Grab is a Singapore-based on-demand urban mobility platform, founded in 2012. The mobile application was initially established as a Southeast Asian version of Uber, which at the time, held a virtual monopoly over the emerging global ride-hailing market. Yet, by 2018, Grab had put its California-based rival out of business in Southeast Asia. The key reason of this event was hypothetically, not Grab’s superior technological capabilities or fundamental features, which were arguably no different than Uber. The critical edge Grab’s founders had was their intricate knowledge of their own region. Grab capitalized on this subtle strength to create a robust home-court advantage over the seemingly more ‘powerful’ Uber, which had much deeper financial coffers but a critical lack of knowledge regarding the regional social and physical infrastructure and also bureaucratic networks.
Grab tuk-tuks in Cambodia
Vivid representations of such specific knowledge can be observed in many occasions of Grab’s biography, as in the instance of their launch of delivery services in Kuala Lumpur, Malaysia during 2012. While the American company Uber offered ice-creams for users to sign up to its platform as it did back in its home market, Grab pounced on the occasion through offering durians at a single ringgit. The durians, which appealed to Malaysians dearly, sold out immediately, while Grab took the pole position in a key market in Southeast Asia, a position they have not given up since. The importance of such subtle knowledge of local nuances is due to the paramount ‘first-mover-advantage’ in such an inelastic industry. Mobile platforms’ user base resemble new born crocodiles, whom designate the first face they see as their parent; as smartphone users tend to be notably resistant to switch between such applications once they get used to one. Noticing such a phenomenon early on, Grab rapidly expanded into the region since 2013 and has so far been the first ride-hailing, delivery and mobile payment for most of Southeast Asian mobile users; appealing to each specific market with a specific, localised strategy — in contrast to Uber’s usual ‘one-size-fits-all’ approach.
Another aspect of home court advantage for Grab was their much stronger local networks in Southeast Asia compared to their foreign (non-regional) rivals. During 2017 for example, at the height of their contest with Uber, Grab appointed the former National Police chief of Indonesia as their chief commissioner, tapping into his “experience in dealing with various stakeholders in the government”. Closer relations to local taxi unions, motorcycle and cab rental firms, regulators and ultimately the customer base constantly soothed Grab’s rapid expansion throughout Southeast Asia.
Grab’s appointed former National Police chief of Indonesia (left)
Grab has been able to expand across Southeast Asia so rapidly thanks to large sums of obtained investments, which stack up to almost $9 billion USD at the time of writing. These investments, which were majorly sourced from venture capital firms and sovereign wealth funds such as the Singaporean government’s investment branch Temasek, ramped up exponentially in the last couple of years and made Grab Southeast Asia’s most valuable technology company. Offering drivers attractive sign-up incentives using such significant amounts of cash, Grab put expansion before profitability in its grand growth strategy. Due to its perceived success, the aspirations surrounding Grab became collectively shared as a source of national pride in Singapore. Purposefully promoting local technology champions in various forms since decades (Chng, 2017), the Singaporean government has been remarkably supportive of Grab both in terms of allowing regulatory comfort for an otherwise controversial business-model and financing.
The concept of ‘State Ventured Enterprise’ (SVE) is offered as a neologism in order to conceptualise a neoliberal model of national technology development in Singapore. An alternative to the age-old ‘state-owned enterprise’ (SOE) model, the concept of ‘SVE’ is a term to categorise technology companies that are subsidised by governmental institutions (as in the case of Temasek) through critical early-stage investments and also various forms of regulatory relief — which was a contrast to the much more stringent approach to the local bike-sharing industry in Singapore. As much as there are many forms of sovereign wealth funds globally varying from pension reserve funds to national commodity reserve corporations, the Singaporean sovereign wealth fund Temasek represents a true ‘development fund’, unlike many others which are typically cash reservoirs of oil-rich countries (Loh, 2010). As a development fund, Temasek has a certain political agenda, in which, beyond simply speculating on any given business around the world that will bring high returns, it targets socioeconomically relevant projects and hence aims to promote fundamental societal and industrial policies of Singapore. Grab, as an archetype of a state-ventured enterprise in Singapore, has been accordingly put to the forefront of local technology champions in the city-state and is often claimed to be an inspirational model for up and coming startup companies.
Grab Co-Founder Anthony Tan with Lee Hsien Loong.
Such aspirations of the state as a key economic transformer and a provider of sustained welfare and growth through promoting local champions have been often described with terminology such as ‘midwifery’, ‘demiurge’ or ‘husbandry’ — in the context of providing preferential trade advantages through selective tariffs, import substitution policies etc. (Evans, 1995). The neologism ‘state-ventured enterprise’ updates this set of terminology, enabling a conceptual tool to describe the contemporary trend of governmental economic policies that aim to not only take big risks in developing certain industries but also be able to bear the upsides of such investments (Mazzucato, 2011).
Onat has been Regional Director for Southeast Asia at wamo Technology Ltd., (a UK-licensed fintech startup) since the beginning of 2020. He ‘s also been working on Gojek as his PhD case study at the National University of Singapore since the summer of 2017. His love for QR codes began during his time in Shanghai and he’s tried his best not to carry cash ever since.
