I remember coming to SE Asia a couple of years ago, and finding it amazing how I could order an Uber with the same app / account that I do in the West (albeit only from major, supported cities).
However, returning recently, for me (at leat anecdotally) it’s almost infeasible to order an Uber here now due to their low driver rates. Grab seems to be everywhere, but with rates similar to Uber, I do wonder what went wrong. I was thinking only the other day that it feels like Uber let this opportunity slip through their fingers.
Both platforms are vastly cheaper than their western services ($1 for over a mile). They also both offer ‘moto’/motorcycle hire for one-person rides which is extremely convenient... I’m wondering why we don’t have similar services in the built-up western cities such as London or New York.
Grab did a better job of having an offering that fit the local markets, whereas Uber tried to fit its US model here. It has since adapted but Grab has always executed faster and better.
Grab showed up front pricing first. Grab allowed paying by cash. GrabPay has been (somewhat) adopted by other companies.
There's another thing I heard lots of people saying in KL a few weeks ago. Uber had developed a reputation for employing crooks—drivers who would accept a fare and claim the payment, but simply not show up, and so on—and not doing anything when they were reported. Grab was supposed to be a lot stricter with its drivers, and their drivers were much more trusted.
Local here, in my country Grab tried to abide by the local law while Uber is acting like they are above the government. Taxation for example, Grab has no problem paying tax, while the local branch of Uber said that they are only a 'marketing company' for Uber BV located in Holland (a well known tax haven) so they don't have to pay any corporation income tax at all. IANAL but even if that is legal, it still doesn't sit right with me or the local government.
oh and the marketing problem too, they changed their uniform and colour them for a few times while Grab just sticks with green. I just don't feel they have a clear strategy for anything at all.
It is impossible get their real profit so they are taxed 2% on their revenue. Oh and I forgot, when the authority requested them to hold a meeting on how should the taxation be, they didn't even bother to reply! That's like asking for trouble.
As a tourist in Kuala lumpur last year, I had better experiences with Grab trips. They accepted cash, drivers seemed to be happier and fare was slightly cheaper.
> SoftBank Group Corp., a major backer of Grab’s and Uber’s as well as China’s Didi Chuxing, has pushed consolidation to improve the profitability of a global ride-hailing business that bleeds billions of dollars a year
The anticompetitive effects of common ownership [1] have been hypothesized in respect of the public markets:
"A lot of the way we traditionally think about corporate governance does not fully account for the fact that most investors are diversified. This comes up a lot in mergers and acquisitions. Company A wants to buy Company B. If they combine, they will have cost savings worth $X, and the question is how much of $X goes to Company B shareholders in the form of merger premium and how much of it goes to Company A shareholders. If you are a diversified investor holding a proportional amount of both companies' shares, you don't care at all. You just want the deal done. But because corporate law, at least in the M&A context, gives directors a duty to maximize value for their shareholders, Company B will negotiate hard to get as much of the premium as possible. Money will be spent on bankers and lawyers. Company A might be pushed to raise a lot of debt to pay more, making the benefits of the deal riskier (for Company A). And Company B might ultimately just say no to a deal because it doesn't like how the benefits are split, denying those benefits to diversified shareholders. By maximizing value for its shareholders, considered as its shareholders, Company B might actually be hurting those same shareholders, considering their entire portfolios." [2]
One doesn't find Fidelity going out and saying "you two should merge so you can raise prices on consumers." But I guess that's okay if you're Softbank?
Given that prices are now so low that the service is unprofitable, it does not seem all that irresponsible for the firms' owners to want prices raised?
Yes, the fact that customers are basically paid to ride even at this late stage means that the question of survival isn't really about individual firms so much as about the category altogether. When this was the case for satellite radio, Sirius and XM merged, which was a good thing even though it meant prices would rise.
If two companies can make more together than apart, they're going to merge. Whether the shareholders are common or discrete doesn't change that incentive.
What does change is each side's tolerance for transaction costs. Mergers are expensive because both sides argue (a lot) over how to split the expected premium. If there is no argument, the transaction cost goes down. Merger costs going down means merger frequency goes up; consolidation occurs.
Stock swaps are a cheap way to "merge" without merging. Combining Uber and Grab would reduce consumer choice in both markets. The same occurs when they mutually dis-engage. In a traditional acquisition, the acquirer would have to agree on a price with the acquired. That doesn't need to happen, or at least as precisely, here.
All that said, these deals do look like Softbank trying to get around antitrust rules. If Uber and Lyft split the U.S. market across the Mississippi, lawmakers would likely frown [1].
As someone who recently had a bad experience with Didi in China, I really wish there would be at least two competitors for each industry at any given point.
But I agree, before Uber left the Chinese market, there was more pressure to be customer friendly. And the regular promos (with ridiculous amounts of free rides) where also nice from a customer perspective.
In pushing for these sales, SoftBank appears to be valuing Uber and other cab hailing business as taxi businesses and aiming to improve profitability by reducing competition rather than as a precursor to gain marketshare for some kind of driverless taxi fleets. The insiders don't seem to subscribe to the breathless enthusiasm of online commentators who have long considered Uber's current model as merely a stepping store to driverless fleets.
Because that's all they are. Uber and its competitors provided a valuable service in demonstrating what a modern taxi service ought to look like (at least from a customer perspective). But now that they've raised that bar, they don't provide a lot of added value other than as a worldwide integrated brand (in the case of Uber specifically).
Whenever door-to-door self-driving eventually arrives, it won't be in a timeframe that's remotely interesting to current investors in these services.
And that's particularly true of South East Asia, where human driver costs are negligible and differences in road networks and driver behaviour create all sorts of interesting new challenges for self driving software even if it handles California near perfectly.
Those are good points. If I have trouble imagining self-driving vehicles navigating Boston at rush hour, it truly boggles the mind to imagine them making it around Bangkok, Jakarta, or KL. I'm an experienced driver and I wouldn't want to.
And, as you say, while a lot of people probably overestimate the driver cost as a percentage of a taxi ride in developed Western countries, it truly is almost negligible in Southeast Asia. It's very common for people to have full-time drivers.
In a lot of SEA and EMEA markets road signs, signals, traffic lights, etc. are often non-existent, wrong or broken. Intersections may have 10-20 signs all oriented in a non-standard position.
Throw in motorists and bicyclists that are constantly swerving between lanes and inches from cars. Seeing current videos of how self-driving cars react, it would constantly be jerking in different directions.
There are also lots of local habits that self-driving cars would need to be trained to do, eg in Nepal when in a two lane and you spot an oncoming car, you turn on your right blinker to signal you see each other and can pass safely.
"Uber said it lost $1.1 billion in the last three months of 2017 on revenue of $11.05 billion — results that reflect a steady improvement in the company’s financial position, with revenues growing and losses narrowing. In the preceding quarter, Uber lost $1.46 billion on revenue of $9.7 billion.
Uber said it lost $1.1 billion in the last three months of 2017 on revenue of $11.05 billion — results that reflect a steady improvement in the company’s financial position, with revenues growing and losses narrowing. In the preceding quarter, Uber lost $1.46 billion on revenue of $9.7 billion.
...
Based on a financial earnings criteria excluding expenses like stock-based compensation — a significant portion of how Uber rewards its employees — the company said it lost $475 million in the fourth quarter compared with a loss of $607 million in the prior three-months period."
Pity, the repeated discounts from grab and uber making trips almost free will quickly be a thing of the past...
I like it when inventors subsidize my life style in an effort to get market share. Hope gojek can become a competitor in the markets I go to so that those discounts start again.
I get a sense of deja vu with this deal, and previously the Didi deal in China. It's very reminiscent of how Yahoo ended up holding a large chunk of Alibaba stocks.
Uber is doing very well in Latin America and Canada, so yes. Also, if you compare Uber to companies like Facebook and Google it has a large market position where both of those don't and its expansion strategy resulted in a large share of the biggest players in all other markets.
If this is how loosing looks like I want more losses like this.
Eventually perhaps. There are differences for now. Namely this battle is mostly or only in India. And Uber has around half of the market share. With SoftBank owning 30% of Ola and 15% of Uber, I’m sure they’ll want consolidation.
So what is Uber’s thesis these days? Global taxi monopoly is dead. Self driving cars is dead. Time to dump this dog in an IPO and hit up the buyer of last resort ... America’s 401ks.
Uber sent out an email for people to download Grab, since it will no longer work in SE Asia after the 8th of April[0].
Personally, so far, I'm not impressed with grab's software and epayments infrastructure in Indonesia, compared to uber where I can use my card and pay for any of my wifes/friends usage without having to think about things like topping up or buying credits (though to be fair, a lot of platforms in Indonesia [maybe even SE Asia] seem to have the same situation regarding payments, with worse software). Maybe this will change, but right now it feels like a demotion.
Here's to hoping a decentralized platform for ride hailing can come into existence in the future and remove the reliance on SoftBank's will to unify the market on their terms.
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[ 3.0 ms ] story [ 123 ms ] threadHowever, returning recently, for me (at leat anecdotally) it’s almost infeasible to order an Uber here now due to their low driver rates. Grab seems to be everywhere, but with rates similar to Uber, I do wonder what went wrong. I was thinking only the other day that it feels like Uber let this opportunity slip through their fingers.
Both platforms are vastly cheaper than their western services ($1 for over a mile). They also both offer ‘moto’/motorcycle hire for one-person rides which is extremely convenient... I’m wondering why we don’t have similar services in the built-up western cities such as London or New York.
My one trip to Malaysia, I found Grab to be the cheaper choice.
source: living in Vietnam for ~1 year.
Grab did a better job of having an offering that fit the local markets, whereas Uber tried to fit its US model here. It has since adapted but Grab has always executed faster and better.
Grab showed up front pricing first. Grab allowed paying by cash. GrabPay has been (somewhat) adopted by other companies.
So how does that work? Do drivers get a statement at the end of the month on how much they owe Grab? Is it itemized by ride, or juts aggregated?
oh and the marketing problem too, they changed their uniform and colour them for a few times while Grab just sticks with green. I just don't feel they have a clear strategy for anything at all.
The anticompetitive effects of common ownership [1] have been hypothesized in respect of the public markets:
"A lot of the way we traditionally think about corporate governance does not fully account for the fact that most investors are diversified. This comes up a lot in mergers and acquisitions. Company A wants to buy Company B. If they combine, they will have cost savings worth $X, and the question is how much of $X goes to Company B shareholders in the form of merger premium and how much of it goes to Company A shareholders. If you are a diversified investor holding a proportional amount of both companies' shares, you don't care at all. You just want the deal done. But because corporate law, at least in the M&A context, gives directors a duty to maximize value for their shareholders, Company B will negotiate hard to get as much of the premium as possible. Money will be spent on bankers and lawyers. Company A might be pushed to raise a lot of debt to pay more, making the benefits of the deal riskier (for Company A). And Company B might ultimately just say no to a deal because it doesn't like how the benefits are split, denying those benefits to diversified shareholders. By maximizing value for its shareholders, considered as its shareholders, Company B might actually be hurting those same shareholders, considering their entire portfolios." [2]
One doesn't find Fidelity going out and saying "you two should merge so you can raise prices on consumers." But I guess that's okay if you're Softbank?
[1] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2427345
[2] https://www.bloomberg.com/view/articles/2015-04-16/should-mu...
This is pretty much it. A generic strategy for most of "megafunds"
If two companies can make more together than apart, they're going to merge. Whether the shareholders are common or discrete doesn't change that incentive.
What does change is each side's tolerance for transaction costs. Mergers are expensive because both sides argue (a lot) over how to split the expected premium. If there is no argument, the transaction cost goes down. Merger costs going down means merger frequency goes up; consolidation occurs.
Stock swaps are a cheap way to "merge" without merging. Combining Uber and Grab would reduce consumer choice in both markets. The same occurs when they mutually dis-engage. In a traditional acquisition, the acquirer would have to agree on a price with the acquired. That doesn't need to happen, or at least as precisely, here.
All that said, these deals do look like Softbank trying to get around antitrust rules. If Uber and Lyft split the U.S. market across the Mississippi, lawmakers would likely frown [1].
[1] https://en.wikipedia.org/wiki/Sherman_Antitrust_Act
But I agree, before Uber left the Chinese market, there was more pressure to be customer friendly. And the regular promos (with ridiculous amounts of free rides) where also nice from a customer perspective.
Whenever door-to-door self-driving eventually arrives, it won't be in a timeframe that's remotely interesting to current investors in these services.
And, as you say, while a lot of people probably overestimate the driver cost as a percentage of a taxi ride in developed Western countries, it truly is almost negligible in Southeast Asia. It's very common for people to have full-time drivers.
Throw in motorists and bicyclists that are constantly swerving between lanes and inches from cars. Seeing current videos of how self-driving cars react, it would constantly be jerking in different directions.
There are also lots of local habits that self-driving cars would need to be trained to do, eg in Nepal when in a two lane and you spot an oncoming car, you turn on your right blinker to signal you see each other and can pass safely.
...
Based on a financial earnings criteria excluding expenses like stock-based compensation — a significant portion of how Uber rewards its employees — the company said it lost $475 million in the fourth quarter compared with a loss of $607 million in the prior three-months period."
https://www.nytimes.com/2018/02/13/business/uber-earnings-ip...
I like it when inventors subsidize my life style in an effort to get market share. Hope gojek can become a competitor in the markets I go to so that those discounts start again.
As an aside, Lei does some awesome videos on technology and definitely worth a subscription!
[0]: https://www.youtube.com/watch?v=OfFX9iKZAj0
That guy would disagree I think.
https://en.m.wikipedia.org/wiki/Grab_(company)
If this is how loosing looks like I want more losses like this.
https://qz.com/1187144/softbank-not-uber-is-the-real-king-of...
Softbank/Saudi Arabia is going to control the global taxi market.
Personally, so far, I'm not impressed with grab's software and epayments infrastructure in Indonesia, compared to uber where I can use my card and pay for any of my wifes/friends usage without having to think about things like topping up or buying credits (though to be fair, a lot of platforms in Indonesia [maybe even SE Asia] seem to have the same situation regarding payments, with worse software). Maybe this will change, but right now it feels like a demotion.
Here's to hoping a decentralized platform for ride hailing can come into existence in the future and remove the reliance on SoftBank's will to unify the market on their terms.
[0] https://help.uber.com/h/1e6cfc45-10da-416c-a7a3-d13f75505c34