How I built a billion dollar coffee company called Kopi Kenangan

Here is a transcript of the video. It has been edited for clarity.

What do you think about when you are having your morning coffee? Is it the taste? The vibe of the cafe, perhaps? Or maybe the price?

Well, the answer is that it depends. And recognizing that very notion is what makes Indonesian coffee chain Kopi Kenangan different from many of its competitors.

Edward Tirtanata: Starbucks and other global coffee chains really prioritize consistency. Where a cup of latte in Jakarta, Singapore, and New York tastes the same. For Kopi Kenangan, we prioritize going hyperlocal.

Which is why this cup of Kopi Kenangan coffee here in Singapore may taste different from a cup in Indonesia.

Edward Tirtanata: I realized that, you know, people have different tastes and preferences, right? If I go to Vietnam, I don't like the coffee is too strong for me. But then, if a Vietnamese drinks Indonesian coffee, they'll be like, Oh, it's too mild for me, right? There's no right or wrong. It's just based on preference.

Edward Tirtanata: And this is where we really shape our strategy for our global expansion.

Ernestine Siu: What started as a local coffee stall in 2017 has now gone global, with 850 locations across Southeast Asia. It's backed by the likes of Serena Williams, Jay-Z and Eduardo Savrin's B Capital.

There are three numbers to watch out for in Kopi Kenangan's story – $15 thousand – the amount Edward says they initially invested into opening the company's first location. $8 million – Kopi Kenangan's first outside investment by venture capital firm Alpha JWC Ventures. And $106 million, the amount Kopi Kenangan says they brought in in 2023.

This is Founder Effect.

Globally, the company sells more than five million cups of coffee each month. On average, that's about two cups per second.

Ernestine Siu: So, how did they do it? We're here at the company's Singapore headquarters to find out more.

This is Edward Tirtanata. He was born an entrepreneur.

Edward Tirtanata: I didn't really study much when I was a kid. But whenever there is an opportunity to make money, or do business, I always get excited and always get passionate about it.

Edward Tirtanata: So some of these little side gigs that I did when I was a kid, whether it be, you know, trading Pokemon cards, I think back then it was like very popular. And I did a lot of buying and selling.

Edward Tirtanata: Buy low, sell high, right? It's a concept that I learned by doing.

Edward Tirtanata: It's not about the money; it's about the pleasure of doing it. It is something that you know, really excited me until today.

Edward attended Northeastern University in Boston where he studied finance and accounting. But things didn't go according to plan.

Edward Tirtanata: Growing up in Jakarta, especially coming from an entrepreneurial family, I always get exposed to a lot of things that my father was trying to do. He tried so many different things in his life. And I get inspired by it.

Edward Tirtanata:  During my freshman year in college, I had one fateful call from my mother, which was telling me that, oh, your your dad is going through some financial difficulty. I think you need to come home quickly and help.

Edward Tirtanata: And that is why I decided to really expedite all my courses. I was able to squeeze everything in three years. I was able to graduate rather quickly. And when I'm back in Jakarta, I went straight to entrepreneurship.

Despite witnessing the setbacks faced by his father, Edward forged ahead with his own business ideas.

Edward Tirtanata: Before I started Kopi Kenangan, I started this tea chain called Lewis and Carroll. Ironically, I thought, oh, there are a lot of cafes, but most of them only sell coffee. Why don't I start a cafe that is selling tea. 

Edward Tirtanata: But I realized that doing my fifth, sixth and seventh store, the store is nowhere near as profitable. And that's when I realized that the market is already tapped out.

One day in 2017, Edward and his long-time friend James Prananto were having a conversation in his tea shop, when they came to discover a problem. 

Edward Tirtanata: We realized that a lot of Indonesians cannot purchase $3-4 cup of tea or coffee, right? If every cup of coffee costs you $4, and then you consume it for 30 days, that is exactly 1/3 of minimum wage.

Just as flavor profiles can vary across regions, so can the appetite for spending.

This can be best explained through something called the Starbucks Tall Latte Index, which compares and maps out the price of a Starbucks Tall Latte in each country across the world.

This makes it easy to spot where a Starbucks latte is the most and least expensive in the world.

So, while a Starbucks latte would cost approximately 2% of the median daily income of the population in the United States, that same latte would cost approximately one-third of the median income in Indonesia.

Edward Tirtanata: And that is when we realized that instead of being a trip home business model, like Starbucks, we want to create a grab-and-go coffee company.

Edward Tirtanata: Instead of focusing on the sofa or fast Wi-Fi, we're gonna focus on a good, high-quality cup of coffee. So that's how we started Kopi Kenangan together.

Ernestine Siu: Shortly after that chance conversation in a little tea shop in Jakarta, Kopi Kenangan was born.  

Edward Tirtanata: We believe that the key recipe of success in branding is to be different, right? And I realized that nobody is using an Indonesian name.

Edward Tirtanata: And I asked James, what is the most memorable memory that you have? Oh, my ex-girlfriend. And that is why our first menu is called Kopi Kenangan Mantan, which directly translates into, memory of my ex-girlfriend coffee. And that went really viral.

Edward Tirtanata: A lot of people were saying, oh, this coffee tastes exactly like my ex-girlfriend. It was sweet in the beginning and bitter at the end. So that really creates that organic virality.

Edward Tirtanata: We did not invest a single dollar for influencers, but they're all just posts themselves.

Ernestine Siu: Together, they invested $15,000 into opening their first location in Jakarta, Indonesia.

Edward Tirtanata: The experience of opening our first store was very hectic. We only raised like 15k for, you know, friends, family and our own money.

Edward Tirtanata: And we went over budget, unfortunately. Thankfully, the contractor was kind enough to let us pay late. Little did we know that actually, from the first-month profit alone, we were actually able to pay back all of the outstanding. And we were really able to make our money back in three months.

After successfully opening his first store, Edward and James quickly re-invested their profits into expanding the business. They went on to experiment with how they opened new locations.

Edward Tirtanata: So, for my real estate strategy, I would like to test for scalability. And therefore, I intentionally choose my second outlet to be in proximity to my first outlet. It was only 500 meters away. And to our surprise, there was no cannibalization at all.

Edward Tirtanata: We found out that we can open 14 stores on one road and there is no cannibalization at all. And the second thing that we tested is the fact that can we actually compete head on with global brands? So that is why I believe that out of like the first 15 stores, at least half is next to Starbucks.

Edward Tirtanata: And we actually took a lot of their market share because obviously, you know, the taste is more localized, and it's half the price. So a lot of people back then actually buy our coffee and sit at the global coffee chain.

Ernestine Siu: In 2019, Kopi Kenangan received its first outside investment of $8 million from venture capital firm Alpha JWC Ventures.

Two years in, Edward had grown the business to 20 locations. By 2019, the business had grown to more than 200 locations. And by 2022, as economies slowly picked up following the Covid pandemic, Edward and his co-founder had nearly quadrupled their store count across Southeast Asia.

Edward Tirtanata: Back then. I got a lot of pressure to actually just lay off all the employees and then maybe close the store, you know, temporarily.

Edward Tirtanata: But I believe that the key for us getting out of COVID is not to, you know, close our stores, but to open more, which was counterintuitive, right?

During the pandemic, Edward and his team invested heavily into building out their technology to help scale the business. And rather than being conservative, Edward chose to take advantage of the lower prices to open more locations.

Edward Tirtanata: We use data to open stores near the customers. We even made the investment to go inside the mall because we know that this is the best time for us to do land grabbing. 

Edward Tirtanata: So we made that investment. And that's why we were able to go to where we are today.

Ernestine Siu: Kopi Kenangan achieved unicorn status in 2021. By April 2024, the coffee chain had raised over $230 million in capital from investors across the globe.

Despite the business's success, it didn't come without its own set of challenges.

Edward Tirtanata: Entrepreneurship, for me is a constant struggle. I think it never gets easier; it only gets harder. The only thing that improves is yourself and your team; you got better at handling, you know, struggle. If you think about it, right? I have never led a company with triple-digit revenue before.

Edward Tirtanata: And it all started with a very simple, hectic beginning, where our biggest issue back then was how can we find coffee when we ran out of it? We need to use my Toyota Innova to go around the city to buy creamer or go to Bandung to buy coffee beans.

Edward Tirtanata: So I try to learn every day how to become a better leader, how to become a better CEO, how can I lead a company of this size, right, and an even bigger size in the future? So this is something that you do as an entrepreneur.

Edward Tirtanata: It only gets more complicated as a business goes bigger. And I'm sure that it applies not just to Kopi Kenangan but to businesses globally as well.

Edward Tirtanata: I think the best advice that I can give to fellow entrepreneurs is to be different. The next Starbucks is not going to look like a Starbucks; the next McDonald's is gonna look like a McDonald's. The next Google is not going to look like Google today. Right? So you need to be radically different in order for you to compete against the incumbent. 

Edward Tirtanata: And now. I'm very excited of what the future holds for us. I believe that it's just the beginning of our journey. We were still very, very far from meeting our dream to become a global coffee chain. And hopefully we will be able to meet that dream within the next four to five years.

Ernestine Siu: Edward hopes to expand Kopi Kenangan to 3,000 locations by 2028 and dreams of listing the business in the U.S. one day.  

Edward Tirtanata: In order to achieve that 3,000 number, we need to put a very strong emphasis on our international expansion.

Edward Tirtanata: Our Indonesian business is highly profitable. But our international business is not yet profitable, right, admittedly. But we believe that to meet our vision of 3,000 stores by 2028, we need to make that investment today.