was used for many purposes. Construction of the building commenced in 1913 and was inaugurated as the Nederlandsch-Indische Kunstkring arts and culture center on April 17, 1914, by the then Governor General of the Dutch Indies Alexander Willem Frederik Idenburg. Initially aimed at Dutch expatriates, the center broadened its appeal in the 1930s to the wider local community and staged exhibitions of world-class artists such as Pablo Picasso.

Under the wartime Japanese occupa-tion, the building functioned as the head office of Muslim organization Majelis Islam A’la Indonesia. From 1950 to the 1990s the building was used as by the Jakarta city’s immigration department. After that, sadly, it was abandoned and looters removed the stained glass win-dows and other valuable interior items.

In 2003, the government took an active interest in the building again and began to restore it. By late 2008, follow-ing extensive renovations, the building reopened as the Buddha Bar, an inter-national franchise, that included a bar and restaurant. Religious objections to the name and use of Buddha statues in a commercial venue led to the closing of the bar in late 2010, which then reopened in 2011 as the Bistro Boulevard, with a restau-rant and art gallery. The Tugu group then took over in 2012, beginning even more renovation from September last year.

Tugu KunsTKring PaleisliFe

A good example of the place’s de-sign is the Suzie Wong bar and lounge, which sits adjacent to the Royal Ball-room. Poster boards promoting the 1960 romantic movie The World of Suzie Wong dominate the walls at either end of the bar. They also help integrate the Chinoiserie and Java-nese furniture and craft items that fill the room. Deciding how and where to redecorate the place with the family’s antiques took hours of work. “It was a day and night task,” recalls Annette.

That task is not yet over. A colonial-style bakery selling Dutch pastries is still being completed. “There’s still plenty of work to do on the building,” says Annette, who is currently devot-ing much of her available time to supervising the project. She adds that it is likely to be some years before the group can financially recoup the substantial capital investment it has made in the building. Nonetheless, Annette feels that all of Tugu’s hard work should be worth it in the end: “What has happened is really a dream come true,” she observes with a grin. F

FROm TOP CLOCKWiSe: annette anhar with a Suzy Wong poster; Building facade; Colonial fine dining at Kunstkring; The main dining room is filled with historical artifacts.

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healTh waTchshanTi shamdasani

to breathe better and mediate.In parallel to the growth of yoga

is the increased use of dietary supple-ments, such as multivitamins, min-erals and individual vitamins. These dietary supplements offer the promise of improved health, although their ac-tual effectiveness is subject to debate. Despite this, consumers are willing to pay for these supplements in pursuit of good health.

Along with yoga and supplements, there is also increased interest in pi-lates, massage, acupuncture, acupres-sure, ozone treatments and various other options said to help improve health (along with the old standby, exercise). Even lower income popula-tion have mbok jamu (herbal lady) or tukang pijet (masseurs).

What many are seeking could be termed “integrated care.” It is person-alized, participatory, and relationship-based care, emphasizing a holistic healing to achieve a total wellness that includes an individual’s emotion-al, mental, spiritual, and social goals along with a physical one. The primary therapies used to achieve these goals are healthy habits, such as balanced nutrition, exercise, adequate sleep, and positive outlook. Integrative healthcare skillfully uses the best of both conven-tional and other strategies to attain these goals. On the other hand, conven-tional care tends to focus more narrow-ly on preventing and treating diseases.

Today we live in a world filled with toxic elements, including stress and chemicals, that are damaging to

Today, we are seeing a rather notable and growing trend within the middle and upper classes to improve their

health. Obesity is the main reason why people are seeking healthier lifestyles, as obesity is no longer a “rich nation” disease. In nations such as Malaysia and Thailand, a third or more of the population is now classified as obese. Needless to say, with obesity comes other illnesses.

In the quest to fight fat and have a healthier lifestyle, one of the biggest trends is the growing popularity of yoga. What is surprising is the massive expansion of yoga. For example, Bi-kram Hot Yoga will be opening up five additional new branches, and this is Jakarta only, excluding Bali and other big cities in Indonesia. Some may say yoga’s stated health benefits are in the realm of pseudoscience. However, at the very least, people are learning how

The Yoga ConneCTion

ShanTi ShamdaSani IS tHE DIRECtOR OF gOvERNmENt AFFAIRS FOR SOutHEASt ASIA (ASEAN) At jOHNSON & jOHNSON, tHE DEPuty FOR INtERNAtIONAl COOPERAtION (FOREIgN tRADE AgREEmENtS) At tHE INDONESIAN CHAmBER OF tRADE & COmmERCE (KADIN) AND AN ADvISOR tO ASEAN OutREACH CONSultINg.

OveRWeiGhT POPuLaTiOnS in SOuTheaST aSiaOverweight prevalence (%) for adults of both sexes (BMI of > 25 kg/m2)

Source: WHO Non-Communicable Diseases Country Profiles, 2011

44.2 32.230.226.521 18.413.3

12.1 10.2

Cambodia Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam

our health. In pursuit of career and other goals, many people neglect things that help fight toxic elements, such as enough sleep and relaxing with friends and family. The mental, spiritual and physical is all part of the wellness approach. The risk is that bad health can make you enter a down-ward spiral. In the end, a person’s health is their responsibility. F


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The Chimney viLLaGeKampung Kobong’s smokehouses have been producing Semarang’s popular smoked fish for the last two decades. TexT and PhOTOS By ahmad zamROni


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FROm LeFT CLOCKWiSe: Smokehouses alongside the banks of the Kali asin river; The smokehouses are usually made from bamboo; a woman pulling a sack of coconut shell charcoals—used as fuel for the fires to smoke the fish.


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A thick blanket of smoke often covers Kampung Kobong—literally the village of chimneys—that belch out from the

dozens of chimneys sticking up from the smokehouses along the banks of the Kali Asin river in north Semarang. There are about fifty smokehouses here—each has at least four chimneys.

The smokehouses produce smoked fish popular in Semarang dishes. A variety of fishes are smoked, mostly cob, catfish and tuna. Before smoking, the fish are cut into small pieces, washed, dried in the sun and then smoked for about ten minutes. Women do most of the work, starting around sunrise and working until 5 p.m. For a day’s work they’ll get Rp 40,000 on average, while the owners can net a profit of about Rp 300,000 a day depending on market demand. F

CLOCKWiSe FROm LeFT: after cutting and washing, fish are dried in the sun before being smoked; Coconut shells being burned into charcoal; Smoked fish ready to be sold in the market; most of the smokehouse workers are women.

The chimney villageliFe


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The meThod of producing smoked fish in kampung kobong has changed liTTle over The years.


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The high LifeAround the globe, developers are taking luxury living to a new level, erecting superstructures that command dizzying prices per square foot from plutocrats in search of killer views. In Manhattan 432 Park Avenue (under construction) is on track to set the record for the tallest all-residential structure in the world, although planned projects in China and India are competing to be top dog. The current record holder? Dubai’s 1,358-foot-tall Princess Tower.

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432 PARK AVEnuEnEw YoRK CITYHeigHt: 1,396 feet, 96 storiesCompletion: 2015pentHouse priCe: $95 mil

onE57nEw YoRK CITYHeigHt: 1,004 feet, 75 storiesCompletion: 2013pentHouse priCe: $90 mil

THE SHARDLonDonHeigHt: 1,016 feet, 95 storiesCompleted: 2012pentHouse priCe: $78 mil

ECHo BRICKELLMIAMIHeigHt: 750 feet, 60 storiesCompletion: 2016pentHouse priCe: $8 mil

TouR oDEonMonACoHeigHt: 558 feet, 49 storiesCompletion: 2014pentHouse priCe: $250 mil

MEIER-on-RoTHSCHILDTEL AVIVHeigHt: 590 feet, 42 storiesCompletion: 2014pentHouse priCe: $50 mil

PRInCESS TowERDuBAIHeigHt: 1,358 feet, 107 stories Completed: 2012pentHouse priCe: $28.5 mil

TrOPhy hOmes

FOrBes liFe


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THE EYE

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AccountAble luxuryLexus has just introduced its top of the line sedan with the LS 600HL, with a 5.0-liter V8 engine and cutting-edge hybrid technology to deliver smooth, seamless power unusual in a hybrid. The engine generates 438 horsepower and has a 0-to-60 mph time of 5.6 seconds. Equipped with an all wheel drive system to further enhance traction, this hybrid model has an exclusive bamboo interior. Price: Rp 2.9 billion

Mickey’s tributeitalian notebook maker moleskin has released a limited edition mickey mouse notebook series. the notebook shows the evolution of mickey mouse’s image over time, starting with the first drawing in 1928. A six-page drawing guide is tucked into the inner pocket in the back to provide inspiration. Available in two sizes, the notebook’s cover features a sketch of mickey mouse, designed by a disney artist especially for this limited-edition notebook.


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triple exceptionAlityglobal whisky maker Johnnie Walker presents its first triple malt whisky with odyssey, a name inspired by the son of the brand’s founder, sir Alexander Walker, and his passion for epic journeys. odyssey is crafted from three rare single malts, handpicked by master blender Jim Beveridge, who has worked for the brand for three decades. it is said to have a unique flavor with hints of fresh citrus fruit, smooth honey, and creamy caramel. the whisky undergoes a time consuming and expensive process called marrying, where the three whiskies are combined and stored in a cask to blend and soften them. presented in a crystal glass decanter, with an art deco design, it pays tribute to the heritage of the brand and features the John Walker & sons monogram—a special endorsement of an exceptional whisky.

Price: Rp 10 million

inspiring soundsHigh-performance personal audio producer Monster presents its collaboration with renowned luxury watchmaker Hublot with the Hublot Inspiration by Monster. It is a noise-cancelling headphone that features Monster’s new audio engine, and has the world’s most advanced digital noise cancellation, for crystal clear sound. Like a fine watch, it uses carbon fiber and brushed aluminum. Noel Lee, the audio engineer behind the sound of Beats by Dr. Dre headphones, specially tuned this headphone. It also has a Bluetooth wireless connection.

rAcing lightnessto mark its cooperation with the mercedes Amg petronas Formula one team, iWC schaffhausen has unveiled its first timepiece in a carbon case with the ingenieur Automatic Carbon performance. the middle section of the case is manufactured using the same process as the monocoque of a racing car. the dial is also made of carbon fibre. it goes perfectly with the authentic Formula one look and gives the watch a profiled, three-dimensional surface. With an integrated shock-absorption system, the iWC-manufactured 80110-calibre movement is unaffected by extreme acceleration as well as sharp braking maneuvers and vibrations, making it the perfect watch for racing drivers. the rubber strap with its stamped calfskin inlay is stitched either with yellow or red nylon thread, reminiscent of the stripes on racing tires. limited production of 100 watches each, of either yellow and red nylon threads.


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THOUGHTS

Leonid Shebarshin’s career as a businessman really got its start on aug. 22, 1991, with the collapse of the coup against Soviet President Mikhail gorbachev. Shebarshin, then 56 years old and a 30-year veteran of the KgB, was summoned to the Kremlin by gorbachev and told to take over as chairman of the Soviet KgB, replacing Vladimir Kryuchkov, who was arrested for his role as the

main plotter behind the coup. Shebarshin was a master spy, responsible for all Soviet foreign espionage activities and having served as KgB station chief in such hot spots as india and iran. one of Shebarshin’s best suppliers was recently convicted Cia mole aldrich ames. in a long interview with FoRBeS in his small office on Moscow’s northern edge, Shebarshin boasts in flawless, unaccented english: ‘We used to get him [gorbachev] Reagan’s classified briefing papers the same day Reagan saw them.” —FROm The nOvemBeR 7, 1994 iSSue OF FORBeS

there are more leaks here than in the men’s room at anheuser-Busch.—BaRRy GOLdWaTeR

most of the time, the war against leaks is much more about a presidential quest for control—over information, over his own White house, over the government—than it is about real damage the leak has caused. —JOnaThan BeRnSTein

O divine art of subtlety and secrecy! Through you we learn to be invisible, through you inaudible and hence we can hold the enemy’s fate in our hands.

—Sun Tzu

a talebearer revealeth secrets: but he that is of a faithful spirit concealeth the matter. —PROveRBS 11:13

Asking journalists to denounce leaks because of their deleterious effects on the functioning of government is as hopeless as asking an airline to denounce jet fuel because of its impact on the environment. —BenJamin WiTTeS

the men of the FBI, with hardly an exception, were proud of their insularity, of having sprung from the grass roots. They were

therefore whisky-drinkers, with beer for light refreshment. By contrast, Cia men flaunted cosmopolitan postures. They would discuss absinthe and serve Burgundy at room temperature. —Kim PhiLBy

One shudders to imagine the mischief that some budding J. edgar hoover, now playing Call of Duty on his iPad after school, might one day make with the assets of the [nSa’s] Utah Data Center. —hendRiK heRTzBeRG

fiNAL ThOUghT Saying nothing is sometimes the right thing to say.

—mALcOLm fOrbes

SOURCES: THE COLUMBIA DICTIONARY OF QUOTATIONS; THE LITERARY SPY; NEWYORKER.COM; WASHINGTONPOST.COM.

It’s easy to forget what intelligence consists of: luck and speculation. here and there a windfall, here and there a scoop.— JOhn Le

CaRRe

ThOUghTs ON secrecY

What the press never does say is who the leaker is and why he wants the story leaked. Yet, more often than not, this is the more important story: What policy wins if the one being disclosed loses? —danieL PaTRiCK mOynihan


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Forbes Indonesia - June 2013