Bibit: Building Trust In A Category That’s New To Consumers

Building trust with first-time consumers is critical for any brand - particularly where their money is concerned. In 2019, Sigit Kouwagam and Wellson Lo launched Bibit, a robo-advisor that makes it easy for Indonesians to start investing and build a portfolio. The country’s stock market, which has long been dominated by institutional investors, is now attracting more retail investors as Millennials and Gen Z look for new ways to grow their savings. The Bibit team started a Telegram group early in their product journey and invited users to share complaints, ideas and questions. Some of the app’s key features - such as a shared portfolio for spouses and an auto debit function - emerged from that customer feedback. On this episode of Moonshot, Sigit chats with Rohit Agarwal, a Principal at Sequoia India & SEA, about how Bibit is empowering Indonesians to make sound investment decisions, and building a brand that first time investors trust by actively engaging with them.



Show Notes

  • The evolution of Indonesia’s retail investors and creating products with their concerns in mind (03:34)
  • Lessons from Bibit’s landlord on opening communication channels with their users (09:34)
  • Tapping into Indonesia’s changing investment ecosystem (13:58)
  • Empowering Indonesians to make sound investment decisions (21:24)
  • Getting your customers to become your ambassadors of trust (24:18)
  • Questions to ask yourself before taking the entrepreneurship leap (28:25)



Dewi Fabbri: Indonesia’s stock market has long been dominated by institutional investors. But, more retail investors are jumping into the stock market for the first time. Between 2019 and June 2021, the number of retail investors grew 125% – that’s nearly 6 million Indonesians now buying stocks and mutual funds. And, it’s a number that’s expected to increase as a new generation of Millennial investors look for ways to grow their savings. In 2019, Sigit Kouwagam and his co-founder launched Bibit, an app that makes it easy for new investors to wade into the stock market. We’re here today with Sigit and Rohit Agarwal, a Principal at Sequoia India & Southeast Asia, to talk about what it takes to build trust in a category that’s new to consumers.

Sigit, it’s so great to have you here with us today. Can you tell us, how did you come up with this idea to launch Bibit?

Sigit Kouwagam: Dewi, thanks for having me. So, if we look back at the company, it was actually started back in 2013 as a community platform for stock traders. And the idea at that time was, how do we make the stock market more inclusive? So we created this platform and I think basically, based on the interaction with the user, we figured out that when we understand our users, the questions about how to buy stocks were actually quite simple to answer. People understand you can open an account with a brokerage, you can get someone to help you and assist you to do that. But the question about what stock to buy was actually a lot more complicated. You need to understand the company fundamentals, you need to understand macro and microeconomic factors. You need to understand how the corporate governance of the company is being applied. I think that is actually very complicated to a lot of users. So, we asked ourselves the questions, what do people actually want when they buy stocks? Do they want to gamble? Do they want the excitement out of buying and selling stocks? Or, do they actually want to be a part of the company and also to be a part of that company’s future? And, I think most people want this process to be very easy and simple. That led us to think of why we created Bibit in the first place. We have a mission to help Indonesians to achieve a secure financial future. And I think the way to do that is by investing in the right way.

Dewi Fabbri: Sigit, that’s an area that’s still nascent in Indonesia. Rohit, what excited you about Bibit’s mission? Where do you see retail investing headed in Indonesia?

The evolution of Indonesia’s retail investors and creating products with their concerns in mind

Rohit Agarwal: I think Sigit touched upon a very important point, that Bibit is on a mission to provide a secure financial future for millions of Indonesians. I think this is the part that resonated the most with us. When we met Bibit and we looked at how they’re helping millions of Indonesians save towards their long-term life goals, towards goals like buying a house, saving for their kids’ education, saving for their emergencies, it was very clear to us that Bibit was taking a more comprehensive approach towards planning a financial future for them.

Dewi, retail investors in Indonesia have grown more than 10X in the last five years, but I think we are just getting started. [This is due to] a combination of factors from increasing awareness, to endorsement by the government to promote mutual funds and stocks as a means of saving for first-time earners and Millennials, to smartphones and Internet access, which provides 24/7 trading interfaces, to digital KYC. We believe as Millennials and first-time investors join the market, it’s important for them to start their investing journey with confidence. And, it’s super important for them to have some custodianship, some hand-holding through this process, which I think platforms like Bibit, which enable investors to choose from a diversified portfolio of stocks, mutual funds, and bonds, enable and give consumers the confidence to invest for the long-term, to save towards their long-term goals and spend time in the market.

Indonesia is still primarily a cash-based society and it’s very hard for people to ‘deposit’ their money in an app, let alone invest in products that they do not fully understand. So I think, Sigit, we’d love to understand from you guys, how are you overcoming these challenges and really, how are you getting people to deposit their life savings in an app?

Sigit Kouwagam: If we look at the Indonesian market today, there are a lot of challenges, like you mentioned, right? I think it mainly revolves around how retail investors perceive the market right now. One is that investing is complex and complicated. Most people don’t understand how the capital markets operate.

There are a lot of different available instruments – stocks, bonds, mutual funds, and other types of capital market instruments – and, they don’t have the time and the experience, or the education level to understand the complexity. So, it’s always in our mind on how to make it simple. One of the ways to make it simple is to use technology to really tailor the investment products to people’s goals, people’s financial situations and people’s risk tolerance.

Another part is, how do we, as you mentioned – a lot of people still transact in cash – so, how do we make sure the whole funding of the account becomes very seamless? So, we built the layers on [questions like] how do we connect to the banking system? How do we connect to the e-money and e-wallet players to make the whole process very seamless and integrated into how they go about their daily lives today? And, another part is that how people see investments is actually… It is very risky.

Not only does it carry market risk, or the type of risk that securities might offer, but actually, you face a lot of fraud risk. There are a lot of scams and pyramid schemes in the market. So, it’s very important that we educate the users into investing the right way, into investing into the legitimate type of investment products. And eventually, how do we build trust in a market that is very nascent, where there are a lot of different Ponzi schemes that are being offered every day to retail investors?

And another part is, which is also a myth in Indonesia, is that investments are reserved only for the rich – so, you need to have a lot of money to start investing. Where when we want to talk about what is the right way to invest, we believe that it is to build a low-cost diversified portfolio by making recurring investments. Do not try to time the market. Do it like savings, just invest at a given period every month, every week. And, we ask ourselves, how do we make this whole process simple again?

So, this is where we look at countries like India, for example, with an SIP (systematic investment plan) system that can help people to want to build a very low-cost diversified portfolio, by making regular investments into mutual funds. And, we try to automate this by working with banking and e-money partners to make the whole process seamless. So, now people can set an auto-debit into the investment account and deposit their money, every month or every week or even every day.

Lessons from Bibit’s landlord on opening communication channels with their users

Dewi Fabbri: So Sigit, that’s really interesting. You’ve gotten Indonesians to trust the process with Bibit. So,what insights have you gleaned? How are people using the app?

Sigit Kouwagam: I think when we look at the way people use the app, there is a lot of learning when we talk to the users. We understand that they want an easy and simple way to fund the account, monitor their investments, and also the ability to invest in a bite-sized way into a diversified portfolio of stocks and bonds. That’s why we created a way to do an auto-debit to your bank account or your e-money account to make this whole process very simple, that you can set it [up] once and you can forget about it. And this was achieved by talking very closely to the users.

One of the learnings that we got here was actually from our landlord in the office… At that time he asked me, “Hey, any feedback, any complaints that you might have, tell it directly to me”. And, because I know them very well, [I said] “I don’t want to offend you by telling you this”, but he told me that, “Hey, a tenant complaint is a blessing to me”. And, I think this is something that struck me very much. That the way we interact with our customers should be – the level of service that we provide should be like this, right? You really talk directly to them.

So, we created a Telegram group. Every one of the users can actually join the group and they can talk directly to me or my co-founders. And from there, they can give us tips, feedback, even complaints… But, I think we always take it as – if they decided to tell us about their struggles, to tell us about the real problems that they have, that is a very unique insight that we cannot get anywhere else. And, also the fact that they are telling us about it is actually, in a way, a blessing that they decided to give us an input so that we can improve; and not that they just stop using the app and go somewhere else.

So, that’s how we started to get all of these inputs and we created a product really tailored to solving their daily problems. And, that’s how we built the features that we have right now in the app.

Dewi Fabbri: And, what’s one example of a customer complaint that they voiced on this Telegram group that you’ve gone and you’ve worked on, and you’ve actually built into the app?

Sigit Kouwagam: Another insight is that, “Hey, I’m married. I want to save for my kids’ education and both me and my wife actually have a monthly income. One thing is that we have a similar goal. We have a similar wish to save for our kids’ education and we want to do it together. We want to put the money into one single pot where each of us can contribute”. And, the way we see that – what matters here is actually the goal and how people contribute. If one, the husband contributes and then the wife creates a separate account and actually, they have to tally it, this is very complicated to do – they have to divide it half-half… So, we created this new feature called Bibit Bareng.

You can create a shared portfolio where both you and your wife can actually contribute to the same pot, and both of you can monitor it in real time and both of you can have access to it equally.

Dewi Fabbri: Oh, that’s great. So, it’s really making it seamless for, in this example, a married couple to both contribute their income to the shared household savings.

Tapping into Indonesia’s changing investment ecosystem

Rohit Agarwal: And, Sigit, you’re obviously making it very easy for Indonesians to save in mutual funds and create shared portfolios. But also, we’re seeing massive interest and adoption for stock trading in Indonesia. And, I think some of it is driven by new age stocks and tech companies going public, which is driving interest of the younger generation and the Millennials into the stock market. And, it’s still very early days but it’s a promising start. Talk a little bit about what you see as the biggest challenges in the Indonesian market. I mean, Indonesia still has a few large cap companies and they’re obviously growing, and over the years there will be many more and especially from sectors that one would consider new age and more interesting to Millennials – but, how are you seeing this ecosystem shape up and what are some of the biggest challenges and also the opportunities?

Sigit Kouwagam: So I think it’s very interesting, as you mentioned, to see that in the past one and a half years, on the demand side, there is a lot of interest, especially from the young generation to try to invest directly into stocks. That in itself has really created the excitement when it comes to stock trading. But, we have to understand that 95% of Indonesians have less than three years of investment experience. And, we understand that when it comes to actively trading stocks, it takes a lot of education, and it takes a lot of skills to become a profitable, active stock trader. And so, I think, that is where it’s very important to make sure that we improve the education level, the knowledge of Indonesians when it comes to the stock market, so they can separate between investing and speculating. I think that is very important on the demand side. But, when we talk about the supply side, it’s quite interesting also that some of the tech companies have started listing in the domestic exchange. We will start seeing more and more large tech companies listed in the domestic exchange in the near future as well. But with regards to the depth of the market itself, right now, the market has an average daily trading volume of about a billion dollars, which is still very minuscule with respect to the size of the stock market, the size of the economies, and as more and more companies list on the stock exchange, more and more familiar names to the retail investors – especially the young generation – will start to join the capital market, and where people can have access to, again, own a part of these great companies, I think, that will create the opportunity going forward.

Rohit Agarwal: And Sigit, I mean there is one challenge on the supply side, which stems from not having companies which Millennial investors can relate to – products that they’ve used, or names that they’ve heard of. But, there’s also a challenge. A lot of the gratification from stock trading that’s driven Millennials to trading in the last 18 to 24 months, and this phenomenon that’s playing out globally, is driven by products like options and futures, where with a small pot of money you could take large positions and there’s a lot of leverage involved. Obviously, these are complex products, but when you get one of those right early on, you suddenly see your money double or triple in a short span of time which drives a lot of Millennial investors to talk to their friends about it, and then draws them in. So, talk a little bit about how you’ve seen that phenomenon in Indonesia, because Indonesia today doesn’t have products like options and futures because the regulator deems them too risky for inexperienced investors.

Sigit Kouwagam: There is a lot of speculative behavior in the market and there’s a lot of excitement. And of course, in the past few months we’ve seen one of the strongest market rallies came in from a rebound that was happening from the dip back in March 2020. Obviously, everyone’s a genius when the market is rallying in one direction and going up, and you keep making the right investments and trading decisions… But, I think it’s very important to understand that to a lot of retail investors, using leverage or complicated structure products is very risky and they need to understand the risk involved. You can use more than the amount of the capital that you contributed. And, in Indonesia, the way we see it as well, is that futures and option markets are non-existent in the local stock exchange… We do not have any liquidity with regards to these complex products; where if we look at some of the other countries, actually the depth of the market is really contributed to by these futures and options products. And, it can sometimes amount to 10X to the regular, delivery stock trades. So, this is also something that needs to be solved going forward. As the market starts to mature, there is more depth into the market, there is the ability for people to ride these options, ride these futures contracts, and have the ability to hedge them in the market. Then, we will start seeing more and more liquidity with regards to futures and options and derivative products. But of course, on the other side, we have to be mindful of whether people have the right set of tools, the right set of knowledge and understanding with regards to these complex products.

Empowering Indonesians to make sound investment decisions

Rohit Agarwal: And, Sigit, that’s a super important point – for people to understand the risks involved in different products. I mean, risks lie on a spectrum when you are investing in mutual funds, to when you’re investing in equity only mutual funds, to when you’re investing in stocks, and when you’re trading derivatives, like futures and options, margin borrowing and buying stocks. And obviously as you pointed out, we are coming off of one of the longest bull cycles in capital markets, all around the world. So, what are you doing to educate customers about these inherent risks, and are you making sure that they are using options, futures, leverage, or even picking stocks in a responsible way?
Sigit Kouwagam: So, we just actually launched StockBit Academy. This is basically educational content that we distribute for free on our apps, so that people can really learn about how to invest in the right way. And, I think we try to make it simple for people to understand. We try to break it down into bite-sized content and materials. We deliver quizzes at the end of each [piece of] content to make sure that people get what were the points that were trying to be delivered. And, the idea for this is we try to educate users about the time-tested investment principles that have been proven to be the sustainable way to be a long-term investor in the capital market, because one of the ideas to be an investor is that you should… One, is that it’s very hard to time the market. It’s very hard to guess the market directions in the short-term, but you can have a more educated analysis with regard to understanding the companies, understanding the business, understanding the dynamic of the landscape, of the competitive landscape of the business that the company’s doing. I think those, again, it’s the idea of how do we empower people with the right tools so that they can identify what is the characteristic of a great company. And they can buy the stocks and own part of those great companies going forward.

Getting your customers to become your ambassadors of trust

Dewi Fabbri: Educating your users – that really goes a long way to building trust with them. Rohit, as you look back over your time working with Sigit and the team at Bibit, what advice would you give aspiring founders as they look to build trust with their consumers?

Rohit Agarwal: I think Dewi, trust is a very interesting topic. And, I think not just with your customers, but in any relationship, building trust happens over time. There are moments in any journey when you’re tested and the decisions and actions you take in those moments, and who do you place first? Do you place yourself first? Do you place your company first? Do you place your team first? Or do you place your customers first? [These] decide whether customers can trust you in a long journey. And, I think most people that are signing up on platforms like Bibit are trusting the platform to do the right thing for them, not just today, but over a period of time, that could be several years.

So, I think the thing that has probably impressed us the most about Sigit and the leadership team has been that they have always put customers first. They understand that in addition to meeting business targets and driving the business forward, they have a huge responsibility where the financial prosperity of a lot of families depends on how their investments on the Bibit platform do. And, they take that very seriously. And, I think this builds a lot of trust with customers. They understand that Bibit is prioritizing their financial safety, their financial prosperity over companies’ short-term goals or profits. I think what also builds trust is if you can deliver what you promise.

So, it’s always a good idea to under-promise and over-deliver, which I think the Bibit team has again done. They have been very consistent on not promising investment returns or not marketing to consumers in a way that brings them with an expectation of a short-term profit or a short term rich-by-the-night goal. So, I think that’s building trust and patience.

And, I would say the last thing, which all founders should practice or that I’ve seen good founders practice when they’re looking to build trust with their customers is to make sure that whenever these customers… Like what Sigit mentioned, can customers reach out to founders? Do they have a face? I mean, nobody really trusts a logo. People trust a face. And, do they know a face? Do they know somebody’s name who they can reach out to when things go wrong or when they need any assistance? And, I think it’s super important to establish direct channels of communication, especially in the early days with your customers, because these customers are going to be your ambassadors of trust, who go and tell their friends and families about how Bibit stood by them, or any company stood by them when they needed them. So yeah, I think these are some things which I’ve seen good founders practice in building trust with their customers.

Dewi Fabbri: Those are some really insightful takeaways for aspiring founders as they strive to build trust with their customers. Sigit, what are three pieces of advice you’d like to give someone who’s just starting out on their company-building journey.

Questions to ask yourself before taking the entrepreneurship leap

Sigit Kouwagam: Instead of giving three tips, because we are still learning a lot, I think I would give three questions to themselves before they start building a company. I think the first one will be to ask yourself how comfortable you are with uncertainty. In the early days, there will be a lot of moments, decisions to be made… There’s a lot of things that you have to decide with a very limited set of information. And, I think that is a very important trait, to build a company in the early days. So again, ask yourself that question, if you are comfortable with uncertainties. The second one is, perhaps ask yourself, what do you give up by starting this entrepreneurship journey? What do you lose and can you bear that opportunity-cost? I think that is the second question. And probably the third question is, if money is no object to you, will you still be doing this, anyway? I think if the answers are yes to those three questions, then after thinking very hard and carefully about it, then if you decide to make the leap, then don’t look back and enjoy the journey.

Dewi Fabbri: You’ve clearly taken the plunge and I hope you’re enjoying yourself on your company-building journey. Rohit, Sigit, it’s been a really insightful chat on how Indonesians are looking to invest and more importantly, how to build trust with your customers. Thank you both for taking the time to join us today. I’m Dewi Fabbri and for more interesting startup stories, visit our website or follow us on Spotify.