Monthly Archives: August 2016

Volkan Ozkan from Webnak

Webnak‘s GM Volkan Ozkan recently gave a talk about the company at Kolektif House.

In the talk, Volkan shares some metrics about the size and structure of the trucking market, how companies and truckers have traditionally found each other, and how Webnak’s managed marketplace offers both sides a strictly better experience than this status quo.

You can watch the full talk below.

Skill and luck

Michael Mauboussin is the head of global financial strategies at Credit Suisse. He also teaches at Columbia Business School.

He’s a student of uncertainty with a deep interest in the respective roles of skill and luck in determining outcomes in different areas of life including business, investing, and sports.

In this 75 minute interview, Michael shares his thoughts on a wide range of topics including the relative roles of skill and luck in different fields, the difference between fund management as a profession and fund management as a business, and some of our most common human biases.

Although the interview is 75 minutes long, when I reached the end I wished it had been longer.

Tapu’s first year

Tapu, an online real estate auction marketplace where we’re investors, recently completed its first year of operations.

The company shared some data about its performance over its first year, which you can read in Turkish here.

Here are some highlights of what the company achieved during its first year:

  1. The number of properties sold on Tapu grew an average of 87% per quarter.
  2. Over 1,200 buyer candidates participated in auctions on in the 2nd quarter of 2016.
  3. had 250,000 visitors in July 2016.
  4. Of the properties that were first listed for sale in May 2016, 30% were sold within 3 months (by the of July 2016).
  5. Of the properties sold on Tapu, 26% were sold within the first 15 days of listing.

Disconnecting before sleep

Since I wake up at 6 AM and I need a good 7-8 hours of sleep to function well, I’m usually in bed by 10 or 11 PM. And I can’t get to sleep without disconnecting from electronic devices like my smartphone and laptop at least an hour before sleeping. Some people claim that 30 minutes is enough but I’ve found that I need an hour to unwind my mind.

Disconnecting for me isn’t simply about not using the device while it’s on. It’s about effectively turning the device off so that I can’t be interrupted by an incoming call, message, or email. This means placing my smartphone in airplane mode by around 9 or 10 PM depending on when I plan to go to sleep.

It can be tempting to work a bit longer especially when I’m in the zone. However the result is always that I have a hard time going to sleep, sometimes tossing and turning in bed until past midnight. And since my biological clock is programmed to wake up around 6 AM, this means that I get less than 6 hours of sleep which makes me grumpy the next day.

Having the discipline to disconnect at least an hour before sleeping is well worth it.

Modacruz’s Markafoni campaign

Yesterday, our female fashion marketplace Modacruz launched a campaign with Markafoni, one of Turkey’s leading e-commerce sites. After Kapgel, Modacruz is the second company in our portfolio to partner with Markafoni.

The partnership between Modacruz and Markafoni, which is currently advertised on Markafoni’s homepage, is such that users who upload an item for sale on Modacruz get 15 TL off of a minimum 75 TL order on Markafoni. So if you’re looking to buy an item on Markafoni but you would benefit from creating some space in your wardrobe before doing so, this partnership is for you.

The partnership makes sense not only for the users of both platforms, but also for the platforms themselves. Markafoni gains direct access to Modacruz’s base of sellers while Modacruz benefits from Markafoni’s traffic.

The campaign is valid until the 31st of September, so you’ll want to act before then if you want to take advantage of it.

Belittling your competition

I was recently exchanging notes over email with the CEO of one of our startups’ main competitors. After talking about why we’re taking a particular approach in the market, he responded by saying that it was because of actions like this that he didn’t even consider our company to be a competitor.

This reminds me of the following interview with Microsoft’s CEO Steve Ballmer from 2007. The interviewer asks Steve what he thinks about Apple’s new iPhone and Steve simply laughs it off, stating “$500, fully subsidized with a plan, I said that is the most expensive phone in the world, and it doesn’t appeal to business customers because it doesn’t have a keyboard, which makes it not a very good email machine”. Granted, Steve acknowledges that the iPhone may sell very well later in the interview.

Steve’s attitude when asked about his competitor is to belittle them. This is the same attitude which our startup’s competitor has towards us.

When someone displays a condescending attitude, it’s useful to ask why this is the case. If you didn’t think that someone was credible competition, you would either ignore them or dismiss them kindly. The fact that you’re being condescending suggests that you want to hurt them and this would only be the case if they’re a significant threat.

As Steve’s interview shows, when someone belittles their competition it says more about the fragility of their company than the performance of the competitor. Our startup is in a great position.

Sharing written comments before talking to potential investors

When one of our startups is fundraising for a new round, the investor candidates who they reach out to often get in touch with us to get our take on the business. As existing investors who have been involved with and are familiar with the company for at least a year, investor candidates want to hear our perspective in areas like the strengths and weaknesses of the founders, the future of the market, competition, and the appropriateness of the size and usage breakdown of the funds being raised.

In the past, I used to prepare for these conversations by writing down my thoughts on the business and referencing these writings during our conversation. Recently, I started doing something different. In particular, I now share these written thoughts with the investor candidate over email prior to our conversation.

This achieves three goals.

First, it anchors our discussion around the key issues which pertain to the company at hand. These issues are usually presented in a more scattered manner in the company’s presentation and this makes them more difficult to digest. We know what matters to the company right now, which isn’t necessarily the case for the potential investor. By directly zooming in on what matters, we save the investor a lot of time trying to distill what’s essential and what’s not. Investors appreciate this.

Second, our actual conversation is much more productive. Rather than spend the first half of the conversation going through the notes that I had prepared, we’re able to dig into the specific key issues in these notes which the potential investor wants to talk about. Often times the potential investor agrees with my reasoning on most of the key issues and has a different take on one or two issues. We then talk through why we have a different take on these one or two points which are often crucial in determining the investor’s ultimate investment decision.

Third, sharing my written notes about the company prior to our conversation shows that I’ve prepared for our talk. Although I would also prepare in the past, the potential investor didn’t know this because I hadn’t shared my written thoughts. Being prepared shows that I care about our conversation and potential investors appreciate this.

For each of these three reasons, I’ve found it very effective to share my written comments about our startups before talking to new investors evaluating these startups. I’m going to stick to this habit.

Steve Jurvetson

Steve Jurvetson of DFJ recently participated in an interview hosted by McKinsey. The interview packs a lot of information into 6 minutes.

In the interview, Steve talks about how:

  1. Many industries are becoming software businesses, thereby positioning them for big changes and venture investment opportunities.
  2. He looks for entrepreneurs who have the self confidence to be humble.
  3. Space travel will eventually be as cheap and safe as air travel.

I couldn’t embed the video in this post so I’m sharing the link to it here.

Webrazzi’s 10 year anniversary

Webrazzi, where we’re investors, is the leading tech news website in Turkey.

It’s the primary way in which companies in Turkey’s tech sector share their latest developments and people in and outside of the sector follow local and global developments in the tech industry.

However, Webrazzi didn’t attain this position overnight. It’s been 10 years since the company was founded by Arda Kutsal. In these 10 years, the company has expanded from its original position as a news website into adjacent businesses including event management, career services, e-commerce, and seed investing.

Webrazzi recently shared a summary of its progress over its first 10 years. You can read it in Turkish here.

I congratulate Arda and the Webrazzi team on the success they have achieved thus far, and wish them an even brighter future. They provide an invaluable service to the Turkish tech community.

How things just might work out

What hurts more for a startup investor? A startup that you pass on which eventually goes on to be very successful, or a startup that you invest in which fails?

The way to think about this question is to analyze the respective losses in each case. When you pass on a startup that eventually goes on to be very successful, you lose the upside of potentially 10X or 100X returns. When you invest in a startup that eventually fails, your downside is capped at 1X. You can’t lose more than you invest.

As a result, it makes sense for an investor to invest in a startup as long as they believe that the startup has a chance of being very successful.

This doesn’t mean that you should put all rational thought on hold and invest in everything that comes along, guiding yourself by the theory that every startup has a non-zero chance of being very successful. In practice, very successful startups are very rare and extremely hard to build. It takes much more for a startup to have a chance of being very successful than what most people assume when they first start a company or begin investing in startups.

What it does mean, though, is that seeing how things just might work out, rather than why they won’t work out, is an important ingredient to being a successful investor. The cost of not investing in a startup that goes on to be very successful is greater than the cost of investing in a startup that fails. As a result, when you’re on the fence about what you believe might be a great opportunity, it’s useful to err slightly on the side of optimism.