Building a Lean Startup in a Developing Country

by Aldi Haryopratomo

In this post I’d like to use the lens to evaluate how would I have applied course concepts like lean start-up, product market fit, etc, in the developing world based on my experience setting up Ruma in Indonesia, which coincidentally has the second largest number of Facebook users in the world. Ruma’s goal is to create an app-store for low-end phones that sell useful applications like job search. (e.g., 

Based on the precept that start-ups shouldn’t scale until the hypothesis has been validated, the natural move when I started Ruma would be to start hiring engineers and start developing the product and try to get users in the system. Unfortunately, this is more difficult to do in developing markets mobile phone industry for a couple of reasons. First, most users access the Internet via mobile phones and to get access to a lot of users we’d need to partner with a Telco operator. Naturally few telecommunications operators would be willing to partner with a startup. Second, the lack of a venture capital market means that you need to be able to generate revenue almost immediately. 

So we started by selling a basic product, prepaid cellular minutes, which generated instant revenue despite having very low margins. The goal was to stay lean and that we would grow our network of customers to the point that an operator would finally notice us. The bad news was that we almost went broke trying to get there as we fell into the common pitfall of thinking that costs such as labor should be low in a developing country. It turned out that the costs for the top talent were not wildly different because equity or options type compensation is not yet common. We were thus stuck with a high salary base and began leasing access to our customers for market research to consumer goods companies to make payroll. This need for immediate monetization distracted us from building, testing, and refining our products with our customers.

The good news is that after two years, we did grow to be big enough to be noticed as we now have over 5,000 resellers serving half a million customers. This enabled us to raise modest funding and sign a partnership deal with a Telco. Now our focus has shifted back to building our original products: the app store and its first few apps. It was during this phase that I realized how important product market fit is, especially if you’re focusing on low-end mobile devices (basic Android/Java phones). There is such a limit on the capability of the phone that it’s key to iterate and get feedback on which ones are the most important for the users. What was interesting though that our customers were very willing to work with a buggy product because the alternative to the product is to not have the application. 

Ruma is still a long ways away from being a home run, but the learning experience has been rewarding. Some key lessons related to the course are: 1. Immediately find low cost ways to create scale so you get noticed. 2. Monetize immediately and don’t underestimate labor costs. 3. Drop unnecessary features. 4. Don’t be afraid to launch a buggy product if you’re competing against non-consumption.