Uber vs Grab — category violation and becoming impact-driven
“Let your plans be dark and impenetrable as night, and when you move, fall like a thunderbolt.” ― Sun Tzu, The Art of War
Sun Tzu. I remember reading The Art of War. It was required reading for the international relations class in college. Hard to imagine the impact of this tiny book. It was translated to English from the original Chinese edition.
There are multiple versions. But the English one that I read was by Lionel Giles. His I believe was the first English translation.
Today The Art of War doesn’t just apply to war. It applies to business strategy. It applies to international politics. It applies to life. It applies to category design.
Uber. A category leader in the ride-hailing apps space. Founded in 2009. Made taxi service defunct. Now, almost twelve years later, hailing a cab is not a set of words that are used together. Let’s get an Uber. Or Uber it.
Uber was the undisputed category king/queen in the United States. As part of its expansion strategy, Uber launched in Singapore in 2013. The aim was to capture the South East Asian market from thereon. Uber was valued at billions by this time and no one can dispute its dominance. With cash to burn, what did Uber really have to lose?
Uber captured the market in the US at such a rapid pace and scaled so quickly. And given how big they were when they entered Singapore, losing wasn’t an option. So they adopted the same acquisition strategy that made them the category leader in the USA.
Grab (it was known by a different name at the time) was already in Malaysia in 2012. The advantage they had? The co-founders (Anthony Tang & Tan Hooi Ling) knew the region and the challenges of operating in it.
And with Uber entered the ride-hailing market in Southeast Asia everyone thought they would bury Grab and never look back. But Grab continued to grow. They grew because they understood the culture and regulatory framework of the region. They were local.
They had a pay by cash option from inception. Uber just used a plug-and-play approach with their app. They didn’t have a cash option till 2015.
I live in Sri Lanka and let me tell you a story about rush hour traffic. I lived only about 7 kilometers away from the office. If I left office by 4:00 pm. I was home by 4:20 tops. If I left office at 4:45 pm I would get home only at 6:00 pm.
Rush hour traffic in this part of the world is the pits. Grab knew this and introduced Grab Bike. It allowed customers to grab a bike ride home. While cars were stuff in rush hour traffic, bikes made it home much faster. Grab was starting to inch its way ahead.
In an interview with Financial Times, Reed Hastings, co-CEO of Netflix said — “we are very much still in challenger status,” of Netflix’s position outside the US.
Hastings understands something Uber didn’t. Creating a category and leading in one geography doesn’t automatically guarantee leadership status in another.
Things really started snowballing for Uber when they were hit with crisis after crisis.
The rape in Delhi by an Uber driver. The reports of sexual harassment within the company and then CEO Kalanick’s leadership and culture. The video of Kalanick yelling at an Uber driver. The #deleteUber movement.
Eventually, in mid-2018 Uber sold out to Grab in about 8 countries. They still got a 27.5% stake in Grab.
According to CNN Business, here’s what Dara Khosrowshahi, Uber CEO, wrote in an email explaining the deal:
One of the potential dangers of our global strategy is that we take on too many battles across too many fronts and with too many competitors. — Source https://money.cnn.com/2018/03/25/technology/uber-grab-deal-southeast-asia/index.html
As Sun Tzu said in the Tactical Dispositions chapter:
To secure ourselves against defeat lies in our own hands, but the opportunity of defeating the enemy is provided by the enemy himself — Sun Tzu, The Art of War
It wasn’t a bed of roses for Grab either. They were losing money fast. They got into a price war with Uber. The game-changer for Grab was not just local and regulatory knowledge. But also regional funding.
Grab not only category violated Uber. They became impact-driven. The Grab for Good initiative was launched in 2018. Starting with the hearing impaired community and then expanding to differently-abled persons. They worked on improving the livelihoods of these communities. They also shared individual impact stories of how Grab was changing the lives of their delivery partners. Launched the Capturing One Million Smile campaign to spread positivity.
Grab unleashed the power of individual impact. In doing so grew 70% year-on-year in 2020 compared to 2019 (as reported by Vulcan Post).
Group CEO Anthony Tan announced a $275m fund as part of the GrabforGood initiative, a few days ago.
The fund will be used to address immediate needs like the COVID-19 vaccine administration and longer-term social and community sustainability programs. Grab has broken this impact-driven initiative into two:
- For Grab Partners — subsidized insurance, scholarships, and financial aid for people with disabilities.
- Community — Literacy programs, climate change resiliency grants, and tools, natural disaster recovery relief.
Here’s what Anthony Tan posted on LinkedIn:
I am reminded of what Sun Tzu said in the nine situations chapter:
When you penetrate deeply into a country, it is serious ground. When you penetrate but a little way, it is facile ground — Sun Tzu, The Art of War
A few days ago a heartwarming individual impact story about a local fishmonger in Penang made the news. Shahjahan had a fish stall in the wet market, which was affected by COVID-19. Thanks to Grab’s #TechUntukSemua program he was able to start selling on Grab. Today he supplies fish, to all of Penang.
This is the power of impact design in category dominance.