$270 Million Coffee Empire in Indonesia: The Journey Unveiled - Kopi Kenangan | Edward Tritanata

Summary

Edward Tritanata, CEO and co-founder of Kopi Kenangan, shares his inspiring journey from a slacker to leading a coffee empire. After a life-changing phone call about his family's potential bankruptcy, he transformed his life, waking up early and dedicating himself to studies and business. Despite pandemic challenges, Kopi Kenangan thrived, growing to over 900 stores and raising $270 million from investors like Jay-Z and Serena Williams. The company's success lies in its unique business model, focusing on taste, price, and location, and a commitment to empathy and continuous improvement.

Takeaways

• 🚀 The speaker's life took a dramatic turn after a phone call from his mother about potential family bankruptcy, which ignited a drive for success.
• 🎓 Despite previously struggling in school, the speaker graduated magna cum laude from Northeastern University, highlighting the power of a life-changing event.
• 🔥 The founder's daily routine includes waking up at 5:30 a.m. and spending time at the library or gym, emphasizing the importance of discipline and hard work.
• 🌟 Edward Tritanata, CEO of Kopi Kenangan, aims to outperform Starbucks and has achieved significant growth, even during the pandemic.
• 📈 Kopi Kenangan has expanded to around 900 stores in two countries within six years and has raised approximately $270 million from reputable investors.
• 🌍 The company's vision is to grow beyond Southeast Asia, with plans to sell more in the next 2-3 years and expand to new markets.
• 💰 Edward learned about the 'Starbucks Tall Latte Index', which influenced his decision to offer high-quality, affordable coffee to the Indonesian market.
• 🏪 The business model of Kopi Kenangan focuses on small, grab-and-go stores to reduce rental costs and pass savings onto customers.
• 📊 Kopi Kenangan differentiated itself by using an Indonesian name and focusing on taste, price, and location, which are key to its success.
• 📈 The company tested scalability by opening stores close to each other and in competition-heavy areas, proving their market fit.
• 🤝 During the pandemic, Edward showed empathy to his employees by ensuring their salaries and bonuses were paid, even taking a ₹1 salary himself.
• 📱 Kopi Kenangan leveraged technology and online sales during the pandemic, growing their app to around 3 million users and focusing on delivery.
• 📈 The importance of continuous improvement and a 'day one mentality' is emphasized for long-term success in business.

Q & A

How did Edward Tritanata's life change after the phone call from his mother?

Edward's life changed dramatically after learning about his family's potential bankruptcy. This revelation ignited a fire within him, leading to a complete change in his attitude towards life, waking up early, and dedicating himself to studying and fitness.

What was Edward's initial goal when he started his business?

Edward's initial goal was to build a business bigger than Starbucks. Despite initial skepticism, he has achieved significant success with Kopi Kenangan, which now has more stores than Starbucks in certain regions.

How did Kopi Kenangan perform during the COVID-19 pandemic?

Surprisingly, Kopi Kenangan grew by three times in terms of store count during the pandemic. Instead of being an end, the pandemic became an opportunity for growth and expansion.

What is the significance of the 'Starbucks Tall Latte Index' mentioned by Edward?

The 'Starbucks Tall Latte Index' compares the price of a Starbucks latte to daily income, highlighting the affordability of coffee in different countries. In Indonesia, the high percentage indicates that not everyone can afford a latte, which influenced Edward's decision to offer high-quality coffee at affordable prices.

Why did Edward decide to name his coffee chain 'Kopi Kenangan'?

Edward chose the Indonesian name 'Kopi Kenangan', meaning 'Memory of Coffee', to differentiate his brand and make it memorable. The unique name helps the brand stand out in a market with many Western-named coffee shops.

What business model does Kopi Kenangan follow?

Kopi Kenangan follows a 'grab and go' model with small stores that do not require seating. This allows them to reduce rental costs and offer high-quality coffee at more affordable prices.

How did Edward approach the expansion of Kopi Kenangan?

Edward expanded Kopi Kenangan by testing scalability and intentionally opening stores close to existing coffee chains to prove their market fit. This strategy helped them attract funding and grow rapidly.

What was Edward's strategy for dealing with the challenges of the 2020 pandemic?

Edward overcame the pandemic by showing empathy to his employees, ensuring their salaries and bonuses were paid, and focusing on online sales and technology to grow the business.

How did Edward ensure that Kopi Kenangan's coffee was affordable and of high quality?

Edward used data from customer feedback to determine an affordable price point for their coffee. He also made adjustments to the recipe, such as reducing sugar by 30% in Malaysia, to cater to local taste preferences.

What is the 'day one mentality' that Edward mentions, and how does it apply to Kopi Kenangan?

The 'day one mentality' is a philosophy of never being complacent and always striving for micro-improvements every day. This mindset is integral to Kopi Kenangan's culture, driving continuous innovation and growth.

What is Edward's vision for Kopi Kenangan in the next 5 to 10 years?

Edward envisions Kopi Kenangan becoming a global brand, expanding beyond Southeast Asia and establishing a strong presence in the international market.

Outlines

00:00

🚀 From Slacker to Success: Edward's Transformation and Kopi Kenangan's Growth

This paragraph tells the inspiring story of Edward Tritanata, who turned his life around after learning about his family's potential bankruptcy. His newfound determination led him to graduate magna cum laude from Northeastern University and become the CEO and co-founder of Kopi Kenangan, a coffee chain that now has over 900 stores in two countries and has raised $270 million from investors like Jay-Z and Serena Williams. Despite the challenges of the 2020 pandemic, Kopi Kenangan grew threefold in store count, selling 5.5 million cups of coffee per month. Edward's vision for the company is to expand beyond Southeast Asia, using a unique business model that focuses on affordable, high-quality coffee in small, grab-and-go locations, and a brand identity rooted in Indonesian culture.

05:03

🤝 Empathy and Innovation: Overcoming the Pandemic and Scaling Kopi Kenangan

In this paragraph, Edward discusses the challenges faced by Kopi Kenangan during the COVID-19 pandemic, which saw a significant drop in revenue due to closed malls and offices. To address this, Edward demonstrated empathy by ensuring employee salaries and bonuses were paid, even taking a ₹1 salary himself. This act of empathy was crucial for maintaining a motivated workforce. Additionally, the company capitalized on online sales by developing their app, which grew to 3 million users. Edward emphasizes the importance of taste, price, and location in their business strategy, backed by research from Nielsen and Kantar. He also shares insights into tailoring product offerings to local preferences and the importance of continuous improvement, encapsulated by Kopi Kenangan's 'day one mentality'. Edward's ambition is to grow Kopi Kenangan into a global brand within the next 5 to 10 years.

Keywords

💡Slacker

A 'slacker' refers to someone who is lazy or does not work hard, often neglecting responsibilities. In the video, the speaker mentions being a 'slacker' in their past, spending time in internet cafes playing games, which contrasts with their later transformation and success.

💡Magna cum laude

This Latin term is used in academia to denote a high level of academic achievement, typically indicating a student graduated 'with great praise.' The speaker used this term to highlight their impressive turnaround in academic performance at Northeastern University.

💡Bankruptcy

Bankruptcy is a legal status where an individual or a company is unable to repay their outstanding debts. In the script, the family's potential bankruptcy serves as a pivotal moment that spurred the speaker to change their life's direction and work ethic.

💡Work Ethic

A 'work ethic' refers to a set of values or a mindset that emphasizes the importance of hard work and diligence. The speaker's transformation includes adopting a strong work ethic, waking up early, and dedicating time to the library or gym.

💡Visionary Goals

Having 'visionary goals' means setting ambitious and forward-thinking objectives. The speaker's goal to be 'bigger than Starbucks' exemplifies visionary thinking, which others initially dismissed as unrealistic.

💡Pandemic

A 'pandemic' is a widespread disease outbreak that affects a large number of people across multiple countries or continents. The speaker mentions the COVID-19 pandemic as a challenging period during which their business, Kopi Kenangan, surprisingly grew.

💡Store Count

The term 'store count' refers to the total number of physical retail locations a business operates. In the context of the video, the growth in store count by three times during the pandemic is highlighted as a significant achievement for Kopi Kenangan.

💡Investment

An 'investment' is the act of committing money or resources with the expectation of generating profit or income. The speaker discusses securing investments from high-profile individuals and firms, which contributed to the rapid expansion of Kopi Kenangan.

💡COGS

COGS stands for 'Cost of Goods Sold,' which is the direct cost of producing the goods sold by a company. The speaker mentions shifting rental costs to COGS as a strategic move to offer high-quality coffee at affordable prices.

💡Differentiation

Differentiation in business refers to the process of making a product or service distinct from competitors. The speaker emphasizes the importance of differentiation by choosing an Indonesian name, Kopi Kenangan, and focusing on grab-and-go coffee shops.

💡Scalability

Scalability is the ability of a system, network, or process to handle a growing amount of work or to expand. The speaker discusses testing scalability by opening stores in close proximity to each other and to competitors, proving the potential for growth without cannibalization.

💡Empathy

Empathy is the capacity to understand and share the feelings of others. The speaker recounts using empathy during the pandemic by ensuring employee salaries and bonuses were paid, even at the expense of their own salary, demonstrating a people-centric approach to leadership.

💡Day One Mentality

The 'day one mentality' is a mindset that encourages maintaining the enthusiasm, innovation, and customer focus from the early days of a venture. The speaker describes this mentality as a core principle at Kopi Kenangan, emphasizing the importance of never being complacent and always striving for improvement.

Highlights

Edward Tritanata, CEO and co-founder of Kopi Kenangan, attributes his turnaround from a slacker to a successful entrepreneur to a phone call about his family's potential bankruptcy.

Kopi Kenangan has grown to command approximately 900 stores in two countries within six years of its founding.

The company has raised around $270 million from reputable investors, including Jay-Z and Serena Williams.

Kopi Kenangan sells approximately 5.5 million cups of coffee per month, with aspirations to expand beyond Indonesia and Malaysia.

Edward learned about the 'Starbucks Tall Latte Index' and recognized the high cost of lattes relative to daily wages in Indonesia, leading to a business model focused on affordability.

Kopi Kenangan's business model emphasizes smaller store spaces to reduce rental costs, allowing for higher quality coffee at lower prices.

The brand's differentiation strategy includes using an Indonesian name, 'Kopi Kenangan', to stand out in the market.

Edward intentionally opened stores near established coffee chains to test scalability and market share potential.

During the COVID-19 pandemic, Kopi Kenangan grew by three times in terms of store count, defying expectations of failure.

In response to the pandemic, Edward reassured employees of their salary and bonus security, even taking a ₹1 salary himself.

Kopi Kenangan leveraged online sales and technology during the pandemic, growing their app to around 3 million users.

The company's success is attributed to a focus on taste, price, and location, supported by data from Nielsen and Kantar.

Edward emphasizes the importance of daily micro-improvements and maintaining a 'day one mentality' to prevent complacency.

Kopi Kenangan's growth strategy includes rapid expansion, scaling from one store to 226 in three years.

Edward's personal journey from academic struggles to entrepreneurial success is a testament to the power of a changed mindset and hard work.

The company's approach to empathy and employee well-being has been a key factor in overcoming challenges and building a strong employer brand.

Edward's vision for Kopi Kenangan is to become a global brand within the next 5 to 10 years, expanding its reach beyond Southeast Asia.

Transcripts

I was kind of failing in school.

You will see me often at internet cafe playing game.

It was really an ordinary life of a slacker.

Somehow, miraculously, I got accepted in Northeastern University

and even graduated magna cum laude

because I had one phone call that changed my whole life.

My mom called me to tell me that actually, our family is going through

potential bankruptcy.

Since then, my attitude to life changed completely.

It really brings a lot of fire into my life.

I wake up 5:30 a.m. every day.

I'm always at the library or at the gym, never anywhere else.

I told everyone that I want to be bigger than Starbucks

everyone thought you were dreaming?, are you high?

Right now, we are bigger than Starbucks.

In 2020 it was the pandemic.

Everyone told me that it's the end of Kopi Kenangan.

Throughout Covid we actually grew by three x.

In terms of store count.

Nobody can tell you what you can or cannot do.

Every day it comes down to you your will, your conviction, your hard work,

whether you can make something happen or not.

Hi, my name is Edward Tritanata.

I'm the CEO and co-founder of Kopi Kenangan.

Kopi Kenangan itself right now commands around 900 stores

in two different countries.

Even though we are only six years old.

In total, we have raised around $270 million ranging from Jay-Z,

Serena Williams, Sequoia Capital, several others, reputable investors.

Right now we are selling approximately around 5.5 million cups per month.

Hopefully in the next 2 to 3 years we will be able to sell even more,

not just to Indonesia, but then to Malaysia and beyond.

I learned that there is such thing called Starbucks Tall latte index,

that is actually the price of Starbucks latte

compared to your daily income, US is around 2%,

whereas in Indonesia it's actually more towards like 30%.

There is no way everyone in Indonesia is drinking a cup of latte

where it consumes close to 30% of your daily wage.

Most cafe back then always thought of making a cafe to be large with

very comfortable sofa with very fast wifi.

A lot of people like myself don't need that comfortable sofa.

I just want a good cup of coffee with affordable price.

Of course that means a higher COGS.

But realize if I make this space really small, what is there to think about?

My hypothesis is that if I shift the rental cost to COGS,

I can sell much higher quality coffee at a much more affordable price.

And that remains to be our business model to be grab and go.

To be small.

It doesn't need seatings, but we can attract a lot of crowd.

We are trying to take customers from online as well because back in 2017,

online delivery just started.

I realized that whether your store is 200 meter square or 20 meter square,

it doesn't really matter.

In a business that has a big market, you always have a lot of competitors.

I realized that we need to be differentiated.

We need to look different than our competitor.

A lot of people make their cafe to be a Western name.

But then I realized that, okay, why don't I use Indonesian name

so that I sound different?

That's why I name it Kopi Kenangan, Memory of Coffee.

That branding actually makes people remember us.

I do believe that with the recipe that we have made with the pricing point

that we have decided we have a chance.

For stores in 2017 and 2018,

we try to expand, because the thing about coffee is that

your catchment area is usually typically within 2 to 5 kilometer radius of your store.

Obviously, Indonesia is very big if you want to get people in other city,

other district, other subdistrict, obviously you need to open a store there.

And when we expand, actually our logic was quite simple.

We want to test for scalability, meaning that if I open nearby

the revenue still be good or will it be cannibalizing each other?

That's why I intentionally open the next store,

I think within half a kilometer away from the first store.

Interestingly, I intentionally pick a location where it already has

a bunch of coffee chain near ourself.

For example, in our first store, there is a Starbucks Coffee Bean and Tea

leaf and a bunch of streetside vendor.

On our second location. There is also a Starbucks and FamilyMart.

We open near them and we were thriving.

Even in the midst of like competitors, we are using that logic.

We keep on finding where are all these coffee chain and we open near them.

We did well near them. Why not open more near them?

That's when we were really able to attract funding,

because we were able to identify opportunity to grab market share from existing larger coffee chain.

If you are trying to get an investor to invest your business,

It is really as simple as how to envision your company in the next 5 years?

Famous investor from Sequoia Capital once told me that

a good company waste money when money is the only constraint to growth,

and everyone, including ourselves and our investor believe that it was the case for Kopi Kenangan

when we first got our large investment and that's how we were able to grow quite rapidly.

First year we only have one store, second year we have 56 stores,

third year we have 226 stores.

You can go really fast if you have that product market fit.

I think the biggest challenge that the organization has ever faced

is obviously in April 2020, when our border was shut down,

our revenue literally dropped by close to 50%.

All of our stores are usually in malls or in offices, and then

suddenly nobody goes to mall offices.

What do we do?

No, revenue means I cannot pay my employee salary.

But then I overcome the challenge with empathy, actually.

How did I use empathy?

I told all my employee that I will pay your salary.

I won't miss your bonus, even if it means I myself not getting any salary.

I actually took a ₹1 salary along with my other co-founders, because we want to show

our employee that you have security.

If they don't feel like they can feed their family, then obviously

they won't be able to work well.

They will just be worrying about their family every day.

But back then, having spent a lot of times with the employees at the store,

I realized that they work hard for the company.

It's just basic human element to actually show sympathy,

to repay kindness with kindness.

That's exactly what I am trying to give to our employee.

Helping them get on with their life, helping them work hard for us.

I'm really glad that I did that.

I thought it was logical as well, because we need to build employer branding as well

to make sure that people know that we are a company

that is run by empathy, not by sadistic culture of like all about cost cutting.

Together we were able to overcome the pandemic.

And of course, it's not just using empathy, but then we leverage a lot of online sales as well,

because that's when we really build our app.

And our app literally grew from zero to, I think today around 3 million users,

because during the pandemic, we just doubled down on technology, whether it be

on a third party or our own technology.

I think the most important thing to business is taste, price and location.

It is proven from the multiple FGDs that we have done as well.

with Nielsen and Kantar.

A lot of demand actually fall off after it reaches a certain price point.

That's why you need to make sure that the price is right.

That's why when I first started Kopi Kenangan, I asked literally everyone

I can find just compile data. How much would you pay for this coffee?

Using data, we were actually able to charge a cup of coffee

that is affordable to many.

In terms of the taste, we realize that Malaysian and Indonesian

have different preferences.

That's why we actually reduce the sugar inside our drinks in Malaysia by 30%.

Last but not least is location.

If your location is too far, nobody is going to go to your location.

Maybe once just to try. Are they going to come back?

No. I think people are just busy with their life.

They don't want to go too far to get something

that they deem as daily necessity.

During my entrepreneurial journey, I realized that the most important thing

to succeed in life is to actually have a goal

and then do micro things one step at a time.

No great entrepreneur is ever make it from doing one big thing.

It's always a combination of small things here and there, whether it

be trying to improve the recipe every day, trying to source for better

ingredients but cheaper, or whether it be to have empathy to your customer.

It's all the small improvements that we try to do every day.

That's why in Kopi Kenangan we live by a mantra called day one mentality,

where every day is day one for us.

Never be complacent. Never be satisfied with yourself.

Always try to make micro improvements every day.

As an entrepreneur, especially at my age, I am not satisfied to where I am today.

I think the journey is only the beginning.

I do believe that in the next 5 to 10 years we will become a global brand,

not just in Southeast Asia, but beyond.