© Reuters. FILE PHOTO: FILE PHOTO: A Grab logo is depicted at the Money 20/20 Asia Fintech Trade Show in Singapore
By Aradhana Aravindan and Anshuman Daga
SINGAPORE (Reuters) – In the first few weeks of the coronavirus outbreak, Anthony Tan, the CEO of Southeast Asia's largest hail shipping company, recalls mistaking the infection as a China-only problem, similar to the severe acute respiratory syndrome in 2003.
As COVID-19 turned into a pandemic and the markets rocked, the 38-year-old sought advice from titans among his investors, including Masayoshi Son from Softbank (OTC 🙂 and Satya Nadella from Microsoft (NASDAQ :).
The message was clear. Nobody knew how long the crisis would last or how deep it would be. Tan, who founded Grab in 2012 with Harvard Business School alumni Tan Hooi Lin, learned that he had to set thresholds and take decisive steps, even if they were unpopular.
"There's no more debate, it's just an execution," he said.
In June, the Singapore-based company laid off around 360 employees, nearly 5% of its workforce, after cutting discretionary spending.
"I remember tears couldn't stop rolling down my face. I never want to go through it again," Tan said in his first interview since the layoffs.
The pandemic marks the first crisis for Southeast Asia's decade-old start-up ecosystem that Grab has made a household name and the most valuable company with over $ 14 billion.
Grab says his app had a total of 198 million downloads, even though it hasn't become profitable yet.
The company operated in 351 cities in eight Southeast Asian countries and gained global attention in 2018 when Uber (N 🙂 sold its regional business to the startup after a costly five-year battle. In return, Uber took a stake in Grab.
As coronavirus measures put pressure on the region of 650 million people, Grab saw demand for his transportation business decline, but then nearly 150,000 of his drivers switched to delivery drivers for customers heading home.
"Food delivery has become the norm, food delivery is growing very quickly, cashless payments are increasing very quickly, so with or without a vaccine these behaviors have permanently changed and we have benefited," said Tan, the grave for a prepared future in which its users will at least partially work from home.
"You couldn't ask for a better hedge," Tan said in the living room of his penthouse in Singapore, where he often spends 15 hours a day at his standing desk, sometimes exercising with dumbbells.
DELIVERY OF FINANCIAL SERVICES
The company, which counts Indonesia as its largest market and faces tough competition there with Jakarta's Gojek, is doubling its shipments, with its two-year grocery business overtaking mature transportation as its largest segment.
With consumers staying at home, plans for the travel and hospitality industries had to be scaled back. However, the financial business has been bolstered by the rise of digital payments and small businesses looking for working capital loans. The financial services business includes asset management, insurance and credit.
With support from China's Didi Chuxing and Japan's MUFG, Grab was already turning into a universal everyday app, but the pandemic accelerated plans, including providing more services to traders.
The company, which claims to have more than 9 million drivers, dealers and agents, is also waiting for the outcome of its application for an online banking license in Singapore.
While the pandemic initially led to short-term thinking in a struggle for survival, Tan said working from home for months and consultations with executives from around the world made him think and reflect on the longer term.
With "even just crazy and microscopic about the cost," Grab was now on a faster path to profitability, Tan said without giving a timeframe.
Jixun Foo, managing partner at GGV Capital and a former Grab supporter, said speed is key.
"When times are good, everyone wins market share. When the tide turns, the best companies are the quickest to react and the quickest to correct their business," he said.