Wither Rocket Internet? with Jon Russell

Jon Russell from TechCrunch joined us to discuss Rocket Internet’s 1B exit to Alibaba & its impact to ecommerce & funding cycles in Southeast Asia. We dissected the implications from the Lazada exit and the continuing movement of Rocket Internet spinning off their other assets such as Zalora and Foodpanda within the region and foreshadowed the next stages for the start ecosystems faced by the onslaught of the Rocket Internet effect in the past few years. Last but not lease, we discussed the future of Rocket Internet & revisit the “winter is coming” narrative in Asia.

Here are the interesting show notes and links to the discussion (with time-stamps included):

• Jon Russell (@jonrussell, LinkedIn, weekly newsletter on Asia Tech (highly recommended), Personal Site), Reporter at TechCrunch
  • Upcoming gig in  TechCrunch Disrupt NY [0:46]
• Wither Rocket Internet [1:10]
  • Alibaba’s $1B investment to Lazada: What happened? We discussed the rumors circulating before the news broke out as well. [1:43]
  • Spiralling losses show Lazada desperately needed Alibaba Investment [3:45]
  • Lazada’s gross merchandise value is US$1B. [5:05]
  • What’s the impact to ecommerce in the Southeast Asia market? [5:39]
  • Is Alibaba buying instead of building its way to Southeast Asia? by Josh Horwitz from Quartz. [6:34]
  • Who has benefitted from the Alibaba investment? Rocket Internet, their early investors or the employees involved in them? [7:19]
  • How did Lazada driving up so much revenue and yet not able to losses? [8:20]
  • Zalora, Rocket Internet’s unprofitable Asian fashion portal, is selling off business units [9:50]
    • How has Zalora performed so far within the Rocket Internet portfolio? Note that it has been part of Global Fashion Group (GFG), a consolidation by Rocket Internet for 5 emerging market brands: Dafiti (Latin Amercia), Jabong (India), Lamoda (Russia & CIS), Namshi (Middle East) and Zalora. Their valuation dropped from US$3.5B to US$1.1B with US$340M investment.
    • As part of the consolidation, how does Rocket Internet viewed the Zalora investment? What is it actually set out to do? [10:05]
    • Recently, Zalora loses some senior executives, Harry Markl & Avni Pundir, who are they and why did that happen? [13:39]
    • Given Alibaba’s investment in Lazada, why did Rocket sell the business units in Thailand and Vietnam? (Ref: Retail giant Central Group is buying Zalora’s businesses in Thailand & Vietnam) [14:31]
  • Given Rocket Internet’s rapid selling off or divestments of assets at the moment, particularly in food delivery (foodpanda) and ecommerce (Zalora), does that give us some hints on the financing environment in general (revisiting the winter is coming narrative)? [16:22]
  • A lot of people talked about Rocket Internet’s execution capability, but in the past few years  (Ref: Christoph Gerber’s Analysis on Rocket Internet), they seem to be throwing the money at the problem. Is it the way how they have hired or their turnover is so large that the whole institution lack institutional memory? [18:51]
  • Given what is happening with the global markets, has Rocket Internet’s promise failed? [19:52] 
  • What are the other things that they are doing, for example, Zenrooms to Brazil? [20:50]
  • As we observe Rocket Internet’s rise and fall in the past few years, what is the near and far impact to the startup ecosystems across the world? [21:20] 
  • Will Rocket Internet exist in a few years time? [23:51]
  • Silicon Valley does not want to buy Rocket Internet’s companies, for example, hear Brian Chesky’s explanation of culture as a reason (in Sam Altman’s “How to start a startup” course) on why Airbnb did not buy from the Samwer Brothers. [25:00]
  • What are the interesting news for Southeast Asia lately? [26:13]

Editor’s Note: We received a note that Christoph Gerber has not worked with Rocket Internet as mentioned with the podcast. His analysis is based on the people who he knew worked in Rocket Internet from Berlin. Our apologies with the error. 

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The show is hosted by Bernard Leong (@bleongcw) and are sponsored by Ideal Workspace (Twitter, Facebook and LinkedIn) with their new Aspirus Desk on Indiegogo (Twitter, Facebook, Medium). Also check out Ideal Workspace’s new standing desk, Aspirus and sign up for their mailing list. Sound credits for the intro music: Taro Iwashiro, “The Beginning” from Red Cliff Soundtrack.