I Wish I Knews - Before Deciding On The Startup Idea

This post is a reply to a list of questions I've been asked by a friend of mine, due to his research.


I Wish I Knew Before I Decided To Launch Vanilya Club

Since it is now very clear that the main business value proposition behind Vanilya Club is not so strong, my reply to this question is: I wish I were much more experienced on valuating, assessing and detecting the weaknesses and strengths of a business idea. 



The Idea Comes First - Not The Team

In entrepreneurial talks, it is generally said that the more important element between the idea and the team, is the team because even if the idea is bad, a good team can change the idea and move on. In my experience, this is not always or even mostly true. I've seen many average teams that work on shiny ideas that became very successful, very fast; meanwhile, I've seen many brilliant teams that work on troublesome ideas that could not survive. So what you are trying to do is much more important that how you are trying to do it. If what you are trying to achieve or implement makes sense in terms of business, you will somehow learn the correct ways of doing it.

So do not trust in yourself or the wonderful team you have build, focus on the idea first.

Pivoting is very hard. Much harder than it sounds if you have an ongoing business (your startup, your customers, your suppliers...) You have to be damn lucky to make a good pivot. (Unless you have enough capital to terminate everything by burning your seed investment)


The Greatest Components of A Successful Business - and why beauty box subscription model is not a good business idea in Turkey

Scale - Scale Fast

The greatest problem behind Vanilya Club is that the business is very hard to scale and even more importantly scale fast. For the business to grow, we needed both the supply and demand to scale; and even more scale in accordance/together. A good business idea should not have anything in front of it that stops it growing / growing fast.

Cost Of Scaling

Another scaling problem is the incremental cost of it. While the business grows, are the problems also growing or lessening? Think of an online marketplace: the greatest problem of a marketplace is that when it is small, people are not interested so much because they will most probably not find what they are looking for. However if the marketplace is bigger, the matching of supply and demand is easier and hence it works better. And the incremental cost of growing is negligible. Vanilya Club's cost of scaling was very frightening due to the reasons below:

• need of incremental capital (keep inventory)
• operation is getting harder (many different beauty profiles, in terms of skin type, hair type etc..)
• brand relations are getting harder to maintain (so much more brands that conflict with each other)

In short, nothing scales well and moreover scale comes with its incremental cost.

The Market Size and Market Fragmentation

Among the biggest mistakes I've made was the fact that I did not think / consider so much about the market size. Even worse, I did not have any idea about the market's formation: is it dominated my a few companies or is it very fragmented? Even even worse: I did not have any idea which is better.

• High-end beauty market in Turkey is relatively very small compared to US and European countries. 
• Annual spending per user is very low. 
• Moreover internet penetration of beauty consumer products' market is lower that other consumer products' market. 
• If a market is small, the focus of companies is by far on sales. Marketing department / responsible may even not exist in most of the companies. 
• The beauty market in Turkey is not fragmented. A few big companies holds 80-90% of the market. Not well fragmented markets are not suitable at all for new ideas and startups. Startups need small companies that are looking for great new ways of doing business. Big companies are not interested in early stage ideas & businesses. So in an not sufficiently fragmented market, a startup will find harder a place to co-operate and develop its product.

Vanilya Club was an online marketing solution for high-end beauty brands in Turkey. What a mismatch !



The Conclusion: A Startup

• should focus on a great idea that solves a real problem
• should target a very big and fragmented market
• should be able to scale fast and efficiently