What does departure of Go-Jek’s Vietnam CEO mean?

In our 2019 Southeast Asia predictions, we believed that Go-Jek’s regional expansion would be slow and bumpy.

Just a few days ago, authorities in the Philippines rejected its appeal to launch ride-hailing operations in the country, two months after rejecting the application. Go-Jek is trying a go-around by acquiring Coins.ph, a fintech company that owns a licence, and some users. However without the ability to run a use case, it is hard to see how payment standalone can be very useful.

In Singapore, a much expected price war between Go-Jek (which is still called GoJek) and incumbent Grab ended much earlier than people thought, sparking speculations of cash issues amid major fundraising exercise of both.

Go-Viet’s shake-up

This week, it emerged that Go-Jek’s Vietnamese subsidiary, Go-Viet, had lost its two top leaders: CEO Duc Nguyen and Chief Growth Officer Linh Bao. Another Mr Duc, COO Duc Phung, seems to be the spokesperson now, at least in the interim.

DealstreetAsia, run by our old friend Joji Philip, first reported the story. The sources were saying that the departing leaders were also demanding a significant sum of compensation, amounting to US$800,000 from the company.

The company has thus denied it, saying the executives are not leaving the company, but transiting into a more advisory role. Well, a delicate save while the fundraising is still ongoing.

Tough market

Some of our colleagues at Momentum Works participated in the early days of Vietnam’s ride-hailing market, and know how hard it is to crack it from outside. Licenced (and pretty clean) taxis are omni-present (and often run by big taxi groups), while motorbike taxis are not that hard to find either.

But so is Indonesia – it was not that hard to find an Ojek before Go-Jek and later on Grab (price transparency and safety were separate issues), while Blue Bird taxis were already everywhere.

So if Indonesia can be cracked, why not Vietnam? And also, the business model ultimately rests on leveraging the network of drivers and the transport use case to build food delivery, payment and many other things: the Super App.

Therefore, Go-Viet was fully launched in September last year, after months of preparations. At the press conference, Duc said that the results from test runs were very positive, and the company were quite optimistic about the future.

This was only half a year ago.

Local, rather than localised

When Go-Jek launched its operations in Vietnam (Go-Viet) and Thailand (where it is called Get), it expressed that it would give the local team sufficient autonomy to grow the local business as their own.

“We guide heavily upfront, but the hope is that over time they will be able to actually craft a unique market-led strategy both in terms of selecting which products to launch, the sequence of how to launch, and how they want to do it,” the Founder, Nadiem Makarim, said then.

CEO Duc, an Uber veteran, also said that Go-Viet was a Vietnamese startup with funding and technology support from Go-Jek.

Besides, the choice for Go-Jek’s local leadership made a lot of sense. Most of them (including Duc and Linh who have just left) are native Vietnamese rather than Viet Kieu (ethnic Vietnamese who grew up in the West).

This is actually important for a business that has a heavy offline element – local Vietnamese are usually more adept at navigating through complex local web of regulations and interest groups.

We also blogged (in Chinese) that if Go-Jek really pursued this path, it could become an interesting possibility for companies which already have a big home base to expand. This would be very interesting approach if it works.

Soon, Go-Viet claimed to achieve 35% market share in Ho Chi Minh city, its port of entry.

Tough reality

Many of our ex-Rocket friends, who are now scattered across different tech companies and investors in Vietnam, disagree with that market share claim.

“While I use it quite a bit because it is cheap, its market penetration is certainly not great” one friend, who heads marketing now at a local tech company, told us. “You just need to go to the street to count how many drivers they have versus that of Grab.”

This month, Go-Viet has increased its driver commission at Grab levels, similar to what Go-Jek did in Singapore. It also adjusted driver incentive schemes and fulfilment requirements to the drivers.

While its counterpart Get in Thailand has already penetrated into food delivery service (albeit in a very crowded place with GrabFood, Foodpanda and Lineman powered by Lalamove, among many), Go-Viet seems to be stagnant across all its service verticals.

There could be many reasons why this is the case: tough competition, regulatory issues, lack of investment and HQ attention etc. Regardless, it highlights how difficult it is to challenge dominant players at this stage, unless you are armed with a huge war chest.

There are also unverified rumours of internal conflicts and even corruption cases at Go-Viet. Both, to be honest, are quite common among early but fast-growing startups – Alibaba experienced it, Baidu is still plagued by it.

As colourful as bikes in China?

Go-Viet is not the only player vying the Vietnam market though. VinaCapital-backed Fast Go and local startup beGroup have both launched in Ho Chi Minh City. 

Although, if you scan through the streets, blue and yellow are far less ubiquitous than green and red.