7 businesses that cloned others and made millions

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7 businesses that cloned others and made millions

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Corporate boards and business schools may focus on innovation. But when starting a company, it can be the case that tweaking an existing idea is both easier and more profitable than creating something from scratch.

"It's always easier when you're starting a company to try to improve an existing idea," said Paul B. Brown, co-author of the 2012 book Just Start, published by Harvard Business Review Press.

Indeed, in today's world copycat companies are a reality of doing business. It's increasingly the case in the crowded field of technology, where different companies' smart watches, smartphones and tablets have come to closely resemble their rivals' products. But it's also the case in other industries, where copycat businesses — when done lawfully — can work and be hugely profitable.

"Innovation happens from imitation in many ways," said digital strategist and marketer Ross Simmonds. "In business we see that time and time again, with organizations that come out of nowhere with simple tweaks."

After all, it wasn't Starbucks, for instance, that invented the coffee shop. But where was the first place you ever ordered a "grande" coffee?

Here are seven examples of businesses that cloned others and made millions.

  • Instagram Stories and Snapchat

    Instagram had already made its money in 2012 when Facebook bought it for $1 billion. Four years later it released its own version of Stories — the very same feature that rival Snapchat had introduced, wherein photos and videos shared with friends are deleted after 24 hours. It's perhaps plausible that Instagram would never have rolled out its own Stories function had Facebook's $3 billion offer to buy Snapchat been accepted in 2013. But what we know now is that Instagram Stories has added 250 million users in the year since it launched, while the now-public Snapchat has seen its stock price erode since it first began trading on the NYSE last March.

    Facebook, which reported $27.6 billion in 2016 revenue, doesn't release revenue numbers for Instagram that now has about 700 million users, but Piper Jaffray analyst Samuel Kemp predicts that Instagram's revenue could rise from $2 billion in 2016 to as high as $22 billion by 2021. Prior to its IPO this past March, Snapchat revealed 2015–16 revenue of $463.1 million. So far in 2017, Snapchat reported Q1 revenue of $149.6 million and Q2 revenue of $181.7 million.

    Instagram co-founder Kevin Systrom.
    Emmanuel Dunand | AFP | Getty Images
  • Indiegogo and Kickstarter

    People would perhaps be forgiven for thinking Kickstarter is the grandfather of online crowdfunding sites. After all, nearly $3.2 billion has been pledged to Kickstarter projects, such as mega-successes Pebble watch and the Oculus Rift headset, since it opened for business in 2009. But rival Indiegogo actually opened up shop in 2008, a year before Kickstarter was even launched.

    The mechanics of a crowdfunding campaign on Indiegogo are slightly different — in addition to "fixed funding" campaigns, which both crowdfunding sites host, Indiegogo also supports "flexible funding" campaigns, where people keep their money if they don't meet their overall funding goal. But both sites, since their foundings, have hosted more than 100,000 crowdfunding campaigns, and with a 5 percent fee charged by each to successfully funded campaigns, both sites have made millions.

    Kickstarter home page
    Source: Kickstarter
  • Sega and Nintendo

    In his book Console Wars: Sega, Nintendo, and the Battle That Defined a Generation, author Blake J. Harris peels back the curtain to give readers a glimpse at Sega's efforts in the 1990s to dethrone Nintendo, which in the United States was the undisputed king of the video game. (In 1990, Nintendo accounted for 90 percent of America's $3 billion video game industry.) Taking a page from Nintendo's book and the success of the game Super Mario, Sega created Sonic the Hedgehog and began making waves. At one point, as Harris explains in his book, Sega amassed a 55 percent share of the U.S. video game market.

    In 2016, revenue for Sega Sammy Holdings, parent company of Sega, was $3.12 billion in U.S. dollars. Nintendo's 2016 revenue was $4.5 billion in U.S. dollars.

    A person dressed as the Nintendo character Mario waves at a pop-up Nintendo venue in Madison Square Park, March 3, 2017 in New York City.
    Drew Angerer | Getty Images
  • Alando and eBay

    The Samwer brothers are well known to folks who analyze copycats in the tech industry. Their prowess at mimicking innovation goes back to 1999, when the three brothers developed Alando, a German copycat to American online auction site eBay. Within four months eBay purchased Alando.de for $43 million. In 2016, revenue for eBay was $9 billion.

    The headquarters of eBay in San Jose, California.
    Getty Images
  • Xiaomi and Apple

    It was in 2014 when Jony Ive, chief design officer of global technology titan Apple, used the word "theft" to describe what Xiaomi was good at. China's Xiaomi is commonly the target of folks who believe it's good at copying rival Apple when it comes to Mi smartphones. It's a question that's been posed directly to Xiaomi co-founder and president, Bin Lin. Lin and others in the company insist there are differences, despite a user interface that is remarkably similar to Apple's. Today the Chinese smartphone maker is worth more than $45 billion, and is the fifth largest in the global industry.

    Xiaomi stopped disclosing its annual sales figures in 2016, but 2015 revenue was $12.5 billion. Its revenue target for 2017 is $14.5 billion. Comparing Apple, whose fiscal year ends each September: In 2015 the Cupertino, California-based company's revenue was $234 billion.

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  • Google Home and Amazon Echo

    In 2015, Amazon released the Echo, a personal home assistant that has countless people asking Alexa whether it's raining outside. (It's projected that by 2020, revenue from the Echo and Alexa alone could be $11 billion.) One year later Google released its Home device — a personal home assistant that has countless people asking Google whether it's raining outside. It's perhaps the starkest example of copycats being a reality of the tech world that's present on this list. By the end of 2017, however, another entry to the home-assistant market will make its debut. That's when Apple releases its HomePod — a year after Google Home and three years after Amazon Echo.

    In 2016, revenue for Google parent company Alphabet was $89.73 billion. Amazon's 2016 revenue was $135.99 billion.

    Google Home
    Source: Google
  • FedEx and UPS

    Difficulty in getting supplies such as medicine and computer parts delivered speedily led Fred Smith to found Federal Express, otherwise known as FedEx, in 1971. Its signature red-white-and-blue delivery trucks are routinely found in cities and suburbs today — oftentimes parked near the big brown box trucks of rival courier company United Parcel Service, or UPS, which got its start in 1907.

    Both of these private package-delivery services have grown into international behemoths, each moving more than 25 million packages per day and doing tens of millions of dollars of revenue every year.

    In 2016, revenue for FedEx was $50.4 billion; UPS 2016 revenue was $60.9 billion.

      Fedex
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