Grab co-founders Anthony Tan and Tan Hooi Ling first met while pursuing an MBA from Harvard Business School.
Back in their native Malaysia, taxis were not a preferred method of transportation. Securing a taxi was difficult, and many overseas travelers often complained of being overwhelmed by drivers.
Many also feared getting into cabs alone for fear of their personal safety – even Hooi Ling used to pretend to be on the phone during night taxi rides.
When they entered their school’s business competition, they both wanted to address this issue. They shared the idea that the cell phone revolution could help ensure safe and reliable on-demand transportation.
They took second place and won $ 25,000 for their idea, which became their seed capital for Grab.
Disruption of the transport industry in the SEA
Anthony Tan, Co-Founder and CEO of Grab (formerly MyTeksi) / Image Credit: Grab
Anthony and Hooi Ling started MyTeksi in Malaysia in 2012, which made it possible to book a ride via an app.
This happened just a year before Uber launched in Singapore and two years after Gojek in Indonesia.
The founders’ goal was to address the concerns of taxi commuters in Malaysia, but they ultimately wanted to resolve the region’s pressing transportation problems.
Against this background, they expanded into the region from 2013 and this year moved to Singapore, the Philippines and Thailand as well as four other Southeast Asian countries. Over the next four years it was renamed GrabTaxi.
GrabBike in Vietnam / Photo credit: Saigoneer
The company continued to expand its services and was sensitive to the needs of its customers in the respective countries. For example, GrabBike was introduced in countries like Indonesia and Vietnam as users prefer motorcycles to avoid massive traffic jams.
GrabShare was launched in Singapore, a car pool option that allows users to enjoy lower fares.
In October 2017, Grab made its first billion trips. It made the next billion trips in less than nine months and crossed three billion trips in January 2019.
As its driver and customer base grew, Grab has expanded from city to city and currently operates in eight countries in Southeast Asia – Singapore, Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Thailand and Vietnam.
Acquire ride-hailing rival Uber
Grab vs Uber / Photo Credit: Kentaro Iwamoto
When Uber entered the Southeast Asian market in 2013, Grab was only a year old but eventually turned out to be a strong competitor in the Southeast Asian (SEA) market.
While Grab originally competed with Uber, it became one of the top ridesharing opportunities in Southeast Asia outside of Indonesia when it acquired Uber’s SEA operations in March 2018.
Under this agreement, Grab controls all Uber activities – including the food delivery arm UberEats – in countries such as Cambodia, Malaysia, Vietnam, the Philippines, Singapore, Indonesia, Thailand and Myanmar.
In return, Uber will receive a 27.5 percent stake in Grab, which at the time was already worth billions of dollars.
However, the Singapore Competition and Consumer Commission (CCCS) stated that it had not been informed of the merger.
It also had “reasonable grounds to believe that the Grab and Uber merger was in breach of competition law,” as the deal could “significantly reduce competition for the private rental car industry in Singapore.”
In September 2020, CCCS fined Grab and Uber a total of $ 13 million for the merger. Uber was fined $ 6.5 million while Grab was fined $ 6.4 million.
Adopt a super app strategy
Today Grab is so much more than just a hail-fighting company.
A range of services have been developed to meet the daily needs of the area, from groceries to food delivery to payments and financial services.
It is believed that the “super app” model was first developed by Chinese multinational conglomerates such as Alibaba’s Alipay and Tencent’s WeChat.
Grab’s Arm for Food Delivery GrabFood / Photo credit: Grab
Grab officially launched its GrabFood grocery delivery business in May 2018, which grew exponentially after the company acquired the operations of UberEats in SEA.
Later, services like grocery delivery, hotel booking, ticket buying, and even video streaming on demand were added to the app.
GrabPay / Photo credit: Grab
As part of its financial offering, Grab launched the QR code-based mobile payment service GrabPay in January 2016.
Grab has also tried to provide credit and insurance services as part of its “Grow with Grab” roadmap. Small and medium-sized business (SMB) loans and microinsurance for drivers are currently being provided in Singapore.
GrabPay also expanded its financial services to include Pay Later, a postpaid and installment payment service in Singapore. and a microinvestment product called AutoInvest.
Most recently, Grab together with Singtel as a consortium received a digital banking license from the Monetary Authority of Singapore (MAS).
With the license, private customers can now be offered services such as account openings, deposits, as well as debit and credit cards.
According to MAS, the new digital banks are expected to start operating from 2022.
Grab could soon be worth nearly $ 40 billion
In April 2014, Grab raised more than $ 10 million from Temasek’s Vertex Ventures in a Series A round. After the funding, Grab moved its headquarters from Malaysia to Singapore.
Since then, Grab has continued to attract venture capital firms to fund its operations.
Obtain Capital Raising and Assessment / Image Credit: Craft
In September 2016, the company became one of the few startups in Southeast Asia valued at more than $ 1 billion and achieved unicorn status.
After Grab received a significant investment from Toyota Motor Corp in June 2018, the valuation rose to $ 11 billion (S $ 15 billion) in August.
It quickly became the region’s first “decacorn,” a term coined for startups valued at over $ 10 billion.
According to Crunchbase, Grab has raised $ 12.1 billion in 33 funding rounds (now in Series I). Prominent investors so far include SoftBank, Alibaba, Didi Chuxing and Toyota.
It is recently reported that Grab is in talks to go public through a merger with a U.S. acquisition company that could be valued at nearly $ 40 billion.
If this were confirmed, the deal would be the largest blank check transaction of all time. Grab is currently valued at more than $ 16 billion.
In early January, sources also reported that Grab was considering a US listing and its IPO could raise at least $ 2 billion.
Previously, Grab co-founder and CEO Anthony announced that Grab could go public if its entire business is profitable.
Grab President Ming Maa said in a company update that his core businesses “continued to grow well”.
The group’s total sales are up roughly 70 percent year over year in 2020 from 2019, and grocery deliveries are expected to pay off by the end of this year.
The past decade has certainly been a productive one for Grab in building its market share. It will be interesting to see if the next decade will be profitable for the group.
Selected image source: Nikkei Asia