Group 36@Sophia – The Rise of Rocket Internet

Rocket Internet is a German VC firm and startup incubators founded in 2007 by the 3 Samwer brothers.

The company’s business model is to quickly build copies of successful E-commerce platforms in markets and countries where competition is not very strong in the targeted sector. The firm controlled by its founders is known for its aggressive approach in building these new companies, often referred to as “blitzkrieg”. It prides itself for the speed of execution and ability to hire exceptional talents.

Rocket Internet operates in more than 50 countries and has more than 75 ventures in their portfolio such as the e-commerce retail companies Zalando in Germany, Jabong.com in India, Lamoda.ru in Russia, ZALORA in South East Asia, The Iconic and Zanui in Australia, the global food delivery platform Foodpanda/Hellofood, etc.
In France, they are for example known for creating CityDeal, which is a clone of american Groupon. They implement new firms all around the world except in USA and China.

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“My advantage is never that I’m the first” the elder brother states “My advantage is that we just build faster and better in more instances than anyone else.” As well as copying others’ models, the Samwers have made significant investments in originals, including Facebook, LinkedIn and Zynga.

“We looked at trends in the US, the Asian market and in the offline industry, and thought about how we could bring them online, because this is what we have some relevant experience at doing. That was the original idea for Rocket: bringing together people who will then allow us to be faster than competitors whenever we have an idea, because we can start right away.”

The overall performance has been extraordinary. The company has so far launched around 30 startups, only five of which have failed.

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Marc, the youngest of Samwer brothers likes to compare Rocket Internet to some kind of McKinsey on steroïds… The company recrutes their « entrepreneurs » from high level international consulting firms or corporate banking. The entire organization is maximum efficiency oriented. Because each and every new project is planned to be sold at the highest price possible.

Created 15 years ago, this war machine rarely misses its goals and continues its spectacular development. This has been so successful that its founders are now going for an IPO : they want to raise from 800M$ to 1.5B$ for 15% of their company.

So why have they been so successful ?

Because their business model is not just about cloning websites which are successful in the US, make them grow fast and manage them on the long term; but above all selling them for a high price only a few years (or months) later…

And it works, as shown by the long list of success stories : in 1999 they sold their online auctions website Alando to Ebay for 53M$, 5 years later they got 270M$ with the sell of Jamba (mobile rings platform) to Versisign. In 2008, they sold BigPoint (online social games) for 110M$ and in 2010 it was Groupon’s turn to buy its own French copy : CityDeal…

http://en.wikipedia.org/wiki/Rocket_Internet

http://www.wired.co.uk/magazine/archive/2012/04/features/inside-the-clone-factory

 

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