#8 GKC | 🐙 From $5M to Scandal: The Fall of Octopus

💡 GOOD Insights

💛 Co-curated with Admond Lee from The Runway Ventures, a weekly newsletter to help you become top 1% founders by learning from startup failures.

📈 The Rise of Octopus

🇮🇩 Octopus is a reverse-logistics startup in Indonesia that promised to revolutionise waste management.

It was founded by Hamish Daud (CMO), a well-known Indonesian actor and TV presenter, along with his four friends (Mohammad Ichsan as CEO, Niko Adi Nugroho as CTO, Rizki Mardian as Head of Data & Analytics, and Dimas Ario as Chief People & Culture) in 2020.

The Problem — 🥫 The inefficiency of waste collection and the lack of incentives for waste collectors make waste management incredibly difficult in Indonesia.

The Solution — ♻️ Octopus provides a solution that streamlines the waste collection process and offers better incentives for waste collectors, creating a more sustainable and profitable ecosystem.

🏭 For manufacturers — Brands and FMCG producers can track and collect their waste using Octopus’s real-time data dashboard, ensuring they don’t end up in landfills (TPA).

🧑🏻‍🏭 For waste collectors — They are incentivised to collect waste and ensure waste is properly processed through Octopus’s platform.

In July 2022, the company secured $5 million in funding from notable investors like Openspace and SOSV, validating its business model and helping it expand its operations.

At its peak, Octopus gained considerable traction (1,700 waste banks, 14,600 trained and verified collectors, 200,000+ platform users).

📉 The Fall of Octopus

🦑 Well… Octopus actually started sinking 6 months after raising fund.

The downfall of Octopus began to unravel as quickly as it rose to fame due to a tangled mess of financial mismanagement (unpaid salaries), broken promises, and public scandals (fraud and misconduct).

Early 2023 — 🚨 Reports of unpaid salaries begin to emerge.

• The CEO attributed these delays to a transition to a B2B model that affected cash flow, but this explanation did little to quell the anger of employees who were struggling financially.

Jul-Dec 2023 — 🤦🏻‍♂️ Allegations of fraud and misconduct surfaced within the company.

• CEO had lied about holding a degree from UC Berkeley — he never actually graduated from UC Berkeley.

• 🤯 The CMO, Hamish Daud, faced accusations of harassment and sexual assault against a former employee.

Jan 2024 — Octopus’s online presence was virtually dead.

• Employees were reportedly put "on rest" indefinitely, with no clear direction or communication regarding the company's future.

Feb 2024 — Suddenly, Hamish resigned from his position as a CMO due to “personal reasons”.

Jul 2024 — The CEO tried to sell the business to competitors but failed.

❌ 2 Mistakes

Mistake 1: Financial mismanagement & lack of transparency

💸 Octopus secured $5 million in funding in July 2022, but the company still managed to fall into a dire financial situation after 6 months.

🤫 As financial troubles mounted, the leadership remained silent, providing vague explanations that did little to address the concerns of employees and stakeholders.

Mistake 2: Toxic work environment

The toxic work culture within Octopus was another significant mistake.

As more and more allegations of fraud, harassment, and misconduct emerged, Octopus’s management simply ignored employees’ complaints and allowed the issues to snowball.

This hostile environment, combined with the financial instability, led to chaos and disillusionment among employees, causing the company’s downfall.

💡 3 Lessons Learnt

Lesson 1: Prioritise financial planning & accountability

Octopus raised $5 million in July 2022 and subsequently couldn’t pay its employees after 6 months. That means the monthly burn was close to $1 million in Indonesia.

How? I don’t know. The burn was unreasonably high and it wasn’t sure where the money was spent.

💰 But one thing is for sure — the money raised from investors is their trust toward your execution as a founder and the potential value that your company can create in the future. Never abuse the trust.

Lesson 2: Be open, not silent

Transparency is essential to building trust with employees, investors, and stakeholders. When things go wrong, staying silent or offering vague explanations can cause more harm than good.

Lesson 3: Integrity is everything

You don’t need a degree from a prestigious university (i.e. UC Berkeley, Stanford, Harvard) to become a founder. Heck, most VCs I know don’t really focus on the founder’s education credentials — unless you’re building a deep tech startup.

So I don’t understand why Octopus’s CEO had lied about holding a degree from UC Berkeley. If you lose money, you can earn it back. But if you lose your integrity, you lose everything.

🎉 GOOD News

 💡Fundraise | SG DiMuto secures $5.9m from Seeds Capital, SGInnovate provides food supply chain solutions in new markets

 💡M&A | ID Pintar acquires 3 firms to boost overseas job placement

 💡Regulations | SG Platform worker protections to kick in from January 2025

🏆 GOOD Opportunities

 🚀 Accelerator | BIND Startup Acceleration Program | Due Sep 6

 🚀 Competition | Future of Capitalism ($1M funding) | Due Sep 30

 🚀 Grant | Climate Change Innovation ($150k grant) | Due Sep 15

💁‍♀️💁‍♂️ GOOD People

🙋‍♀️ Karin Chan | Co-founder @ GenieFriends

🙋‍♂️Jeremy Soh | Vice President @ BEENEXT

🙋‍♀️ Jonas Skattum Svegaarden | CEO @ Katapult Ocean

❤️ Amazing Content You’ll Like …

The $82.5M Mistake for Tani Hub - When shooting for the stars, naivety and mismanagement will ensure you crashing hard (link)

Indonesia’s Talent Shortage - Huge gap in tech talent demand (900k) vs. supply (50k) in Indonesia (link)

The story of JALA - A university project turned ID shrimp farming leader empowering 18,500 farmers (link)

👍 How I Can Help

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