HijUp Business Stories: Valuable Lessons for the Startup Community

I started HijUp in 2011. In the first month HiJup launched, this business is very profitable. I manage this company with two assistants. Armed with a 4x4 room, we tried to run a company. At that time, we managed to make a profit of $20.000 in revenue in the first month of the three's hard work. Inevitably, this is a very profitable business.

In mid 2019, after 8 years of existence, we succeeded raise $5 million. The business has grown more than 20x since then. However, still Haven't made a profit yet. Countless how many funds have been "burned", and sometimes we panic when there are questions about how long this will last. I myself could not sleep well. I realized at that time that having a lot of money didn't mean all was well. We are rich, we have a lot of money from funding (as a very profitable business). We think we will get even more funding next year. Then, we use the "burn money" strategy to achieve growth. Some people have told me that if we grow faster, investors will keep coming. They assured them to "don't worry about money." Unfortunately, that's not the case. Investors don't come. I'm starting to not believe in the rules of this game anymore. We have to have our own way to survive. We must be able to control destiny.

We have 6 months. I made an analysis of how we can run out of money. Why is it so different from the early days that could make a lot of profit. So, here are some of the findings that then form the basis of my decisions.

Number of Employees

banyak founder who take pride in the number of teams they have in the company. I am one of them. However, this is the wrong mindset. This is more to the emotional side and one's ego founder. I realized this when analyzing the existing team. At that time there were about 160 employees. The income per person decreases every time I increase the number of employees. Of course, the large number of employees makes me feel better, but on the face of it, the company doesn't look any better. Worse, the number of employees is one of the main drivers of other large costs such as buildings, electricity, administration, etc. Every single person I add will spend half their salary. Something I wasn't aware of.

I spoke to the HR team and suggested laying off as many people as possible, ensuring HijUp's operations continue to run smoothly. They proposed reducing 100 employees. They say HijUp will continue to run well even with a 70% reduction in staff. To my surprise, after all these years, we only realized this. We are blinded by the money we have. This was a very costly lesson for me as a founder and CEO.

HijUp's Founder and CEO, Diajeng Lestari

For me, firing people is not an easy thing. It was a very difficult and very personal decision. I have faith in the team that already exists. They are great people. Deep down in my heart, guilt enveloped me. I keep accusing myself of being a non-credible CEO. My consciousness is questioned, I am too emotional. I had mixed feelings and I lost confidence. In the end, I announced to all the team that a major decision had been taken, to reduce the staff size by 70%.

With this downsizing, we managed to cut 80% of the money burning rate. Our time is getting longer. However, that alone is not enough. I want to go back to the early golden days of HijUp, the time of freedom where we were a very profitable business.

Simplify technology and operations

The cost of technology is one of the concerns. It's true, I'm not a founder with a tech background. This is really a big challenge, a blind spot for me. Then, I then asked my husband, Ahmad Zaky, who is a founder with greater technological talent. He said we should be able to cut out 80% of unnecessary technology. According to him, the technology we build is too complex, too sophisticated for a small startup like HijUp. "Oh my God," I said.

I called my tech team and asked them to cut 80% off unnecessary tech costs. We finally managed to cut costs quite significantly. This project cuts the existing combustion rate in half. Increase our time longer.

We also found a lot of unnecessary processes. Some processes are also simplified. This is only a fraction of our burn rate. But the impact on productivity and happiness for staff is many, they can make the same impact with little effort.

Focus on customers and partners who bring profit

My next finding lies with the partners or tenants. We have many tenants and we find that each tenant is not equal in terms of profit. One can make a lot of profit, while another "burns money" using the same resources. So, we propose cutting out non-profit tenants.

We redouble our efforts and investments only to profitable tenants. The results are amazing. Tenants are also putting more resources into our business. So, profits are increasing.

We are starting to reap profits 6 months after all these projects started. In this era of Covid-19, I feel grateful that we made this decision. We feel ready now. We are very agile and ready to face this Covid-19 environment.

From this experience, I realized that it is important for founders and CEOs to be conscious and always rational. Do we really need one thing or another. We must also think that funding is our own money, not investors' money. By having such a mindset, we will spend wisely, because money will not come twice.

I also realized that not all startups are equal. Maybe a unicorn could follow the path of growth. However, startups like HijUp can't do that. Business models and scale factors differ. Everything should lead to profit and steady growth.

Hopefully the experience I share can be useful for many founder wherever.

- This article is a guest article written by Diajeng Lestari. He is the Founder and CEO HijUp.