How to turn $5m into $100m+ in a few months:
What Copycat King Oliver Samwer taught me during my early days at Rocket Internet.
Trust me, the story is crazy.
๐งต:
What Copycat King Oliver Samwer taught me during my early days at Rocket Internet.
Trust me, the story is crazy.
๐งต:
To jog your memory:
Rocket Internet was the German copycat known for cloning American brands.
Rocket Internet was the German copycat known for cloning American brands.
Rocket was so notorious that @thesamparr dubbed it โone of the most hated yet successful tech companies in the worldโ in one of the most-read stories on @TheHustle.
The employee he โsecretly interviewedโ?
Yeah, that was me. ๐
thehustle.co
The employee he โsecretly interviewedโ?
Yeah, that was me. ๐
thehustle.co
@thesamparr @TheHustle Back to my story.
In late 2011 or early 2012, I learned on LinkedIn that an old friend, Don Phan, had started working at Rocket.
We started DMing about it.
I went to Rocketโs website. It was just a logo.
What was Rocket, and what did they do?
In late 2011 or early 2012, I learned on LinkedIn that an old friend, Don Phan, had started working at Rocket.
We started DMing about it.
I went to Rocketโs website. It was just a logo.
What was Rocket, and what did they do?
@thesamparr @TheHustle Don told me about Rocketโs biz model:
Clone US companies and bring them to the rest of the world.
I was intrigued.
Clone US companies and bring them to the rest of the world.
I was intrigued.
@thesamparr @TheHustle I googled Rocketโs founders, the Samwer brothers, to learn their story.
In 1999, they copied eBay and made their own auction site: Alando.
On March 1, they launched Alando.
By May 30, they had sold Alando to eBay for $43 million.
Crazy.
In 1999, they copied eBay and made their own auction site: Alando.
On March 1, they launched Alando.
By May 30, they had sold Alando to eBay for $43 million.
Crazy.
@thesamparr @TheHustle At the time I talked to Don, Rocket was cloning Groupon.
Groupon was THE thing in the Hong Kong startup scene in 2011.
I decided to take the plunge.
Groupon was THE thing in the Hong Kong startup scene in 2011.
I decided to take the plunge.
@thesamparr @TheHustle Don introduced me to Opal Wu and Stephen Chung at Rocket.
But Opal wouldnโt meet me at their office.
Weโd always meet at Pacific Coffee. (I would later find out why.)
But Opal wouldnโt meet me at their office.
Weโd always meet at Pacific Coffee. (I would later find out why.)
@thesamparr @TheHustle Opal sold me on Rocketโs vision.
He said I could be an entrepreneur in residence, a jack of all trades.
No more spreadsheets. No more running around Hong Kong in a full suit. ๐ฅต
I signed a contract at Pacific Coffee.
He said I could be an entrepreneur in residence, a jack of all trades.
No more spreadsheets. No more running around Hong Kong in a full suit. ๐ฅต
I signed a contract at Pacific Coffee.
@thesamparr @TheHustle On the first day of work, I showed up at the office on Granville Road in Tsim Sha Tsui.
My heart sank.
The air conditioner was broken.
I went to the washroom.
There was a piece of shit in the toilet. ๐ฉ
OF COURSE the flush was broken.
My heart sank.
The air conditioner was broken.
I went to the washroom.
There was a piece of shit in the toilet. ๐ฉ
OF COURSE the flush was broken.
@thesamparr @TheHustle Opal told me: โYou now run Zalora Hong Kong.โ
Zalora is a Zappos clone. The Samwer brothers had successfully cloned it in Europe as Zalando.
The same investors backing Zalando were backing Zalora.
Zalora is a Zappos clone. The Samwer brothers had successfully cloned it in Europe as Zalando.
The same investors backing Zalando were backing Zalora.
@thesamparr @TheHustle We had to hit crazy numbers to get more funding from the investors.
We had to DOUBLE EVERY WEEK.
Forget @ycombinator. What did they know about growth?
Step aside, these three German brothers were redefining the word โblitzscaleโ!
We had to DOUBLE EVERY WEEK.
Forget @ycombinator. What did they know about growth?
Step aside, these three German brothers were redefining the word โblitzscaleโ!
@thesamparr @TheHustle @ycombinator Lesson #1:
Do unscaleable things to achieve scale.
In our case, scale would unlock capital.
Capital = rocket fuel.
Do unscaleable things to achieve scale.
In our case, scale would unlock capital.
Capital = rocket fuel.
@thesamparr @TheHustle @ycombinator This is unbelievable as I write it.
But we literally listed SKUs from Zalando and dropshipped them to customers in Hong Kong.
But we literally listed SKUs from Zalando and dropshipped them to customers in Hong Kong.
@thesamparr @TheHustle @ycombinator The order flow went like this:
1. Asia team manually duplicates and uploads SKUs from zalando[dot]com for sale on zalora[dot]com
(Our CAC was higher than our AOV. Hello, zero-interest environment.)
1. Asia team manually duplicates and uploads SKUs from zalando[dot]com for sale on zalora[dot]com
(Our CAC was higher than our AOV. Hello, zero-interest environment.)
@thesamparr @TheHustle @ycombinator 2. Customer places an order.
3. Asia team places the same order on zalando[dot]com and aggregates all orders of the day (i.e., 100 pairs of shoes).
4. Someone at a Zalando warehouse in Germany bulk-packs the shoes and sends them to Singapore.
3. Asia team places the same order on zalando[dot]com and aggregates all orders of the day (i.e., 100 pairs of shoes).
4. Someone at a Zalando warehouse in Germany bulk-packs the shoes and sends them to Singapore.
@thesamparr @TheHustle @ycombinator 5. Team members in Singapore unpack the shoes and ship them directly to consumers in Hong Kong.
Order by order.
(This team seemed to be made up of fresh grads from Portugal.)
Order by order.
(This team seemed to be made up of fresh grads from Portugal.)
@thesamparr @TheHustle @ycombinator If an average order was $100 paid by a customer, our total cost was $500-$600 all in.
Fucking crazy.
Fucking crazy.
@thesamparr @TheHustle @ycombinator But we grew from 1 order a day to 100s of orders a day because we pumped sales with marketing spend and didnโt charge any markup for the actual fulfillment cost from Germany.
Fucking crazy.
I did NOT understand it.
Fucking crazy.
I did NOT understand it.
@thesamparr @TheHustle @ycombinator I was oblivious to the fact that growing topline at all costs would unleash a beast.
@thesamparr @TheHustle @ycombinator In retrospect, the calculus was simple.
For Hong Kong:
1. Sell 10,000 pairs of shoes in the first month
2. Show crazy hockey stick growth
3. Lose $1m of EBIT, including overhead
For Hong Kong:
1. Sell 10,000 pairs of shoes in the first month
2. Show crazy hockey stick growth
3. Lose $1m of EBIT, including overhead
@thesamparr @TheHustle @ycombinator Across the region, we lost $5m of EBIT, but this unlocked $100m+ in funding for rocket fuel.
(Please bear with me and these ballpark figures. I donโt remember the exact numbers because this was ten years ago!)
(Please bear with me and these ballpark figures. I donโt remember the exact numbers because this was ten years ago!)
@thesamparr @TheHustle @ycombinator Zalora became the stepping stone for raising close to $1b in aggregate for SE Asia (Lazada, Zalora, etc.)
It was a crazy playbook.
But it was timely because all investors were starting to look for growth at all costs.
It was a crazy playbook.
But it was timely because all investors were starting to look for growth at all costs.
@thesamparr @TheHustle @ycombinator Lesson #2:
Donโt sell orange juice to someone who wants apple juice.
(As an angel investor, I often see founders pitch things without proven demand. You need to prove demand.)
Donโt sell orange juice to someone who wants apple juice.
(As an angel investor, I often see founders pitch things without proven demand. You need to prove demand.)
@thesamparr @TheHustle @ycombinator Investors want to see โUber of Xโ or โUber in Y geography.โ
It helps mitigate risk.
(I know. Stupid. Because venture capital is all about taking risks.)
It helps mitigate risk.
(I know. Stupid. Because venture capital is all about taking risks.)
@thesamparr @TheHustle @ycombinator But Rocket showed:
The amount of funding you unlock from investors grows exponentially when you can prove demand.
The amount of funding you unlock from investors grows exponentially when you can prove demand.
@thesamparr @TheHustle @ycombinator Our final checklist to unlock crazy funding from investors:
โ TAM (total addressable market)
โ Proof of concept (easy when youโre cloning something thatโs already proven)
โ Growth
โ TAM (total addressable market)
โ Proof of concept (easy when youโre cloning something thatโs already proven)
โ Growth
@thesamparr @TheHustle @ycombinator What happened after my first few months at Rocket was even crazier, but Iโm running out of steam.
If you want more, sign up for my newsletter! ๐
romankhan.beehiiv.com
If you want more, sign up for my newsletter! ๐
romankhan.beehiiv.com
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