Ferry Unardi dropped out of Harvard to create Traveloka, a US$1 billion “unicorn” that has changed the way the travel industry works in Indonesia and beyond. “All of our products and services are based on customers’ pain points,” he tells Ajeng G. Anindita
Seven years ago, Padang-born Ferry Unardi was studying for a Harvard Business School MBA degree when obstacles he encountered while trying to book trips to his home town led to a groundbreaking business idea. His concept was Traveloka, a wildly successful online company that has mushroomed into a “unicorn” after receiving more than US1 billion worth of investor backing. With Traveloka, Unardi has changed the way the travel industry works in Indonesia and beyond.
“There were times when I needed to fly back to Indonesia to visit my home town and other cities,” Unardi recalls in an exclusive interview. “At the time, I found some difficulties in obtaining a direct flight ticket, For example, getting from Indianapolis to Padang was just too complicated! I needed to buy a flight to Jakarta, then buy a ticket to go to Padang after I had arrived in Jakarta.
“I thought this was both a problem and an opportunity at the same time, and that somebody needed to find the most practical solution. Then, down the road, I met colleagues who are now my business partners, Derianto Kusuma and Albert Zhang. I met Derianto when I was working at Microsoft, and I got to know Albert while studying Computer Science at Purdue University (in West Lafayette, Indiana). We used to discuss the development of the internet industry in Indonesia, and we talked about going back home to give something back to our country.”
Born in 1988, Unardi earned a Bachelor of Science degree in Computer Science and Engineering at Purdue. “After I completed my Bachelor’s degree, I worked as a software engineer at Microsoft in Seattle for three years. Then I decided to resign from the company and I applied to study for my Master’s degree at Harvard. This was only to last for one semester, before I made my decision to build Traveloka.
“Honestly, becoming an entrepreneur and developing a start-up had never once crossed my mind before. As a teenager who loved IT, I saw myself as more of an engineer. This idea came up based on my own experiences when I was a frequent flyer from the US to Indonesia for almost eight years, and while also trying to understand the flight reservations system in Indonesia.”
But why take such a drastic decision to drop out of the world’s most famous business school? “I think it was about fate, destiny and will,” Unardi answers. “After I joined Harvard, I felt that it was not the best way forward for me. I had spotted a business opportunity, and I felt that that working together with Derianto and Albert, I could start to create an impact. So I decided to build Traveloka. I knew it was a big risk to take this decision, but I remember saying to my colleagues: ‘We are 23 years old, we are young enough to make mistakes, and there is no better time to do it.’ I believe that if we hadn’t jumped into the market at that exact time, we would have missed the train.
“As a start-up, there were so many challenges that we faced and learned from. The biggest challenge was that I had very limited expertise in software engineering. I am so grateful that Derianto wanted to build Traveloka with me. Because of him, Traveloka could scale its business with cutting-edge technology. Traveloka started when it was only a small team and now we have more than 2,000 employees. At the start we served only the Indonesian market, but now Traveloka serves six countries in Southeast Asia, and each of these markets has its own uniqueness. We started with only flight tickets, but now Traveloka has more than 10 travel and lifestyle products. Traveloka’s traffic amounts to tens of millions of visits each month.
“The first funding that we got was from [Indonesian early stage investment fund] East Ventures in 2012. I was happy to get to know [East Ventures co-founder and Managing Partner] Willson Cuaca. He was the person who helped us in the early days and also the one who has believed in us until now. I think we convinced him early on that our team consisted of people who had strong backgrounds in software engineering, and shared a mission to solve real problems with technology.
“In 2013, we received Series A funding from Global Founders Capital, the venture capital arm of Berlin-based technology incubator Rocket Internet. Fast forward to 2017, we got nearly US$500 million investment from Expedia [one of the fastest growing online travel portals in Asia], East Ventures, Hillhouse Capital Group, JD.com and Sequoia Capital, all of which highlighted confidence in Traveloka and the potential of the Southeast Asian travel market – and it was at that moment that we got the unicorn title.”
Navigating the Traveloka website is child’s play. How did Unardi make such a complicated process as finding and booking the international flights and hotel rooms people need so easy to do? Surely it wasn’t a simple matter? “In the early days, we rarely slept early,” says Unardi. “One of the biggest projects we had was when we launched our app in 2014. I think we had done so many meetings and brainstormings just to make sure all of the things went well and that people could experience the benefits of booking through our mobile app. Now, I am happy that more than 40 million people have experienced our app and enjoyed a seamless booking experience.
“In spite of all the challenges, I must bear in mind that: ‘If you develop good services for people, they will eventually come.’ I believed that we should not build a service where people only specifies one feature they liked. But we should focus on how we can make users love to utilise the whole service. This is what we do at Traveloka. We focus on understanding our customers’ needs. All of our products and services are based on customers’ pain points.”
The key to Unardi’s success is that he has persuaded the airlines and hotel groups to work with Traveloka. The company has established partnerships with more than 100 domestic and international airlines, serving more than 200,000 routes worldwide. Its killer app has been downloaded more than 40 million times, making it the most popular travel booking app in the region. None of this phenomenal success came easily.
“At the beginning of our presence in the market, there were no airlines who intended to build partnerships with us,” Unardi recalls. “We could only create sales through our resellers, without receiving any payment. At that time, our focus was to grow our website visits and make improvements, such as developing a clean and simple website interface. In just a short period, airlines and hotel groups became aware of us and started forming partnerships with us.”
The travel industry has undergone a revolution in the past 10 years. Says Unardi: “Just five or 10 years ago, travelling was not as easy as today. Back then, it was hard to get information to book travel itineraries, and the price was quite expensive. Today, with the rise of the smartphone and internet penetration in Indonesia, we live in a digital era where you can get information easily, book your travel itinerary on the go, and have various options of low-cost carriers and budget hotels.
“These changes have made travelling become no longer a tertiary need but even a primary need for most people – one that’s even more important to them than buying goods. The leisure economy is becoming more popular. People invest more in travel and lifestyle experiences compared to goods. This trend has happened in recent years, where people now have higher flight hours, staying in hotels more, experiencing new attractions, hanging out at new restaurants. To enjoy these lifestyle and travel experiences, people like to upload their moments through social media. At Traveloka, we are here to help them create those moments.”
How will Traveloka develop in the future? “We will continuously strengthen our partnerships with hotel groups and companies in the transportation, attractions, entertainment and culinary businesses in Southeast Asia,” says Unardi. “Traveloka is committed to enabling customers to do more than just travel. Moving forward, Traveloka will be focused on developing not only travel but also lifestyle products.
“Travel and lifestyle experiences complement each other. For example, when you travel to a new destination the first thing you might want to know is, where is the best place to eat? Now, with Traveloka, you can do all that on one platform. We have more than 10 products, categorised in three main sections: transportation, accommodation and lifestyle.”
Unardi cites start-up veteran and venture capitalist legend Ben Horowitz’s book The Hard Thing About Hard Things as a major inspiration. “This book taught me that you should not only pay attention to growth or users, but that you really should focus on what’s behind that – for instance, building the right team,” says the young entrepreneur. “People don’t talk about this because it’s not directly related to the internet. But at the end of the day, we are a company. And as a company, we need first and foremost to build a solid team.”