
A growing respect for the Samwer brothers - richoakley
http://posts.richoakley.com/post/rocket-internet-respect
======
tegogob
They hurt local innovation and ecosystem development in emerging markets from
Asia to LatAm to Africa. They come in, hire away talent only to fire them in a
few weeks. they damage the budding trust the consumer has in ecommerce.

They are bullies and have a superiority complex boasting about their capacity
to execute. They do not have a monopoly on execution. That's a farce.

They are greedy, selfish and generally think only of themselves. Not the
consumers they serve, the local markets or their employees.

I have witnessed them come into markets, destroy the lives and dreams of
entrepreneurs and employees in emerging markets and shut down abruptly.

Finally, this operation (thier ecommerce operations in particular) is a house
of cards. Service quality sucks, customers are lied to and they engage in an
epic waste of money

It is impossible to build online retail operations in 1-2 years. Yet this is
their objective. Build fluff and sell to some unsuspecting corporate
development team.

The problems groupon is facing is inextricably linked to the involvement of
the samwers as far as I'm concerned. Elsewhere, flash sales and couponing
operations do well. Anything these guys touch is ultimately unsustainable and
fluff. Now they want to try online retail with its logistics, warehousing, etc
in emerging markets without a long term horizon. Ha! In a few years time you
will realize how stupid the praise in this article is.

[http://e27.sg/2012/09/10/is-rocket-internet-losing-its-
grip-...](http://e27.sg/2012/09/10/is-rocket-internet-losing-its-grip-in-
southeast-asia/)

[http://sgentrepreneurs.com/2012/09/05/is-there-any-method-
in...](http://sgentrepreneurs.com/2012/09/05/is-there-any-method-in-rocket-
internets-madness/)

~~~
tolos
I'm going to assume you believe what you're saying.

You make it sound as if customers hand away money to a shady stranger who
quickly disappears, and that the entire point of the company is to trample
employees into the dirt. I have a hard time believing this, especially after
all of the examples given in the article.

~~~
tegogob
Let's not debate this. Go to

<http://www.facebook.com/home24.my?filter=2>

This is what they do in many cases. Comments about refunds can be found on FB
page of virtually all ecommerce operations.

With regards to employees, imagine you live in the developing world, you have
a well paying job at a mobile company. The sort of job 95% of the population
will kill for.

Rocket shows up, doubles your salary. You quit your job and join rocket. One
month later, they decide they are shuttering operations. You are fired through
no fault of yours.

This may be fine (actually it isn't) in the developed world but is terminal to
career and financially disastrous in emerging markets where job market is not
liquid, job opportunities are prized and one individual sustains an entire
extended family.

------
jedc
The Samwer brothers fill a (pretty big) hole in the market. They execute
proven business models in countries before the market leader can get there. If
US-based companies would put more emphasis on international expansion the
Samwers' business would melt away. (I'm a American who's lived in the UK for
years and gets really irritated that a lot of great US companies don't bring
their services here.)

side note -- I have to think there's a market for a group of experts based in
major European/Asian markets that would specialize companies in clearing the
hurdles to expanding internationally. Get a handful of people in the UK,
Germany, France, Spain, Italy, Russia who are experts in local regulations and
can work fast to expand a US-based business.

~~~
vidarh
I agree.

I'm in the UK, and has done quite a bit of work in the payment space, and I've
kept seeing this all the time.

On one hand, a lot of US companies just ignore the European markets. On the
other hand, a lot of the ones that try demonstrate why:

Assumption after assumption about regulatory regime, languages, culture etc.
need to be beaten out of them. When they grasp multiple languages, you can bet
a lot of them will get caught out with multiple languages in a single country
(this one always confuses me - so many US companies deal with at least Spanish
that you'd think more companies would be prepared to deal with this). Then
there's inevitably issues around VAT/sales tax, and engineers who don't have
the faintest understanding for just how strict handling of invoices are in
some European countries (I remember when my dad still had to print out every
electronic invoice he issued and _glue them in_ on numbered pages in a book to
satisfy the auditors - thankfully things have moved on somewhat, but US
engineers: Stop making systems where invoices can even theoretically be
mutable after issuing already, and you'll be vastly better placed for
international markets).

~~~
ArbitraryLimits
> so many US companies deal with at least Spanish that you'd think more
> companies would be prepared to deal with this

Actually it's the opposite - inside the US, Spanish-speaking markets are
mostly served by companies that only serve those markets and not the English
speaking ones.

------
cs702
As Steve Blank tirelessly repeats, a startup is NOT a business, but a
temporary organization searching for a viable business model.[1]

The Samwer brothers don't invest in startups! They invest in viable business
models. They don't fund search; they fund only execution.

\--

[1] <http://steveblank.com/2012/03/05/search-versus-execute/>

~~~
josephcooney
I'm glad you reminded me that Steve Blank is the only living authority on
start-ups, and that the word start-up can only mean precisely what he says,
and nothing else.

~~~
edoloughlin
Can you not make your point without the sarcasm and snarkiness? When I found
HN, the reasoned, respectful discussions were what made it different from
other sites. Posts like yours make this feel more like Slashdot.

------
swombat
My response: <http://swombat.com/2012/9/20/rocket-internet>

The short of it: This is, in my opinion, perhaps the most innovative company
in the startup industry today, the first of a new industry. To declare them
non-innovative, as some people do, is either short-sightedness or just
jealousy.

I'm sure a lot of people were jealous of YC too when it first started turning
the angel/VC investing world on its head. Same difference.

~~~
sandGorgon
Their strategy looks good - however what many people are assuming (that they
do great execution ) is not correct. They have a record of hiring the top
management in their investee companies from consulting firms. There has been a
series of hire and fire events in their portfolio at the CEO level because of
this.

I see a lot of comments in this page highlighting the fact that they open and
shut companies in a matter of months. Actually, the problem is what I
mentioned earlier. Poor choices of executive mangement (with no execution
experience) results in runaway spending, disproportionate salaries, etc. In 6
months time the Samwer brothers take one look at the margins, decide that the
business is unsustainable (as opposed to changing the execution) and shut it
down.

In fact there is a recent article floating around that talks about this (my
google-fu isnt good enough).

I personally think that Rocket's model is a brilliant strategy, but lacks
appropriate execution structure.

------
davidspinks
The Samwer brothers definitely deserve respect in a world where execution is
paramount. Often, they execute more efficiently than the companies they copy.

If anyone says it's easy to just copy a company, they've never built a company
before. There are so many intricacies that go into building a company and
culture the right way. When you look at a company, you're only seeing the tip
of the iceberg. You can copy the part that you see, but without everything
under it, you won't succeed.

One thing I would have loved for Rich to speak about a bit more is their
treatment of the founders and employees of Rocket companies. I've spoken to
employees before who shared stories of very harsh work environments and high
turnover rates. Founders get very little equity. Employees get none.

From a business perspective, obviously they're doing something right and if
people find enough value in being a part of these companies to put up with the
downsides, that's their decision.

Still would love to see a deeper look into the negatives.

~~~
yardie
_Often, they execute more efficiently than the companies they copy._

Easy to say when the guy out front is taking all the arrows. Onlive went out
of business because they had too much capital tied up in servers and not
enough customers. Competitors now know that tying up money in servers is not
the way to go. A fatally, expensive lesson learned by a technological leader.

------
mschaecher
At Airbnb we respected them as a competitor, enough to know that we needed to
crush them. Forgive the sports metaphor, but it's like in sports when you have
respect for an opponent that you will face, but come game time you're at war.

Gotta say though, it was damn fun absolutely decimating them in a global game
of 'Risk'.

I'll just leave these numbers here....

Airbnb vs Wimdu in Berlin - home of Rocket & Airbnb clone Wimdu \- Airbnb -
5830 listings (<https://www.airbnb.com/s/berlin>) \- Wimdu - ~504 listings
(<http://bit.ly/P3XcLA>)

Airbnb vs Wimdu in San Francisco - home of Airbnb (and yes, they tried to
compete with us here) \- Airbnb - 3904 listings -
<https://www.airbnb.com/s/san-francisco>) \- Wimdu - 294

------
brackin
They're incredible at what they do and that isn't building innovative, new
businesses. They've probably made more successful (in terms of revenue, exit,
etc) web businesses than anyone else has. They've scaled up ideas into big
companies by bringing on a lot of capital.

I don't respect them because they don't use this to build new, long term
businesses and tear into others intellectual property but I can acknowledge
their success thus far.

From what I've heard in the inside it's not the kind of place you'd want to
work, people are fired and quit daily and it's cut throat but it seems to be
working for them in terms of business.

------
Sakes
I am blown away, these guys have hacked innovation.

What this says to me is innovation is relative. If you've never seen an
iPhone, and someone shows you a Samsung Galaxy, you would think it is mind
blowing.

As far as the true innovators are concerned, because this is clearly a massive
hack and not innovation, maybe this means there is a problem that companies
have when trying to take a domestic company/app/service global.

Is there someone that could figure out how to deliver a service that simply
takes any company's app and makes it globally distributable?... By removing
government obstacles and language barriers...

------
kurtvarner
Being able to paint copies of a Picasso does not make you a great artist. Nor
does it _deserve_ respect from the artistic community. All it says is that I
have enough skill to operate a paint brush when given an exact template.

~~~
silverbax88
This is true, but art and business are not exact mirrors. Business has a lot
more in common with sports and war than art. Sports teams copy each other like
crazy when they see something working.

Facebook was a copycat. Google was a copycat.

Every television network in existence would be considered a copycat of the
DuMont Television Network.

NASDAQ is a copycat.

Best Buy is a copycat.

American Idol is a copycat.

Not sure where you draw the line on originality.

~~~
kurtvarner
There's a big difference between your examples and copying a company down to
the pixel level. Come on, copying literally _every pixel_. As a designer and
entrepreneur, I strongly feel there is something wrong with that. It is purely
theft.

~~~
sillysaurus
_theft_

The word "theft" implies that someone is being "wronged" by the action.

If we ask ourselves "is this the case? Is anyone harmed by the actions of the
Samwer brothers?" then, after we force ourselves to really sit and think about
the answer to the question, and after we attempt to find real-world examples
which support our point of view, then we find ourselves in the uncomfortable
situation of being inexorably pushed, prodded, and shoved toward the
inevitable conclusion: No. No one was harmed. In fact, just the opposite: the
people who now have access to the cloned services now enjoy a higher quality
of life due to it.

In short, inasmuch as I share your prejudice, I cannot figure out any way of
reconciling that prejudice with the honest assessment that the world is now
more enriched than it was prior to the Samwers.

~~~
biafra
The people working for RI and the incubated companies are wronged. The copying
is not the problem. The problem is how they treat their employees. In the
Berlin tech scene, if you were working for rocket you are treated as an easy
victim. As someone who accepts every insult, being yelled at and every wrong
that is done to them.

------
trotsky
_its as if they want to make it known that they are unashamadly, and without
apology, cloning to the pixel, rather than taking the same idea and taking it
into a new market. There is an element of cheek and disrespect that detracts
from their credibility as entrepreneurs._

I wonder if this has (accidentally?) become part of their winning formula.
Psychologically it seems quite likely that a competitor will give less respect
(and therefore thought) to a company that seems cheap and uninspired.

------
bosch
I'm going to go against what most people are saying and disagree that this is
a good thing. Too often companies like this are only after the money. For some
reason their company STRONGLY reminded me of Zynga, which in my opinion is not
a good thing.

------
drpgq
I'd be curious to know pg's opinion on the Samwer brothers.

------
mammalfriend
There isn't an issue in creating a process to bring business models into new
markets that are working. It's innovative in a way and that's cool.

But it's not cool how they at least used to operate: contact US startups that
had traction, and tell them they wanted to invest and bring them into EU. Ask
for info on the business. Then, clone it.

As a side note it actually isn't great to have such a short cycle between
startup traction and inevitable cloning. It means small startups have to rely
on things like (gasp) the patent system to protect themselves from paying
upfront to work out a business model only to have someone come in immediately
to fragment the market.

------
oiciruam
The way I see it the major difference between Rocket and startup foundries
(Betaworks, Science, Sandbox) is how original the ideas are. And the only
difference between foundries and VCs investing in shared assets for their
startups (data analysis in Google Ventures, distribution in 500startups) is
the belief in founders. If the costs of starting up fall it´s just time before
some investors with operational backgrounds consider removing founders as part
of the risk. Rocket is a model for a new form of ´startup corporation´, which,
beyond clone sites, seems like an original idea.

------
benackles
We often hear that "ideas are worthless, execution is everything", so it comes
as no surprise that someone who executes well, should reap the rewards. I've
heard many times about how terrible the Samwer brothers are for "ripping off"
others innovations, but the truth is they have proven that they can out
execute the original innovators.

In the case of Groupon, there was very little innovation, so riding the wave
over an incumbent seemed on obvious. However many have tried, but few have
executed as well as Samwer and in the end Samwer proved the business was too
simple to emulate.

I don't think in the case of Stripe and Square that emulation will be a viable
strategy. Payments by their very nature suggest an extremely high level of
trust. Short term emulation would seem to breach that trust. I wouldn't invest
the time nor money in a platform which is inherently built to sellout.

Pinterest on the other hand...well...good luck!

------
confluence
First thing - this is written by a "media guy" and looks essentially like a
practice PR piece - <http://paulgraham.com/submarine.html>.

Second - whatever the source of the article it still has a point.

The Samwers do execute reasonably competently and they do help bring new
things to market. The thing that most people don't like is that they succeed
and put bed to the lie that original ideas drive markets - when timing,
location and execution matter more. See Apple's success in bringing copied
tech to mass market consumption - one of the biggest companies in the world is
a copycat and that is perfectly fine for Apple buying consumers.

------
erichocean
I wonder if this is actually a knock against the common incubator/VC idea that
"founders/team are everything".

Clearly that's not how the Samwer brothers operate, where a viable business
model that "clicks" for whatever reason is all that matters.

They simply hire qualified people to execute an existing idea, and then pump
massive marketing dollars to establish the company. There's ZERO evidence that
they go into a market _because_ they have "a great team", which AFAICT, is all
something like Y Combinator really cares about.

It's interesting nonetheless -- perhaps there's multiple ways to start and
scale new companies?

------
javajosh
The Samwers are exploiting the incredibly inadequate web of trust we have on
the internet. It's incredible to me that we're willing to spend money with
completely virtual entities and expect things to work out. Is our trust in
regulation and the rule of law that solid? Especially in emerging markets?

------
therandomguy
Business 101 teaches you that if barriers to entry are low there will be many
competitors. Why is this so surprising for people? It is good for the
consumer. It always has been.

In the SWOT section of your business plan, under W, if you didn't have Samwer
brothers you need to rethink it a bit.

------
rebelnz
I trialled for their Aus arm and promptly walked out after finally getting an
answer to how much they (don't) pay. I took a job a week later for double what
they offered which is still an average wage. I have no respect for these guys.

------
anuraj
Execution is key, ideas can be easily copied.

