Entrepreneurship in Turkey

1. On Entrepreneurship in Turkey
Ziya G. Boyacigiller
This presentation was created and given by Ziya
Boyacigiller who was leading Angel Investor and a loved
mentor to many young entrepreneurs in Turkey. We have
shared it on the web for everyone’s benefit. It is free to
use but please cite Ziya Boyacigiller as the source when
you use any part of this presentation. For more about
Ziya Boyacigiller’s contributions to the start-up Ecosystem
of Turkey, please go to www.ziyaboyacigiller.com

2. Entrepreneurship in
Turkey?
Entrepreneurship /
Intrapreneurship circa 2008
Ziya G. Boyacıgiller
Sabanci University

3. Ziya G. Boyacigiller (c) 2005
EMBA 4
Entrepreneurship won’t
work in Turkey…
 Whatever works in USA won’t work here…
 No one will invest here in a new business…
 Holdings will destroy you once your business becomes
significant enough…
 There is no legal protection, intellectual property rights…
 They will copy you, all your efforts will go to waste…
 Government will back their supporters, will damage you if
you don’t work with them…
 You can’t overcome the government bureaucracy…
 When there is corruption, the mafia you can’t be in
business honestly…
 If you are a minority partner, they will cheat you…
 etc…

4. Ziya G. Boyacigiller (c) 2005
EMBA 5
A Question?
 How did the following companies start
and become successful in Turkey?
 Hedef Alliance?
 Dizayn Group?
 Mavi Jeans?
 Logo Yazilim?
 Gantek?
 Artesis?
 AirTies
 ….

5. Ziya G. Boyacigiller (c) 2005
EMBA 6
… it is easy to be
an entrepreneur
in the US?
And who says…

6. Ziya G. Boyacigiller (c) 2005
EMBA 7
Spin-Off Companies…
 In 2000, there were 454 spinoffs, within all American academic
institutions, pp57
 In 2000, average was 4.2% spinoffs-to-disclosures ratio
within 26 selected universities (~37% of total with spinoffs) in
USA. Pp68
 During 1980-1996, MIT spinoffs = 134, went public = 24, 18%
public “spin-off ratio, pp19 & pp30
 Using 4.2% and 18%, we get 0.3%. This means only 3
spinoffs for each 1,000 disclosures succeed to go public (IPO).
(Note that this ratio is for MIT and is much higher than non-
academic success rates. However, the rate for VC backed
companies is 100 times worse!)
 Moreover, during 1980-1996, average years to IPO for 24 MIT
spinoffs equaled 4.5 pp30

7. Why does one
become an
entrepreneur?
money
excitement
power
fame
work
social contribution
knowledge
competition

8. Ziya G. Boyacigiller (c) 2005
EMBA 9
Top 10 US Billionaires
Name Age Worth Company
Bill Gates 48 $48B Microsoft
Warren Buffet 74 $41B Berkshire Hathaway
Paul Allen 51 $20B Microsoft
Alice Walton 55 $18B Wal-Mart
Helen Walton 85 $18B Wal-Mart
Jim Walton 56 $18B Wal-Mart
John Walton 58 $18B Wal-Mart
S. Robson Walton 60 $18B Wal-Mart
Michael Dell 39 $14B Dell
Larry Allison 60 $14B Oracle
Source: 2004 Forbes 400

9. Ziya G. Boyacigiller (c) 2005
EMBA 11
Example for Good VC
Investments:
KP’s star companies:
 Google 240x
 Netscape: 80x
 @home: 87x
 Amazon.com: 44x
 Exite: 73x
 Rambus: 51x
 Citrix : 40x

10. Ziya G. Boyacigiller (c) 2005
EMBA 12
Returns of VC Companies
Kleiner
Perkins
Caufield &
Byers
IRR Sequoia IRR Matrix
Partners
IRR
1992 fund 39%/y 1992 fund 110%/y 1995 fund 223%/y
1994 fund 122%/y 1995 fund 175%/y 1997 fund 516%/y
1996 fund 287%/y 1998 fund 93%/y 2000 fund -30%/y
1999 fund -21%/y 1999 fund -5%/y 2001 fund -39%/y
2000 fund -16%/y 2000 fund -25%/y
Source: Venture Scoreboard

11. Ziya G. Boyacigiller (c) 2005
EMBA 13
Global VC Investments
1998-2002
Region Invest Funds Raised Not-
Committed
$ Billion $ Billion $ Billion
Global 660 788 128
North America 466 554 89
Western Europe 123 154 31
Asia Pacific 46 55 8
Middle East & Africa 11 12 1
Mid and South America 12 10 -3
Eastern Europe 2 3 1
Source: pwcmoneytree.com 2004

12. Ziya G. Boyacigiller (c) 2005
EMBA 14
Favored Industries?
Source: pwcmoneytree.com 2004
VC Yatirimlari ve Endustrilerin Dagilimi
2004
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13. Ziya G. Boyacigiller (c) 2005
EMBA 15
10 Top Countries
Region Investment
2000 2002
US $105B $62.7B
UK $9.6B
France $1.1B $5.5B
Italy $2.5B
Japan $2.9B $2.4B
Germany $1.2B $2.4B
South Korea $0.1B $2.0B
Netherlands $1.6B
Canada $1.6B
Sweden $0.6B $1.4B
India $0.3B $1.1B
China $0.1B $0.35B
Source: UN Human Development Report, 2001
2003:
US $18.2B
Europe $3.0B
Source: pwcmoneytree.com 2004

14. Ziya G. Boyacigiller (c) 2005
EMBA 16
How can China run?
 What has changed in China…
 In the last 5 years IDG Technology
Venture Investing invested $170Mio
with %43 IRR.
 In 2004 record 253 companies
received $1.3 billion.
 Selecting investments fit for China’s
economy and markets…

15. Ziya G. Boyacigiller (c) 2005
EMBA 17
What is changing in Turkey?
 EU forcing structural changes
 Economic reforms (IMF)
 Government encouraging
entrepreneurship
 EU supporting entrepreneurship
 Turkic and ex-soviet markets
 EU and USA have difficulty working in
Middle East
 EU market opening up (customs union)

16. Ziya G. Boyacigiller (c) 2005
EMBA 18
Entrepreneurship is a
Strong Driver of Economy
 Approximately 4% of US labor force is
involved in starting a new company every
year.
 Business owners in US is 13% of
nonagricultural labor force.
 All this, despite the odds – 40% of new
businesses started in US live over a year,
only 25% survive for 8 years.
 Why is Nigeria the most entrepreneurial
country?

17. Ziya G. Boyacigiller (c) 2005
EMBA 19
Additionally “creative destruction”
is at work; very few Fortune 500
companies stay on the list for
more than a decade or two.
Corporate
Entrepreneurship

18. Ziya G. Boyacigiller (c) 2005
EMBA 20
Microsoft, Apple Computer

19. Ziya G. Boyacigiller (c) 2005
EMBA 21
Walmart, Target

20. Ziya G. Boyacigiller (c) 2005
EMBA 25
Dr. Edward Demings’
Famous Beads Experiment
The output of a process produces both
random and systematic deviations. By
replacing people or putting a gun at
people’s heads it is not possible to reduce
or eliminate either. Instead, you need to
understand and eliminate the root-causes
of the deviations.

21. Ziya G. Boyacigiller (c) 2005
EMBA 26
Nature of Growing and
Aging

22. Ziya G. Boyacigiller (c) 2005
EMBA 27
Corporate Lifecycles

23. Ziya G. Boyacigiller (c) 2005
EMBA 33
Obviously, something
separates successful
entrepreneurs (inside or
outside companies) from
the masses of others…

24. Ziya G. Boyacigiller (c) 2005
EMBA 44
Tell a Story…
Narrative stories overcome these issues:
1. Set the stage
(who are the actors)
2. Define dramatic conflict
(difficulties)
3. Resolution
(how you win)