Kaskus is a familiar and admired internet brand in Indonesia. Behind this giant internet company is an inspiring story of hard-working entrepreneurs building an internet startup back in their college days.
Contrary to what most people think, Kaskus was actually founded in the U.S by three aspiring Indonesian students, Andrew Darwis and two of his college friends at the University of Seattle in 1999. It started out as a news portal. The founders translated English news to Bahasa Indonesia and also included pictures taken by a 1.2 megapixel digital camera. That camera is now an ancient relic but back then it was a cool toy to have, as CTO and founder Andrew Darwin explains to us.
In its early days, Kaskus was very much inspired by Detik.com which saw great web traffic growth and, of course, increasing advertising sales. Kaskus wanted a piece of that market, especially when Andrew and company saw the growing potential of internet businesses. Unfortunately, the team couldn’t compete with Detik. Traffic at Kaskus was small and monetizing the site was tough. But Kaskus was just a hobby anyway. It wasn’t a formalized business and making money wasn’t the priority. Soon after, two of the other co-founders got tired and wanted out.
Andrew wasn’t too particular about the departure of his co-founders. Kaskus was after all just a hobby. On the plus side, Andrew got to own 100 percent of Kaskus which gave him full control over the website. With limited manpower and resources, Andrew knew that he couldn’t sustain the news model. In 2000, Andrew decided to transform Kaskus into a bulletin board forum for communities. That change would prove to be the biggest and wisest decision made for Kaskus years down the road. But back then, to Andrew, it just made sense to create a user-generated model for online content. He was a geek at heart and wasn’t keen on journalism.
Biting the Bulletin Board
The forum started with a focus on gaming and Counterstrike in particular. Andrew recalled that in 2000, Kaskus only had 19 users with 100 daily pageviews. But soon, traffic started to pick up. Members were seen posting content including about cars and other hobbies. Porn was one of the content types introduced by users at Kaskus. Back then, users were sharing pornographic material in different forum threads. So in 2002, Kaskus decided to set a channel for people to post porn so as not to undermine the other forums. Traffic was growing at Kaskus but Andrew was still juggling between school and his internet hobby. Money wasn’t what he was looking for. But the thrill of building an internet community and product kept him going.
Andrew graduated in 2002, and then he started working at a web development firm. After three years, he switched and worked at Lyrics.com. He was balancing both Kaskus and his day job all the while. The geek entrepreneur wasn’t aware of the potential of his site. He just wanted to own an internet product that people were actually using. It wasn’t until 2005 to 2006 that Kaskus started to see some serious money. Andrew, who was still the only employee back then, was pleasantly surprised. The offer was decent, which paid about $4,000 a month for ad placement. But still, Andrew didn’t turn Kaskus into a full time business. Instead, he went on to take his masters degree while running Kaskus on the side.
2008 proved to be a pivotal year for Kaskus. Not only did Andrew finish his masters program but he also snagged Ken Dean Lawadinata as an investor and also as CEO. Meanwhile, Andrew took the helm as CTO. At age 26, Ken is now the youngest CEO in Indonesia. He explained to me that back then he saw huge potential in Kaskus and decided to dive straight in. His dedication to Kaskus also saw him drop out of college to run his internet business full-time. Both of them met while Ken was studying in the US. They were cousins and also good business partners. Kaskus turned out to be a giant that made an impact in the Indonesian internet industry.
That was also the year when both young entrepreneurs decided to return to Jakarta, Indonesia, to incorporate Kaskus as a business entity. With Indonesia’s tight regulations on pornographic content, Kaskus decided to remove its porn channel and other racy content from its forum. In the same year, Kaskus also hired Semut Api as its branding agency which Ken says has helped Kaskus’s image in a huge way. By the end of 2008, Kaskus recorded about 350,000 registered members generating a whopping 2.4 million pageviews each day. Ken told me:
We saw huge growth in online ads sales and we have a larger traffic than Detik.com. So we thought we might be able to compete if we provide high quality traffic at a more affordable rate.
In 2009 and 2010, Kaskus was very much focused on rebuilding its platform and hiring talented engineers. Andrew said that Kaskus was using a free bulletin board service that didn’t allow it to scale any much farther or faster. The free bulletin board couldn’t cope with its size. So Andrew decided to build a bulletin board framework internally that would give Kaskus the longevity it needed. Ken revealed that from 2009 to 2011, Kaskus’ revenue grew by 250 to 300 percent. Kaskus’ exponential growth had attracted much interest from investors around the globe in 2010. But Kaskus didn’t really need the money. Ken revealed:
We are self-sustainable and we don’t need investors who have global reach. We want to focus on the Indonesian market. Some investors abroad said that they are investors of Facebook… but we didn’t need all those.
In 2011, Kaskus made a decision to receive investment from GDP Ventures. Ken said that the connections that GDP Ventures have with the largest bank in Indonesia, BCA, and also other connections in the local space, were important factors in their decision to go with GDP Ventures. Ken and Andrew also feel comfortable working with them, as Ken said that the “trust factor” is equally important. The investment, as they described, is a strategic one. Clearly, Kaskus isn’t just going to focus on forum and online community building. Ken and Andrew have set their eyes on e-commerce and e-payment, both of which don’t have a clear market leader in Indonesia, yet. Ken said:
With our user base, we have a chance to be the eBay and Paypal of Indonesia.
The transition to venture into e-commerce is natural as many users in Kaskus are already using the forum to review, buy, and sell products. Ken says that Kaskus’ merchant platform will be similar to eBay’s. But for a start, it will not be charging users for product listings. Ken wanted to build its user base in its merchant listing and he pointed out the case study in China between eBay and Taobao.com.
Despite being the later entrant, Taobao’s free-of-charge listings for merchandisers won the market. Kaskus is determined to serve the merchants first before thinking how to monetize its e-commerce platform, which will be launched around June or July this year. Its escrow payment service, Kaspay, also has a healthy number of users – 100,000 – so far. All in all, Ken says that he hopes a typical Indonesian will read reviews on Kaskus’s forum, find the product at Kaskus, buy the product at Kaskus, and pay for it with Kaspay. He added:
There’s a lot of competition in e-commerce and e-payment right now. But we believe we have the users and the cashflow to sustain our vision.
The future looks bright for Kaskus as it expands to different verticals. It now has 20 million unique users, generating over 800 million pageviews each month. And we are glad to have Andrew and Ken to speak at Startup Asia Jakarta, held on June 7 and 8.
[Fun fact: This article was written when I was stuck in a traffic jam in Jakarta.]