Category Archives: SEA

Montage Sequence #2 – bubbles, loonshots and the OA

Some great stuff in this issue.

This I think about a lot especially in the context of SEAsia:

4/ Finally, I was struck by how all the companies mentioned in the “bubble” pieces – often in reaction to the sticker shock of what seemed like a large valuation back then – went on to bigger and bigger valuations as time went on, often many times over. Which leads me to wonder:
a) why did so many commentators miss the growth that was going to happen to these companies?
b) is the same mistake being made now in the narrative around valuations?

Now I want this book :: Loonshots.

I am still struggling to like OA. 😉

Montage Sequence #2 – bubbles, loonshots and the OA

Grab Touting Masa’s Backing Amps Up Southeast Asia Taxi Wars – Bloomberg

Grab Touting Masa’s Backing Amps Up Southeast Asia Taxi Wars – Bloomberg

I really like Tim for bucking the trend of most reporters and questioning all of this. I met Tim once in Singapore and we shared a meal and chatted. Really enjoyed it and I love that he is accessible and talks via Twitter.

He is willing to kind of say what most won’t:

What Grab failed to do, however, is show how having large tanks of kerosene to burn begets a sustainable business. That makes this bluster look a lot like Asia’s bike-rental wars, and we all know that didn’t turn out well. We shouldn’t be surprised that it’s Masa once again feeding the frenzy given his reputation as a big-stack bully.

No one knows where all of this will land. If the race is about raising piles of cash then I guess Grab is winning.

Obviously I like talking about this subject :: https://seedvc.blog/2019/03/22/my-take-grab-vs-go-jek-inside-asias-battle-of-the-super-apps-fortune/

However I am not sure that means they ultimately win – my issue is that both Grab and Go-Jek seem to think ridesharing forms the basis of a super-app. I am not sure I agree:

 

Scaling A Company While Controlling Costs – AVC

Scaling A Company While Controlling Costs – AVC

Interesting that Fred is suggesting companies reduce engineering costs by outsourcing to China.

I think this works for Zoom cause the CEO came from China and knows how to do it. My guess is most companies find the appeal attractive but will not have much success. You would need a solid executive lead in the company who can manage China and fold the results into the overall framework. I think few will be able to pull this off unless they have a Chinese exec on their team.

However I don’t think China is the only option but what is increasingly happening is the competition for these bodies is growing both from local companies and from regional startups. You see this very clearly in Indonesia with even the large players like GoJek having to do engineering abroad to compete.

As the entire startup ecosystem grows around Asia the local companies will probably be able to hire and manage better but I think the culture of working for an overseas company could also be attractive.

As tech goes global this pull for talent is only gonna increase and I am not sure the USA startup ecosystem will have the leg up for much longer. Since the rise of Asia is unstoppable at this point:

(My take) Grab vs. Go-Jek: Inside Asia’s Battle of the ‘Super Apps’ | Fortune

Grab vs. Go-Jek: Inside Asia’s Battle of the ‘Super Apps’ | Fortune

Much to talk about with this subject. I don’t know where to begin. Let me first state that what’s happening in the SEAsian ecosystem is amazing and of course these 2 players are a massive part of that. I won’t knock that but I also still feel inclined to talk about how I feel about it or how my product head reacts to it.

First off:

With a 2017 GDP of $2.8 trillion, Southeast Asia, were it a single country, would be the world’s seventh largest economy; at its current growth rate, it would rank No. 4 by 2030. But for investors, market size is only part of the appeal. Super-apps promise a new mode of connecting with customers and an opportunity to amass a vast data trove about their preferences and purchasing behavior. It’s a model pioneered in China by Alibaba’s Alipay and Tencent’s WeChat; Mark Zuckerberg, in a recent blog post, hinted that he hopes Facebook can emulate it. Many believe revenue from super-app services and the data they generate will prove to be more stable, more profitable, and easier to scale than revenues from ride-hailing—where profits have been elusive even as growth skyrockets.

I am incredibly lucky to be doing what I am doing at a time like this. SEAsia has many more laps to go for the “race”. Most of the big companies will tell you that the bulk of the business right now is in the tier 1 and 2 cities and heavily slanted to tier 1. Imagine how big some of these businesses are when tier 2 and beyond start to kick in – and eventually they will.

The other thing to take note of is that for Google and Facebook, SEAsian revenue is already massive but yet ARPU is some 25% of what they see elsewhere which means the revenue will only get bigger. Couple ARPU growth with more users out of tier 2 cities and beyond and basically you haven’t seen the how big it will go.

Let’s discuss G and G more. First off I challenge the premise of the super-app. I am quite vocal in my view on this, super-apps work in China because of China. The density, the lock-in by the Chinese giants and the government aiding the growth of the Chinese giants has to be taken into account. None of of those traits are in SEAsia apart from the density but even the density is not quite the same. To constantly keep thinking that the super-app is what users want will eventually backfire on them since the rest of the traits are not here – users have choice.

I for one pretty much hate the super app concept. I am so sick of the steps I need to take to book a ride for example with Grab. I have to play wack-a-popup with promos and getting through stuff I don’t want or need to simply book a ride. Due to this I use Comfort and Gojek more. That’s Grab’s fault though – they could provide me with a better experience. They could simply let me set a preference that instructs the app to default to the ride screen for example. I know they won’t but they could. What’s interesting is with Gojek offering rides only in Singapore, then I only deal with that UX. I love it but my guess is Gojek will eventually ruin this for me in Singapore as well. 

I had a conversation once over Twitter with a VC from the USA who is funding Grab and I realised he has no sense of what I am talking about since he has never really used the app. They simply apply the China lens around super-apps to SEAsia and assume it will work. It may, I don’t know yet but I think unbundled apps are much better for users. This is actually where I would like to add that neither of these companies is answering the siren call of user needs, they are just shoving down our throats the UX we think we all want. I tend to vote with my behaviours. I don’t use anything from Grab but rides.

The other day I was in the situation of needing to use GrabPay to pay for lunch and when I clicked on it I was sent through some verification loop and was never able to add any money to my wallet. Keep in mind my wallet worked before and I had a credit card attached to it – seems all that was gone and I was starting over. Just silly. Why would I even bother – since NETS and ApplePay work well and once setup I never even think about them. These apps continually test user patience with experimentation, bad UX and constantly forcing users to start over. It is ridiculous.

I used cash BTW – it sill works for now.

I have problems with Gojek as well but of a different nature. First off the tech is just way behind Grab’s. This has gotten more apparent as I use both in Singapore. The other day I booked a Gojek ride and noticed the car driving away from me and getting farther away. I tried to message, a pain cause there is no in-app chat – but the driver did not reply. Then the car stopped and wasn’t even moving. I called the driver and he said he was picking up Jan or something at an apartment. Essentially the app was matching me to a car that wasn’t picking me up. The driver was annoyed, I was annoyed and then I had to cancel and start over – with Comfort. 

There is a litany of tech issues – no expense management, no ability to use credit cards across other regions and the app just feeling slow. It sucks – I had high hopes but I think if this is a race then Grab is winning for sure. That’s obvious.

My biggest gripe with Grab though is their origin. They started as a taxi company which is fine but it is what they inherited with that origin story. Taxi companies are notorious for terrible customer service – probably to riders and drivers alike. I only know the customer vantage point which is one with normally bad customer service and I have numerous experiences myself. No point in going into it since it is what it is. 

I think the larger question though is ride hailing profitable? My guess is that it is not which is why these two players are going into everything and calling it a super-app. Only time will tell since autonomous vehicles, government run transport and the remaking of cities will radically alter the ride hailing playbooks. As the companies look to other products they will either be able to use ride hailing to entice users into their other products or they will need to unbundle and compete with other, better products. Again, it is too early to tell and investors are pouring money into G & G hoping that the super-app is the model with one of these guys owning the region.

I am not so sure it will work.

Sea is raising up to $1.5B for its Shopee e-commerce business in Southeast Asia | TechCrunch

Well this is a battle to watch.

Since Amazon Prime showed up that’s pretty much where I get my stuff – apart from going to the store or the wet market. Yes – that’s still a thing in Asia and I love it.

I get the other stuff I need from iHerb which has great prices and ships for free to Singapore. Can’t beat it.

I still very rarely wonder in the untamed marketplace that is Lazada or Shopee. I have tried them both for some weird stuff I couldn’t get elsewhere but generally are disappointed with the quality of it. For sure though the marketplace model of each holds very little interest from me so I am always amazed at the numbers for these products but of course not a lot of profit yet.

Then add in the while Carousell and Facebook stuff for lots of other P2P transactions which our family has used way more than Shopee or Lazada but both could be done so much better. I actually there is some opportunity in the P2P space being done right but maybe Carousell and FB are just too big now.

Anyways – welcome to SEAsia! Its gonna be a crazy next 10 years!

Sea is raising up to $1.5B for its Shopee e-commerce business in Southeast Asia | TechCrunch