Grab is expecting to hit $1 billion in revenues in 2018, just six years after the ride-hailing app was founded in Singapore.
Valued at $10 billion during its newest fundraising, the ambitious unicorn also said on Tuesday that it is seeking partners along the transport value chain, expanding into grocery deliveries, and launching a super-app that will bring together all its services from taxi-hailing to payments.
It is not the kind of language you would expect from a company caught up in an anti-monopoly ruling in its home town. However, the drive for scale is becoming so imperative for modern internet companies that Grab is refusing to hit the brakes.
The Asian start-up that forced San Francisco-headquartered Uber to pull back from Southeast Asia is fighting a provisional finding on July 5 by Singapore's Competition and Consumer Commission that the move substantially reduced competition and has allowed Grab to raise prices.
Grab said in March that it had bought Uber's Southeast Asian operations. In return, its closest competitor Uber will take a 27.5% stake in Grab.
Grab’s co-founder Hooi Ling Tan argued at the RISE conference in Hong Kong on Tuesday that there are still plenty of competitors in Southeast Asia, such as Indonesia's Go-Jek, but that Grab's biggest rival wasn't another company but "the hand that waves down a [conventional] taxi at the side of the road”.
Grab has entered the official appeals process in Singapore and Tan said Grab would be writing a letter to Singapore’s competition watchdog by the end of the month. Asked if she was optimistic the deal with Uber would stand she replied: “Of course.”
Tan said Grab’s discussions with regulators were broadly about making sure consumers continue to get good services at a reasonable price whilst also encouraging business innovation.
Platform analysts say scale allows internet companies to gather vast quantities of data, which feeds into superior data analysis and attracts more merchants because they can target consumers more effectively. This network effect can push the platform further ahead of its competitors.
Grab, which is backed by Chinese peer Didi and SoftBank, is rapidly gaining scale. It says it is the first Southeast Asian technology startup to have achieved run-rate revenues of over $1 billion across an installed mobile base of over 100 million users.
SUPER-APP
The internet companies that have been most successful to date in creating an online one-stop-shop for consumers, are social networking apps such as Tencent’s messaging service WeChat.
Tan said she did not think social media platforms had any advantage over an application that evolves out of ride hailing. “There is no cookie-cutter model,” she said, noting the key factors being a user base and consumer trust.
Tan acknowledged the challenges Grab faces in maintaining its growth. “That’s why we are intentionally opening up to other partners, because we know it is a lot to build. It has taken us six years and a lot of investment,” she said.
SMART CITIES
Japan’s largest carmaker, Toyota, said on June 13, it would invest $1 billion in Grab and expand their existing collaboration in the area of connected cars.
The collaboration with Toyota underscores Grab’s ambition and its plans to weave itself into the transport supply chain from the end-user to the original equipment manufacturer.
Tan said Grab wants to be involved in shaping the future of transport, working with governments to solve congestion in Southeast Asia’s smoggy cities and to build smart cities.
Grab is pondering some of these issues with Toyota.
“What is the future of a vehicle: what could and should it look like,” Tan said. “That’s where we’ve had some great discussions with Toyota on both the hardware and software side.”
Hans Tung, managing partner of GGV Capital, an investor in both Grab and Didi, said mergers and partnerships are a good way to gain scale and build a bigger empire. “We will see more of that going forward,” GGV Capital helped Didi to become an investor in Grab.
For all that, regulators will be pleased to hear that this prominent tech investor sees a limit to this trend of companies just getting bigger and bigger.
He cites the case of Tencent and Alibaba, which compete intensely to the point where they bar companies they back from receiving funds from their arch-rival, according to financial sources.
“The fact that those two don’t get along, and compete in every way, is not a bad thing. It’s safer for everybody,” Tung said.
