My Grab Adventure, Part 1

Hey everybody, welcome back to Stevey's Tech Talk. Today I'm going to be talking about Grab — that's right, Grab Taxi, which is an Uber-like company in Southeast Asia that I used to work for, and they just had their IPO yesterday as of this recording. I waited until the IPO to talk about them, to make sure there wasn't any hint that I'm an insider — even though I haven't been at the company for over a year and a half and don't have anything to do with them anymore.

I want to talk about Grab because it was a really interesting company. There are a lot of companies out there that do a lot of stuff, but I don't think there are very many as interesting as Grab was. Interesting problem space, interesting people, interesting challenges, interesting technology. Really, really complicated. There's no way I can do it justice in one little talk. But I wanted to give you a little of the flavor, because it was mind-blowing. I got my mind blown probably once a week for my first three months there, where I would just learn things that astonished me.

I'm not going to do anything structured or top-down. I'm just going to go stream of consciousness here. When I think about Grab, immediately I think about steaming tropical jungles, the humidity right in your face, and air-conditioned hotels — unbelievable amounts of air conditioning in Singapore. People criticize the West for their addiction to air conditioning, but Singapore is really cold inside buildings, because their first prime minister decided that would help you man up.

I started at Grab in late 2017, October. And I was there for almost two and a half years, until the pandemic hit and I couldn't travel anymore. I showed up in Jakarta on the first day. By the way, I was supposed to be at a party with Googlers — because I left Google to go to Grab, and they were like, hey, let's all go to the brewery and have a farewell session. And Grab was like, no, we need you on a plane right now, you need to be in Jakarta on Friday for a company event. So I booked a plane ticket on Wednesday and left that night, and wound up in Jakarta, Indonesia, while I was supposed to be at my going-away party. So sorry about that, guys. I hope you had a nice beer and didn't say too many unkind things. I got dragged into this tornado.

To describe Grab, you really have to compare it to giant natural events — a hurricane or a tornado, because that's kind of what was going on. The growth was phenomenal, and I think still is. The competition was phenomenal. When I showed up, they were competing with Uber, and also with Gojek and some other local players. But Uber was a big, scary threat. They meant business. They had a lot of money to burn, and they were like, we're going to win in this market and crush all you little locals, because we know what we're doing.

So maybe the first interesting lesson from Grab is that Uber lost. I think Uber was out within six months after I joined — I had nothing to do with it, obviously. Why did Uber lose in Southeast Asia? They lost because they were arrogant. That happens to a lot of companies. And that arrogance took the shape of: we know what's best, we're going to ignore the regulators, we're going to treat Southeast Asia like it's all one big country. But Southeast Asia is not one country.

Southeast Asia is Indonesia, which is the fourth largest population in the world. It's like 95% Muslim. Why does that matter? It matters because if you want to do deals, you're going to be doing deals with religious figures, and these people have millions and millions of followers — companies filled with people who are potentially door-to-door salesman types, who can sign people up to be drivers. And Uber didn't pay any attention to that. Grab is a very secular company — they're from Malaysia, headquartered in Singapore — but you sort of have to embrace religion in Indonesia to move forward, because mosques are everywhere, and daily prayer schedules can completely impact your ride allocation. Religious leaders will get mad if your service is down and nobody can get to an important holiday. And Uber was just like, whatever, I don't care.

And then there's Vietnam, which is communist, and they have their own rules. The Philippines had laws against motorcycle taxis — kind of for a good reason. People would put 12 people on a motorcycle. If you've never seen a picture of 12 people on a motorcycle, I encourage you to go find one. People would get a motorcycle and attach a bunch of plywood and handlebars, a real Mad Max-style contraption on top, and the whole family would ride on it. And of course there were horrible, grisly accidents, so they made it illegal. And they weren't flexible enough to accommodate motorcycle taxis in a place that's completely gridlocked.

That gridlock is a fact of life in almost all of Southeast Asia. The traffic is astonishingly bad. You'll easily spend three hours a day commuting in metropolitan areas like Surabaya and Jakarta. The rich families there will get a big Mercedes van, hollow it out, and put in a child's playroom complete with all the digital stuff and the toys and a nanny — a living space in their van, because they spend so much time sitting in traffic.

So the Philippine market has the motorcycle taxis, Thailand has its own market, Vietnam has its own. What people are doing in Vietnam, they're not following what's going on in Indonesia. They don't care — they're Vietnam. Vietnam is the center of the world to the Vietnamese, and Bangkok is the center of the world for the Thai. So you can't just go in and say, we're going to treat them all the same. You can't run the same promotions, you can't have the exact same rules for drivers and passengers, the things Uber was trying to standardize globally. And so Uber was the ugly American. They were fierce, and they did have brand-name recognition even in Asia. But they couldn't keep up.

Another really important dimension to this whole race is regulation. Every country has their own laws. When I say motorcycles, you don't usually think of getting on the back of a motorcycle when you're taking an Uber. But in Southeast Asia, a large number of the drivers are motorcycle drivers — you get on the back of a bike, put on your helmet, and they take you to your destination, zipping through all the cars. The reason you want a motorcycle is it's much faster, because they can go on sidewalks, they can go down embankments. It's really crazy.

From a technical perspective, it was a routing nightmare. If you know your drivers are going to drive through a shopping mall, which is technically illegal but they all do it anyway, do you route them on the illegal route? And then who's liable if they get a ticket? Drivers will happily go the wrong way on a busy one-way street, something you would never think of doing in the West. They'll hop on with a big stack of pizzas or martabak on the back and head straight into traffic, and the cars all just get out of their way.

So the whole space is very local, very provincial. You have to understand each individual government, and all of the influencers. I've said it before on my show and I'll say it again: you want to go global, you can't treat everybody the same. You're going to have to understand how they think and what makes them tick. In Indonesia, fear of missing out is really big — everybody's following what the influencers are eating, the food of the week changes every week, and everybody stampedes there. And it's the fourth largest population in the world. You can't even break it down to the country level — a city of 20, 30 million people is like a little country, and what's happening in that city might not be happening in another.

I went to a driver signup. I got some cool Grab jackets and helmets and brought them back for the team in the U.S. The one we went to in Vietnam, there was a sign on the wall — I took a picture of it — that basically said: if you don't work, you're going to starve. This hugely threatening sign, reminding people that if they don't get a job, they're going to go hungry. And that was just kind of normal. They probably did it because their competitors were doing it. You have to adapt. You have to go to the ground. That's what they would always say. Go to the ground, go to the ground.

So Uber failed miserably, and they backed out and wound up allowing Grab to buy their business with stock. So Uber became an investor, and Dara is sitting on the board of directors now. Uber is still struggling worldwide with regulators. They struggled in China — China just completely favored Chinese companies, and that's their prerogative. Same thing happened in Russia, with Yandex. And now Uber's taking a lot of heat in the West, because what is Uber associated with in your mind? Slave wages. The gig economy is touted as a way to make a little money on the side, a side job — but nobody does that, they do it as their main job. It doesn't pay benefits, you have to pay the maintenance on your car, it doesn't pay very well, and people don't tip very well. The whole gig economy is widely frowned on as a gray area, a kind of quasi-modern slave labor pool.

Well, in Southeast Asia, the situation could not be more different. Getting a job as a Grab driver in most of these countries is a life-changing event, in a positive way. We talked to many, many drivers — we were supposed to, we'd go take rides and go to the ground and get their feedback. And they would just be so happy they'd gotten this Grab gig, because they could buy an Android phone for their kids to help with school, or get their first washing machine and save five hours a week of doing laundry. We had statistics internally that showed many of the drivers who signed up with us were people who were at the end of their rope — if they didn't get a job, they were going to turn to a life of crime. And there's so much crime in Southeast Asia. It's staggering. It's a part of life.

And the governments are corrupt. In Southeast Asia they're corrupt in a really bold way — they'll sic the authorities on anybody they don't like. Grab one day got their license shut down because they're outsiders, and the Indonesian government doesn't like outsiders. And there are oligarchs — a bunch of oligarchs in Southeast Asia. The disparity between rich and poor is much more pronounced than in the West. There isn't really much of a middle class — it's mostly people who are really, really poor and people who are really, really rich. And the rich ones protect their interests, and the poor ones get by however they can. That's why they're so religious — it's the last resort for the poor. There's extremism and bombings all the time. Read about Bali terrorism. We named one of our tech projects after Bali, and people were like, why did you name it after Bali? Because that place gets blown up all the time.

So there was no way Uber was going to compete with them. The competition is so multifaceted. We're talking about hundreds of thousands of drivers — driver partners, they call them. Why do they call them driver partners? Well, at Grab they differentiate from Uber in a lot of ways. I started off by saying Grab is like Uber, and now that you've got that anchor in your mind — but what they really are is a delivery network. And they are extending that delivery network via financial services.

The most simple manifestation of this is they loan you the money to get a bike, because a lot of the drivers are too poor to afford a motorcycle. So you loan somebody the money, you take a little gamble, they get a bike and their uniform and start taking rides, and you take a commission out of their rides to pay off the loan — the bikes are probably a couple hundred bucks. So over the course of maybe a year, you pay off your bike, and now the driver owns the bike outright. They've been making money, they own a motorcycle, and they've proven they're financially responsible enough to pay back a loan. So you loan them more money if they want — get them two or three more bikes, and they can start renting those out to their friends. They're a little entrepreneur. They're called a micro-entrepreneur. And it's going on right now all through Southeast Asia. But Uber doesn't have loans. Uber doesn't have a financial arm. The market is too crowded in the West — there are already so many credit cards out there, and people use credit cards out here basically for loans. And that's just not a thing in Southeast Asia.

Most people in Southeast Asia — and we're not talking about Singapore, Singapore is very westernized — the rest of Southeast Asia, they don't use banks. They have banks, but nobody uses them. Most people are unbanked. They get paid in cash, they transact in cash, they keep cash stuffed in their mattress, and the whole world revolves around this cash economy. And it creates effects you wouldn't even imagine.

For example, the whole "O2O" phenomenon, which is the reverse of eBay: you go buy a bunch of random stuff online, and you set up a little garage sale or pawn shop, a little flea market where you're the seller — you got all your stuff online because you have a credit card, and then you sell it for cash to all the locals at some massive markup, because they can't get stuff online. Grab was partnering with a company doing that. Huge business — a million people out there allowing poor, unbanked people to buy stuff online.

If you're a cash economy, you're not going to get a loan from a bank. They're not going to loan you the money to get a motorcycle, or to start your own little restaurant doing delivery for GrabFood. You're stuck. It's a self-perpetuating cycle where you're in poverty, so nobody's going to give you any money, so you can't prove yourself enough to lift yourself out of poverty. And so hundreds of millions of people are stuck in this. And Grab comes in and says, we'll loan you some money, we'll get you a motorcycle, and eventually you'll own it, and you'll have income. That's just something they didn't have before.

I went to Jakarta several times — and Jakarta is a pretty rich city compared to the rest of Indonesia — and it was absolutely filled with a sea of shanties, with rusty corrugated metal roofs and chickens running around, right in the middle of downtown. Look out from one of those fancy skyscrapers with all the air conditioning, and you look down, and it's all shanties below you.

That region has 640 million people — twice the population of the United States — and those people are basically undergoing an industrial revolution right now. Why? Manufacturing tends to move where labor is cheap. A lot of your clothes used to be made in China, and China is so rich now — they've eliminated extreme poverty, and nobody wants to do manufacturing jobs anymore, or they want to get paid more for it. So it's no longer cost-effective to have a lot of stuff manufactured in China.

And for other reasons, people might not want to be reliant on China as the sole supplier in their supply chain, because it's a single point of failure — just like in designing tech systems, you don't want one system that if it goes down, the whole place is screwed. So people are moving manufacturing down into South Asia and Southeast Asia. But it's not as simple as just going where the poor people are. You have to have a network.

Why did Grab even start in ride hailing in the first place? It was the co-founder, Hooi Ling Tan. She was terrified when she would go into cabs in Southeast Asia growing up. Cabs in Southeast Asia are really seedy. You get into a cab and you're rolling the dice. They'll pull the whole scam — oh, the meter's broken, just a hundred bucks, give me a hundred bucks. And if you don't, they go get the corrupt police officer that's in on it with them, to say he's going to throw you in jail if you don't come up with the money. Or worse. Especially if you're a woman.

So Grab became the safety option, because Grab rides aren't even metered — they're prepaid prices, so your wallet is safe, you're using GrabPay, you don't even have to carry cash. They're tracking where all the drivers are, and they can tell if a driver is taking you somewhere Grab didn't tell them to go. There are panic buttons in the Grab app — they've saved people's lives with the panic buttons. The whole experience is dramatically safer. And the drivers tend to be better people, because they know they're being monitored and they'll lose their job if they do something bad. With taxis, they can just deny it all and drop a body somewhere. It's really bad in this taxi world. So taxis were the stinky, poisonous old-world concept that Grab is helping get rid of.

But they found themselves in possession of a delivery network. And so they can do B2B — deliveries from one business to another. And a delivery from one business to another is the whole supply-chain network that turned China's manufacturing sector into the world's largest 3D printer, where you'd say, I need to assemble this doll, I need clothes and a head and some hair, and I'll outsource those to the different places that make the individual pieces, and they deliver to each other via a delivery network, and eventually the whole thing gets delivered to shipping.

And all the financial services that go along with it — because they don't just have loans, they have insurance. Cash drivers can't get insurance for accidents, but Grab will sell them insurance, and it's very reasonable. The reason I joined Grab really was for their financial services. You're going to read analysts from Goldman Sachs saying it's a really murky sector. And you know what? It is a murky sector.

The central banks, like Bank Indonesia, are very much a branch of the government, and the government is in bed with the oligarchs. So the banks have really tight controls over all the regulation to keep other people out. Why are they all using cash? Because they don't trust the banks — they're corrupt. You put in your money, and they're just like, oh yeah, take your money — and then, no money, sorry, go away.

So there's this deep, fundamental cultural distrust — you learn it from when you're a toddler, don't trust banks. But people trust apps. They trust big tech, and Grab is effectively big tech. So they'll build up savings accounts inside the Grab wallet. And that concept of having a wallet is really powerful, because all of a sudden Grab has a money pool they can get float on, and it gives them insight into spending so they can start building ad networks — to see people's shopping habits and show them relevant ads.

And who doesn't want to see a relevant ad? I am completely surrounded by guitars and other stringed instruments right now as I do this talk. I love guitars, and I will never get tired of seeing ads for guitars. I'll see an ad for a guitar place or a ukulele and I'll just be like, yeah, I want that. That's good for everyone. If you're in Vietnam or Thailand and you're hungry and it's lunchtime and you happen to be glancing down at your Grab app, you might want to see an ad for a relevant place to eat with a coupon. Ads and promotions are tied very closely together in Southeast Asia.

So we started with a ride-hailing network, and it grew into a financial-services network where you could create micro-entrepreneurs, and it's growing into B2B, which isn't a huge sector for them yet, but it's going to be. I was at Amazon in 1998 when everyone was like, a bookstore online, how stupid is that, Amazon's never going to amount to anything — and the stock was down to $4 for a long time. Nobody believed in Amazon. There was a dot-com bust and people expected Amazon to go away. So Grab is poised for success in the region, because they have the connections there.

Now you can tell I haven't run this by PR. Grab's CEO is an oligarch. He started the company by asking his dad for a couple of cab companies. His mom is basically a Duke — the equivalent of a Duke in Malaysia. I remember, because she was in charge of facilities, and every time we needed more space we had to go talk to her. I only found out later that she was Anthony's mom, named Dato' Rosie — but Dato' was the honorific in front of her name. I looked it up, and it meant something equivalent to Duke or Duchess, an honorific bestowed by the prime minister of Malaysia. It goes back to the Middle Ages.

They were already the kings of Southeast Asia before they started. And what does that do? It gives them insider leverage that Uber could never get, because he can call up his oligarch buddies who have ownership of 60% of all the industry in a particular country and be like, yo, let's do a deal and get rich together. He can unblock things, because Bank Indonesia isn't going to play ball unless there are backdoor deals happening. That's just how it works.

But he's a really humble guy. Really down to earth. It's not an act — I've known him for two and a half years, it is not an act. He is at his core one of the most humble people you'll ever meet, silver spoon or no. He is there for the people.

I'm already out of time, and I just got started. I haven't even told you all the stories yet. Let me tell you about the fake rides — the mafia, in Indonesia. When I was at Amazon back in 1998, '99, we were building CC Motel, which was a credit card storage where credit cards would go in and never come out again, because you didn't want anybody to ever be able to hack it. It was literally a one-way interface. Amazon was laser-focused on fraud from the very beginning, and they found that the global epicenter of credit card fraud was Indonesia. Not Eastern Europe, not Russia, not China — Indonesia. And it was quite sophisticated.

So the fraudsters — basically the mafia, organized crime — made a lot of money off that fraud. And then they went to the next thing. There's gun running and drug smuggling and human trafficking, a little bit of all of that, but really none of them were as profitable as just stealing rides from Grab. They took all their thugs and put them in warehouses — there are spy photos of them with huge tables of workers with stacks of Android phones, all pretending to be drivers, with reverse-engineered fake versions of the app that will claim they picked the passenger up and tell Grab's servers the ride's completed. Please go ahead and deposit my driver promo into my account. And that money just gets siphoned off of Grab's promo economy.

In order for Grab to grow into a Goliath the way Amazon did, the only way to get past that is to become profitable, and to become profitable they have to stem the bleeding of their number one cost. And the number one cost is promos. Spend on promos. They need to move to a reward system like airline reward points — you're all familiar with how reward points work, and they're better than promos. If somebody gives you $5 off a Subway sandwich, you'll go get your sandwich with the $5 off and then never eat there again.

But if you get a rewards wallet that lets you redeem those points at any number of places you're interested in, you've got loyalty. The loyalty is basically the handcuffs they've got on you. If they move that direction, they can control the spend and keep people in their network instead of jumping back and forth.

They have a path to profitability. And once that happens, the whole thing changes, because they're going to be like Amazon was — always razor-thin profits, always. Anthony Tan spent a lot of time studying what Jeff Bezos did. And Jeff Bezos didn't do it in Southeast Asia — Amazon has almost no footprint there at all.

Let me step back and recap. Grab is in a crazy space. Southeast Asia is growing like crazy. It's filled with poor people — happy people, by and large. They really are pretty happy, because the food is great and it's warm all the time, the beaches are wonderful. You don't need a lot of money to be there. I loved Bangkok and I loved Saigon. I thought Jakarta was not very tourist-friendly, but a pretty impressive city. My wife was in a Grab car getting taken around the city to various malls while I was at work, and the driver finally looks at her and says, so, why Jakarta? He couldn't believe she was there at all. And Malaysia is really cool — I loved Kuala Lumpur. There were so many beautiful places, and people are happy there, but they are pretty poor, and Grab is changing that almost overnight. Look what happened to China in the space of 30 years: they went from mostly poor to the richest economy on the planet. That is going to happen again in South Asia, especially India if they get their act together, and in Southeast Asia.

Southeast Asia is hungry — in a very literal sense of the word. They work hard, they're motivated, and they're excited. The engineers there are hotshots, and they can make stuff work like nobody's business. They may not do it in the most sophisticated, elegant way Google might, but they get it done. And they've got fierce competition — Gojek merged with Tokopedia, there's a lot of consolidation. But Grab are the kings. They've got the top brand recognition all the way through. They have really streamlined operations, and they're always finding ways to make the drivers happier and more effective, and make routing more efficient. Routing is a complicated problem — think traveling salesman times traveling salesman. And they've got their financial arm. Grab wallets, GrabPay — it's showing up everywhere.

So they're growing the way Amazon grew, where Amazon kept changing: sorry, we're not a books, music, video company anymore, we do clothes and toys, and all of a sudden we do computing services, and movies. Look at all the things Amazon has done. You probably assume Amazon can go do that in Southeast Asia, and you'd assume wrong. And you probably assume Google can go open up shop in Southeast Asia, but we found that Google Translate is terrible for most Southeast Asian languages. Southeast Asia is opaque to the Western companies. They don't get it.

The way you do business there is all about going through the socially acceptable back channels. I'm not saying Grab is doing bribes, but Grab has to deal with organizations where bribes are common. In the United States, we don't know how to deal with that. When the Goldman Sachs guys say Grab is in murky territory, they're not kidding. But so was China, and China is still murky territory — nobody knows what's going to happen to big tech in China — but they're still rich. And Southeast Asia is going the same way.

So that's part one of Grab. I've gone for 50 whole minutes and I haven't even begun to scratch the surface of the stories I could tell you. It was the wildest ride I have ever been on. I am grateful, and I will always consider myself to be a grabber — my Smash character name is Grabber. I was part of a family. That's how tight they were, and how well they operate and execute. I'm forever grateful for the experience. It was amazing. And with that, that is it for this week's Stevey's Tech Talk. I will see you next week.