For those of you who don’t know me, I was CEO of Groupon Ukraine from May 2011 – end of 2012 (I left to do a startup). As a former employee of Groupon during the times when Oli and Marc Samwer were running the show in the international business, I sometimes get asked what makes those guys successful. With Rocket Internet they’ve created an empire of e-commerce businesses around the world and have raised more than $800m in funding for these companies this year alone. So how do they do it?
First I’d like to make a disclosure… I have never personally met Oli or Marc. I was supposed to meet them in Moscow once but they were late and I needed to take a flight back to Kiev. Despite not meeting them I participated in many weekly conference calls that they led with all countries they managed and was a recipient of hundreds of their emails that they would send out to all country CEO’s. So while my view is probably not as accurate as someone who worked closely with them, i would still say that what you’re about to read covers a lot of the core principles fairly well.
What Everybody Already Knows about Rocket Internet
I’d like to note that i’m not going to rehash details about the stuff that is pretty much always written about them and is already well understood. For example they are known for hiring ex-consultants and bankers and giving them country manager roles. They are know for making swift decisions to close down entire businesses and fire hundreds of people. They are known for cloning businesses down to the last detail. None of that is a secret… and you can find hundreds of articles on line about this.
The “Other” Key Success Factors of Rocket
1) Clear KPI’s with detailed reporting on a weekly basis. This is a core characteristic of any Rocket company and it is one that many other investors screw up. Rocket makes every single country prepare a standardized report and send it to them each week so that they can monitor and do early detection on any problems.
2) For important businesses, they always maintain a clear line of communication not just with the CEO but with several other lieutenants. There is a clear Machiavellian reason for this… it keeps the CEO honest and in line if he needs to worry about his CFO or COO telling a different story then him.
3) They keep a mobile group of “consultants” that they can quickly shift into a country if the country is performing poorly. These consultants are typically young, analytic types who have proven themselves in at least one operational role and are willing to travel. As a poorly performing business you know that while the Samwers perhaps don’t have the time nor the contacts to get very involved in your business themselves, but they will happily send in some hired guns who will quickly make your life very difficult.
4) The “you do not want me to visit” strategy. Oli is very famous for this one and it’s a part of what gives him a legendary aura. There are several very famous instances where Oli made a visit and started firing people wholesale. Sometime because he didn’t like the way they looked or spoke. (yes, if Oli operated in the US he’d probably be sued quite often)
5) Managers should always lead by example and understand every aspect of the business. This is something that I think is really commendable about their style. They don’t accept CEO’s saying “oh, that was so and so’s fault.” Their view is that CEO’s should understand everything about their business and you can fully expect that Oli will quiz you unexpectedly on detailed minutiae.
6) CEO’s should be soldiers that fight alongside their troops. For example in Groupon CEO’s were expected to go on a lot of sales call with their sales people to understand the ‘pulse’ of the business. And if you didn’t you needed to worry about Oli randomly asking you which meetings you were at the previous week. Oh yeah… and you never try to lie to Oli. He takes a strange pleasure in trying to uncover liars.
7) Discipline, Discipline, Discipline. This is perhaps what they do better than any other investor in the Internet sphere. They get their managers to be very disciplined. I’ll give you a great example of how Oli operated… we used to have international calls that Oli would lead and 50+ countries would get on the call at the same time. You were not to be even one minute late. Oli would kick off the call at the exact start time and start calling off random names of CEO’s. If they were absent, Oli made a list and fined them several thousand Euros each.
All-in-all you have to hand it to these three German brothers. They are far from geniuses but they are very hard workers and they know how to do what they do well. They’ve also created armies of ex-Rocket people that are now starting and building their own companies using some of their philosophies. Love or hate em’ but you have no choice but to respect them.