Rocket Internet's Oliver Samwer Breaks It Down

Transcript

hello again Mike Butcher with tech crunch is this thing on hello you guys can hear me um so um all of a sandw you know it's fantastic to have you on a tech crunch stage um we uh we our first encounter didn't work out so well we uh tried to have a meeting and uh there I think there was a misunderstanding about our interview but anyway it's all in th... Read More

Summary

In this interview, Mike Butcher from TechCrunch interviews the CEO of Rocket Internet, Oliver Samwer. They discuss Rocket Internet's success, recent challenges and losses, investment strategies, and future plans.

Questions & Answers

Q: Why has Rocket Internet experienced a drop in valuation and financial losses recently?

According to Samwer, Rocket Internet is a unique and complex company that builds businesses from scratch in various sectors and countries worldwide. The complexity of Rocket's operations makes it harder for analysts to understand the company, and they may not fully value it. Samwer believes that Rocket's long-term view and young portfolio companies need time to mature and become profitable, so losses and valuation fluctuations are expected.

Q: Is Rocket Internet asking investors for patience?

Samwer clarifies that he is not directly asking investors to be patient, but the management team at Rocket Internet has a long-term perspective. When Rocket went public, they provided clear guidelines on the time it takes for different sectors to break even. Samwer also mentions that there is low liquidity, indicating that most investors are still holding their shares.

Q: Why does Rocket Internet have a complex structure with multiple subsidiary companies?

Samwer explains that the complex structure originated from having various business and investor interests in different geographies. Over time, Rocket has consolidated its operations and reduced complexity. They now focus more on regions rather than separate entities for the same business model. The structure has evolved and adjusted to fit the company's needs.

Q: Are investors backing Rocket Internet or the business model?

Samwer believes that investors are primarily backing Rocket Internet's business model. He highlights the consistency of internet successes he and his team have demonstrated over the past 16 years. Additionally, the management team's background and expertise, as well as the promising pipeline of new ventures, are factors that attract investors.

Q: How does Rocket Internet incentivize its employees if they are not founders?

Samwer explains that Rocket optimizes for the likelihood of success. They provide employees with stakes in the startups they work on, ensuring that if the company does well, they will have a significant return. Samwer emphasizes that being a founder is not necessary to benefit from a successfully executed business.

Q: Can Rocket Internet compete with companies like Uber in different sectors?

Samwer believes that choosing the right battlefield is crucial. Rocket Internet has developed its own unique business models that focus on network effects within specific countries, avoiding direct competition with globally dominant companies. Factors such as the business model's cash needs and several other considerations influence their decisions.

Q: Is Rocket Internet known for creating businesses in developing markets?

Samwer agrees that Rocket Internet has a strong presence in emerging markets, but he clarifies that they are not simply participating in a land grab. Starting businesses from scratch in these markets involves solving numerous challenges related to logistics, employment, and internet access. Samwer believes that their ability to navigate these challenges makes them true entrepreneurs.

Q: Why does Rocket Internet invest in multiple companies within the same sector?

Samwer explains that each company has its own unique business model, even within the same sector and country. For example, Rocket's emerging market food delivery business differs significantly from a similar business in mature markets. The focus is on regional specialization and leveraging the opportunities available in various countries.

Q: Have there been times when Rocket Internet was close to failing?

Samwer admits that in the 16 years of working in the industry, they have come close to failing many times, particularly with certain business models. Entrepreneurship is challenging, and overcoming daily obstacles and failures is a part of the journey. However, Samwer and his team have consistently found a way to overcome and keep moving forward.

Q: What drives Samwer to continue in entrepreneurship?

Samwer mentions that he has always wanted to be an entrepreneur since the early years of Silicon Valley. He finds excitement in creating something from scratch and shaping new markets. The idea of seeing a company grow and make an impact is what motivates him to keep going.

Q: What are Rocket Internet's plans for 2016?

Samwer states that the focus is on delivering consistent growth, profitability, and results. They intend to continue investing in existing and new ventures, ensuring they have enough cash to support the businesses and start new ones. Samwer emphasizes the importance of delivering on their promises and being prepared for the long game.

Takeaways

Oliver Samwer, the CEO of Rocket Internet, discusses the complexities and challenges faced by the company in this interview. He highlights the unique nature of Rocket Internet's business model, the need for long-term investment in young portfolio companies, and the importance of delivering consistent growth. Despite recent losses and valuation drops, Samwer remains optimistic about Rocket Internet's potential and the opportunities available in emerging markets.