
Rocket Internet Preparing to Go Public - hofimax
http://tropicalconsiderations.com/2013/01/05/breaking-news-rocket-internet-preparing-to-go-public/
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ChuckMcM
So its a rumor of a rumor. Interesting. Personally I don't think its a
credible rumor but lets set that aside for a moment.

These guys are a derivative business, generally picking up the value between
an idea growing in one market and its arrival in another. Its not a bad place
to be but to the extent that it is successful it indicates that the capital
system isn't enabling rapid enough expansion of successful businesses, this
isn't a steady state.

Think of it this way, company A starts in market X and demonstrates traction,
then r-i starts up company B in market Y with the same value proposition and
gets traction there. The investors in A don't see this as "validation of our
idea in market B" they see it as "we didn't move into B quickly enough". So
instead of accruing that value to company A its been diluted into company B.
This situation happens when capital markets become so risk averse they start
crimping their own ability to capture value. Its an imbalance and lately it
was I think enhanced by the questions about how the IMF monetary system is
going to resolve out its current tension.

The situation is temporary as once the other factors of fiscal instability are
removed, the investors in these companies will be push them to expand into
those other markets and take that risk on. That will then make it very hard
for R-I to continue operating the way it does today (well it will greatly
reduce their success rate) and so they won't be a good candidate for outside
investment.

I got to meet a guy [1] who took advantage of scared investors for a living,
he bought (and sold) 37 single family homes out of foreclosure in the Bay
Area, pretty much from almost every county but more on the peninsula/southern
side than the east bay. He said he's on track to quintuple his investment in
just under 3 years. He attributes his success not to some special gift of
insight, just that he didn't believe that the Bay Area housing market was
'never' going to be the same, and where other investors were too timid to
invest he stepped in.

[1] Like many neighbors I tour houses nearby when they are on the market, I
met this guy when he was talking with the Realtor showing the house. The
broker had been getting questions they couldn't answer about the solar power
system on the roof.

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jstanley
This sounds like great news for Rocket Internet, but having read the article I
don't even have a cursory understanding of what they do. I think it would have
been beneficial to include a sentence or two about what they do beyond "clone
factory".

EDIT: This seems to be them: <http://www.rocket-internet.de/>

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thedaveoflife
In a nutshell: take successful US start-up ideas and create a European version
of the exact same thing.

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antr
you forget the part were US startups won't go abroad, ignoring non-US users.
Who is to blame?

It's everyone's fault and no-one's fault.

~~~
thedaveoflife
I'm not trying to cast aspersions... just to state facts.

~~~
antr
I understand, but US startups have a wrong sense of entitlement. They might
come up with the idea, but if their execution falls short why should others be
stopped?

I'm not just talking about European startups, but this also happens within the
US ecosystem. Take the latest and greatest: SnapChat vs Poke.

Additionally, if a US startup does not service the rest of the world
(specially in e-commerce, which is what Rocket Internet focuses on) they are
giving others an opportunity; and others have the right to execute this. Take
Gilt copying Vente Privee; VP is not calling Gilt a copy cat.

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Nickste
As HN places significant value on innovation and entrepreneurship, I suspect
that there will be a number of comments on this post calling out Rocket as a
parasitic clone machine who steal good ideas from hard working startups and
throw massive capital at these clone businesses in developing markets.

While this is definitely a valid criticism, I'd urge you to read this post:
<http://posts.richoakley.com/post/rocket-internet-respect> which argues that
we, as entrepreneurs, have a lot to learn from the way Rocket has managed to
execute so phenomenally well in each of the developing markets it has
targeted.

Especially given a few recent posts on HN detailing failed attempts at
startups, I think the above post highlights the importance of being able to
consistently execute in a business.

~~~
biafra
I am not criticising them for being a clone company. Especially not when they
are cloning companies that are not interested to come to europe.

I think they treat their employees bad.

I have worked for one of their companies as a freelancer and I would never
want be an employee there. It was an eye opening experience though.

I would recommend not working for them without researching their modus
operandi first. If you like to be yelled at in meetings and told a three year
old would do better work than you, maybe this is the right place to work - for
you.

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ebufra
I regard the Samwer brothers as kings of execution. They have even come into
Nigeria. Within 5 months, they have set up 3 companies. See
([http://www.innovation-village.com/2012/12/rocket-internet-
la...](http://www.innovation-village.com/2012/12/rocket-internet-launches-
kaymucomng.html)). They also go where traditional companies are not confident
to go to. I respect them. J P Morgan even just gave them funds for their
ventures in Africa. See ([http://www.innovation-village.com/2012/10/j-p-
morgan-invest-...](http://www.innovation-village.com/2012/10/j-p-morgan-
invest-in-jumia.html)). I wish them the best.

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joewee
This is a significant move for several reasons: 1) Samwers have made the
majority of their money from selling their clones to the original companies. I
think they can continue doing this with much success. So I don't see why they
need to go public.

2) Cloning to sell doesn't seem like a viable business model as a public
company, what metrics would they be judged by? So that means they are
seriously building companies now for cashflow and long term potential.

3) From what I know about Rocket Internet many of their management level
employees are transient. As someone else stated, they hire a lot of interns
and young employees looking to gain a little experience before moving on to
something else. Can they continue doing this as a public company?

4) They are extremely aggressive, and focus a lot of growth by any means. I
don't think anything they do is illegal, but such focus on rapid growth always
leads to problems (think real estate loan bubble). They will dramatically
increase their liabilities as a public company.

5) Is this the first technology incubator to go public? Public companies are
similar to them?

Wanting and planning to go public is one thing. Having the management team,
financials and story to convince people to actually buy your shares is
another. I'm looking forward to reading their prospectus.

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mmelin
This is big. Rocket Internet is a perfect example of what's wrong with the
European startup ecosystem. I don't doubt they'll have a successful IPO, but
it will leave a foul taste in the mouth of Europeans, especially Germans and
Swedes.

~~~
knorthfield
Why? I'm European and I don't really have any strong feelings about it. Isn't
this capitalism at work? I'm really having trouble seeing the issue. If laws
have been broken that's one thing but fair competition is another entirely.

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mmelin
You know, I see your point. Our mantra is "ideas are worthless, execution is
everything". Rocket is an execution machine, and they deserve recognition for
that. The problem is that because they are so successful at copying ideas and
executing them in other markets, it reinforces the stereotype that this is
what all European startups do. Maybe it's simply a matter of lack of
confidence on the part of us Europeans, but I think a lot of people agree with
me on this.

~~~
flexie
Rocket Internet identified a market in the fact that American companies often
ignore the European market for years.

Because of their large home market, American web startups can grow to
considerable sizes before having to worry about multiple languages, multiple
export rules, multiple tax systems, multiple consumer protection regimes,
multiple payment systems etc. That is a huge advantage that American companies
have over European startups. Rocket Internet and their like are levelling the
playing field a bit.

All business ideas are to large extend inspired by others. Maybe some of the
companies the Samwer brothers "cloned" were truly first in their field, but if
they had taken the German market serious the Samwer brothers wouldn't have had
a chance. It's their bad.

