Interview with Yann Schuermans, Founder & CEO of Baskit

Hello everyone and welcome to a new episode of ChainTech. I'm your host Max Henry from the Global Supply Chain Council. So thanks again for joining us on another episode of the show as we continue to host some of the most interesting ChainTech founders and discuss the rapid rise of supply chain logistics and procurement technology. Across Asia, as we jump into today's conversation, also I want to remind everybody that you know we still have our Chantech platform that you can have a look and check it out where we bring a number of new solutions on a regular basis. And also, if you're interested to listen to the previous interviews, you can go and visit chantech.show. So today I'm very happy to to host one of our founders called Jan Schumanns, who is the founder. and CEO of Basket. Hi, Yan, how are you?

I'm doing very well. Thanks for having me here.

Okay, so let me jump into, uh, right into our question. And we always start by trying to understand a little bit on your background. If you could share a little bit on, you know, where you come from, what you've done in the past, and maybe starting with your field of studies, and, and maybe talk briefly about some of the, uh, maybe corporate jobs that you had before, before starting Basket. Yeah.

Sure. Let me start this at the family origins, right? Because it connects to what I'm doing today. So I come from a legacy of about 400 years or so of manufacturing and distribution, right? Both on the Belgian and on the Brazilian side. On the Belgian side, which is one of my nationalities, we were brewers. We brewed beer for a very long period of time, just something that you do in Belgium, right? That lasted up to around the 1950s. And then from there, once the brewery was shut down, my family moved to Brazil and started to make orange juice. So a very manufacturing distribution heavy background on the family. And I guess that, that kind of laid the foundation for what I would do with my own career, with my own life. Even though I did spend quite a bit of time between the 2 countries, ever since I was in my teen years, you know, I was always fantasizing about working in the space as well and in consumer goods and distribution supply chain. So the first opportunity that I had after finishing my studies in economics in the UK, I jumped straight back into it and I went to work for one of the largest brewers. So a company called AB InBev and that threw me into a global career in supply chain where I spent a lot of time in APAC countries like China, doing a lot of work in India, Southeast Asia, covering many areas from digital supply chain management to M&A and even managing some of the markets for them. So I guess it's a long consumer goods dynasty there. With the past 10 years or so spending quite a lot of time in APAC, especially in the space of beverages and FMCG.

So what was the aha moment and what actually triggered you to start your own company?

About 2017, a year or a year and a half after the company sent me to China, I was given a project to help them to digitize parts of their supply chain, especially around the intermediaries that they work with. And back then there was this feeling in the company of all these, our third-party wholesalers and distributors, they're so complicated. It's a black box. It's us versus them. And, you know, the company said, hey, Jan, go try to help us figure this out. You know, how can we squeeze them? How can we get the most out of it? And so I went there with that mentality of, you know, it's me versus them. We're gonna have this conversation where I almost have to find ways to figure out where they're taking advantage of the company or how I can find leverage. But as I went to talk to these wholesalers and these distributors, this whole world opened up to me across all of China, and this was without exception. I just got to realize how important those intermediaries were to the local communities, to the actual health of those supply chains, and that sure, you know, they're smart and they're playing games with the brand principles, but they're so fundamental. Nothing happens unless we have the right incentive of alignment of incentives and also the right connectivity and data exchange. So that flipped my worldview of, hey, these intermediaries are so, so, so important. How can we get brands, how can we get the supply chain to operate in a little bit more harmony so we maximize that relationship between the upstream and the downstream? So ever since then, I've been obsessed with creating vertical software that helps that relationship, that helps the exchange of data, that helps the flows between those principals and those intermediaries. It took me a while to act on it. I had to mature in my career for a few years before I did it. So I spent another 4 or 5 years in the company before pulling the trigger. But that was the moment where became obsessed with helping supply chain intermediaries be better and receive better treatment from the manufacturers.

So in one sentence, what is Basket doing?

So Basket is an enabler for supply chain middlemen. We believe that especially in emerging markets, the middle parts of the supply chain cannot be removed. They need to be empowered. And to empower it, we need 3 elements: credit, software, and commercial support. So we provide those 3 things to supply chain intermediaries for the benefit of the downstream and also the manufacturers.

So who are your customers and what are the biggest benefits that your solution is bringing to them?

Our customers are predominantly distributors and wholesalers that serve the general trade. So these are the more traditional parts of the supply chain. So these customers, they're not small, they're actually relatively large in terms of turnover. Some of them do millions a month in turnover, but because they service traditional parts of the supply chain, both in consumer goods and things like textile and garments, they themselves are not very digitized. They still use pen and paper. They don't have core systems. A lot of times they don't have access to formal financing. So the core benefit that we bring to them is we remove some of the backend, some of the operational heaviness from their business, save them some costs, enhance their ability to reach new customers digitally, but protect what they do best, which is the front office. They are amazing at engaging their local communities and we don't want to mess with that. We want to remove the operational heaviness from their hand so they can do what they do best, the best they can.

So what kind of tools do you actually provide to them? Can you just take a few examples of some of your most interesting tools or features that those distributors can use here?

Yeah. Customer touchpoints between our wholesalers and their customers are often manual, self-pickup, cash and carry, WhatsApp communications. There's very little active engagement. It's a very passive relationship. What we do on the front office for them is we enable them to manage through CRM, through an order management portal, to manage a lot of those conversations and a lot of those interactions digitally so they can drive more business from their existing customers, but more easily get their product catalog with dynamic pricing, with promotions that they might want to run to more customers. So that's on the front office, increasing revenue. Now to do that, I need a very strong back office. So I need a very strong inventory management software, a very strong warehouse management software so that I know in that messy warehouse what's available, what they need more of. So I can also help them on the procurement side. So I help them on both sides with a series of back office and front office platforms.

So on the supply side, they're dealing with manufacturers, large, very large manufacturers, right, who are providing bulk, you know, orders to them for certain type of products. And then on the other side, they're facing retailers, mom-and-pop, you know, supermarkets, you know, convenience stores, right? Is this where we stand?

Okay.

So you mentioned that a lot of us distributors can be somehow medium or large companies, are still, you know, quite laid back in terms of technology. So are they, you know, what kind of tools are they currently using? Like, you know, are they using Excel or you mentioned WhatsApp, you know, what are they running on right now and how do you help them to, you know, change the way that they, you know, adopt technology?

some of them are using tools imposed by the brand principals, by the manufacturers. So they will use extensions of their ERPs, or they will use internal B2B platforms. But those are usually adopted only to a certain extent because obviously they're only servicing the requirements of one principal. It's not the distributors' or the wholesalers' choice to use. So in that case, what we do is we actually say, I know that you need to please your brand principal, let me give you the tools that will actually help you manage the other parts of the business in a way that works for you. So for the ones that are using things, we help to manage that relationship. So we make their multi-platform engagement with the brand principals a lot more manageable for them so they don't have to open 20, 30 different apps at once, right? So that's on the more sophisticated distributor side. On the less sophisticated side, oftentimes they're using Excel at best or some very old POS that they also kind of use as an inventory management tool. But that's on the best case scenario. In a lot of cases, they are either using their brain to keep track of inventory or they're using pen and paper, maybe a very simple spreadsheet. So it's very rudimentary. There's not a sense of urgency around keeping the warehouse up to date. It's not the thing that is most top of mind.

So you're currently based in Jakarta, so you're obviously focusing on the Indonesian market, which is a huge FMCG, you know, market for a lot of brands. Why did you pick Indonesia and not, you know, I mean, you were in China before, which is much more mature, but why did you pick Indonesia and not the other Asian countries?

Yeah, so I've been obsessed with finding a way to create vertical solutions for many, many years, you know, almost 7 years now. And with that obsession comes the desire to tackle the biggest problem out there. And if I look in terms of complexity, fragmentation, and also the current timing of the market, Indonesia is just at the perfect inflection point. It is so fragmented, the topography, the demographics, they're all at that, you know, perfect point around digital adoption, but also with a very traditional supply chain. So I like to think of Indonesia as the nirvana for that obsession that I had, right? Just because it ticks all of those boxes. Now, there is a separate component to this as well. Indonesia received a lot of funding for digital initiatives, startups, and supply chain in different areas. But the specific area that I'm interested in around wholesalers and intermediaries, that has been very underfunded. So I felt that the piece of the puzzle I can contribute can really be meaningful here.

The entire industry is also going through major change. Obviously, there's been a, you know, some pretty big marketplace, you know, e-commerce marketplace in Indonesia, the like of Tokopedia and Shopee and Lazada. You know, how are you you also helping those wholesalers and distributors to connect and work more efficiently with those e-marketplaces?

Yeah, that is a really good question because it's at the center of why we do what we do. The premise that Basket stands behind is that e-commerce on its own cannot reach its full potential unless the underlying infrastructure is ready to provide the fulfillment, the entire logistics, the warehousing, etc. That's why e-commerce usually stops at 8, 10, 12% penetration even in developed markets. So what we are doing with our wholesalers is digitizing them so they can be part of that online to offline infrastructure. So a lot of times what ends up happening is our wholesalers, sure, they wanna buy from brands, they wanna have that formal relationship, but they're predominantly focused on sourcing, on having access to the best possible portfolio. And sometimes that comes from e-commerce platforms, sometimes that comes from different types of sources. So having that connectivity and making it seamless for wholesalers is a very important step in bringing the right price and the right assortment to the different communities because the wholesalers at the end of the day, they're kind of like a payment gateway and fulfillment center for that community. Now, naturally, what we do very simplistically on the downstream side between the wholesaler and their customers is digitizing that order making. And for, from in the spectrum of journeys, right, it's a very important educational point to moving consumers and retailers into a more e-commerce driven type of order making.

But those wholesalers are also being disrupted by those marketplaces, right? A number of them are, you know, are competing with those huge marketplaces in Indonesia. So how do you see them evolving, and is technology becoming one of the key advantages, or, you know, one of the edges they have to leverage if they want to stay competitive in this market?

I believe the— and this is something you can see through the data— e-commerce penetration or percentage of total sales went through the roof during COVID And there was this expectation that it was going to stay that way. But immediately after COVID, the traditional channels, the offline channels, mom-and-pop shops and whatnot, actually bounced back stronger than pre-COVID, which was completely against what everybody expected. So what does this tell you? This tells you that there is still a requirement. There's still a trust component in shopping locally. There is still a huge need and a huge legacy in the supply chains run by brand principals, which depends on these wholesalers. And third, there are situations in which, you know, it aligns everybody's interest to have hundreds of thousands of these wholesalers using their own working capital to stock up and hold inventory. Removing that might not be as healthy for the brand principals as people think. So my perspective is that for the next 30, 40, 50 years, we're actually going to see a very small decline in their overall contribution to the market. Sure, there will be some consolidation, but it will not be as drastic as people think. It will be more of a modernization rather than a removal. If you think about, if you take that a step forward as well, when you think about markets like Philippines and Brazil, interestingly, a lot of wholesalers and a lot wholesaler groups developed into cash and carries and developed into these large developed groups where the wholesaler and the distributor's role is morphed into this kind of like hybrid large DC with a Costco-like front. I foresee that more and more we'll see some of those dynamics playing in Indonesia as well. So they will be strengthened, I believe, at least, but modernized.

For your solutions, do you have any competition in a country like Indonesia?

We, because we're building vertically, we compete in different fronts, right? So we pick many battles. I would say that the wholesaler, the middleman empowerment narrative is a new one. So folks who are going directly for wholesalers, going directly for let's help them out from a technology central point of view, that's quite new. So I don't see that many people out there, but because we also use our wholesalers. We have more than 150 today, and then we bring those wholesalers as a solution to Brand Principles to improve their supply chains. There are other companies that provide supply chain services here, right? So in some cases, we would have some competition there, especially startups that have started to brand themselves as digital distributors. So yeah, we pick some fights with different folks, but centrally at the wholesaler, I think it's quite a new initiative.

Do you focus on specific segments in terms of product category, or do you go across the entire FMCG or general trade segment?

We built for FMCG first.

Okay.

The mindset that FMCG has the broadest infrastructure because it's such a large supply chain. And then what ended up happening is from FMCG, we started to branch out into textiles, into things that are more kind of beauty and personal care, things that are a little bit on the fringes, not as fast moving with higher margins using the infrastructure from FMCG. So I would say today we're 60% or so FMCG and multi-category across a variety of things.

Okay. How do you market your solutions and get your customers? So, you know, obviously those companies, wholesalers, distributors, are you calling them? Do you, you know, meet them at shows? How does that work? How do you get your business?

Yeah, it's a very local, very regional business. So we have to hire and we have to work with people who know that community very well. So our motto is, you know, very deep, you know, build community-based strongholds. So whenever we go into a community, the people that we hire there, they will know the wholesalers, they will know the distributors, and then we go very deep into those communities and then we expand bit by bit outside using the networks that we already know. So it's almost like going in circles around a central point that enables us to have minimal spend on marketing and use things like referrals, use things like additional hires who have those connections already in order to bring business. Now, what we're starting to do today is we're starting to work with very large brand principals in Indonesia who say, hey, I love what you're doing in terms of bringing us new wholesalers. I would love for you to plug into my existing supply chain where I have also thousands of wholesalers, and can you help me to make sense of that? So there is a more kind of efficient go-to-market now where the distributors and the big principals are pushing us using their existing verticals.

So Indonesia obviously is a very fragmented market with, you know, both industry-wise but also geographically. those distributors and wholesalers, you know, I mean, you know, really different from different province and different islands. And within those islands, you also have different regency. And so how do you know, are those companies very, very local and very, you know, regional focus?

Very. I was just having this conversation the other day with the CEO of a company that operates in Central Java. and a bit different, but we have exposure to the same types of clients that we were just talking about, just how different the profile is. So in West Java, which is where we're very strong, the wholesalers are more like warehouses. So it's 80% warehouse, 20% retail front with a little bit of a cash and carry. In Central Java, it's very cash and carry focused and very trading focused with the warehouse kind of deprioritized and a lot more sparsely populated. So for sure, the differences are massive even within Java. So it's very difficult to generalize.

What is your revenue model with those distributors and how do you make money with those companies?

As a company, we build vertical software, right? Meaning that we want to provide an operating system end-to-end principle all the way down to retail. But we realized that given our age, we're just a year, a year and a half old now. We cannot do all of that and be a profitable company because we'll be spreading ourselves too thin. And it's very difficult to sell in technology as a pure solution in Southeast Asia. So what we do is we anchor components of a marketplace as our Trojan horse into that relationship. So the first thing that we drive for our customers is incremental revenue. So we onboard wholesalers who in our marketplace can be both sellers and buyers, and then we find ways to bring them additional volume, additional orders. And we monetize that. Once we've monetized that and we're making him money as well. So on a revenue share basis, we have then earned trust. Once we've earned the trust, he's okay to begin paying us a fee, a platform fee, a subscription for the platform that we provide him. Now we do this over and over and over and over again to hundreds of wholesalers. And then we bring those wholesalers to the big brand principals. And then we have strategic partnerships, kind of more outcomes-based partnerships with the brand principals who want to improve their market share to who want to improve their specific supply chains. And that's really the big generator of revenue for us.

Okay, tell us about your team. How many employees do you have full-time and how many engineers? And do you actually develop everything in Indonesia or do you outsource some of the solution development to other countries?

So we are about 50 people today, 50 people full-time with a few sales agents in the field, but that's the core team. About half of that is product and tech. The remainder will be about, so 20 to 25 product and tech, about 20 is on the operational and commercial side partnerships, but also managing our day-to-day. And then we are 6 leaders. The team is very Indonesian focused. I'm the only non-Indonesian from that perspective, so I needed to compensate, but they are all a pretty diverse set of of folks. So we have veterans who were part of some of the first-generation platforms that tried to crack the supply chains in Indonesia. So we're taking some of those learnings. We have folks who have been in supply chains for 20, 30 years across different verticals on the commercial side. So we're a little bit of a melting pot of new digital blood trying a second time, and then also veterans who've been more on the traditional side and bring more of that general trade wisdom. We've chosen to do everything here locally and build a truly local Indonesian company because we realize that it's already such a diverse country with so many ethnicities, sub-ethnicities, so many ways of working, so much complexity. We need people to be firmly plugged in on the ground, which is why myself as well, I spend a lot of time in the field. I go to visit the market a lot, and even though my Bahasa is not perfect, you know, I get by and I make it a point to be there as much as I can.

Let's talk about your funding journey. If you could share a little bit about how you started your company, did you bootstrap it for some time? And what was the type of funding that you raised in the past few years?

For us, getting started was not easy because we came at a time when companies in Indonesia had raised a lot of money. a lot of money and they had models that were almost the polar opposite of what we were trying to do from, you know, from either disruptor or enabler, right? So for us to come into the market, a foreign founder starting something new and then knocking on the doors of VCs, they were like, wait a second, we just funded, you know, this company and that company. So for me, I had to resort to going into my inner circle and speaking to mentors, speaking to people that have deep trust in me and have worked with me and long enough to know that I'm able to execute. So I got together a few CEOs of certain companies. So Kraft Heinz, APAC CEO, AB InBev CEO, Heineken former CEO for certain markets, several of these FMCG folks who, you know, had that trust and we got together a nice little group and that got me off the ground and that got me through that initial period of investors weren't too comfortable with us because we were new. And then also, you know, we just needed to be able to get some momentum. What was interesting for us is that we were able to get traction very quickly. So the moment that we hit revenue in a few months from starting the company, that changed the perspective of investors. So around the beginning of 2023, when we were revamping up our investor engagement, we had our pre-seed which was led by an investor called Forge Ventures. And that was for us, you know, the first, oh wow, okay, now we're funded, now we're safe. What we hadn't realized is that the market narrative had been changing a lot from disruptor to enabler. So the moment that we closed our pre-seed round, we immediately reopened a seed round and raised another round. So there were 2 back-to-back rounds at the beginning of 2023, which have afforded us the luxury of having 4 or 5 years of runway today. So in total, we raised about $5.5 million and our burn is minimal. So, you know, I think we're in a pretty comfortable position today to be able to experiment and drive things.

Let's talk about the pandemic. And so what kind of lesson have you learned and how challenging it was for you to go through and all that difficult time in a place like Indonesia?

And in the early days, you mean when we were starting out?

Yeah, probably starting out and then at the end of it also. And probably what other lessons did you learn out of that pandemic as you as an entrepreneur?

So the pandemic has fundamentally changed a lot of dynamics within the supply chain here. Some of the things I mentioned were stronger than before the pandemic. So versus the general trade penetration, which took a lot of people by surprise because people had been investing in digital commerce and And so nobody could have predicted that. It also changed dynamics around when the loadings and when the supply cycles, inventory ups and downs happen within the country in a way that is probably more permanent than people expected as well. So as the first Lebaran, the first kind of Ramadan Lebaran period, which is when a lot of loading happens in Indonesia ahead of the festive period, that is you know, a very, very important time for supply chain companies. I was entering the market right as the loading was beginning to happen and people were making preparations. So what we were expecting is we were expecting similar types of dynamics to what had happened in previous years pre-COVID. But the, the Libanon of 2023 was extremely soft. It was actually very, you know, a lot of products that used to sell a didn't sell. People who used to go to their communities, their homes to spend time with family chose to travel instead because the borders open and people could go abroad. So it was a very interesting time where I couldn't look backwards to take inspiration for the future and nobody had insights on where things were gonna land. And especially as a foreign founder who has even, you know, less insights because I haven't spent a lifetime here, that was quite challenging. So I had to surround myself with really, really really solid advisors and people who could open the right doors and guide me. Folks like an individual called Shafi who was the CEO of Transmart here in Indonesia and a few other angels that really supported our journey. I don't think we would have been able to get the traction we did and have the right footing without them supporting us.

Indonesia also has seen the creation of a rise of a number of startups focusing on supply chain logistics. You know, what is the current landscape today, you know, in 2023? And as market, as you mentioned, is changing, funding is getting harder, companies need to show real profits. So what is the landscape of those gentech companies look like in Indonesia?

I think it's interestingly enough Like I said, the fundamentals for the country are perfect where the GDP per capita is at that $5,000 per capita. All the demographics, all those fundamentals are still intact. They're beautiful. However, what has happened in the past year or so with all the overinvestments, with some startups going under and not being able to, you know, lots of layoffs, that has a little bit tarnished both both the investment side of things, but also the market side of things. So on the investment side of things, you know, very openly, I will say that supply chain/FMCG are not the most sexy and fashionable startups for the time being, just because there's a history of, there's no history of great outcomes there. So I think that this is going to stay for a while, meaning that funding will go to other sectors that are more exciting, like environment, ESG stuff, AI and whatnot. For me, that's great because, you know, it means less people entering, but it also does create a barrier for folks who want to innovate in the space and raise substantial capital. From a market perspective, it's also complicated a little bit. People that have seen these startups go under, they are more reluctant to work at startups now. So talent is very difficult. So once you do have talent, you have to fight a lot to keep them. And you also have to fight to build the right image with with potential partners, brand owners, distributors. Sometimes they're reluctant now to engage because they say, hey, are you going to be around next year, right? So you have to be extremely good at projecting stability, at being professional, and it forces young startups like ours to be professional and to be very, you know, engaging in a way that they can relate to earlier than probably we would have had to if this wasn't happening in the market.

What is your biggest challenge as a CEO and founder of a company right now?

My biggest challenge right now is people. It's always people. It's back to the point that I was mentioning.

You see, our leaders Hello everyone and welcome to a new episode of ChainTech. I'm your host Max Henry from the Global Supply Chain Council. So thanks again for joining us on another episode of the show as we continue to host some of the most interesting ChainTech founders and discuss the rapid rise of supply chain logistics and procurement technology across Asia. As we jump into today's conversation, also I want to remind everybody that, you know, we still have our Chaintech platform that you can have a look and check it out, where we bring a number of new solutions on a regular basis. And also, if you're interested to listen to the previous interviews, you can go and visit chaintech.show. So today I'm very happy to host one of our founders called Jan Schuimans, who is the founder and CEO of Basket. Hi, Yan, how are you?

I'm doing very well. Thanks for having me here.

Okay, so let me jump into, uh, right into our question. And we always start by trying to understand a little bit on your background. If you could share a little bit on, you know, where you come from, what you've done in the past, and maybe starting with your field of studies, and, and maybe talk briefly about some of the, uh, maybe corporate jobs that you had before, before starting Basket.

Sure. Let me start this at the family origins, right? Because it connects to what I'm doing today. So I come from a legacy of about 400 years or so of manufacturing and distribution, right? Both on the Belgian and on the Brazilian side. On the Belgian side, which is one of my nationalities, we were brewers. We brewed beer for a very long period of time, just something that you do in Belgium, right? That lasted up to around the 1950s. And then from there, once the brewery was shut down, my family moved to Brazil and started to make orange juice. So a very manufacturing distribution heavy background on the family. And I guess that, that kind of laid the foundation for what I would do with my own career, with my own life, even though I did spend quite a bit of time between the 2 countries. Ever since I was in my teen years, you know, I was always fantasizing about working in the space as well and in consumer goods and distribution supply chain. So the first opportunity that I had after finishing my studies in economics in the UK, I jumped straight back into it and I went to work for one of the largest brewers. So a company called AB InBev, and that threw me into a global career in supply chain where I spent a lot of time in APAC countries like China, doing a lot of work in India, Southeast Asia, covering many areas from digital supply chain management to M&A and even managing some of the markets for them. So I guess it's a long consumer goods dynasty there with the past 10 years or so spending quite a lot of time in APAC, especially in the space of beverages and FMCG.

So what was that aha moment and what actually triggered you to start your own company?

About 2017, a year or a year and a half after the company sent me to China, I was given a project to help them to digitize parts of their supply chain, especially around the intermediaries that they work work with. And back then there was this feeling in the company of all these, our third-party wholesalers and distributors, they're so complicated. It's a black box. It's us versus them. And, you know, the company said, hey, go try to help us figure this out. You know, how can we squeeze them? How can we get the most out of it? And so I went there with that mentality of, you know, it's me versus them. We're gonna have this conversation where I almost have to find ways to figure out where they're taking advantage of the company or how I can find leverage. But as I went to talk to these wholesalers and these distributors, this whole world opened up to me across all of China. And this was without exception. I just got to realize how important those intermediaries were to the local communities, to the actual health of those supply chains. And that sure, you know, they're smart and they're playing games with the brand principles, but they're so fundamental. Nothing happens unless we have the right incentive of alignment of incentives and also the right connectivity and data exchange. So that flipped my worldview of, hey, Hey, these intermediaries are so, so, so important. How can we get brands? How can we get the supply chain to operate in a little bit more harmony so we maximize that relationship between the upstream and the downstream? So ever since then, I've been obsessed with creating vertical software that helps that relationship, that helps the exchange of data, that helps the flows between those principals and those intermediaries. It took me a while to act on it. I had to mature in my career for a few years before I did it. So I spent another 4 or 5 years in the company before pulling the trigger. But that was the moment where I became obsessed with helping supply chain intermediaries be better and receive better treatment from the manufacturers.

So in one sentence, what is Basket doing?

So Basket is an enabler for supply chain middlemen. We believe that especially in emerging markets, the middle parts of the supply chain cannot be removed. They need to be empowered. And to empower it, we need 3 elements: credit, software, and commercial support. So we provide those 3 things to supply chain intermediaries for the benefit of the downstream and also the manufacturers.

So who are your customers and what are the biggest benefits that your solution is bringing to them?

Our customers are predominantly distributors and wholesalers that serve the general trade. So these are the more traditional parts of the supply chain. So these customers, they're not small, they're actually relatively large in terms of turnover. Some of them do millions a month in turnover, but because they service traditional parts of the supply chain, both in consumer goods and things like textile and garments, they themselves are not very digitized. They still use pen and paper. They don't have core systems. A lot of times they don't have access to formal financing. So the core benefit that we bring to them is we remove some of the backend, some of the operational heaviness from their business, save them some costs. Enhance their ability to reach new customers digitally, but protect what they do best, which is the front office. They are amazing at engaging their local communities and we don't want to mess with that. We want to remove the operational heaviness from their hand so they can do what they do best, the best they can.

So what kind of tools do you actually provide to them? Can you just take a few examples of some of your most interesting tools or features that those distributors can use?

Yeah. So the customer touchpoints between our wholesalers and their customers are often manual, self-pickup, cash and carry, WhatsApp communications. There's very little active engagement. It's a very passive relationship. What we do on the front office for them is we enable them to manage through CRM, through an order management portal, to manage a lot of those conversations and a lot of those interactions digitally so they can drive more business from their existing customers, but more easily get their product catalog with dynamic pricing, with promotions that they might want to run to more customers. So that's on the front office, increasing revenue. Now to do that, I need a very strong back office. So I need a very strong inventory management software, a very strong warehouse management software so that I know in that messy warehouse what's available, what they need more of. So I can also help them on the procurement side. So I help them on both sides with a series of back office and front office platforms.

So on the supply side, they're dealing with manufacturers, large, very large manufacturers, right, who are providing bulk, you know, orders to them for certain type of products. And then on the other side, they're facing retailers, mom-and-pop, you know, supermarkets, you know, convenience stores, right? Is this where we stand? Okay. So you mentioned that a lot those distributors can be somehow medium or large companies, are still, you know, quite laid back in terms of technology. So are they, you know, what kind of tools are they currently using? Like, you know, are they using Excel, or you mentioned WhatsApp, you know, what are they running on right now, and how do you help them to, you know, change the way that they, you know, adopt technology?

some of them are using tools imposed by the brand principals, by the manufacturers. So they will use extensions of their ERPs or they will use internal B2B platforms. But those are usually adopted only to a certain extent because obviously they're only servicing the requirements of one principal. It's not the distributors' or the wholesalers' choice to use. So in that case, what we do is we actually say, I know that you need to please your brand principal, let me give you the tools that will actually help you manage the other parts of the business in a way that works for you. So for the ones that are using things, we help to manage that relationship. So we make their multi-platform engagement with the brand principals a lot more manageable for them so they don't have to open 20, 30 different apps at once, right? So that's on the more sophisticated distributor side. On the less sophisticated side, oftentimes they're using Excel at best or some very old POS that they also kind of use as an inventory management tool. But that's on the best-case scenario. In a lot of cases, they are either using their brain to keep track of inventory or they're using pen and paper, maybe a very, very simple spreadsheet. So it's very, very rudimentary. There's not a sense of urgency around keeping the warehouse up to date. It's not the thing that is most top of mind.

So you're currently based in Jakarta, so you're obviously focusing on the Indonesian market, which is a huge FMCG market for a lot of brands. Why did you pick Indonesia and not, I mean, you were in China before, which is much more mature, but why did you pick Indonesia and not the other Asian countries?

Yeah, so I've been obsessed with finding a way to create vertical solutions for many, many years, almost 7 years now. And with that obsession comes the desire to tackle the biggest problem out out there. And if I look in terms of complexity, fragmentation, and also the current timing of the market, Indonesia is just at the perfect inflection point. It is so fragmented, the topography, the demographics, they're all at that, you know, perfect point around digital adoption, but also with a very traditional supply chain. So I like to think of Indonesia as the nirvana for that obsession that I had, right? Just because it ticks all of those boxes. Now, there is a separate component to this as well. Indonesia received a lot of funding for digital initiatives, startups, and supply chain in different areas. But the specific area that I'm interested in around wholesalers and intermediaries, that has been very underfunded. So I felt that the piece of the puzzle I can contribute can really be meaningful here.

The entire industry is also going through major change. Obviously, there's been a, you know, some pretty big marketplace, you know, e-commerce marketplace in Indonesia, the like of Tokopedia and Shopee and Lazada, you know, How are you also helping those wholesalers and distributors to connect and work more efficiently with those e-marketplaces?

Yeah, that is a really good question because it's at the center of why we do what we do. The premise that Basket stands behind is that e-commerce on its own cannot reach its full potential unless the underlying infrastructure is ready to provide the fulfillment, the entire logistics, the warehousing, etc. That's why e-commerce usually stops at 8, 10, 12% penetration even in developed markets. So what we're doing with our wholesalers is digitizing them so they can be part of that online to offline infrastructure. So a lot of times what ends up happening is our wholesalers, sure, they want to buy from brands, they want to have that formal relationship, but they're predominantly focused on sourcing, on having access to the best possible portfolio. And sometimes that comes from e-commerce platforms, sometimes that comes from different types of sources. So having that connectivity and making it seamless for our wholesalers is a very important step in bringing the right price and the right assortment to the different communities because the wholesalers at the end of the day, they're kind of like a payment gateway and fulfillment center for that community. Now, naturally, what we do very simplistically on the downstream side between the wholesaler and their customers is digitizing that order making. And in the spectrum of journeys, right, it's a very important educational point to moving consumers and retailers into a more e-commerce driven type of order making.

But those wholesalers are also being disrupted by those marketplaces, right? A number of them are, you know, are competing with those huge marketplaces in Indonesia. So how do you see them evolving, and is technology becoming one of the key advantages, or, you know, one of the edges they have to leverage if they want to stay competitive in this market?

I believe the— and this is something you can see through the data— e-commerce penetration or percentage of total sales went through the roof during COVID And there was this expectation that it was going to stay that way. But immediately after COVID, the traditional channels, the offline channels, mom-and-pop shops and whatnot, actually bounced back stronger than pre-COVID, which was completely against what everybody expected. So what does this tell you? This tells you that there is still a requirement. There's still a trust component in shopping locally. There is still a huge need and a huge legacy in the supply chains run by brand principals, which depends on these wholesalers. And third, there are situations in which, you know, it aligns everybody's interest to have hundreds of thousands of these wholesalers using their own working capital to stock up and hold inventory. Removing that might not be as healthy for the brand principals as people think. So my perspective is that for the next 30, 40, 50 years, we're actually going to see a very small decline in the overall contribution to the market. Sure, there will be some consolidation, but it will not be as drastic as people think. It will be more of a modernization rather than a removal. If you think about, if you take that a step forward as well, when you think about markets like Philippines and Brazil, interestingly, a lot of wholesalers and a lot of wholesaler groups developed into cash and carries and developed into these large developed groups where the wholesaler and the distributor's role is morphed into this kind of like hybrid large DC with a Costco-like front. I foresee that more and more we'll see some of those dynamics playing in Indonesia as well. So they will be strengthened, I believe, at least, but modernized.

For your solutions, do you have any competition in a country like Indonesia?

We, because we're building vertically, we compete in different fronts, right? So we pick many battles. I would say that the wholesaler, the middleman empowerment narrative is a new one. So folks who are going directly for wholesalers, going directly for let's help them out from a technology central point of view, that's quite new. So I don't see that many people out there, but because we also also use our wholesalers. We have more than 150 today, and then we bring those wholesalers as a solution to Brand Principles to improve their supply chains. There are other companies that provide supply chain services here, right? So in some cases, we would have some competition there, especially startups that have started to brand themselves as digital distributors. So yeah, we pick some fights with different folks, but centrally at the wholesaler, I think it's quite a new initiative.

Do you focus on specific segments in terms of product category, or do you go across the entire FMCG or general trade segment?

We built for FMCG first.

Okay.

The mindset that FMCG has the broadest infrastructure because it's such a large supply chain. And then what ended up happening is from FMCG, we started to branch out into textiles, into things that are more kind of beauty and personal care, things that are a little bit on the fringe, is not as fast moving. doing with higher margins using the infrastructure from FMCG. So I would say today we're 60% or so FMCG and then multi-category across a variety of things.

Okay. How do you market your solutions and get your customers? So, you know, obviously those companies, wholesalers, distributors, are you calling them? Do you, you know, meet them at shows? How does that work? How do you get your business here?

a very local, very regional business. So we have to hire and we have to work with people who know that community very well. So our motto is, you know, very deep, you know, build community-based strongholds. So whenever we go into a community, the people that we hire there, they will know the wholesalers, they will know the distributors, and then we go very deep into those communities and then we expand bit by bit outside using the networks that we already know. So it's almost like going in circles around a central point that enables us to have minimal spend on marketing and use things like referrals, use things like additional hires who have those connections already in order to bring business. Now what we're starting to do today is we're starting to work with very large brand principals in Indonesia who say, hey, I love what you're doing in terms of bringing us new wholesalers. I would love for you to plug into my existing supply chain where I have also thousands of wholesalers and can you help me to make sense of of that. So there is a more kind of efficient go-to-market now where the distributors and the big principals are pushing us using their existing verticals.

So Indonesia obviously is a very fragmented market with, you know, both industry-wise but also geographically, those distributors and wholesalers, you know, I mean, you know, really different from different province and different islands and within those islands you also have different regency. And so how do you know, Are those companies very, very local and very, you know, regional focus? Very.

I was just having this conversation the other day with the CEO of a company that operates in Central Java and a bit different, but we have exposure to the same types of clients that we were just talking about, just how different the profile is. So in West Java, which is where we're very strong, The wholesalers are more like warehouses. So it's 80% warehouse, 20% retail front with a little bit of a cash and carry. In Central Java, it's very cash and carry focused and very trading focused with the warehouse kind of deprioritized and a lot more sparsely populated. So for sure, the differences are massive even within Java. So it's very difficult to generalize.

What is your revenue model? With those distributors and how do you make money with those companies?

As a company, we build vertical software, right? Meaning that we want to provide an operating system end-to-end principle all the way down to retail. But we realized that given our age, we're just a year, a year and a half old now, we cannot do all of that and be a profitable company because we'll be spreading ourselves too thin. And it's very difficult to sell in technology as a pure solution in Southeast Asia. So what we do is we anchor components of a marketplace as our Trojan horse into that relationship. So the first thing that we drive for our customers is incremental revenue. So we onboard wholesalers who in our marketplace can be both sellers and buyers, and then we find ways to bring them additional volume, additional orders, and we monetize that. Once we've monetized that and we're making him money as well, so on a revenue share basis, we have then earned trust. Once we've earned the trust, he is okay to begin paying us a fee, a platform fee, a subscription for the platform that we provide him. Now we do this over and over and over and over again to hundreds of wholesalers and then we bring those wholesalers to the big brand principals and then we have strategic partnerships, kind of more outcomes-based partnerships with the brand principals who want to improve their market share to who want to improve their specific supply chains. And that's really the big generator of revenue Okay, tell us about your team.

How many employees do you have full-time and how many engineers? And do you actually develop everything in Indonesia or do you outsource some of the solution development to other countries?

So we are about 50 people today, 50 people full-time with a few sales agents in the field, but that's the core team. About half of that is product and tech. The remainder will be about, so 20 to 25 product and tech, about 20 is on the operational and commercial side partnerships, but also managing our day-to-day. And then we are 6 leaders. The team is very Indonesian focused. I'm totally non-Indonesian from that perspective, so I needed to compensate, but they are all a pretty diverse set of folks. So we have veterans who were part of some of the first generation platforms, that tried to crack the supply chains in Indonesia. So we're taking some of those learnings. We have folks who have been in supply chains for 20, 30 years across different verticals on the commercial side. So we're a little bit of a melting pot of new digital blood trying a second time, and then also veterans who've been more on the traditional side and bring more of that general trade wisdom. We've chosen to do everything here locally and build a truly local Indonesian company because we realized that it's already such a diverse country with so many ethnicities, sub-ethnicities, so many ways of working, so much complexity. We need people to be firmly plugged in on the ground, which is why myself as well, I spend a lot of time in the field. I go to visit the market a lot. And even though my Bahasa is not perfect, I get by and I make it a point to be there as much as I can.

Let's talk about your founding journey. If you could share a little bit about how you started your company, did you bootstrap it for some time? And what was the type of funding that you raised in the past few years?

Yeah, for us, getting started was not easy because we came at a time when companies in Indonesia had raised a lot of money, a lot of money, and they had models that were almost the polar opposite of what we were trying to do from either disruptor or enabler, right? So for us to come into the market, a foreign founder starting something new and then knocking on the doors of VCs, they were like, wait a second, we just funded, you know, this company and that company. So for me, I had to resort to going into my inner circle and speaking to mentors, speaking to people that have deep trust in me and have worked with me for long enough to know that I'm able to execute. So I got together a few CEOs of certain companies. So Kraft Heinz, APAC CEO, AB InBev CEO, Heineken, former CEO for certain markets, several of these FMCG folks who, you know, had that trust and we got together a nice little group and that got me off the ground and that got me through that initial period of investors weren't too comfortable with us because we were new. And then also, you know, we just needed to be able to get some momentum. What was interesting for us is that we were able to get traction very So the moment that we hit revenue in a few months from starting the company, that changed the perspective of investors. So around the beginning of 2023, when we were revamping up our investor engagement, we had our pre-seed round, which was led by an investor called Forge Ventures. And that was for us, you know, the first, oh wow, okay, now we're funded, now we're safe. What we hadn't realized is that the market narrative had been changing a lot from disruptor to enabler. enabler. So the moment that we close our pre-seed round, we immediately reopen a seed round and raised another round. So there were 2 back-to-back rounds at the beginning of 2023, which have afforded us the luxury of having 4 or 5 years of runway today. So in total, we raised about $5.5 million and our burn is minimal. So, you know, I think we're in a pretty comfortable position today to be able to experiment and drive things.

Let's talk about the pandemic. And so what kind of lesson have you and how challenging it was for you to go through that difficult time in a place like Indonesia.

And in the early days, you mean when we were starting out?

Yeah, probably starting out and then at the end of it also. And probably whatever lessons you learned out of that pandemic as you as an entrepreneur.

So the pandemic has fundamentally changed a lot of dynamics within the supply chain here. Some of the things I mentioned were stronger than before the pandemic. So versus the general trade penetration, which took a lot of people by surprise because people had been investing in digital commerce. And so nobody could have predicted that. It also changed dynamics around when the loadings and when the supply cycles, inventory ups and downs happen within the country in a way that is probably more permanent than people expected as So as the first Lebaran, the first kind of Ramadan Lebaran period, which is when a lot of loading happens in Indonesia ahead of the festive period, that is, you know, a very, very important time for supply chain companies. I was entering the market right as the loading was beginning to happen and people were making preparations. So what we were expecting is we were expecting similar types of dynamics to what had happened in previous years pre-COVID. But the, the Libanon of 2023 was extremely soft. It was actually very, you know, a lot of products that used to sell a lot didn't sell. People who used to go to their communities, their homes to spend time with family chose to travel instead because the borders opened and people could go abroad. So it was a very interesting time where I couldn't look backwards to take inspiration for the future and nobody had insights on where things were gonna And especially as a foreign founder who has even, you know, less insights because I haven't spent a lifetime here, that was quite challenging. So I had to surround myself with really, really solid advisors and people who could open the right doors and guide me. Folks like an individual called Shafi who was the CEO of Transmart here in Indonesia and a few other angels that really supported our journey. I don't think we would've been able to get the traction we did. can be— have the right footing without them supporting us.

Indonesia also has seen the creation of a rise of a number of startups focusing on supply chain logistics. You know, what is the current landscape today, you know, in 2023? And as market, as you mentioned, is changing, funding is getting harder, companies need to show real profits. So what is the landscape of those gentech companies look like in Indonesia?

I think it's interestingly enough, like I said, the fundamentals for the country are perfect where the GDP per capita is at that $5,000 per capita. All the demographics, all those fundamentals are still intact. They're beautiful. However, what has happened in the past year or so with all the overinvestments, with some startups going under and not being able So, you know, lots of layoffs that has a little bit tarnished both the investment side of things, but also the market side of things. So on the investment side of things, you know, very openly I will say that supply chain slash FMCG are not the most sexy and fashionable startups for the time being, just because there's a history of, there's no history of great outcomes there. So I think that this is going to stay for a while. a while, meaning that funding will go to other sectors that are more exciting, like environment, ESG stuff, AI, and whatnot. For me, that's great because, you know, it means less people entering, but it also does create a barrier for folks who want to innovate in the space and raise substantial capital. From a market perspective, it's also complicated a little bit. People that have seen these startups go under, they are more reluctant to work at startups now. So talent is very difficult. So once you do have talent, you have to fight a lot to keep them. And you also have to fight to build the right image with potential partners, brand owners, distributors. Sometimes they're reluctant now to engage because they say, hey, are you going to be around next year? Right? So you have to be extremely good at projecting stability, at being professional. And it forces young startups like ours to be professional and to be very, you know, engaging in a way that they can relate to earlier than probably we would have had to if this wasn't happening in the What is your biggest challenge as a CEO and founder of a company right now? My biggest challenge right now is people. It's always people. It's back to the point that I was mentioning. You see, our leadership