Monthly Archives: March 2016

Bitaksi’s new app design

I opened the Bitaksi app to call a taxi yesterday morning and was pleasantly surprised to discover the app’s new design and improved user experience.

The functionality of the app hasn’t changed a lot. However the colors in the new design are much lighter and more cheerful. Although it may not have the same effect on each user, this makes me feel better using the app.

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The hamburger menu on the top left of the map screen has also changed. When you clicked on it in the past, a list of pages including your profile, payment information, addresses, and promotional campaigns would emerge from the left in the form of a drop-down menu.

When you click on the new hamburger menu you get a full screen dedicated to these pages, and the pages are shown in boxes under a rotating banner rather than one below another. This approach makes much better use of a smartphone’s limited screen space. Bitaksi’s founder Nazim Salur highlighted the importance of this in an earlier interview. It also gives Bitaksi the space to highlight the most important promotional campaigns and app features it wants to promote in the rotating banner.

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There’s also a new feature that lets you calculate an estimated fare based on your departure location and destination.

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Overall, I really liked the simple yet impactful changes.

Thank you Sevla

Sevla Serbest, our HR head who helped our startups with their hiring and employee retention activities, recently left us to join financial product comparison startup Bayzat. Bayzat is based in Dubai and Sevla had long wanted her next career move to be abroad so this move helps achieve that goal.

During the two and a half years that we worked together, Sevla was an amazing contributor to our startups. She has helped some of our startups hire close to half of their team, and has shared valuable advice on how to attract the right people and build a company culture that motivates them once they start working.

Sevla’s contributions didn’t go unnoticed by our startups. In a survey last year where we asked our startups what we were doing right and how we could improve our services, Sevla was one of the most popular answers for what we were doing right.

Sevla was also a genuine pleasure to work with. We would meet once a week to review what she had worked on over the last week and what she was currently focusing on. During these meetings, Sevla would regularly come up with proposals to help us better serve our startups. We would review the ideas together and, if we decided to implement them which was often the case, she would take full ownership of executing the idea to perfection.

I thank Sevla for her deep contributions to our startups, and am confident that she’s going to continue to create tremendous value in her new role at Bayzat.

Making scarcity abundant

What will the next disruptive tech company look like? There’s no crystal ball to definitely answer this question. All an investor can hope to do is to develop frameworks which, when evaluated together, increase our odds of being correct in each of the underlying startups that we back.

Common examples of these frameworks include those we use in evaluating founders (missionary vs. mercenary founders), markets (Porter’s five forces), and the potential for financial returns (non-consensus and right).

A dimension which receives much less interest, and one where there therefore don’t exist many useful frameworks to evaluate the dimension, is that of the abstraction layer of what the next disruptive tech company will be doing. While a company’s market describes what a company is actually doing, the abstraction layer is what enables the company to do what it is actually doing.

For example, at its surface, Uber connects passengers with drivers in the inner city transportation market. However, the underlying reason why it is able to offer this service is because the passenger and driver identities and ratings available on its platform serve as layers of trust that make passengers comfortable getting into the cars of drivers, and drivers comfortable accepting passengers into their cars. So the abstraction layer description of what Uber does is that it serves as an identity and rating platform.

So the question we’re asking ourselves is what the abstraction layer of the next disruptive tech company will look like. And this is where Alex Danco from Social Capital shares a useful framework. Basically, Alex states that disruptive tech companies emerge with abstraction layers that make abundant a resource which we currently view as being scarce.

Offline trust was scarce and Uber made it abundant.

Information was scarce and Google made it abundant.

Social connectivity was scarce and Facebook made it abundant.

What’s scarce now, and who can make it abundant?

Reading blog post comments

Together with the internet, the cost of distributing written content has fallen to zero. As a result, there is an explosion of written content on the web.

This content comes from two sources. The first is professional organizations that are designed to produce content, like newspapers and magazines. Although these content producers often come from the print world (for example, The New York Times), they can also get their start directly in the online world (for example, The Information).

Professional organizations that are built to produce content have a fixed cost base (writers, editors, office rent, …) that they need to cover. In order to cover these fixed costs, they need to make a lot of money. And this means that, no matter how they choose to monetize (advertising or paywalls), their writing needs to be read by a lot of people. Depending on the size of their organization, they need to appeal to at least the early majority and often the late majority and even laggards.

Because of the nature of the readership of the content produced by professional organizations, the comments sections of these writings are superficial at best, and derogatory at worst. Although innovators and early adopters also read the same content, they don’t engage in the comments because their voices would be drowned out by the majority.

On the other hand of the content production spectrum are individuals like bloggers. They write with the goal of sharing their knowledge and experiences for the benefit of those around them. They often don’t need to monetize the content because it’s not their primary job, and even if it is they only need an income stream sufficient to cover the expenses of a single individual. Their survival doesn’t depend on the readership of the masses. Appealing to niche communities of innovators and early adopters is enough.

Since bloggers write about topics that are of interest to them and niche communities of users with a deep interest in similar topics, the comments section of these writings are informative at worst, and very insightful at best. The readers are informed and often have personal experiences about what the blogger is writing about, and this lets them build on the blogger’s writing. The comments sections of the blogs of Fred Wilson and Brad Feld in the VC community are great examples of where you can see this type of productive behavior.

If you find a blog post interesting, I strongly encourage you to read its comments. They often contain as much, if not more, insight than the original post.

Obama with Seinfeld

President Barack Obama was comedian Jerry Seinfeld’s first guest in season 7 of his show Comedians in Cars getting Coffee.

Partially due to the fact that the end of his second and final term in office is approaching, Obama is very candid during the talk. This produces a casual and funny conversation where Obama also shares some words of wisdom. I really liked the points he made about the value of anonymity, how politics is like football, and how privilege can have a toxic effect on your judgment.

The video is about 20 minutes long and you can watch it below.

Hiring and building culture

Ben Silbermann is a co-founder of online pinboard Pinterest and Patrick and John Collison are co-founders of payment service provider Stripe.

In the talk below, they share their thoughts on hiring and how to build a culture. Here are my key takeaways:

  1. When you hire the first 10 people on your team you’re actually hiring much more than those 10 people. Each of those 10 people will subsequently hire 10 more people so you’re actually hiring 100 people. This is why it’s very important to get your first hires right.
  2. When a startup is hiring, you’re looking for talent that is undervalued on the market. Big companies are home to a lot of talent but by the time these people land at a big company they’re very likely to be properly valued so it’ll be hard to convince them to join your startup. And even if you can convince them they’ll be expensive to hire. What you want to be looking for is talent that hasn’t been identified yet.
  3. You want to hire people who are genuine, care a great deal about what they’re doing, and get things finished. The first creates an environment of intellectual honesty that makes them straightforward to work with. The second makes them take ownership of what they’re doing and do it to the best of their ability even when no one’s watching. And the third ensures that the startup executes at the fast pace necessary to outperform competition.

You can watch the full talk below.

Content and connections

Startup L. Jackson was an anonymous Twitter account that shared his observations on Silicon Valley, startups, and venture capital. He stopped tweeting on the 1st of January of this year.

During the time that he tweeted, many people took the insights of his tweets as a signal that he was a leading entrepreneur or VC. The latter was more likely because VC’s tend to be more active on Twitter than entrepreneurs (we have more time and marketing is a greater part of our job) and Startup L. Jackson was very active. His insightful observations helped him reach 80 thousand Twitter followers.

Last week, we discovered that Parker Thompson is the human behind the Startup L. Jackson account. Parker is currently a partner at AngelList and was formerly a partner at 500 Startups and Director of Business Development at Pivotal Labs during the time when the Startup L. Jackson account was active. So Parker has indeed been an investor in his latest two roles, and was a startup employee before that. However, he wasn’t one of the leading VC’s or entrepreneurs in the Valley that most people expected. His Twitter account has about 8 thousand followers and, while a high number, it trails the number of followers held by the Twitter accounts of leading VC’s and entrepreneurs. Before we discovered that he is the man behind the Startup L. Jackson account, he had about 3,500 followers.

There are two explanations for the large difference in the follower numbers of Parker’s personal account and his anonymous account. The first is that the content posted by Startup L. Jackson and that posted by Parker Thompson are different. This is indeed the case. The anonymity offered by Startup L. Jackson’s account let it tweet much more directly about politically incorrect observations. Saying things like they are attracts followers.

However, I think that there’s also a second reason why the Startup L. Jackson account attracted more followers than Parker’s personal account. Most people evaluate others not based on the content of what they say, but based on the importance that other people with a high social status place on them. Startup L. Jackson was followed by and regularly had Twitter conversations with many of the leading VC’s and entrepreneurs in Silicon Valley, and many people followed him simply because they also wanted to be associated with someone that has these connections. Parker didn’t have the same social status, so he had less followers.

Cash on delivery and return rates in the Middle East

I came across Aramex COO Iyad Kamal’s presentations at the Arabnet conference while browsing the Twitter feed of Wamda Capital’s Fares Ghandour.

Aramex is one of the Middle East’s leading e-commerce logistics providers and this gives it a lot of information into how e-commerce is developing in the region. Some of our companies already operate in the Middle East, and it’s a natural expansion ground for many others, so the data in this presentation is very valuable in helping them define their Middle East strategy.

What’s particularly striking is the very high percentage of e-commerce orders in the Middle East where the order is paid for by cash on delivery (COD) rather than credit card (CC). At 76%, COD accounts for a much higher share of e-commerce orders in the Middle East than its <40% share (depending on the category) in Turkey.

As a result of the higher usage of COD, return rates are higher in the Middle East than in Turkey. However, comparing the 19% return rate for COD orders with the 8% return rate for CC orders, the former is much lower than I would have guessed. I would have guessed that many more COD orders are placed with the goal of trying a product out before buying it, and that this would produce a much higher return rate. The COD return rate is also trending downwards over time (24% in 2012 to 19% in 2014). This is likely due to the combined efforts of Aramex and leading e-commerce businesses.

Taken together, the share of COD, the return rates for COD orders, and their directional trend suggest that the benefits of accepting COD in the Middle East (more customers) likely outweigh its costs (more returns) for most businesses.

You can read the full report below.

Vivense’s Series B round

Our furniture e-commerce business Vivense announced its $5M funding round this week. The round was actually completed several months ago but the announcement took place this week.

I wrote about Vivense’s overall strategy and the company’s use of offline showrooms to acquire customers in a vertical with high average order values and highly differentiated products in earlier posts. I’m not going to repeat these arguments here.

Vivense is fortunate to have been able to raise $5M in a challenging startup funding environment. It shows just how well the company is performing. We’re doubly fortunate that we were able to participate in a round led by Earlybird whose investment track record in Turkey speaks for itself.

Vivense’s strong execution has now been complemented with the financial firepower necessary for the multi-year journey towards building a self-sustaining e-commerce business. We’re happy to be along for the ride.

A good statistic

I woke up this morning to the news that former Intel CEO Andy Grove passed away.

I never met Andy Grove in person but his book High Output Management is the most practical book on management I’ve read. His passing away therefore left me feeling sad and uneasy this morning.

In the sufficiently long run, each of us is just a statistic. What each of us has done will eventually be forgotten, if not in the 100 years that our family members remember us then in the 1000 to 10000 years that humanity remembers us. But it’s up to us whether, for whatever length of time we are remembered, we’re remembered as a good statistic or a bad one. Andy is a great example of the former.