Meet Grab: The King of Southeast Asia

Hey everyone - Harry here, and Good Morning, Good Afternoon, or Good Evening!

Welcome to Issue #3 of Deep Dive with Inquisition. In this issue, we will go over the story of Grab, from its founding to the strategies it used to become the "King of Southeast Asia.”

Meet Grab, a Singaporean company founded by Anthony Tan and Tan Hooi Ling backed by investors such as Softbank, Vertex Ventures, and more!

Early Days of Grab:

Grab was started in Malaysia in 2012 as an attempt for Anthony Tan and Tan Hooi Ling to make taxi - rides safer in Malaysia. The company moved its headquarters to Singapore from Malaysia during 2014. The company had multiple names during its early years; starting as “MyTeski” then rebranding to “GrabTaxi” to finally landing on their current name of “Grab.”

Overview of SEA - transportation:

SEA is one of the world’s biggest areas for rapid economic growth with surging demand for the implementation of technology aimed at making daily lives more efficient.

1. SEA is a market for over 650+ Million people.

2. The Ride - Hailing market size for SEA during 2023 was projected to be around $20 billion with the market continuing to grow.

3. Popular transportation types are cars, motorcycles, tuk-tuks (three-wheel motorcycles), and electric scooters/bicycles.

4. Digital Wallets (like Uber Wallet) and Credit/Debit Cards are two popular payment methods however cash is still a popular method for payment in SEA.

5. Smartphone usage will exceed 80% by 2025 for countries inside the SEA Region.

Rise of grab: How Grab first started and scaled.

The rise of Grab can be summarized as successful market research with localization, strategic acquisition, and service diversification for the needs and wants of its customers.

Back in 2012, Grab was known as “MyTeksi” and it first partnered with local taxi companies and scaled it to 11,000 bookings during the year alone. Grab’s first model was different from the traditional model of taxi calling where customers would wave down taxis driving by. Instead, Grab allowed customers to book a partner taxi through the established partnership Grab made with local taxi companies. Grab customers could rate the taxi ride and have access to real life tracking. This concept significantly improved the quality of the customer’s ride which resulted in Grab becoming a huge success during the first stages of trust building with its platform users. Based on the huge success, MyTeksi moved slightly away from their partnership with local taxi companies and additionally implemented their own taxi drivers allowing users to decide.

After successfully validating the business model during the first year, MyTeksi was rebranded to Grab and rapidly expanded to other countries inside the SEA region such as the Philippines, Thailand, Singapore, Myanmar and Vietnam.

As the service was gaining popularity across the different regions in SEA, Grab was able to secure a $10 million Series A investment led by Vertex Ventures after starting with an initial $250,000 check from its own family company - Tan Chong Motor Company in 2013.

After this investment Grab focused on rapidly scaling the user base and reaching millions of users by the end of 2013 which was a major contribution factor for investment giant SoftBank Group to invest $250 million into Grab during 2014.

The company not only focused on its main services, it further branched out and launched services that are connected to the core service: transportation which introduced “GrabCar”, “GrabBike”, “GrabExpress”, “GrabFood” and “GrabFinancials.” These services were inside the big scheme of transportation, but was focused more towards providing the specific need and wants of its general user base.

The rapid rise of Grab was the tipping point towards it becoming “Super App”.

Introducing the “King of SEA” - how Grab became a Super App.

Grab was originally started to improve the transportation system inside Malaysia. A lot of people in the region viewed Grab as an alternative for Uber in X inside the SEA region. Grab and Uber are very similar companies both of them are operating inside the same space and providing the same features (e.g., real-life tracking, calling taxis/drivers via the app, etc).

This leads to the question of, how did a local transportation company that leveraged the technologies as Uber, eventually, not only beat the market share of the world’s biggest ride-sharing company, but also eventually acquire it?

The answer is simple: through hyper-localization of the needs and wants of its consumers. The biggest mistake Uber made was not localizing its services. This eventually made services like Grab continue to expand its market share inside the SEA region. Specifically, Uber had the global - approach where no matter which region it is located in, it will follow the standard procedure when using its services however Grab was different - it understood the local and cultural aspects where the biggest differentiator will be Grab allowing cash - payments meanwhile Uber forcing its users to only pay via credit/debit card.

Furthermore, countries in SEA are known for their heavy traffic which has lead to bikes being a very popular method of transportation. Thanks to the localization and quick adaption strategy, Grab launched its bike transportation service “GrabBike” at the end of 2014 as a strategy for people to continue to use Grab for various types of need and wants.

However, back in 2013, SEA region countries were all about using cash whether it is a big or small purchase - a lot of the population used cash and still uses cash very often even during 2024. Uber decided to implement the option to pay in cash for its users inside the SEA region however it was after that Grab grew its presence and became a growing major - player inside the region for all sorts of transportation-related services.

Grab wasn’t only focused on simply providing one type of transportation - it focused on localizing and expanding its services to different services in the transportation - industry. As a result, Grab was able to diversify its revenue model, rapidly scale, and become part of almost every single individual's daily - life through providing their services. Unlike Grab, Uber showed little adaption strategy and strongly followed the Western-style/approach for the SEA market which ultimately led to the acquisition of Uber’s entire SEA market operation to Grab in exchange for 27.5% of the parent company “Grab Holdings Inc” which was the market - share of Uber inside the entire SEA region.

After Grab dominated the general transportation market, it started to further expand into other areas that were connected to the general - transportation market: finance.

Grab entered the financial market and focused on providing a smooth payment experience for its users at first. Grab entered the financial market with their subsidiary called “GrabFinancials” - which provided digital banking service, buy now and pay later payment services, loans, insurance, and wealth management services for its consumers.

By focusing on hyper-localization and rapid expansion, Grab was able to further expand into other interrelated sectors such as the financial sector. This caused Grab to seamlessly integrate themselves into the everyday lives of the general population inside the region which propelled the company to become a “Super App” in the SEA region.

This leads to another question: how was Grab able to achieve dominance inside the SEA market apart from the localization strategy and rapid scaling?

Apart from the localization of its wide - range of services, Grab focused on two major things to successfully scale further: 1.) Advertisement and 2.) Royalty - Program.

Regarding its advertisement strategy, Grab invested a large portion its money into advertisements on a variety of platforms and areas to grow the presence of the company and its new services. The far reach of tis advertisements allowed people to know about Grab and sparked a curiosity in them to try Grab’s services.

Once Grab sparked one’s curiosity, it further captivated its users by successfully becoming an “All in One Stop,” investing heavily into creating its fansbase (community) through “GrabRewards”. This program rewarded its users for the wide - various services offered which provided an incentive for the users to use Grab for transportation-related purposes to even financials such as banking and health.

Challenges for Grab:

Despite its success, Grab faces several challenges:

1. Competition: Local competitors like Gojek present significant competition which is a major challenge for Grab.

2. Regulatory Hurdles: Navigating different regulatory environments across SEA requires constant adaptation and compliance efforts.

3. Operational Costs: Managing a vast network of drivers and services entails high operational costs, necessitating efficient management to maintain profitability.

Future of Grab:

1. Further strengthening its position as a Super-App inside the SEA region:

2. → Grab is further strengthening its financial - aspects where they are heavily focused on the wealth management of individual customers - which is a huge scale-up from providing digital banking and online payment services.

3. Shifting its focus from hyper-growth to sustainable finances:

4. → Grab is currently unprofitable and the officially stated that it will be focusing on making its financials more sustainable while continuing to scale.

Key - Takeaways from Grab:

Grab can be seen as one of the companies that changed the way how transportation was done inside the SEA region. It brought safety, and a better experience for both passengers and drivers and fueled digitalization inside conservative industries.

Below are the benchmarking strategies that Grab used which can be used for your own business:

1. Research and identify successful market leaders inside and outside of your local market:

   → Research and identify the successful market leaders outside of your local market and implement strong adaptability and localization for the specific - region that your service is launching. Become hyper-local and adapt fast.

2. Prioritization of the needs and wants of the users/customers:

   → Prioritize what customers need and want inside your local market before benchmarking. (Cash + Card Payment or Only Card?)

3. Aggressive Expansion:

   → Aggressive expansion into connected - areas of your service. Grab was started as an “Uber for Malaysia” but now it serves as a “Super app” across most countries in SEA. This is only possible because Grab successfully identified the connected sectors (e.g., Payment = Transportation → Fintech → NeoBank/Internet Bank/Payment Provider) or even (e.g., Transportation = Delivery (Food and Logistics → Still same service for drivers but not onboarding any customers/passengers).

Just like the story of David and Goliath, you should never underestimate your opponent. Underdogs will always win if there is an immeasurable amount of effort, grit, and bravery. Thus, the key to success, according to Grab’s playbook, comes from research, prioritization of needs and wants, hyper-localization, along with aggressive expansion into other areas connected to the main scope of things after building a strong foundation (e.g., a community that loves your product/service).

If you are enjoying the content you are receiving, please feel free to share the link below with your friends, family, co-workers, etc., while also checking out what Inquisition is all about!

Thank you so much for reading!

-Harry