JP Ellis' Winding Journey to Build a Business as a Foreigner in Indonesia

This article is part of DailySocial Mastermind Series featuring innovators and leaders in the Indonesian technology industry to share stories and perspectives.

John Patrick Ellis, who is familiarly called JP, is a technology and finance entrepreneur who has been based in Indonesia for the last 15 years. Born in the United States and growing up in Asia and Europe, he first came to Indonesia to work in the development sector (NGO) in 2005 and remains here today as the founder of a fintech startup.

JP's career is full of unexpected choices and coincidences. Starting from the New York law industry to education and public health services in Flores, playing an associate role in a regional private equity firm, launching a location-based messaging app starting in 2012, to being involved in the founding of the Indonesian Fintech Association and establishing a regional fintech company that is fairly success.

With a background in political science, international relations, and languages, JP has extensive experience in entrepreneurship, technology, and planning. In his current role as group CEO of C88 Financial Technologies, he oversees diversified fintech businesses in the credit decisioning, financial analysis, credit scoring and market lending space with more than 400 employees in Indonesia, the Philippines, Singapore, Thailand, Australia and China. The DailySocial team had the opportunity to discuss JP regarding his journey, why Indonesia, why fintech and what it's like to try and succeed as a non-native immigrant. Half of our discussion took place in English, and continued with excellent Indonesian, in which JP expressed quite fluently but with a slight accent.

When you were young, did you ever think about starting a business or becoming a CEO?

I was born in the United States but I spent my childhood moving around every few years in Asia and Europe. These moving experiences defined my youth, and made me an adaptable, resilient, and open-minded person.

As a child, my dream was to become a professional swimmer. I trained hard and did quite well in competitions. But around the age of 16, I realized my abilities were not yet at Olympic level. Then, I focused less on sports and shifted more to school and studying. But the strong work ethic from swimming training has stayed with me, and has served me well over the years.

From a young age, I always liked thinking about how to solve problems, but it wasn't until I was 10 years old that I realized that this could be realized as a founder. I did a lot of things before I got to that point, but the common thread of my career has been a focus on problem solving.

You have an educational background in political science and international relations, what is it really about passion You and how do the two go hand in hand?

I love solving problems and questioning how the world works. Maybe this is what really drives and defines me. In Indonesia, and throughout the world, there are so many problems to be solved, it creates business opportunities. Not all of them, but most. Many of the world's giant companies started from here.

I graduated from Columbia University. Graduates like me usually go on to get a Juris Doctor degree from law school. Most of my friends have done this and I intend to do it too. After graduating, I worked in the New York legal industry in the field of dispute resolution. It was very interesting and work went very smoothly, but I just sat at a desk all day. There is a slight feeling of emptiness. Then, I applied to several world development work (NGO) programs. I received many offers including one from Princeton-in-Asia, but the most interesting offer was from a Stanford University affiliate program called ViA to join a project in Flores, rural eastern Indonesia.

At that time, everything on Flores was very limited. There is no electricity, no signal, and no running water. We had to walk through the forest to get to the villages. Perhaps because of this, the place is filled with great warmth and community. I interacted with the Tado people, learned the Manggarai language, and helped realize several initiatives in both education and public health for the village community, working with their teachers and the Community Health Center. It was a very satisfying experience but also an eye-opener for me.

JP Ellis with the Regent and Ethnic Figures at the Old Golo Beo Tado House, West Manggarai, Flores, NTT in 2005

After that, I worked with successful entrepreneurs, John and Cynthia Hardy, who sold their international jewelry company to a private equity firm. After the sale, John and Cynthia then asked me to help them turn a vacant plot of land in Sibang Kaja, south of Ubud, into a Green School; as the first employee there. John and Cynthia are charismatic and very innovative. It's great to be surrounded by enthusiasm and positive energy every day. Through them, I met my wife Agatha who also worked there. We have now been married for almost 13 years and have two children.

I then had the opportunity to join a regional private equity firm in Singapore and Jakarta founded by Tom Lembong. It's called Quvat Capital and Principia Management. I learned a lot from Tom and really enjoyed working for him, Brata and the team. I spent over four years there and undertook many varied projects including due diligence corporate, deal procurement and execution, fundraising, investor relations, research, special situation restructuring, and even trading.

Throughout this time, I have really enjoyed being around smart people and working directly with companies in a dynamic, fast-paced environment. Although Jakarta is a big city in many ways, it maintains the values ​​of a smaller community; politeness. I felt that the time I spent in rural Indonesia could help me understand the situation in the capital on a deeper level than if I had come to Jakarta directly from New York, Paris, or San Francisco. It is very important to understand things at both the micro and macro levels. You can't really understand one without the other.

Before starting C88Group and CekAja, you founded Harpoen Mobile. Can you share a little story about the company?

Since 2011, I have been convinced that the internet would become a very powerful economic force in Southeast Asia. Looking back, I find that this action was premature. But at that time I didn't realize it. Plus, after several years in private equity, I felt like starting and growing my own business. I like to create things and solve problems, am adaptable, and like challenges and adventure. In many ways, technology startups are the perfect vehicle to express and explore all of this.

We launched Harpoen Mobile on my dining table and our first product release was a location-based iOS and Android app called Harpoen. We then added a free product stack called Mapiary, which is essentially a location-based ad server, in an effort to generate more revenue.

My co-founders and I are glad we tried something original. At that time, many startups in the region tended to copy existing models. We feel proud because we tried new ideas. Thankfully, we have many friends in the tech community and media who support and encourage us. We represented Indonesia at the World Summit Awards for mobile innovation in Abu Dhabi in early 2013, and won! That is quite an achievement that can be recognized in terms of innovation.

But innovation alone is not enough. At the first startup, most likely, you will make a lot of mistakes. We felt it ourselves. In selecting location as the core of our service, we were stuck with the inflexible mathematics of GPS and the complexity of information saturation. To summarize briefly, in a typical information network content exists on two axes, usually creator and novelty or relevance. Location introduces a third axis and thus achieving mathematical information density is exponentially more difficult: the world is a big place and no matter how large you make the GPS vector, there will always be places out of reach with old content or no content at all. This is the reason why many location-based services like FourSquare and Highlight were not as successful as everyone expected in 2012. In computer science parlance, location-based content would be described as an algorithm with "exponential complexity."

Retrospectively, even if we had been massively successful and achieved DAU, the commercial model would not have worked because commercial ad monetization and CPM are very difficult to measure in Indonesia even now, let alone in 2012.

So, after a year of trying - and many amazing experiences including being the first founder to pitch at the first TechInAsia Summit in Jakarta in 2012 - I met with a Toronto, Canada based advertising company that was planning to commercialize the location to enterprise clients. Our Mapiary location ad server can help their clients like Nike take people on an interactive jog, or Heineken take people on an interactive pub crawl. There were a lot of interesting use cases and they were very enthusiastic, and I felt the technology was a better fit for North America as well, so they ended up acquiring what we had built and I was able to return capital to the investors. Overall, it wasn't a commercial success, but it gave me a lot of courage and experience.

What prompted you to create CekAja?

After Harpoen Mobile, I remain passionate about startups. At that time, the startup community in Indonesia was still quite small and everyone knew each other. I think a lot about what changes and opportunities will be created by increasing digitalization of the economy, and my close friends Sebastian Togelang and Andy Zain do the same. At the end of 2013, we all came together to establish Kejora Ventures. I act as entrepreneur-in-residence. I started building my fintech company in the Barito Pacific building in Jakarta, adjacent to Kejora.

We decided to do something unusual and launch in Jakarta and Manila at the same time. It's very unusual to launch a product in two countries simultaneously, but we have deep technical resources and a strong founder like Stephanie Chung in Manila. Additionally, fintech in both markets was quite similar at the start of 2013; it does not happen that one market is more advanced than another. So we felt taking a “one paddle two three islands past” approach would help us grow faster.

We were one of the first companies in Jakarta and Manila to engage with banks regarding the fintech/bank collaboration model. We quickly ran to see and visit every meeting room in the bank. But what we didn't take advantage of at that time was the length of time banks had to adapt and change. Even now, I am still surprised that many banks in this region are still not moving towards digital. This can be partly explained by the banking sector's residual trauma from the '98 crisis, and that large institutions have incentives that punish failure more than they reward success, whereas startups are the opposite. So asymmetric incentives is my best explanation when people ask me why the pace of change isn't as fast. Change is happening, and COVID-19 has accelerated it.

In the early days, we also recognized that laws and regulations needed to develop to support fintech innovation. Starting in 2014, I joined several other fintech entrepreneurs such as Niki Luhur, Karaniya Dharmasaputra, Budi Gandasoebrata, Aldi Hariyopratomo, Ryu Kawano, Alison Jap, and many others to start what has now become the Indonesian FinTech Association. We also do similar policy advocacy work in the Philippines. This created what I think is the momentum for a lot of the regulation and fintech activity that we see today in both of these markets.

Over the years, both the business and the association have grown and developed. In business today, we have marketplace aggregation, marketplace lending, credit scoring, score aggregation, insurtech, data management solutions, analytics, and credit risk management, and decision-making software available in the cloud and as a license. We partner with Anton Hariyanto, Sulaeman Liong and Rainier Widjaja for our company and client capabilities in almost every bank in the country.

We have an amazing team, and of course there have been many setbacks and challenges along the way, but we are growing and delivering value to clients and the industry. Meanwhile at the Association, tremendous growth is taking place and there are now hundreds of fintech companies in the country, and clear fintech laws, as well as tremendous engagement with the OJK and BI. Having said that, I think Indonesia has some of the most innovative and clear fintech laws and policies in the world. This is the work of an entire industry and I am very proud to have played a small part in it.

In 2018, C88 Financial Technologies (CekAja's parent company), received a strategic minority investment from global credit assessment company Experian.

You have looked at markets in several parts of the world, what makes Southeast Asia different, especially Indonesia?

The region is unique because of its demographics, growth rate, and interest rates. Regionally, Indonesia is unique because of its size. The other markets in Southeast Asia each have their own interests, and to be successful regionally, there are principles you must pay attention to in order to harmoniously balance the strengths of each market alongside the weaknesses of the others. For example, even though Indonesia is large and full of potential, monetization is very difficult and consumers and companies are very price sensitive. Other markets may have easier monetization paths, but smaller market sizes and less growth. Therefore, the best approach for the region is creating a balance between these elements.

For those looking to start a technology business in the region, they should know that the market is moving fast, and will remain so for years to come. Don't be intimidated by how fast it moves or think it's "too late" at all. Now that there is significant internet usage and mobile device penetration, a dynamic venture ecosystem with lots of capital and professional investors, inspiring leaders and success stories, exists super app and also stories exit successful through sales and IPO. Cloud technology is starting to emerge and develop more and more and this will pave the way for SaaS models, laws are clearer, and now COVID-19 has created this massive digitalization push. Once everyone is vaccinated and the economy opens again, it is clear there will be an acceleration of technology-enabled business models.

However, it is also important not to build a startup. However, start with business. Know your economics, know your path to monetization and profit, focus on doing well rather than fancy metrics or just going viral. Sometimes it's hard to tell the difference, especially for young founders, and when the media is gasping for breath and investors are demanding growth to meet the return expectations of their portfolios. But as someone who has done a lot in this field over the years, experienced successes and failures, I can say that when you really want to start, start with the business and not just the startup.

To be entrepreneur It's not easy, especially as an immigrant. What challenges did you face when you arrived and built your business in Indonesia?

I feel very welcomed here. This country has given me so much and I am grateful for that. I love the work I do every day, the people I work with, and the opportunities we have to solve problems and build a better industry, a better society, and a more prosperous country.

I think every struggle I've experienced is one every founder experiences: adapting to the product market, grappling with being on the right side of unit economics, building a great team and a healthy culture, navigating the COVID-19 crisis, and so on. I won't even mention these difficulties - this is the essence of being a founder.

In terms of being a foreigner, I honestly don't even feel it anymore. For people who know me well, there is very little friction between my Caucasian self and my Indonesian self. I feel comfortable on both sides and I like it.

With a wealth of experience in business, are there any hopes you still haven't achieved? Have you ever thought about eventually returning to the United States?

I'm interested in many things and I feel like I can continue to create new and innovative products and services for decades to come. There are many things I want to do, many problems to solve, and new innovations to create.

Especially in fintech, the industry is still in its early stages. I firmly believe that in the next decade, technology companies will be the ones leveraging data, building products, writing software, building analytics, and creating customer experiences to make Indonesian consumers and businesses universal banks, and competitive regionally and globally.

Regarding the United States, I recognize that the country needs to rebuild society and trust and restore its institutions in a post-Trump context. The United States will need energetic, committed people willing to roll up their sleeves and help do that. I don't rule out that one day, I might want to come back to play a role in it. But now, my company, clients, friends and family need me here in Indonesia and in Southeast Asia. Keep in mind, we also have a significant presence in the Philippines, and hundreds of employees and large businesses there, and there are a lot of opportunities there that encourage me.

Regarding the current pandemic, are there any significant changes occurring in your business?

Our clients are banks and financial services institutions. Many have been forced to postpone or stop projects and activities due to the pandemic. Although they had no intention of delaying, adapting to a work from home system for such a large organization was a challenge, with many unintentional delays. As a business, we have to be very flexible and adaptive to this reality to ensure we can continue to exceed our clients' expectations. The good news is that our clients need digital solutions. We anticipate a very encouraging post-vaccine climate for our clients and businesses.

As we enter 2020, we feel as ready as any company for whatever happens. We have several executives in Beijing, and because of that, the executive team and I were aware as early as mid-January of last year that a global pandemic was possible. We had a scenario that led to frightening levels that fortunately the disease never approached.

When lockdown started happening in the Philippines and Indonesia in March last year, I got the whole company together and we put together a clear strategy on what we were going to do to survive the crisis and ensure business continuity.

We have a very specific level of business continuity, and we send everyone home to work according to clear direction, policies and instructions. I also opened up our bi-lingual strategy memo and sent it to many other companies and startups. I want what we are doing to respond to COVID-19 to be accessible to others who may have doubts about whether it will affect them. We thought COVID-19 would create a crisis that would be long-lasting and severe, and unfortunately, we were right.

Clearly, my team and I were able to make the appropriate changes to the business to put us on a good path. We continue to serve our clients well, grow profitably, and innovate in our market segments. With vaccines starting to roll out now, we are starting to shift into an optimistic mindset for 2022 and beyond. We feel 2021 will continue to be difficult for most of the year, with some improvement heading into the second half.

What do you want to convey to the entrepreneur out there who wants to start a business but is hindered by the pandemic?

In my opinion, there has never been a better time to start a technology business. Yes, the virus creates challenges, but a vaccine is also nearly here. Focus on 2022 and beyond. And don't think it will be too late. In technology, nothing really ends because innovation will always be born. The code keeps recompiling. It's true that almost 90% of startups fail, but if you focus on building your business rather than starting it, you'll already increase your chances of success. Nearly every piece of knowledge you need is accessible and easy to learn. All it takes is commitment and hard work to do it. I do this, and many of my high-performing colleagues and friends do too. We don't just magically learn a new subject. Instead, it's a constant effort to stay up to date with what's new and current with technology and the world.

To start a company, you have to identify where the big problems are, how you solve them and how you turn them into a business. This mindset is something I have learned and developed over the years. Focus on the problem and the customer, be a learning machine, be optimistic and realistic at the same time, treat others well, focus on the community, and the results will be good. Indonesia needs more problem solvers, that could be a reason for you to move forward and solve problems. We can. The nation's children can. I'm optimistic.

- Original article in English, translated by Kristin Siagian