Rocket Internet: the German giant in Sri Lanka’s startup waters

Rocket Internet isn’t famous in Sri Lanka: it’s a German “internet company” that seems to have no need to market itself. However, anyone who’s been on Facebook has probably seen a Rocket brand paraded in front of them. Kaymu.lk, Lamudi, Carmudi.lk, Everjobs.lk – all the up-and-coming .lk platforms that seem to have serious pocket money for social media – yes, those are Rocket Internet companies. Sri Lanka’s internet platforms are under a slow blitzkrieg from a European giant that will basically spend whatever it takes to hit that #1 spot.

So what IS Rocket Internet? 

Some people call Rocket Internet an incubator. Incubation implies time and patience. Instead, Rocket Internet is the world’s biggest startup factory. The Berlin-based company specializes in taking existing, successful, and scalable Internet business models, spinning them off into startups, and then supersizing these startups across Asia and Europe almost in the blink of an eye.

Take Kaymu, for instance: Kaymu began in Africa in December 2012. Now it’s spread across 32 countries. That’s an expansion rate of a little over one new country every month.

Kaymu is just a tiny piece of Rocket’s pie. They own online farmers’ markets (Bonalive); car purchase platforms (Carmudi, Carspring); online furniture shopping portals; credit card payment systems; app-based laundry services; fashion; tourism, and flight services platforms; companies providing loan facilities; you name it. According to their last annual report, their portfolio’s valued at 3.1 billion Euro – that’s 3.39 billion dollars; that was after an IPO in October 2014. They launched 10 new companies in 2014 alone. Their food delivery services list spans 71 countries. It’s an empire that follows an ambitious credo: “To become the world’s largest Internet platform outside the United States and China.” 

4.4. billion people visit Rocket Internet websites and apps. Of course, these userbases probably cross over into each other, but statistically, that’s over half the world’s population.

Rocket Internet was created and run by the Samwer brothers: Marc, Oliver, and Alexander; their parents were lawyers. They’ve often been described to us as “brilliant” and “fantastically arrogant”, usually in the same sentence. They have a history of working together: they founded Alando – a sort of German eBay, which eBay acquired in 1999, and Jamba!, which VeriSign bought for $270 million. They then set up a venture capital company; now they have investments in Bigpoint, Facebook, Zynga, LinkedIn, and others. 

Silicon Valley hates their guts, of course. Sarah Lacy of PandoDaily aired many of the Valley’s feelings when, in 2013, it ran an article called “Are the Samwers going public? Who cares?” In it, she derided Rocket Internet for being a “shameless clone-ubator” and stated point-blank that “real entrepreneurs will never respect the Samwer Brothers.” “The Samwer brothers are despicable thieves,” Jason Calacanis is said to have tweeted. Stories about Rocket Internet carry words like “clone kings” and “clone factory”. Even European entrepreneurs haven’t been too keen, with some viewing the clone culture as detrimental to the spirit of innovation.

Oliver Samwer hasn’t been afraid to lash out in turn. “The chairs might be more comfortable at Google,” he said at the Digital Life Design Conference in Germany. “And the drinks. I hear they have sushi. We are for the real people who want to build companies.”

What are you up against?

In Sri Lanka, the overwhelming instinct is to diss Kaymu and Carmudi – ethics, branding, operations are things that frequently get lambasted. However, there’s also an alternative viewpoint: that the German giant, by driving service adoption, is benefiting Sri Lankan entrepreneurs just as much as themselves. Just like Anything.lk paved the way for Sri Lankan e-commerce and wow.lk and ikman.lk showed Sri Lanka the value of digital classifieds, Rocket Internet’s money might just be what’s needed to push adoption of more and more Internet services in Sri Lanka.

There is the very real risk of being run over, though. An article published in Wired magazine in 2012 reveals the key to the Samwers’ success: they’re brilliant at execution. Alando, their German eBay clone, was bought for millions of dollars after just 100 days of going live. At the time, there were 18 other competitors: the Samwers hit gold because they executed better than anyone else could. The same ethic pervades Rocket today – Oliver Samwer’s been quoted as saying that Rocket Internet’s approach is a methodical process, fine-tuned and repeated over and over.

“It’s very strict,” we were told by a source who worked in one of their local operations. “There’s a very strictly defined process and no deviating from the recipe.”

“You just have a bunch of very smart people around you that learn extremely fast and share a lot of knowledge,” says one of the top-voted answers on Quora, where tech and business mix. “You get a goal (“build up this department”, “define this process”, “hire a team of 10 people and organize them”, “solve this problem”,..) which will certainly exceed your knowledge and everything you have done before. As I already mentioned, they will give you a lot of trust and more responsibility you thought you can fulfill. But in the end, although you will do a lot of stupid mistakes and start over again and again, you most certainly will do the job. It is just how it works and it works surprisingly well.”

“… if you are a German/Austrian with good exit options (based on your prior work experience) and connections at the top (to Oliver or the partners) then I think it can be a great experience. For everyone else, think again. And think hard.” says another.

“Co-founders have no control or ownership over the company as they are simply puppets with fancy titles. No equity, reasonable pay but a title that they can’t get anywhere else.  It’s like picking up a Manager level guy from a tech company and making him CEO.”

Regardless of how Rocket Internet operates, the Berlin giants are apparently here to stay. Unless they fail fast across the board and pull out – which seems highly unlikely – future Internet startups in Sri Lanka, particularly anything related to e-commerce, are going to have to stay on their toes.