TIP821: Grab Holdings (GRAB): Why Uber Surrendered Southeast Asia w/ Shawn O’Malley & Daniel Mahncke

**SPEAKER_1** (0:00)
You're listening to TIP.

**Shawn O'Malley** (0:03)
Should we do it?

**Daniel Mahncke** (0:04)
Ready when you are.

**SPEAKER_1** (0:05)
All right.

**Shawn O'Malley** (0:06)
All right. So imagine you're stepping into a border, and you're there to pitch to an investment committee, and your opening slide highlights a company.
Well, they just lost $3.5 billion in a single year, and this was not all that long ago. And that company also operates across, well, eight entirely different countries. So they're juggling volatile currencies, fractured regulatory regimes, and they're just relying heavily on a massive fleet of independent contractors riding through some of the most congested cities on the planet.

**Daniel Mahncke** (0:35)
Well, that does sound like a logistical nightmare on paper, I would say.

**Shawn O'Malley** (0:40)
Yeah, you would probably get laughed out of the room, honestly.

**Daniel Mahncke** (0:43)
I don't know, Shawn, but you're not really selling me here on the pitch that you will do in a couple of minutes.

**Shawn O'Malley** (0:48)
Okay, but what if on the next slide, you revealed that this exact same company had fundamentally rewired the daily economic reality of more than 600 million people?

**SPEAKER_1** (1:02)
Since 2014, with more than 200 million downloads, we have interviewed the world's best investors, studied deeply the principles of value investing, and uncovered many compelling investment opportunities.
We focus on understanding businesses and intrinsic value, investing accordingly, and sharing everything we learn with you. This show is not investment advice. It's intended for informational and entertainment purposes only. All opinions expressed by hosts and guests are solely their own, and they may have investments in the securities discussed. Now for your hosts, Shawn O'Malley and Daniel Mahncke.

**Daniel Mahncke** (1:48)
So, where do you want to start, Shawn?

**Shawn O'Malley** (1:50)
As I was saying, the company I'll be pitching today, Grab, has transformed from a cash-burning, ride-hailing app into an increasingly profitable pillar of Southeast Asian economies. And the question is whether that integration into people's lives in emerging markets can mean attractive returns for us.

**Daniel Mahncke** (2:10)
Well, that's right. So, what that means is that we're here, of course, to assess yet another business for our intrinsic value portfolio that we manage alongside our colleague, Kyle Grieve. And I have to say this is an interesting one, not only because the business is quite similar to Uber's, which is obviously one of our largest portfolio holdings, but also because we've had the chance to actually connect directly with the investor relations team at Grab.

**Shawn O'Malley** (2:34)
Yeah. And not just that, we're currently planning on interviewing Grab CFO on YouTube. So, if everything goes to plan, you'll see that in a few weeks. So, keep an eye out for that folks, and you can subscribe to our YouTube channel and the show nodes for updates on that. But yeah, the story today is going to overlap in some ways with another one of our portfolio holdings, Mercado Libre. Because like Mellie, Grab has leaned into consumer finance and developing markets to help drive consumption. And funny enough, one of Mellie's biggest competitors, C Limited, which owns Shopee, is also a player in Southeast Asia that Grab has bumped up again. So, I think we have a lot to discuss today.

**Daniel Mahncke** (3:13)
We do. We do. And well, Mellie and C are also two companies that I happen to know quite a lot about after covering them here extensively on this show. But as you said, I think the best comp is certainly Uber. So I think it will be important for us today to kind of understand the similarities but also the differences between Grab and Uber because they do differ in some very important ways. At least that's what you told me. And that's also something that I saw with all of the e-commerce players around the world. So they're obviously similar in many ways, but because their customers have very different needs, they have over time and sometimes even from the get-go found these different value props and kind of ways of running the business. So Sharpie, for example, is much more focused on mobile commerce than Amazon obviously has ever been operating in the US. Then Melly built its payment arm because its customers otherwise just couldn't pay for goods online because obviously they didn't use credit cards back then. Mostly they paid with cash and also just with being outside, going to shops, going to stores and not buying anything online. And I think there were probably similar problems for Grab also. So kind of getting back to the Uber and Grab dynamics, what impressed me most about Grab initially is that despite being confined to just one geographic region, they managed to outcompete Uber in Southeast Asia, to an extent that Uber actually exited the region entirely, which we will get into more later. But I think that's pretty impressive because we've seen what Uber can do with all this scale and expanding into other markets. Yeah, they did a pretty good job on that.