Another day, another massive wad of cash flying Rocket Internet’s way. This time it’s JP Morgan again, putting somewhere between $ 40m-$ 80m into the Samwer Brothers’ Lamoda fashion site.
Lamoda is of course a Russian version of Rocket’s Zalando, which is in turn a clone of Zappos. JP Morgan has already invested in Zalando (figure unknown) and the Brazilian version, Dafiti ($ 45m), and fast becoming a serial Rocket backer. It will have a way to go before it matches Kinnevik though – they’ve put in over half a billion so far this year.
With the JP Morgan news, and with super-new Square clone Payleven having rolled out to Brazil, the Netherlands, Poland and the UK late last week, I think it’s time to address a rather important question.
Is cloning really so bad?
It’s not hard to find those who maintain it is. Witness Jason Calacanis’s rant in February, which justifiably championed originality and decried the Samwers for giving Germany a bad rep.
But it’s a subject I find more complex the more I think about it. Here are what I consider to be the main issues at play:
Territoriality
Let’s take Square as an example. Currently only available in the U.S., it has been cloned by Payleven, iZettle and others, all of which are targeting other markets.
Is this wrong? Should those other countries all have to wait for Square to get its act together and expand overseas?
Much as I love originality, I find it hard to see this as a clear-cut issue. A good idea is a good idea, and I personally don’t think ideas should be protected as intellectual property. That’s never how innovation has worked. Even Saint Steve sang the praises of “stealing great ideas”.
And it’s not as if every innovation coming out of the U.S. is guaranteed to make it overseas at all. After all, the U.S. is a huge market in itself.
Another thing to consider here: if you’re going to clone, it really matters where you do so. Rocket has largely (though not entirely) stayed clear of the U.S. up until now. It’s hard not to wonder how much of that is to do with the potential legal troubles they could face in the country where so many of their cloning ‘victims’ are based.
Speed of execution
It took Rocket a couple of years to clone Square. It took them less than a year to do the same to Stripe, which now has a copy in the form of Paymill.
It’s easier to come down on the cloner’s side when you’re looking at something like Lazada, Rocket’s Indonesian answer to Amazon. Amazon is hardly a fledgling, and it’s not available in Indonesia, so… duh. Someone did a clone there. Wouldn’t you?
But when the original company is barely teething, it all starts to look quite unfair. The Samwers’ MO is to roll out new business models at the speed of light, and there’s no way on this earth that a fresh startup can hope to compete on an international scale, no matter how bright their idea is.
That’s a real problem. The answer, if there is one, is for every startup that thinks it might get cloned to go international from the start. Easier said than done, I know, and it depends very much on the nature of the business. That said, Ifeelgoods chief Michael Amar wrote up some interesting suggestions on this topic for VentureBeat yesterday – it’s definitely worth a read.
Look and feel
Lazada may have some legitimacy in terms of timing, but boy does it look like Amazon. Again, that’s a problem.
There is no justification for making a clone look like the product it’s copying, unless that design is obvious and essential to functionality. Copying colour schemes and layout is not cool. And copying actual code from a rival is just plain stupid.
There are many reasons why that kind of copying is ill-advised. It betrays laziness, for one thing. It also sails close to actual ‘passing off’: trying to create the impression that you are, or are affiliated with, something you’re not. Also, copying code usually involves copyright infringement.
Everyone copies
How many startups copy? Almost all of them. Rare is the new company that’s built its idea from scratch, and there’s nothing wrong with that. We all stand on the shoulders of our forebears.
Google wasn’t the first search engine: it was just much better than its predecessors. Same goes for Facebook and social networks, and Apple and smartphones. What those companies did, though, was to take a concept and innovate on top of it.
There is nothing stopping clones from being creative after their birth, if they want to be. Whether they do or not is another question, and one that ultimately comes down to the character of the cloners.
In short, cloning is a big gray area. If you believe ethics are fundamental to business, it’s clearly going to be off-limits, but if you are more flexible on such things, it’s difficult to deny the attraction.
And if you, like me, get queasy at the thought of ripping anyone off, then consider this: effectively stopping this sort of behaviour would require a globally enforceable intellectual property regime that protects ideas. That’s not going to happen. But, even if it were practical, would you really want it?
