Some thoughts about Rocket Internet
I’m trying something new here, putting down some thoughts I write for our Dow Jones Market Talks — quick analytical takes on the day’s big tech stories.
- On Rocket Internet: Rocket Internet’s CEO Oliver Samwer likes to compare himself to Alibaba chief Jack Ma and Amazon CEO Jeff Bezos, or at least he aspires to. Mr. Samwer says Rocket’s mission is to become the world’s largest Internet platform outside the U.S. and China. The challenge, at this stage, is that the markets outside of the U.S. and China can’t yet provide the kind of returns and opportunities that Amazon and Alibaba are tapping into. Mr. Samwer likes the execution and leadership styles of Messrs. Ma and Bezos, but he’ll need nerves of steel, as well as deep pocketed, long-term investors, to make it into their leagues by dominating the slowly evolving markets of the developing world. (amir.mizroch@wsj.com; @amirmizroch)
2. Rocket Internet’s shares may have dipped on debut, but the company’s executives believe they have a winning formula for the long run: the concept that the best times for Latin America, Asia, and Africa are still coming, and so establishing e-commerce companies in those regions now makes long-term financial sense. As more and more people in emerging markets go online, especially through mobile devices, Rocket believes its formula for replicating successful American e-commerce companies in the Third World — where the margins are higher and competition is lower — will be vindicated. Rocket now launches around 10 new e-commerce startups a year. None of its current stable of 70 companies world-wide are profitable yet. (amir.mizroch@wsj.com;@amirmizroch)
3. A bad start to the day for key European tech companies Zalando, Rocket Internet, and Rovio. The first two disappointed on their Frankfurt Stock Exchange debuts, while the latter, Angry-Birds maker Rovio announced it was firing 130 people, or about 16% of its workforce. Rovio and its iconic Angry Birds game series have struggled in recent years amid stiff competition from a new breed of mobile games developers. Rocket Internet, a hybrid startup incubator and venture capital firm, is seeing a dip in its share price after launching. Zalando, the online retailer created by Rocket, is similarly disappointing. Tech watchers in Europe will be looking to see if these three firms, who are at the heart of the technology ecosystem on the Continent, can rebound, or whether European tech is headed into a cold spell. (amir.mizroch@wsj.com; @amirmizroch)
4. Tech editors were bombarded by a PR blitz from German ecommerce incubator Rocket Internet ahead of its debut on the Frankfurt Stock Exchange. The hype: Rocket has found a formula to replicate successful ecommerce startups from the U.S., and would roll them out in Africa, Asia and Europe at a dizzying rate. Rocket’s chief Oliver Samwer argues: Why build startups in garages with two MIT dropouts anymore, when you can get experienced entrepreneurs to replicate existing companies? Haagen-Dazs didn’t invent ice cream, he said, but it’s the world’s leading ice cream brand. Today, as Rocket disappointed on its stock exchange debut, falling below its issue price of EUR42.50 to EUR41.39, Mr. Samwer must be thinking, maybe original flavors are what investors are looking for after all. (amir.mizroch@wsj.com; @amirmizroch)
