What’s it like to be the billionaire co-founder of a sprawling digital business empire that wasn’t born in Silicon Valley? Oliver Samwer, co-founder of Rocket Internet, gave a glimpse during an on stage interview with TechCrunch’s Mike Butcher, here at TechCrunch Disrupt London 2015.
The German startup factory is often accused of being a ‘clone factory’, taking a Silicon Valley business model to a region where a U.S. tech giant doesn’t play in order to landgrab untapped markets. Rocket has built a portfolio of 70 web companies worth billions in value using its ‘follower’ model, covering some 120 countries and playing across some four or five sectors.
Defending the cloning model, Samwer argued that entrepreneurship is a holistic endeavor — involving many more tricky pieces than just having a good idea.
“If you look at entrepreneurship one piece is the idea. But to get it done and to get it done in a sustainable way I think is a very different one,” he said. “If you look at emerging markets if this were easy just go and recreate Nigerian Amazon. Or just go to Indonesia and recreate Brightcove. Or go to Myanmar and create Booking.com. Then I think a lot of people would have done it.”
Rocket-backed companies include Amazon-style e-commerce platforms, a Square-style mobile payment reader, and even an Uber competitor, Easy Taxi. Although Samwer clearly has a measured appetite to take on Uber directly — i.e. in the markets the Silicon Valley behemoth is also directly targeting. Easy Taxi is live in around 30 countries at present vs Uber’s 67.
“I think you always should choose your battlefield,” he said when asked about competing with Uber. “I think to basically compete with a company like Uber, exactly in the same countries, exactly in the same model, would be probably very challenging.”
“We basically build our own model. Choose a model that has network efforts more within a country, instead of globally. Secondly, not too cash intensive. Thirdly, a lot of other factors come into play and I think we try to avoid battlefields that are too intensive,” Samwer added.
Samwer said Rocket takes “a very long term view” when it comes to seeking a return on its investments. “The management team is very patient,” he said, noting that it allows its ecommerce companies between six and nine years to reach break-even; five to seven years for a marketplace startup, “because it needs less capex”; and fintech companies six to eight years on average.
He argued that this long term view is part of the reason Rocket Internet’s value is about 30 percent below its 2014 IPO price at the moment. “Our companies are still relatively young,” he said, adding that Rocket is also a pretty difficult entity for analysts to get their heads around.
“We are very complex. We build businesses from scratch,” he said. “The only way to understand Rocket is if you look deep into every single one of our companies. And so on average it probably takes three times as much time for an average analyst to understand.”
The next wave of Rocket Internet backed businesses will continue to be a very broad church, of course, but Samwer name-checked areas of current focus — which he called “the new frontiers.”
“We double down on the new frontiers, meaning food, on home and living, on emerging markets… on new opportunities like mobile on-demand services; many of our services are present in London making good progress. On fintech services. So I think we are generally optimistic for transaction-based Internet model. And that has always been our core.”
During the interview, he was also asked about an early investment in Facebook. He turned a $10M investment in 2008 into a $50M exit a few years later but missed out on a much bigger share if he’d stayed invested.
Asked about that decision to sell, Samwer said: “Selling too early is probably our biggest mistake in many many years. That is the power now as a public company, we have the means to own more of our winners and we’ll keep them longer. And I think if you look at the first 16 years of our life we sometimes had to sell too early to find the next company.”