Team: Lemon

1. What are the pros(P) and cons(C) of Rocket Internet’s

approach?
ORGANIZATION DESIGN:
 Specialization
Rocket Internet builds companies - Acting as the incubator and investment firm has pioneered
an extreme approach to new venture creation that is often referred to as a “startup factory:” it
rapidly assembles and scales new companies, replicating business models that have been
developed elsewhere

P: Separating the ideation of business models from their execution 

-> Rocket Internet can concentrate on the latter, (it eliminates the need to create an
environment that is conducive to both processes).
The technology risk is near zero because presumably the original inventor has proven it out
The market risk is less because presumably the original inventor has successfully
commercialized the product or service
The team risk is greatly reduced when the Rocket Internet investors hand pick and then
micromanage the new company team

C: Dependence on the availability of appropriate (co-specialized) business models

“Copycat of ideas”

 Controlling structure
Hierarchical authority plays an important role: Rocket Internet executives intervene with the
CEOs of portfolio companies and tell them what to do 

P: Alleviate “distractions” such as recruiting or financing. 

    Leverage knowledge and capabilities of the firm
    Possibility to command knowledge sharing between decentralized units (i.e., portfolio
companies), e.g., by codifying knowledge into standard operating procedures
C: The process sometimes takes longer time to be decided
     Control is all in Rocket Internet although there are numerous founders of Startups->
Founding entrepreneurs thus hold unusually small levels of equity in “their” companies (for
example, CEOs can expect around 5 to 10%), Their shareholdings will be based on
performance/ achievements (can be a pressure/ disagreement if it is not carefully handled)

MOTIVATION
Mission:
The incubator and investment firm has pioneered an extreme approach to new venture creation
that is often referred to as a “startup factory.” Following its mission “to become the world’s
largest Internet platform outside the United States and China”
Firms:
“A small share in a big pie can be more attractive than a big share in a small pie”, if the
company turns out to be successful, and founders are attracted by the experience and
resources of Rocket Internet
Founders also receive competitive salaries
Elaborate tracking and reporting systems
P: Incentives
C: Work conflicts and pressure

ORGANIZATIONAL CULTURE
Rocket Internet has earned a reputation as a very data-driven company.
Use tracking tools for evaluations
Performance targets at Rocket Internet companies are very demanding, and underperformance
is punished, no matter whether regular employees or a company’s managing directors are
concerned
Rocket Internet’s influence over its portfolio companies does not have a set termination date.
Instead, Rocket Internet follows a strict economic approach, closely monitoring the performance
of each company, to then decide about further engagement or exit. While relationships are thus
in principle open-ended, the firm’s focus on data rather than people and its strict performance
culture might foster the perception of a potentially short-term collaboration.

P: Execution and data-based working style and productivity increasing

C: Pressure and unknown path since Startups are guided not led lead

GROUP BEHAVIOUR
In the early stages of a company, when firm’s employees are typically located at the Rocket
Internet campus, people even sit in offices sorted along functions rather than portfolio
companies for specialization guides.

P: Specialization
C: Communication among companies 

COMMUNICATION
Placing experienced staff into portfolio companies, and the firm’s managing directors (R.I staff)
tend to play crucial roles in more than one company at the same time, constitutes important
bridges of communication and informal knowledge transfer. Depending on the current needs of
a portfolio company, the involvement of Rocket Internet can range from the loose advice that a
venture capital firm might provide, to the in-depth collaboration of a consulting relationship

2. Would you consider Rocket to be a successful business, or

were they just lucky? Please discuss your answer in at least 15o
words
Rocket Internet is not purely a Startup, they should be considered as an investment and
incubator firm. While other Startups focus on creating unique ideas, Rocket Internet provides
service needed to bring those concepts to life. They have two product lines: duplicating
successful business ideas in a different market, and second, funding and providing personalized
support for new business ideas. To help support new business concepts, Rocket Internet offers
a wide range of support: from operating (coding, analysing, staffing) to funding and networking.
To do so, Rocket Internet uses a standardized process so that potential business ideas can
launch in 90 days. As we can see, Internet Rocket provides a wider range of support, as well as
lower requirements than an usual Incubator. However, in return, entrepreneurs who used
Rocket Internet’s service gave up a huge equity of their company, many of them only held 5 -
10% of “their” startup, therefore lost their dream company. This business model is widely
averted, and considered “copycat” or “blacksheep” in many startup ecosystems around the
world. In my opinion, Rocket Internet acts more like an outsourcing and incubating firm. What
differentiate them is that they take much higher risk than most Incubator and Venture Capital,
willing to invest even in the earliest stage of a Startup. In order to make this business
successful, Rocket Internet has developed a wide range of networks with investors, and staff
who are experienced in IT, Business Analyst,,, to function in a company. Their business proved
to be a huge success (not by luck) in the past, mostly because “Startup” was a new thing back
then. Moreover, their founders understand the formula to create a successful startup, since they
have founded and invested in many well-known firms, such as: Facebook, Linkedin, Zynga. At
that time, their business idea solved every problem that an entrepreneur can face. Nowaday,
besides VC, Accelerators, and Incubators, crowd-funding and Government are contributing
deeply to assist the Startup ecosystem, ensuring great ideas get the help it deserves. To that
end, Rocket Internet market share will likely decline in the near future, due to their bad
reputation, their extreme method as well as more and more supporting systems will replace
them. 

3. Would you consider Rocket Internet as a pariah or a pioneer?

Provide a discussion as your answer in at least 150 words 
To define Rocket Internet as an imitator who is not well received or as a down to earth starter is
controversial. Described as a “clone factory,” Rocket Internet copies promising business models
and adapts them somewhat to local markets (but sometimes even keeps website designs very
close to the original). Treating business models as public goods, the firm searches actively for
new ideas, all of which are then evaluated. The firm has received more or less criticism about
the operation since they were called “Copycat”. Furthermore, when placed in the Silicon Valley
environment, such companies who resemble ideas that have already existed are not widely
recognised, especially when the firm’s radical innovator inspires contempt for those who prefer
to merely replicate models and strategies that have already been proven on more mature
markets”. However, perhaps Rocket Internet’s intervention was necessary to spearhead the
emergence of a fully-fledged entrepreneurial ecosystem in unsung places such as developing
nations or… Europe. It has worked, as seen with the cases of Zalando (market cap €18bn), one
of Europe’s tech jewels which was brought up in the Rocket Internet empire, and that of Jumia,
which employs 5,000 employees across a dozen African countries. On the other side, Rocket
Internet may be considered as a pioneer because of hiring in-demand top talent from industries
far removed from the tech world, starting with consulting and investment banking. Also, they go
through trials and errors when it comes to expanding a tech-driven business across national
borders and in unwelcoming markets such as East Asia or Africa. Last but not least, the very
notion of startup building — it was rather unknown before they popularised it and now startup
studios are flourishing all around the world. 

4. How effective is Rocket's organizational structure and its

sourcing of talent? Provide a solid and founded discussion by
drawing on the theory from the course.
Organizational Structure

Sourcing Talents
 Rocket Internet staffs a team based on its existing pool of suitable founders, who can
start working on the project right away
 The new startup company does not need to worry about attracting further talent or about
the administrative burden of the recruitment process since Rocket Internet is in charge of
this
 Try to supply a steady stream of talent to its portfolio companies. 
               In recruiting new employees, the firm values aggressiveness, a detail-oriented and
data-driven mindset, and a focus on execution. (The firm focuses on ambitious business school
graduates that might otherwise seek a career in consulting or investment banking)
=> Effective for:
1. Selective labour sources 
2. Knowledge, mentorship and guidance is focused on start-ups
3. Execution is specialized (Every department has its own function and concentrates only
on it)