Astaga!com: An Internet portal company rising at the right time

By Riyadi

JAKARTA (JP): Astaga is an Indonesian exclamatory word, and it was no more than that until last February, when 27-year-old Jonathan Moriss and 26-year-old Andrew Hayek launched Astaga!com, a general Internet portal company.

Now people with Internet access in Indonesia recognize astaga as more than just an exclamatory word. Moriss and Hayek are even dreaming that Astaga!com will become an "household product" if or when the Internet becomes an indispensable tool in the future.

Astaga is a phenomenon in Indonesia's internet market. With a massive marketing campaign, it has grown from nothing to become "the number one internet site" in Indonesia within six months.

Morris claims that Astaga currently has about 230,000 registered users, mostly using its free e-mail service, and records 680,000 page views per day, compared to about 200,000 page views booked by Detik.com and 180,000 by Kompas.com.

That's a high figure, considering the relatively small number of people with access to the Internet in Indonesia (two million according to AC Nielsen).

With its prominent status in Indonesia's Internet market, Astaga can easily raise fresh money from new investors. A number of big name investors have been lining up to take part in financing the company. One of them is Lehman Brothers.

Lehman Brothers will soon join Batavia Investment Fund II Ltd. and Olympus Capital Partners Asia to become Astaga investors and shareholders.

It was Jonathan Moriss who first floated the idea of establishing a major Internet portal in Indonesia. Moriss got full support from his boss in Batavia, Patrick Alexander, and friend Frederick Long, managing director of Olympus Capital.

With strong financial support, Moriss contacted a long-time friend in Chicago, Hayek, in June 1999.

The two spent one year together working for Boston Consulting Group in Chicago. In fact, it was Morris who persuaded Hayek to work with the group. And it was Morris again who, this time, persuaded Hayek to work with him on a totally new entity.

Hayek took a one-week vacation and came to Jakarta for the first time in October, 1999. Hayek and Moriss then finalized the business plan for Astaga.

After his one-week stay, Hayek returned to Chicago, packed up everything he had and left for a new life Jakarta.

Moriss and Hayek started to implement their business plan in December: Recruiting, designing web pages, logos, and preparing all the supporting elements from a small room in a corner of tower B of the Arkadia office complex in South Jakarta -- where Astaga is still located.

After two months of preparation, the two Americans, supported by about 60 employees, launched Astaga!com on Jan. 9.

Astaga in the beginning was not much different from other new Internet sites in Indonesia. Like many other sites, it started with a strong emphasis on news.

It was all driven by the success of Detik.com, Hayek said. When he and Morris came up with a plan for Astaga, Detik.com was defining the Indonesian market.

"So, when we were building Astaga initially, our eyes were on Detik. Our model was Detik. There was the most successful site, that was the starting place. And we grew from there," Hayek said.

Astaga grew fast, however, and left all other sites behind, including Detik.com, thanks to a massive marketing drive. That's what makes Astaga different.

According to AC Nielson, Astaga's ads spending ranks first among other web sites in Indonesia. And that has paid off, Hayek said, with Astaga becoming the number one Internet site in Indonesia.

Besides marketing, Hayek said Astaga had been aggressive in expanding its portal, effectively moving from a news portal to a general portal with a wide range of services.

Astaga!com now includes a search engine, free e-mail, free fax, post cards, chat rooms, games, a discussion board and the latest news and interesting features on politics, economy, health, astrology, women, technology, travel and sports.

After massive expansion over the last six months, Astaga!com is now focusing its efforts on building revenue streams for itself.

It is time for Internet companies, including Astaga, to prove that they can make profit, and not only rely on funding from investors.

Astaga!com targets to reach breakeven by the end of next year. One immediate source of income will come from advertising. It also plans to franchise Astaga products, including clothing and credit cards. Another source of income will come from a planned online mall.

On the cost side, Astaga will not expand further. The cost will remain relatively the same, whether site visitors increase or not.

Moriss and Hayek said Astaga will eventually become a profitable venture, with increasing revenues and relatively stable cost spending. With capital at hand, they vow to maintain Astaga's position as the number one portal in Indonesia at all costs.

Astaga will then share its future profits with its employees through a stock option program and with the public through an initial public offering on the Jakarta Stock Exchange in the first quarter of next year.

Hayek said Astaga is not worried about competition from existing Internet companies nor from new portal companies, noting that the market is a bit saturated now, something, he says, benefits established Internet brands like Astaga.

"We saw there was an opportunity to create a leading entity in the Internet space. We started early enough so that we could establish our brand quickly, and get our products out in front.

"I don't know if you would have the same opportunity now. It was an opportunity that we took in December, and now it's a bit different."

"That happens in every market. It opens and then there are a lot of players and it becomes difficult," Hayek said.

Hayek predicted that only a few portal companies would survive the competition, reckoning successful Internet companies in the future would have to be creative, innovative and able to keep up with the market.

"I think Astaga will be one of few Internet companies that will succeed... Long term, we will be a confluent of the media, TV, radio, Internet, a lot of blends together," he said. "I think Astaga will be a media company, a broader sort of entity."