Advantages of Scaling an Operational Marketplace Out of Turkey

Cleanzy is a house cleaning marketplace that started in Turkey and later expanded to Spain, Italy, and the UK. The company raised subsequent rounds of funding and leveraged Turkey as a playground to finetune the strategy.

Tayga was my guest on the 5th episode of Glocal Podcast, where we discussed the advantages of scaling an operational marketplace out of Turkey and their learnings so far. Ever since the podcast, Tayga has raised another round of funding, bringing the total capital invested to $4.5M.

Endless iterations until right market and model

Tayga initially wanted to create a ride-sharing marketplace but then decided to concentrate on home services to move away from the heavy investment needs, avoid regulatory problems and lower the critical mass required to overpass the chicken and egg problem. The asynchronous supply and demand matching requirements in-home services enabled Tayga to create liquidity and process transactions without the need for growing both sides of the marketplace substantially early on.

The Turkish law forced Cleanzy to employ its supply (cleaners) full time or get licensing, and this pushed Tayga to concentrate on house cleaning and become a vertical marketplace. The lack of dominant players in Turkey for all these marketplace models was Tayga’s weapon as he wandered around testing different ideas.

Easy to overcome the chicken and egg problem

The biggest challenge while starting a marketplace is reaching the critical mass that is needed on both sides to match that will lead to a transaction. As demand finds the right supply more often (or vice-a-versa), the marketplace liquidity increases. 

One of the most common ways to overcome this chicken and egg problem is to ensure that one side of the marketplace remains active with external incentives, just like the way Uber paid drivers to keep the app open. As supply is subsidized, the platform pushes extra efforts to grow the demand and fill in the unutilized supply by generating transactions. 

Initially only serving Istanbul, it was easy for Cleanzy to find good quality supply thanks to the high youth unemployment rate and demand flooded in from high-income areas in the city. The company even employed full-time cleaners to ensure high quality and manage supply availability comfortably. When Cleanzy needed more predictable and healthy cash flow, Tayga used his corporate connections for b2b sales and managing demand even got exponentially easier.

Cheap to fail and learn a ton

Low costs in Turkey enable entrepreneurs to test each component on the business model and shift gears more frequently. To leverage this, entrepreneurs do employ continuous mechanisms for rapid tests on technology, business model, marketing activities, marketplace liquidity models, target segments, etc. Embracing this agile mindset, Tayga has continuous to run rapid experiments in Turkey while also scaling business in 4 different countries.

After a series of business model shifts, b2b sales and partnerships, and supply management strategies, Cleanzy’s promising metrics show true product-market fit. Cleanzy has a better NPS score than almost all of its global competitors thanks to all the retention increasing activities, dynamic commission models and incentive programs. 

"We run 10-12 different experiments here each week. Turkey is our playground." - Tayga

Cleanzy is not the oldest or the most invested company in this vertical. But it is the one with the most tests, failures and endless experiments. Turkey’s suitable dynamics and Tayga’s experimental mindset put Cleanzy steps ahead of its competitors.

The team’s agility in execution became Cleanzy’s main weapon as it entered different regions like Italy, Span, and the UK.

Growth mindset and expansion playbook

With its dense population, congested high-income areas and availability of cleaners, Istanbul was a great initiation point for Cleanzy. But Tayga was well-aware of the constraints of the market and had bigger dreams from the start. Analyzing the strengths and weaknesses of Istanbul, Tayga concentrated on 12 cities and evaluated them with the following parameters:

• The unemployment rate (especially for youth) should preferably be medium to high so that it is easier to find high-quality supply from the start.
• The population should at least be a million to ensure high demand enough to reach profitability fast.
• Transportation easiness is critical to increasing liquidity in the marketplace by more matching between supply and demand across the city.
• The minimum hourly wage should be low enough to process more transactions at a lower price point.

Onboard high-quality supply, generate demand to ensure supply satisfaction and work on B2B relations to take the marketplace to the next level.

Getting ahead with technology

A relatively cheaper but high-quality team in Turkey also helps mature technology. Cleanzy aims to outperform its competitors through better matching algorithms, based on cleaning type and distance, incentivization schemes to improve quality and post-job controls. To mitigate circumvention problems and other fraud, Cleanzy developed tracking systems and smart alerts - developing a better backend than its competitors. 

"Everything aside, our core weapon is the team." - Tayga

Customer funded business

Access to capital is still very limited in Turkey. This shallow investment environment pushes companies to become cash-flow positive early on by keeping their customers happy. Something we always advise our portfolio companies: you should always be 6 months away from profitability to be on the safe side.

Perhaps the biggest advantage of the lack of funding is the problem-solving mentality that sits at the center of the company culture. Compared to its highly-funded competitors, Cleanzy puts itself apart by happier customers, analytical approach and high employee retention building a robust culture from the start. 

"I'm sick and tired of the Homejoy example. They took  $40M investment and instead of solving those problems, they just threw money at them and failed..." - Tayga, Cleanzy

Team, Culture, and Vision

Cleanzy was able to keep everyone from the core team since the beginning with an unparalleled employee retention rate. The company's culture, built on metric-focus and agile experiments, is the cornerstone on route to the grand vision.

"We're showing people an alternative way of earning. It is possible to make more money in less time and raise the living standards of cleaners while also making the customer happy. We touch the lives of too many people." - Tayga