Why Rocket Internet Is Going Down

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Revenue growth has slowed at most of Rocket Internet’s portfolio start-ups, ranging from furniture e-commerce and food delivery in Europe to online fashion in markets from India to Latin America and the Middle East.

Its share price has fallen 39% this year.

Several articles has been published to explain the above happening. But Growtist’s own view is as follows:

Rocket is going down because its business model is based on 2 flawed insights.

Rocket’s 2 flawed insights:

  1. Professionals (esp. top-tier consultants) can grow a start-up
  2. Growth is mainly about Execution

It is these 2 flawed insights/beliefs, then, that lead to a wrong business model:

Copy successful business models from the west, and execute them aggressively in emerging markets.

The right Growth insights:

  1. Professionals (esp. top-tier consultants) cannot grow a start-up well. Only self-driven entrepreneurs can do that
  2. Growth is not mainly about Execution. Growth is about taking the right judgment calls, as you go on the execution path

Therefore, copying successful business models and executing them aggressively in emerging markets does not work.

Analytical references:

  1. Investors worry that Germany’s Rocket Internet is plunging back to Earth
  2. Rocket Internet shows signs of coming back down to earth
  3. Germany’s Rocket Internet Falls Back to Earth
  4. Rocket Internet: What It’s Like to Work at a Startup Clone Factory
  5. Rocket Internet — A detailed look An analysis about Rocket Internet
  6. Where Rocket Internet went wrong with India
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