Magical Couch of Truth Bombs - Episode 1 - Copycat Business Models

Sometimes the best things are unplanned. We’re experimenting with a new type of content where our Head of Stories, Zac, tells Kim and Adrian the topic of the discussion 10 seconds before we start filming! 🙃🎬

Transcript:

- So there was an article recently on copycat businesses in Latin America, in South America, it's called Copycat Versus Disruptors, something like that and it's talking about how they don't have, there's a lot of startups that are English-speaking, that never made it to that region, so there's a bunch of startups now and probably startup institutions, who are using a model of just ripping it off, similar to Rocket Internet as well.

- Yeah, well, we've been reading a lot of about them and we know that like, if you present a brand new idea to an investor, 99% of the time, they're gonna look at you like, "Where have you come from?"

- Yes.

- Like Gabe and me got shut down for five years, before they got any traction and if you're the disruptor in the industry, you're just gonna have a, you know, like pushing shit uphill actually,

- Yeah.

- whereas if you can reflect on something, that is working somewhere else in the world, you've immediately got a business model that's viable.

- It's a great example of how unfair the world truly is, is that the disruptors, there's also that saying awesome research around how it's often the third big crack, the third highly-funded startup within a particular vertical category will often be the one winner, because the first two spend all their cash educating the market on why this thing's good, they run out of cash and the third one comes across the top.

- What are we doing then?

- Fucks 'em up, yeah, I know. I don't know what we're doing, I'd probably have them capitulate. Like Rocket Internet definitely from Germany is the best example right there, they're the most, the biggest example in the world of people doing this. So they started off, I can't remember the names of their particular assets, but they've got a huge amount of assets.

- HelloFresh.

- HelloFresh.

- Iconic.

- Iconic.

- Fedora.

- Fedora, yeah, like a bunch of these multi, like multi, you know, columns and their model is they've got a fund, massive, massive, massive fund.

- 50% backed by a Swedish family or something?

- Yeah, super rich, so this family is like loving this model, 'cause it's like doing pretty well and they are public, the fund is publicly listed now as well, but yeah, they just, he figured it out where he ripped off, did a complete ripoff of Ebay and pushed it again, like these Latin ones, he pushed it to like a third world country somewhere.

- Yeah, all the colours were the same everywhere, I think it was like exactly the number of letters and exactly the colours.

- Yeah, like the multicoloured logo,

- Yeah.

- and then launched it to that other market and then within 60 days, Ebay bought them for, I believe, 50 mill US,

- Yeah.

- It was in a six, within, which is fucking good, that's like a million a day, it's a good salary. They actually tried to do an Airbnb replica,

- Yeah.

- and they really struggled, because of the heavy community aspect that Airbnb has, right, he said that they couldn't make it work, because it had this community vibe in it and that was when Rocket Internet decided to pivot to only doing really pure e-commerce play,

- Yeah.

- so I think if like founders have a generalised idea, that's quite mass market, you need to realise,

- Commodotize.

- yeah, commodotize, mass market, pretty broad, you have to realise that like there's much bigger fucking boys that are gonna be trying that startup and you and like you're so likely to lose, most of us have to like stick to a niche, where they've got an unfair advantage or something that flies under the radar a bit and create a brand and create a community, if possible around your startup. I actually for a very long time and maybe still a big part of me hates them and like I'd buy from Deliveroo in bits and like boycott Fedora, if I can,

- Because of it, yeah.

- because of it, like because, if you just support the people, that are copying, then would it like, then it doesn't incentivize anyone to be--

- The innovator.

- the innovator and if they start to really become that disgusting, that you can never make it on your, if you're the first person to innovate and you never make it, then who's gonna be that first person, right.

- Everyone would be shit scared of innovating, yeah.

- Yeah and did then only leave it up to like the big corporates, that have the money to make some mistakes and do it, they're never gonna innovate fast enough, so then the world's never gonna change.

- Yes.

- There's only like that many Elon Musks in the world, that are like willing to put everything they've got on the line to create change, I think there's something different about taking it and going to a different country,

- Yep.

- so this copycat model around taking something that's happening in the States and then doing it in Latin America, I don't know that there's any, I think that's fine, like I think that startup would have taken a long time to conquer the States and then conquer Canada and Australia and all the English-speaking countries would be like first things in their five-year road map,

- Yeah.

- they would have taken forever to get to Latin America and then to localise, right,

- Yep.

- so, I don't know.

- It does give that--

- I actually don't know that there's anything wrong with that.

- Yeah, I think the lessons I've learned from Rocket Internet, like I 99% hate them, but 1% respect them and the 1% is pretty heavy, I think I say 1%, 'cause five or 10% would--

- 'Cause you don't wanna sound like you're--

- I don't wanna say five or 10%, even though it might be secretly be part of the same thing, but the thing I, the thing I,

- I'd be like a 15.

- no, it's not 15, it definitely would be max 49, but but the thing I do respect about Rocket Internet, even though they're dicks is in approach, like it's really brutal that they're stealing innovative people's ideas, but the thing that can be learned from the two things, there's one like, execution, execution, execution, like founders are so, they're great at coming up with ideas, but they're so shit at getting it done and Rocket Internet has created a factory of getting it done and I think other founders can look at that model, obviously not everyone can burn 10 million a month, but just that meticulous, like really treating it heavily commercial from day one, really sprinting, they run probably faster than anyone in the world, they get to like--

- And they're not romantic, 'cause they want them to like solve the problem,

- Yes.

- you know, they see it as they're there to like make a shitload of money and get out and they weren't there to be romantic about how they were gonna solve this food delivery problem, they didn't even really care, you know, when we're talking to super early stage founders, if you see something going well in the States, or you see something going well in Asia or even in Latin America, like this thing and you wanna copy them, Australia's often not the first car off the rank, in terms of innovation and this, not, it's just not a problem copying a business model that exists and it's not, it's actually much easier to get an investor,

- Yes, yeah, it's a real shame as well that you know, entrepreneurs are so scared of people stealing their ideas and things like this obviously highlight that it does happen sometimes, but I think it's important for people to understand that there's so many winners in this space as well, I think there's this perception that there's winner take all, we were talking about food, like there's four, four options in Brisbane alone

- Yeah.

- and they're massive ones, so I think even though there's these giants, even though there's these giants like stealing ideas and even in China, like people looking on crowdfunding campaigns as their job to like steal hardware and physical products.

- That's a real problem though.

- Yeah, it's a real problem, but most of the time they only focus on mainland China, but I think again, for the most part, a lot of the time, these are really mass market consumer ideas, a big, big multi billion dollar play,

- Yeah, they want to take it out of the box, like who cares where you got it from?

- Exactly, so planners have just got to be careful that they don't go for stuff that's too generic or of course, you put yourself at risk of, the amount of ideas that we've heard pitched that Facebook or Google could so easily do and have done, usually in most cases already is crazy like, you've just got to be, people are just gonna do weirder shit.

- Yeah, yeah, or like find a really weird niche, that Google or Facebook isn't interested in being just for them,

- Yeah and just owning that space and that's not something, that the big platforms or big product companies are going to focus on in the near future.

- I think Google's the best example.

- Totally.

- They started like three years after Yahoo or something, or a year, two years after Yahoo.

- Yeah, Google wasn't first to the party, Facebook wasn't first to the party, none of these were. In a way everything is stolen, it's just what percent you stole.

- Exactly, adopted.

- Yeah.

- adopted.

- Borrowed.