Grab co-founders Anthony Tan and Tan Hooi Ling first met each other when they were pursuing an MBA at Harvard Business School.
Back in their home country of Malaysia, taxis were not a preferred choice of transportation. Securing a taxi was difficult, and many overseas travelers would often complain about being overcharged by drivers.
Many were also afraid to hop into taxis alone, fearing for their personal safety — even Hooi Ling used to pretend to be on the phone during late-night taxi rides back in the day.
When they took part in their school’s business competition, they both wanted to tackle this problem. They shared an idea that the mobile phone revolution could help deliver safe and reliable on-demand transportation.
They clinched second place and won US$25,000 for their idea, which became their starting capital for Grab.
Disrupting The Transport Industry In SEA
Anthony and Hooi Ling launched MyTeksi in Malaysia in 2012, which allowed the booking of a ride via an app.
This happened just a year before Uber launched its ride-hailing service 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 solve the region’s pressing transportation problems.
With that in mind, they expanded into the region from 2013 onwards, moving into Singapore, the Philippines, and Thailand in that year and four other Southeast Asian countries over the next four years, rebranding themselves as GrabTaxi along the way.
It continued to expand its services, remaining sensitive to the needs of its customers in respective countries. For instance, it launched GrabBike in countries like Indonesia and Vietnam as users prefer riding motorcycles to avoid massive jams.
In Singapore, it launched GrabShare, a carpooling option that allows users to enjoy lower fares.
In October 2017, Grab’s number of rides hits its first billion. It reached the next billion rides in less than nine months after that, and crossed three billion rides as of January 2019.
As its driver and customer base grew, Grab expanded from city to city and currently operates across eight countries in Southeast Asia — Singapore, Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Thailand and Vietnam.
Acquiring Ride-Hailing Rival Uber
When Uber entered the Southeast Asian market in 2013, Grab was only a year old but it eventually proved to be a strong competitor in the Southeast Asia (SEA) market.
While it originally competed with Uber, Grab’s acquisition of Uber’s SEA operations in March 2018 turned it into a top ride-sharing player in Southeast Asia outside of Indonesia.
Under this deal, Grab controls all Uber operations — including its food delivery arm UberEats — in countries like Cambodia, Malaysia, Vietnam, the Philippines, Singapore, Indonesia, Thailand, and Myanmar.
In return, Uber gets a 27.5 per cent stake in Grab, which already has a valuation in several billion dollars then.
However, the Competition and Consumer Commission of Singapore (CCCS) said that it was not informed of the merger.
It also said that it had “reasonable grounds to suspect that the merger of Grab and Uber has infringed the Competition Act”, as the deal may lead to “substantial lessening of competition for the private-hire car industry in Singapore”.
In September 2020, CCCS fined both Grab and Uber a combined $13 million for the merger. Uber was fined $6.5 million, while Grab was fined $6.4 million.
Adopting A Super App Strategy
Today, Grab is so much more than just a ride-hailing company.
It has went on to develop a suite of services for the region’s everyday needs, from food to grocery delivery, and even payments and financial services.
Touted the “super app” model, it is believed to have been first pioneered by Chinese multinational conglomerates such as Alibaba’s Alipay and Tencent’s WeChat.
Grab officially launched its food delivery business GrabFood in May 2018, which grew exponentially after the company took over UberEats’ operations in SEA.
It later added services like grocery delivery, hotel booking, ticket purchasing and even on-demand video streaming on its app.
As part of its financial offering, Grab launched its QR-code based mobile payments service, GrabPay, in January 2016.
Grab has also forayed into providing loans and insurance services as part of its “Grow with Grab’ roadmap” strategy. It currently provides loans to small-medium enterprises (SMEs) and micro-insurance for drivers in Singapore.
GrabPay also extended its financial services towards offering ‘Pay Later’, a post-paid and instalment payment service in Singapore; and a micro-investment product called AutoInvest.
Most recently, Grab was awarded a digital bank license together with Singtel as a consortium by the Monetary Authority of Singapore (MAS).
With the license, it will now be able to provide retail customers with services such as account openings, deposits, as well as debit and credit cards.
According to MAS, the new digital banks will likely commence operations starting 2022.
Grab Might Soon Be Valued At Nearly US$40 Billion
In April 2014, Grab raised more than US$10 million from Temasek’s Vertex Ventures in a Series A round. Following the funding, Grab moved its headquarters from Malaysia to Singapore.
Since then, Grab continues to attract venture capital firms to fund its operations.
In September 2016, the company became one of a handful of startups in Southeast Asia to be valued at more than US$1 billion, achieving the ‘unicorn’ status.
After securing a significant investment from Toyota Motor Corp in June 2018, Grab’s valuation rose to US$11 billion (S$15 billion) in August.
It quickly became the region’s first “decacorn”, which is a term coined for startups with a valuation of over US$10 billion.
According to Crunchbase, Grab has raised US$12.1 billion across 33 funding rounds (it’s at Series I now). To date, some of its prominent investors include SoftBank, Alibaba, Didi Chuxing and Toyota.
Grab is recently reported to be in talks to go public through a merger with a US special purpose acquisition company that could value it at nearly US$40 billion.
If confirmed, the deal would make it the largest ever blank-check transaction. Grab is currently valued at more than US$16 billion.
Earlier in January, sources also reported that Grab was exploring a listing in the United States and its IPO could raise at least US$2 billion.
Previously, Grab co-founder and CEO Anthony did share that Grab could go public when its entire business is profitable.
Grab president Ming Maa shared in a company update that its core businesses have “continued to grow well”.
Its total group net revenues have grown approximately 70 per cent year-on-year in 2020 compared to 2019, and it also expects to break even in food delivery by end of this year.
The past decade has certainly been a productive one for Grab in terms of the building of its market share. It will be interesting to see if the next decade will be a profitable one for the group.
Featured Image Credit: Nikkei Asia