The case for entrepreneurial plagiarism or why are the Samwers good for entrepreneurship

by Vasile Tofan

Aldrich 12 was packed to its limits for Oliver Samwer’s talk yesterday at HBS. It seems that neither the en masse departure of his key people, nor the blitzkrieg management style are diminishing the allure of Rocket Internet. No question, it is still considered bon ton to smirk at the reference to their clone machine, but no one can deny that the machine has been tremendously successful. I commented on Andrej’s post on the topic that ultimately the copycats are a necessary evil. In this post I would like to further elaborate on that thought.

Slide from Oliver Samwer’s presentation at HBS,
referring to Dafiti as an ‘adaptation of the
US peer model Zappos’ and detailing the
phenomenal growth of the company

‘Copycats’ vs. ‘Originals’ – where is the distinction line?

First of all, ‘copycat’ is a tricky label. The line between what is and is not a copycat is blurry at best. While there is a clear distinction between an original and fake Louis Vuiton bag, the case of startups is more complicated. Was Facebook a copycat of Friendster (the latter already launched before Zuckerberg even enrolled at Harvard)? Google a copycat of Yahoo Search? Yahoo Search of Altavista and Infoseek? Was Zappos a copycat of the Amazon’s shoes section? I for one cannot tell. Fred Wilson implicitly suggested the looking in the mirror test in judging the copycats (‘I couldn’t look myself in the mirror if I were to invest in anything but the original’), but this is tricky too. Otherwise, shouldn’t Union Square Ventures drop Zynga, which is known for systematic ‘creative adaptation’ of competitor games?

Copycats lead to better products

This is about creative destruction at its best. Amazon would not have been the delightfully easy to use platform it is now in the absence of an army of copycats it had to outdo. It is for a reason that we moved from Netscape to Explorer to Mozilla to now Chrome. A successful copycat has consistently improved on the original, making all of us using it the ultimate beneficiaries. TestTube, for instance, was a precursor of Birchbox. However, nobody knows the original and we are proudly celebrating Hayley and Katia as visionary entrepreneurs. It is Birchbox that ultimately had a product which consumers loved more. Now, why should we smirk at Samwers’ Glossybox? The situation just repeats itself. Moreover, the copycat is ahead of the original on certain aspects. Glossybox, for instance, was first to launch a male offering, while Birchbox is still in coming soon phase.

Copycats help the incumbents to scale up

Groupon would probably not have been the $12bn company it is now absent the CityDeal acquisition. Similarly, eBay would have arguably not been so successful in Germany absent the Alando transaction. Where the original US startups win on originality, the Samwers of the world compensate on execution and understanding of international market intricacies. The fact that the clones end up being bought by the incumbents is the ultimate proof of the value they create.

Copycats can be genuinely innovative

One of the reasons e-commerce is slow to take off in emerging markets is the broken infrastructure – reliable payments and logistics systems in particular., a ‘copycat’ launched by a fellow HBSer in Russia, has been accepting cash payments on delivery instead of credit cards to address the payment barrier. Samwer’s e-commerce projects in Vietnam are building an army of scooter curriers to overcome the delivery constrain. iZettle, the European counterpart of Square, is coming with a distinctly innovative (and seemingly superior) approach to hardware security. and One Kings Lane added quirky twists to the traditional flash sales sites. By adapting the core elements of the business model the copycats can be truly innovative, which is always an admirable thing and pushes the entrepreneurship ahead.

Market talks

Ultimately, it is the market mechanism that puts the definite stamp of approval and legitimizes the clones: VCs pour in money, MBAs join them and consumers buy their services. 

Mainstream VCs are clearly embracing the imitators. Look at the backers of LivingSocial, BuyWithMe or iZettle and you’ll probably conclude that Fred Wilson is rather lonely in his mirror test. Samwer’s 10min interview slots at HBS filled up beyond capacity as MBAs are keen to join Rocket’s gold rush. More consumers are buying sneakers on Zalando than on Zappos. Closer to home, at least five of the 2011/12 winners of HBS MVP funding, are ‘copycats’ of some sort.

The reason Samwers are so irritating is because they don’t even try to mask or somehow soften their plagiarism. In fact, they seem proud to copy the look and feel as closely as possible! To build on the academic citations parallel, what they do, might not be plagiarism at all, as they proudly cite the source (‘Zalando is our Zappos, Pinspire is our Pinterest’)     :-)    . Would they be less irritating if they had carefully altered the designs or come up with more original names? Probably yes. Would that have changed anything of substance about the argument? No.

We might all smirk. But the Samwers are clearly having the last laugh. At least until more agile copycats end up disrupting the ‘original clones’ with even better copies. In the meanwhile, consumers are simply loving it.