The Copycat Dilemma

I wrote this post for the BNOTIONS blog after being inspired by many Toronto based copycats, which made me wonder who else is doing this around the world.

“Berlin, at first glance, a strange place for the kind of ruthless business execution for which Oliver Samwer is famous,” writes Inc. magazine’s Max Chafkin in this month’s article, The Sincerest Form of Flattery, highlighting copycat tech startups overseas in which billionaire entrepreneur, Samwer is famous. The article’s abstract reads “Now they [Samwer and like-minded entrepreneurs] knock off online shoe sellers, daily-deal sites, and any other Internet-based business you can name. Is there something wrong with that? Or is it just a fact of business in a connected world?” Questions that lead us to wonder whether or not the new model to technology success in business still commends authentic innovation over emulated execution? Inside a company building technology and incubating startups, I had to dig deeper.

I spent the weekend in the Toronto sun chatting with two Groupon competitors, Buytopia and DealFind, of chance networked encounters. A friend of mine introduced me to each with reasons other than networking with fellow tech industry people. Both in the top 5 of Canada’s online coupon industry (DealFind is currently number one), could be considered Groupon copycats. But the market is big, even as neighbors to the US (the home of Groupon, the major innovation leader in the space in the US), has made me wonder how lucrative copycat industries are. At BNOTIONS we spend so much time thinking about innovation and authenticity, it is hard to imagine ourselves building platforms specifically designed to copycat.

That being said, it is hard to ignore the thought of competitive advantage of like-companies when outside the birthplace of the ‘idea.’ In Russia, top search engine Yandex and in China top search engine Baidu relish in their true understanding of their local market, in which Google has been unable to yet conquer. Is a local understanding and connection a competitive advantage, even in an industry so hyper globally connected?

With over 800 million users on Facebook globally, it would be tough to argue a local advantage in global technology. Although, in most traditional industries localized concentration within larger corporations has been a more successful tactic in conquering majority share amongst markets (shown through Decide & Deliver by Blenko & co. of Bain & Co.). With a growing market share in the US, we at BNOTIONS even decided to open an NYC office to be closer to our US customers. Even in an age of digital communication, understanding a local market and becoming embedded within, has a lot of value. Meeting customers face-to-face, understanding cultural differences, and showing a respect for local business practices is something copycat entrepreneurs like Samwer (behind Airbnb, Stella & Dot, Zappos, Groupon, and many other big name technology startups in Europe and the East) has proved that this creates openings in markets.

Local entrpreneur here in Toronto, Alyssa Richard (and friend of BNOTIONS) of Ratehub.ca runs what she has often referred to as “the Bankrate.com of Canada.” She is not an intentional copycat, as she saw the opening in the Canadian market for a specific Canadian mortgage comparison website that Bankrate.com had not yet tapped. She built her ‘like’ company based on product need in an open marketplace, with few Canadian competitors, in which she felt she could conquer, local to her.

In fact, this mentality is exactly how I feel competitors should enter the market. The mentality behind our in-house startup, Atendy, an event registration platform who is, in many ways a competitor to Eventbrite; that having a slightly different approach with a product that you ‘perceive’ as better makes you competitive, not necessarily a copycat. When looking at competing, an entrepreneur’s first question is usually whether or not they can do it better, in their market.

With only two thirds market share in the US, the company birthplace, Google has plenty of US copycat competitors. That being said, it has, in many ways, driven them to build better products faster, as well as expand quicker. Google has over “85% of queries in Europe” (The Economist) showing that maybe traditional conventions of knowing your market better and being local aren’t necessarily true. But at the same time, if you are a copycat (exact clone) in another market, like Samwer, it just might be. Arguments can show positives on either side of the debate between copycats in different countries and authentic innovation expanded.

All in all, I could not deduce a positive or negative response to the copycat craze in the technology industry. The game of execution is in many ways most of the entrepreneurial battle. In the words of Eric Reis, “executing the wrong idea well, is just as bad as not executing the right idea.” At BNOTIONS, we do not strive to copycat, but if we see an idea worth building on, we won’t be shy.

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