Monthly Archives: August 2015

Government service

I recently read Y Combinator’s Sam Altman’s blog post on the US Digital Service.

Basically, Sam shares the US government’s Digital Service project whereby it gets experienced tech engineers, product managers, and designers to work on government projects. Talent from Amazon, Google, Facebook, Twitter, Twilio, and YC has joined the project so far, with great results. The Digital Service has helped reduce its upfront development cost from $200M to $4M while reducing its annual operating costs from $70M to $4M.

I think that the idea of Digital Service is a great idea that more countries need to adopt. Being a government official and performing military service shouldn’t be the only ways in which you can serve your country. If you have a specific skill set, you should be able to put it to good use in a government role.

Your contribution shouldn’t have to be in the form of a long-term career, but could take the form of a 1-2 year full-time commitment or a specific consulting engagement. It also doesn’t need to be restricted to the field of technology. Whatever the specific shape of your potential contribution, there should be a government platform that accommodates your desire to serve your country in that way.

On demand delivery app promotions

Together with the growth of consumer facing on demand delivery apps in the US, there has been an explosion of similar startups in Turkey. The leading players in the space so far are Kapgel where we’re investors, Getir, and Bol Bol. I wrote about Kapgel in an earlier post.

Each of the companies has a slightly different model. Kapgel fulfills consumer orders from a wide range of third party merchants including restaurants, grocery stores, retailers, and dry cleaners. Getir relies on its own inventory to deliver product categories like snacks, personal hygiene products, baby products, and pet foods. And Bol Bol delivers from third party restaurants and grocery stores. I’ve tried each service, and have had a pleasant experience with each one.

The space has clear network effects. Consumers go to where the products they want can be found and are delivered the fastest. This requires a lot of merchants (or inventory) and a liquid delivery network. The merchants (or inventory), in turn, want to be where there is the most consumer demand.

As a result of this market characteristic, there’s a good chance that we’re going to see a runaway market leader in the space a few years down the road. There will be competition which survives, but the difference between being the market leader and placing second or third may be an order of magnitude apart.

Since each company is aware of this, they’re investing heavily in promotional campaigns to attract consumers. First off, none of the services charge a delivery fee right now. Beyond this, in the last two days alone, Kapgel has offered a free cake mix (there are more free products lined up) and Getir has offered a 25% discount on all orders up to an order value of 100 TL. Bol Bol has a gamified point system that lets you collect points for liking different restaurant cuisines, favoriting specific dishes, uploading your credit card details, and sharing your product feedback with the company. These let you collect enough points to earn free product without even having to place an order.

I look forward to seeing how the space evolves over the upcoming years. In the meantime, these promotions make it a great time to be a lazy consumer.

Solving our transport problem

I recently came across the infographic below showing the tremendous inefficiency of our current transport system. The infographic is the strongest representation I’ve seen to date showing how our reliance on private cars for transportation creates a significant amount of unnecessary congestion.

Let’s quantify the inefficiency. As shown in the infographic, there are 200 people in 177 cars. That’s 1.1 passengers per car. If we assume that the average car has 5 seats, that means that the cars are operating at 23% of their capacity. That’s a 77% inefficiency.

Ride sharing to match passengers with empty seats is one clear solution. Our investments Lyft and Volt are doing just this.

Other solutions offered in the infographic include getting people on bikes and promoting the use of public transport like buses and trains. The latter becomes easier with apps like Moovit and Trafi that show you the best combination of public transport options to get you from where you are to where you want to go at any given time.

Achieving an efficient transport system is going to require a combination of the approaches mentioned above. Fortunately, technology has made these approaches readily accessible to everyone with a smartphone. Solving our transport problem is now simply a matter of using this technology.


If you follow my Twitter feed, you’ll have noticed that I engaged in two sessions on the Wondr app last Friday. Built by the team behind our 1-on-1 anonymous chat app, Wondr lets you participate in 1-on-1 anonymous chat sessions with your Twitter followers. You simply open the app, create a session stating what you want to talk about, and wait for your followers to reach out. Although you can enter into 1-on-1 anonymous chat sessions by sharing your username with your friends and on social media, Wondr makes it easier for you to broadcast to your Twitter graph (more professional followers than friends) while also letting you set the stage for what you want to talk about.

I created two sessions on Friday, one called “Trying Wondr” and the other called “Startups and VC”. I had four people in total, two in each session, reach out and we had great conversations where they shared feedback about our startups and pitched what they were working on. Despite the layer of anonymity, the conversations were each respectful and polite. However, in contrast to the conversations on which skew towards friendly relationships, those on Wondr were exclusively about professional topics. Although I’m not a regular user of, I’m therefore much more likely to be a regular user of Wondr.

If you want to check out Wondr, you can start a session as a host by downloading the app here. You can also tune in to my current Wondr session to see what it feels like as a participant. The app is still in the early stages and the founders would appreciate your feedback. Feel free to leave it in the comments below.

Exits in Turkey

One of the most frequent questions I get from investors evaluating the attractiveness of investing in Turkey’s internet sector is about the health of the exit environment.

Going public and getting acquired are the two most common paths to exit for internet startups. The first hasn’t happened yet in Turkey, although I believe it will in the not too distant future. The second requires an acquirer, which can either be a local or an international company. Local companies don’t have a track record of acquiring successful internet companies, so this leaves international companies. Indeed, the two largest acquisitions in the Turkish internet sector to date have come from international acquirers, with Delivery Hero buying Yemeksepeti for $589M and EBay acquiring GittiGidiyor for $217M.

The range of potential exit options available to Turkish internet companies is indeed less than the range of options available for internet companies in markets like the US and Western Europe where going public and being acquired by a local company are more readily available options. However, as Yemeksepeti and GittiGidiyor show, great companies achieve great exits no matter where they’re located.

In thinking about our exit prospects at Aslanoba Capital in Turkey, I rely on the exit track record of my old fund Romulus Capital‘s first fund in the US. We launched the fund in 2008 and had invested in 17 companies by the time I left in 2013. During this 5 year period, 1 company, Crocodoc, had achieved an exit by being sold to Box in 2013. Another company, Gyft, was sold to First Data a year later in 2014. It’s now 2015, 7 years following the first fund’s launch, and 2 companies have been sold. This is 2/17=12% of the portfolio.

At Aslanoba Capital we invest at the similar seed and early stages as Romulus. We’ve invested in 39 companies in Turkey so far. If we use the same figures as Romulus, we would expect 12% * 39 = 4-5 exits in 7 years. Since we started investing in 2013, this means that we would expect 4-5 exits by 2020.

We also need to adjust for the different exit environments of the US and Turkey. It’s very rare for an internet company to go public, even in the US, so I’m not going to adjust for different IPO environments. This leaves acquisitions. Acquisitions are split between international buyers and local buyers, and since local buyers for successful internet companies have yet to emerge in Turkey, I’m going to apply a 40% discount to the number of exits that we would expect to see in Turkey. I recognize that the 40% figure is arbitrary. We can talk at length about whether the discount should be 30% or 60%, but for the purpose of this analysis what matters is the approximate directional effect.

Applying a 40% discount to the expected 4-5 exits in order take into account Turkey’s exit environment, I expect 2-3 of our startups to exit by 2020. While this may seem like a small number, we need to keep in mind that the companies that do exit are likely to be the best performers in our portfolio. And in a venture world where returns are driven by power laws, one exit alone has the potential to return multiple times a portfolio’s original investment amount. If we can get 2-3 very large exits by 2020, we’ll be in great shape.


Tapu is our investment in the real estate space. It’s an online marketplace connecting real estate buyers and sellers in a live auction environment. We invested in the company together with Earlybird’s Digital East Fund and angel investors Can Yucaoglu, Seha Ozgur, and Banu Kucukel.

Buyers on Tapu browse properties online and can visit the properties they’re interested in offline. However, the bidding and payment of the service fee to participate in the auction (this service fee is refunded to all participants but the auction winner) take place fully online. This is a big convenience for both buyers and sellers over traditional online real estate marketplaces where properties are listed online but the negotiation and down-payment take place offline. The full final payment takes place offline in both models.

Tapu’s second core benefit is its auction model. The fact that a market mechanism rather than an individual negotiation is used to determine the price of the property makes the price converge to its market value much faster. This process can take months in the absence of an auction environment.

Tapu’s founder Emre Ersahin recently spoke about the company and its value proposition to Emlakwebtv. I couldn’t embed the video from the article directly onto this page so you’ll need to visit this link to check it out. It’s 8 minutes long and in Turkish.

PC’s and smartphones

I turned off my Mac laptop yesterday and when I restarted it, it was no longer working. I no longer get to the login screen.

I searched the web from my smartphone for troubleshooting suggestions and applied them one by one, but none of them worked. So I took my laptop to an Apple store and they’re going to try to repair it over the next day.

It’s been less than 24 hours since I don’t have access to my laptop, but I can already feel the pain. Although my smartphone serves well to do those parts of my work which require content consumption, processing, and communication, the small screen isn’t conducive to extended periods of content creation. For this I prefer a large screen.

Smartphones overtook PC’s in terms of annual sales a few years ago, and also in terms of install base more recently. The dominance of smartphones will likely grow in the future. However, if you’re looking to create content rather than just consume it, you’re still better off with a PC.

Stowaway Cosmetics founder interview

I wrote about our investment in direct-to-consumer cosmetics brand Stowaway Cosmetics two weeks ago.

Jason Calacanis is also an investor in the company and he recently interviewed Stowaway Cosmetics founder Julie Fredrickson for This Week in Startups. You can watch Julie talk about what Stowaway is doing, how they differentiate themselves from competitors, their future plans, and what it’s like to be a female founder in the full interview below.



Managing expectations

Earlier this week, Google announced that it will be creating a new holding company called Alphabet to serve as the parent organization which owns the current Google’s individual business lines. These business lines include Google (which includes what most people think of as Google, namely its search engine, maps, YouTube, Android, apps, and overarching ads unit), Nest, Fiber, Calico, Google Ventures, Google Capital, and companies which emerge from its moonshot projects division Google X.

I’ve been trying to wrap my head around the implications of the announcement for the last few days. The final conclusion I’ve reached is that it’s simply a great way for Google to manage expectations, and most notably the expectations of public market investors due to its status as a public company.

Business-wise, not much is changing. Google was already working on many other projects beyond its core business. Investors accepted these currently unprofitable non-core businesses as part of owning Google stock because of their option value. In line with Google’s “20% time” policy whereby Google lets its employees spend 20% of their time working on projects outside of their core job responsibilities, the message that Google was sending the markets was that its non-core businesses also take up roughly 20% of Google’s energy. Markets accepted this.

Together with the Alphabet restructuring, Google is clearly signaling that its priorities are shifting. In the future, Google’s core search and ads business will likely take up 20% of its energy, with those among the other businesses it pursues which are successful taking up 80%.

In the absence of the restructuring, public markets would have first expressed skepticism, and then likely punished Google’s stock as it began to dedicate more of its resources to new businesses. They would have continued to believe that Google stock, after all, should be giving them exposure to what Google is known for, that is search and ads.

Together with the restructuring, Google has effectively managed investor expectations to welcome, rather than criticize, the increasing focus on new projects as it unfolds. Owning the company’s stock is no longer just about having exposure to Google’s search and ads business, but clearly about owning all of the projects that the company stands for. Expectations have been correctly set.

As shown by the 7% jump in Google’s stock price following the announcement, it was a very smart move.