WWN27# – Ride-Sharing Battle in Southeast Asia Intensifies: Grab vs. Uber

Uber vs Grab.jpg

What’s Been Happening?

In 2016, Uber did the unthinkable – it conceded defeat in a costly battle that it has been waging for a year with its local rival Didi Chuxing in China. Uber had been reportedly spending $1 billion a year in its effort to compete with Didi whilst the latter was offering driver and passenger subsidies to stay dominant in its home country. Uber Technologies will sell its brand, business and data to Didi. As part of the deal, Uber Technologies and its other shareholders will receive a combined 20% stake in the combined company.

With China settled, the arrangement is seen to benefit Uber in the long run as it cuts its losses in China and focuses on other opportunities such as gaining market share in other countries in Southeast Asia, India and America.

What Now?

Grab, the ride-hailing company competing with Uber in Southeast Asia has successfully raised $2 billion in new financing from existing investors Didi Chuxing and SoftBank. Grab operates in 36 cities across seven countries in Southeast Asia where it claims to have 50 million downloads from users and 1.1 million drivers on its platform.

This spells trouble for Uber as they had previously lost the battle against competitor-turned-partner Didi in China. Uber only began to see profits shortly before its exit from China last year, approximately three years after it entered the region via Singapore.

In a bid to establish a stronger foothold in Southeast Asia’s ride hailing market, Grab is likely to use the new financing to further develop a mobile payments platform as Grab sees the revenue growth as being “stuck” due to the country’s outdated banking system.

What’s Next?

Uber is under increasing pressure from strong challengers such as Grab in the South East region. By providing financial support to Didi, Grab will inevitably further hurt Uber’s expansions, forcing it to leave Southeast Asia too, rather than burning more cash. Although Grab entered the market as a challenger rather than the first mover, they have been growing at a much faster rate than Uber due to its excellent knowledge and adaptation of local customs.

Some examples are:

  • Subsidizing internet and smartphones for economically disadvantaged drivers
  • Allowing cash payments from customers rather than card payments

Despite the growing list of problems at home and abroad in Southeast Asia, a rumour is circulating that SoftBank is looking to take a multi-billion dollar stake in Uber as it tries to acquire a wider share of the Southeast Asian ride-hailing market. If this holds true and takes place, it may be a much needed silver lining for Uber to continue its operations and expansion plans in the region.

References:
https://www.bloomberg.com/news/articles/2016-08-01/uber-said-to-merge-china-business-with-didi-in-35-billion-deal
http://www.vanityfair.com/news/2016/08/uber-surrenders-china-in-35-billion-dollar-deal
https://techcrunch.com/2017/07/23/grab-raises-2b-from-didi-chuxing-and-softbank/
https://www.bloomberg.com/view/articles/2017-07-27/why-uber-s-losing-to-local-rivals-in-southeast-asia

WWN#23 – Wanted: New Uber CEO as Travis Kalanick Resigns

What’s Been Happening?

In February, a 3000 word blog post was written by former Uber engineer Susan Fowler which detailed Uber’s toxic company culture. It’s a story of a company that was portrayed as a global start up success in public but revealed as an organisation in complete, unrelenting chaos by the author. She alleged that there was constant harassment and discrimination and when she raised the issue with management, they were dismissed.

Around the same time, a video emerged of Mr Kalanick arguing with an Uber driver about lowering prices for its black car service. He later issued a profound apology in which he stated that he must “fundamentally change as a leader and grow up”. It was a bit too late though, as the damage was done.

In the wake of controversies, a number of senior Uber staff resigned in March, including Uber President Jeff Jones, SVP of engineering Amit Singhal and Uber VP product and growth Ed Baker.

Earlier this month, Mr Kalanick said that he was taking an indefinite leave of absence. One of the reasons cited was the loss of his mother in a recent boating accident. Another reason could have been to facilitate the transition of responsibilities from Kalanick to other members of senior management, in line with recommendations issued by US Attorney General Eric Holder in his report to Uber to overcome its ethics and leadership troubles.

What Now?

A shareholder revolt led by five of Uber’s most prominent investors has resulted in Kalanick agreeing to resign. In a letter titled, “Moving Uber Forward” the investors wrote to the CEO that he must immediately leave and the company needed a change in leadership. In addition, improved oversight was requested by filling two of the three empty board seats with independent directors and that a new CEO and experienced CFO be found immediately. Although Travis has resigned, he will remain on Uber’s board of directors and still hold a significant stake in the company.

What’s Next?

As the search for a new CEO commences so does speculation. One rumour is that US Ex-President Barack Obama may become the new CEO and may be just what Uber needs to stop the company from completely falling apart. There has already been speculation that Obama wanted to enter the tech industry and a connection between Obama and Uber is David Plouffe who was the campaign manager for his 2008 presidential campaign. Later on, he became a policy advisor for Uber.

Sheryl Sandberg is another name that is on the candidate list for CEO of Uber. Sandberg has extensive experience in the tech industry, having served nine years as COO at Facebook. Uber directors, including Arianna Huffington, are increasingly convinced that a woman at the helm would be well suited to fix Uber’s mess. However, sources close to Sandberg say that she’s not interested and will be staying with Facebook.

The search for the CEO and the CFO is more complicated than it would seem, as finding the right individual with experience leading a disruptive business model like Uber’s is far and few between. Once the leadership team has been restructured, Uber may have a chance of being in the spotlight again for all the right reasons instead.

https://techcrunch.com/2017/06/20/uber-ceo-travis-kalanick-resigns/https://www.nytimes.com/2017/06/21/technology/uber-ceo-travis-kalanick.htmlhttps://www.bloomberg.com/news/articles/2017-06-21/facebook-s-sandberg-won-t-run-uber-but-she-knows-what-it-needshttp://www.abc.net.au/news/2017-06-21/uber-ceo-travis-kalanick-resigns/8639438http://nypost.com/2017/06/21/uber-wants-sheryl-sandberg-to-be-its-next-ceo-sources/