01: Krishnan Menon | BukuKas
Co-Founder @ BukuKas | Closing the Banking Gap in Southeast Asia.
Ingredients for Success:
Rely on your strengths. Krishnan, although a foreigner in Indonesia, leveraged his relationship management skills to build his local network while maintaining a global outlook for his company, BukuKas.
Focus wins. In a nascent market, opportunities and temptations will always arise. But going deep within a single vertical typically pays: Krishnan’s unwavering view of the banking opportunity for micro-businesses in Indonesia is a case-in-point.
Draw parallels to innovate. There is comfort in hiring ‘industry experts’. Krishnan’s bet on bringing in fresh thinking from gaming has helped create a hands-off distribution product for merchants.
Although hailing from India, Krishnan has solidified his presence as a formidable entrepreneur in Indonesia by founding two technology companies: Fabelio and BukuKas, the latter of which he is currently focused on. During our call, I was eager to learn more about his entrepreneurial endeavors, his view on the peculiarities and uniqueness of the Southeast Asian market, along with his plans for scaling BukuKas.
Krishnan and his co-founder, Lorenzo Peracchione.
Building in Indo
Given our Indian nationality and common interest in Southeast Asia, I had to start with the question: “Why have you decided to build your businesses in Indonesia?”. Expecting a detailed, data-driven response, I instead received something simple, yet rewarding in itself, “Lazada brought me here for my summer internship, and things just went from there. Honestly, people smile all the time here, it’s such a friendly place. It’s been easy to adapt here”.
Prior to launching BukuKas, a cash management platform for Warungs (the local name for mom-and-pop stores in Indonesia), Krishnan built Fabelio, a design-centric e-tailer. It’s safe to say that he’s now well-versed and plugged into the Indonesian and broader Southeast Asian startup ecosystem. But it wasn’t always that easy. “The benefit of being an entrepreneur is that you learn to never say no. Of course, when I initially moved here, I was questioned about how I lacked market expertise, but I persisted. Now, I feel like I have a superpower: the ability to relate to the local Indonesian environment while maintaining a global perspective,” Krishnan says.
Still, I wanted to learn more about the parallels between Krishnan’s Indian roots and his experience in Indonesia. On the difference, Krishnan said without hesitation, “Everything is done on Whatsapp. Even more so than in India”. It might seem curt, but that description in itself speaks volumes. In India, Whatsapp is the go-to means of communication - from grocery orders to ‘formal’ business agreements - which is why it seems surprising for Indonesia to eclipse India in its usage of the platform. But this made sense, given Krishnan’s go-to-market strategy for BukuKas’ target audience: shopkeepers.
With over 60 million across Indonesia, Warungs are essential to daily life across the country.
Tailwinds
Built as a layer on top of Whatsapp, Krishnan sees an opportunity is creating structure across the existing operating environment for Indonesia’s 60 million SMEs. By providing a formal framework for the store’s cash flows, shopkeepers will more effectively manage their businesses. A big plus of this strategy is the access to cash flow data will allow BukuKas to credit-score each store. This leads to a broader, more monetizable opportunity: becoming a bank, for the inherently unbanked shopkeeper population.
“We believe that there is a gigantic gap on the macro level. First, on the number of people using Whatsapp for business transactions. And second, in terms of the banked vs. unbanked population. That makes this a unique time in Indonesia’s history where both trends will merge in the long-run; 10 years from now, there’s little doubt that almost everyone will be on Whatsapp and we will see a much larger banking population.” As Krishnan spoke to this, it was hard for me to not draw the parallels with India’s banking push, where 80% of the population has access to an account today (although the usage of these accounts remains questionable…).
Focus & Listen
A common pain point for Warungs is competing with larger supermarkets on price. This is a common case of the benefits that stem from economies of scale. Larger markets have access to centralized and reliable distributors that supply goods at a competitive price. On the other hand, the fragmented Warung is not as appealing a client; this leads to price and supply inconsistency.
Naturally, a tangential opportunity for BukuKas would be to centralize F&B distribution for the Warungs. Krishnan, however, was unwavering in his company’s mission to first monetize on the banking side. “We’ve definitely thought about serving Warungs on the distribution side. But we strongly believe that focus always wins. And right now, we’re focused on the neobanking play - that’s where we view the largest near-term opportunity.”
The “near-term opportunity” not only arises from intuition for Krishnan, but through his willingness to listen to his users. “If there’s one thing that you need more than anything as an entrepreneur in SEA: the awareness that you don’t know it all.” Today, through his interactions with shopkeepers, he’s become knowledgeable on the critical pain points for Warungs; access to capital remains on top of the list.
Drawing Parallels
One of the key tenets of innovation is to experiment with improbable scenarios to form a new way of doing things. Krishnan lives by this at BukuKas, through his willingness to build by drawing parallels from other industries. “Keeping simplicity in mind, we’ve been wanting to build a tech-only, hands-off distribution product since the get-go. In incepting the product, we looked at comparable industries - ERPs and accounting tools - and noticed that these tools were built for highly sophisticated users. Using concepts from the gaming industry - early funnel optimization, viral loops, retention loops, and social nudges, to name a few - we’ve managed to build a business that requires zero salespeople.” Krishnan walks the walk:
“If you hire a banker, they will build another bank. That’s why we recruited the Lead Product Manager at Zynga to help build BukuKas.”
Final Frontier
In forming a view on the Southeast Asian opportunity, Krishnan surprisingly did agree with the skeptics, “...the frustration is real; from Lazada, I’ve experienced how each consumer across SEA thinks differently: from the way a brand is perceived to how a product is purchased.” There’s a reason Krishnan has maintained a relentless focus on Indonesia for Fabelio and BukuKas. “It’s fine to call SEA one ecosystem for mathematical purposes. But investors and entrepreneurs need to be aware of the construct created and that the countries are different.”
All said, there are positive aspects of the region that are often overlooked.
“To me, when I landed in Indonesia for my internship with Lazada, it felt like India in 2010. At the end of the day, there is predictability involved in how each emerging market in SEA evolves.”
This dynamic of the region is particularly beneficial for an entrepreneur like Krishnan: one with local market expertise that brings a global outlook, and who has a strong desire to innovate by incorporating learnings from different industries and countries.
It’s no surprise then, the recent traction that BukuKas has achieved. The product is present across 500+ cities, their merchant base increased from 7,000 to 1,000,000 in the last 9 months, and the firm saw a 30x rise in the number of transactions during the same period. To top things off, BukuKas recently announced a $9 million pre-Series A funding round led by Sequoia’s Surge program, Credit Saison, and Speedinvest. For Krishnan, clearly, things are looking up.
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