Rocket Internet is an incubator that hatches online businesses across the world. In Asia, Stefan Jung co-founded and spearheaded its operations for over two years, seeing the growth of Zalora, Lazada, FoodPanda, and PricePanda, while witnessing the death of OfficeFab at the same time.
To mark Rocket Internet’s second anniversary of opening its first office in Southeast Asia this week, we reached out to Stefan to learn of his experience of building up the empire and also his take on the growing startup ecosystem in Southeast Asia. On a related note, Stefan is also one of our speakers at our upcoming Startup Asia Jakarta conference next month.
Tech in Asia: How has Rocket Internet in Southeast Asia changed over the last two years?
Stefan: Rocket is a startup story in itself. We went from a company that had a great track-record of building successful companies in Germany to becoming the world’s largest company builder with a presence in over 40 countries with over 25,000 employees in our ventures around the globe. When we started in Southeast Asia there were very few processes in place at the time and building up the operations was an amazing entrepreneurial experience. Looking at how professionally we support ventures today compared to only two years ago, we have made great improvements with the hard work we put in around the world.
Tech in Asia: What are some of these improvements you mentioned?
Stefan: We provide a much better infrastructure to our ventures now. We built our own systems to improve operations in all parts of the ventures from online marketing to warehouse systems, from buyer replenishment tools to supplier management. We’re constantly thinking about how we can make our ventures more successful. When we learn a new lesson in one venture in Brazil, Nigeria or India, we will share this with ventures around the world. Therefore we only need one person with a smart idea and then this idea will be implemented around the world. This gives each founder access to a global network, which we encourage to leverage more every day.
Tech in Asia: What have been some of the major difficulties you had to overcome in Asia?
Stefan: There were two major challenges at the beginning. The first one was to convince people to join a startup. When we started to recruit our very first employees and talked about our plan to launch Zalora and the vision we had for the company, there was a common reluctance to leave a stable career path in a multinational company to join a startup.
The second challenge was to convince brands to come on board. The majority of the leading global fashion brands did not sell their products online yet in most of the Asian countries. They also didn’t even have any terms and conditions in place for online. So we had to educate many suppliers on the potential of commerce in the region and together set up frame agreements on what, for many of the brands, were their first e-commerce activities. Looking back, how fast both the startup scene and the brands engaging in e-commerce have grown, these challenges fortunately do not exist as much any more as the momentum is growing.
Tech in Asia: In the press, Rocket is often described with the term “clone factory” and “copycat.” How do you view this?
Stefan: There are two challenges to building a successful business: the idea generation and the execution. As the world gets flatter and more transparent, great execution will become even more important. And within execution, there are many examples of how we innovated. For our mobile payment business in Europe, we were the first ones to launch the technology to accept credit card transactions with the ‘chip and PIN’ solution.
For many countries in Asia, Africa and Latin America, we were the first ones to introduce a cash-on-delivery system for people to shop online without a bank account or credit card. We constantly try to push the envelope when it comes to innovating on the execution level to increase the execution speed.
Tech in Asia: Talking about the execution focus at Rocket, can you give an example of how long it takes you to launch a business?
Stefan: One of the last ventures we launched, it took exactly three weeks from making the decision to starting the business to our launch day. While the tech team built the front and backend systems, I recruited the co-founders and worked on the business models for Asia. Within such a short time span, we managed to launch in five countries simultaneously.
Tech in Asia: The impact Rocket Internet has on the tech ecosystem is a controversial topic. What is your take on this?
Stefan: I think there are a lot of positive things we have contributed so far. We brought many of our investors that for the first time invested in Southeast Asia. They certainly look for additional opportunities now to finance and support more entrepreneurs [in this region]. The large funding rounds for Lazada and Zalora of over $100M certainly put the region in the spotlight, and friends from Silicon Valley suddenly called and showed an interest.
Additionally, many people we recruited probably would not feel comfortable jumping into the startup environment without the Rocket network. And if you see the startup scene now there are many former employees of Rocket ventures that contribute greatly to the [ecosystem]. Looking at Indonesia for example, we have Christian Sutardi and Cynthia Chaerunnisa from FoodPanda that are very successful with Lolabox, or Steven Kim and Adrian Li from OfficeFab who just launched Qraved. So there are many examples in each country with entrepreneurs out of the Rocket network.
Tech in Asia: How do you see the progress of the region here?
Stefan: Everyone can see the attractiveness in the macro data. 61 percent year-on-year growth in smartphones, the rise in internet penetration, the appeal of the demographic factor, etc. The progress becomes even more clear through seeing all the activities going on with building the ecosystem:
From new accelerator programs launching, to new VC funds entering the market, new strategic partners opening up to startups to seeing an increase in exits. The momentum is very tangible. I was fortunate to be a judge at several startup competitions, e.g. Startup Weekend or the Geeks on a Plane tour, and it’s great to see the quality of products and services the new generation of entrepreneurs are building.
Tech in Asia: I understand that you are also leading the investments from Rocket’s new $200 million Global Founders Capital Fund in Southeast Asia so far. Why did you choose to invest in Traveloka?
Stefan: I looked at the travel space for quite some time, and then the first time I met Ferry [Unardi, co-founder and CEO] I had the conviction right away that he together with his team will be an outstanding success story. The founding team has a strong passion for developing the product and has the skills to execute. We invested only around six months after the launch, but the traction they achieved at that date and the way they continue to progress are very impressive.
Tech in Asia: What are you looking for when teams are pitching to you and what advice do you have for aspiring entrepreneurs?
Stefan: Every investor looks for different things in the first meetings. It’s very seldom that I see a business model that I have not looked at in detail before, so for me I first want to understand the motivation and strength of the team and whether they can successfully execute their vision. Entrepreneurship is hard with many ups and downs. So be honest to yourself whether you want to dedicate the next five years of your life to building a successful business.
(Edited by Terence Lee)