If you can't beat 'em, clone 'em: the copycat websites causing war on the web

Just north of Berlin’s Checkpoint Charlie there is a clone factory. It’s called Rocket Internet and it clones technology companies, copying sites such as Pinterest, Groupon and Airbnb, giving them a new name — in those cases, Pinspire, CityDeal and Wimdu respectively — and launching them in new territories.

Often, they go on to sell these knock-offs back to the startup: Groupon and eBay both bought their doppelgangers. Rocket, run by the Samwer brothers, Alexander, Oliver and Marc, has more than 700 employees and is currently operating 42 clones worldwide. These companies don’t actually impersonate their competitors in an attempt to phish customers; they style themselves as independent startups who happen to offer exactly the same service, which keeps them just the right side of legal.

‘I have heard people say phenomenally derogatory things about the Samwers,’ says Greg Marsh, who co-founded London startup OneFineStay and went to university with them. ‘They strike fear into the hearts of people who are less capable of executing.’ This is what the brothers, aged between 38 and 42, pride themselves on: not coming up with their own ideas, but being faster, tougher and meaner than other entrepreneurs. ‘I will die to win and I expect the same from you,’ Oliver once emailed his staff. ‘The time for the blitzkrieg must be chosen wisely, so each country tells me with blood when it is time. I am ready — anytime! I do not accept surprises. I want this plan confirmed... you must sign it with your blood.’

Since 1999, when they first cloned eBay (as Alando), the Samwers have made $650 million, according to Forbes, out of other people’s ideas. Part of that money came from the Crazy Frog ringtone — the Samwers’ company Jamba! marketed the amphibian, invented by Erik Wernquist. ‘The Samwer brothers are despic-able thieves,’ tweeted Jason Calacanis, a serial entrepreneur during the first dotcom boom, now an investor. ‘How do they sleep at night?’

Comfortably, apparently: Rocket and its employees don’t see themselves in the same negative light. ‘As with any industry, there will be competition and it is important that healthy competition is not wrongly confused as cloning,’ says Hinrich Dreiling, the co-founder of Airbnb clone Wimdu and a long-time Samwer lieutenant. ‘Just as Tesco is a competitor to Sainsbury’s and Apple is a competitor to Microsoft, we have our own competitors and it is this competition that is driving innovation within the industry. The market we are in is new and developing at a rapid rate — it would be un-realistic for any business to believe it could dominate or monopolise the market with no competitors.’ Dreiling insists that Airbnb is not Wimdu’s target: ‘The challenge is not other small innovators but rather how to take the largest chunk possible out of the hotel market.’

Airbnb couldn’t agree less. In June 2011, the company emailed its users: ‘A new type of scam has been brought to our attention: Airbnb clones posing as competition. We’ve discovered that these scam artists have a history of copying a website, aggressively poaching from their community, then attempting to sell the company back to the original.’ They didn’t mention the Samwers by name, but they didn’t have to: Wimdu is the com-pany’s biggest competitor (Dreiling declined to comment on the incident).

Marsh says that ‘anyone who’s worked with or seen the Samwers up close is impressed. They are not cowboys.’ And some argue that the Samwers are good for the European tech scene. ‘For a company based in Europe — or not in Silicon Valley — one of the toughest things is to compete against a well-funded business [there],’ says Marsh. The Samwers are competing against companies that can take care of themselves, the argument goes. And the Valley companies that buy their knock-offs get a ready-made customer base and the associated revenues, without having to build their own infrastructure on the ground (building a Groupon or eBay requires a lot of this; purer web propositions like Airbnb don’t, and so are less likely to buy or tolerate their clones). Davor Hebel, a London-based investor at Fidelity Growth Partners Europe, says, ‘Clones are a good thing in fostering the overall ecosystem and sometimes have a misleading name.’ Money from selling clones can fund more European entrepreneurs to start new businesses. As Dreiling says, Rocket is not after ‘small innovators’.

That may have been true until early 2012, when the Samwers did something new, bringing their blitzkreig against a young Swedish company, Wrapp, that allowed users to send their friends gift cards for shops such as H&M and Victoria’s Secret via Facebook. The Samwers’ version was called DropGifts.

Hjalmar Winbladh, Wrapp’s co-founder and CEO, was surprised: ‘It was a change of strategy from cloning big American com-panies,’ he says. ‘Suddenly they decided to aggressively pursue a small startup.’ Winbladh says the Samwers’ clone approached Wrapp’s clients — highly visible brands, including McDonald’s — undercutting their rates. ‘They aggressively pursued [our clients] not with a superior product but with a lot of promises about execution,’ he continues. ‘It shattered my business model. It cost us a lot of money.’

There is little redress for startups. It’s extremely difficult to patent business methods or website designs, especially across borders. As dastardly as the Samwers’ ethics may seem, their notoriety is because they are successful, not unique. ‘Ultimately I’m very relaxed about the idea that copying someone’s business model is a dirty trick,’ says Marsh. ‘We didn’t do that. But if you do copy someone’s business and you do it better, good luck to you. There’s nothing wrong with that — it’s called capitalism... I sometimes think a little competitive heat would keep us on our toes.’