Monthly Archives: January 2017

Situational awareness

I recently read an excellent piece which uses the analogy of chess to drive home the importance of situational awareness in achieving positive business outcomes.

As the piece argues, you can’t achieve repeated positive outcomes by simply analyzing what actions you and others have taken in the past and the consequences of these actions. This is the equivalent of following a series of chess moves and the outcome of the game without knowing what the chess board on which the game is being played looks like. Just like different chess moves produce different outcomes given the state of the chess board, the same actions produce different outcomes depending on the context in which you find yourself.

Instead, you need to develop an understanding for the context in which each action was taken. In other words, you need to know what the chess board looks like at a given moment in the game. If you understand the context, you can not only explain why some actions will produce better outcomes than others but also potentially come up with new actions that may have not been taken in the past which could produce even better outcomes.

You can read the full piece here.

Tradeoffs, judgment, and learning

If you’re fortunate (born in a good place, to good parents, with good genes) and work hard, life throws a lot of opportunities at you.

It starts with school. First, you get to go to a good school. Second, you get to choose what to do while there. What classes do you take? How much time do you dedicate to your classes? Who do you hang out with?

Then comes work. What sector do you work in? What role do you take in that sector? Who do you work with?

And what about your personal life? How much time do you spend with family and friends? Do you choose to build your own family (other than the one you were born into)? If so, who do you build it with?

In each of these decisions, there are tradeoffs involved. Assuming both majors are demanding, studying economics means that you can’t study computer science. And focusing on your studies means you have less time left over for extracurriculars. Working in tech means not working in pharma (unless you’re using tech to change pharma). Being a VC means not being an entrepreneur. Deciding to build a family means spending less time with friends. And saying yes to the one means saying no to the others.

These tradeoffs exist not only within domains but also across them. I once come across the following quote: “Work, sleep, family, fitness, or friends. Pick 3”. I feel like I’m doing a pretty good job with 4, but 5 would be very challenging. And even if you think that you’re getting 5 done, you’re probably doing less on each dimension than someone who is only focusing on 3 or 4.

As a result of these tradeoffs, you need to not only decide what to do, but also what not to do. For example, as a VC, where do you get your information from and where don’t you get it from? Which factors about the companies you meet do you evaluate and which do you overlook? How much time do you spend trying to build deal flow, versus picking the right companies within your deal flow, versus working with the companies you’ve invested in?

Faced with these tradeoffs, each person will have a different answer depending on their personal goals and preferences. But given two individuals with identical goals and preferences (if this exists), there is an optimal way to go about building a life that’s aligned with these goals and preferences. And what you need to get there is judgment.

Judgment consists of identifying tradeoffs, setting goals, making decisions, taking action, evaluating the results, and tweaking your decisions and actions in light of the results as long as your goals remain the same. And since there’s a feedback loop, improving your judgment isn’t a destination but a journey. If you don’t choose to stop learning, it never ends.

So enjoy it.

Cohort vs repeat rate analysis

Many startups track their repeat rate, defined as the number of customers who purchased in a specific time period divided by the aggregate number of customers who have ever purchased from the company, as a sign of the health of their business. However, this isn’t necessarily accurate.

Here’s the formula for a company’s repeat rate at time 1:

Repeat rate at time 1 = Customers who first purchased at time 0 and also purchased at time 1 / (Customers who first purchased at time 0 + Customers who first purchased at time 1)

As this formula shows, two factors contribute to a high repeat rate at time 1.

The first factor is a high percentage of customers who first purchased at time 0 also purchasing at time 1. This is the subsequent purchasing behavior of the cohort of customers who first purchased at time 0.

The second factor is a low number of customers who first purchase at time 1.

In other words, a high repeat rate can be the result of strong cohorts but it can also be the result of low growth.

You want to isolate the former effect. And this makes cohort analysis a more useful tool than the analysis of repeat rates.


There are two ways to do something.

The first is to do it with intent. This means knowing why you’re doing it, seeing how it aligns with your long-term goals, and thinking about and accepting the trade-offs which result from what you’re doing. When you do something with intent, you take ownership of what you’re doing.

The second is to do something by going through its motions. This often comes about in two ways. You either do something because someone told you to do it or you continue on a journey that you embarked on because of a short-term impulse without evaluating its long-term destination and the resulting consequences. The outcome is the same in both cases. Since someone told you to do it and you either haven’t questioned whether it makes sense to you or you have but have decided that it doesn’t make sense, or since your short-term impulse has gone and you discover that the long-term intent isn’t there, you don’t take ownership of what you’re doing.

And there’s a big difference in the quality of the output produced when something is done with intent rather than by going through the motions.

In the context of the entrepreneur-investor relationship, it comes across in the entrepreneur’s presentation, how they respond to your questions, how they follow-up with you, the experience you have while using their company’s product, and many more interaction points.

And it’s the single most important determinant of whether an entrepreneur succeeds. Addressing big pain points in big markets with smart strategies is table stakes. And on a long enough time horizon luck cancels out. Intent determines the winners.

And doing things with intent takes more time than doing things by going through the motions. Since any one person’s time is fixed, doing things with intent means that you do fewer things than if you were to go through the motions.

So it’s important that you prioritize what you do based on the value at stake and urgency of each action.

And it’s also important that you team up with other people with intent to increase the aggregate time available to your organization.

Finally, intent isn’t an infinite resource. You can’t act with intent all the time. There are times when you act with intent and times when your intent is depleted and you fall back on your habits.

So it’s important to, to the extent possible, take important actions when your intent is intact.

Give feedback to Bitaksi’s founder

Nazim Salur, the founder of Bitaksi where we’re investors, took to Twitter yesterday night to request feedback about how to improve Bitaksi.

If you have an idea that you’d like to share with the Bitaksi team, you can do so by responding to Nazim’s tweet below.

Let’s see if any of the ideas make it into the new Bitaksi experience.

The Mobilotoservis experience

We recently purchased a car for my wife. Since it’s a used car, we wanted to have it go through a thorough check-up and maintenance service.

So we called Mobilotoservis (Turkish for “mobile auto service”), the car repair and maintenance service that comes to your doorstep where we’re also investors. We compared the price quoted by Mobilotoservis with those offered by other services that require that you drop off your car at their service location. Despite the costs of the additional trip made by Mobilotoservis to serve you, its price quote was lower than that of the other services. So we chose to go ahead with Mobilotoservis.

Mobilotoservis’ service experience was even better than its price advantage. Our mechanic showed up right on time, carefully described each of the check-ups and changes he was going to perform in detail, and let us watch and ask questions during the entire hour and a half long process. None of the services I visited in the past performed the second and third actions. And these actions are essential to keeping the customer informed and thereby earning his trust.

Yes, as investors in the company, we might be biased. But I did my best to observe the experience as objectively as possible. And I believe that Mobilotoservis offers an order of magnitude better value for money than any other car service I’ve received in the past.

Words, facts, and emotions

Eric Weinstein, a mathematician and economist who is also managing director at Thiel Capital, wrote an excellent piece on what he believes is the most important scientific term or concept that ought to be more widely known. It’s called Russell conjugation (or emotive conjugation) in honor of philosopher Bertrand Russell and, stated simply, it shares that words have two layers, a factual layer and an emotional layer.

From the example in Eric’s piece, each of the phrases below suggests that people don’t change their mind. That’s the factual component. However, the perception that you have of each person after reading the phrase is different. And that’s the emotional layer.

“I am firm. [Positive empathy]
You are obstinate. [Neutral to mildly negative empathy]
He/She/It is pigheaded. [Very negative empathy]”

As shown in this example, the emotional layer sometimes simply reflects who is being talked about. If you’re describing yourself, you’re likely to use a word with a more positive emotional connotation than if you’re talking to someone else in the same room. And if you’re talking about someone else who isn’t in the same room, it’s easier to use a word with a more negative emotional connotation.

I have two key takeaways from the piece.

The first is to, to the extent possible, extract the factual and emotional layers of the information you absorb. The factual layer reflects the communicator’s perception of reality while the emotional layer reflects how they feel about that reality. Both are valuable signals.

The second is to choose your words carefully. Your recipient will interpret what you say based on the emotional connotation of your words to the same if not to a greater extent than their factual content.

I highly recommend reading the full piece which you can do so here.

16 questions about self-driving cars

Andreessen Horowitz recently shared a presentation highlighting 16 questions about self-driving cars that have yet to be answered. The questions are broken down into 3 categories: technology, business, and social.

Some of the questions overlap with a previous post that I wrote on what our future of accessing autonomous electric vehicles is likely to look like.

Rather than provide specific answers, the presentation shares ways in which to think about the latest developments relevant to each question. This lets you think about and research those questions you find the most interesting in order to come up with your own answers.

Here’s the full presentation.

Startups and knowing

If you know that you don’t know something, you don’t act on it. As a result there’s no danger to you or the people who would be impacted by your actions if you were to take them.

If you know that you know something, you act on it. And since you know, in expectancy you produce a positive outcome for yourself and those around you.

The danger is when you know just enough to think you know something, without actually knowing enough. Because you think you know something, you act on it. But because you actually don’t know enough, in expectancy you produce a negative outcome for yourself and those around you.

Since they hold the potential for very large upside but also carry a lot of uncertainty at the surface, startups attract a lot of people who think they know something without actually knowing it. This is true for entrepreneurs, investors, LP’s, and many other groups of constituents.

This problem is exacerbated by the fact that you don’t need to actually know something to convince someone. You simply need to know more than the person you’re trying to convince. So startups also attract a lot of people who know that they don’t know something but act like they do because they know that those around them know less.

When working with startups, you need to pay attention to act on what you know and not act on what you don’t. You also need to watch out for people who think they know but actually don’t and people who don’t know but act like they do.

A look at Turkey’s entrepreneurial ecosystem

Wamda Capital, our partners in Modanisa, Insider, Kapgel, and Volt recently hosted a podcast between Kaan Kalipci from Wamda, Hande Cilingir from Insider, and myself.

In the podcast, we talk primarily about Turkey’s startup ecosystem. However, we also touch on the MENA region.

You can listen to the full 42 minute podcast below. Thanks to Wamda for hosting us on their platform.