Grab’s SPACtacular rise… and looming threats

 

Grab is an unequivocal success. It’s one of Southeast Asia’s biggest ever startups and has achieved what most companies can only dream of. In a short nine years, it has gone from a scrappy startup to a regional tech juggernaut.

The latest feather in its cap is its SPAC (special purpose acquisition company) deal – the largest of its kind the world has seen – that will fill its coffers with more than US$4 billion and value it at a near-astronomical US$40 billion (RM165 billion). This makes it more valuable than Malaysian giants Maybank, Tenaga Nasional and Sime Darby combined.

The best part of it all? The founders – Anthony Tan and Tan Hooi Ling are both Malaysian, with Grab starting as MyTeksi in 2012 right here in Kuala Lumpur. I can’t help but feel proud of the fact that two Malaysians have orchestrated a masterclass in startup building that can rival that of luminaries in Silicon Valley and Shenzhen.

However, I can’t help but also feel that what could – and should – have been a Malaysian success story has now become a Singaporean success story. Grab moved its headquarters from Kuala Lumpur to Singapore in 2014, due in large part to a lack of funding options here.

Commenting on that, Lee Heng Guie, the executive director of Socio-Economic Research Centre said: “Singapore has an attractive corporate tax rate, alongside a vibrant and liquid market for investors. Our government needs to think on how to create a similar ecosystem here in Malaysia.”

He’s right on the money.

And of course, arguably, the biggest blunder was Khazanah’s failure to see Grab’s massive potential and not investing in the promising startup even though Grab had applied to it for funding. Realising the golden opportunity, Singapore’s Temasek swooped in and invested US$10 million (RM41 million) in the startup. The rest, as they say, is history.

I can only imagine what a killing Khazanah would have made if it had had the foresight to invest in Grab when it had the chance. But then again, I suppose hindsight is always 20/20.

However, irrespective of what could – or should – have happened, the point is, today, Grab is a regional behemoth that shows no sign of stopping.

But that doesn’t mean it’s going to be smooth sailing from now. Far from it.

Grab’s precipitous rise has put it on a collision course with some ambitious, deep-pocketed competitors, both locally and abroad. For starters, as dominant as Grab’s ride-hailing service has been in Malaysia and Singapore, it isn’t nearly as all-devouring in Indonesia – Southeast Asia’s most populous country and hence its most important market.

Currently, Gojek – its biggest regional rival in ride-hailing – is almost neck-and-neck with it in Indonesia. In January 2021, Grab had a revenue market share of 65% for car rides, and 46% for motorbike rides, with Gojek gobbling up the rest.

Plus, Covid-19 has seen the ride-hailing industry take a massive hit due to widespread lockdowns. This has led to Grabfood – Grab’s food delivery service – recently becoming its largest revenue generator.

But GoFood – Gojek’s food delivery arm – has a lead on Grab in Indonesia. In Malaysia, however, GrabFood seems to be pipping early-mover Foodpanda, a smaller outfit that against the odds, has managed to hold its own.

AirAsia – left hemorrhaging money by Covid-19 – has thrown its hat in the ring as well and now provides a cost-effective, no-frills alternative food delivery service. I can see it taking off (pun intended) thanks to its one clear advantage.

Unlike Grabfood and Foodpanda, which charge a whopping 25-35% in commission, AirAsia Food only charges 10%. This majorly undercuts the incumbents and I can see mass adoption of the service once AirAsia Food overcomes its app’s user interface issues.

Another area of intense focus for Grab is financial technology or fintech. GrabPay – Grab’s e-wallet – has been well received by Malaysians and Singaporeans alike thanks to its seamless integration with its ride-hailing, food delivery and grocery delivery services. In terms of market share, GrabPay is the clear market leader in Singapore, while in Malaysia, it shares the podium with Boost and TouchNGo e-wallet.

However, Indonesia has been a tough cookie for GrabPay to crack, with Gojek’s GoPay leading the market there. And with Gojek’s impending merger with Indonesian e-commerce unicorn Tokopedia, GoPay will only become more pervasive and engaged in the lives of many in the region.

But despite the evermore frigid business landscape, Grab has stayed true to its super app ambitions by also entering the insurance and banking sectors. Today, you and I can take travel, ride and accident cover right on the Grab app, without having to speak to insurance agents or needing to waffle through myriad clunky websites. Just a few clicks and we’re covered.

Even more significant is the digital bank licence that was granted by the Monetary Authority of Singapore (MAS) to the Grab-Singtel consortium. Thanks to this, the Grab-Singtel digital bank – which is set to launch in 2022 – will do everything a traditional bank does today, albeit while operating in cyberspace.

With such exciting moves and an impressive track record of besting well-heeled rivals, Grab looks set to become a Southeast Asian staple in the decades to come.

But what would this Grab of the future look like?

With so much functionality being added to the Grab app, I wouldn’t be surprised if a chat application was layered on it, ala WeChat, or an e-commerce platform was added to it, ala Lazada.

Grab already has the GrabMart functionality so it’s not a stretch to expect full e-commerce integration being part of its product roadmap, especially with Gojek-Tokopedia (GoTo) breathing down its neck. At this point, will it develop its own e-commerce platform from the ground-up or would it opt to partner with Lazada?

A Lazada partnership looks promising as Lazada is owned by AliBaba, which in turn is under the thumb of Softbank, which in turn happens to be one of Grab’s largest investors. A Shopee partnership, however, is out of the question as it is owned by Sea Ltd, another Singaporean monster with monster ambitions of its own.

In terms of ride hailing, I expect to see both autonomous “robo-taxis” and flying taxis from Grab. Its president Ming Maa has already said that we can expect Grab’s self-driving taxis to be roaming the streets by 2022. Once this takes off, I expect self-driving Grab rides to become the norm very quickly. In this future world, human drivers could become a relic of the past.

In a similar vein, Grab has signed a Memorandum of Understanding (MoU) with German flying taxi startup Volocopter. I can conceive of a future world where we use Grab’s flying taxi to go from central KL to KLIA and maybe even to other satellite cities and towns such as Petaling Jaya, Puchong, Damansara, and Cyberjaya.

And of course, thanks to the future Grab also being a digital bank, there’ll be seamless integration with GrabPay, making it incredibly easy to move money around and pay for all the services Grab and its partners have to offer.

The future – although fraught with challenges and challengers aplenty – looks bright for Grab. Its tenacity gives me confidence and its Malaysian roots fill me with pride. And at the end of the day, no matter what the future has in store for Grab, it’s set to take us on one hell of a ride.

Buckle up! - FMT

The writer can be contacted at kathirgugan@protonmail.com.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.