The Samwer brother's blitzkrieg on Silicon Valley
German brothers Marc, Alexander and Oliver Samwer have made billions from copying successful online businesses. Is their ruthlessness justified?
"You haven't arrived until your web application has a German clone," TechCrunch founder Michael Arrington observed back in 2008. Tell that to the world's largest e-commerce company, Amazon, which has become the latest target of three publicity-shy German brothers whose skill at devising 'copycat' websites has earned them billions as well as the fear and loathing of much of Silicon Valley.
Marc, Alexander and Oliver Samwer are "among Europe's most consistently successful digital entrepreneurs", says Wired. "They are also among the most controversial."
Ever since 1999, they've been shamelessly knocking off the brilliant creations of Silicon Valley's best and brightest and cloning them internationally. As a business model, it's been "wildly successful", says Bloomberg Businessweek. Since starting their first "dot-clone" (a German version of eBay), the brothers' have gone on to duplicate high-growth web firms, including Airbnb, eHarmony, PInterest, and Groupon. Their Berlin-based incubator, Rocket Internet, has launched more than 100 companies.
Imitation might be the greatest form of flattery, but it can prove very expensive for the brothers' targets. Their imbroglio with Groupon was a case in point. Two years after the innovative daily-deal site launched in Chicago in 2008, the Samwers launched a blatant knock-off called CityDeal.
Within five months it was the top deal-of-the-day site in countries across Europe. "Groupon could have fought CityDeal in the market place," says Businessweek. It could perhaps have launched an intellectual property lawsuit, "though the chances of winning would have been slim" (firms can't be patented and trademarks only apply in countries where they're registered). But it "took the path of least resistance" and bought its German clone for $1bn.
The Samwer brothers grew up in Cologne, and "always dreamed of starting a company when we were aged 12, 14, and 16", Marc explained to Zeitgeist in 2007. Until the mid-1990s, the internet wasn't even on their radar. That changed in 1998 when they took a trip to Silicon Valley, where they worked as interns and spent evenings attending talks. Bowled over by eBay, they had the idea of "starting it back in Europe". The rest is history.
The three siblings claim to play an equal role in their 'clone factory' (see below), but it is the "physically imposing" middle brother, Oliver, who has emerged as de facto leader, "renowned for his effectiveness... and ruthless execution", says Inc. magazine.
Last year, he was forced to apologise after an internal memo to senior staff was leaked to TechCrunch. "I will die to win and I expect the same from you," he wrote, giving managers the weekend to produce a plan for a "blitzkrieg" in their territories, signed "with your blood". Watch out Amazon!
The Samwers' digital clones are a "licence to print money"
In taking on the might of Amazon, the Samwer brothers have launched their most audacious campaign to date, says Nikolas Woischnik on TechBerlin.com. The main territory they're targeting with their new site, Lazada (aka Mizado), is southeast Asia the fast-growing economies of Indonesia, Malaysia, the Philippines, Singapore and Thailand, where Amazon currently has no presence.
But they seem to be taking more than the usual care to avoid the attentions of lawyers. Most of the copy-cat sites that come out of Rocket Internet are faithful to their originals in every last detail. Yet they have taken care with the Amazon logo to replace the famous orange curve with a shopping cart.
Are the brothers rip-off merchants or legitimate entrepreneurs? The founders of Airbnb (an online booking platform for home rentals) are in no doubt, says Max Chafkin in Inc. magazine. They've described the Samwer's German version of their site, Wimdu, as the work of "scam artists". But there are just as many in the tech community who disagree.
Oded Shenkar, professor of global business at Ohio State University and author of Copycats, argues that American businesses place an unreasonable emphasis on innovation ignoring the fact that many great firms, from Southwest Airlines to Apple, have been "great imitators". There have always been copycat businesses, he says. Technology has dramatically accelerated the process. "A successful internet start-up can be knocked off in an afternoon."
Oliver Samwer "makes no claim to be an innovator", says Matt Cowan in Wired. "My advantage is never that I'm first," he says. "We just build faster and better in more instances than anyone else." Ironically, the brothers' success has now spawned so many imitators that the district of Mitte in Berlin is considered the "global centre" for digital cloning.
Still, no rival has yet matched their prowess. "They have a success rate of 70%-80%," concludes one local entrepreneur. "It's almost a licence to print money."