News finally broke – Gojek confirmed it’s overseas expansion ambitions, and is willing to spend US$500 million to fund its machine. As we have been talking about the potential entry of a competitor (to challenge Grab) in The Low Down, this news did not come as a surprise.
While Grab may be scrambling their forces right now, there are a few observations we’d like to highlight:
1) Grab’s position is not really defendable, and the two giants will finally collide, as it did with Meituan and Didi in China.
2) In terms of product, execution experience, war chest – Go-Jek is definitely best positioned to execute its expansion plans.
3) Gojek has been hiring aggressively recently – some people from Uber forfeited the Grab compensation to join Go-Jek
4) However, at the end of the day, the company needs to be successful beyond ride-hailing to be sustainable (think Gopay – where it is already hugely successful in Indonesia), otherwise you slay the dragon and you become the new dragon (as you raise prices and commission), a new dragonslayer emerges.
5) Grab has been very slow in adopting change for their business, and growth of its other businesses (fintech, food delivery, messenger services) have been slow; but Go-Jek is much faster.
6) Grab investors will still try to bully Go-Jek through its investors.
There’s no telling how far this “clash of titans” will go and how aggressive Gojek will be. As consumers however, we could probably expect cheaper rides and vouchers as soon as these two giants come head to head. For drivers, it’s probably great news too – especially when Grab is being increasingly accused of dropping incentives.