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by Jonathan Lo Fred Wilson stated that he would not invest in copycat models. This surprising comment came despite the many success stories of copycats such as Google copying Yahoo, MercadoLibre copying eBay etc. Not to take anything away from what Wilson has achieved thus far as a great investor, but I think this is an easy statement to make after you’ve succeeded in the Venture Capital business. Wilson mentioned that his no copycat investing is a matter of pride, but very few VCs can afford to make this a matter of pride. Union Square Ventures is arguably one of the top tier VC firms, therefore they have the luxury of being approached by a larger number of start-ups; as entrepreneurs are more inclined to work with them in light of their past success, giving Union Square Ventures a much wider selection of companies to choose from. While Union Square Ventures has portfolio companies that expand internationally, a large majority of these investments start in the US market. Given th...

By Qingxi Wang Copycat model can be good or bad. Some companies adopting ideas from others can succeed and benefit their users, while some can destroy the ecosystem of the software industry. There have been famous successful examples such as Google copying Yahoo and Baidu copying Google. Meanwhile, there are cases like Tencent copying ideas and business models from small companies. Here let’s discuss two issues: first, what can make a copycat model to be successful; second, what’s copycats’ potential impact on the software industry ecosystem. First let’s take a look at the two most successful “copycat” software companies – they are Google and Microsoft. Google did not just copy Yahoo’s idea. It followed the simple idea to search the content on the web, but it has completely different infrastructures and ranking methods behind, and it was not very successful until the AdSense technology and business model was invented. In other words, Google has made many innovations which are much more...

by JJ Jiang In the entrepreneurial world, people often place a halo over the concept of innovation and at the same time undermine the importance of execution. This is understandable because great innovations pushes boundaries and changes lives and yet they are a rarity to come by. In this day and age, it seems like it’s becoming more and more difficult to come up with a true new idea. However, it should be remembered that if without perfect execution, innovations are merely good ideas, which are dime a dozen. Some people believe only novel ideas are worth being worked on and shuns upon business models that are classified as copycats. These business models are considered second class citizens. Although, this shouldn’t be the case in my opinion. Many successful businesses that changed lives are not truly original. Google copied yahoo, facebook copied myspace, and all the venture capital firms use similar investing models. There are many other examples. Yet, many of these “copycats” a...

by Maya Farah Many of us – grad students – have been bit by the startup bug. We are working on business plans, building MVPs to test our ideas, and looking for opportunities to build our own companies, or join fast-growing ones as we graduate. Speaking on behalf of the international students studying in the US, I can fairly say that one of the major questions that are our minds is: stay in the US, or go back home? Yesterday, Oliver Samwer addressed this concern in his recruitment presentation at HBS. His answer in a nutshell: for all the reasons why people want to build businesses in the Valley, we should leave. People want to build businesses in the US because of easy access to capital, concentration of skilled/technical labor, etc. Oliver views this abundance as source of competition, and says our brainpower and education can be leveraged much more in an environment which is not as competitive.  Last year, Naguib Sawiris (one of the most influential men in Egypt) addressed the Mi...

by Jeff Buening Two recent events at HBS have drawn attention to the nature of copycats in entrepreneurship – 1) Fred Wilson’s visit to our Launching Tech Ventures class and 2) Oliver Samwer’s recruiting visit for his largely successful Rocket Internet company. Interestingly enough, each speaker maintained a very different view on the matter. Fred Wilson was quite negative on the model from an investment perspective – maintaining that, while it may be personal quirk, he has trouble investing in companies that aren’t the first in their domain for a new market disruption or category killer – because it’s more competitive and harder to win by nature of being a copycat. Oliver Samwer, on the other hand, makes a living (and quite an impressive one at that) copying successful internet companies and building them out in other parts of the world faster than the originator. While he’s the first to admit that he’s not a visionary like Mark Zuckerburg or Andrew Mason, he does maintain that ...

by Katie Nadler As an aspiring entrepreneur I’ve heard the same thing over and over again. Professors, students, investors and (some) entrepreneurs all emphasize that in general good ideas are cheap; it’s the ability to execute on them that creates valuable businesses. Of course in reality it is some combination of the two but it’s an interesting point to consider when looking at copycat businesses, which is the focus of this blog post. The potential for copycats is likely in the back of all entrepreneurs’ minds. In my Launching Tech Ventures class this week we were lucky enough to have Fred Wilson of Union Square Ventures as our guest. He shared some very valuable insights into what makes a successful startup. During the conversation he was asked what he thought about copycats. Immediately his tone changed from upbeat and energetic to solemn and annoyed. He said very curtly, “I hate them.” On the one hand I agree completely with Fred. Entrepreneurship is about innovation, new ...

by Will Clayton When Fred Wilson from Union Square Ventures spoke to our LTV class, he mentioned a profound emotional dislike of copycat investing and entrepreneurship where instead of inventing an idea in the first place, the focus is on out-executing the innovator. Often these “fast followers” end up winning the market, e.g. Google vs. Yahoo, Lycos, etc., so there is a clear economic incentive to learn from the core innovator’s missteps and focus on incremental innovation through superior execution. Though Fred acknowledges these rewards, he remains disinterested in this style of investment. I suspect his lack of interest is driven by his preferred role as the “entrepreneur’s consigliere“ – a role that could be less necessary in at least some copycat models when execution (not strategy) is the driving force behind success. At this point there is probably some value in making a distinction between copycat/fast-followers in a start-up’s home market and clones in alternate geograph...

Anonymous When asked about copycat business models in our recent Launching Tech Ventures class, Fred Wilson responded with the perspective that he’s not interested. While he acknowledged that it was mostly due to “ego”, I think that there are serious risks to consider with copycat businesses. The original player in a particular industry has the chance to build up its brand, scale, and relationships which can serve as a first-mover advantage. For example, Rent the Runway was able to establish relationships with designers which were essential to its business model. Whether it is because of a formal exclusive relationship or because it doesn’t make sense to put in additional effort to work with another company doing something very similar to Rent the Runway, designers are less likely to work with a similar 2nd or 3rd company thus making it hard for any copycat business to follow successfully. In addition, by definition, a copycat will have at least one competitor and will have to sha...

by Om L. Lala In our most recent LTV class, Fred Wilson noted that he could never bring himself to invest in a “copycat” venture that simply borrows an idea or business model that has already succeeded. Baidu, Mercado Libre and other tech companies in emerging markets were referenced as examples. He argued that such copying was morally questionable and that from a personal perspective, investing in such a company would make it “difficult to look at [him]self in the mirror.” (To clarify, Fred was not referring to stealing specific intellectual property, which is simply illegal, but using an overarching idea or business model already developed by another entrepreneur). At first, Fred’s argument resonates with most people. To the extent that an entrepreneur is able to serve society by creating value and meeting an unmet need, he or she is entitled to profit from the value created. And viscerally, it feels right to say that an entrepreneur who borrows an idea is far less entitled to ...

by Vasile Tofan Aldrich 12 was packed to its limits for Oliver Samwer’s talk yesterday at HBS. It seems that neither the en masse departure of his key people , nor the blitzkrieg management style are diminishing the allure of Rocket Internet. No question, it is still considered bon ton to smirk at the reference to their clone machine, but no one can deny that the machine has been tremendously successful. I commented on Andrej’s post on the topic that ultimately the copycats are a necessary evil. In this post I would like to further elaborate on that thought. Slide from Oliver Samwer’s presentation at HBS, referring to Dafiti as an ‘adaptation of the US peer model Zappos’ and detailing the phenomenal growth of the company ‘Copycats’ vs. ‘Originals’ – where is the distinction line? First of all, ‘copycat’ is a tricky label. The line between what is and is not a copycat is blurry at best. While there is a clear distinction between an original and fake Louis Vuiton bag, the case of start...

By Andrej Rusakov The criticism of technology start-up “cloners”, who take innovative but proven business ideas from the U.S. and copy them in Europe, Latin America, and China is raging. Silicon Valley entrepreneurs claim that “me too” companies discourage innovation as they limit initial innovator’s upside and thus prevent true entrepreneurs from launching new ventures. Venture Capitalists, however, do not seem to mind, and continue to pour increasingly large funds into copy-cats (e.g. Samwer brothers recently raising $700 million), viewing them as lower risk compared to “new-idea” start-ups as the product/market fit has already been validated in “me too” companies. Who is right here? Do “me too” businesses add value to the society? Can their founders be called entrepreneurs or are they simply executors? Innovation Adopters? From a societal point of view, copy-cats do add value. They foster competition and bring innovative products to new markets fast. Why should a billion people in I...