The Rocket Internet way is often vilified as a ‘copycat’ model, but it’s formidable in its efficiency. It’s based on a belief that in a flat world, there’s no need to reinvent the wheel – a good idea that has succeeded in one place can always be replicated elsewhere. Typically, a successful internet venture in the West is cloned in the East. Examples are many, from Amazon-like Lazada and Airbnb clone Wimdu to GrubHub inspired Foodpanda.
Instead of wasting time on developing new ideas, they pick sureshots and focus on the execution. The advantage is that you get a proven business model. So the time to start up and gain traction is shortened. It takes less than 100 days to launch a business for 80 percent of Rocket Internet companies – something that’s very hard to do for any normal startup that begins with a new idea and then validates it.
But there are disadvantages, and frustrations too, in such an execution-driven model – especially for those with an entrepreneurial and innovative streak. Three such entrepreneurs, who were earlier with Rocket Internet, explained the good, the bad, and the ugly of copycat startups at a free-ranging discussion at our Startup Asia Jakarta 2014 conference today.
Pros and cons of the Rocket way
Steven Kim, co-founder and CEO of restaurant discovery site Qraved, worked at Rocket Internet’s OfficeFab before it shut down. He says the key difference between a Rocket company and a typical startup is speed. “Early on, they don’t talk of chicken-and-egg problem, etcetera. Basically, choose one thing, and go hammering at it.”
Juan Chene, VP of Business Development at Bobobobo, who was earlier an MD at Foodpanda, agrees. “High benchmarks are set, and KPIs have to be achieved. From marketing channels to customer acquisition, everything is measured on a daily basis. The top guy might call you anytime.”
There are negatives too in such a sterilized, fast-track approach.
As Fung Fuk Lestario, co-founder and CEO of Rupawa, puts it: “It can be chaotic. We hired 50 people at one go. Because of that, there will be a lot of turmoil. If you do it at normal pace, you will build the culture slowly. But here we have to do steroidal hiring. Because of the lack of culture building, there will be a lot of friction, and so a lot of attrition too.”
But Juan Chene pointed out the positive side as well: “The focus for Foodpanda was to get a lot of big restaurants onboard right in the beginning. So we had to get a great sales force and advertisers straightaway. The sales excellence focus can be interesting to learn and replicate.”
Why are Rocket grads such assholes?
To this question from the moderator, who was Kevin Aluwi, chief financial Ojek at Indonesian motorcycle taxi aggregator GO-JEK, the three panelists became introspective.
Fung Fuk Lestario was the first to tackle it: “We are given a lot of budget, and with it a lot of responsibility. That is a lot of power, and sense of decision-making, which can go to the head of some people – some, not all [laughs]. That’s my diplomatic answer.”
Steven Kim personalized it: “You feel you are way more in the top rungs compared to your peers at that point of time in their careers. With that comes long hours, lack of sleep, no time to exercise, and you grow overweight and grumpy.”
Juan Chene’s answer to the asshole perception was succinct: “A lot of things go on, so you learn to say ‘no’. A lot of people don’t like to hear ‘No’.”
How to beat a Rocket company
“If you are a startup, you shouldn’t be competing against a Rocket company,” quipped Steven Kim in jest, when asked for tips on competing with Rocket-backed ventures. But then he went on to underline the need to localize in the Asian market. “You need to develop a value proposition that is more local, and communicate that to the local market and industry, against a global company like Rocket.”
But the prerequisite, he added, is making sure you are executing – “and that is how you can raise capital too. If you look at senior managers in Rocket, they are working till 11-12 at night. So you have to be ready to do it in your startup too to take Rocket head-on.”
Fung Fuk Lestario was more gung-ho, saying there are lots of ways to compete with Rocket. “First, understand that Rocket is a big conglomerate of companies. The dynamics have changed in the last few years. Rocket has already done the top few companies in many internet verticals. So now Rocket has become more aggressive. They are copying AirBnB, Uber etc – verticals they wouldn’t have entered early. These models have not been fully validated.”
Fung says the key for startups is knowing that they can out-innovate Rocket, because that is it’s Achilles’ Heel. “Pick a niche, which Rocket won’t copy, and make it really big so that when Rocket comes, you are too big to touch.”
That’s of course is easier said than done. Juan Chene had a more operational tip for competing with Rocket: “It is important to spend money wisely. Hire right. That is something Rocket doesn’t do. So you can have an advantage there. Get a great team and build it with you. Try to find ways to spend money more targeted into localized communities. Building those communities early can give you an edge over Rocket.”
A marathon versus a sprint
The mindset of a Rocket company is very different from that of a typical startup as we know it. Steven Kim has experienced being in a Rocket company that ran out of steam, before striking out on his own with Qraved. He shares a very personal observation on the change he has felt: “The biggest difference in mentality is that you are in a marathon instead of a sprint, which is what Rocket companies do. The smarter ones who sprint always burn out. So the real startups will think in very different ways. Normal startups think long term. I learned that and am doing it differently now.”
Juan Chene concurs. His advice to startups is not to think like Rocket “which thinks investors need to see the short term returns. Focus on long term goals.”
The last word from these entrepreneurs who ‘graduated’ from Rocket is that while KPIs are important, in the early stages of a startup, it is better to focus on fine-tuning the business until it is poised for a surge into high growth. And keep the innovative, entrepreneurial, visionary spirit alive always – instead of metronomically ticking off one growth target after another.
This is part of the coverage of Startup Asia Jakarta 2014, our event running on November 26 and 27. Follow along on Twitter with the #startupasia hashtag.
This post These entrepreneurs left Rocket Internet to strike out on their own. Now they share how to beat Rocket companies appeared first on Tech in Asia.
These entrepreneurs left Rocket Internet to strike out on their own. Now they share how to beat Rocket companies
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