I call them good examples of what works with dubious ethical implications. We are talking about startups that copied (“cloned”) ideas from more or less consolidated companies, modified them a little and, as a result, made a fortune.
You’ll learn:
- How these seven startups stole others’ ideas and implemented them in non-existent markets
- why Germans can be dangerous for established companies
- that you can make a LOT of money with cloning
Ready to learn from the best in the cloning game? Go for it.
Three brothers (Marc, Oliver and Alexander Samwer) were fascinated by the concept of eBay and wanted to reproduce it in Germany.
Unfortunately, eBay never responded to their requests for collaboration.
This was not unfortunate for the brothers. It was unfortunate for eBay. The lack of response led the Samwers to launch the business themselves.
Fast forward three months. The brothers have just opened their fourth glass of champagne to celebrate the HUGE success they have achieved in just 90 days after launch. (I assume they drank champagne; that’s what I would do.)
But their party is interrupted by a loud phone ring. One of the brothers answers the phone; It’s Goldman Sachs.
eBay has realized that Alando is a formidable competitor. They also realized that the best way to get rid of competition is to acquire it.
Story summary
eBay acquired Alando for $43 million just three months after the startup went live.
Unless you’ve been living under a rock, you know that Zappos is an online shoe store. They have advertisements everywhere.
But Zappos was almost as popular 10 years ago. Soon, what happened to eBay happened again to Zappos: a German took note.
His name was Rubin Ritter. With the help of his co-founders, Robert Gentz and David Schneider, he cloned the Zappos idea and applied it to the European market.
Thus was born Zalando, a web retailer that even stole its first syllable from Zappos.
(Fun fact: the Zappos clone is called Zalando. The eBay clone is called Alando. Coincidence? I don’t think so.)
But Zalando didn’t want to be just another clone. The store soon became as big as Zappos and even more valuable ($5.3 billion).
Story summary
Zalando became even more valuable than Zappos and was never acquired by the “original” company.
Quora is a United States-based question and answer site where users can interact with each other, exchange opinions, and answer or post questions.
That’s pretty much how I would describe Zhihu too, except it’s a China-based platform.
As of March 2021, Zhihu hosted 315.3 million questions and answers posted by 43.1 million people.
In comparison, Quora hosted 88.6 million questions in March of the same year.
Unfortunately, Quora has not published the number of answers its platform hosts, so we cannot compare the numbers.
But we must keep in mind that Zhihu is one year younger than Quora. This means that the imitation achieved at least the same success as Quora, if not already surpassed it.
Story summary
Even though Zhizhu is a Quora knockoff and is a year younger, the platform became a huge hit in the Asian market.
Lazada, “the Amazon of Asia,” was founded in 2012 and is now present in six countries: Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
Like Amazon, Lazada sells… well, everything: from electronics and appliances to clothing and books.
The startup has copied Amazon even when it comes to shipping and return policies. Lazada offers free shipping and returns, just like its big brother Amazon.
The only real (but important) difference between Amazon and Lazada is related to payment options.
Many Asians don’t like to use credit cards or don’t have them. I know, a surprise.
While Amazon mostly offers payment through credit cards, Lazada also offers the option of cash on delivery. This makes Lazada much more attractive to the average Asian consumer
Story summary
Lazada still can’t compare to the giant that is Amazon, but the startup is doing exceptionally well in its own playing field. This is because the startup has met its consumers where they already are and implemented unique solutions.
It seems that the brothers like to clone together. Like Alando, Beeconomic was founded by brothers Karl and Chris Chong.
They launched the startup in 2010, two years after Groupon launched. Beeconomic’s entire business model was borrowed from the American company.
The startup contacted merchants, organized discounts and special offers, and announced them to its audience.
This turned out to be just what the Asian market needed. Beeconomic was on the fast track to success.
But Groupon had its eye on Beeconomic.
Just seven months later, the company acquired it for a staggering $24 million.
Beeconomic was renamed Groupon Singapore. Karl Chong, one of the two brothers who launched the company, stayed with the company as CEO, although not for long.
Watch the interview with Karl Chong here. Briefly talk about how and why the company was acquired:
Story summary
Beeconomic did so well that it was acquired by Groupon just 7 months after launch for a whopping $24 million.
Groupon made it onto this list twice because it was cloned at least twice, but for different markets.
Beeconomic was aimed at the Asian market. CityDeal focused on Europe.
I should also mention that CityDeal, an imitation of Groupon and Beeconomics, was another product of the Samwer brothers’ factory, Rocket Internet.
(Remember them? They’re the same brothers who cloned eBay and made $43 million. Well, they realized they can make a lot of money cloning. So they built a business that follows the formula: find a non-existent market + clone successful ideas = earn money).
CityDeal shares the fate of Beeconomic. It was acquired by Groupon just five months after launch, but at a better price for the Samwer brothers. $170 million, to be exact.
Story summary
The Samwer brothers also scammed Groupon and made $170 million from their counterpart.
But is it moral?
I’m not sure.
Most of us are quick to judge the Samwer brothers and the like. We are convinced that what they do is immoral, and we see their success as an undeserved reward.
But we could also see it another way.
Cloning startups share useful and valuable ideas with a larger population. They take those ideas to non-existent markets and improve the lives of consumers.
Think about it.
Before Beeconomic, Asians did not have the same opportunities as Americans. They couldn’t access coupons and discounts, so they had to spend more money than a US citizen using Groupon.
Beeconomic was the first to offer the same solutions to the Asian market, helping people save money.
Are people supposed to refuse? Is the government supposed to say “No, don’t come to our market, even though we really need this solution”?
It is important that we reflect on these questions.
