Attack of the Clones

“Dude, your idea has already been thought of. Not only that, it has been acted upon and is up and running! Not to disappoint you, but they even had funding by [insert prominent Silicon Valley Venture Capitalist]!”. This must be one of the most deflating comments a starry-eyed young entrepreneur embarking on his my-oh-so-amazing idea can hear.

Imitation, or the mere adaptation of an existing model, has been frequently frowned upon. In today’s modern society where innovation is celebrated and trumpeted, startups which try to replicate business models (whether by chance or by intention) receive little support and encouragement. The over-zealous goals of emerging entrepreneurs and investors to create a world-changing, revolutionary product begs the question whether startups that focus on existing ideas can still make their mark.

Geographical Localization

One area that imitating startups can look forward to is the localization of an existing business model. Most of the novel business ideas originates from the United States. However, it has been proven that adapting an existing model to a big localised market can reap great rewards. China and Europe are some of the largest markets outside of the US. In China, we have RenRen(Facebook), Weibo(Twitter), Diandian(Tumblr), Zhihu(Quora) etc. In Europe, we have Alando(eBay), CityDeal(Groupon) etc. These ventures have grown to be wildly successful, many of them achieving public offerings and massive buyouts.

The reason for their success is pretty clear. Whilst skeptics may point to the authoritarian Chinese government’s heavy handed exclusion of foreign firms, localization brings local expertise and on-the-ground knowledge into the business. For example, Baidu may be a blatant copy of Google in its early stages, but its heavy focus on media content (whether the industry folks like it or not) contributed heavily to its eventual success. Baidu understands that the Chinese market craves digital content such as music and videos, and will utilize a search platform which make their task at hand easier. CityDeal, acquired by Groupon eventually for a “3 digit million sum”, was able to build up its merchant networks very quickly due to their networks on the ground.

A Market that is Big Enough

Groupon went public in 2011 amidst much fanfare (and plenty of controversies). Groupon essentially pioneered the group-buying discount concept, amassing a huge amount of users in a pretty short span of time. However, LivingSocial proved that if the market is big enough, another clone can succeed and share some of the spoils. LivingSocial started off very similar to Groupon, differing slightly in the execution. LivingSocial is rumored to be considering going IPO this year. Similarly, Sugarsync proved that despite Dropbox dominant position in the consumer cloud storage industry, it is still able to operate well and stand on its own. In fact, as of date of writing, there are currently 12 Pinterest clones, with some of them actually being backed by VC money.

Adapting and Improving an existing idea

Adapting and improving upon an existing idea has been popular for sometime now. Facebook arguably takes its inspiration from Friendster, improving on its execution. In fact, Facebook can be regarded as a master in “stealing” ideas and improving them. Facebook Deals(Groupon), Places(Foursquare), subscribe(Twitter) etc shows much of the features borrowed from others. Apple’s iPod, widely regarded as one of the most iconic personal consumer product of the last decade, was an idea blatantly copied from previous MP3 makers such as Philips and others. What Apple has done was to take the original idea, which was good, and innovate by slapping a compelling design on it. Another example that we can see is Ryanair, and to be fair, almost all the low-cost airlines in the world. Low cost flights were the brainchild of Southwest Airlines, a US-based airline. Ryanair and all the others learnt greatly for it, copying its business model, tweaked it slightly and blossomed to overtake the original in the realm of budget airlines.

Lets face it, we would love to develop products that will change the world. But that is difficult, not to mention, sometimes unwelcomed. Innovation is not merely creating new products, but rather developing products that create value for the markets around us. The world needs diversity, even if it revolves around the same idea. If imitation and adaptation is unethical, we will have only one airline, one fast food chain, one search engine, one operating system (well, almost) etc. Perhaps its time we remove this negative connotation to imitators, for the No.2s had proven that they can still be wildly successful and may even overtake the pioneer. Its not the idea folks, its ultimately the execution.

What do you guys think? Will imitating and adapting successful US models work in Asia? Or Singapore for that matter. The success of Beeconomic proved that there exists lucrative exits for those who can localize a foreign business concept. Will a Rocket Internet clone (intentional!) in Asia be successful?

5 thoughts on “Attack of the Clones

  1. I think it is depending on the market as you pointed out in the article. If you can justify that you are the sole operator in that market and that market is large enough, it’s still possible of making money.

    However, in my opinion, it begs the questions of why do you want to be an entrepreneur in the first place ? If you are looking for the gold mine, I suggest developing your skills and try to be employed by some of the big players like Facebook, Microsoft or Apple. Your chances of making more money is much higher than risking your entire career on something that 99% will fail. The rule of thumb in the industry is that 99% of new ventures will fail, let alone a copy-cat product in a small market such as Singapore where English-educated individuals still prefer the original product anyway.

    Only when you really want to leave some impacts and leave a legacy, entrepreneurship is the right career for that matter.

  2. We can’t prevent others from copying. Neither others can prevent us from cloning their business model. Copying a business model should not be a shame to any entrepreneur. However, when someone copies it, he should do better than the original one. If not, it is just another completely waste of time project that is not able to capture the consumer’s eyeball.

    There are lots of Singapore companies that have gone International, mig33, Buzzcity, Brandtology. All their business models are not original, still they are able to go out of Singapore and operate it on the international level.

  3. Yeah. I do agree that an entrepreneur’s motivation should go beyond just the financial lure that a venture offers. However, as pointed out by Yugene, I think cloning a successful business should not produce a negative stigma. I think as long as it has its value to the market (be it localization, some form of execution differential), these companies are still fulfilling a void in the market (or else they wont be there in the first place). I think such an approach is still beneficial to all and we should not be too quick to dismiss them.

  4. Ideas spread like wildfire and no one can investigate who owns the idea. You can’t patent ideas! But you can patent an “embodified” or expressed idea.

    So, everyone expresses an idea differently. So I guess once your app had been made public and is launched, founders must pivot quickly and find gaps and links between the idea and the market’s desire.

    So, although ideas spread like wildfire, remember to carve it to the people’s desires.
    [Hey, does this rhymes?]

  5. Thanks for sharing!

    I guess lean startup may solve this problem well. A lot of successful examples also had their “unknown” time, firms such as Baidu and RenRen, had a hard time to survive before they found their own way despite they immitated Google and RenRen.

    It’s just like you said Baidu’s focus on media contents made it take off, and RenRen’s concentration on sharing of user generating contents and gifts made it successful.
    We can observe a common trajectory from these “successful copiers” They start by immitate the fuctions of world leading firms, and then add in the special cultural ingredients, learn from the users and response in a positive way tp cater for their needs and expectations.

    Execution may be a focus for these “adapters “, however innovation can never be neglected. Not a radical one maybe, but you have to make the users like your service!

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