In 2018, Jakarta was a home to over 10.4 million people. With a national urbanization rate of 4.4% as stated by World Bank in 2016, the largest city in Southeast Asia must transform into a better place to live. One way is to transform into a smart city; the concept of a city or urban area that incorporates information and communication technology (ICT) and the internet of things (IoT) to improve citizens’ welfare. Smart city ecosystem platform Qlue (PT Qlue Performa Indonesia) plays a crucial role in developing the Jakarta Smart City (JSC) program. The company was founded by Raditya Maulana “Rama” Rusdi and Andre Hutagalung, currently the startup’s CEO and CTO, respectively.
Qlue’s establishment began from Rama’s concern at the number of Jakarta’s problems, and how the city government couldn’t solve these because of the lack of a communications channel. His team was a thriving software house back then, serving clients from both the private sector and government. They designed Qlue App as one of their products, which functioned as a platform for people to report problems and the government to solve them.
“That’s where our name came from. Give them a clue about what’s going on in the city—mostly issues for them to actually fix,” says Rama. Enabled with artificial intelligence (AI) and machine learning from the beginning, it is also able to predict traffic jams and flooding. On the other side of the app, on-ground officials will receive reports in their area according to their job. Hence, each problem can be solved immediately, monitored from the app’s dashboard, and analyzed at the command center.
So, in early 2014, the team wrote a pitch to the Jakarta administration, which was then led by governor Joko “Jokowi” Widodo and his deputy Basuki Tjahaja Purnama. Beyond their expectation, Basuki himself agreed to meet the Qlue team and welcomed the idea enthusiastically. It was also in line with the government’s JSC program launched in December 2014, with which Qlue has been integrated for four years.
The team never thought that Qlue was going to develop into a business. They only designed Qlue to help the government create a better environment and deliver a social impact. However, the number of users kept increasing beyond expectations. Moreover, the team saw that the software house’s business wasn’t sustainable due to serving only a one-time project, and its revenue was starting to get compromised because of Qlue’s huge cloud expense.
“Looking at the high traction back then, we realized that it was time to spin the product into a company in 2016. The original software house stopped, and everybody focused on Qlue.”
Rama shares that until Qlue became a company, he had not been familiar with the concept of startups, investors and venture capital (VC), let alone a business model. At that time Budi Setiadharma of VC Prasetia Dwidharma approached them as their first angel investor. He said that he was interested in Qlue’s huge impact, despite the company’s lack of a business model. Then Djarum’s GDP Venture followed in 2017, and Telkom’s MDI Ventures joined in February, finally closing Qlue’s series A funding at around $4 million in total. Most of the funding was used for Qlue’s research and development and talent acquisition.
There is a wide range of problems in the city, from trash, illegal parking and illegal levies, to flooding and drug dealers. In the beginning, the application received 5,000 reports daily but now these have decreased to 800, with a consistent solution ratio above 90%. This means for Qlue as a platform to function well, maintaining users and having a solid commitment from the government need to go hand-in-hand.
The issue was raised in the Jakarta gubernatorial election in 2017. The team was skeptical that Qlue would continue being used by the new administration, and that reports from users would decline. Therefore, Qlue decided to add a more automated line of reporting, named QlueVision. Since Qlue was already connected to hundreds of CCTVs for the JSC, it equipped them with AI to help with illegal parking, license plate identification, intrusion, facial recognition, and so on. The concept isn’t only feasible for such B2G smart city projects. Qlue’s B2B clients can cut operational costs and create a safer environment within their buildings, factories, or industrial complexes.
Since then, Qlue has begun to venture more into the private sector. If previously the public sector made up 80% of Qlue’s clients, Qlue aims to balance the two equally by this year. The company also offers a flexible pricing scheme: perpetual and subscription. A perpetual license is based on capital expenditure, where clients can use the software for as long as they wish upon paying a lump sum upfront and yearly maintenance fees. A subscription license, on the other hand, is based on operational expense, so the price is determined by the amount of operational costs that clients are able to cut. Most public sector clients favor the perpetual scheme, whereas private sector clients prefer the latter. Pricing depends on a project’s complexity, but Rama says that on average it starts from Rp 300 million, up to billions of rupiah.
The company began to generate revenue in 2017, growing threefold every year and has been profitable since last year. Rama says the fast growth has been possible because the smart city ecosystem is an untapped territory, with Qlue being the only local player that provides end-to-end services. “People prefer to work with us because we are a one-platform-forall, and they don’t need to hire many providers as that would be costly.”
As of August 2019, Qlue worked with more than 50 ongoing clients in both the public and private sector, including 22 city administrations. It is used by regional police forces, disaster relief agencies, companies like PT PAM Lyonnaise Jaya, PT PLN, PT Telekomunikasi Indonesia, and PT Transportasi Jakarta, and the nation’s major real estate companies such as PT Alam Sutera Realty, Sinarmas Land Ltd, and PT Metropolitan Land. The problem now is that big projects come with high costs as well, so Rama wants to minimize these and increase Qlue’s margins.
“Last year we had many product developments that haven’t matured yet. But moving forward there are going to be greater net margins than gross margins. We’ll be healthier,” says Rama. This year he also aims to achieve threefold growth again.
As a new company, Qlue’s target now is to balance between its social impact and business, between the B2B and B2G recurring model, to be sustainable. “We don’t want to give away the social impact of our business, so that’s what we are currently balancing out. A business has to run in order to keep having a good impact, right? So it’s juggling between the two.”