Will Path’s Controversial New Indonesian Investor — Bakrie — Be Bad for Business?
Bakrie Global Group
The good news for Path: It just closed a $25 million investment, after much speculation that it could not do so.
The bad news for Path: Its new venture backer — Bakrie Global Group of Indonesia — is part of a very controversial conglomerate in its home country.
Almost immediately after this site broke the news that the private mobile social network had raised its large Series C round, questions arose around Path’s decision to include the Bakrie unit, part of a massive Southeast Asian company with major interests in the region’s mining, oil and gas and telecommunications industries.
Among its most disturbing issues: A massive mudslide disaster in 2006, linked to the drilling of a Bakrie subsidiary, Lapindo Brantas, in which 14,000 homes in Java were destroyed.
So, as the news of the funding broke, many of Path’s Indonesian users — where it is very popular — took to Twitter, claiming that they would abandon their accounts as a result of the ties to Bakrie.
But Path CEO Dave Morin defended the company’s decision to take funds from Bakrie.
“During our fundraising, it was strategically important for us to find an investor in the region which would allow us to have a partner on the ground,” Morin said in an interview with me this weekend. “To help us really expand our operations there, and ultimately to deliver a higher quality service to our community in Southeast Asia.”
“It’s a business decision for us, made on the criteria that I said,” Morin said. “And with Bakrie and Bakrie Telecom — having a mobile carrier partner that can help us with that is very important.”
It’s a bittersweet moment for Path, which has had quite a long, rough 2013. The company laid off one-fifth of its workforce in October and faced intense criticism for what many deemed “spammy” growth practices over the summer.
Morin acknowledged those issues in another interview Friday. But, for his part, he also noted that Bakrie Telecom is one partner of four major area operators, not its only partner in Indonesia.
“Additionally, we also have partnerships with the other three major telco carriers — so Telkomsel, XL and Indosat — to deliver higher quality service to their users as well,” Morin said. “So this isn’t a one-off — just because this particular carrier decided to do a small investment doesn’t mean they’re our only partner in the region.”
Bakrie Global Group CEO Anindya Bakrie also downplayed his company’s stake in Path in a tweet sent on Saturday. “Thank you for the congratulations. We are only a small part of many investors’ @path,” the translated text of his tweet read. He also added: “After all, we are one of the largest users of Path.”
Anindya Bakrie is the son of Aburizal Bakrie, the patriarch of the powerful family, who is running for president in elections this year.
Morin wouldn’t comment on whether or not there were other strategic investors in the region that Path could have gone with for the round instead of Bakrie.
Still, however large a stake Bakrie has in Path’s latest round — which also includes existing investors Greylock Partners, Kleiner Perkins and others — the question of whether upset Indonesian customers will abandon the service remains.
“We’re monitoring the sentiment and trying to understand the concerns and the positives,” said Morin. “We probably have as much positive feedback than negative.”
You could not tell from the many tweets, most of which decried the investment, such as this one:
Will it matter?
“We listen as we always do, but it’s a little bit early to tell if we have an answer to that question right now,” said Morin. “But I certainly hope not.”