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How the Samwer Brothers Cloned Their Way to a Billion-Dollar Empire
The startup world is full of success stories, but few are as controversial as the Samwer Brothers.
Alexander, Marc, and Oliver - three German siblings with a shared vision and an unshakable bond.
The Samwer Brothers gained notoriety by doing one thing exceptionally well: cloning American internet companies.
Their strategy was simple but effective:
Identify successful US startups
Replicate their models with precision
Execute ruthlessly
The trio's approach took Europe by storm. They quickly became the dominant players in the region's startup market.
Their secret sauce? Unwavering ambition, willingness to take risks, and perfect synchronization as siblings.
Despite their success, the Samwer Brothers faced backlash for their methods.
Critics accused them of lacking originality and employing harsh execution tactics. But the brothers remained unfazed, focused on their singular goal: winning at all costs.
Let's take life lessons from the Samwer Brothers!
Early Days and Influences
Growing up in Cologne, Germany during the 1970s and 1980s they were under the strong influence of their businessman father. From a young age they displayed ambition, confidence, and intelligence.
After attending Germany's leading business school, the WHU-Otto Beisheim School of Management, the trio moved to Silicon Valey.
They started as an intern in America and came across Ebay, the online auction site.
They believed that the success of eBay in the United States could be replicated in Germany. This was the birth of Alando.
"Our problem was we wanted to be entrepreneurs first, then had to find an idea," said Marc Samwer.
The Story Behind Alando - eBay Clone
In 1998-1999, Oliver, Alexander, and Marc Samwer teamed up with co-authors Max Finger, Karel Dörner, and Jörg Rheinboldt to create Alando, the German version of eBay.
Samwer Brothers left their hometown of Cologne and moved to Berlin. There, they brought in three college friends to help, including their 25-year-old chief financial officer, Karel Doerner.
Karel had only worked at the consulting company McKinsey & Company for two months, but he was the only one with experience in a corporate job. In February, they founded Alando.de.
The Samwer Brothers had spotted a gap in the market - eBay had not yet expanded internationally.
They created a direct copy of eBay's core features, from seller listings to buyer payments.
Christoph Braun, co-founder and managing partner at Action Capital Partners, recalls his first meeting with the Samwer Brothers:
"A good friend of mine who was a business angel contacted me and asked me to meet with them. The three brothers had come by train from Cologne—basically empty-handed, without one single chart. All they had sent me in advance by letter mail [sic!] was a simple business plan."
Christoph further added recalling his first interaction with the Samwer brothers, “I smiled from head to toe and I simply thought: either this is totally schizophrenic or totally boss. I said to my colleagues: Let’s do it!”
On March 1, 1999 Alando.de went online.
Within a month, the site had gained 3 million page views.
The site took off, and within 100 days of launch, Alando became Germany's No.1 auction site.
On May 17,1999, Goldman Sachs called to say that Ebay was interested.
On May 21, 1999, Ebay's founder, Pierre Omidyar, flew to Berlin.
And on May 30, less than a hundred days after founding the company, the six 20-somethings sold Alando.de to Ebay for $43 million.
As Scott Barnum, then Manager and Vice President of eBay International, stated: "In the German Internet-commerce world, they are very atypical."
The Samwer Brothers' Winning Formula
The Alando success story wasn't just luck. It was a masterclass in entrepreneurship that showcased the Samwer brothers' key skills:
Identifying lucrative business models
Aggressive promotion through marketing campaigns
Rapid movement to outpace larger competitors
Swiftly scaling the business for profits
This success catapulted the Samwer brothers into the European internet scene's spotlight.
Rinse and Repeat: The Samwer Strategy
After Alando, the brothers gained confidence in their model replication strategy.
Their thinking was simple: If it worked once, why not again and again?
Over the next decade, they perfected their playbook:
Step 1: Identify successful and rapidly growing internet companies
Step 2: Research how and why they work, studying their functions and code
Step 3: Launch an identical clone brand in Germany and other countries, leveraging past experiences
Step 4: Use aggressive marketing and funding to scale up quickly
Step 5: Sell the company to the major player they copied for a huge multiple of their investment
The Samwer brothers' bold strategy led them to successfully launch numerous startups, one after another:
Jamba! (Aug 2000) - a wireless content provider for games, pictures, and music. It was a copy of VeriSign which purchased it in 2004 for $273 million.
Zalando (2008) - a copy of Zappos (online shoe retailer). Zalando became one of Europe’s leading online fashion retailers, going public in 2014 for $5.9 billion.
CityDeal (2009) - a copy of Groupon which was sold to Groupon after 5 months for $126 million.
eDarling (2009) - a copy of eHarmony an online dating site. eHarmony bought a 30% stake in it.
MyVideo - a copy of YouTube
Wimdu - a copy of Airbnb
Paymill - a copy of Stripe
Easy Taxi - a copy of Uber
Foodpanda - a copy of grubhub
Lazada - a copy of Amazon
Usually, they sold their clone companies back to the originals and with each new project, they were raising more money.
Rocket Internet — The startup studio that's revolutionizing the tech world
In 2007, the Samwer brothers took a bold step and founded Rocket Internet, a startup studio that would change the game forever.
Originally known as JAC, Rocket Internet allowed the Samwer brothers to bring their own ideas to life, rather than just copying others.
To rapidly scale their startups, they hired young, hungry business developers and programmers who lived by the Samwer mantras:
Speed over perfection
Hire fast learners, not just experienced experts
Growth at all costs
By 2014, Rocket Internet had exploded to over 30,000 employees and raised a staggering $2 billion from investors like Russian oligarch Len Blavatnik and Swedish investment firm Kinnevik.
The Samwer brothers, once just emulating billionaire entrepreneurs, now joined their ranks. They owned a whopping 65% of Rocket Internet through their firm.
In 2015, Rocket Internet was valued at an incredible $6.6 billion, earning the Samwers the title of "German Internet Royalty."
Just two years later, in 2017, Rocket Internet sold its entire stake to Alibaba for $3 billion.
In September 2020, Rocket announced plans to delist from the Frankfurt Stock Exchange, buying back shares with the company's cash.
Fast forward to early 2024, and Rocket Internet's portfolio of startups spanning e-commerce, travel, fintech, marketplaces, and more is valued at over $12 billion.
The Samwer brothers and Rocket Internet have proven that with the right strategy, team, and relentless focus on growth, anything is possible in the startup world.
The Rise and Fall of Rocket Internet
Rocket Internet, once hailed as Europe's startup powerhouse, has faced a significant downturn. Here's a breakdown of the five crucial factors that contributed to its fall:
1. Increased capital availability: Since 2007, startup capital availability has skyrocketed from $55 billion to over $288 billion in early 2021. This surge has dramatically altered the investor-founder dynamic, giving founders unprecedented negotiating power.
2. Maturation of the tech talent: As the tech ecosystem evolved, operators gained valuable experience from past ventures. This maturation increased their value and control, making Rocket's model less attractive to seasoned professionals.
3. With shift in online marketing, Rocket's once-powerful USP in online marketing has diminished. Their SEO/SEM-focused approach has become outdated in an era of rapidly evolving digital marketing landscapes.
4. The rise of platforms like Shopify and BigCommerce has simplified e-commerce launches. This shift has rendered Rocket's technical infrastructure largely unnecessary, eroding a key component of their value proposition.
5. Reputation damaged: Reports of toxic work environments and questionable growth tactics have tarnished Rocket's image. Employees grew wary of potentially abusive conditions, while social issues further compounded the company's reputation problems.
Controversial Strategies
The Samwer brothers are known for their aggressive strategies, but they've faced a lot of controversy in European startup circles.
Workers at their company, Rocket Internet, described a stressful, high-pressure environment, with some employees even crying from the workload and tight deadlines.
Their focus on fast growth led to questionable actions, like buying customers to show false growth.
They were also sued by competitors for using unethical tactics and were criticized for copying others' business ideas.
Despite this, the Samwer brothers took on big risks and continued to push into new areas. Though their methods were controversial, their influence on Europe's startup scene is significant.
Their story highlights both the risks and rewards of aggressive business strategies in a fast-changing industry.
Oliver is more concerned by what he sees as a double standard. "In the internet, everyone says this kind of thing is a copy," he says. "But look at the reality. How many car manufacturers are out there? How many washing-machine manufacturers are there? How many Best Buys? Did someone write that Dixons copied Best Buy, or did anyone ever write that Best Buy copied Dixons, or that [German electronics retailer] Media Markt copied Dixons? No, they talk about Media Markt. They talk about Dixons. They talk about Best Buy. What is the difference? Isn't it all the same thing?"
What Aspiring Entrepreneurs Can Learn from Samwer Brother?
Love them or hate them, the Samwer brothers have left an indelible mark on the startup world. Here are five crucial lessons aspiring entrepreneurs can learn from their journey:
Prioritize speed over perfection. According to the Saamwer brothers, one should not wait for perfect timing. In the fast-paced world of startups, being first often outweighs being flawless.
More opportunities come with successful scaling. It attracts capital, talent, and leverages future ventures.
Being ruthless can backfire. It is evident that their mercenary tactics damaged employer-employee relationships and damaged careers. So, one should be careful.
Replicate wisely. In established industries, model replication is useful, particularly when you lack a local presence. But your model should have some differentiating features too.
A powerful partnership pays off. Entrepreneurs with no such sibling bonds as the Samwer brothers can make partners with like-minded people.
Which lesson resonates most with you?
As for me, all of these lessons learnt from the Samwer brothers are worth remembering. Which one are you going to apply next?
Whether you admire or criticize them, one fact remains undeniable: The Samwers excelled at efficiently cloning American internet companies. They proved that exceptional execution can overcome geographical disadvantages.
Their story serves as a powerful reminder that with the right strategy and relentless focus, aspiring entrepreneurs can build empires, even from unlikely starting points.
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Thank you for reading. See you in the next time.
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