Rocket Internet, known for incubating copycat startups, struggles to find a path to profitability as its stock price hovers at a third of its peak, hit in 2014
German tech company has created 100 startups, many of which remain unprofitable — BERLIN—In 2011, German tech company Rocket … Tweets: @jonrussell and @extradotph Tweets: Jon Russell / @jonrussell : Ouch, Rocket criticized for “deeply unprofitable startups” http://www.wsj.com/... @extradotph : The problem is that rocket cannot copy how the original company executes the idea. http://twitter.com/...
Context & Ripple Effects
Rocket Internet spent early 2016 trimming the portfolio rather than fixing it — in February it sold four food-delivery units to Just Eat for $140M, an admission that some clones were worth more inside a strategic buyer than on Rocket's own books. This WSJ report is the fuller diagnosis behind those sales: of roughly 100 startups incubated, many remain unprofitable, and the stock sits near a third of its 2014 peak.
The criticism Jon Russell amplified on Twitter cuts to the model itself — Rocket can copy the idea but not the original company's execution. Two months later, Bloomberg's inside look would sharpen the same point into a verdict: far better at starting companies than running them.
First-order effects
- Rocket's unprofitable portfolio companies now face a choice between reaching profitability on their own or being sold off like the food-delivery units, because public-market patience has collapsed with the share price.
- Public investors are repricing the incubator thesis itself — a stock at a third of peak means the market no longer credits Rocket's launch volume as evidence of durable value creation.
Second-order effects
- Later-stage capital for copycat ventures tightens across Rocket's network: if the lead incubator cannot show exits or profits, co-investors and acquirers discount cloned businesses accordingly, pushing more distressed sales like the Just Eat deal.
- Rivals and regional operators gain leverage in negotiations for Rocket's underperforming units, since the seller's urgency — visible in the falling stock — is public information.
Third-order effects
- The pattern ends where the coverage says it does: Rocket delists six years after going public, its value down from €6.7B at IPO to €2.6B, closing the experiment of running a startup factory as a listed company.
- Going private shifts the conflict from markets to shareholders — by late 2025, minority holder Scherzer & Co accuses Rocket of marking down startup valuations to buy out backers at bargain prices, showing how opaque portfolio accounting becomes once public scrutiny is gone.
The trend: Startup factories built on rapid cloning are discovering that launching companies at scale does not compound into operating skill, and the model is retreating from public markets into private control.