Go-Jek is fine, but does he leave his riders behind?

JAKARTA / SINGAPORE: After making waves at home, where he has more than a million drivers, he is focusing on Southeast Asia – with his beta application in Singapore on the verge of ########################################################################## 39 be launched today, Bloomberg announced yesterday.

Among its investors, eager to accelerate its expansion abroad, include Google and Temasek Holdings.

Its president and CEO and founder, 34-year-old Nadiem Makarim – born in Singapore – proudly states that Go-Jek is "by far the largest job-creating entity in the history of the country." 39; Indonesia. "

READ: Go-Jek launches pre-registration portal for drivers in Singapore

READ: Go-Jek aims to raise $ 2 billion for the expansion of Southeast Asia: Sources

But the option of choosing the country is no longer universally celebrated by its ojek motorcyclists. More and more of them are demanding high tariffs and stricter regulation of such companies.

Since 2016, his discontented riders – and those of his rival Grab – have taken to the streets to make known their misfortune.

"It's like we have to work," said a runner, Arif. "We work as independents without legal protection. We are helpless if something happens to us while we are at work. "

How did Go-Jek come to this when it seemed to be the solution to the crowded roads of Jakarta, one of the most congested cities in the world and where the company was founded in 2010?

After four months of negotiations, the Why It Matters program got an interview with the man behind the first unicorn in Indonesia – a start-up valued at more than $ 1 billion (his latest assessment around USD 5 billion) – for some answers.

And Nadiem said the decline in revenues – a similar complaint heard by Grab's drivers in Singapore – is a necessary reality for a maturing sector. (Watch the episode here.)

TWO GOOD WHEELS, WITH A BETTER APP

Go-Jek is not just an equestrian phenomenon. Its application provides a series of transactions, ranging from grocery and mail delivery to cleaning and even massage services. Users therefore do not have to deal with Jakarta's well-known traffic.

In the food delivery sector, following the withdrawal of Foodpanda from Indonesia in 2016, Go-Jek continued to capture 95% of the market.

To date, its application has generated more than 105 million downloads and processes more than 100 million transactions per month.

READ: Indonesian Go-Jek group close to profits in all segments except transport: CEO

READ: Comment: When Go-Jek arrives in Singapore, the expectations of consumers, drivers and delivery services

But the "pre-requisite at the beginning of Go-Jek" was Jakarta's motorcycle taxis, which Mr. Nadiem said he took wherever he went to the Indonesian capital, because they were "a much faster way to get from to B by beating the traffic.

"I was a big supporter of ojeks, I think, before many other people … And because I took ojeks very often, I quickly realized that these guys were smart, that they were customer-centric (and) reliable, "he said.

"It was a kind of secret faith that we had in the most underrated segment of society, because they could do everything for you … And now, this industry is five times larger than in the traditional market."

Thanks to Go-Jek's diversified model, which includes its Go-Pay cashless payment service, its users can earn income throughout the day.

"In the morning, they go to fetch people to work at home. During lunch, they deliver lunch to the offices. In the afternoon, they deliver parcels to ecommerce companies and then … they send people back home, "Nadiem said.

"In the meantime, they sell Go-Pay refills. So you have a variety of services and income opportunities for drivers. "

Taken for a ride?

But do Go-Jek runners laugh to the bank or did it become a race for them?

Mr. Mas Bangun, a three-year-old rider, has benefited so far. "I can choose to roll or not. Otherwise, well, I do not need it because Go-Jek is a way to earn extra income, "he said.

If I do not feel well, I would choose to take Go-Food orders. The distance is usually shorter. Guests can order only dishes that are not too far away.

Others, however, are unhappy because of the inconveniences. Krisna Wiharnanto, for example, said that the so-called partnership between Go-Jek and the riders is now "just a term" because "we are not on an equal footing" and the current system "n & # Is not what had been promised before. "

"In the beginning, it was not bad … When the tariff started to fall, the income became insufficient. The bonus has been increased, but the goal to reach the bonus has also been raised, "he said.

"For those who previously worked from 6am to 4pm, they must now start at midnight to run after the points … All this risk, just to have this bonus. It is not surprising that there are accidents every day.

As with other relay companies, points and performance can generate cash bonuses for Go-Jek drivers. Long distances and some jobs are worth more points.

But the way mobile phone applications determine prices is usually a mystery. We know that their algorithms determine prices according to supply and demand. And companies generally impose systems that ensure minimal acceptance of attractions.

When the Why It Matters team followed a Go-Jek runner for a day, she found that once the reservation was recorded, it was a race against the clock: the runner had 10 seconds to accept, otherwise the reservation was considered canceled.

Three cancellations in one minute result in the suspension of the rider's application for five minutes. And at midnight, the data is reset for the next day.

In the end, the rider achieved a score of 67% and 16 points, a goal of 65% and 12 points set by Go-Jek for a bonus of about 29,400 rupees ($ 2.80 S). For 10 hours of driving, her total earnings were 117,300 rupees.

Mr. Krisna pointed out that, according to Go-Jek, the income of his riders could reach Rs. 8 million per month. But even that's not the net income, he said.

Before deducting daily expenses: fuel, telephone and data bills, operating expenses, bike maintenance. We did not even talk about (what) if there is an accident.

In the end, a runner keeps about 65% of what he earns.

RESPOND TO CRITICAL

In theory, a driving application on the move is simply a technology that associates drivers with passengers. In reality, a company such as Go-Jek also monitors its riders with the help of comments and acceptance rates, thus determining their salary.

To fight for the interests of runners, Mr. Krisna co-founded Aspirasi Serikat Ojek Online Indonesia, a union that is behind some of their protests.

"I always want to fight, even if there is little hope. If we do not fight, who will? ", Did he declare.

Many Indonesians welcome the convenience of mobile phone applications, but it also requires tougher laws, recognizes Andri Yansyah, former director of the Jakarta Transportation Agency, who was replaced by a new agency in September .

These are not in place, however, as the status of such applications has not yet been clearly defined. "Does it mean public transportation? Is this special transport rental? Is this a private transport? We are not sure ourselves, "he said.

Having online motorcycle taxis (available) may have solved transportation problems, but there is still no regulation of the sector and it has become a problem.

As the government tries to set the rules of the game, what does Mr. Nadiem say about concerns and protests? "We like the dynamism, but it does not necessarily reflect the point of view of all pilots," he said.

"A lot of their demands relate to the price increase per kilometer. But there are other considerations. Much of the pricing is also limited by the imperatives of your competitors. "

Then there is the importance of the "discipline" of the industry through the reduction of subsidies. "I sympathize and sympathize completely with a lot of pilots who did a lot more … but that's the reality of a maturing sector," he said.

With regard to their feeling of being subordinated to Go-Jek, he pointed out the structure of the industry.

"They use a platform to generate revenue. Much of this is flexibility … You can work when you want, so you can work harder when you need more income, "he said.

"It's very difficult for pilots to see the macro. As a business, we can see that: The balance … What is most successful is that these two sides are developing, right? More drivers, more customers. We are perfectly aligned. "

COMPANIES ACTING AS "MINI-GOVERNMENTS"

The growth difficulties of the hiking industry are not unique to Jakarta. In Singapore, Grab also reduced driving incentives after its merger with Uber.

Mr. Victor Ang, a three-year-old licensed driver, said his weekly premiums had dropped to S $ 250, from S $ 1,000 to S $ 2,000.

"(Grab) is a trading company, so it absolutely can not burn money from investors," he acknowledged, even though he could only feel under the heel of the company.

The Singapore Competition and Consumer Commission has since ordered the company to maintain its pre-merger pricing algorithm and driver commission rates. This does not include incentives, but before the entry of Go-Jek, Grab has introduced new ones to retain drivers.

READ: Great reading: Passenger car drivers face obstacles when they are looking to get out of a formerly lucrative area

READ: Singapore's competition watchdog fined Grab and Uber $ 13 million for merger

However, the road ahead could still be bumpy. Jason Davis, Associate Professor of Entrepreneurship and Family Business Insead, who conducted field research at Go-Jek's headquarters in Jakarta, worries about the disgusting companies '' act as mini-governments.

"We are living in a very exciting time where technology and platforms are enabling companies to get started very quickly. They have their own market and the choices they can make to encourage certain behaviors or other behaviors, "he said.

"The concern is that these companies can grow so quickly and the market can shift their business – that they can then extract value through pricing and discourage competition."

He does not think, however, that private drivers have been misled. "They were instead given a system in which they could work, and maybe they could not expect what would happen in this system."

Asked whether consumers can do anything to thwart or minimize negative spillovers, he replied: "The most powerful levers may belong to governments. Smart governments can carefully regulate what is acceptable on the platforms. They can do things like discourage monopolies.

"There is a problem though … because these companies are so innovative, so dynamic, they create so many jobs, so many improvements in people's lives, that governments do not want to be too dominant in regulation and discourage this. innovation and that entrepreneurial spirit. "

Thus, regulatory frameworks must both keep pace with the industry and have the appropriate system of incentives and laws.

Watch this episode of Why It Matters here. New episodes every Monday at 20h.