Grab, a ride-hailing company and Uber competitor, is frequently brought up as THE example of a successful Southeast Asian startup. The company was founded in Malaysia in 2012 under the name MyTeksi by a young Malaysian entrepreneur named Anthony Tan, and scaled quickly, expanding from Malaysia to the Philippines, Singapore, and Thailand in 2013 and Vietnam and Indonesia the following year. It has since become a one-stop-transportation-shop and payments platform in the region, offering a variety of services across transportation, payments, delivery, and more.
Because Grab is one of only a handful of Southeast Asian unicorn startups, it serves as a paradigmatic example of startup success motivating local entrepreneurs. But, it also represents a bittersweet moment in the history of the Malaysian startup ecosystem. The company got its start in Malaysia, but is not a completely homegrown success story, as it moved its base of operations to Singapore in 2014, and refers to itself as a Singaporean company.
The Grab leadership team was convinced by its investors to make the move because of regulatory issues in Malaysia surrounding raising funds from international VCs, tax breaks and subsidies offered by the Singaporean government, and greater opportunities for securing international funding.
Whether because of its Malaysian roots or its access to Singaporean resources, there’s no questioning Grab’s success. Through mid-2019, it has raised US$7.5 billion in funding from the likes of SoftBank and chinese ride-sharing company Didi Chuxing, and is valued at US$14 billion, making it the most valuable tech startup in Southeast Asia. As of 2018, Grab claimed to have 95% market share of the Southeast Asian taxi ride-sharing market, and has shown no signs of slowing down. Its position as an innovator and leader, rather than copier and follower, culminated in its 2018 acquisition of Uber’s Southeast Asia business. Moreover, it has extended its reach way beyond ridesharing, and has grown into an ecommerce and digital payments company with several services housed within a centralized platform–a ‘superapp.’
A core reason Grab has been able to stay one step ahead of Uber technologically in Southeast Asia is the same reason ride-hailing company GO-JEK, itself a unicorn and Grab competitor, has maintained a stronghold in its native Indonesia. Massive global companies like Uber are unable to fully take into account local behaviors and localize their products because they are growing at such a rapid pace on such a large scale. Consequently, they end up tweaking their one-size-fits-all models in each country or region based on their understanding of user needs, but still fall behind homegrown competitors who have much more local knowledge and are able to apply this knowledge technologically in a more sophisticated and nimble manner.
For instance, Grab accepted cash as payment from the onset as it realized that most riders in the developing countries it covered do not own credit cards. This same idea took Uber two years to implement. Once smartphones became more ubiquitous around Southeast Asia, Anthony Tan quickly pushed for the Grab app to function as a digital wallet, “enabling riders to load money into their app via credit cards, online banks, local ATMs and even a group of convenience stores that participate in an over-the-counter digital wallet service called GrabPay.” Grab has also enabled peer-to-peer payments, has worked to bring merchants onboard to accept GrabPay, and has even introduced micro-loans and insurance options for Grab drivers and businesses that use GrabPay.
Through these tactics, the company has successfully used technology in a smart and efficient way to overtake more established or larger companies.
The Grab saga is viewed by many in Malaysia as a near miss of massive startup success, a prime instance of wasted opportunity and a failing on the part of the Malaysian government to do more to entice the company to stay put. Grab is, or would have been (depending on who’s asked the question) the only unicorn to come out of Malaysia. Still, it proved the case for startup success in Malaysia, even if that success can only reach a certain threshold before a startup must make the choice to leave in order to continue growing.