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Summary:

Social gifts startup Wrapp says it is massively speeding up its expansion plans as a direct response to a copycat funded by the notorious German Samwer brothers — and the company’s CEO is warning retailers that doing business with the clone could prove costly.

Hjalmar Winbladh, CEO of social gift service Wrapp

Hjalmar Winbladh is angry. The normally unflappable Swedish CEO of gift-giving startup Wrapp, and a serial entrepreneur with a string of successful businesses behind him, thought he’d seen it all before. But then he ran headlong into Germany’s infamous Samwer brothers, Europe’s copycat kings.

“I’m used to competition,” he tells me. “But these guys are getting more and more aggressive with what they’ve been doing.”

He’s talking about the arrival of DropGifts, a clone of Wrapp that appeared from the Samwers’ Rocket Internet factory last month. The launch struck me as a significant escalation by the German trio because it moved away from Rocket’s tried-and-trusted model of cloning successful American websites, and instead chose to target a months-old European startup with an interesting but largely untested business. Sure, Wrapp — which partners with retailers to let you give gifts to your friends through Facebook — has got some substantial investment and strong credentials … but it’s barely out of the starting gate.

Over the last few weeks, Wrapp’s team has had time to digest the news and work out what the appropriate response is. And their decision?

It’s time to come out with all guns blazing.

Speeding up

To begin with, the company’s entire roadmap has been moved forward. The site currently only operates in Sweden, but Winbladh says a slew of new territories will be added much faster than had previously been expected — we’re talking weeks, not months. This, he believes, should prevent DropGifts from being the first mover in most important markets.

“We don’t have the luxury of being able to wait,” says Winbladh. “So we decided to speed up since the Samwers started their blitz against us.”

And in order to fund that rapid growth, the company is also ready to speed up another part of its plan, turning back to investors to build up its warchest — despite having only closed the last $5 million of its Series A investment in January. Winbladh says that although this is not what he expected to be doing right now, it will not be difficult to move so rapidly to the next phase of financing.

“We will not have a problem raising a Series B,” he says. “We could have raised more before. And it’s not a coincidence that we have [board members] Reid Hoffman and Niklas Zennstrom behind us.”

Recently Rocket defended their approach in conversation with our Berlin reporter, David Meyer. DropGifts spokeswoman Mariko Schmitz and Dominik Richter of Rocket company HelloFresh said that although Wrapp “inspired” the German service, that was only part of the story.“Of course [DropGifts has] been inspired [by Sweden's Wrapp], but there’s a big movement on the internet about social gifting and companies linking into Facebook.”

“In my opinion, the real work begins when you’ve launched a concept and you follow it up, and you build something on top,” Richter added.

And while the bluntness of the copycat has clearly riled Wrapp’s team, they also seem to understand that the best way to outrun a copycat is to do a better job. And here is where they think they really have the jump on their rivals: strong existing relationships with partners, more big partnerships on the way, and a team that is focused on doing its job properly.

“It’s a free world,” Winblad said, “but we think in the long term it’s about driving innovation, building the best product and cooperating with retailers. And I’ve spoken to a lot of retailers, especially global brands, who want us to speed up.”

Some stores, he says, are being “aggressively pursued” by DropGifts salespeople, but many of them are subsequently approaching Wrapp to voice their concerns about the German business. And his belief is that the Samwer brothers will make poor partners for other businesses because of their track record and short-term outlook.

“What puzzles us is that it’s completely different from what they’ve done in the past, which is cloning retail businesses. We have to be aligned with retailers, not compete with them: it’s very important to us to run a neutral business,” he argues. “They’ve made a strategic mistake because you can’t be a competitor to retailers while also building something with them and sharing data with them.”

Ultimately, he says, the conflict between DropGifts and the rest of the Rocket empire could be its undoing.

“If you are a global brand, I don’t think you can build trust with somebody whose business is copying retail businesses. If I was a retailer, I’d be very concerned about working with the Samwer brothers. They could be very, very dangerous.”

  1. Obviously the gifting space is getting hot right now! Beside bad copycats there seem to come up innovative models like Toast (http://toa.st) or BonaYou (http://www.bonayou.com/)

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  2. WOW, an early stage startup with 5 million in the bank needs a copycat to realize that it has to SPEED UP??? You should be going at FULL SPEED already guys!
    And now you are mad because you can’t leave work at 5pm anymore? That’s business! Welcome to the real world! If you are not good or fast enough to beat a clone you simply don’t deserve to take the market imo.

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