High Forms of Flattery

Clone Wars: Rise of the Fast Follower Startups

This startup looks like that startup.

lego star wars clone army Clone Wars: Rise of the Fast Follower Startups

A FEW MONTHS AGO, AN ENTREPRENEUR in the tri-state area was soliciting web development help via Craigslist. “I’m looking for a Meetup.com clone script,” the listing said. “It must have all the social community features that Meetup.com has, including the capability to add new groups, users events, polls, connect to other social communities, shopping cart, sponsors and sub sites.” Meetup, which was founded in 2002 and has about 80 employees, is reportedly valued at more than $50 million. The asking price for a replica was $300 to $600.

Last week, two ads appeared from the other side of the fence: a programmer-for-hire looking for something to build who claimed to have built a Facebook clone in four days, a Flickr clone in three days and a Google clone in two weeks. He noted that he’d also created a Craigslist clone, adding, “but no one visits it so we are posting this ad to Craigslist.”*

When it comes to internet startups, much is made of the entrepreneurs who first bring an idea to market—innovators or “first movers,” in the parlance of market researchers. But vastly more common are “fast followers,” the ones who jump on a hot idea and dash off a carbon copy. After all, the first mover doesn’t always win the race: just look at the Mac, launched in 1984, versus the Windows PC, launched in 1985, or at Facebook, which came after Friendster, Myspace and the Winklevoss social network HarvardConnection.

Turntable.fm, a music streaming service that went viral immediately after its April launch, was built in about six months by three entrepreneurs based in Union Square. About two months later, a local trio of former Googlers launched a music streaming game called Rolling.fm.

The similarity was more than striking. Both sites are designed to look like a cartoon night club where users can join a rotating line-up of D.J.s and play songs for a crowd of tiny avatars. Turntable listeners rate songs as “lame” or “awesome,” while users on Rolling rate them “weak” or “hot.” On Turntable, users appear as ambiguous elf-animals that get bigger as they accrue more D.J. points; on Rolling, the characters look like Homie dolls that get more bling as they level up. “I think it’s obvious that the initial version of Rolling is inspired by Turntable,” Rolling co-founder Tim Zhou said carefully in an email. “To say otherwise is not accurate.”

Fast followers have been around since the days of the first dot-com boom. Even Kozmo.com, the website that offered free one-hour delivery of almost any product and is considered one of the classic flame-outs of the 90’s tech bubble, had, despite its dubious business model, an imitator.

According to Silicon Alley Reporter publisher Jason Calacanis, one venture capitalist Kozmo pitched—Ross Stevens of Integrity Capital Management—liked the idea so much he launched a competitor. “They started something called Urbanfetch, which was a direct knockoff,” Mr. Calacanis said. This led to a legal settlement as well as retaliatory mischief; at one point, Kozmo had five employees order packs of M&Ms delivered to the office every hour, “just to see if Urbanfetch would do it,” Mr. Calacanis said.

Me-too startups seem to be popping up with increasing intensity amid the current wave of social media–centric web-based businesses, in which easy programming languages, the availability of ready-made tools, open source code and a reinvigorated supply of capital has everyone aspiring to internet entrepreneurship. “It’s this whole cargo cult thing, where people imitate the things you see on the surface,” web developer and serial entrepreneur Kyle Bragger told Betabeat. “Foursquare does badges and they did them really well. And then all of a sudden everyone was like, ‘I want to add badges to my startup!’”

There are more than 200 variations of the “daily deal” group discount site Groupon (commonly referred to as the “Groupon clones”) in the U.S. alone. In China, more than 1,000 have been launched and several hundred more are offering deals around the world, according to the New York-based deal aggregator and market researcher Yipit. These carbon copies range from bit-for-bit replicas to fairly creative takes on the concept of temporary group discounts.

Groupon’s wild success inspired Google to launch its own take on the daily deal site, Google Offers; at the other end of the knockoff spectrum, some intrepid entrepreneurs started offering a quick-and-dirty $350 software kit called Wroupon, which imitates Groupon’s daily deal conceit as well as the layout and language to generate “the perfect Groupon clone.”

Check Out A Side By Side Comparison of Fast Followers, From Wroupon to FreundeFeed

Meanwhile, the proliferation of “patent trolling,” frivolous lawsuits brought against startups based on overreaching software patents, has been in the news lately. How can overzealous intellectual property prosecution coincide with a rise of the clones?

The reasons for both have to do with the country’s overloaded, backed-up patent system. A startup’s design and branding can be protected with a copyright or trademark, which takes six months to a year to process. A new technology or method, like Groupon’s “tipping point,” would need to be protected with a patent in order for Groupon to take its clones to court. But a patent application usually takes two or three or three years to be examined—an eternity for a web 2.0 startup—and it’s never certain whether it will be granted, said Elliot Furman, a patent lawyer who has a masters degree in engineering from Stanford and specializes in software and web start-ups. And even if a company owns a patent, legal action is difficult, time-consuming and expensive. Pursuing a case is often not worth it to a young startup, especially those in the earlier stage who are working with limited funds.

Groupon, for example, can’t sue for patent infringement: it doesn’t own any patents yet. The startup filed for a patent on its flash deal mechanism, “a system and methods to mutually satisfy a consumer with a discount and a vendor with a minimum number of sales by establishing a tipping point associated with an offer for a good or service,” in 2009. That and five other applications are still pending. The patents are very specific: rather than attempting to patent the idea of a tipping point-based discount, the application describes a series of 10 successive actions that describe Groupon’s particular implementation. But Groupon has raised more than a billion dollars and therefore has the resources to pursue other kinds of intellectual property lawsuits. The company sued at least one of its clones, the Australia-based Scoopon, for registering the trademark “Groupon” and squatting on groupon.com.au. The case settled out of court. Facebook game-maker Zynga, another billion-dollar company, is suing São Paulo-based Vostu for copyright infringement while simultaneously defending itself against a lawsuit from Los Angeles-based SocialApps, which is suing Zynga for copyright infringement, violations of the California Uniform Trade Secrets Act and other claims.

SocialApps claims that Zynga used its code to build Farmville without adequate compensation. But most derivative startups don’t steal code—they look at a site and reverse-engineer what they see. “Most of these companies are using more or less standardized protocols,” Mr. Furman said. “They may even be using off-the-shelf software.” The service built on top of the technology, he said, is in most cases what companies want to legally protect with patents for the way the service works, copyrights for the way it looks and trademarks for the name and branding.

Fast-follower startups are an international industry, much like the “fast fashion houses” such as H&M and Zara that spot a new design on the runway and place cheap knockoff in stores just months later. China has its own versions of most successful startups—which, conveniently enough, tend to be blocked by the government’s censors—including Twitter, Facebook, Google, Quora and a score of Tumblr clones such as Dian Dian, which differentiated itself in its first iteration with Chinese writing and a darker shade of blue. German entrepreneurs Oliver, Marc and Oliver Samwer are notorious for producing copycat start-ups. The brothers attempted to partner with eBay to launch the German version of the auction site; when eBay didn’t respond, they made their own–which they sold to eBay for $50 million four months after it went live, according to the New York Times. Oliver Samwer co-authored a book in 1998 called America’s Most Successful Startups: Lessons for Entrepreneurs. One of their incubated startups, Wimdu, is a mirror image of the short-term rentals site Airbnb which is valued at $1 billion dollars. Airbnb said of Wimdu: “These scam artists have a history of copying a website, aggressively poaching from their community, then attempting to sell the company back to the original.” Wimdu told us it’s building a business, not angling to be bought.

Check Out A Side By Side Comparison of Fast Followers, From Wroupon to FreundeFeed

But unlike the so-called patent trolls—companies that exist solely to extract money from new start-ups via broad, vaguely-worded software patents—the fast followers are considered an acceptable part of the web ecosystem rather than contemptible parasites. Like the fast fashion houses, fast follower startups serve different markets, iterate on the originals, and keep first movers moving fast to stay ahead.

As University of Washington professor and former Microsoftie Scott Berkun says in his book The Myths of Innovation, all new inventions are basically collaborative. Technology evolves by group effort. Even the Chinese clones, safe in their protected market, eventually start innovating on the original ideas. “Zhihu [Quora clone] and DianDian [Tumblr clone] are following a common pattern of Chinese internet companies. Copy first, innovate later,” Kai Lukoff wrote on the Chinese tech blog TechRice. “Clones though they may be at present, I personally find myself rooting for these upstarts.”

In January, Match.com introduced a feature called DateSpark, which Aaron Schildkrout, co-founder of the local dating site HowAboutWe, thought looked familiar. “The Match implementation was, like, a very overt copy of HowAboutWe, the language, the design,” Mr. Schildkrout said. “It was kind of like an ugly, poor duplicate of what we had built. I felt like it was a little lame but I understand why they would do it and felt simultaneously that it was really affirming.” Match.com did not respond to a request for comment.

Hitting back, HowAboutWe offered Match.com subscribers a three-month subscription for free, though Mr. Schildkrout sounded decidedly unthreatened by the larger company. “The core outdated lameness of Match persisted,” he said. “It would have been cool if they did what we did and did it better, so we could learn from them.”

Does HowAboutWe copy other people? we asked.

“Yeah, constantly,” he said, citing Twitter and OKCupid. “I wouldn’t say copy but we have taken huge pieces of ideas from other people and their great implementations—that’s part of what being a great user experience designer is. I think that’s a healthy dialogue that exists between competing companies.”

HowAboutWe has not attempted to patent the idea of a dating site built around proposing date ideas. “Our task is to be incredibly innovative, creative, try things quickly and figure out what works, kill what doesn’t work, continue to iterate on what does, and therefore beat out anybody that’s trying to copy us,” he said.

Entrepreneurs do often have identical ideas independently as technological evolution makes new things possible. The emergence of services like Twilio, which makes it easy for developers to send text messages and make phone calls from mobile apps, inspired a staggering number of group texting startups around the same time, including GroupMe, Groupie, Fast Society and the recently-folded Freespeech, and that’s just in New York. Mr. Furman gets waves of clients who ask him about patenting the same thing. “In a month, six or seven people come to me with virtually the same idea!” he told Betabeat.

But it’s a different story when there is a possibility of consumer confusion. A trademark application takes only six to 12 months to process, and it only costs a few hundred bucks to send a cease-and-desist letter, as the New York-based founders of the application-hosting service Nodejitsu did when an Arizona startup offering the same service launched under the similar name NodeFu.

At the time, the NodeFu website referred indirectly to Nodejitsu: “We started this project because the ‘other’ node.js hosting services were not sending out coupon invitations.” But NodeFu’s founder Chris Matthieu said the branding was unrelated. “There is a trend in the software industry now around ninjas and apps/sites ending in the suffix ‘fu,’” he said in an email. “In addition for my fondness of ninjas, my son is also a black belt in karate and a red belt in kungfu. I have been surrounded by martial arts for 14 years now. There really isn’t that much in common between the Nodefu and Nodejitsu sites other than being oriental. I didn’t see any ninjas on their site. Not sure what the big deal is nor do I see any concerns with copyright.”

Still, Mr. Matthieu later changed his company’s name to Nodester.

Check Out A Side By Side Comparison of Fast Followers, From Wroupon to FreundeFeed

*UPDATE: This ad turned out to be a parody. “This can’t possibly generate any responses, I thought,” writes Ted Dziuba, the listing’s author. “Nope. 31 replies in about 2 hours, before Craigslist pulled the post.”

A version of this story appeared in print in the New York Observer the week of Sept. 2, 2011.

Follow Adrianne Jeffries on Twitter or via RSS. ajeffries@observer.com

Comments

  1. Tom Limonceli says:

    The early bird gets the worm but the second mouse gets the cheese.

    Isn’t that the Microsoft way?

  2. a movers company that should always be having a right term for you to have on , a right choices to have them as part of your moving days.

  3. angela shean says:

    beat the good beat through movers company , you can assure that you are in good hands as you move into your office ,new homes to live.