Issue 4 | 9 Feb 2016

Every other week, the Fueled team hosts our own take on a book club. We call it Article Club and we all pop into a big conference room in our SoHo office to debate and discuss ideas and issues affecting tech. The basis of this conversation is 2-3 articles selected by senior members of the team. Articles and notes from each week appear here.

The Articles

Rocket Internet: What It's Like To Work At A Startup Clone Factory - Submitted by Ilan Nass
Apple's Declining Software Quality - Submitted by Joe Indriolo
Fake Online Locksmiths May Be Out to Pick Your Pocket, Too - Submitted by Aaron Cohen

This week the Fueled team decided to keep the articles light with a focus on scam, decaying software, and copycat entrepreneurs.

These copycats all come from one venture/startup-incubator hybrid called Rocket Internet. While Rocket Internet is certainly not the most moral leader in the tech industry, they are innovative and have developed a profitable model. Founded by three German brothers, Rocket Internet is a multi-billion dollar incubator for startups employing over 30,000 people. Their strategy is simply to be first on the scene abroad for scaling successful startups that have already proven themselves in the US.

Rocket Internet’s model seems shady at best and potentially illegal. Once a Silicon Valley startup succeeds, Rocket Internet deploys a team abroad to take that ecommerce site and replicate the infrastructure elsewhere. What’s especially hard to swallow, is that these well-funded replica startups are then sold back to their parent company once that parent company is ready to approach the European market. Rocket Internet essentially copies, funds, scales, and then forces the original owner to pay for it. But how?

Rocket Internet has found e-commerce business to be the easiest to build quickly and corner the European market with. Built from bankers and consultants, it’s their model that wins rather than a product or service. Because there are no universal patent laws, this type of activity is difficult to legally enforce.

There are, however, limitations as to which type of industry can scale with an imposter startup. Companies that build a community and work to maintain user trust is harder to clone. Rocket Internet attempted to reproduce Airbnb, for example, but had difficulty quickly building a consumer-base when trust and brand was crucial to success.  They also have an incredibly high employee turnover rate due to an aggressive pressure put on CEOs to scale quickly and successfully with the numbers to prove it.

While they may not play nice, these brothers have certainly build a profitable empire.

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Joe led our next discussion on Paul Jone’s article, “Apple’s Declining Software Quality.” We dug into the (seemingly inevitable) demise of Apple’s software with a few basic starter questions -

1. Are they truly shipping subpar software?
2. Will they ever be able to deliver a unified experience again?
3. Is their hardware still strong?

Apple software hasn't been great. The core, native, apps in iOS are rarely preferable to sleeker and more innovative apps that users can purchase through the mobile store or through iTunes (ridiculous). Desktop productivity software has been seriously lacking and consumer grade has trumped any sort of professional level.

But it’s not all bad news. While Apple has dropped the ball a bit, they’re certainly making concerted efforts to change. For instance, new software is now made public in beta to test the stability and have some user transparency. QAing publically is a huge step in creating more secure software. They’ve also made a shift to emphasize their clear strength - hardware - with increased research and marketing efforts in wearables and cars.

At their start, Apple delivered a unified and seamless experience for users. Steve Jobs would say, “it just works.” And mean it. But now Apple is a massive ecosystem and they can no longer afford to just sell experience.

Our suggestion? Narrowing the focus on an ideal consumer base to allow for rock-solid software creation. Rather than lose pros (who are the ones noting these gaps), Apple ought to break their software experience into regular consumer-grade and pro. 

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Lead-generating in the locksmith and on-demand service industry is becoming rapidly problematic. The NYT looked a bit closer at how such clear scammers could escape Google’s grasp. For starters, let’s discuss what Lead-gen operations look like:  

A team abroad lists physical locations near the in-need customer that appear legitimate, often with a real address and photos of an office nearby. In reality, these links are to call centers who have hired shady subcontractors in the area.They provide a conservative estimate and send a locksmith over. After the locksmith arrives or the work is complete, customers are shocked to hear that the real cost is exponentially higher. When too many people begin rating or calling back to demand a refund, the number is shut off. And this problem roots deeper than just locksmiths - it can be any on-demand service industry where little to no relationship with the customer is required after the service is complete.

The focus in our discussion wasn’t on scam artists. There will always be scammers. Rather, our team was surprised that Google hadn’t figured out a way to recognize these images as photoshopped, or traced these scammers who purchase bulk domains to a few sources.

What we concluded was that it wasn't because they can’t. That sort of check doesn’t fit into the model that Google’s search quality team works within. Their world is algorithmically focused. Catching and reprimanding imposter or rip-off locksmiths on a case by case basis is simply not worth the time - as it hasn’t scaled to a level that requires an algorithmic solution. It does seem logical, however that this increase in illegitimate sources could lead to a crackdown by Google’s team.