Material World

It seems Goldman Sachs is not the only financial powerhouse interested in investing in what they have termed the “N-11” countries. This morning Kleiner Perkins Caufield & Byers, the Silicon Valley-based venture capital firm, has announced that, together with NY/Beijing-based Tiger Global Management, it is investing $26m in Trendyol.com, the fastest growing, biggest fashion etail site in Turkey. Someday, I plan to write a post about the inexplicable choice of names for fashion etail sites, but not today.

This is the first time Kleiner had invested in a Turkish company, and only its second fashion etail investment, after renttherunway.com.

So what is this presumed goldmine? Dreamed up in 2009 by Demet Mutlu, during the summer after her first year in the Harvard MBA program (she had previously worked in marketing and consumer goods for P&G) and launched 16 months ago, it is a fashion site that currently serves four million Turkish members out of an 150,000 sq ft warehouse, works with 1,000 brands from Valentino to the high street (it buys on consignment), as well as its own crowd-sourced mass market label, Milla, and can do the entire thing from its Facebook page.

Essentially, it spins itself as a social shopping Valhalla for a country of 35 million internet users and 46 million credit cards – which is 60 per cent credit card penetration. Trendyol now has  4 million members, which is one of every nine internet users in Turkey, 70 per cent of whom are under the age of 34.

“I think the most important thing for a company is customer obsession,” says Ms Mutlu, who also says her big idea has been “the importance of listening and letting the customer dictate what they want.”

This sounds kind of hokey, but the site has been profitable since last Christmas according to Ms Mutlu, who thinks it can be a billion dollar company in the next three to five years. Trendyol now has 350 employees, up from ten at the start, and has so far raised $50m after starting with $1m. Kleiner invested in Trendyol both through its venture fund and the sFund, a new fund created last year with limited partners such as Facebook, Amazon, and Zynga, and focused on working with companies specifically geared toward leveraging the social web.

“We are big believers in the social web as a fundamental new layer for the internet,” says Aileen Lee, a KP partner, who also points out that in countries such as Turkey the etailing plays an important role, as bricks and mortar infrastructure lags behind the spending power of the population, whereas internet penetration has reached “critical mass.”

All of which sounds well and good – it’s hard to argue with success – but has some very frightening implications for traditional designers and retailers, many of whom are still tiptoeing into e-commerce.

If the way to make and raise money, especially in what are going to be the next big markets, is not by doing what the old luxury brands have been doing in their approach to BRICS – tell customers what to wear, head to toe and build enormous flagships—but rather by presuming the customer knows what they want and letting them dictate that from their desks, some strategic tap dancing may be required.