The furious feel cloning a business is immoral, and the curios want to know if it is legal to copy a business model, right down to the aesthetics of product design.
The legal proceeding in the World Wide Web is obscure, and depending on an individual’s definition—being a shameless copycat, or cloning businesses, is synonymous to stealing. If capitalizing on other entrepreneur’s creativity, work and development is an art, the Samwer brothers have perfected it with execution, relentless marketing, and having the nerve to sell their reproduced business back to the original company.
This was the case in 2009 when the Samwer brothers copy factory, Rocket Internet cloned Groupon with CityDeal—only to sell it back to them for $126 million.
Their technique entails making carbon copies of internet start-ups internationally (Europe) before the original company has the resources/workforce to expand. This is the case with Airbnb and Wimdu—they copied Airbnb in details and launched Wimdu to the European market before Airbnb had the chance. As you can imagine this infuriated the founders of Airbnb.
The Difference between Competition and Stealing
The line between competing for a market share with a similar idea and downright stealing is clear enough. After all most, if not all start-ups have competition to race for that market share; you have probably heard of Instagram but not Picplz, or Foursqaure but not Gowalla, these are competing companies—so how is Rocket Internet clones different?
The difference is down to the ‘way’ they compete by replicating the original idea rather than creating a rival company that offers something different or with a unique perspective or at least a hint of creativity.
Some may argue that it’s all about execution of a product that makes businesses successful and there is some truth in this. But with Rocket Internet executing something you already know works in not difficult. It is not hard to hire a designer and programmer to make an exact copy of a site, and it is not difficult to market when you have the resources to do so.
Since the Samwer brothers are so prolific with their stealing, they have made billions doing so—so execution is not going to be a problem for them, it does not require talent or any respectable ability to do so in their position.
People that have trouble executing a product is usually due to lack of funding, no media attention and poor marketing strategy, due to their notoriety, the Samwer brothers get all the funding and media attention they need, all they have to do is copy the marketing strategy of the original.
They managed to raise $90 million for their Airbnb copy, Wimdu; and have made it a successful business in Europe, if their site’s traffic is anything to go by.
Like it or not, there is nothing illegal about what Rocket internet do, at least for now, in the dot com world is boils down to morals, and the Samwer’s have none.
Who Are the Samwer Brothers?
Alexander, Marc, and Oliver Samwer are the founders of the start-up incubator, Rocket Internet that breeds successful copies of successful businesses such as Pinterest (Pinspire), eBay (Alando), and Zappos (Zolando). If they aren’t doing the copying themselves, they are funding it, as is the case with Wimdu, which is run by CEO Arne Bleckwenn.
They are the most scorned entrepreneurs in the tech world, and they are from a Germany, ironically a country where entrepreneurship is a rarity. They are rumoured to be worth up to a billion dollars though their successful business strategy and profitable exits.
They rarely give interviews, most assume this is because of their amoral business strategies, they strive on copying in a world where innovation and creativity is celebrated. In an interview with Wired, they justify their business practices:
”We are builders of companies, we are not innovators,” Oliver Samwer tells Wired. “Someone else is the architect and we are the builders.”
They also claim not to be motivated by money in the interview with Wired, which I find hard to believe.
Due to their success, I have no doubt they will inspire other entrepreneurs to take the easier way to success and clone businesses, rather than innovate.
The good that can come from the cloning nation
We can learn a thing or two from those that clone like Rocket Internet:
- Rapid international expansion- companies should start making it a priority to expand internationally much sooner after raising capital for their business. This will help prevent clones capitalizing on countries the original company has yet to reach.
- Early Acquisitions- It sucks buying from copycat competitors but sometimes you just have to and the earlier the better. The good news is copycats are most likely motivated by money so are always willing to sell. With the Olympic Games coming to London, it would be wise for Airbnb to acquire Wimdu, due to their prevalence in Europe.
- Threating legal action- Although there is not much companies can do legally to stop cloning, they can at least threating to do so, this will scare off some of the cloners.
- Patents- Filing patents are complicated and costly but sometimes you have to do it to protect your business model from copycats. Despite patents being used to make money by filing lawsuits and so on, its original intent is to protect innovation.
Despite all of the above, it is difficult to execute, unless a start-up is a multi-billion dollar company like Apple, there is little you can do or better yet afford when it comes to stopping clones; after all a start-up is a start-up.
It is too expensive for start-ups to protect their ideas-legal proceedings takes months and sometimes years before they are finalized and most start-ups can’t front the money for legal cost and the manpower to fight a battle that may not be won.
To conclude, although clones can have success of their own, it is unlikely to beat the original in terms of overall market share. Media attention is crucial to a business’s success, and clones are largely ignored by the press and the original business has the edge for starting-up first.