Old and New: Istanbul at the Cross Section of Time

It’s officially Day 2 of our Global Immersion in Istanbul and our group of 40 has done so much already! Many of us arrived a day early and had the opportunity to tour the city. While catching up on each other’s winter break stories, we walked through ancient structures that date back as far as 500 AD. Our group looked up in awe at the magnificent domes covered with intricate blue and gold painted tiles in the Sultan Ahmed Mosque, or more commonly known as the Blue Mosque. Not to be overlooked, the Hagia Sophia stands directly across the Blue Mosque to create the most visited area in the Old City. Standing between these two iconic sites, I couldn’t help but wonder, how did people back then build all of this?

The admiration extended into the first official day of our program. Boston Consulting Group welcomed us into its Istanbul office and provided us with a very insightful overview of Turkey’s current economic situation. We were then whisked away to Fit Startup Factory, one of the first startup incubators in Turkey. As we learned more about the resources made available to entrepreneurs in the last few years, it was incredible to hear how much Turkey has changed.

Yet at the same time, Turkey still seems to have a lot of catching up to do. From the discussions in our meetings, the biggest hurdle facing entrepreneurship in Turkey is the people’s mindset that stems from an older generation. Parents have instilled in their children an aversion to taking on the risks of starting their own companies; rather children are encouraged to find a stable corporate job in which they have a predictable salary. This sentiment was reinforced when we spoke to entrepreneurs at Boğaziçi University’s incubator today.

It will be interesting to see what else we will learn as we continue to explore and analyze the startup scene in Istanbul in the coming days. Oh, but don’t worry, we will of course enjoy as much as the city has to offer in true CBS fashion. Follow our journey at #GIPTurkey and other amazing CBS Chazen trips on #cbschazentravel on social media!

Turkish Delights at the Spice Bazaar
Turkish Delights at the Spice Bazaar

Turkey and Europe: Reject or Be Rejected?

By Aziza Jamgerchinova

One of Turkey’s overriding goals has been an entry into the European Union.  In fact, the country’s Prime Minister Tayyip Erdogan was so keen on aligning the country with the Western norms that he aggressively tackled a number of thorny issues like minority and women’s rights since coming into the office in 2002.  His efforts were often in the spotlight, while the rest of the world pondered whether Europe would let a country of 80 million Muslims join the club.

Turks have soured on the idea of joining a sinking European Union.Photo: Kunal Kain
Turks have soured on the idea of joining a sinking European Union.
Photo: Kunal Kain

The potential impact of the economic and political tie to Europe was an issue discussed during every single company visit on our trip.

While individual opinions may have differed, it was clear that the on-going sovereign debt crisis, which has brought Europe to its knees, made Turkey re-consider its options.  At least within the business circles, Turks have soured on the idea of joining the EU.  The Arab Spring has created new opportunities for Turkey to wield its power in the region, and many are asking the arduous question: Should Turkey reject Europe before being rejected?

As the lure of joining the EU is fading, Turkey is increasingly looking East instead of West, embracing its Muslim identity along the way. Foreign Relations Director at MUSIAD, a religiously conservative business group of 20,000 companies that is close to the prime minister, told our group about his recent trip to Tunisia and Morocco.  Turkish manufacturing and construction companies are vying for government contracts and new business partnerships in that part of the world.  MUSIAD often finds itself in the role of a “middle man,” connecting the right companies with one another.  The demand for the Turkish know-how in road building and residential construction is high in Tunisia and Morocco, and is only expected to grow.

CEO of Abdi Ibrahim, a pharmaceutical company in Istanbul, said the firm has recently acquired the majority stake in Kazakhstan’s Global Pharm.  She emphasized that Central Asia, along with other former Soviet states, was a growing market for them with ripe opportunities that won’t be found anywhere in Europe.  Needless to say that almost half of Kazakhstan’s population is Muslim.

Meanwhile, Turkey’s membership talks have stalled, and recent public opinion polls indicate that the country’s ambition to connect itself to sinking Europe is waning.

Private Equity in Turkey: The Business of Kissing Frogs

Selim Kender, a graduate of Columbia Business School and Principal at TurkVen, discusses the peivate equity firm's portfolio companies.Photo: Aziza Jamgerchinova (c) 2013
Selim Kender, a graduate of Columbia Business School and Principal at TurkVen, discusses the private equity firm’s portfolio companies.
Photo: Aziza Jamgerchinova (c) 2013

By Aziza Jamgerchinova

Selim Kender, Principal at TurkVen, welcomes us at the offices of the private equity firm in Ortaköy. White marble steps lead down to a contemporary two-story mansion, the back end of which opens to a seaview terrace.  The views of the Bosphorus are arresting and postcard-worthy.  Inside, a team of 17 professionals make multimillion investment decisions.  The understated design of the office, with its dark wood paneling in the main conference room, gives it a feel of opulence and grace.

Selim joined TurkVen over six years ago, having previously worked at Fortis Bank and Finansbank in Istanbul.  He is a graduate of Columbia Business School.

Working at a private equity fund can be like having to kiss a lot of frogs to find a prince, says Selim.  He shows some numbers to prove his point.  TurkVen started by screening over 2,000 companies.  And after a rigorous process to find the best investment fit the firm ended up with 17 deals.  Almost all of TurkVen’s latest deals were buyouts, with the firm acquiring up to 51% equity.

While TurkVen manages only $1.5 billion in assets, today it is the largest shop in Turkey.  Its portfolio assets include supermarket chain Migros Türk TAS; pizza chain Domino’s Pizza Restaurantlari AS; satellite TV provider Digiturk; and cosmetics retailer Tekin Acar, which Selim calls a Turkish Sephora.

In 2006, TPG Capital and local partner Actera Group concocted a $810 million purchase of Mey Içki San. ve Tic. AS, Turkey’s largest producer of raki.  Five years later, Britain’s Diageo bought the Turkish distiller from TPG for $2.1 billion.  The splashy exit generated a gain of more than 400%, and that’s what put Turkey onto the global PE map.  Today, all the big private equity players like KKR and Abraaj Capital show heightened interest in Turkey, says Selim.

The Newsroom: A Visit to Hürriyet

Columbia Business School students visit the office of Hürriyet in Istanbul.Photo: David Lerman
Columbia Business School students visit the office of Hürriyet in Istanbul.
Photo: David Lerman
hurrieyt 2
Tijen Mergen, a marketing executive at Hürriyet, talks about recent shifts in the Turkish media landscape.
Photo: David Lerman

By Aziza Jamgerchinova

Our visit to Hürriyet starts with a brief welcome reception in the main atrium of the company’s headquarters in Istanbul.  Modern art pieces, including paintings, posters and sculptures, give the office the Google vibe.  There is no trace of cubicles, and everything feels young and fun.

After the reception our group is invited to an auditorium, where Tijen Mergen, a marketing executive at Hürriyet, and Bulent Mumay, a Web Coordinator, tell us about Hürriyet Dünyası, or the World of Hurriyet.

The media company’s flagship publication is a newspaper by the same name.  The daily covers domestic and international news, sports, arts and culture, and features opinion pieces from leading Turkish journalists and social influencers.  Following the latest media trends, Hürriyet has been aggressively expanding its online presence.  The web edition of the newspaper features video reports and user-generated content like Twitpic images.  Mr. Mumay, who leads the digital team, tells us about a recent success during the coverage of a bomb attack in Izmir in August of 2012.  The web edition of the newspaper broke the story by publishing the very first image of the blast’s aftermath that the editors were able to find through Twitter.

Hürriyet is owned by Doğan Holding which today ranks among Turkey’s top three conglomerates.  Doğan is active in six business areas, among which media and energy get a special attention.  In addition to Hürriyet, Doğan has a joint ownership with Time Warner of CNN Türk.

After the presentation, we are invited for lunch at Hürriyet’s cafeteria.  Mr. Mumay and a few other executives are able to join us, so the conversation about Turkey’s media continues.

Istanbul: Travel Basics

Foreigners at Istanbul Atatürk Airport wait in line to get a Turkish visa.Photo: Aziza Jamgerchinova (c) 2012
Foreigners at Istanbul Atatürk Airport wait in line to get a Turkish visa.
Photo: Aziza Jamgerchinova (c) 2013

By Aziza Jamgerchinova

For most students in the Global Immersion Program group, the first encounter with Turkey will be Istanbul Ataturk Airport. It is named for the founder of the modern Turkish republic, whose portrait you will see not only on the Turkish currency but also in many offices we will visit during the weeklong trip. The airport is a sleek modern facility with flights to all major destinations around the world. Americans need a visa to enter Turkey. The visa can be purchased at the airport, just prior to going through passport control. The current price of the visa is $20 and can be paid in cash. Once you get your visa and the passport stamped it’s a short walk to the baggage carousels. One annoyance is that the luggage carts are not free of charge as they are in many Western airports. Good luck getting Turkish lira coins at this point. Once you exit into the main airport concourse, you will find ATMs, local desks of Citibank and HSBC, and even a Starbucks in case you urgently need a caffeine fix.

Taxis are the easiest way to get to Grand Hyatt Istanbul where our group is staying. They run on meters, and taxi drivers know enough English to understand where you need to go. However, as a foreigner you might be somehow overcharged or taken on a longer route. A cab fare from Ataturk airport to Taksim takes about 20 minutes without traffic and costs around 50 New Turkish Lira (TRY), or roughly $28. During rush hour both the fare and the length of the trip expand. Taxi rates after midnight and before 6 a.m. are 1.5 times higher.

For those seeking an adventure or traveling on a budget, consider the subway that connects the airport to central Istanbul. Enter the subway station on the lower level of the airport by taking an escalator down to the basement of the main concourse. The subway fare is 1 TRY, or about 60 cents, and does not depend on the distance traveled. A subway ride to Taksim, a trendy neighborhood where we are staying, will take about 45 minutes. The trains are comfortable clean and safe. Expect curious passengers to be staring at you most of the time, and a few brave ones may even ask you some questions. While the subway service is excellent most foreigners prefer taking a taxi.

ATMs and currency exchanges are everywhere in Istanbul. In addition, most merchants – especially at gift shops – will gladly accept American dollars at a slightly lower exchange rate. Exchange offices are much more convenient than banks if you need to change money, and they stay open until at least 7 p.m. Banks close by 5:30 p.m. Keep in mind that some of the Turkish paper bills look alike so pay attention to what you give and what you receive in return. Traveler’s checks are too hard to cash in Turkey. But credit cards are widely accepted, especially at restaurants and bars frequented by Westerners.

Internet access can be spotty at Turkish hotels. Luckily central Istanbul is full of Internet cafes and restaurants with wireless. Several years ago, the municipal government installed free wireless in a few landmark locations. If you are walking along the Istiklal Caddesi the free connection will show up as an option on your device. An online registration will give you three hours of free access per day. If you think you will need a cell phone in Istanbul it’s worth buying a local SIM card. Roaming for American providers will be pricey.