The scale of the German Mittelstand

President Obama talks about the strength of America’s small businesses. But it is not the same as small- and medium-sized businesses in Germany. They are called, simply, the Mittelstand (“middle estate”) and they are the backbone of German business. I’m astonished by the numbers: the Mittelstand makes up 90 percent of all German companies, providing 60 percent of all jobs that require social security payments and 80 percent of all official vocational positions.

Via The German Model.

Lessons From the World’s Most Ruthless Competitor

A few days after I meet with Samwer, I visit Rocket’s headquarters, a six-story office building on the old East German side of the Brandenburg Gate that houses 200 of the company’s 500 employees. I listen as managing director Alexander Kudlich explains how he and Samwer decide which start-ups to imitate. The market must be big—$1 billion or more—and there must be a proven business model that has worked in another region. Rocket looks for “burger and beer opportunities,” universal products and services that are not specific to a given culture or region. “Once we see those things come together, then we map the business model against countries and see where there are white spots,” Kudlich says. “Then we do it.”

The decision to copy a given business generally takes three hours to a couple of days; actually building the first version of the new company’s website takes four to six weeks. “The speed at which you can make decisions here is amazing,” says Brigitte Wittekind, a former McKinsey consultant who was recruited last year to create a clone of Birchbox, the New York start-up that offers samples of cosmetics to subscribers for $10 a month. Wittekind’s company, Glossybox, spent its first year opening websites in 20 countries. It has 400 employees and 200,000 paid subscribers—twice as many as its American counterpart—and just launched in the United States, one of the few instances in which a Rocket clone will go head to head with the company on which it is modeled.