Lummo is building a merchant operating system comprising accounting, finance, and e-commerce tools for small and medium-sized businesses in Asia. The company was founded in 2019 and since then has grown rapidly and today has over 3 million monthly active users. Lummo recently raised tens of millions of dollars from the likes of Jeff Bezos, Tiger Global and Sequoia India.
For more information on Lummo's product, market and growth opportunities, check out our deep dive.
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Mikal: Krishnan, thanks for joining me today to share a little more of the Lummo story. Before we dig into Lummo I’d love to hear a bit more about your personal story. So you were born and educated in India but somehow ended up building startups in Indonesia. How did that happen?
Krishnan: Well first of all thanks for having me, it is nice to talk to you.
So most things in my life are driven by serendipity more than anything else. It was never a plan. I barely knew about Indonesia. I was an entrepreneur in India. It didn't really work out so I went for a Masters to France. Then I decided to do an internship and in the end in France more than 60 companies rejected me for an internship including Amazon. After that the only internship I ended up getting was with Rocket Internet to move to Singapore or Indonesia. The salary was like $800 and I thought “okay with that salary I'm going to die in Singapore so let me just go to Indonesia.”
So, it's really random. I had no idea anything. I just needed to make some money. So that's how I ended up here. Like very, very by chance. And this was long time ago for 2013.
Mikal: It feels increasingly like the space for that slow, deliberate learning that you had at your previous startup Fabelio is disappearing. We have been in a funding environment for the last few years where entrepreneurs are increasingly awash with capital. Personally I've seen multiple startups raising successive rounds a couple of months apart with very limited progress in between. What do you think this is doing to founder psychology at the earliest stages?
Krishnan: This happened in India I think in 2015 or 2016, then it cooled down.
It has never happened in Indonesia at this sort of scale where left, right and center people are getting funded. Raising a $10 million check has become like quite easy here now. It's really not uncommon. When I did my first seed round for Fabelio in 2015 raising $200,000 was a big deal.
Now people raise a million bucks off of a powerpoint, right? It's completely different now. I think the negative of that is many people are new and fresh entrepreneurs and what's going to happen is they haven't seen any downturns right? I remember in my last venture back in 2016-17 there was something like a nuclear winter. Not a single VC would write a check period. They wouldn't write a check at all, and you know how the investor world is very herd mentality, right?
Once maybe the public markets tank, then the private markets will tank and boom, boom, boom suddenly you have a shutdown for 12 months. I don't think many entrepreneurs have experienced that. I don't think many of them are prepared for that. There's going to be a bit of a bloodbath when that happens for sure. But in the end, you know, casualties is a part of this space and the ones who survive go on to do even better. Plus the ones who survive learn a lot in the process. That's what's going to happen now. I'm very, very sure. And it's probably 12 or 18 months away.
We'll talk about the future vision for Lummo in a little bit but I'm curious, was there a light bulb moment at any point where you realized this was a real problem worth solving for merchants? Was there a single moment or a couple of moments?
No not a single moment. Interestingly, I've never been a single moment person in my life. I am collecting information and processing it all the time. I I'm very jealous of those people who have that single moment. They see a train going and think “oh I'm going to make the train fly.”
Like I have never had those moments. There was one moment which I would argue was definitely always in the back of my head. So for Fabelio we have done close to $100 million in revenue over four years and have had $100 million dollars of money flowing through our bank and it's the same single bank BNI. We also have had $20 million of funding.
So altogether we've processed over four years a lot of money at the same bank. Now when I asked them for a credit card they said “no we cannot give you one. You need three years of profitability to get a credit card” That’s audited profitability by the way. And the only way you can get a card is if you deposit $20,000 they'll give you $16,000 in card in plastic and believe me today's it's the same. It has not changed at all. It's still the same, it was always the same. For me it's like I'm giving you $20,000 you're giving me $16,000 in credit back and charging me and this deal doesn't make sense at all, right? So these kind of unique moments in banking has always bothered me.
But it's a combination of a few of these and that's what I've always felt because of coming from India. I mean even my maid has a bank account in India. So there's all these comparisons that keep growing within India. I've always felt that Indonesia, even though it's such a better macro country than India, how can banking be still not there yet?
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