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Summary:

Europe’s most notorious cloners have built their reputation by copying big American companies. But now they appear to be readying a new rival to small Swedish startup Wrapp — a change of tactics that has ‘surprised’ Wrapp CEO Hjalmar Winbladh.

dropgifts-grab

Rocket Internet, the German web incubator run by the Samwer brothers, is notorious for aggressively cloning American sites and launching them in Europe. They’ve done it with everything from eBay to Facebook to Groupon — and just a couple of weeks ago they came under fire for the shamelessness of Bamarang, their carbon copy of the design flash sales site Fab.com.

While their tactics win them few friends — even Russian superinvestor Yuri Milner apparently turned down the chance to join their latest fund over concerns about their approach — there is at least an obvious method on display. So far, the Samwers have targeted established, well-funded, American services who have yet to gain much of a footprint in Europe.

But today a report about their latest venture seems to show that they’re changing tactics.

According to Berlin blog Silicon Allee, Rocket is gearing up to launch “Dropgifts”, a rival to the gift-giving service Wrapp:

Rocket Internet’s next clone startup will be called Dropgifts and will be modeled on the Wrapp gift-giving service, Silicon Allee understands. Two Facebook pages have already been set up for the new service fromRocket, the Samwer brothers’ investment vehicle, a hint that it will launch sooner rather than later.

[…]

The site also includes three bullet points: “Surprise your friends with free gift cards”, “Choose from a variety of awesome brands” and “Sign up and start Dropping free gifts today”. The “awesome brands” include some names from Rocket’s very own stable, such as Zalando and Wimdu.

Wrapp essentially allows people to send gift cards to their friends on social networks — sometimes paying from their own pocket, sometimes passing on offers from retailers and other businesses. Groups can also use Wrapp to club together and send joint presents.

While it’s not entirely clear what Dropgifts will look like — the sites are currently password protected, and the Facebook pages were taken down over the weekend — the report appears to be accurate. Indeed, when it does launch, the service seems to plan on going big: a search of domain records appears to show that individuals linked to Rocket have lined up Dropgifts sites in countries across Europe, from the U.K. in the West to Russia in the East, and from Finland in the North to Italy in the South.

The difference between Dropgifts and the other Samwer clones is that unlike previous targets, Wrapp is not an established, well-funded, American service: it’s a young startup that only launched in Sweden at the end of last year. As it says on its website:

Wrapp is based in cold and dark, but sometimes warm and bright Stockholm, Sweden. We also have an office in sunny California’s Silicon Valley. Currently we only partner with retailers in Sweden, but other countries will be added very, very soon!

True, Wrapp isn’t necessarily an entirely run-of-the-mill startup. It has a great founding team, including serial entrepreneur Hjalmar Winbladh, the former CEO of Sendit and Rebtel, and Andreas Ehn, the former CTO of Spotify. It closed $10.5 million in funding at the turn of the year, from well-regarded investors including Reid Hoffman of Greylock and Skype founder Niklas Zennstrom through his company Atomico. And it’s ambitious, with plans to launch in America and the U.K. this year.

But unlike most of the businesses that Rocket clones, Wrapp is barely out of the starting gates.

I spoke to Wrapp’s Winbladh today, and he told me that he was “surprised” by the rumors.

“At this point we don’t have much information about them — so it’s premature for us to say anything,” he said. “But it’s surprising that they would clone something as young as Wrapp.”

Wrapp already has sales people working in Germany and the U.K., both markets that Rocket appears to have lined up for Dropgifts, he said — and added that he believed the company was well prepared for a battle on German territory.

“I’m used to competitive situations, and there are lots of things with this product that make it hard to copy,” he said. “And because of the situation with clones in Germany, companies like Wrapp have to launch with strategies in place for the German market.”

So have the Samwer brothers crossed the line this time?

I’ve written recently that cloning and copying is a fact of life for most significant businesses, and heard from experts who say that it practice happens more often than we would like to admit, often in our own backyards. But while they argue that the best way of fighting that sort of copying is to go international earlier and execute better, what do you do if you are the underdog? Where do you draw the line?

Compared to the Samwers, who are currently pitching investors for a $1 billion growth fund to pump up their businesses, Wrapp is very small fry indeed. Rocket isn’t just hoping to build a copy of an existing major site and exploit a geographical market it has yet to enter, as it has done in the past with eBay and Groupon: it’s looking to elbow its way past that competitor before it even gets going.

Under the antitrust laws of many countries, using market dominance in one area to force out competitors in another is considered anti-competitive practice. By this token, the Samwers — who control one of Europe’s strongest Internet companies and have a massive war chest — are starting to tread a fine line.

Rocket did not respond to a request for comment. I suspect its employees may simply scoff and suggest that Wrapp for not growing fast enough, the question is how far and how fast can a very young startup be expected to expand.

“Of course I’m paranoid about it — I am an entrepreneur, which means I am paranoid about everything,” said Winbladh. “I won’t say I am not concerned, but they will actually help me to execute even better because it will help me galvanize the team.”

  1. Please stop complaining! This is the life of anyone, and it brings great value to consumers faster! Even Pablo Picasso said: “Good artist copy, great artist steal”
    The great thing about online business is that they are easy to start which makes them attractive for entrepreneurs in the first place. Entrepreneurs should not be surprised by that. Groupon had a huge benefit in finding Rocket Internet and joining forces. See it as an advantage!

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