ABOUT US

IT HAS all the ingredients of a Silicon Valley urban legend - a graduate student hacking away in the corner of a dorm room in the prestigious Carnegie Mellon University, garage-cum-office beginnings, maxing out on credit cards to come up with initial funding and most importantly, survival and growth in one of the toughest crisis-wracked markets in the world.

Meet Indo.com, better known on the street as Bali Online, the travel portal, which owns virtually all of the Internet-based bookings of the island paradise's hotel rooms. Its chief executive officer Eka Ginting was in Kuala Lumpur. He took a few minutes off his busy schedule in between making presentations to venture capitalists and surveying the lie of the land for possible relocation to the Multimedia Super Corridor (MSC) to talk about life, the universe and of course, Indo.com.

"I went to Carnegie Mellon in Pittsburgh and while I was doing my PhD in computer science, I came up with the idea of starting a travel portal. It was a classic case of a graduate student hacking away in the corner of the dorm room." He started the portal while he was still a student in the US and it was run in Indonesia by his retired veterinarian father.

Initially Ginting paid for the business by maxing out on his four credit cards. "We needed money to rent server space in the US, pay for the Internet connectivity and our software. I did it all on credit cards. One of my cards was an AT&T card and when I got back home to Indonesia and people asked me who funded my business, I would say, AT&T and pull out my card to show them," he said with a laugh.

"I came back to Indonesia in 1997, thinking I could do it by the book, you know raise funds and grow the business." But the Asian financial crisis ripped through Indonesia, leaving bloody gashes in the economy as well as the psyche of the nation. "Everybody and their mother were leaving and there was no capital to be had anywhere."

Crisis not with standing, Ginting converted the 5-by-12 meter garage of his parents' home in Bali into an office, fit in 15 people (mostly programmers) and was in business.

"In 1998 I wanted to get married and I needed a steady job so I joined Mckinsey and Co and became a weekend programmer for Indo.com. My dad took over the day-to-day running of the business." Ginting recruited the "Habibie kids", the best and brightest of the young Indonesians who had been sent to some of the most prestigious universities in the world.

He asserted confidently: "I have been side by side with some of the best brains from Carnegie Mellon and Berkeley and have even worked in Microsoft for a spell. These guys could hold their own with the best of them in terms of programming skills." And how did Ginting manage to recruit some of the best brains in Indonesia, with virtually no funding and with the flight of brains from Indonesia's sunny shores?

"There has been this growing thirst for doing business in Indonesia without having to sleep with the Suharto family. It was all about idealism and we recruited most of them on a handshake without even a specification of the salary." The team pounded the pavements to sign up hotels and in the beginning www.indo.com was basically an information portal undertaking e-mail commerce, meaning that bookings were done by filling in forms online and then forwarded them to the hotels.

Last year, Ginting got his friend Adi Widjonarko, a Wall Street whizz kid to join the team. Widjonarko had been leading the JP Morgan team in the restructuring of Indonesian banks and he had spent a great deal of time on Wall Street. "I told him, you jump, I jump and we both quit our day jobs, reinvented the company and created the business as it is today where people can use their credit cards to book and instantly get confirmed rooms," he said.

Indo.com had developed a software which it hosts and enables hotels to accept online bookings. "There was a lot of training involved because when we started, there was no Internet Service Provider in Bali and the hotels would basically have to mail-order a modem from Singapore."

The company hosted the software Application Service Provider (ASP)-style, charging US$3 (US$1 = RM3.80) per room per night for all rooms booked using this technology. As it was depending on inbound rather than outbound traffic, it also did international marketing, guerilla fashion at zero cost.

"We knew where the geeks hung out and what they say to their friends, the geek customer on the other side of the Net. We got them to talk us up." Indo.com raised its first round of funding - US$1.6 million - mid-last year. Its first major investor was Trendbank, a division of Softbank, while the rest of the capital was basically from "founder, friends and family".

"We launched the full e-commerce site in September last year. The first customer to use his credit card to pay for a holiday in Bali was a Danish businessman and his Eskimo wife and their child, who live in Greenland. "When they landed in Bali, they received the royal treatment with Balinese dancers and the works. The businessman was so amazed that he actually called his banks to ask, did these guys charge for all this?" After its launch domestically, Ginting went out to other markets such as Singapore, Malaysia, Brunei and the US to see what it had by way of competition.

"We realized that the state of technology is at a point where we can still contribute. Nobody owns this space and it is not like there is a Yahoo! for the inbound market. If we move in and move in quickly we may be able to secure that market." He added that Indo.com decided to take its concept and expand it to the rest of Asean.

"Nobody owns the inbound traffic to major tourist destinations such as Chiengmai, Phuket, Langkawi, Kuala Lumpur, Singapore, Vietnam or Cambodia. "We are in the process of setting up a Orientmagix.com to do the same thing out of all these markets. We decided that this regional effort should be out of Kuala Lumpur or Singapore where a good portion of the business will be coming from."

He said the customer base would be from countries such as the US, Australia, Japan, the UK, Germany and Scandinavia. "We asked the customers who booked on Bali Online where they had their last holiday and for a good number of them, it was an Asia-Pacific country. "We decided that the smart way to do this would be to link up these major destinations. At the moment, nobody owns the inbound traffic here and if we offer a similar online service, the tourists would use it. "We need to develop regional product relationships, regional products and acquire new customers. "Now we're an Indonesian company but we would like to be an Asean company, which is Kuala Lumpur or Singapore-based."

And how will he decide between Singapore and Malaysia: "We would be where our customers want us to be and where the money (investors) want us to be." Which means that it is really dependent on the outcome of this fund raising drive and which venture capitalists kick in with the dough.

He added that Indo.com expects to start its regional initiative in a few months. "By the end of the second quarter or in the early third quarter, we expect at the very least, to have a presence in these countries." The company is looking to raise US$6 million and its initial investor Softbank will be taking up a portion of that.

"The biggest chunk will go marketing and advertising. We will be talking to vendors for hotels, rental cars and travel agencies, basically people whose products will be available online or people whose products can be moved using our engine." He said the company's path to profitability is pretty clear and it expects to be in the black by early next year. "We were actually making money as Bali Online, about US$100,000 to US$150,000 a year, which is good enough for a family business.

"We have two integrated offerings - the technology itself and the customer portals. Unlike 99 per cent of the travel portals out there, we own the technology that we use. If you look at the biggest winners, such as Microsoft Expedia or Travelocity, they own their technology. "We also own the consumer portal, the interface that connects directly with customers. So we can provide the travel industry both the booking engine and the customers themselves. In that way, we're distinct."

He said at the moment, the site has a total of 8 million users, 12 million hits per month and 500-600 rooms in its database at any one time. "For the portal site, we receive an average of 10 per cent of the room bookings online while on the technology side, we charge the hotels US$3 per room, per night." He pointed out that with virtually no marketing spending, it has already managed to rake in online bookings of US$2 million to US$2.5 million a year. With proper marketing: "...we expect to increase that by a factor of eight to 10."

So that is how much it expects to make. And how much does it spend? "We have a burn rate of US$75,000 a month, which could go up to US$100,000 to US$110,000 a month. However, the company which has never had the luxury of "cash to burn", instead does know a thing or two about saving money.

For instance, when it was just started and Ginting needed to buy a Sun Microsystems server which would have cost the company US$50,000, he mail-ordered the parts such as the processors, hard disks and casings and put it together himself at a fraction of the cost. And the thrift-streak is still there. "Recently we needed to furnish our office, so we went to a bank restructuring agency and bought furniture from liquidated banks."

Ginting, who is in the midst of doing his dissertation for his PhD in computer science (he left the US in 1997 when he had completed everything but his dissertation) also talked about the huge amount of research that went into setting up the site. "I did economics in undergraduate school but I am a techie at heart. You see the things technology can do, but you need to be able to tell its story in a compelling way to appeal to the business community.

"Setting up the site was based on quite extensive research. I realized early on that travel is a natural candidate to take advantage of the Internet phenomenon. "When you bring travel products online you are actually buying information. The Internet becomes a natural medium for the online process of getting to that product. You can actually call the rest of the experience, the actual travel and stay at the hotel, after-sales service."

He read a bewildering mix of literature in his research, ranging from learned tomes such as the Journal of the Psychology of Travel and Margaret Mead's Anthropological Treatises on Cultures in the Asia Pacific to popular travel guides, to learn as much as he could about the decision-making processes of people when they travel. "In 1995, when I launched the site I wrote all the articles on the site myself and it was a blend of popular guidebooks with something of a deeper anthropological twist.

"Basically the travel business is not really about the old or new economy. It has always been there and these new technologies make it more simple, effective and efficient."