Monthly Archives: February 2017

VC and founder recommendations from a 19-year old

Tiffany Zhong is a 19-year old who worked in venture capital at Binary Capital, a fund that includes Snapchat, Instagram, and Tinder among its investments.

In this post, Tiffany shares her learnings and resulting recommendations for VC’s and founders.

Having started investing in startups at age 21, I could relate to the post. The only difference is that I didn’t know nearly as much as Tiffany when I was 19.

In other words, don’t be fooled by Tiffany’s age. Most of the recommendations are spot on.

Carbon’s Android app

Carbon, a digital healthcare system where we’re investors, recently released its Android app. This complements Carbon’s existing iOS app to ensure that the company can serve the vast majority of smartphone users.

Carbon currently serves all of California with its virtual care, and offers in-person care at its 55 Pacific Avenue, San Francisco location.

So if you live in these areas, you can check out Carbon’s Android app to see just how Carbon uses technology to provide you with a significantly better virtual and in-clinic healthcare experience than traditional healthcare systems.

MOSX

Following its recent expansion to start serving customers in Ankara, Mobilotoservis, our car repair and maintenance service which comes to you, launched its first hardware product.

The product is called MOSX and it’s an adapter which plugs into the on-board diagnostics (OBD) port of your car. The adapter uses Bluetooth to send information about the status of your car to the MOSX smartphone app. For the initial launch of MOSX, this information includes trip logging, driving feedback, fuel consumption and carbon emissions data, and the discovery of problems with your vehicle.

Using MOSX, Mobilotoservis is able to remotely diagnose the repair and maintenance needs of your car so that you don’t have to worry about them. Once it identifies a need, MOSX immediately informs the Mobilotoservis team. Mobilotoservis then gets in touch with you to resolve the issue remotely where possible or, for issues that can’t be addressed remotely, to serve you at the location of your choice.

While MOSX’s primary goal is to help Mobilotoservis better serve its customers in need of car repair and maintenance services, you can also use it as a standalone product for its trip logging, driving feedback, and fuel consumption and carbon emissions data sharing features.

I don’t have a car as I prefer to get around by public transport and taxi, but my wife’s car is currently equipped with MOSX. We’re beta testing the product. If you’d like to learn more about the device and be among its first users, you can visit this link.

The Mobilotoservis team also presented MOSX at the Webrazzi Summit last year. You can watch their full presentation in Turkish below. It runs roughly from minute 38 to 50.

Getting in on the ground floor

After a new venture begins to take off, many people want to get onboard. Competition to join the venture increases.

However, at the same time, since the risks of the venture have decreased, the potential intrinsic and extrinsic rewards it offers also decline. So you’re faced with an environment that’s simultaneously more competitive and has lower prospective returns.

This is why you want to get in on new ventures on the ground floor. That’s when there’s little competition and it’s easiest to get in. It’s also when there’s the prospect of disproportionately high intrinsic and extrinsic returns.

The challenge, of course, is identifying the right new ventures to get into on the ground floor. Fortunately, you can take multiple swings during the course of your life. And with each swing you learn a bit more about the defining characteristics of the right new ventures. So your probability of getting in on the right one improves with time.

And you only need to hit one home run in your life. You only need to get in on the ground floor of the right venture once. The intrinsic and extrinsic returns of doing so are often enough to keep you feeling happy and successful for a lifetime.

But chances are that once you experience this thrill once, you’ll want to experience it again.

Selling

There are many reasons why someone might not buy what you’re selling.

They might not have the resources to buy it, they might have the resources but not have put in the time necessary to understand what you’re selling, they might have put in the time but still not understand it, they might understand it but arrive at a different conclusion about its value, or it might be another of the large group of buyer-related reasons. Finally, the reason for not buying might also be you, the seller.

As these examples show, there are many more buyer-related reasons for someone to not buy something than the single seller-related reason. Yet, despite this mismatch, we disproportionately turn to ourselves when someone doesn’t buy what we’re selling. The reason for this is that we default to viewing our lives as being the result of our own actions and need to make a conscious effort to realize that much of what happens is actually the result of the actions of others.

In other words, there’s a mismatch between the actual probability that the buyer isn’t buying because of you versus your perception of this probability.

Recognizing this mismatch helps you keep selling with confidence.

Prioritizing your investor outreach

Let’s say you have a list of investors who you’ve targeted for your startup’s fundraising. Some you know well and some you don’t. Some you believe are likely to invest and some you believe are less likely. Perhaps the latter group are in this position because they don’t know you.

How do you go about reaching out to these investors?

One approach is to reach out to them all at once, contacting those you know well yourself and requesting your mutual contacts to introduce you to those you don’t know well. While this approach is fast, it’s unlikely to produce the best results. The reason is that the investor candidates you don’t know well are unlikely to decide to invest if you reach out to them through a mutual contact with no stake in the fund. A recommendation from someone without skin in the game is a less effective recommendation than one from someone with skin in the game.

A better approach is to prioritize your investor outreach. First, you should approach those investors who you know well and who are likely to invest. As you receive positive responses from these investors, you should then request that they introduce you to other potential investors who you know less well.

There are two advantages to this approach. First, by having someone with skin in the game introduce you to investors you don’t know, you greatly increase the chance that the latter decide to invest. Second, independent of whether the person introducing you to a potential investor has skin in the game or not, investors are more likely to invest when there are others already onboard than when they need to be the first to commit.

A prioritized investor outreach takes more time than an all-at-once shotgun approach. However, the better results make the approach well worth it.

QR codes and other consumer tech trends in China

Over the last 13 years, I’ve lived in Turkey and the US. And I haven’t actively used QR codes in either of these geographies.

As a result, I was always intrigued when I heard that QR codes are widely used in China. Now I have at least a partial answer for why this is the case.

In this Andreessen Horowitz video presentation on consumer tech trends in China, Connie Chan shares that there are about 1.7 credit cards per person in the US. This is in contrast to around 0.3 credit cards per person in China. The same figure for Turkey is around 1.9.

Payments is one of the primary use cases for QR codes in China. Since credit card penetration in the country is low, and since consumers want an alternative to cash, QR codes linked to the digital money on your smartphone help fill the gap. Since credit card penetration rates are much higher in Turkey and the US, there isn’t as big of a need for an alternative.

For QR codes to take off in countries with high credit card penetration rates, they’re likely going to need to address a high frequency use case outside of payments.

You can watch the full 24 minute video presentation, which includes an overview of consumer tech trends in China other than QR codes, here.

Startup information

People often ask me for information about our startups. Investors, competitors, entrepreneurs, potential employees, my friends and family, and others all want to know how a particular startup is doing.

In these cases, I pay attention to only share that information which the startup has already shared in a public setting. If the startup hasn’t shared the information, I don’t either. My memory is fallible so I’m sure there have been a few times when I shared a piece of information thinking that the startup had already shared it publicly when they actually hadn’t. However, I think I do a pretty good job of sticking to this principle in general.

If I’m asked to share information that I know isn’t public, I respond by stating that I’d need to ask the company’s founder for permission before doing so. Most of the time the inquirer understands that this is likely private information and therefore takes back their request. However, sometimes they still ask for the information. In these cases I check with the founder before getting back to them. I know that sometimes this frustrates the inquirer.

If it were up to me, I would share that information which is the output of strategic decisions taken by the company, but not information which can be used as an input to strategic decisions.

For example, I would share a website’s overall visitor count because this is the output result of many factors like the size of the market, the quality of the product, search engine optimization, and marketing. Knowing how many visitors a website has gets the recipient of this piece of information no closer to replicating the website’s performance.

However, I wouldn’t share how the company’s marketing budget is evolving as this may contain valuable strategic information about which channels work to drive traffic in that specific market. This information could then be used as an input in the design of a competitor’s marketing strategy.

Ultimately, however, it’s up to our founders to decide which information they want to share and which they don’t. And it’s our responsibility as investors to respect this.

How startups thrive in emerging markets

Rina Onur who leads 500 Startups’ investments in Turkey, recently wrote a TechCrunch piece called “How startups thrive in emerging markets”.

The piece provides a great overview of the types of startups that we see in Turkey, the resilience that they’ve shown in a politically and economically challenging 2016, and why 500 is investing in the country.

Rina concludes by stating that she is “very optimistic that in the next decade there will be numerous centaurs and hopefully a few unicorns that emerge from Turkey and Turkish entrepreneurs.” We agree.

Carbon on Product Hunt

Carbon, a digital healthcare system where we’re investors, was trending on Product Hunt yesterday.

From an earlier post which I wrote on Carbon, “Carbon serves as a technology layer that takes care of the administrative tasks like registration, billing, and providing shared access to medical records which are currently the responsibility of hospitals, while letting doctors focus exclusively on what they do best, that is giving the actual care.”

You can check out Carbon’s Product Hunt page and read through the community’s feedback here.