Monthly Archives: March 2015

Transactional marketplaces

Wedding planning platform Dugun recently launched its new wedding invitation marketplace Davetiyo.


Prospective couples interact with a lot of merchants during their wedding planning process. These include wedding venues, organizers, photographers, and wedding invitation producers. Couples need to meet most of these merchants offline as the ultimate service will be delivered offline. This includes visiting the wedding venue, setting up logistical details with the organizer, and getting pictures taken before, during, and after the wedding with the photographer. Because of the need for an offline interaction before a transaction is completed, it makes sense for Dugun to send customer leads to merchants in these categories.

Wedding invitations, however, can be delivered fully online. All the couple needs to do is select a theme for the invitation and envelope they like, and fill it in with pictures and writing. Because of this approach, it makes sense to offer customers a fully online end-to-end wedding invitation ordering experience rather than directing them as leads to merchants. This is why Dugun powers Davetiyo as a separate transactional marketplace.

My wife and I were among Davetiyo’s first users when we had our wedding last summer. This was before Davetiyo had a website. We were happy customers and the platform has grown to include a much wider variety of invitation themes since then. I took a look over the current themes available and there seems to be something for everyone.

TV advertising

Tasit is a used car classifieds site that we invested in back in 2013. Founded by Birol Kabakoglu, the company’s goal is to be the leading car vertical classifieds site in Turkey.

Tasit is 4 years old so it has already optimized most of the low hanging fruit like targeted online marketing to bring customers and car dealers onto its platform. On top of this, many car dealers have yet to build an online presence and remain skeptical of the benefits of online sales channels. Given this context, it made sense for Tasit to launch a TV advertising campaign.

Despite being less targeted than online marketing, TV advertising can be particularly valuable for internet companies to create trust within their traditionally offline communities. Although TV viewership is declining, a company with the resources to engage in TV advertising signals to viewers that it’s a trusted brand.

You can check out Tasit’s TV ads below. My favorite is the first one. What’s yours?

Hiring signals

Direct-to-consumer car buying platform Roadster announced that it has brought onboard Rudi Thun, formerly Head of Vehicles at eBay Motors, as COO this Wednesday. Rudi has been serving as an advisor to the company since December 2013.

I haven’t met Rudi however I was very happy to hear that he’s joining Roadster and I welcome him to the team. I’m confident that Roadster’s CEO Andy Moss made the right decision.

Whenever the leader of the most trafficked vehicle marketplace on the web decides to leave his company to join a car marketplace startup less than 1.5 years old, it’s usually a good sign.

Free Bitaksi rides

The weekend is here so I thought I’d share a little treat.

If you haven’t used taxi hailing app Bitaksi in the past, you can get a free ride up to 20TL (or a 20TL discount for a more expensive ride) simply by signing up.

iOS users can download the app here and Android users can download the app here.

The discount is only valid if you pay with your credit card but that’s much simpler than paying with cash anyways.

Also, make sure you use the discount before it expires at midnight on Tuesday.

Turkey’s unicorns

My partner Hasan participated in the “Where are the Unicorns from Turkey?” panel at Startup Turkey, organized by Etohum, last month, together with Kerim Ture from Modanisa and Hakan Bas from Lidyana. The panel was moderated by TechCrunch editor Mike Butcher. You can watch the full video below.

A unicorn is a company with a valuation of at least a billion dollars, so we likely don’t have any such companies in Turkey’s internet sector yet. On the panel, Hasan pretty much says “One day we will have many unicorn companies. The question is how soon it will be.” I fully agree. Together with the widespread use of mobile technologies, the shift from offline to online behavior in emerging markets has just begun.

The biggest candidate in Turkey is probably Sahibinden, the country’s leading horizontal classifieds site. Sahibinden may actually already be a unicorn and we simply may not know it yet. Although the company hasn’t taken any outside funding and therefore doesn’t have a paper valuation approved by outside investors, its valuation is likely nearing the billion dollar mark. Other candidates include Hepsiburada, Turkey’s largest e-commerce site which was valued at over $400M in a deal with Abraaj recently, and Yemeksepeti, Turkey’s leading food ordering site which is likely valued even higher.

We also have multiple candidates to become unicorns in our portfolio. We just need to be patient.

Demo Days

I was reviewing Y Combinator’s Winter 2015 startups this morning. As I read about what the startups were doing and further researched a few that were interesting, I remembered the last Y Combinator Demo Day that I attended in 2013.

I had immediately discovered that Demo Days aren’t for me. The frantic pace of 2 minute presentations gives startups just enough time to explain what they’re doing and how they’re growing. You can discover the first by simply reading each startup’s elevator pitch written on paper, and the second can often be gamed in a single slide. For example, startups use tricks like showing cumulative figures rather than monthly figures, percentage growth rates which are always high from a low absolute base rather than the underlying traction metric, or metrics pertaining to only a subset of their power users, each of which can give the appearance of stronger growth.

The most valuable piece of information which comes across in the presentation isn’t what the company is doing or its growth slide. It’s how well the founder presents. Unfortunately, presentation skills give very little guidance on a startup’s eventual chance of success. Presentation skills can be learned much more easily than hard work and determination. So a founder with an introverted personality who doesn’t come across that strong in an initial presentation (compare this 2005 talk by Mark Zuckerberg to his current presentations) actually has a much better chance of being successful than a charismatic presenter who doesn’t follow through with hard work and determination on their startup after they’ve left the glory of the stage.

Since our brains are wired to respond positively to signals of social strength, even a viewer who is fully aware of their cognitive biases is at risk of being impressed by a startup simply because of the strong delivery of the founder’s presentation in a social setting.

Y Combinator is a role model for other accelerators around the world so its approach to Demo Day has been adopted by other accelerators. This includes Etohum, where we’re investors, whose Startup Turkey event last month featured 3 minute startup presentations.

Demo Days may be a good fit for some investors, but they’re not for me. I prefer to research a startup’s market and the differentiation inherent in their approach from my computer, try out their product and review those metrics which I feel are important, and have a lengthy chat with the founders to understand whether their minds prioritize and solve problems in a way that makes sense to me.

Private late stage tech company valuations

There’s been a lot of recent talk about whether private late stage tech company valuations are too high. There are arguments on both sides of the table which are covered at length elsewhere.

Rather than rehashing these arguments, I’ll share some anecdotal evidence which makes me believe that late stage tech valuations overall are indeed higher than what can be justified by most companies’ fundamentals and the size of the opportunities ahead of them. However, there are still diamonds in the rough, or so we believe.

As early stage investors, our focus is on companies with 0 to 2 years of operating history. We therefore rarely see opportunities to invest in billion dollar companies which almost always take longer than 2 years to reach that valuation. In fact, we hadn’t seen any until the last month. I started working at Aslanoba Capital in June 2013 so that’s 20 months without a single opportunity to invest in a billion dollar tech company.

However, in the last month alone we’ve been offered the opportunity to invest in 3 billion dollar companies. Since this is abnormal for us, similar opportunities must also abnormally be popping up on the desks of other investors without a late stage focus, or perhaps even no tech focus at all. This is usually a signal that there’s too much demand for these offerings and this results in higher prices.

Among these 3 companies, we decided to invest in 1. We participated in Lyft’s latest round led by Rakuten. Since we made this investment, we clearly don’t think that all private late stage tech companies are overvalued. Investors need to be increasingly careful, but there are still diamonds in the rough.

Healthcare data

I had coffee with Erden Asena, the founder of Doktorsitesi (“doctor site” in Turkish), this morning. With over 2.8M monthly unique visitors, Doktorsitesi is Turkey’s largest patient to doctor Q&A platform.

Patients can ask questions about the problems they’re experiencing to the specialized doctors on the platform. If the problem is too complex to be solved through an on-platform textual exchange, the patient can also make an appointment to visit the doctor in person.

In the future, Doktorsitesi has the opportunity to offer patients the ability to engage in video chats with doctors. This would be used for those problems that require more in-depth interaction than a textual exchange but don’t call for an in-person appointment. The cost would be higher than a textual exchange (Doktorsitesi allows patients to ask doctors one question per month for free and up to 10 questions per month for 5 TL which is roughly $2 at the time of this writing) but lower than an in-person visit.

In addition to facilitating different forms of patient to doctor interaction, Doktorsitesi sits on a massive amount of data from the textual exchanges (open forums and private messages) that take place on its platform. The content of the exchanges contains valuable information such as the prevalence of diseases, recommended treatments, and medications offered by doctors. Once anonymized, this information can be further sliced according to demographic information like region, a patient’s age, and gender, as well as across time. This makes it extremely valuable for players like pharmaceutical companies, fast moving consumer goods companies, and insurance firms who can make better decisions based on this data.

The scarcity of such information in the traditionally opaque healthcare industry makes it that much more valuable. Think about it. When picking where to eat out, we have tens of restaurant review sites available to guide our decision. However, when making a much more critical decision about what treatment to receive, which medication to take, or which doctor to visit, we overwhelmingly rely on anecdotal evidence from our family and friends.

We could be making much more informed decisions. Doktorsitesi is just scratching the surface of its vision to address this problem not only for consumers, but for all the actors in the healthcare ecosystem.

Modanisa partners with STC Ventures for international growth

Our portfolio company Modanisa recently announced a new $5.5M funding round. The round in which we also participated was led by Aiman Al-Atiqi of STC Ventures, the venture capital arm of Saudi Arabia’s largest telecom operator STC. This is STC Ventures’ first investment in Turkey and we look forward to the opportunity to continue to partner with them in the future.

Modanisa is an online fashion retailer serving women who dress according to the principles of Islam. This is a market of over 400 million women who spend close to $100 billion on clothing each year. Surprisingly, it’s also a deeply underserved market. Founded in mid-2011 by serial entrepreneur Kerim Ture, internet entrepreneur Sami Guzel, and retail executive Lale Tuzun, Modanisa has been operating for less than 4 years. However, it is already the largest online platform in the world dedicated exclusively to Muslim female fashion.

The company’s Turkish origins give it a unique competitive advantage in the sourcing of high quality textiles for its third party and private label brands. This translates into well-designed, fashionable clothing manufactured at affordable prices for end consumers.

Despite having no physical international presence so far, Modanisa already ships over 35% of its products to customers outside of Turkey. This statistic is unmatched by even the most successful internet retailers in Turkey. This is why it makes a lot of sense to partner with STC Ventures as Modanisa looks to grow its international sales. Over 150 million of the 400 million female Muslim population that Modanisa targets lives in the Middle East and STC Ventures provides direct access to these countries.

We’re fortunate to partner with STC Ventures, and thankful to Jan Fomferra and his team at investment bank IEG, and Recep Bildik and his team at the Borsa Istanbul (Istanbul Stock Exchange) Private Market platform for bringing us together with the STC Ventures team.

The Borsa Istanbul Private Market platform is a unique effort that matches Turkish startups looking for growth capital with local and international investors. We appreciate the strong support which Borsa Istanbul is showing local startups and we’re confident that Modanisa is just the first of many successful transactions which will be facilitated by the platform.