Driven By Integrity: Laying Economic Foundations, One Tile at a Time
Tandean Rustandy, ’07 (AXP-6), Distinguished Entrepreneurial Alumni Award
Photo by Seth Thompson
Schrager: How did you first have the idea to start your company?
Rustandy: Early in my career, I was conflicted about some of the practices the companies I worked for were employing. I started my career in the timber industry. Indonesia is rich in timber resources, but the timber companies seem to know only how to cut down trees, not plant them. They don’t do it sustainably. I didn’t think this was right, so I quit my job to start my business in ceramics.
Schrager: Did you have a background in the ceramics industry? If not, why did you choose to get into that industry?
Rustandy: No, no background at all. I really learned by doing. I was more interested in creating a company I could be proud of than the details of the industry that would allow me that freedom. Too many people go into business just to make as much profit as possible, without addressing the future and the broader impact of the business itself. When I started Arwana, I wanted to do things differently. The biggest problem in Indonesian business is corruption, and I wanted nothing to do with that. I wanted to grow the company through good corporate governance, and with integrity.
Schrager: When you first started the company, what did you do differently than the competition?
Rustandy: It was important for me to be based in Indonesia—because I am a nationalist. But to do business here, you typically need relationships with people in the government and the military, with the people who have the power. I was a young guy without connections, but I didn’t want to start a business based on connections. I wanted my business to be run by the management team, not by powerful outside entities. I believe in the free market, supply and demand, and that’s how I wanted to grow my business.
Schrager: Has your business approach changed over the years? What currently differentiates you in the marketplace?
Rustandy: Today, we’re the healthiest ceramics company in Indonesia. We’ve figured out how to run efficiently and then sell the product as inexpensively as possible, without sacrificing the quality. We’ve expanded into the East Asian markets, as well. Everyone in the world is so afraid of China right now because China’s production costs are hard to beat. But, we’ve found a way to compete on their price points while delivering high-quality goods.
Schrager: How did you make your first sale?
Rustandy: It was very difficult. There were already lots of big players in the industry. I think what helped me was I focused on selling to ‘second tier’ cities, rather than the big market–leading areas. For example, in the US, it would be like selling in Alabama or Mississippi, rather than in New York. And really, this was a blessing in disguise, because the 1997–98 financial crisis in Asia crippled the larger markets, but in secondary cities, with more agrarian-based economies, the demand for my product was still there.
Schrager: Looking back, what was an early turning point in the growth of the company?
Rustandy: I’d have to say that it was during the country’s upheaval in the late 1990s. The Thai baht collapse triggered the biggest economic crisis that’s ever happened in Indonesia, and it coincided with our political crisis. The government changed. There were riots where hundreds of people were killed, and there was a wave of anti-Chinese violence that included mass looting of Chinese-owned shops. As a double minority in my country—I’m both ethnically Chinese and a Christian—it was a difficult time. Inflation made our rupiah worth only twenty cents on a US dollar. Many companies went bankrupt. Even though I was selling at a loss, I kept running the company, and maintained the production. I just did the best I could to keep selling my product. I had to remember that a business is about more than just profits. I saw this as a time to really establish my reputation, to make gains in the market, and to promote confidence in the product by keeping the quality consistent. Eventually, prices began going back up, and I got to the point where I could stabilize and then grow again. I learned a lot from that experience, and it was definitely a turning point in our growth.
Schrager: Did you ever feel like you were placing ‘big bets’ on the future? Can you give me an example?
Rustandy: I think the future is really in Asia—in Indonesia. So, no, I don’t think I took a gamble at all. If you look at my company, it’s been growing consistently from the start. Given that we’ve been growing for so long—more than seventy-fold to date—it’s going to be harder for us to maintain that rate, going forward. But then again, the market offers a lot of opportunity. Indonesia is a big country with a large population, but it is also very poor—our GDP, per capita, is still very low. So we have to keep our costs low and our pricing affordable, yet still produce the best possible product. We just have to work harder, and put our hearts into it.
Schrager: What advice would you give to aspiring entrepreneurs who want to do what you have done?
Rustandy: I think a common mistake among entrepreneurs is to start a business in order to make as much profit as possible. You have to think about it differently. You have to build your surroundings, invest in your staff. My mind-set is, as an entrepreneur—particularly in an underdeveloped nation—I have to contribute back to my country and help to build its economy. I believe in building a business in a way that enables everyone to increase their quality of life and their standard of living.