Fortinet, a global leader in broad, integrated and automated cybersecurity solutions, today called for established financial institutions and their fintech partners to jointly address critical cybersecurity needs in order to forge successful collaborations.
The general lack cybersecurity safeguards in fintech companies has raised serious concerns around data protection and compliance, especially with the implementation of EU’s GDPR in May 2018. The recent spate of global cyberattacks has also emphasized the need for application security and cloud protection.
In late March, Uber Technologies Inc announced that it has agreed to sell its South-East Asian operations to Grab, withdrawing from yet another fast-growing region to end a war of attrition with a fierce local rival.
Under the agreement, Grab will acquire all of Uber’s operations in a region of 620 million people, including food delivery service UberEats.
The US ride-hailing behemoth in return gets a 27.5 percent stake in a combined entity and its chief executive officer will join the board of the Singapore-based company.
So, what now for Grab?
The following are excerpts of a CNBC interview with Grab CEO, Anthony Tan (AT) from the latest episode of CNBC Conversation, interviewed by Nancy Hungerford (NH).
NH: Anthony, thank you for taking the time to speak to CNBC. What a week for you.
AT: It's a busy week.
Nancy: When you were starting off the business, thinking about Uber picking up its own game in Southeast Asia, did you ever think ‘one day, I will be buying their business in my own backyard’?
AT: Yeah it was something that I dreamt about for sure and I felt that why can't a Southeast Asian company come up and build a Alibaba, a Tencent of Southeast Asia and I have always said this if you look at my past reviews, to interviews, you will see the same and now what we have proven is that Southeast Asian companies can and will continue to build these regional champions and that is something that I aspire and encourage all start-up founders to think about, about how do you grow up and build that wonderful regional champion.
NH: These deal doesn't always come easy and not necessarily cheaply either, really. Uber is still getting a 27.5 percent stake in the business, what Uber called several billion dollars worth. How did you arrive at the valuation?
AT: There is always many ways. One was obviously, it was an indication of market share and we are clearly in a market leadership position and number two was the other assets that they were thinking about us, we were thinking with them and they said ok this was reasonable, where both sides felt this could be acceptable to both boards.
NH: Founders never liked to give out too much with the company though was it a struggle for you to just think ‘ooh can we make it a bit less than 27.5 percent’?
AT: Of course of course, all of us were debating hard about it. But you know, and you know we weren't fixated on hey a bit here more a bit there less. It was really focused on how can we create a great company that builds great products and solves real problems for customers in Southeast Asia.
NH: The Uber CEO gets a seat on the board as well. What does Dara Khosrowshahi bring to Grab?
AT: Dara and I are very blessed we have built a relationship of trust. You know we see…I've seen how much he's taken and changed Uber. He sees us and you know Uber had many options and they chose us and they felt that we have the most cost efficient platform. They felt that, ‘hey you're the leader in transport, we believe in Southeast Asia, we want to invest and grow Southeast Asia, and you are the most efficient vehicle to grow in Southeast Asia’.
NH: Speaking of Uber's options you may have a pretty good idea of what Uber and SoftBank are both thinking now when it comes to ride hailing. Do you think India could be next when it comes to another deal for Uber there?
AT: I'm not in a position to comment for Uber but I can say this that for us, Grab is a company that continues to focus on, hey as long as we are the most efficient. As long as we can grow beyond even transport now we’re, thanks to us being able to acquire Uber's assets, including the operations of Uber eats. Now Grab can also grow its food business and because of that we are now a major food player across the region.
NH: Is the food side of the business almost more exciting for you in this deal than just the ride hailing side?
AT: I would say I'm extremely excited about all of it and I'm very blessed to say we have both transport. We are already the most cost-efficient. Now we just got as a platform grows more and more efficient we get better and better at serving customers. Number two we think about the food component. How do we get not just the assets but complement with our current Grab food business and we now have the largest or we are becoming the largest O-to-O business in Southeast Asia.
NH: Talking about your customers. One question I've heard from several people who use Uber and Grab today is ‘am I going to pay more as a result of this deal’. What do you tell people?
AT: Well it's very simple. Customers always want to pay less. Drivers always want to pay or get paid more. So how do you build a sustainable business knowing that you have this wedge and the beauty about us coming together is building the most efficient marketplace platform. What does that mean? Think about Grab share now because of Grabshare more and more people can actually be on one same trip. When you get more and more people in one same trip the asset utilization shoots up the cost of serve for the business comes down. Passengers get cheaper prices drivers earn more money.
NH: But for the same route I'm doing today. Let's say when I go from home to the office it usually takes about 10, 15 minutes in traffic. I've been using Grab's VIP promo sometimes it is $7.50 for that journey. It is going to stay that way?
AT: Well we'll see. I mean maybe perhaps what we will do instead is cross sell you a Grab pay, maybe we'll let you buy your Starbucks. Right now we have got a promotion with Starbucks, we can pay using Grab pay. We could also provide Grab financial services. So it's easy to just say you know ‘hey I just want a coupon for my transport ride’. But we were really thinking about having you as our customer not only from food payments and Grab financial.
NH: And on the driver side. I did have an Uber driver yesterday actually tell me he wasn't so worried he would just switch to Grab but today he says he gets paid more for Grab rides than he does Uber. Is he going to be paid the same?
AT: Well in fact it depends because some of them actually get paid more, previously someone didn't get paid more. So it depends on which scheme in terms of number of transactions they are on. So it depends on as we move forward. What we will continue encourages drivers, the best drivers will obviously be taken care of and we will obviously reward based on quality of service.
NH: And from your standpoint, bottom line does this improve margins this deal? Will it increase your path to profitability?
AT: Yes of course, many of our markets will now continue to grow more and more sustainable. But again it's not just about us becoming more profitable. How do we become more profitable at the same time serve society, serve our customers, work with governments to serve our customers better. And that's things like Grab share where we can bring down fuel costs, less congestion, cheaper prices, better incomes for our drivers.
NH: The reason I ask about profitability is because there's still a lot of investment going on we're going to get into all those areas in just a bit. But sticking to the ride hailing side Uber was just one battle. You're also fighting a big battle with Go-Jek in Indonesia. Who's winning at this stage?
AT: Well let me be clear, we are in close to 120 cities in Indonesia. We are clearly leading in transportation. And now as we continue to invest in Indonesia we are very confident now with the Uber eats assets will also become the number one food player in this region. And then as we continue to expand Grab pay, Grab financial that will expand throughout the region.
And let me just take a step back. In 2017 we saw, we invested in tech. We have a great tech bench. We have now over a thousand engineers. We have the largest land fleet, over 2.7 million drivers. We have close to 200 cities across the region. Now 2018, we're going to expand, we're going to execute on what we built in 2017.
What does that mean? With the largest land fleet. Now we can make sure to that Grab food really scales because we have the whole delivery last mile logistic network. We can obviously, as we have a lot more drivers on the platform, they want to expand their business. We provide Grab financial services to them. So all of it is about complementing each Grab transport, Grab pay, Grab financial, Grab food, complementing each other and scaling throughout the region. So every of these major pillars will be served in all the major cities across the region.
NH: And Indonesia specifically though it's such a huge market. Can you give us a better idea just how much investment is going into that market?
AT: Oh I'm super focus in Indonesia. I mean if you look at myself, my co-founder, most of the time we spend in Indonesia. We love Indonesia and that's why we've gone. I mean now we are close to 120 cities. You're going to see us expanding through the next 150, 200. And of course with the acquisition of Kudo and our Kudo network we are also the largest agent network in Indonesia that now today serves over 500 cities and towns.
NH: Speaking of Kudo let's talk about some of the other areas you're expanding into. You often talked about solving a problem when you set out with Grab initially. What is the single biggest problem you're trying to solve today?
AT: The single biggest problem I would say a big part is how do we take who were considered completely invisible from whether it is the banking sector. Or they just couldn't afford the basic financial services or just weren't earning enough money because nobody would give them a chance because they'd were below the poverty line and how do you make them visible?
So take for example, I'll share with you a quick story about Pak Rudy. Pak Rudy was the guy who used to make $135 dollars a month, U.S. dollars. He was a construction worker and you know he became a Grab bike driver, he now makes 10 times more revenue than he made at $135. He now has enough with Grab financial to have a second bike he is now saving up for a chicken farm. He never ever had a bank account. Today he has a bank account. So these are people that were completely invisible, will now become visible.
NH: It sounds to me you're leaning almost towards a financial services company. When I go out on the street today and I ask someone what do you think Grab does? Most likely they're going to say a ride hailing or taxi app. What do you want them to say?
AT: I want them to say that Grab solves the most complex problems in Southeast Asia. It's a company that is focused on solving problems for Southeast Asians and for people who live in Southeast Asia and addresses all their problems. The minute they wake up, they book a car, the car comes, the guy has his car financed by Grab financial, he or she then pays for her lunch. Local noodle stall with Grab pay, zips between meetings using a Grab bike then orders Grab food on the way home right. How do we think about solving all these problems for our customers in this region?
NH: There is an enormous amount of data that comes as being a services company to really what you're describing as being all things to all people in some ways...
AT: To the masses.
NH: To the masses. When you consider the amounts of data comes with great amounts of responsibility as well. The situation around Facebook has shown everyone that in recent days. In light of what has happened with Facebook Cambridge Analytica, does that make you think twice about how you collect data and use data at Grab?
AT: Of course. As a regional champion, we have big responsibilities. One big responsibility is to the Southeast Asian start-up ecosystem. Now we've been able to harness tremendous engineering talent. We have six R&D centers all throughout the world. We've been able to bring and show venture capital that wow, in Southeast Asia you can create big companies. Can we help exits? Right. And so that people get more and more confident of the region.
And the third is can we mentor great start-up founders. You know, with Kudo if you can talk to the founders, you know, we have such a great relationship and we continue to really foster and mentor them. The second is we have a massive responsibility on our largest constituency which is customers like you, drivers, agents, how do we make sure, I mean a lot of people, in Southeast Asia. Let's be real. A lot of people in Southeast Asia don't have the basic financing capability or even ability to even think about working capital loans. A lot of people don't have, in this part of the world don't have, you know, safe transportation that they can count on before Grab, a lot of people don't have a ways of paying that that is trustworthy. Right?
So how do we solve these problems when I see us serving two large Southeast Asia ecosystem and all our major constituencies in this part of the world.
NH: Does that mean you're going to be a full-fledged financial platform for all consumers because right now you're talking about insurance services? Micro financing loans, that's pretty much aimed at the drivers. Are we talking about everyone logging on to your site and being able to get their own loan, being able to access these financial services?
AT: Well again I want to stay very focused on who has a problem and do we deserve to solve that problem by knowing most information about them. So for example our drivers. Our driver partners, that is because we know how much money they make.
So for us Grab financial is very easy for them on our agents, for example our Kudo agents. Can we solve more problems and help them expand their little aquarium or a little…in a mobile recharge shop to two stores or three stores. So again very, very focused on sectors that I would consider most people who are invisible which is majority of Southeast Asia. Many who are unbanked. How do you make the invisible visible?
NH: And you're not the only one really trying to help the under banked population in Southeast Asia if you will. We know that Ant financial from Alipay is trying to make a bigger push in the region. It's been widely reported that Jack Ma had spoken with Grab even with you and a prior fund raising round. Have you spoken to Jack Ma about what you're doing in payments and financial services?
AT: I've spoken to Jack Ma some time back and I have tremendous respect for him and many of the great visionaries and Masayoshi, Cheng Wei, Dara. I will continue to obviously seek all their guidance and advice people like that really has made a mark in history.
So I'm just a guy in Southeast Asia who literally built the regional champion. And I'm very blessed with it. So now I seek all the best advisers to help us grow old and fulfil that big responsibility that we have.
NH: What about partners though? Jack Ma comes knocking on your door and says I really like what you're doing in the financial side of things. Can we do this together?
AT: Well I think Ant financial again, another great company, for us as we are all about working with many, many partners. We don't fixate on ourselves on who's the best partner. We think about what are the biggest problems and how do we solve that problem. And if Ant financial, whoever is another great partner we are focused on that problem and on that segment of under banked or invisible people that we can help and solve that problem.
NH: You also speak about congestion as being a problem that you would like to solve. What role does autonomous vehicles play in this? You've experimented with autonomous vehicles right here in Singapore. Is this something you see Grab having on a full scale level at some stage in the near future?
AT: Yeah, it is real, I think autonomous technology has developed as it is maturing as you see of course as it matures. There's going to be more trials and errors of course but we need to make sure that we embrace technology. If you can make life safer, if we can help reduce congestion through Grab share and take off more and more cars off the road and really help people get from A to B safely, affordably. So you know in a market like Singapore do we see a future for it of course.
NH: Do you work at all with your partners like Toyota's investment fund, Hyundai was part of the latest fund raising round do they help you in the autonomous vehicle development side?
AT: We work with multiple OEMs and many of them yes we do talk to them about and they are all passionate about mobility. So we are working with all of them to think about what are the best solutions for this part of the world.
NH: And the reason I ask is because ultimately here the big auto manufacturers investing in companies such as Grab have to think it's a bit of a cannibalistic move here because ultimately is Grab going to result in fewer cars on the road?
AT: Again. I don't think you know any of these companies are thinking about just about number of sales. They're really focused on how do we solve the problems in Southeast Asia. In Singapore for example, in fact the government has already imposed a zero car growth policy, car light policy. So it's not a matter of who sells what. It's really about aligning with the government policy. How do we serve the people better.
NH: You just recently spoke about Masayoshi Son. You had the chance to work with him and if I could take another step back and talk about the future of the ride hailing industry in general. A lot has been said about Softbank kind of playing matchmaker in this. They've backed several players. Do you think we're going to end up in a world where there is greater consolidation and one major force with Softbank at the helm here?
AT: I don't have a crystal ball but I can see that Masayoshi Son is an incredible visionary. For us, you know specifically our deal. Masa is obviously a tremendous mentor that I learn a lot from. But Dara and I really spend a lot of time to do what is best for both our companies and again you know please check Dara but my understanding is they believe in Southeast Asia. They just want to know ‘hey is this the most efficient platform out there?’
And that's why Dara has invested in us and now today they are 27.5 percent. They have a seat on the board and we will continue to grow and be the most efficient platform out there.
NH: This growth comes with more responsibility as a leader. No doubt about it when you talk about these people you've been able to work with already. What have they already taught you about leadership?
AT: Oh many things. I mean they taught me how to become a leader in market share how to be extremely customer focused. They have taught me how to be very efficient with promotions. They taught me how to think about values. How do you build a company that is founded on values.
NH: And when we talk about the very early days as you go back we're talking about setting the example now for other companies in Southeast Asia. What was that like when you went to go pitch to Softbank?
AT: Obviously there's anxiety. Like every leader will go through but how do you embrace and internalize the anxiety, the fear and come out with even better solutions. And Masa and I have grown a tremendous friendship over the years. It's all about understanding what your values are. If you were to ask me, if I were to advise someone who is going to see Masa, I will say be clear. What do you want? If it's just money, there is plenty of money everywhere. Be clear what you want. Be clear what you want to give but most importantly be clear on your values because if your values are unclear you'll fall through the cracks. And the one thing I've learned is Masa and a lot of great leaders in tech or auto tech is really focused on building a value driven company and that's something that Grab feels very strongly about.
NH: As you look forward to the next stage, with all of these various growth areas we have touched on. You must be thinking now IPO. How far along will those plans be?
AT: I mean now that one sector of our businesses clearly has a clear path to profitability. That obviously becomes a closer and closer reality. But as we think about you know, how we are growing Grab financial, how we are growing Grab food all across the region. We see these as complementary and we see IPO as just one of the many options out there.
NH: When see a clear path to profitability. Give us a deadline when is it going to be profitable?
AT: Actually certain markets are already profitable.
NH: Which ones?
AT: Can't name them. Not right now at least, not in this segment.
NH: We certainly tried. Anthony, thank you. It's been a real pleasure having you speak to CNBC. Thank you for your time on the CNBC Conversation.
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