The a16z Show - a16z Podcast: Layering Tech and Culture in Iran

Episode Date: June 30, 2015

In this special international edition of the a16z Podcast, Nazanin Daneshvar, co-founder and CEO of Takhfifan, the "Groupon of Iran", shares her experiences and broader observations about the startup ecosystem and tech infrastructure in Iran with guest interviewer Christopher Schroeder (former entrepreneur, D.C. investor, and author of Startup Rising). How did she do it? (Hint: With a bit of subterfuge and clever cloaking.)What are the attitudes toward failure in a time and place where startups aren't really considered a real thing? This is the second installment in a special series on tech startups in Iran, part of a larger theme around global tech and how software -- including mobile -- is eating the world … and creating new opportunities within it. Stay Updated:Find a16z on YouTube: YouTubeFind a16z on XFind a16z on LinkedInListen to the a16z Show on SpotifyListen to the a16z Show on Apple PodcastsFollow our host: https://twitter.com/eriktorenberg Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

So hi, everyone. Welcome to the A6 and Z podcast. I'm Sonal and I'm here today with a very special edition of the A6 and Z podcast International. We have two special guests. One of our guests is Nazanin Daneshvir, who runs a web-based startup in Iran called Takfifan. And our other guest is Christopher Schroeder, who wrote a really interesting book last year called Startup Rising. And he can describe more about his background and she'll describe more about her background as they talk to each other about what it's like to do startups. internationally and particularly in Iran. You know, the book Startup Rising is a departure for me because I have been an internet entrepreneur. I've run three companies. I'm a venture capitalist now, mostly American-based. But I've been spending a fair amount of time in emerging growth markets and fundamentally seeing how ubiquitous access to technology is just changing societies everywhere, bottom up. And Startup Rising is about the Arab world of all things. And I can tell you most Americans watching CNN or on Vox or whatever they're using, do not see a hopeful version.

of the Middle East. And I think that most Americans think of Iran, they still think Argo. And the fact is, in many respects, what I've seen in Iran has just been an amazing group of talented young people with outstanding engineering capability and outstanding access to technology. We just never hear about it. We never see it at all. So the people that are mainly outside of Iran, they really have this feeling, okay, because of all these sanctions being pushed, like to Iran. Iranian generation. They're really far behind of what's going on in the world, but the reality is different and the young generations are like constantly looking at the West, they're constantly

looking at what's happening in America and Europe. They're trying to adapt themselves. I'm not saying in Indonesia. I'm the founder of Taftbufant.com, which is the biggest and the most popular group buying website of Iran. I had experience like working in an IT and development teams as a team leader in London and Germany and then I decided to move back to Iran around four years ago. Before Taffmikman, I did have another startup that was online grocery shopping and then that one failed and the main reason was about like the delivery and logistic issue. So by that time I promised to myself I'm not going to get into another business model that involves logistics because in Iran the logistics is not still these days is not developed as it

should be. We started as two people and now we are basically having more than one million customers and we are operating in seven cities and we have grown to 60 people. I love the story of how you started this company. Could you tell a little bit just your perspective because I'd say half the entrepreneurs I met were women. I mean and certainly half of the engineering graduates every year are women. So basically my story slightly goes back to my childhood because we were just like my dad just two daughters and he never had his son. So he was always expecting us, I mean, especially me, to act as an older son. My dad was just like, okay, look, you have to go and work for yourself. And that was the starting point that I started working for different companies. Like,

I remember the first that I went to work because the manager was just shouting at somebody else in the office. I started shivering. I came back and I started crying. I was just like, no, this is not my thing. I'm not going to go back to work. And then I moved to London and then started as a technical team leader later on in Germany. And then when I moved back, I was 26 years old. There was no like word like called startup or anything. Still lots of them think like we are like 60 over 60 people, I mean people sitting in our office.

They think like I'm doing the whole work from our home because they think like it's a website for them. Static website is exactly like another e-commerce website. So I started like approaching different merchants. etc, to try to make a deal. And I remember, like, I was put up, like, I got this meeting from a marketing manager of a massive governmental place in here.

And then I'd go in, and then I explained my idea. And then the girl was just so excited and interested. The only question that he asked was just like, where is your manager? Just don't waste my time. Go and come back with your manager. And I was just like, I am the manager. I just came home and I was just like,

Dad, I have no idea what this girl was talking at. And it was just like, hallelujah, you know. This is Iran. You can't, you know, the thing just doesn't work, like how they work in Europe. So how it happened was just like, I started going to the meetings with my dad. And then I was introducing him. It was a manager of one of the biggest power plants around Terra. And so he was taking time off, just coming with me, just pretending that he's the manager of the company.

And so he was just like, oh, yeah, we started this company. And there we go. She's going to explain it. So the rest of the meeting was in my hand. And that was actually the success point that we started making proper deals because otherwise nobody was listening to me. His job was literally a peer in the meeting. He didn't spend time talking in the meeting. Yeah, yeah, yeah.

No, he was just sitting there and just listening to me. And I was just explaining the whole idea. And then we just, okay, goodbye, finish. Like, when we registered the company because of the issues, like, I put his name as the CEO of the companies because they were checking the registrar of the company. And then they didn't want to see a moment just sitting there. So my dad's still like the official CEO of the company, although he's never present in the company anymore. Now when I talk about it just sounds funny and crazy as well,

but I remember with those years, I really was offended. I mean, constantly. Yeah, I had to change all my mentality towards being a woman, especially being young. It's amazing to me that what you've accomplished, and obviously it's still relatively early days, not as soon, but can you just tell me how much you think the ecosystem has evolved? When I came back to Iran, nobody even knew the startup world.

I mean, in the IT section especially, I mean, there was just like they didn't have a clue. Nobody had a clue. And I think the whole change is just started around a year and a half, two years ago, that then these events started appearing like startup events. And then the universities started picking up an entrepreneurship, especially in IT and e-commerce section. The number of like universities that have added the entrepreneurship field as a field as a field at the university is just incredible. Now pretty much all the universities have that,

but by those years, I mean, just one of the universities had the entrepreneurship for studying for people. And I think, like, through the last year and a half or two years, all these events, like, started giving people the idea, like whether the startup men, like they're missing lots of the points, which is not complete in the ecosystem, including, like, proper investment, including proper mentorship, etc. These are another things that are still there.

I'm hoping that in the next couple of years, we can really go through the whole thing and get it properly done. One of the things that surprised me is that there were over 31 government-backed incubators and accelerators with some pretty interesting technology. And I know one of the questions I always have and other people from the United States is going to have is about government and rule of law and how easy is it for companies to actually succeed. Can you talk a little bit about that and how that's changing? Yeah, well, I mean, to be honest, one of the interesting points that everybody asked me, they were just saying,

have you ever had any issues from government or whatsoever? And I'm really so happy that basically through the last couple of years, we didn't have the smallest issue from those guys. They have always been maybe not fully understanding that all ecosystem and startup needs, which they are starting to understand. I'm not saying it was easy, but we didn't. have any barrier or any problem, you know, placing from the government side to start a company. I was incredibly impressed a year ago in talking to actually an ICT information communication technology minister that, one, tremendous investment is being put in the infrastructure. So last year, he told me $4 billion was spent in tech infrastructure.

They're going to spend $25 billion over the next two to three years. a year ago when I was there, there was barely any 3G, 4G, even though people had access to smart devices and Wi-Fi. This year, it sounds like there are 20 million subscribers to 3G, 4G. He talked about e-health as a huge initiative. He talked about ending plastic going from debit cards to mobile payments. I mean, none of this I think people in America hear about it all. Was he just telling me what I want to hear, or are you really seeing this? No, that's absolutely true.

I mean, the fact that has happened, like, I mean, they have launched 3G on one of the operators and 4G and LTE and the other operator. And so now pretty much all the mobile phones in Iran can have the possibility to access 3G, and it's super, super cheap. So you pay $3 a month and you have a pretty good access to 3G, which I'm always using, you know?

It's incredible. And I mean, my speed on my mobile phone is pretty much the same and I'm in Germany, like on my mobile phone and I'm having 3G. Has this connectivity had a huge impact on your business in the last year? Initially, when we started our own company, we had this online payment, like ATM payment and cash and delivery as our payment method. I'm basically quite delighted to say that, like last year, the number of cash and delivery orders were so low that we just canceled the whole payment method.

So now we don't do any more cash and delivery. It's just online payment plus, like, card payment, ATM payments. And I think like the number of people growing having access to ATSL, that our market is also growing. Obviously, we still have some issues of the trust, which we are hoping that the government is going to add with them at some point. So, Nazan, one of the things that I hear when I come back to America, and this is true,

by the way, from emerging markets from Southeast Asia to Latin America to the Arab world to Turkey and now Iran, people think that startups are like exceptions. that there are a handful of very smart, well-educated young people who are doing this and it's on the margins. That is the same story about us. So wherever I go, the people are just saying, oh, wow, you've made it. You're such a story this.

I'm just like, look, hold on a second. Then my difference with you was just like I had this courage that four years ago I dropped my super well-paid job in Germany. I moved back and I just gave it a chance, you know. I had a long talk at an entire university over the failure story, in the faith conference. And we just said, come on. I mean, today is the day that you should really, you know,

give it a chance. Otherwise, you're going to regret the rest of your life if I would have done it. So the main thing that I'm getting from the people in here is still like they are not. Because as I said, the whole ecosystem is not completely. So you don't know if you're going to get like a proper investment. If you quit your job, how it's going to work, or incubators, accelerators, they are just getting into a place. So as I mentioned, I think it is evolving and the things are getting in the right place.

But people are still scared and looking at, they're just like, oh, wow, these guys were like kind of superstar, but obviously the reality is just like we have just been a normal people, just taking a bit more part. And that's it. You know, I've seen this across emerging markets, certainly in the Arab world, but in Iran as well, that failure is necessary in entrepreneurship. We all know this. We all live it every day. It's one of the great competitive advantages, frankly, of America and Silicon Valley that you can brush yourself off and get to the new one. I have a sense, now seeing that failure is not really as accepted in the culture. Maybe I'm wrong, because I actually am seeing it changing among the new generation around the world. But can you just talk about the cultural challenges to failure and is it changing in the ecosystem in Iran? Success is like a process. It's not going to happen overnight.

So the people with the bird is success, if they haven't experienced any failures. But the fact is, like, obviously it was not accepted initially. Like, I remember when I was fed in my first startup, I mean, my parents were much more depressed than me because they told such a big thing for me, but it wasn't really because I came over, like, in improvement. So I think that is definitely an us to really explain to people that even if they fail, they are on the path to be successful. And that's something that I always ask my colleagues and all the other, you know, company owners and entrepreneurs that really make it clear to people that you have paid as well.

It's not like you've been successful suddenly over a night and there you go. And the others have already failed. Success breeds success. Like 10 years ago, who would have said that Alibaba would be the most successful tech startup in the world coming from China? And now there are, you know, a hundred of them. And I suspect that that might happen in Iran too, no? Yeah, surely. That's absolutely what I think as well. I mean, if I would have said, like, I would have thought, like, the first that we start, sometimes we look at it with my sister. I mean, the first office that we started was 40 square meters that I paid off from, like, my savings from Germany. And now we are sitting at the 600 square meter office, like, four floors, like, completely all, like, people. And then sometimes we look at the pictures from that time that we were just, like, running around. We didn't have a clue about what's going on. So, I mean, if somebody would have us, us by that year, I would have just, like, said, no, that's just going to be a joke.

It's we are not going to get there, you know. Do you see people from around the world trying to engage early and around startups now? Yeah, there are already, like, lots of Europeans that have visited our office. They have been in Tehran. There are some of them already in Tehran. They have offices. I even heard, like, from a very famous company that I cannot name one of their top managers, the American was already here, like a couple of weeks ago.

Some of them have already done some expats. have already done some investments. So lots of people are actually moving back, looking at the market, and the other ones that are, I mean, they know the opportunity that have already started investment and they're breaking in the market in here. So I've heard a lot about the Ibridge's gathering, which is one of the largest gatherings of Iranian startups and the rest of the world. Obviously, it's been held in Berlin because you can't host it in America.

And the press has given it great coverage. I'd dine to hear what it was really like on the ground. How was it this time? We were just three companies from Iran, including us and two other massive giant, like, 20-year-old software companies from Iran. So we were the only ones from the web section. And how many people attended the gathering outright? It was planned for 2,000 people. So I'm assuming that it was around $1,500, something like that.

Mostly Europeans? Or where were the rest of the people from, for the most part? Oh, they were like Belgians, like Germans, and that was very interesting. like Grunda Zena probably you know that. And they were asking me in an interview like, why there are so many Germans in here? Like, rocket internet VC fund was there.

Everybody was there, basically. The fact is there are two groups of people, you know, and they're Americans. You know, Americans are sanctions. So they are always running around. They are looking at the companies. They're talking to them, etc. But the fact is when it comes to the real serious story, they're just like, oops, sorry,

you know, we are Americans. We have to wait whatsoever. And then Europeans, they are not sanctioned, so they just need to get a permission. I'll tell you, one of the biggest things that I've conveyed both to... Christopher? I think we'll last now. His connection, I think, is the one that's the worst, ironically. Hi, Christopher. I think one of the most important things we have to point out here is that she gets better Skype

from Iran than I'm getting from northeast United States. That's sort of a metaphor for this entire conversation, I think. So, you know, I tell Americans here that you guys have 65% broadband penetration, which compares favorably to America, 72% or whatever it is. Like so many great emerging markets, 120% mobile access, meaning people have more than one SIM card. You know, smartphones everywhere. You know, iPhones are illegal and there are over 6 million iPhones there.

I mean, we really have trouble appreciating the meaning of this. And they think that even if you have technology, you're restricted. So can you explain to me why everyone I meet has Facebook and Twitter and everybody sees what everyone else in the world sees? How does that even work? Facebook advertisement is closed for Iranians like Google AdWords as well. But the fact that people here are having the full access to Twitter, to Facebook, and Facebook is blocked by the government as well, but we are going through the VPN. So everybody is connecting through that.

So that is just like I was just checking my Twitter before basically the whole call to start. So you're pretty much all the time, like having full access to all the social media. I love that I met with an economic minister who publicly said, publicly said on this trip that everyone uses Twitter and Facebook. And we think shortly this will be very helpful for businesses to reach consumers going forward in Iran. I mean, who would have thought that? Absolutely. It amazes me how across the region and in Iran, maybe even more so, I find more women entrepreneurs than I. I find in Silicon Valley. Do you think that this is actually a means in this country, that there's

going to be a way that they're going to sort of bypass old strictures to really engage, you know, in very powerful ways in the future of Iran? I think that is definitely one of the ways, you know. I always sell like to the women. Like if we had to work in a factory, it would have been much more difficult for us. But with the IT and e-commerce business, it's at least you can, you know, you can sit in your office, you can like concentrate, do IT work. And it doesn't. doesn't have really that much of a hassle that you would have if you were working at some other kind of businesses. I mean, that is still a bit of a shame because, like, women are still, like, although the graduation rate is quite high at the university, but they are not a serious, like, positions or serious entrepreneurship companies yet, but hopefully this would change.

As I said, because of the rate of the female graduates from university, I think over a year, when this concept and the whole startup story really, you know, gets into the ground. Like, the women are really going to be a big mover in Iran as they are in the other fields, I mean, excluding IT. You and I are going to meet Nazanin five years from now. I want you to dream for me what the Iranian ecosystem is going to look like. What do you think it's going to look like? Well, I mean, to be honest, I can already see, like, we are going to be at a super competitive

market, like that the whole idea. Like, I remember from Berlin, time, when I was looking at. living there. There are still cafes that we were like sitting there and we're just like, don't talk about your idea so loudly. They're all entrepreneurs sitting all around. They're going to steal your idea and then the investors were listening, etc. So I think definitely we are going to get to the same stage in Iran as well. I mean, and that's not probably even in five years. I can't thank you enough for that. I mean, it was wonderful meeting you in Tehran and to see you and all your colleagues doing what you're doing. You make me very hopeful for the future and the new

generation there. So wonderful to spend time with you. Okay, so thank you for covering all the stories and like basically taking this crazy market out there so people can really see, you know, what's going on in this like in this country. So that's, that's pretty amazing for me. I mean, that's the biggest interesting thing that, you know, I could have dreamed about. Thank you very much.