Quintura blog reports today that the Russian online ad market size has reached almost $1.4b in 2011. This represents a 56% jump YoY. These are fantastic numbers for the market. No wonder the country has produced two massive internet companies Yandex and Mail.ru, that have primarily ad-based revenues.
In comparison, the online ad market in Turkey is estimated to be around $400m in 2011 (The IAB figures for 2010 were 271m Euros). Furthermore, my personal estimate is that at least $250 of this is Google, which leaves a paltry $150m for any local company that is going after ad dollars.
This is a problem that impacts the ultimate quality of original Turkish content, which is monetized at lower rates than other geographies. It certainly explains the dearth of online content businesses that have reached any significant scale (the Nokta sites, Eksi Sozluk, Mackolik and SporX are the exceptions here). And finally, it points to a huge opportunity as one would expect this gap to close.
As one of our investment themes, we will be watching solutions that enable more effective monetization of content, beyond ad networks, and lean producers of high-quality content that can attract online ad dollars.
eBay announced today that it has increased its stake in GittiGidiyor, Turkey's leading ecommerce company to 93%. This is a landmark transaction for Turkish internet. Congratulations to Serkan, Burak, Tolga, Aydonat, and the team at iLab! This is the fruit of a lot of hard work.
The real winner in the deal is the Turkish internet, ecommerce and VC industries. This is the first internet exit of a magnitude that creates real wealth for the entrepreneurs. That means the case for internet entrepreneurship as a viable career path for the best and the brightest coming out of the best schools in Turkey has gotten stronger. The bottleneck of high quality talent for web startups might just get a bit eased.
I bet there are tens of LP presentation decks being updated today, as this transaction gets added to the top of the page dealing with the tough question of internet exits in Turkey. A similar update will take place in corporate development departments of any global internet companies, as Turkey becomes more and more visible on the international M&A roadmap.
Finally, this is also a personal landmark for me and my career as an entrepreneur and investor in Turkey. I'd met the GG team back in 2005 and had the chance to work on the deal alongside the iLab team in 2006. Back then, I had felt that this was the greatest Turkish internet company to invest in. It's nice to see that after 6 years, eBay agreed.
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.
Mark Suster has been blogging about entrepreneurial characteristics. I like his list and agree with all of his points.
The topic has made me think about a key difference I have noticed in Turkish entrepreneurs and their counterparts in the US (and largely, western Europe): multiple, parallel ventures.
I understand this in the entrepreneurs who are emerging out of a "work for hire" service shop. In those cases, many of the parallel ventures are off-shoots of ideas or products developed previously.
I also understand large groups of entrepreneurs. In that case there may be excess capacity at the leadership level that gets taken up by a new good idea that the team just does not want to let go.
However, it's surprising to me that a small team that's gone to work on a great idea can find time to focus on a second (or sometimes, third or fourth) project. There's usually so much work involved in getting one idea off the ground that it should be extremely difficult to parallel process multiple projects.
One reason for the popularity of this model in Turkey may be the scarcity of capital. Entrepreneurs don't want to put all of their eggs in one basket. And if they don't have an outside investor who's directing them to focus on one idea, they try to progress several ventures together to see which one is getting traction.
In our investments, we try to get the entrepreneurs to focus on the idea at hand. Many times, there are previous projects they continue to be involved in, but the core focus always has to be in the company we've invested in.
I just came across an app called Sorumlu Vatandaş (I refuse to link to them). It's a Firefox extension that makes it easier for Turkish internet users to flag a site and notify the Turkish authorities so that site can be examined, and if found inappropriate, access blocked at the ISP level.
I find it deplorable that the internet community in Turkey is working to make censorship easier. I also find the graphic they have chosen to represent the "responsible citizen" ("sorumlu vatandaş" in English) quite funny. 🙂
Two weeks ago I wrote about the enormous size of Facebook's Turkish user population and the lack of attention that Turkish web development community was paying to it. There have been two related developments so I thought they warrant a mention.
First, Webrazzi reports that there will be a Facebook Developer Garage event in Istanbul this weekend. This should be interesting to all web developers.
Second, Inside Facebook is reporting that Turks are the fastest growing European nationality on Facebook, with over a million new users in September, and a total user base of almost 14.5 million.
Any and all web companies in Turkay should be paying attention to this figure and developing a Facebook strategy for their users (and probably attending the Developer Garage event).