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.<p>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.<p>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.<p>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.<p>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.<p>[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.
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".<p>EDIT: This seems to be them: <a href="http://www.rocket-internet.de/" rel="nofollow">http://www.rocket-internet.de/</a>
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.<p>While this is definitely a valid criticism, I'd urge you to read this post: <a href="http://posts.richoakley.com/post/rocket-internet-respect" rel="nofollow">http://posts.richoakley.com/post/rocket-internet-respect</a> 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.<p>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.
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 (<a href="http://www.innovation-village.com/2012/12/rocket-internet-launches-kaymucomng.html" rel="nofollow">http://www.innovation-village.com/2012/12/rocket-internet-la...</a>). 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 (<a href="http://www.innovation-village.com/2012/10/j-p-morgan-invest-in-jumia.html" rel="nofollow">http://www.innovation-village.com/2012/10/j-p-morgan-invest-...</a>). I wish them the best.
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.<p>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.<p>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?<p>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.<p>5) Is this the first technology incubator to go public? Public companies are similar to them?<p>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.
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.