Many among the Silicon Valley innovators have very little good to say about Rocket Internet. Their business practice to clone innovative brands in international markets is a chief complaint.
Examples include:
- Alando (Ebay)
- MyCityDeal (Groupon)
In both of these cases, owners and brothers (Oliver, Marc, and Alexander Samwer) created and built clones of the original American businesses that were subsequently sold back to the original companies that they cloned. In the case of Alando, they reportedly sold it back to Ebay within 100 days of creation for over $50M.
While this model attracts detractors (especially among those who built innovative companies that were cloning targets), it has proved very effective for it’s owners and investors.
“We are builders of companies, we are not innovators. Someone else is the architect and we are the builders,”
-Oliver Samwer, quoted in Wired magazine
Which introduces the $64K question: How to prevent a clone?
An former employee of Rocket Internet highlighted an important business characteristic that can serve to protect your company from cloning attempts.
“The picking process (where we figured out which businesses we’d clone) was not sophisticated. The barrier to entry was capital and execution. Community- or technology-focused companies wouldn’t do because it takes too much time and customer trust to make a lot of money. (emphasis mine -D) We tried cloning Airbnb, but it didn’t work because it’s so brand- and community-focused. Even though we had a staff of 400 staff in 15 offices within two months, it didn’t work. Eventually we realized the best companies to clone were e-commerce businesses.”
Quote from Sam Parr article on thehustle.co
If you want to build something that cannot be easily cloned, be sure that a basis of your company is your relationship with your audience & customers! Someone can copy your web page or how your check-out button looks or what you sell and how. What they can’t steal is your relationship (and the Trust that it has built) with your audience! Trust requires a consistent intent invested over a period of time. Even cloning HOW you run your business cannot replace HOW LONG you’ve done it!
One-Day Actions (#OneSmallChange)
- Schedule an interrupted hour and list 2-3 ways that your business promotes a community. At a minimum, you should promote a sense of community between you and your customers. Ideally, you should also be facilitating connections between your customers as well as supporting ways for your customers to introduce their friends / associates to you!
- Spend a morning answering the phones as a front-line customer service representative for your business.
- Spend an afternoon interviewing 5 customers (2 longest, 2 newest, & 1 at-risk). Ask them (1) Why they chose you? (2) Are you delivering what they expected? (3) What could you be doing better? (4) What would make them leave? (5) What one thing could you do that would ensure they never do?
If you run an e-commerce business or any other business primarily based upon repetitive execution of a standard set of processes, you are at risk for someone else (Rocket Internet or otherwise) to attempt to clone what you’ve built. Imitation is said to be “the sincerest form of flattery”, but being flattered like this is expensive!
Protect your business by imbuing a sense of community and engagement into every customer (or prospect) interaction. Ground it in real relationships that are too expensive to clone and you will not only protect your business; you will further it’s growth!
For additional background: check out this analysis from Wharton (Twitter: @Wharton)
