How GrabTaxi is using local bylanes to stay ahead of Uber in Southeast Asia

Malaysia’s GrabTaxi is a startup hero of Southeast Asia. Every second, three bookings are made on it. Millions commute on it. And it raised a whopping US$90 million in fundingwithin a year – one of the largest rounds raised by a startup in Southeast Asia. These are cold facts. But what went into making it is a very human story.

Anthony Tan, co-founder and CEO of GrabTaxi, still remembers vividly the first time he attempted to get a taxi fleet driver interested in using the GrabTaxi app. Tan, a Harvard grad with rich parents, could as well have been an alien. The driver he was speaking to looked at him with complete disinterest. The conversation was going nowhere – until Tan spoke of his great grandfather, who was a taxi driver. That struck a chord instantly, and Tan went on to drive the taxi for an entire day to spot pain-points for customers and also see things from the driver’s perspective.

It was one of Tan’s closest friends from Harvard university who actually planted the seed of GrabTaxi inside Tan’s head. “He came to my home for our winter break from business school. He took a taxi, got cheated, and was pissed off. He complained to me aloud, asking me, ‘why don’t you do something about this industry?’ That set me off,” Tan toldTech in Asia onstage at our Startup Asia Jakarta 2014 conference today.

A long time ago, Tan’s grandfather, son of a taxi driver, had built an automobile empire out of nothing – Tan Chong Motor, local manufacturer and distributor for Nissan in Malaysia. “He could only speak Hokkien. He had no friends, no family support, yet he built a great company. So what’s my excuse, really?”

The ability to understand the regional nuances of Southeast Asia, respond to them, and build those learnings into the company is the secret sauce to GrabTaxi’s success, according to Tan. “We understood the taxi driver’s need for daily income. We understood that a lot of people really use cash. We respect the hyper local culture in places we operate.”

For example, in the Philippines, there are different dialects in different cities. If you call the GrabTaxi customer service in each of these cities, they speak to you in the local dialect. “Appreciating these nuances and building a product that suits them worked for us.”

Why regional focus is good strategy


GrabTaxi wants to stay in SEA. For now, at least. Tan can’t repeat it enough that his company is a Southeast Asian company built by Southeast Asians for Southeast Asia. With the US$90 million in the bag, Tan’s priority is to hire a lot more talent to press ahead in the region.

This makes sense strategically, given the competitive environment that’s emerging. Taxi apps are on a roll around the world because they fulfill a real need for affordable, convenient, and available taxi services. But the competition is fierce as they are all in a race to sign on customers as well as drivers and owners of cars. The quality of taxis, behavior of drivers, ease of hailing and paying – they all come into it. But all other things being equal, it comes down to the price, especially in the price-sensitive markets of Asia.

The ones with deep pockets are on high ground in this taxi price war because they can offer discounts on rides, help drivers to buy cars, and try new schemes to grab market share. The biggest-funded of them all is Uber, which raised US$1.2 billion in its last funding round and is reported to be on the lookout for another billion. But Uber is fighting on many fronts in the US, Europe, and Asia, whereas others like GrabTaxi are more focused on their regions.

Uber’s closest rival in funding is Lyft, also from the US. The next three are in Asia – Ola in India, which recently raised US$210 million from Softbank of Japan; Didi in China with US$118 million in funding disclosed so far; and the fifth player in this global lineup is GrabTaxi, which has raised US$90 million from Tiger Global, GGV Capital, and Hillhouse.

What’s to be noted though is that no other taxi app in Southeast Asia comes anywhere close to GrabTaxi in funding, which makes it the first among the locals. The main competitor therefore is the global giant Uber. So when Tan harps on GrabTaxi being Southeast Asian, there is sound business logic behind it too.

“Instead of expanding to a lot of places and spreading ourselves thin, our priority is to do what we are doing currently even better. We want to do it great, and not just good,” he says.