In this class, I go through some of the basics of Grab, GoJek and Lazada. And the different approaches for capturing local services in SE Asia.
Which are the most important 1-2 factors for the competition in SE Asia services?
- Consumer engagement and experience. Capturing a share of the consumer mind.
- Merchant engagement and experience. Being strong with service providers.
- Platform business models and their advantages (subsidized pricing, growing interactions, data, etc.)
- Network effects.
- Management execution and access to capital.
Related podcasts and articles:
- Meituan vs. Ctrip vs. Alibaba: Who Will Win in China Services? (Jeff’s Asia Tech Class – Podcast 22)
- How Can Meituan Compete with Alibaba? And Prepare for Next Gen Services Marketplaces? (Jeff’s Asia Tech Class – Podcast 27)
- #16: Basics of Ctrip, Meituan and Marketplace Platforms for Services
Concepts for this class:
- Platforms: Marketplaces for Services
- Network Effects
Companies for this class:
Welcome, welcome everybody. My name is Jeff Towson and this is Tech Strategy. And the question for today’s class, Grab versus Gojek versus Lazada. Who’s gonna win in services in Southeast Asia? And it’s a really fun question. It’s kind of playing out in real time. There’s a lot of dynamics happening. So it’s kind of hard to predict. But we’re going to start to take that apart. And then I will lay out sort of a framework for thinking about it and what variables to watch and what ones not to watch. And then we’ll take a stab at it and vote and see where we end up on this one. So that’s going to be the question for today. And before we get started, I thought I’d talk about the class just briefly because it’s been a crazy couple weeks. And I guess first of all is welcome to the new members. The numbers kind of went off the charts in the last two weeks. The number of downloads, the number of subscribers to the class more than doubled. It’s been kind of amazing. So please welcome to everybody. Appreciate you being here. The basics of the class. which I haven’t talked about in quite a while, is to make you better at this. To sort of, I mean, my job here is not to entertain, it’s not really to inform, it’s not to give you a hot take and a contrarian opinion on everything that happened in the news in the last two days in this sector. I don’t really do that. There’s enough news organizations and commentators that do that. My goal is to make you smarter. in a complicated area and to be the professor, to help you sort of step by step, move forward in your understanding and your expertise and complicated advanced skills take time. There’s no way around that. So, I’ve sort of described this class as sort of a long walk together. that every week we’ll meet, we’ll talk about some subjects, I’ll lay out some frameworks, some ideas, and sort of week by week, week by week, we will step up in complexity, look at more and more cases, and I have put up online now for the subscribers, multiple levels, easy first steps, level two, level three, level four, to sort of help you track your progress and give you a path to walk in terms of going through content. And we’re gonna improve that quite a bit actually. We’re gonna make this class more and more personalized where eventually if this works, everyone will get sort of personalized readings every couple days based on where you are and your own understanding. That’s where we’re headed is one to one education as opposed to one to many education, which is kind of what we’re doing now. And which is really how every university in the world runs, but we’re gonna try and get away from that as the. as we sort of advance the content and the data and the IT side of this. That’s where we’re headed. Anyway, that’s a topic for another day. But yeah, welcome everybody. And we’re going to focus a lot more on Southeast Asia and China together going forward. I’ve talked a lot about China because that’s a good place to start. But, you know, I’ve started to shift down into Singapore, Thailand, Indonesia, and we’re getting a lot of interesting… listeners, subscribers from definitely from Southeast Asia. A lot of people in Thailand, Singapore, Indonesia have been signing up, but also a lot of people out in Germany, Germany’s taking off. Not totally sure why, awesome. A couple people, someone from Dubai Internet City just signed up yesterday, which is awesome because like, God, 20 years ago, I can remember working on a company called Arabia.com. which was a digital internet company based in Dubai, internet city, for my old boss Prince Al Waleed, and that was one of his investments, and I had to fly in with the team and take that company apart. And we eventually basically took it back to the garage. We ended up closing the offices in Dubai, internet city, and shifting most of the focus back to Jordan. That’s a bit of my own little history. Anyways, so we’ll talk more about this, but a lot of Brazil, a lot of Mexico, Germany, and it’s great. So welcome to everybody. And let’s get into the case for today. But first, if you haven’t signed up, please do so. You can go over to jeffthousen.com, sign up there. There’s a 30 day free trial. If you sign up with Alipay, that is actually a little bit more problematic because you can’t do a lot of things there in terms of free 30 day subscriptions. So I’ve been just sending people the first month back. So credit cards and Stripe and all that are better. If you’re doing Alipay, I’ll probably reach out to you and send you $9 at some point. In and out of China, everything gets a little more complicated. Anyways, that’s the site. Let’s get into the… Oh, last thing. For those of you who are members, homework for this week, as every week, take a concept, take an idea within whatever level you’re in. Easy steps, level two, level three, level four. Take one of those, look for a company or an artist and try and write three or four paragraphs of why you think this company I’m watching, a shopping mall, an auto dealership, a tech company, whatever, can build in, say, switching costs. That would be the idea. A network effect. Try to apply in your own life every week to some extent. And the easiest way to do that is to write three paragraphs. If you don’t write it, you don’t know it, in my opinion in life. So, basic homework. Okay, let’s get into some content. All right, so Grab versus Gojek versus Lazada in services in Southeast Asia. Now this is kind of a uniquely South Asia, Asia story. Let’s say Asia more broadly. E-commerce is kind of everywhere. We see Amazon, we see, you know, companies in Africa. We see companies in Europe. That’s e-commerce shipping products, right? I’ve kind of said in the past, like when you think about digital commerce like this. I generally put it into four buckets, physical products, digital goods and services, videos, ebooks, and then either differentiated or sort of standardized services, and I put those into different buckets. Choosing a restaurant is a differentiated service. I may want to go to this restaurant, I may want sushi, I may want Thai food. Getting a ride to the airport is more of a commodity service. Now those are sort of my four buckets when I put these things together. Now this is, I think the coolest stuff happening in this services question is Asia. There’s a couple random reasons why that’s the case is number one, you have an enormous amount of consumers in Asia, you know, probably, I don’t know the numbers off the top of my head, probably about one third of the human race lives within four to five hours flying of Hong Kong. It’s not like the human race is spread out evenly around the world. It really is in a couple places. And Asia is an incredibly dense area with people. And all of these people now have smartphones and the vast and most of them, especially if you go north China, South Korea, Japan, they all have mobile payment and credit cards. So everyone’s walking around with the phone in their pocket that they can buy stuff with and pay for it. That’s a big deal because it makes services often which you encounter out in the world as opposed to sitting in your apartment where people buy goods like laptops online. That helps a lot. So that sort of fueled it. There’s just a big volume effect of consumers. There’s the fact that we have very dense cities in Asia. The urban density of Asia is crazy. It’s much higher than the US, North America, South America, with a couple exceptions. Hong Kong, Singapore, Beijing, Tokyo. We have very dense cities and a lot of these services require density to really work. It is very hard to deliver food in suburban Northern California. You don’t have enough restaurants, you don’t have enough people together, you know, the efficiency, every route. A lot of what the AI does in the sector, it’s optimizing routes. that you get a certain number of orders and then the machine learning figures out what route the driver should take to maximize the profitability. A lot of that, that’s very easy in somewhere like Shenzhen where you have so many people densely packed and it’s very easy in Bangkok and it’s very, Jakarta, forget about it. Like that place is crazy. Try and get across town in Jakarta. We’ll talk about that today. So we got the urban density, we have a lot of cities, we have a huge consumer population, and then we have a lot of low cost labor. Okay, we can have people delivering things in by Amazon in San Francisco, but if you think of how they do that, they have to play the delivery drivers a certain amount of money. They have to pull up down in downtown San Francisco, they have to park their car because you can’t just pull up on the sidewalk and leave your scooter, you’re gonna get a ticket. They’re very efficient at giving tickets in San Francisco. So you got a park, that’s a cost. Okay, that’s not what happens in China. China, the scooter people just zoom everywhere. I mean, it’s, they go up this street, up that street, up the sidewalk, through the park, they’re zipping away. The labor costs are quite low. You have, you know, hundreds of millions of people that can do this job. And so we get a lot more sort of labor aspects there that we can use for things like delivery for sure, delivery food. delivery of packages, but we also get services. Like if you’re a hairdresser somewhere like Chongqing, you don’t necessarily have to open up a little shop. All you need is a mobile app and you can just book gigs on your phone and then zoom over on your scooter, walk into people’s houses and do their hair on a Friday night. We don’t see that in New York. And so doing nails, doing makeup, doing, I don’t know, foot massages. which they do, and then there’s obviously another category of stuff in that bucket. Things like cooking food for people out of your apartment. You know, these sort of pop-up kitchens where people are cooking in their homes and then just selling it to the neighborhood online. There’s a huge amount of local services popping up in this part of the world that we don’t even see in the US or Europe at all. That’s because the labor cost is lower, but all of these people are digitized, so they can digitize, they can sell, and they can do various things. It’s great. And then there’s professional service, accounting, web design, IT designs. The whole world of services happening in Asia is arguably the leader in all of that. So for a lot of reasons, the category of local services is much more dynamic and exciting in Asia. It started in China, but now we see it in Southeast Asia. So I think this is the space to watch. And we can start with really Didi. I mean, you wanna kind of go back to talk about Didi a little bit, because this was one of the first major local services companies to come out of Asia at dramatic scale. It was Didi and then it was Quieti and then they merged up and then it became Didi Chuxing. But it’s the world’s largest ride sharing company. And then it became… really the world’s largest mobility company. Forget Uber. People say, oh, Didi’s the Uber of China. Not true. Didi is the global giant for mobility services. It dwarfs everybody else in terms of scale, probably in terms of revenue, although we don’t really know their numbers. And they say they’re profitable. I mean, Uber and Lyft are smaller versions of Didi. So you look, they’ve got 30 plus million drivers. doing 30 plus million orders today, daily in 400 cities, and they didn’t start out in ride sharing. You know, I have a car, I’m not using it, that’s sort of latent, unused capacity, let’s bring that into the market, unused supply. No, no, they started with taxis. They started with the fact that getting a taxi in a lot of Asia is a total pain. There’s a lot of games that get played on rainy days. It’s next to impossible. They started with taxi hailing, an app that taxi companies could use, and then consumers could find them. And they didn’t really take any money from those services for a long time. They used to, as a way, get users, get data, get participation. And then they moved from taxis into ride sharing, which was illegal for a lot of the time, but they did it anyways, because that’s kind of what you can do in Asia. Then they moved into things like carpooling. They moved into things like bike sharing. Now they’re into scooter sharing. Now they’re into maybe robo taxis. And some of those are platform business models like ride sharing, and a lot of them aren’t. Bike sharing was never sharing. It was just, it was kind of like a vending machine business. You build all these little devices, you put them all over town, and then people walk up with their phones and they buy them as they need them. Not unlike buying a can of Coke or a can of whatever from a vending machine in Tokyo. not a sharing business, not a platform business model, no network effects, but it was a nice service. So they’ve built out a whole suite of mobility services. And based on that, they’re starting to integrate into the cities. So the bus systems, the metro systems, the train systems, they’re sharing data back and forth. The cities are starting to integrate the other way where they’re building like smart streetlights. Because if you can see all the data of all the drivers moving around Beijing, you have all that data, you can, and then you get the public data, which is the metro numbers and the bus numbers, that data is integrated. And you’ve got some grand headquarters run by Didi in Northwestern Beijing. Well, then you can start to deploy smart tools like streetlights that change to reroute traffic in real time based on where the traffic is. If there’s a fire, they can start to reroute. You know, the lanes can switch direction, the streetlights can change, so you can open up lanes to get the fire engines to one part of town. You know, so there’s this sort of, you know, you build in this whole suite of services within transportation, you integrate all the data, you get tremendous transparency, and then working with the city, you start to be able to manage that in real time, which is what they’re building out more and more tools under the banner of Smart Cities. And within Smart Cities, the app that is moving the fastest would be under transportation. The other would be insecurity, which some people would call surveillance. And that’s a topic for another day. But yeah, so it’s integrating into these cities, digital tools, and what you’re seeing out of Didi in China is what we call a, you know, it’s sort of the ultimate mobility app that it’s no longer one app on my smartphone to get a bicycle, one to rent a scooter, one to rent a taxi, one to ride share, one to get a bus. pass, one to get a metro ticket. No, it’s one app that serves the job to be done of how do I get from here to there right now? And it will give you, literally, the last time I talked to DD, they showed me this in their little visitor center, which was it gives you basically three options. I wanna go from northern Beijing to southern Beijing. I press the DD button and it gives me three routes, three options. Option one is the recommended option. and it’s a mix of time and money and whatever, and it might be get a taxi from here to here, then get out and get a carpool bus that takes me across this very traffic-y area mid-morning. I get out of that and then I get on the metro for the last step. It will integrate all of these things to give me the best option, the best solution. That would be option one. Option two might be here’s the fastest route. People care about that. And option three here might be the cheapest route. And I can choose and it will integrate the various services in real time to give me the option. And they’re doing some other things with DD on the driver service side, which I’ve given a podcast about in the past. A lot of the most interesting stuff DD is doing is building out driver services, which they start by offering their own drivers and then they… They spin it out and offer it to basically all the car owners of China. That was podcast 23, if you’re curious. Okay, so that’s Didi, founded 2012 Didi Dacha by Cheng Wei, who used to be an Alibaba guy, you know, because you couldn’t get a taxi, especially at rush hour. Starts with taxi hailing. They get some money from Tencent. Their competitor, Kuididacha, backed by Alibaba. So again, it’s the… Alibaba versus Tencent ecosystem, 2014 Jin Liu, just Liu Qing for those of you in China. Former Goldman Sachs, Asia managing director in M&A, daughter of the Lenovo founder, joins the company as the COO. And those are the two people you always hear about for DD. It’s Cheng Wei and it’s Jin Liu and they’re awesome. Now, like they remind me of Bill Gates. Like, you know, they’re just the team that’s smarter about this than anybody. You know, they whooped Uber. But that wasn’t really a fair fight. Uber actually did quite well. They’re good at price wars. They’re good at M&A. They’re good at expansion. They’re a very high quality team. You know, they’ve got 80%. Let’s say you go back as early as 2015, 2016. Didi’s already up to probably 80% of private car sharing in China and 99% of taxis. And now we get to the point of today’s talk, which is 2015. They start investing in Grab taxi. which has subsequently become Grab, but it was called Grab Taxi as a taxi hailing app in Southeast Asia. Now they say it’s based in Singapore, but it really came out of Malaysia. And that brings us to Grab and why they’re so interesting. 2015, 2016, 2017, you see DD investing in them, along with SoftBank and a decent number of other companies like Mitsubishi and Toyota. And Grab did… Grab did the sort of blitz scaling approach, raise a huge amount of money, expand very rapidly across Southeast Asia, which was not what Gojek did. And we’ll talk about why that’s important. But from the 2017 press release of, hey, there was another deal between DD and Grab. Back in 2017, they called it a strategic investment for a combined $2 billion by DD, Chu Xing, and Softbank into Grab. The comments from Chung Wei, who’s DD, quote, starting with transport, Grab is establishing a clear leadership position in Southeast Asia’s internet economy based on its market position, superior technology and truly local insight. Now that’s actually pretty important. Clearly the money had a lot to do with building market share. This was Blitzscaling. It’s a platform business model, get to scale fast, and hopefully the market tips to you. and you become winner take most, winner take all, which is why people get excited about platform business models and why people throw a huge amount of money at them, even when it doesn’t make any sense sometimes. So I thought his comments were right on target. They wanted market position, superior technology, and truly local insight. And that was the difference between DD and Grab and say Uber in Southeast Asia and a lot of markets. Uber rolled out everywhere. and pretty much put in place the Uber service from the West. Didi didn’t do that. Didi did not expand out of China into these markets directly for a long, long time. What they did is they found local champions who understood the local markets and they gave them money and they gave them technology. And that was the winning strategy. So Grab did great in Southeast Asia, Uber eventually sold out their business. to Grab. And Uber walked away with about, I think, 21% I don’t know the number off the top of my head, 20% of Grab, which was a very good investment. They didn’t get the market, but they got a very good investment the same way they owned about the same amount of Didi out of China. Now from Grab at that time, their press release by Anthony Tan, group CEO, co-founder, was Blah, blah, blah. With their support, Grab will achieve an unassailable market lead in ride sharing and build on this to make Grab pay the payment solution of choice for Southeast Asia. I think obviously right on target. They’re going for market leadership in ride sharing, not taxi hailing, not bicycles, because within all these services, the one that is a clear network effect of business is ride sharing. Lots of drivers on one side, lots of consumers, riders on the other. network effect market collapses. That doesn’t happen in bicycles. It probably happens a bit in taxis, but those tend to be sort of licensed contracts with major taxi companies, not one to one to one to one. So clearly he’s going for market lead in the one service that can get you network effects and he’s going for payment. Very, very smart. Now a little bit about the history of prior to this point. For some of you, this is gonna be old news, but for many of you, this is maybe the first time you’re really thinking about it. What became Grab was founded 2011-12 by Anthony Tan out of Malaysia. He was one of three brothers who worked for Tan Chung Motors, which was a family business, and the family business was the authorized distributor for Nissan cars in Malaysia. Okay, so auto dealership distribution in the auto space. familiar with transportation, familiar with cars. The story that I’ve read is, you know, I haven’t actually talked with Grab, but followed them for quite a long time, that getting a taxi in Malaysia, like in China, was difficult. There’s a lot of local taxi companies. Nobody really liked these companies. They weren’t well-run. There was a lot of games. You get in the taxi, they drive you around town some long route to boost it. You know, there’s a lot of that stuff that goes on. He goes to Harvard Business School in Harvard. He applies this idea of ride sharing to Malaysia, Southeast Asia, writes a business plan. He wins second place in the business plan contest at Harvard Business School based on the idea. He goes back, works with his family business in Kuala Lumpur doing marketing for Ten Jung Motors. Eventually 2012, he quits and with Ten Hoiling, who I am probably butchering that name, I’m sorry about that, founds what ends up being Go-Jack. And she was a Harvard Business School classmate, she was a consultant at McKinsey & Company at the time. They write the mobile app, start to build it out, business plan, all of that. They found a company, they call it MyTexi, i.e. MyTaxi, with some money, seems to me some money from Harvard Business School, some money from… Family they pitch it to the taxi services. Let’s do taxi hailing. This will be an app your drivers can use it to find rides They all seem to decline one of them a small one with only 30 plus taxi eventually says yes So they boom taxi hailing is launched in Malaysia and from there they go on a DD like aggressive expansion They change it from my taxi to grab taxi they go into the Philippines 2013 They start moving Thailand, Singapore, boom, boom, boom, geographic expansion as well as service expansion. They add Grab Car 2014, which is what we would consider ride sharing instead of dealing with taxi partners. Grab Bike, which in this case is motorcycles, not bicycles. That’s Vietnam 2014. They move their headquarters to Singapore. And at this point, OK. eventually Singapore, Japan, Cambodia, Indonesia, Malaysia, Myanmar, Philippines, Thailand, Vietnam, 6,000 plus employees as of 2019. But really what’s important in all this, well one I think it’s all interesting, but they had a very narrow band of services which was transportation, ride hailing, taxis, you know, get on the back of a scooter, get across town. They did food delivery. So there’s what’s called the two primary business, but again, that is mostly a transportation business. And then payment and financial services, really just payment. So they look a lot like Didi, except Didi doesn’t do food delivery. Didi has remained a pure player, a mobility player, right? We offer you a super mobility app, a transportation solution. Grab has stayed largely close to this. but they’ve also added food delivery and they’ve added some degree of payment. That is an interesting approach to, and then they’ve gone wide for geography, which is similar what Dede has done in China. March 2019, they do a private round. According to that, they are priced at 14 billion US dollars, not valued, you know, but. That’s what they got the terms at. So they’re above 10 billion. 2018, they buy out Uber, as I mentioned. Here it is, Uber holds a 23% stake in Grab as of late 2018. So we can already see two different models for approaching local services. I’ve kind of said, look, local services in Asia is awesome for a lot of reasons. But there’s two different models for offering these right now. There’s DD, which is more of a pure play mobility service. And then we have Grab, which has moved beyond that. They’re mostly transportation, but they’ve also incorporated in food delivery and payment. Now that had a lot to do with there wasn’t a great payment provider in Southeast Asia, like there was in China with Alipay and WeChat Pay. So they are somewhat similar, but definitely a bit different. And then we get Gojek, which is a different model for local services. And that brings us to Gojek, which we’ll talk about briefly. For those of you who don’t know, Gojek is cool. It has a really cool name. It’s founded by a man named Nadim Makarim. I’m bad at Thai names. I’m bad at Indonesian names. I’m sorry about that. Who ironically was a classmate of Anthony Tan at Harvard Business School and says like, he has, I think, basically said, look, Grab Taxi was one of his inspirations for launching ride sharing. in Indonesia where he’s from, but instead of doing cars, it’s all about, you know, like grab bike, which is basically get on the back of somebody with a motorcycle or a scooter as a way of getting across town, which if you’ve ever been to Jakarta, I mean, forget getting across town in a car. I mean, you have to be on the back of a motorcycle or a scooter to get across town because the traffic is so bad. So it made a lot of sense for Indonesia. Again, this idea of services. being local and local specific. And the Didi model of we’re not gonna stamp out what we’ve done in China in other geographies like Indonesia or Thailand. We’re gonna look for the local champion who’s figured out a local version of this and invest in partner. Well, Indonesia Gojek was a local version of ride sharing that made a ton more sense in that country than I think what was done in Malaysia by Grab and I think was done in China by Didi. Services, local, local, local. Now this sort of bubbled out of a company I think he was involved in in Indonesia starting in 2009, which was a call center, where if you couldn’t get across town, you would call up a call center and they would connect you with a courier or ride hailing to get you across town. So they were already kind of in the space from what I can tell. But then when this stuff took off, they pivoted over and they went over to a mobile app in 2015, couple years after Grab. And they did something that was very different. And this is the key point for Gojek, is they didn’t stay in mobility services. They became like what people call a super app for Indonesia, where they moved into lots and lots of services in Indonesia that solved various pain points of things that just didn’t work very well in that country. So getting across town would be one, that’s go ride. If you want to get a package across town, a cell phone across town, a document across town, also very difficult. So they started GoSend, where you could just ship things across town. Go Shop, where you could buy things from a local market and have them delivered to you, like 7-Eleven, supermarkets, things like that. GoFood would be the supermarket version. But basically they launched over the past several years, probably about 30 local services. all within Indonesia, mostly, and then answering lots of pain points of life in Indonesia. I’m sorry, I said 30, it’s 20 services the last time I counted. And within that, they have leveraged a massive fleet of motorcycle drivers that they have in Indonesia to do transportation for one, but also to do food delivery, to do package delivery. And they’ve sort of, that’s been their… Their fortress is the super app of Indonesia in lots and lots of services that are very local specific. Now that’s a different model than say what Grab did by focusing mostly on transportation and then going wide geographically. Indonesia’s Gojek stayed more focused on Indonesia, a big suite of services. Now they have expended outside this to Singapore, Thailand, the Philippines, but I think they’re still overwhelmingly sort of the super app. the national super app for Indonesia. And then they’ve taken in investors like Tencent, JD and Meituan, which brings me back to sort of China because if Grab looks mostly like Didi, Gojek looks mostly like Meituan. And I’m gonna put up two links to past podcasts that I think are worth listening to again, if you haven’t. One of them was podcast, let me pull it up here. Podcast 22 and I’ll put the link in the show notes which I called C trip versus Maytuan versus Alibaba Who’s gonna win in the death match in China? That is very similar to today’s topic of this local service fight Between three different business models in this case say C trip Maytuan and Alibaba in China That’s kind of what we’re seeing here in Southeast Asia’s two different business three different business models for services all fighting for the same space, but the approach is different. In this case, it’s Grab versus Gojek versus Lazada. In that one, it was C-Trip versus Meituan versus Alibaba. Gojek looks a lot like Meituan. And then I did another one which was called how should Meituan compete with Alibaba going forward? What’s next for services marketplaces in China? That was podcast 27. I’ll put that in the show notes. Similar topic to what we’re talking about today. Okay. So we have two business models I’ve put out there. Now there’s a third, well not a third. I’ll get to that in a minute, but Grab is increasingly fighting with Gojek because they’re going into that space. Grab is entering Indonesia. So we’re seeing these things go head to head. A couple other of Gojek’s services, I sort of pulled the list. GoPay, which is an e-wallet service for Indonesia. Number four, I think, in terms of usage, GoRide, which is a motorcycle taxi service in Indonesia. As of 2018, GoJack had more than a million drivers. GoCar, which is ride hailing in cars. GoBlueberg, which is a partnership with Bluebird Taxi. So that’s taxi hailing. GoFood, food delivery service. 250,000 merchants in Indonesia. GoMart, which helps you shop at supermarkets that list on the GoJack app. GoSend, which is an on-demand courier service. GoBox, which is also courier, but for boxes instead of packages, smaller stuff. GoTix, which is an app for buying tickets for movies, I assume shows, other things. GoMed, an app based for medicine delivery. GoMassage, which enables customers to request a personal masseuse. GoClean, get you a house cleaning professional, come to your house. GoGlam, an app based on personal hair styling, nail care, waxing, facial services, come and meet you in your house or a cafe or wherever you want. GoAuto, which is an app based for auto care, for maintenance, car washing, emergency repair. What else? GoBills, pay your bills, go points. GoPlay, which is interesting, which is an online content business and a video streaming service. So you can see they’ve really moved dramatically beyond what we were talking about with Grab and Didi. So that’s a second business model. The closest that it looks to me is like Meituan, which it is clearly services across the board. So that’s kind of an intro to those companies. And now I’m gonna bring you to the case question, which is if you’re leaning back, resting, kicking back, wake up, because it’s your turn to participate. Okay, the question for today. and for those of you who are new. This class is 10 times more valuable if you try it yourself as opposed to listen to me. So here’s the question, it’s an important question. It’s something that is a very common question an executive would get working for a services company, working for a digital company, working for a beauty company, an auto dealer, a shopping mall. This is the kind of question you might get as a CEO or an advisor to that company, which is, okay, then here’s my question. Who is gonna win in digital local services in Southeast Asia? Grab versus Gojek versus Lazada, which we haven’t talked about yet. And I’m gonna, how do you take that question apart? Because there’s a lot going on here. Well, I’m gonna give you five choices. Everybody choose your top one. If you really wanna choose your top two, that’s not unreasonable. And vote. Write it down, take a moment, pause the podcast, make a call, and then I’ll go into some theory for how to think about these questions, and then we’ll vote again at the end, and then I’ll give you my take. Okay, so within Southeast Asia, who’s going to win? What is the most important factor? Because you have to have a framework to take this apart. So I’m going to give you five factors to think about. Factor number one. consumer share of mind, which is sort of the Warren Buffett term. Look, consumers are just going to engage in services in certain ways, and whatever offers that the best is going to win. Is consumer engagement going to be based on having the ultimate mobility app? I click one button on my phone to get across town, and that’s what matters most. Is that what consumers are going to go for? Or- is there going to be one app on my phone for any type of service I may want within Southeast Asia. getting my hair done, nails, getting food delivered, getting something shipped to my house, getting a package sent, that’s more like the Go-Jek model. Or is it gonna be geographic? Look, I only really need a super app and services for my country. I don’t need that in the Philippines because I don’t live in the Philippines. So it’s geographic versus suite of service. Within that factor, the consumer engagement, is that the most important factor? And based on that, which of these companies is best positioned? Grab, Go-Jak, we’ll talk about Lazada in a minute. Number two factor to think about, okay, a lot of these are platform business models, so you have to think about multiple user groups. The other user group is the merchant on the other side, which could be the local restaurant shipping, it could be the local haircare place, it could be the drivers for the taxis and the motorbikes. Who is stronger there? And is that the factors matter? Is this a business where you have to be 50% strong on the merchant side in 50% strong on the consumer side, or is it mostly one side? Look, you just gotta get the consumers and then the merchants will come. How important is that factor? Factor number three, platform advantages. As I’ve kind of said many times, a three-sided platform beats a two-sided platform. A four-sided platform beats a three-sided platform. A platform business model beats a regular business with just customers. Is… the platform business that is the most robust with the most user groups, with the most participation, with the most data, which is like MateOne. Ultimately does that win because they can just keep adding services because they have the activity on the platform and that’s what platforms are run on is data, participation and users. And then you can do subsidized pricing and other games like that. That’s factor number three. Factor number four, network effects. Look, it’s all about getting a network effect. If you get that, that’s what’s most important. And I’ve put this list of five things in the show notes in the webpage if you’re watching this on my website. Or number five, look, it’s about execution and capital. Sometimes it’s not about strategy, especially in the early years of something new emerging. Sometimes it’s just about who runs faster, who’s better, and who’s throwing the most money at the problem, which is arguably dee-dee and grab. Gojek has not raised nearly as much money as Grab has. Look, maybe it’s not about strategy this year. Maybe it’s just about run, run, run, run, run. Those are your five factors. Consumer engagement, participation, share of consumer mind, number two. Merchant engagement, number three. Platform business model, subsidies, advantages, number four, network effects, number five, execution and money. So pick your top one or two. based on who’s gonna win in services in Southeast Asia. Pause the thing, make the call, put yourself in the moment. I’m advising the CEO, he or she gave me three minutes to answer this question. I’ve gotta pitch them how to think about this problem and therefore what matters. Okay, pause the thing, make the call. It’s better if you write it down. Write it in your iPhone, write it in your Android phone, in the notes section, pull out a piece of paper, write it. mentally put yourself in the moment and make the call. Okay, pause and please come back. And welcome back. So how did you do? All right, let’s put in one more company in this mix here, which is Lazada. Now, I’ve given you two sort of models for thinking about services. You have these sort of more pure players like Didi, Grab mostly still, that are focused on transportation. And you could argue Ctrip, which I’ve talked about before, is also sort of a pure player. They do hospitality. hotels, flights, Expedia, booking, Agoda, things like that. So we get these pure players in services, almost which I’d call like services 1.0. And then we get these sort of broad suite of service players like the Amazon of services, which is what people used to call Meituan. That they offer low frequency services like booking a hotel, but also high frequency like food delivery, food reservation, hotel reservation. And that looks a lot like, you know, Meituan. that looks a lot like Gojek as well. So we have sort of two different approaches to services, which is interesting, but there’s a third model, which is the Lazada model, the Alibaba model, because Alibaba is going for everything. They are very open about the fact that they see themselves as sort of the ultimate B2C marketplace, the ultimate place consumers go, and the pillars of that, are, which is CEO Daniel Jang talks about this frequently, which is, okay, e-commerce, which is buying products and service, buying products. Entertainment, which is really digital content, streaming, music, videos, things like that, and local services. They are offering all three. So they have Olima, which is like Meituan, but they also have products, and then they have digital content, and they’re bringing all three of these together into one service offering. That’s what a lot of new retail is. You can go to the supermarket, buy your goods, they’ll cook your goods, they’ll deliver your goods. And their argument is like, from the consumer’s perspective, it’s all gonna be one thing. And so they’re going for all three. So when you look at a company like Lazada, which is a major player in Southeast Asia in e-commerce, it is reasonable to assume that they are gonna move in that direction eventually. Right now, they’re mostly doing e-commerce because things are still developing in the e-commerce. world. A lot of warehouses being built out, a lot of logistics, a lot of the basic more e-commerce infrastructure still being deployed. But they are already integrating entertainment into that, which is why they have these shopping festivals now in places like Thailand to celebrate Singles Day, which is a made up Chinese holiday that didn’t exist prior to like 1995, but now people in Thailand are celebrating. So you can see they’re combining the entertainment and the digital goods aspect with e-commerce. And I think services will be next. That is their playbook in China, and they are going for all of Asia. So that could be a third business model here to consider within the service of space. And that brings us to the theory part of today’s class, because I’ve given you some company information. Now let’s talk about some theory. How do you take apart these five options? I’ve given you five factors. The first one was consumer engagement, consumer users, consumer share of mind. Okay. We could talk about a lot of stuff in there. What do people like? What makes them happy? Do they buy car rides differently than they buy dinner? Of course, there’s a lot in there. Within there, the one factor we’ve talked about before is bundling. Bundling is a big idea in the digital world. Bundling used to be not terribly thrilling in the fact that you go to the drug store and you have shampoo and then you have conditioner and then you have one thing that’s. a little bottle of shampoo and conditioner wrapped together in a plastic wrap and you buy that as a bundle. Okay, people have bundled physical products for a long time. And cable packages are a type of bundling. You know, you buy 300 TV shows. But as it went digital entertainment, information services, products, things like that, bundling became more powerful. Netflix is a huge bundle. You can buy Norton antivirus for your laptop and they will try and bundle that with another service. Would you also like identity theft protection? If you buy them together, it’s a lower price. Bundling the economics of that are very, very powerful. That is one of the key concepts we have in our class. And for those of you working through the various levels of that, that’s one of them. Got to understand bundling. Okay. What Matewan can do is they can start to bundle various services. Would you like, you know, if they’re going to sell you a movie ticket, hey you’re going to the movies tonight, buy your ticket here, which Gojek does and Meituan does, but Grab does not. Would you like dinner as well at the restaurant down the street? They can bundle that. If you buy your ticket and the restaurant reservation together, here’s the joint price, which is usually better for consumers and it’s better for merchants. Okay, you can start to bundle services. Would you like to buy a plane ticket and a hotel at the same time, which every time you go into booking.com or go to Expedia, they will always push that. Every time you log in, they’ll try and get you to buy the bundle. Would you like to buy a local tour guide as well? You can start to bundle services within tourism. And that’s really what DD has been doing in China. They’re bundling. the car ride plus the taxi ride plus the metro ticket as one service to get across town. That’s a bundle, okay. How much does that matter within a service like transportation versus how much does that matter across multi-services like Go-Jek, which is different. And then what Alibaba is starting to do this year with their department stores and things is they’re starting to bundle entertainment products and services together. Here’s a new makeup package from L’Oreal that just came onto the market. You know, would you like to buy this today? And we’ll have someone come to your house and apply the makeup. They’ll bundle the service and the product. Well, you can see like they could do that and Gojek and Grab could not. Similarly, Grab could bundle makeup, I don’t know, a restaurant and a movie ticket in a way that Grab could not. So you can see like the more you can have services in a suite and then services and products, you can start to bundle in lots of ways. So I think that’s kind of the key concept I want you to take away from today. There’s three key concepts I want you to remember for today. First one is bundling. Bundling of services within a given sort of traditional industry way of thinking like transportation, hospitality. Bundling of services across multiple industries that we didn’t put together before. like buying a movie ticket and buying restaurant. And then bundling of products and services together, which is what Alibaba is doing right now, which means it’ll probably come to Southeast Asia in a couple years via probably Lazada. And maybe Shopee, we’ll see what they do. So that’s concept for number one for today’s bundling. And that’s one of our concepts in the past. Okay, number two concept for today, there’s gonna be three. Marketplace platforms, marketplace platforms. A plan that was, you know, number three on our list here. That’s, you know, it’s a big deal. When you start to create multiple user groups, all interacting on one platform, lots of interactions start to happen that we didn’t anticipate. You know, you start selling a service to a consumer. So that’s a marketplace platform like drivers to riders. Okay, fine. But then we start to get other merchants like local restaurants, because they… deliver food. Okay, now we have delivery doing food, but then we can do restaurant reservations. That’s a different service. Then we can start to do restaurant reservations in a hotel in a city that I’m traveling to. Well, then it’s hotels plus restaurant reservations or restaurant delivery to your room. That’s different as well. Then we can start to keep adding different user groups from consumers to drivers. from people who do delivery, from people who deliver packages, from people who do services as independent sort of gig economy people like makeup artists, haircare people, things like that. We can start to open up to more and more user groups and all these lots of interactions that we didn’t see coming start to appear. In China, if I’m going out in a car that I’m driving to a restaurant and I have some drinks, I don’t wanna drive my car home. because there is zero tolerance for any type of alcohol in China if you’re driving, zero, nothing. It’s not like 0.8 or something, it’s zero. So what do you do? You open up an app. The app lets me call a person to come over on a scooter. The person rides up on a scooter, puts their scooter in my trunk and drives me home in my own car. That’s a service you can get in China. Nobody saw that coming. There’s lots of little services popping up all over the place. once you have these platforms. That was this idea of local services you can start to mobilize grandmas who live in their apartment in downtown, I don’t know where, Shenzhen. And they live there forever and they’re really good at cooking. Because if you don’t know this, like grandmas in China are unbelievable cooks. And they start to cook in their kitchen and they start to offer it online through a multi-service platform like a Meituan. And then suddenly everyone nearby can buy the cookies they just made or the spicy soup they just made from their whole town, their hometown of Sichuan or their village. So we see these pop up kitchens and local people cooking, either as people who live in their homes or little small independent businesses, as a new type of user group on the multi-service platform. Nobody saw that coming. And apparently this is what Travis Kalanick, whoever you say his name, that’s what he’s working on. now that he’s not in Uber anymore. So there’s lots of this. So this is idea of, you know, these platform business models may just become so robust in services that that’s powerful in its own way. And these narrow niche players, like we just do hospitality, hotels. That whole industry distinction may be an artifact of the old world, and it may not make sense anymore. So think about platform business models. which I’ve talked a lot about, how to think about users, frequency, data, the agency versus the merchant model, the fragmentation versus consolidation, differentiation versus commodity service. I’ve gone through all this before. For those of you going through the steps, look into that, it’s a big idea. And there’s been an explosion on the local services side in large part because of the things I mentioned that are somewhat unique to Asia. Lots of low cost labor, lots of people living in very dense cities. Everyone is now digitally connected. A lot going on there. That may well be the future. So that’s factor number two, concept number two for today. Concept number three, which is the last one because I’ve been we’re running out of time here, is network effects. When in doubt, look at network effects. Network effects are very powerful. Ride hailing. which people got very excited about, was very exciting because people perceived it to be a network effect. The more drivers I offer in the city of Bangkok to take me around town, the more consumers, the more valuable the service will be to consumers. It improves. The more people that, you know, the more chicken restaurants that go, that open up on my street, it doesn’t make the chicken taste better. But the more drivers that are available on my street, the more valuable the service is to me, it gets better. And this is a two-sided network effect, an indirect network effect that vice versa, the more consumers that use this service on a street, the more valuable it is to drivers. There’s less wait time, they spend more efficient thing. In theory, they can get higher prices, especially during surge pricing during rainy days. So the more consumers on the platform, the better for the drivers. The more drivers on the platform, better for the consumers. Network effect. And that was what Uber was based on. And then it turns out, okay, that’s not really totally true. Turns out not all network effects are the same. They come in different varieties, just like everything in life. And it turns out ride sharing is overwhelmingly a local network effect. more drivers in the Philippines does not help me in Bangkok. It doesn’t. It’s kinda nice so I can go there and I can hop on a ride if I fly into town. Fine. It’s not totally powerful because that’s a very infrequent service and frequency matters. So it turns out it’s more local than people thought. Unlike say hotels, hotel reservations is a… a regional or global network effect. If I’m going to vacation around Southeast Asia and Asia, which I do all the time for work, having an entire inventory of hotels in Bali, Japan, China, that’s very valuable to me. The more of that regional or international inventory of hotels makes it more valuable, network effect. And similarly, if you’re a local hotel in Bali, the more consumers from all around Asia that are on the platform, the more valuable it is to you. So ride sharing is a local network effect. Hotel reservations are regional or international, and that’s much more powerful. It’s sort of one way people talk about this is a linear increase in the network value versus an asymptotic one where it flatlines. Another fact, however, another factor, is it a differentiated or commodity service? It turns out ride sharing is a commodity service. I don’t really care about much other than price and how long do I have to wait. But when I go rent a hotel in Bali. I care about a lot of things. It’s a very differentiated services. Is it on the beach? Is it in the part of town I wanna be in? Are we traveling with a family where we need five people so we need a big space? There’s a lot of factors. So hotels actually have a very compelling network effect. Local ride sharing is not. It’s kind of competitive and local. I’m sorry, commodity and local. So that’s one thing to think about with these services. But restaurant delivery, well, restaurant delivery is local, but it’s very differentiated. Today I want sushi, tomorrow I want Thai food. I want a highly rated restaurant versus whatever. So when you look at a company like Grab, what jumps out at me is the network effect for their food delivery is a lot more compelling than the one for transportation. Even though it’s local, it’s differentiated. The transportation one is kind of local and commodity. But then when I look at Metuan and Gojek, I see a lot more compelling network effects in things like hotels. Metuan is one of the large hotel reservation services. So it’s a differentiated and international or regional network effect. So these network effects vary service by service. And when you look at these platforms, it’s like, Of all of these services, what service really is the most compelling in terms of network effect? And what jumps out at me is restaurants. I love restaurant reservations and I love restaurant food delivery. I think anytime you can integrate into local restaurants, that’s great. I think hotels are compelling. Hotel reservations are compelling. I don’t like flight reservations very much. I don’t like train reservations very much. I don’t like ride sharing that much. But depends where you are. Ride sharing in suburban California is not compelling. Ride sharing in downtown Jakarta, motorbikes is very compelling because it’s impossible to get around that town otherwise. So you have to kind of take all these things apart. Like what network effect in all of this? Look, if I can only have one service, what’s the one I want? I want the one with the network effect. Which one is that? So that’s fun to think about. So those are three concepts that are in your sort of learning plan for this course, bundling, marketplace platforms for services, which are different than for products, and network effects. Those are three ideas to think about in all of this. And I’ll keep hitting on these for those of you that are new. Some of this may be new for you and I may have skimmed over it too fast. Don’t worry. As you go through the process, I will send you more and more articles to read about this and you will find out that these factors, these concepts, these tools, I mean they’re kind of like, I don’t know, it’s like if you look at nature and you look at the ecosystems and the savanna and the jungle, we could say things like, look, you know what’s really important on the savanna is claws. Claws are really important. And cheetahs have claws. and lions have claws and birds have claws and claws are important. That’s like network effects, claws. Okay, but that’s kind of general. You have to look at each individual animal and you say what, you know why the reason lions are good? It’s not because they have claws, which is one factor. It’s because they have a combination of factors and tools. They have claws, they have strong jaws, they hunt in packs. There’s three or four major factors that let them be very successful within certain situations like hunting gazelle when they go to drink at the lake. It’s the tools plus the combination of tools against a specific scenario. Claws for birds are totally different. Hawks use claws to dive down and grab smaller birds at certain situations. So they have a combination of tools like claws plus wings. plus a couple other things that let them be dominant in another scenario like swooping down on other birds. So when I talk about network effects, marketplace platforms, bundling, these are all factors, and I’m giving you about 30 or 40 of these over the course of the class, it’s you have to put them together and one, they can all be different. The claws of a lion and a tiger are very different than the claws of, I don’t know, a pigeon or a hawk or something, right? So one, All these factors can be very, very different depending what you’re talking about. And it’s the combination of factors against a certain scenario that lets a company thrive. So I’m pointing this out and I’m asking you to make the call. And let’s bring this around to the end because I’ve been talking at you more than enough for today. I’m about in an hour. So let’s come back to our main question. You have been called into the CEO of a local restaurant chain, a local… supermarket chain, a major, I don’t know, hair design or makeup company or something like that. L’Oreal, L’Oreal China, L’Oreal Southeast Asia, who are very on top of this stuff, by the way. I’ve heard them give presentations about services and products and bundling and customization and all that. They’re totally on top of this stuff in Asia. They really rock in China. That’s a stupid expression for makeup. They do quite well in China. Okay, the question you are asked pulled into the office I hear you’re smart at this you you know, you’re the digital guru you have the certificate from Jeff’s Asia Tech class that says you’re an advanced digital strategist based on this and those certificates are coming. They’re on the way I’ll name them something better than Jeff’s Asia Tech class because that sounds stupid Okay The question is look who’s gonna win in services in Southeast Asia’s? three to five years from now, which is when these strategic factors play out. Grab Gojek versus a Lazada type model, an Alibaba type model. Who’s gonna win? You’re gonna have to come up with an answer, a three to five minute answer. Most CEOs give you three to five minutes that explain, here’s what I think’s gonna happen three to five years. This is what you need to think about. You can’t think about everything. Here’s who I think’s gonna win based on these factors. I think network effects that generate a ton of cash are gonna be defining factor. So we want a company that is really strong in this service. If they get the service, they’ll win everywhere else. If they win everywhere else and they don’t have this service, it’s not gonna happen. It’s mostly about network effects. Or factor number one, it’s mostly about the consumer engagement and captivating consumers and being the place they go to three times a day. It’s the consumer offering that matters most. If you have the engagement and the participation, you can build everything else. That’s a Maytuan model or an Alibaba model. No, it’s about locking up the best merchants on the backside. It’s about having a million drivers other people don’t have, because it turns out getting a million delivery people in every city is actually quite difficult. And the company that has that, the other companies have a hard time replicating that. Maybe it’s that. Maybe it’s all about just having the compelling platform that is very robust with a lot of interactions happening and growing in lots of dimensions we didn’t see. And you start to look like Alibaba over time where you’re just this digital conglomerate. Or look, you know what? It’s just a free for all. And the players that have been doing well are just growing the fastest and hauling and throwing tons of capital at it, which has been grabbing DD really. Okay, you’re gonna have to give an answer. Who’s gonna win in Southeast Asia services? And the five factors I gave you, and we’re gonna vote again, are the same five. Number one, it is about the consumer engagement, share of mind, participation, where the app everyone goes to, where the super app. Factor two, it’s about the merchant, controlling the merchants, getting them on the platform, because these platforms have two sides to them, three sides, four sides. So maybe it’s all about getting the restaurants, it’s all about getting the drivers, it’s all about that. Which… Honestly, DD is focusing a lot on the driver and car ownership people as user groups. Number three, it’s about the platform, the business model. It’s about building all those advantages, doing price subsidies across the platform so you can offer certain services for free because you’re making money over here. Number four, forget all that, it’s about network effects. You gotta have the service with the biggest, most powerful network effects. If you get that, you’ll win everywhere else. Number five, it’s all about which team is better. Who can execute faster? And that’s a lot about throwing money at the problem right now. Those are your five factors. Within that, think about the three concepts, bundling, marketplace platforms, network effects. Okay, make the call. If you’re on a treadmill, well, you could probably keep running and thinking. If you’re laying on the sofa, sit up. If you’re walking around town, that’s awesome. That’s how I do my thinking, is I listen to podcasts and I walk and I think and I scribble notes on my phone. I do that a lot. You’ll see me sometimes, depending on what city, walking around like 2 a.m., mumbling to myself. I do that a lot, actually. All right, pause, really think about it, see where you end up, pick your number one or number top two, pause. And we’re back. So how did you do? You know, it’s a complicated question. There’s a lot of factors going on here. Things are moving fast. And the whole region is still developing quite quickly in this area. So yeah, it’s great. And I’m giving you sort of the digital giant versus digital giant question, which most of you and most people don’t work at these companies. This is actually… a more interesting question when we look at it, this from the merchant or the supplier side. Like if you were a shopping mall, what would you do? If you are a major restaurant chain, what would you do? And I will probably focus a lot more of the class on those types of questions, because most people don’t work for these companies. So it’s not a matter of we’re grab, how do we fight against Go-Jak? You know, it’s how is this impacting the traditional industries within these regions? And that’s, you know, I had… a student in one of my classes, an executive, and we were talking about this stuff in the class, and he asked about auto dealerships, because I think he’s an executive in an auto dealership in Southeast Asia. What does this mean in terms of selling cars, all these e-commerce platforms and ride sharing, and how do we respond to that? And that’s a great question. I mean, and it’s kind of the goal of this class is… for you to become within whatever company you’re working in, the go-to digital person that the CEO looks to, like, look, we’ve run this auto dealership for 20 years. You know, most of the senior management is very good at buying cars and opening shops and doing after service and stuff. We don’t know how to think about any of this. You know, let’s call, you know, I hear there’s someone in the office who really understands this stuff. Let’s call them down and. sit down with the senior management, talk about what to do and just how to think about it. That’s who I want you to be. That’s what I’m trying to do here is to sort of train, if I could be so bold, a generation of digital strategy experts across the world, particularly in Asia, but everywhere, that just become like the digital masters that everyone’s like, oh man, that guy knows everything about this subject. Call him, call him, or call her. So that’s my little hope with all of this. All right, let me tell you my take on this. My take on this is like, you gotta think three to five years out with this stuff. A lot of times what happens with these questions is I overwhelmingly talk to you about strategic factors. And this is a strategy class. So I talk about forces and factors like network effects and platforms and all this. Those things tend to play out over the longer term, but not necessarily in the short term. The markets can be quite crazy and businesses can be quite crazy in the short term. But these are the longer term forces that give you some predictability sometimes. If I see a company that’s got really dominant competitive advantages being built and the others don’t, I’m pretty comfortable saying, look, market share may swing in the next year or two, but I think in a couple of years, this is how it’s gonna play out. All right, when I look at this, the big factors that jump out at me is… Capturing the consumer capturing their engagement being the place that they go to every day five times a day That’s what Warren Buffett would call share of a consumer mind I’ve talked about this in competitive advantages that this is sort of the demand side revenue advantage that matters Coca-Cola has this Starbucks has this it doesn’t have to be digital. I want to be that against that I Think the mate one go-jek model is more powerful I don’t think just narrowing yourself to transportation services is gonna work. I would wanna be the full suite of services. You know, you don’t have 10 cable packages for your home. You have one that offers you 300 channels. When you go to the supermarket, it’s everything that you could buy. Walmart, which is a big winner, offers everything. I think that’s more of the model than… Hey, we just offer mobility services, or hey, we just offer tourism, hotels, and flights. I think it’s closer, I think the future of services is much closer to Maytuan and Gojek. That if you live in Indonesia, this is the app that you use for everything on the services side of life. Getting a ride, sending a package, getting dinner, topping up your phone, paying your phone bill, whatever, getting my hair done. I don’t get my hair done, but a lot of people do. I think… That’s the future. I would not wanna be a niche player on just one band of services like that. So, my take would be like Gojek and Maetuan are I think headed to where the future is and either Grab needs to dramatically expand their suite of services as soon as possible. Now, you could take that for, so that’s sort of point number one. I like that. I don’t see how Grab is gonna compete with Gojek in Indonesia. I don’t see how they’re gonna make much headway there. They’ll make some. None of this is winner take all. It’s not gonna be one. Even in China and the more developed aspects of the services marketplaces, we see two or three players. We see Meituan, we see Lama, we see Ant Financial going into services. It’s gonna be two or three players. But one of them’s gonna be bigger. And I think I don’t see how Gojek is gonna be beaten services in Indonesia right now. And I don’t see how Meituan and Ulema are gonna be beat in services in China. And that’s sort of like number one, if I was talking to Graba about like, you need to go in services right now. Even if they’re small and niche services, you need to offer those. That’s sort of my first take. So that’s kind of factor number one that I think the consumer engagement share of mind requires that. Now within that, some of those services are gonna have powerful network effects and a lot of them aren’t. So I’d make sure I was capturing those, which I think is food delivery more than the others. I don’t think number two, merchant services is terribly powerful. I think they’re switching costs that make sense to do there, which Didi is doing. They’re locking in their best drivers, which Meituan is doing. They’re providing operating software for restaurants. So they’re sort of locking in themselves to the restaurants. I think that’s good. But I think it’s sort of number one and number three. Consumer engagement by having the most robust platform for services, that’s one in three on the list I gave you. That’s where I fall. Now, second to that, the other thing I’d be looking for was the Alibaba model. Is this gonna go to be like what we’re seeing happen in China? And this is just happening in China right now, 2019, 2020. Are we gonna see a more complete suite of products plus services plus entertainment, which is the Alibaba Playbook, the ultimate B2C marketplace? Are we gonna see that emerge in Southeast Asia? Maybe, maybe. I don’t think one company’s gonna do it like Alibaba did. I think it’s gonna be, you know, Shopee and Lazada will fight to be the ultimate e-commerce site for products. And that has a lot to do with building out warehouses and logistics and on-demand delivery and payment and credit. And it’s a different playbook as a company than Gojek and Grab trying to be the ultimate service platform. And that’s a lot about compiling a full suite of services, offering payment, integrating into the local service provider, whether it’s restaurants, drivers. hair salons, whatever. I think those are different playbooks. Both companies are doing that differently. But if I were to read in the news one day, Shopee is doing a joint venture with Gojek. That would absolutely get my attention as whole. That’s important. That could be a big, big deal. Because suddenly a tie-up, Shopee is, which is under C Limited and Garena, they do online gaming, but they are invested in by 10 cents. Okay, Meituan in China is a major investor and strategic partner of Tencent. And Meituan and Tencent are both investors in Gojek. So what if Gojek and Shopee partner together and start to offer bundles of products and services together? That would be really interesting and it would get my attention. So I think that’s really interesting. Now what would Grab do in that scenario? Well, then does it become Lazada and Grab? What if Lazada and Grab partner up? I don’t know if they maybe have done that a little bit. It’s hard to track everyone who’s invested in everyone. So I would be looking for some sort of cross investment or partnership between the winners in services and the winners in products and see if we get something like the Alibaba model emerging in Southeast Asia. I think that would be huge. So those are the two factors I’m thinking about, but there’s lots of others. You can come at this 10 different ways, lots of things going on, lots of development. A lot of it is just the fact that look, e-commerce in Indonesia is moving quickly, largely because Gojek is doing what they’re doing. They are developing the infrastructure for that country in the same way that Grab has done a lot of that in, you know, Malaysia, Singapore, Thailand, places like that, Philippines. and in the same way Shapi and Lazard are doing. So a lot of this is just building out the infrastructure. And once that infrastructure is in place, like it is in China, I think you will see a whole lot of changes happen on top because the main pieces are there. Then who knows what will emerge on top of that? We’ll see. It’s gonna be great fun to watch. Okay, that’s it for today. Kind of a lot of theory. I hope that was helpful. Main takeaways from today, I repeat myself a lot, as you know. You know, think about the three concepts we talked about, bundling, marketplace platforms for services, which can be very different than marketplace platforms for other things, and network effects. Those are kind of your key concepts today. Those are already under certain learning goals. So those of you moving up the pathway, you’ve seen those in other learning goals. The whole idea of how platforms compete in services I talked about in… Podcast 22, Podcast 27, and they go under Learning Goals 16, which was the basics of C-Trip, Meituan, and services marketplaces. So if you want a little more about that, and I’ll put all the links in the show notes so you can go build off that to get your expertise. But as always, I will keep repeating myself over and over. We’ll look at different scenarios, different companies, and we’ll keep hitting the main big ideas over and over. And there’s lots of subtleties in here. So anyways, there we go. But that’s it for me for today. I hope everyone is doing well. Hopefully everyone’s coming out of the crazy world we’re living in right now and life is getting back to normal. For all the new subscribers, welcome. It’s great to have you. If there’s ever an issue, don’t hesitate to reach out to me. If there’s a problem with some tech issues, we’ve had a couple tech issues specifically about Alipay. If you ever have an issue, don’t hesitate just to Gmail me. Yeah, it would be great to hear from you. So thank you so much and I will talk to you next week.
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