Rocket Misfires — Samwers lose key people ahead of huge fund raising to clone globally

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The three Samwer brothers (Oliver, Marc and Alexander) founders of the Rocket Internet incubator in Berlin, are the most successful Internet entrepreneurs in Germany and possibly Europe. After launching and exiting multiple businesses, many of them clones/copycats of US startups, they are multi-millionaires. Indeed, their Groupon clone CityDeal sold to to Groupon for an estimated €750m in cash and shares. But much of that success looks threatened by the departure of at least 20 of its key staff in the last two weeks – including CTO- level people – and possibly as much as 40, according to multiple sources spoken to by TechCrunch Europe.

While Rocket Internet has around 200 people on staff, losing key heads could be a severe blow to the renowned incubator. The timing could not be worse for the Samwers, who are understood to be in the middle of raising at least a billion dollar financing round designed to clone every successful US startup, to launch them outside the US much faster and become a larger global player than many of the Silicon Valley businesses they plan to copy.

Amongst those 40 staff, Rocket Internet has now confirmed to us that one of its key founders, Christian Weiss, CEO at gimigames.com and the former Managing Director at Rocket Internet GmbH, has left to pursue his own interests. Another former Rocket MD, Uwe Horstmann, already left already in summer.

Weiss’s departure, along with nine other envelopers, indicates huge strains at the incubator. As one source told us: “All those leaving are fed up with the Samwers and are going to do something on their own.”

Rocket Internet made its name as an incubator where young MBA founders would be given a healthy salary but just a small amount of shares in a clone startup backed by Rocket. Their most recent clone is one of Pinterest, called Pinspire.de, which typically looks exactly like the original. The business model has worked to attract young aspiring entrepreneurs who were concerned about the risks of a startup – many of them attracted by the Samwer’s focus on “execution innovation” rather than “conceptual innovation”, a model followed more by Silicon Valley.

But it would appear many of Rocket’s staff have seen the management do extremely well out of the exits of Rockets clones while they’ve been left with a mere salary.

As another VC source told us: “Many are leaving and the ones that are still there have ‘mentally’ left Rocket.” He told us that with Groupon shares vesting at the end of many more at Rocket will “break loose.”

A key component of Rocket is a long time member of the Samwer’s ‘praetorian guard’: Florian Heinemann. Samwer observers will be looking to see if he stays on.

Another source with intimate knowledge of Rocket’s internals told us “the situation is very tense” and that those leaving included tech leads and CTOs.

They said Rocket had recently gone more for “managers than for entrepreneurs with Rocket being more like a factory than a venture builder” with managers offered “equity kickers” rather than bonuses. How the terms of those operate is up to the Samwers, who’s are legendary for their aggressive business style. Indeed, Oliver Samwer recently walked out of a pre-arranged interview with TechCrunch.

“The people in charge are more hired managers than the people who started Rocket. They won’t contradict Oliver, it will lose its drive, and it just won’t attract new people if it’s run like a factory,” one well-placed sourced told us.

We reached out to Oliver Samwer for comment who replied on email: “Rocket is growing very fast and its team has also been growing very fast. Rocket develops entrepreneurs and sometimes people decide to go their own entrepreneurial route at some point of time. We think this is what Rocket stands for: an entrepreneurial culture. We continue to have a great relationship with Christian and his colleagues and wish them great luck with their new venture.”

When asked about the departure of other staff and their fund raising exercise, he replied: “As you know we never comment since we focus on building great internet companies instead. Christian and 9 programmers will do their own new venture.. we will continue to collaborate in the future.”

Weiss emailed us with the following statement: “I cannot tell you more about my plans right now, but I can tell you that I am looking back at four and a half fantastic years since I founded Rocket for Oli, Alex and Marc in Summer 2007. I can only thank the whole Rocket team and especially Oli, Alex, Marc and my Co-MDs for this great opportunity and support. I am absolutely convinced that we will continue to collaborate in the future.”

But the departure of key players like Weiss comes at a time when the Samwer brothers are looking to scale their cloning model internationally. For that they will need vast amounts of money, but the prize is huge. Imagine if you could repeat the best of the Valley’s startups in the markets those companies had yet to localise for or reach. Many successful Silicon Valley companies rarely look outside the US until it’s too late. That is a trillion dollar prize, which the Samwers, acknowledged masters at executing clone businesses, would gladly take.

Indeed, we understand a key lieutenant of Yuri Milner’s DST fund was recently walked around the Rocket Internet building, meeting various staff, which would suggest the Samwers could be in talks with DST about their fund raising, though Oliver Samwer declined to comment.

As one source told us: “Oli’s great thing is his family offices investors were very supportive, but in order to go global he needs large institutional invest investors.”

In addition, we understand a brand new incubator is being created in Berlin which will compete head on with Rocket for talent. We understand it has significant backing though no further details are available at this time. However it will be based on creating innovation-driven startups “not just plain copying” a source said.