Monthly Archives: December 2015


We recently completed our final investment of 2015 in Sinemia. This is the second investment we’ve completed through the Borsa Istanbul (Istanbul Stock Exchange) Private Market platform. The first was Modanisa’s most recent round which took place earlier this year.

Sinemia is a membership club that lets you watch a movie per day at theaters across Turkey for a monthly fee starting at 59 TL. Movie tickets in Istanbul tend to cost upwards of 20 TL so you can see how getting a Sinemia membership can quickly become a profitable investment.

Sinemia’s founder Rifat Oguz launched the business in May 2014 while working at Turkcell. The business’ consistent growth over the next year convinced Rifat to leave Turkcell and begin working on Sinemia full-time in August 2015. We met with Rifat in November and, impressed by his traction and vision for the future of the company, made a fast investment offer.

This was the first time that we made an investment offer in person, an approach whose benefits I outlined in an earlier post. At the time of the original post, Rifat had yet to accept our offer. Now that he has, I’m an even stronger proponent of communicating investment offers in person rather than over email or the phone.

As for Sinemia, we believe that the business is just getting started. Despite the global growth of online movie streaming which is often seen as a substitute for watching movies in a physical theater, the Turkish market is seeing continued growth in movie ticket sales. The reason is that the negative effect of online movie streaming is more than offset by Turkey’s growing and increasingly wealthy middle class’ greater disposable income. Part of this growing disposable income is spent on movie tickets.

Despite the increase in movie theater attendance, theaters have yet to operate at full capacity. And Sinemia’s up-front subscription model is a great way to bridge the gap between attendance and capacity. The combination of Sinemia’s subscription pricing model and the fact that it can be used at any movie theater make it appealing for movie goers.

I became a Sinemia member on the 3rd of December and have already watched 3 movies using my membership. The mobile app-enabled movie ticket purchase experience is seamless. And at a price of over 20 TL per ticket, I’ve already recouped my 59 TL monthly investment. Any more movies that I watch until the 3rd of January are effectively free.

Book recommendations for entrepreneurs

I recently shared my book recommendations for entrepreneurs on Webrazzi. The timing of the article was spot on in the middle of holiday season. If you’re looking for a great book to read over the holidays, you may want to take a look at the ones below.

I’m currently reading “Sapiens” by Yuval Noah Harari. I’m about 200 pages into the 400 page book and so far it has proven to provide a great overview of the history of humanity, the features that define us and shape our progress, and how cultures form.

The other books I recommend, each of which I wrote about earlier on this blog, include:

“High Output Management” by Andy Grove (blog post).

“Not Fade Away” by Laurence Shames and Peter Barton (blog post).

“How to Get Filthy Rich in Rising Asia” by Mohsin Hamid (blog post).

In the Webrazzi article I also shared a tip about reading books which I learned from AngelList founder Naval Ravikant. Specifically, the tip is that you don’t have to finish books. Here’s the reasoning.

Books are home to much more insightful content than the short tweets and articles that we’re used to consuming these days. However, we’ve been educated to believe that we need to finish reading each book that we start. This large up front commitment required to read a book makes us think twice before starting to read a new book. Once we relax the assumption that we have to finish books that we start reading, we can enjoy the more informative content of books without feeling like we’re losing time trying to finish a book after we’ve already learned what we need to from it. I’ve been applying this approach in the books I’ve been reading this year and am enjoying the results.

The role of marketing at early stage startups

I was recently speaking with the founder of one of our startups about the right approach to marketing for his business. The startup recently parted ways with their chief marketing officer (CMO) and our founder stated that he didn’t believe that early stage startups should have a marketing department. Instead, he stated that all departments should be thinking about how they can better serve customers in order to grow demand for the startup’s product.

I agree that all departments should work with the ultimate customer in mind. For example, the IT team should build its infrastructure to minimize server down time and page load speeds as the company scales, the operations team should deliver products in the right condition to customers on time, and the product team should build referral loops into the product to facilitate new customer acquisition. However, this doesn’t mean that there shouldn’t be a specific team responsible for creating demand at an early stage startup.

After digging deeper into why our founder concluded that a marketing department isn’t necessary for early stage startups, we discovered that the underlying reason wasn’t because the startup didn’t need such a department but because of how the department mistakenly thought about its role. Specifically, the marketing department had thought that its responsibility was to allocate a fixed marketing budget across different channels. By taking a predetermined budget that it had to spend each month, it didn’t distinguish between the relative customer value generated and customer acquisition costs of different channels. It simply spent on the most common channels which come to mind when you think of an internet startup’s marketing (search engines, social media, affiliate networks, …).

A startup’s marketing department’s role isn’t to allocate a fixed budget. Instead, its role is to drive as much customer value as possible per dollar of marketing spending. This resourceful approach enables the discovery of creative strategies to gain new customers while avoiding those traditional channel segmentations that don’t make sense for the startup’s specific context. It’s not about properly allocating a fixed number of dollars but about creating as much leverage as possible with every marketing dollar you spend. If spending doesn’t make sense, it doesn’t matter if it’s budgeted. You don’t do it.

Placing the relevant team in charge of growth or demand creation rather than marketing may help the team’s members internalize their responsibility to drive customer value at the lowest possible number of dollars, and hence the highest leverage. But whatever you decide to call the team, getting the right customers through the door at the right cost is a very important role for early stage startups. It deserves its own team.

Don’t outsource your thinking

The holiday season is in full swing in the US. I can tell by the slow trickle of emails that I’m getting from our US companies.

Turkey doesn’t have long formal holidays around Christmas or the New Year. The 1st of January is off and that’s it. Despite this, there’s been a noticeable slowdown in business activity in Turkey as well. This is likely because many people are taking holidays outside of the formal ones, companies with business partners in countries that more extensively celebrate Christmas and the New Year are seeing no workflow arriving from their partners, and the prospect of the New Year is putting people in a festive mindset where they want to work less.

This slowdown in work gave me some time to reflect on my blog. I started writing on a daily basis this year, and so a lot of content has accumulated. With a few exceptions where I share personal topics, the content tends to reflect a combination of developments in the tech sector and the companies we’ve invested in, together with my thoughts and recommendations from analyzing these developments.

What I want to highlight here is a caveat regarding these thoughts and recommendations. Specifically, I encourage you to take them as a departure point to perform your own critical thinking rather than blanket truths. The reason is that each analysis is contextual.

When I share a specific company’s new product feature, that doesn’t mean that that same product feature will work for your company. When I share a certain company’s progress metrics, that doesn’t necessarily mean that you should be evaluating your company’s performance based on those same metrics. When I share a specific way in which I evaluate investments, that doesn’t mean that that same perspective will work for all investors.

Each thought and recommendation I share is contextual. This is why I also do my best to share the context of each post (within the limits of respecting our companies’ confidential information) together with my thoughts and recommendations. To get real value out of the posts, I encourage you to read each post in light of its context, think about ways in which your context is similar and different, and arrive at conclusions which make sense for your specific context.

Don’t outsource your thinking.

Generational difference

Hasan and Cetin from Kapgel were on the TV program Kusak Farki (“Generational Difference” in Turkish) last week.

Presented by father and son Oral Calislar and Resat Calislar, the program hosts two guests from different generations to share their experiences in a given domain. Hasan and Cetin are somewhat less than a generation apart, but they combined to deliver a great overview of Turkey’s internet startup sector on the program. They also shared their views on specific internet company business models, target customer profiles, and hiring practices.

Hasan shares his experiences from the dual perspective of an investor and an entrepreneur, and Cetin shares his experiences from the perspective of an entrepreneur.

You can watch the full program in Turkish below.


Pre-game routines

The Golden State Warriors started off their NBA season with a 24 game winning streak. Their point guard Stephen Curry, who was the NBA’s Most Valuable Player in 2015, played an important role in making the streak happen.

Here’s a recent tweet from the NBA showing Stephen’s pre-game preparation.

My three key takeaways from the piece are:

  1. Routine: Stephen follows the same pre-game preparation routine before each game. Practice is the time to try out new things. You’re not going to learn anything new right before an important contest. Right before game time, it’s better to focus on being comfortable. Following a familiar routine helps you achieve this.
  2. Adjusting to your opponent: Stephen is right-handed, but the first shots he takes are left-handed hooks, runners, and jump shots. As a point guard, Stephen is shorter than most players on the court, so being able to use both his hands as offensive weapons makes it much more difficult for the opposing team’s taller players to defend him.
  3. Setting an extreme benchmark: Stephen takes three point shots well beyond the three point arc during his pre-game warmup. You don’t get more than three points for these shots, so it would seem to make more sense to shoot from the three point arc rather than several feet behind it. But shooting from a further distance lets Stephen’s mind adjust his expectations to this longer distance. This way, the shots that he takes from the three point arc during the game seem relatively easy compared to his pre-game benchmark.

A country of immigrants

I recently came across the following tweet.

Basically, it shows how Silicon Valley has a greater share of foreign born people than California and the US. The difference exists no matter how you slice it. In fact, the difference is much greater for the employed population and people who work in the IT industry than it is for the overall population of each geography.

So if you’re looking to recreate Silicon Valley in your home country, attracting foreign born people is a prerequisite. This makes sense because, if we believe that intelligence and hard work are randomly distributed across the world, as I believe, there will always be more intelligent and hard working people living outside of your country than in your country. And attracting them to your country is the best way to increase your country’s competitiveness. This requires making it easy for them to enter and find work in the country, and making the country a place where they want to build a life.

Once in the country, they will self-select themselves into geographic communities that best position themselves around the people whose collaboration they need to succeed. So being a country of immigrants is the first step to creating a Silicon Valley-like region within a country.

Creating technology zones, giving tax credits for innovation projects, and setting aside government funds for venture capital are all well-intentioned. They produce incremental progress. However, they fail to address the core problem, and the core opportunity for moonshot progress. People.

Technology’s consumer surplus

It’s commonly accepted that there has been a slowdown in GDP growth rates following the 2007-2008 financial crisis. Although the global economy has certainly recovered from the crisis, it’s growing slower than it did in the past.

One common explanation for this is that we’re in a period of deleveraging. The high level of debts that were amassed in the run-up to the financial crisis are now being unwound. Consumption is declining as a result, and although partially offset by increased government spending, the overall outcome is slower growth.

However, I believe that there’s another important reason behind the slower GDP growth rates we’re seeing. The reason is technological progress.

GDP measures the value of monetary transactions which take place in an economy. However, technological progress is making previous ways of doing things much cheaper. So the value of the monetary transaction taking place (GDP) is declining even though the consumer is getting just as much value, if not more, from what they’re doing than in the past. There’s a very real resulting consumer surplus but it isn’t taken into account in GDP growth rates. If it were, GDP growth rates would be higher.

This article from The Economist has many great examples of the consumer surplus generated by the internet, and the internet is just one from of technological progress. The time savings generated by performing research on the web rather than at the library, the internet’s role as a free replacement for more expensive forms of leisure, and the way in which the internet eliminates the need for middle men across many industries, are all examples of how it produces consumer surplus.

Although difficult to quantify, these examples of the consumer surplus created by technology are very real. And although they’re not captured in GDP, they’re a very important part of human welfare.

Webrazzi Ventures

Webrazzi, where we’re investors, is the leading tech news website of Turkey. Since its launch in 2006, it has expanded from covering the tech news to hosting events like the Webrazzi Summit and thematic conferences and selling tech gadgets through the Webrazzi Store.

With its most recent expansion, Webrazzi is also becoming an accelerator and an incubator. Webrazzi Ventures‘ goal is to provide seed funding, in-house services, and a strong network to help build global startups out of Turkey.

Webrazzi fills a central role in Turkey’s tech ecosystem. This gives it access to a wide range of current and former tech entrepreneurs with the know-how necessary to build a successful tech business. It’s also well known outside the sector. If someone outside the sector wants to find out about what’s going on in Turkey’s tech sector, they go to Webrazzi. This gives Webrazzi the ability to build relationships with business partners across sectors. Both are very valuable for aspiring entrepreneurs, so building Webrazzi Ventures makes a lot of sense.

The specifics of the accelerator/incubator, like its leadership team, any sector focus, investment amounts and terms, and post-investment operating model have yet to be announced. However, Webrazzi Ventures is well positioned to emerge as an important contributor to Turkey’s seed stage startups. I welcome Webrazzi’s new role.


Modacruz’s new round

I wrote about the growing number of celebrity wardrobes I recognized on our second hand female clothing marketplace Modacruz this past weekend. This is one of the many signs of the company’s very strong performance.

Hummingbird Ventures, an investor in companies like Peak Games and Ciceksepeti in Turkey as well as Deliveroo and MarkaVIP globally, recognized the company’s progress and decided to lead its new $2.5M funding round. All existing investors including Serkan Borancili, Burak Divanlioglu, Nevzat Aydin, and us also participated in the round.

We’re very fortunate to have invested in Modacruz, and welcome Hummingbird to the company. Hummingbird’s great track record in its Turkish and global investments speaks for itself. I believe that Modacruz will be no different.