Author Archives: cankut


The first time I visited Dubai was back in 2011. From the moment I stepped off the plane, I was impressed by two things.

The first is how diverse the city is. Dubai is home to not only local Emiratis but also large groups of people from other Middle Eastern countries, Southeast Asia, Africa, the Far East, Europe, and North America. And these aren’t just tourists. Most live in Dubai.

In fact, with 83% of its residents born outside of the United Arab Emirates, Dubai is the world’s most international city. During a period of time when many societies across the world are becoming increasingly polarized and isolated, Dubai remains a testament to the ability of diverse humans to live and work together in harmony.

The second thing which struck me is how majestic everything is. From the airport to the highways to the malls to the towers, everything in Dubai is imposingly beautiful.

As I traveled from Dubai to Istanbul yesterday, I realized that neither of these facts have changed. As evidence of the latter fact, here’s a picture of the Burj Khalifa, the world’s tallest building, in Dubai.

Sleeping on important decisions

Important decisions rarely need to be made on the spot. The clear exception is if it’s a life threatening and hence potentially life saving decision.

For most other decisions, like the decisions you face as an entrepreneur or an investor, you can afford to sleep on it.

Sometimes you know that you don’t have the answer on the spot, and sometimes although you think you do there are likely to be other variables that you haven’t had the time to process in the moment.

Sleeping on the decision for as many nights as necessary to get comfortable with the likelihood and magnitude of its potential consequences is a simple behavioral habit that greatly improves the quality of your decisions and thereby produces greater peace of mind.

Doing important things on a relatively empty stomach

After you eat, your body works to digest what you’ve eaten. Since your body’s energy is directed towards your stomach, this leaves less energy for other organs, including your brain.

This is why your thoughts are less clear after a meal than before one. The heavier the meal, the lower the quality of your post-meal thinking.

As a result, if you have something important to do, it’s best to do it on an empty stomach.

There is, however, a limit to this approach. Specifically, this doesn’t mean that you should starve yourself. If your stomach is too empty, this also prevents you from thinking well because you don’t have any energy for your body to direct towards your brain.

The solution is to keep a relatively empty stomach so long as you’re doing important things. And if you enjoy larger meals, reserve them for times when you don’t have something important to do.

Sustainable success as an e-commerce company

E-commerce sites across verticals use informational content as a way to differentiate themselves from their competitors. The reasoning is that if they attract visitors by providing informational content about the third party products they’re selling, once informed, these visitors will also purchase the products they were looking for on the same site.

At the margin, this is likely true. Providing a visitor with extensive informational content prior to making a purchase helps build trust which makes the visitor more likely to transact on the same e-commerce site. However, very often this earned trust isn’t enough to overcome differences in the price of the product on different sites. If the product is cheaper elsewhere, the visitor simply learns about the product at your site before transacting at the site with the lowest price.

This is especially true for commoditized product categories and verticals with strong third party brand names. For such product categories, the marketplace approach of aggregating and showcasing the third party products available from different suppliers, thereby letting the customer compare the prices of these products to buy from the supplier offering the product at the lowest price, is more defensible in the long term than the e-commerce approach.

This leaves the creation of a new proprietary brand as the remaining approach to achieving sustainable success as an e-commerce company.

Work, experience, and output

In order to become a professional in a given field, you need to start off by working very hard. The reason is that there’s a lot to learn and you’re competing with other people who are further along the learning curve than you are.

However, the more you learn in a field, the less there is left to learn in that specific field. Although learning never ends even in a specific field, the pace of learning declines.

In addition, many people who were further along the learning curve when you started off in the field drop out, and you surpass many others as a result of your hard work.

When this happens, somewhat paradoxically, you work less hard as you gain more experience.

However, this doesn’t mean that your output declines. To the contrary, since you’ve learned which activities contribute to what you’re doing and which don’t, you don’t chase after everything as you used to when you first started off.

So you get to work less hard, but more smartly, while continuing to see increases in your output.

This continues to be the case unless you decide to enter a new field. If you do so, you get to experience the challenge but also the joy of once again learning something new.

The benefits of raising at a slight valuation discount

In an earlier post on fundraising do’s and don’ts, I wrote that startups should optimize for success rather than valuation. Specifically, I wrote that sometimes it’s worth “taking a few additional points of dilution [by accepting a lower valuation] to get the right partner in your company”.

Marc Lore, the founder of which was acquired by Wal-Mart for about $3 billion in cash and $300 million in Wal-Mart shares, gives several other reasons why taking a slight discount on your company’s valuation is likely to increase your company’s likelihood of success.

In addition to letting you work with the right partner for your company, the benefits of taking a slight discount on your company’s valuation are that it:

1. Increases investor demand for the round, thereby creating scarcity which sometimes even results in a higher final valuation for the round.

2. Makes it more likely that the round’s investors have a nice paper return by the time of the next round, thereby making them more likely to be happy investors who refer the company to other investors.

3. Lowers the likelihood of a potentially morale hindering future down round.

4. Increases the pool of potential buyers of the company by not boxing out smaller buyers who would otherwise not put in the time to evaluate the company due to believing that they wouldn’t be able to meet its valuation expectations.

The turtle and the rabbit

You’ve likely heard the story of the turtle and the rabbit racing each other. Although the rabbit is faster, he stops to look around in the middle of the race, and this lets the slower turtle win the race.

The moral of the story is that, in many settings, a steady and persistent approach outperforms a series of bursts and declines in effort.

Although I believe in the moral of the story, I didn’t believe that a turtle could actually win a race against a rabbit. It turns out that it can happen.

System dynamics

When a cause is introduced into a system, there’s an immediate and often obvious effect.

However, if we’re dealing with a complex system, the cause often has multiple less obvious effects, and many of these effects have follow-on effects which are challenging to predict. As a result, the final outcome, if there is such a thing, can be very different than what the immediate and obvious effect would suggest.

System dynamics is the study of such complex systems where causes produce multiple effects with follow-on effects.

As a complex system, nature produces many great examples of observations which can be analyzed from the lens of system dynamics. Here’s an example of what happened after wolves were introduced to Yellowstone National Park.

The flavor of the day

I was recently speaking with another investor about a potential e-commerce investment they’re looking into. While the investor really liked the startup, they were concerned by the threat that Amazon presents for the company. While Amazon has yet to focus on the company’s geography and vertical, the former is likely to happen within the next year and, given Amazon’s somewhat unexpected aggressive moves in the grocery space, it may also unexpectedly decide to focus on the company’s vertical.

While the threat presented by a large and well-funded competitor with a track record of strong execution is important to recognize, this threat alone isn’t sufficient to justify not investing in a team with a similar track record of strong execution with a singular focus on a large market.

The reason is that there is always a big and well-funded company with strong execution capabilities operating in or adjacent to a startup’s target market. Today, the flavor of the day is Amazon. Everyone is fascinated by the company. The respect is certainly deserved, but the fascination is excessive.

2 years ago, this company was Uber. A few years before that, it was Facebook. Before that, it was Google. And before that, it was Microsoft.

Despite Uber’s presence, competitors like Didi in China and Bitaksi in Turkey are clear market leaders. Despite Facebook’s presence, Snapchat emerged and is now a public company. Despite Google, DropBox is a leading player in the cloud storage space. And despite Microsoft, Google developed into the leading search engine.

While the presence or potential interest of a large company in a startup’s target market is a threat to the startup, it also validates the market.

And what the right startup has is talent and focus that’s very often not available to a large company. The right startup founder is at least as capable and more motivated than the division head leading a large company’s efforts in the startup’s market. And the startup’s singular focus on the market is different than the non-pole position which the market occupies on the large company’s priority list.

Sometimes the large company also has users or customers in its core market who it doesn’t want to risk alienating by aggressively entering a new market.

For all these reasons, know the flavor of the day. But also know that it’s just that.

Comfort with conversational silence

It’s tempting to fill in the natural silences that emerge in a conversation. The reason is that you don’t know the reason for the silence. Specifically, you don’t know whether it’s because the other person isn’t interested in the conversation, or is simply reflecting on what has been said to guide the rest of the conversation in a more informed way.

Since you don’t know which is the case, it’s tempting to play it safe and fill in the silence with the hope of reigniting interest in the conversation.

However, more often than not, it isn’t that your partner isn’t interested in the conversation, but that they were simply reflecting in order to provide a more informed reply. Since we can speak faster than we can think, we often need to allow time for our thoughts to catch up on and internalize what was said before responding.

So, most of the time, the right response to a natural silence is no response. The right response is to simply be comfortable with the silence by acknowleding that it’s a necessary part of enhancing the future quality of the conversation.