Gojek and Grab Holdings Inc. have been battling it out for years in the brutal business of ride hailing and food delivery. They’ve burned billions of dollars in venture-capital money (thanks, SoftBank!), and created hundreds of thousands of jobs throughout Southeast Asia in the process.
Yet talk to executives at either company and they’ll tell you that the real future of their businesses isn’t shuffling people, food and goods across the disparate lands of Southeast Asia. The big opportunity — read, profit — will come from all the other services they can tack on such as payments, loans, ticket sales, supply-chain management, and advertising.
Which makes me think that in some markets it will make sense to park the vehicles.
The role of taxis (and motorbikes) in this “ecosystem” paradigm is twofold: first, to use transport and food delivery as a door to the company’s broader product offering; second, to provide a reason to open the app multiple times a day, building consumer habits and brand recognition.
One square centimeter of app logo on a smartphone screen is the most valuable piece of real estate in the modern world. It doesn’t really matter whether you’re selling taxi rides, a conversation with friends, or cheap goods. Tencent Holdings Ltd. and Alibaba Group Holding Ltd. built addiction to the latter two, and leveraged it to offer China’s dominant payments platforms.
In Southeast Asia, transport is the service that found most traction, thanks to VC-funded subsidies and a brutal pricing war that saw even Uber Technologies Inc. beat a retreat. For all the talk of a dual rivalry, only Singapore-based Grab can be considered a truly regional player. It offers taxis in Singapore, Malaysia, Thailand, Indonesia and elsewhere. Gojek, the hometown hero in Indonesia, has struggled to find traction elsewhere.
But that assessment is only true if you limit it to mobility — measured by their competing green logos on vehicle fleets across Asia’s sprawling metropolises. If you think of the battle as being about the far more important metric of smartphone-screen real estate, then Gojek can still be a solid international player. Grab’s non-transport businesses, such as payments, are nowhere near as established as its taxi services in most markets.
Recent investments by Facebook Inc. and PayPal Holdings Inc. hint at Gojek’s direction. Facebook, which crucially also owns WhatsApp, put $300 million into Gojek’s latest funding round and now has a 2.4% stake in the Jakarta-based company’s payments business GoPay, The Ken reported last week, citing a venture-capital investor with knowledge of the deal. Alphabet Inc.’s Google and Tencent have the same stake while PayPal holds 0.6% in GoPay, according to The Ken.
As my colleague Andy Mukherjee wrote recently, Facebook’s interest in Asia extends beyond mere social networking. India, for example, is becoming a test bed for CEO Mark Zuckerberg’s foray into payments and e-commerce. Its $5.7 billion investment in Jio Platforms Ltd. is less about getting a stake in Mukesh Ambani’s new telco, and more about tapping into India’s vast potential for content and commerce.
Reliance Jio’s dirt-cheap wireless connections serve the same role as Tencent’s WeChat, Alibaba’s Taobao, or Grab and Gojek’s transport: They’re on-boarding mechanisms for consumers and businesses to then buy a broader array of services.
This is why Facebook brings a lot more than just money to Gojek. The social media service is the top app in many parts of the region, WhatsApp is a key communication channel, and Instagram adds millions more users to the picture. If Gojek and GoPay can be combined with Facebook’s products for commerce or payments, then the Indonesian startup suddenly expands its smartphone real estate.
PayPal is an important part of this strategy. The payments provider will be integrated into Gojek’s services while GoPay users will be able to tap into the U.S. company’s network of more than 25 million merchants globally, the two companies announced last week.
With global leaders in the fields of social networking, instant messaging, advertising, and payments all now buying into the Gojek vision, it’s up to co-CEOs Andre Soelistyo and Kevin Aluwi to ride their Indonesian unicorn further afield. They can stay at home and battle over cheap rides and food, or ditch the taxis altogether and take on the rest of Asia.
By Tim Culpan – Bloomberg