It's an extraordinary time in Southeast Asia for business and technology innovation. With the tailwinds of a seismic increase in venture capital investments over the last 5 years, we are now seeing significant business model overlap and competition.
Consider the private ride-hailing businesses vying for dominance at country, region, or global level. Uber, after exiting China, is legitimately still the global category king and is doubling down on SE Asia. This has impacted individual markets such as Singapore with total taxis at the start of 2016 at 28,258, falling to 26,735 in March 2017. Uber is rumored to now have 50,000 vehicles in its network in Singapore. It is a massive investment and commitment.
Grab, as one of Singapore's largest start-up valuations (USD3.3 Bill), competes head-on with Uber and is executing its regional category king play. With a regional population of 620 million, the SE Asia region still gives Grab a massive target market. Their ambition has been, and continues to be, to create a defensible regional category king and block global players, as well as regional start-ups. Both Uber and Grab have combinations of motorcycles, cars, food delivery and in Grab's case local taxis as well.
Go Jek is Uber and Grab's toughest individual country competitor and is Indonesia focused only. With almost half of SE Asia's population (258 mill), Indonesia is a large market in its own right. Go Jek has innovated in that market with a much broader business model, with offerings beyond ride hailing or food delivery and include cleaning services, bill payment, fund transfer, and even massage services on demand.
Smaller Asia Pacific markets such as Australia, are in a much different position of needing to extend into global markets in order to reach scale. SE Asia however, given its size and untapped potential is fertile for the above experimentation for global, regional or country category-targeting and leadership.
Who will win? The fundamental belief is that creation wins. Taking an established model and using massive funding is akin to blunt force trying to break down a steel door. Given the scale, and the unique cultures and environments, this region and market will continue to innovate. Consumers need to see the differentiation between the brands, but the business model also includes at the driver level, where attracting, retaining and motivating drivers is a critical factor in overall success. To do this, a compelling and motivational point of view has to be continually delivered across audiences, which will differentiate the company (and business model) in comparison to the other players.
This process has to start with the problem that is being solved today, and also what is the evolving problem that will be solved. Private ride-hailing was an innovative idea in its time and has vaulted Uber into a global category king position (for now). The model however is rapidly morphing into something much broader, and thus it is a problem being solved that is very different in the future.
The exciting thing to consider is that there are completely new business models emerging in SE Asia and therefore potential new categories being created. The bundling and integration of different tech and services is creating never-seen before capabilities. To truly leverage these models necessitates defining the new category, and having a powerful, convincing point of view around it. The company that does this, will not only create the category, but also dominate it.