In an effort to cover the Turkish Private Equity Industry - for the promotion of Entrepreneurship, the private equity asset-investment model, and the communication thereof.
Turkish Business Networking Site - Cember.net Acquired by German Social Network Xing
03 February 2008
In January, it was announced (here via Reuters) that Xing had aquired Cember.net for 4.4 million euros ($6.4 million), to be paid in stages. Xing is a professional business social networking site that had 4.25 million members at end-September 2007 and competes with US-based Linkedin. Cember.net apparently is the largest professional networking social network in Turkey with over 280,000 members. The site is ranked at 117 in Turkey according to Alexa. Overall ranking worldwide looks like this when compared with Linkedin:
The €15/member price tag for the acquisiton shows that there's still a bit of a discount for Turkish internet properties. Xing is trading at about €45/ member.
Based on this metric, and with an estimated (although dated) 16,000,000 Internet users in Turkey as of September 2006 (only representing 20% of the population), is this a good price? It's hard to say. I can't imagine a lower price for any Internet property given good traction, but to Xing, this might seem damn expensive, given that Cember's members represent barely 2% of all Turkish Internet users. Facebook has 1.6 million users with a page in Turkey, representing 10% of all Turkish Internet users. Please remember that 25% of Turkey's population resides in the 15-29 age range. Xing may figure this and that it is only a matter of time before membership picks up.
Perhaps it's the demographics, or the now-coined "Social Graph", of the Turkish users that warrant the value of the user, those users being professional networkers. Overall, it seems that Xing is rushing to spend its IPO Euros in efforts to consolidate Europe, before Linkedin smashes them to bits. Linkedin already has a huge footprint of Turkish users worldwide, although the site is in English. However, in this case for Turkey, it appears that, although not entirely having the same utility as Linkedin and Xing, Facebook has really already won the game, now the #2 most popular site in Turkey behind Google and in front of YouTube (despite the recent blocks). On a side note, this brings up the question: When will Facebook be blocked? Again, perhaps its only a matter of time before someone builds the wrong application.
In my next post, I'd like to touch on another issue that arrises from this discussion, that of Turkish Internet "Copy-Cats" or "Clone" sites of Western sites. Is that the answer to a successful Turkish Internet property? Stay tuned...
Malcolm Gladwell: The Tipping Point, Blink and the TED Conference
27 September 2007
I first got turned on to Malcolm Gladwell by hearing his name among other VC Blogs. My first encounter was when I picked up his latest book: Blink: The Power of Thinking Without Thinking. Having read Blink first, I may have spoiled the effect of reading that book that he his most famous for: The Tipping Point: How Little Things Can Make a Big Difference. Luckily, I was able to find a copy sitting next to Blink on the best seller rack.
I may be behind the times only finishing it now - it being first published in 2004. However, fret not, for it is still a prudent and powerful explanation of successful businesses, products and social networks in the world of Web 2.0 - beautiful in its simplicity.
For those who haven't read The Tipping Point, the idea is a comparison of the successes in business to the spread of a disease epidemic. Think of a common flu virus that hangs around going from person to person, remaining in equilibrium in its contagiousness. But then something happens - it reaches a tipping point where the equilibrium cannot be maintained - the flu spreads like wildfire - it tips. For example: have you ever considered "yawning"? How long after reading the word "yawning" and thinking about yawning - did you yawn? You may smile later. Malcolm Gladwell can explain why this is.
Applied to business, The Tipping Point helps explain exponential growth of ideas, products, trends and concepts, and will shape the way we look at social trends for years to come. For a great overview, see the Tipping Point Wiki, or else see the Tipping Point on Gladwell.com.
In addition, For a taste of Malcolm Gladwell live and in person, I urge you to watch this video of Malcolm at the TED Conference. It is long (18 min.), but it is well worth it (as are all TED videos). (You are able to expand the video to full screen in the lower right corner button.) In it he details the problem of a tomato sauce company, where the problem was not the sauce (as previously believed), but actually how many sauces the public desired.
I think Turkish producers and retailers could learn a few things from this lesson. You could say that Efes has been following this model lately, but in my opinion, all of those beers are just the same beer. Ulker and competitors Cadbury Schweppes and Kraft (Milka) in the chocolate space could be said to maximizing this concept as well. Any others?
Publisher: Jon H. Black TurkVCAnalyst: With 10 years experience working and studying in Turkey, an MS in Financial Economics, Jon H. Black is a published writer of multi-sector industries in oil & gas and banking & finance. In addition, he has offered due diligence services, dealflow sourcing and aiding private equity professionals entry into the Turkish market through entrepreneur and industry introductions.
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. Having read Blink first, I may have spoiled the effect of reading that book that he his most famous for: 
. Luckily, I was able to find a copy sitting next to Blink on the best seller rack.
Publisher: Jon H. Black
