Turkish Broadband Growth

Broadband First, apologies for a quite period on this blog. I have been buried in some new initiatives, which I will share soon.

However, this piece of news that crossed my screen today (via webrazzi) tipped me over to break the silence: 

The Turkish broadband market has reached almost 7.5m subscribers in 1Q2010 and has grown at an amazing 21% rate YoY.  (Source: BTK)

Internet-Rakamları-2010-1

I don't have the time to look it up, but this must be the fastest growth in Europe.  It certainly is the most encouraging news relating to my investment thesis on Turkish internet, since the comScore online engagement news about a year ago.

Complexity

Clay Shirky does not write very frequently, but when he does, it's often worth paying attention to.  His latest post is no exception.

Sriky is pointing out the changes in the media business and the inability of old media to comprehend them.  He summarizes his point in a fun way:

To pick a couple of examples more or less at random, last year Barry
Diller of IAC said, of content available on the web, “It is not free,
and is not going to be,” Steve Brill of Journalism Online said that
users “just need to get back into the habit of doing so [paying for
content] online”, and Rupert Murdoch of News Corp said “Web users will
have to pay for what they watch and use.”

Diller, Brill, and Murdoch seem be stating a simple fact—we will
have to pay them—but this fact is not in fact a fact. Instead, it is a
choice, one its proponents often decline to spell out in full, because,
spelled out in full, it would read something like this:

“Web users will have to pay for what they watch and use, or else we
will have to stop making content in the costly and complex way we have
grown accustomed to making it. And we don’t know how to do that.”

What Clay Shirky is identifying for the media industry, can be attributed to the Turkish business environment in the broadest sense.  It even includes businesses who were born to the connected economy.

My investments are built on one simple thesis:  That Turkey has lagged
comparable markets in the transition of economic activity to the
connected platforms.  I think there's enormous profit potential in this
situation, if the right exposure is attained.  And part of it comes
from the behavior of incumbents in the Turkish economy. I will be thinking more about specific examples and try to document them in this blog.

S&P Upgrades Turkey

S&P has upgraded Turkey's sovereign credit rating today.  I think i's well-deserved and long overdue, given the level of resiliency Turkey's shown through the global credit crisis.  It's also a bit ironic that the move coincided with recent troubles all over the EU, particularly Greece and Portugal (via Marketwatch).

We have not seen any bank failures, significant stimulus moves by the state, or any large company busts.   Turkey's held up remarkably well and that performance supports my overall bullish stance on my country.

Value of the Identity Layer – Payments Edition

Social-brand-identity Dave McClure has a fun recent post/rant on business models.  In it, he makes a simplification:

Well because as we transition to a Startup Ecosystem driven by direct
payment & subscription business models, i want to make it clear how IMPORTANT it is to make sure users don't forget their passwords.  If they forget their password, and/or can't recover it, then guess what MoFo — YOU DON'T GET PAID.

While I agree with his point, he then goes on to assert that the frequent-use models don't have this problem and therefore should win the transactions/subscriptions business models, which is where I start to get question marks.  He provides examples from his tenure at PayPal and concludes that since Facebook and Google are the most frequently used properties, this is their game to use.

I also agree with the last point.  However, I think it's a gross simplification to tie the causality to frequent use.  It's the identity layer that counts.  Not the frequency.  I play some casual games daily.  but they don't know about me nearly as much as Google or Facebook does.  It's that intimate knowledge of who I am that counts!

TBI Research is pointing out the revenue potential demonstrated by some recent data at Facebook through payments.  It's not surprising that the results are positive.  Payments are directly tied to identity.  PayPal is under huge threat here.  In fact, once the payment structures start to slip, eBay will be under threat as well. 

The identity layer is enormously valuable. The biggest contenders for it are Google (because of Gmail) and Facebook.  The identity layer will allow these companies, as well as those who will be able to grab a piece of it, to challenge some very large internet commerce areas.  Payments are a great candidate.  Others will be classifieds & listings, and loyalty programs.

I think there still is an opportunity in the Turkish identity layer, despite Facebook's domination here.  Not sure how one should play it but I continue to think about it.

NuBridge Venture Summit – A Turkish Internet Milestone

Newbridge I blogged about the NuBridge Venture Summit (and the preceding NuBridge Angel Summit, which took place last week and was extremely successful) last week.  However, as we are about to kick off this event, I believe it's such an important event for the Turkish internet industry, that I wanted to blog about it again, this time in a dedicated post.

PamirgelenbeThe organizer of the event, Pamir Gelenbe, is London-based VC with Turkish roots.  He approached me with the idea that a TechTour-style mini-conference would make sense for the Turkish market, while we collaborated on the European Tech Tour's Web & Mobility Summit back in November.  I thought it was a great idea and said that we'd support the event.

 In the following months Pamir worked hard at putting together an event that now has such a spectacular line up of participants that my expectations are far exceeded.

The event's format is primarily short presentations by leading Turkish internet companies, interspersed with panel discussions by entrepreneurs and venture capitalists.  There will be networking opportunities that will allow participants to connect and hopefully, a few funding deals will emerge from the event.

As with all events of this type, the critical success factor is who the attendees are.  On that front, Pamir has done an excellent job and has lined up the following participants, each of whom play an important role in global venture capital:

  • 3TS
  • Accel
  • Acton Capital
  • BakerMcKenzie
  • Big Bang Ventures
  • Endeavour Vision
  • General Atlantic
  • Golden Horn Ventures
  • Holtzbrinck
  • Index Ventures
  • Sardis Capital
  • TA Asociates
  • Tiger Global
  • Tomorrow Focus AG
  • Ventech
  • Wellington Partners

For the event to accomplish its mission, an investor list of this caliber would have to be met with a local internet company line-up of equal strength.  On that end, the event boasts a who's who of Turkish internet sector:

  • Airties
  • befunky
  • Bilyoner.com
  • Cimri.com
  • Digitouch
  • Dogan Online
  • Doktorsitesi
  • Ebi
  • e-kolay
  • enuygun
  • Euromessage
  • Gamesultan
  • Gelirortaklari
  • grou.ps
  • Hepsiburada.com
  • Hitay
  • limango
  • Magnet
  • Mynet
  • Nokta
  • Sanalika
  • Sporx
  • Tasit
  • Vatan Bilgisayar
  • Yemeksepeti.com
  • Yogurt

I am very confident that this event will be looked upon as a unique milestone in the development of the Turkish internet industry.  We are very proud to have our portfolio companies (befunky, grou.ps and Yogurt for GHV and YemekSepeti.com for me) presenting, and to have had the opportunity to support this event as a sponsor.

Istanbul on the VC Map

Nubridgevetureslogo There are two very important events that will take place in Istanbul over the next couple of weeks. 

First is the NuBridge Angel Summit, organized by my friend Pamir Gelenbe, who's a London-based VC of Turkish origin.  The event brings to Istanbul a group of world-class angel investors, including:

I am also participating in the event, which will take place on January 14 & 15.  It should provide an excellent venue for Turkish internet ventures looking for angel backing.

The second event is the NuBridge Istanbul VC Summit, scheduled for January 21 & 22, which we're proud to sponsor as GHV.  I think this event will be an important milestone in the development path of the Turkish Venture Capital industry.  The event's format will resemble that of the European Tech Tour Association's events, in that a group of top-tier VCs from around the world will get a chance to meet a select group of Turkish internet and technology companies.  You can find a list of participants at the event's website and Çağlar Erol's blog (in Turkish).

I am especially excited to have a few of our GHV portfolio companies (Grou.ps, beFunky, Yogurtistan), as well as a personal investment of mine (YemekSepeti.com), presenting.

If you are interested in being associated with either event, please contact Pamir through the event website, although I understand that attendance will be extremely tight due to space constraints.