Blasts of horns erupt from the gridlocked streets in Istanbul's Mecidiyeköy neighborhood, a business district crammed with 1970s-era concrete buildings. Men in suits and women in fractured-streets-be-damned stilettos, or, infrequently, headscarves, race through the traffic, trusting some Istanbullu maxim of move fast and you'll probably be fine. At the stoplights, hawkers swarm the cars: sallow-looking adolescents brandishing squeegees, a teenager fanning out cards, a saggy-faced beggar woman knocking pitiably on car windows--everyone's a hustler. The stoplights count down the time drivers must wait: 40 seconds...10 seconds...3 seconds...go. And the drivers step on the gas, the pedestrians leap onto sidewalks, and the city seems to be yanking at its reins.
Here in Mecidiyeköy, inside one of those concrete buildings, is a company that's taken the capitalist ambition of the squeegee boys and ramped it up about a thousand notches. This is no ordinary Turkish business. This is AirTies, a maker of wireless routers started by Bülent Çelebi, a Turkish-born, American-trained entrepreneur who's attempting to create a global company in this unlikely place.
Four years ago, Çelebi was far away from this smog and bustle, sitting on his porch in Palo Alto, California, and thinking about what a global business might entail. He wanted to build routers, given his engineering background, and sell to emerging countries where broadband penetration was low but rising fast. He could use American chips, and manufacture in Asia. But he thought he could gain a real advantage if he based his business in Istanbul.
Turkey, as Çelebi knew even then, doesn't have the vigorous economy of a China or India. Its regulations are onerous; bribery and corruption are common. Yet in Turkey, he could save money on salaries and operations, take advantage of economic incentives, and set up an ideal location for selling to Europe, Africa, and the Middle East. He could bring back American-trained Turkish engineers and institute an American management style: the spirit of Silicon Valley, but with a lower price tag. After writing his business plan on his porch, he packed his bags. And at the end of the school year, his wife quit her law firm, pulled their two boys from their California schools, and joined him in Istanbul. Bülent Çelebi was going all in.
Çelebi knows more than most people do about moving to a different country. When he was 7, his father studied education on a Fulbright scholarship in California. The family returned to Turkey after a year and a half, but his father, seeking better jobs, moved the family to the Bay Area again in 1970, when Bülent was 15. "The first time, I totally lost my Turkish and learned English. And then when I moved back to Turkey, I totally lost English and relearned Turkish. And when we moved back to the States, I essentially had to restart," he says. Having lost contact with most of his Turkish friends and finding it tough to connect with the California kids, he focused on math and science. He found more of a groove at Berkeley, where he majored in electrical engineering and computer science and, on the side, launched Process Control Equipment Co., which he built to $3 million in contracts.
Çelebi met his future wife, a Greek-American named Maria Lianides, in 1985 when she was a junior at Santa Clara. On their first date, she had him translate radical political posters that she'd brought back from a recent trip to Turkey. That spelled romance for him, and he proposed 18 months later. Just after that, National Semiconductor (NYSE:NSM) offered Çelebi a job running its Asian marketing. Maria was planning to start law school that fall, but she deferred, and over two weeks in the summer of 1987 they married and moved to Hong Kong, sight unseen.
In three years, Çelebi took the division from $100 million to $300 million in sales. But the time in Hong Kong was the real reward. It was a melee of different cultures. The Çelebis learned Mandarin, traveled to Malaysia and India, and lived a roaring life among the expats. "We loved it. The people who went there were risk takers; we liked being exposed to different cultures," Bülent says. Back in California, where they'd spend their next 13 years, life seemed slower, more beige.
In part because of their early travels, the Çelebis daydreamed about moving to Turkey; too, Bülent's father felt he owed the country something and hoped one of his sons would return. And, despite the awkwardness of Bülent's teenage years, the Çelebis were fixed on raising their two boys in a different culture. In 2003, when Bülent left his job as CEO of Ubicom, a microprocessor company in Silicon Valley, he and Maria figured it was their chance. "You have to understand and appreciate other cultures and be able to relate to other people," Bülent says. "If you're going to do well, I think you need to be flexible and be able to adapt to many different ways of life and philosophies and values. The world is becoming this big global place."
It's easy to see that globalization is happening. It's manageable to address it in a business plan written from the States. But Çelebi found that the reality of it--trying to bring an American-style start-up to a country where CEOs are expected to pay bribes, where laws aren't obeyed, where most of his employees aren't familiar with the American style of management, and where his family has had to adjust to being immigrants--was more difficult than any business plan could predict.
In his corner office, Çelebi unpacks an AirTies router, his thick peaked eyebrows sitting solemnly on his forehead. At age 51 he talks and listens with an engineer's air of appraisal. When he smiles, though, flashing a boyish gap in his teeth, it's easy to picture him as the child who knocked out the electricity on his block in his hometown, Ankara, while experimenting with a motor.
The router may look simple--white plastic, the size of a book--but it reflects Çelebi's sense of the changing world. His idea is that big router companies don't bother with consumers in emerging countries. Traditionally, routers are made in several steps. A semiconductor company designs and builds the guts of the product. The router company adds technical flourishes and hands the whole thing off to an East Asian manufacturer to be encased in plastic, badged, and packaged for consumers. The product, then, is pretty far removed from the end user. This is fine in large markets because the semiconductor companies pay attention to American consumer preferences. But they have little interest in asking consumers in Cairo what features they'd like. Çelebi thought that if he could create routers that worked in local languages and with local networks, he could sell to small businesses, consumers, and telecom companies in Turkey and in the countries all around it.
With Turkey's young and educated work force and cheap operational costs--along with a location that is ideal for ruling the region, as the Ottomans figured out when they conquered Istanbul in 1453--he knew he'd have a huge advantage. Çelebi pays about a third of what he'd pay in Silicon Valley for comparable employees, and about 70 percent less for other costs such as shipping and printing. (Energy is an exception--gas costs $7 a gallon due to taxes.)
From Istanbul, it's a short flight to Kazakhstan, Greece, and Russia, the first international markets AirTies tackled; next up are Egypt, Bulgaria, Romania, and Ukraine. Çelebi's first requirement for a market is high-quality distributors. Using distributors gives him a single ship-to address and means they, rather then he, have to chase down resellers' payments.
Fittingly, his supply chain is international. He uses American-made chips for the manufacturing of his routers in Taiwanese and Chinese factories. But manufacturers want big orders--he can't request a few Kazakh versions of his router and a few Turkish ones. So the manufacturers ship a nearly complete product to Turkey, where a local contractor uses AirTies programs to customize the software's language and telecom configurations for each region, adds country-specific user guides and setup CDs, and ships them off. Couldn't competitors do the same? "If they worked on it, of course they could," Çelebi says. He's applying for patents to protect the technological specifics, but he assumes competitors will focus on big markets, not Bulgaria.
If the supply chain sounds complex, it's hardly been the most difficult part of establishing AirTies. Çelebi knew business was done differently in Turkey. He didn't quite realize how differently.
Cacophonous and young, the AirTies office is populated with girls wearing T-shirts and skirts and guys wearing turtleneck sweaters and slouchy jeans. And then, just when it seems like a San Jose start-up, an apron-clad woman walks by, balancing a tray that holds porcelain teacups and water glasses on doilied saucers. She is the tea lady, whose sole job is to serve and clear drinks. It's a concession to the established way of doing business in Turkey.
It's one of the only such concessions Çelebi has made. Turkish businesses tend to be family-run, with "a big-man, pasha form of organizing," as Jim Stroup, an American with a consulting business in Istanbul, puts it. Employees take direction, not initiative. When Çelebi discussed his plan for AirTies with expat Turks in the U.S., most thought the idea that he could outrun Turkish traditions, along with government regulations, absurd. "We didn't think starting a business in Turkey was a good idea," says Müjdat Pakkan, a Turkish engineer then living in California. "We thought he was crazy."
But Çelebi thought recruiting American-trained Turkish managers could help create an American-style start-up. Turks have long gone to America for postgraduate degrees and jobs. Especially in the late '90s, when U.S. tech jobs were plentiful and the Turkish economy was spiraling into inflation and a massive recession, it seemed the obvious choice. "At the time I graduated, there weren't good job opportunities here. That was the pull of the United States," says Nurettin Atalay, an AirTies engineer who recently moved to Istanbul from Massachusetts. His return, and the return of a dozen other AirTies employees, suggests an interesting trend: Where America was once the destination for these engineers, visa restrictions and growing economies back home have reduced its appeal.
The $300,000 that got AirTies started came from Silicon Valley investors. Even with American funding and American-trained workers, however, the company didn't easily take on an American spirit. The majority of its employees hadn't worked in America, and Çelebi has to remind them to flout that pasha style, take initiative, and set their own deadlines. He found practical skills differed, too. Accountants in Turkey, for example, learn to prepare--and often fake--books for government taxes, rather than traditional P&L accounting. So AirTies trains accountants to prepare two sets of books--one to satisfy the Turkish tax codes and one that tells Çelebi where he's actually making and losing money.
Even seemingly minor things like paperwork encumber him. Here, he's required to sign his name twice on nearly every sheet of every document he submits to the government--he signs once as himself and once as his company's representative (and then, he usually has to get them notarized). He's also had to hire a driver. "I wouldn't think of hiring a driver in a million years in the U.S., but here, there are documents that have to be delivered right, left, and center," he says. "In the U.S., you'd put things in the mail."
By now, though, other than the excessive number of papers he must sign, Çelebi's approaching his job like a U.S. entrepreneur. During a week in early February, he spent Sunday night setting pricing for a contract bid with Turk Telecom. On Monday, he finalized the proposal and sent his staffers to Ankara to submit it. Tuesday he ran the monthly operations meeting, at which each division reviewed how it was doing against goals and what problems had arisen. Tuesday night he had dinner with AirTies' customs brokerage house. By Wednesday, he'd found out his Turk Telecom bid price was only the second lowest, so he pushed suppliers to lower their prices while lining up other potential suppliers. That night, he ate dinner with his Greek distributors. Thursday he had a board meeting and Friday he met with Turk Telecom.
He's made the company "American" enough to persuade even Pakkan, the onetime naysayer, who joined AirTies' engineering team in 2006. "It was comforting to me that I was going to come here and work for a U.S.-style company," Pakkan says. And though a driver may be waiting outside his office, Çelebi's created an American feeling inside the office, says CFO Okan Karliova, who returned after 12 years in the States. "The culture of the company is, when you step out, you're in Turkey, but inside it's so much the United States." AirTies is earning money American-style, too. The company had just $700,000 in revenue in its first year, 2004. In 2006, it had $24 million, and this year, Çelebi is projecting $50 million.
"Turkey is a shame culture, while America is more of a guilt culture." That's the Çelebis' 14-year-old son, Aydin, discoursing, as he does his homework at the dining-room table, on the different punishment frameworks of the two countries. Timur, Aydin's 10-year-old brother, is bent over the long wooden table, sketching muscles on a formidable red monster. Their amused parents are watching them from the sunken, latte-colored living room, where they're sipping Turkish wine and eating fleshy local olives. The Çelebis' duplex is in a part of town called Etiler, in a complex of new and boxy apartment buildings. The lower floor is serene and open, with glass doors overlooking a small garden; upstairs, the narrow hallway is littered with children's shoes.
Aydin and Timur were just 11 and 7 when the Çelebis moved, young enough, their parents hoped, that they'd learn the language and adjust quickly. But while the notion of having your children grow up bilingual and bicultural is appealing, the reality of it can be startling. The Çelebis thought about putting the kids in English-language schools, but found those schools didn't teach Turkish language or history. "Part of the reason we were moving here was to get them exposed to a different culture," says Bülent. "So we ultimately said, you know what, we're just going to put them into the fire." Maria, who took a year off from her law practice (she's now a partner in a Turkish firm) to help the kids adjust, remembers Aydin's first day at his Turkish-language public school. When she dropped him off, the fifth-graders were lined up outside reciting a pledge to Atatürk, the founder of modern Turkey. As an uncertain Aydin walked toward them, the teacher directed a few boys to befriend him, and the boys engulfed him with the hugging, touchy physical intimacy that's common in Turkey but decidedly not in the U.S. Maria was left watching her discomfited boy from the sidelines.
Now her kids are becoming Turkish, and she's an immigrant mom. Her looks--brown hair, bangs, thin frame--don't mark her as a foreigner. But everything else does. The kids tell her to shush when they approach school--her American accent is embarrassing to them, and when she speaks English it's even more mortifying. And could she please hide that cross necklace? (Almost all of their schoolmates are Muslim; Maria is Greek Orthodox.)
Looking up from his drawing, Timur announces that he's started to think in Turkish more than English. Aydin, having finished his thoughts on the different penal ideologies, is analyzing the Turkish class structure. It's hard to know what part of this is a performance for a stranger and what part innate, but it's even harder to imagine the children developing such cultural awareness in a California suburb.
When the current government of Turkey came to power in 2002, it promised anti-corruption measures and economic development. Part of this was a populist response to the inflation and recession that had dragged Turkey down, and part was a bid for European Union membership. Additionally, Turkey's huge trade deficit--$52 billion last year, more than twice the United States' as a percentage of GDP--makes it obvious the country must encourage homegrown businesses. Change is slow in Turkey, but this government's approach to business is getting good reviews.
The economic development includes several incentive programs, which AirTies is taking advantage of. They start with tax breaks. The government has created economic zones inside technoparks, office buildings where R&D companies can apply for space for their engineers. Once they're approved, as AirTies recently was, they get a 10-year reprieve on corporate income tax for any product developed at the technopark. Additionally, companies don't have to pay payroll taxes on their engineers working at the park; that's about a third of AirTies' 90 employees, and nearly all of its most expensive ones. The government offers low-interest five-year loans on half of start-ups' R&D costs for projects it approves, and outright grants of up to 50 percent of engineering costs, also for approved projects.
All this may make Turkey seem like entrepreneurial heaven, but good ideas get tangled in red tape here. Take the technopark. Companies get a bye on payroll taxes only for the hours the engineers are inside the building, so if they're visiting a customer or just outside smoking, the tax break isn't in effect. Or take the loan, which is available only to a start-up that can get a bank guarantee; if the company could get a bank guarantee, it wouldn't need the loan.
These are irritants, but the programs are a big help. It's other government interference that really hurts. Last summer, a clerical error led to AirTies releasing four boxes of routers without customs paperwork. The government threatened to sue the entire management team--under Turkish law, corporate officers are held personally responsible for tax and liabilities owed to the government. The AirTies lawyers negotiated their way out of it--but $400,000 worth of inventory sat in customs for six months.
Had AirTies bribed the officials, things might have moved more quickly. Corruption in Turkey is still rampant. It's rarely overt, but "people that know us and know them come in and make these vague insinuations," Çelebi says. AirTies ought to hire a specific "consultant" to get a project approved, for example, or pay a "mentor" to get AirTies in to see a potential customer. It's not unheard of for companies to buy cars or lease apartments for government officials. "We still refuse to do it," Çelebi says. "There's no end to it once you start. Plus, it's purely an ethics thing." Many of the bureaucratic requirements, most notably the extraordinary amount of paperwork, are meant to protect against cheating and corruption but end up being absurd Colonel Cathcart-esque exercises.
Which is something Çelebi has been loudly decrying. "I've been pretty direct at conferences, to the point where, when we moved into the technopark, the general management asked me to stop criticizing them," he says, grinning. Because this government is eager to hear from business, Çelebi meets frequently with high-level government officials. "This government is actually doing things, and out of 10 things, they do seven right things and three wrong things. So in the aggregate, it's good," Çelebi says.
Because a successful R&D company is so rare in Turkey, Çelebi is becoming rather usefully prominent. The high-profile transport and telecom minister has visited AirTies' office, and an official recently waved around an AirTies router in parliament. "They know us on a first-name basis and are always supporting us. I could never imagine pulling that type of clout together in the U.S.," Çelebi says. He was also selected as a fellow by Endeavor, an American nonprofit that aids entrepreneurs in emerging countries. Endeavor has connected him with influential board members and $5 million in funding from Turkish businessmen.
As for his future in Turkey, Çelebi's betting the political climate and economy will remain stable. Atatürk enforced a strict secularism in government upon his ascension in 1923, and the country has adhered to it since. Nevertheless, the current government has been advocating a more Islamist stance. Çelebi notes that when a political party pushes religion, the majority of the country pushes back. "Every once in a while, the Islamist government tries to do this little thing or that little thing, there's a big uproar, and it shuts down," he says. "I think Turkey's way beyond that type of a situation." Nevertheless, he's conscious of Turkey's volatility, and has tried to protect himself by diversifying into other markets and by saving money.
"There's a lot of stuff here that still drives me up the wall," Çelebi says. "People don't follow rules; laws are just frivolously broken. But it's all the other stuff. The geographic advantages, the cost advantages, it's a booming market, I have unbelievable access to people. So, yeah, there are negatives. No doubt about it, there are negatives. But the positives far outweigh them." Whatever happens politically, he believes broadband use will continue to grow.
On a warm winter night, the Çelebis leave the kids with instructions to heat up some chicken, and they drive the 20 minutes to the Taksim district, the center of hip Istanbul life. They snag a prime street parking spot off Istiklal Caddesi, the crowded pedestrian thoroughfare, and duck into a dilapidated apartment lobby, crowd into an elevator with slim-hipped twentysomethings speaking Turkish and English and French, and emerge at the top of the building. They have reservations at Istanbul 360, one of the city's chicest restaurants, paneled with floor-to-ceiling glass that offers views of the St. Antoine's belfry just a few feet away. Farther out, across the night-black waters of the Golden Horn, the Topkapi Palace and Blue Mosque stand floodlit and glowing over the city. The menu, too, reflects Istanbul's mix of sophistication and tradition; it offers pastirma, an air-cured Turkish beef, but it's wrapped in a mod-looking wonton. This is one of their favorite spots, and now that Aydin's old enough to babysit, they have weekly dinners à deux at restaurants like this.
Life wasn't always so glamorous. Given the easy adjustment they had to Hong Kong, Maria and Bülent assumed the move to Turkey would be smooth. But in Hong Kong they'd been expats with an American company. Here they were on their own, with the future of Bülent's business shaky. "Sometimes it's better not to know in advance," Maria says. "That first year aged us so much--just not really knowing if it was going to work and saying, did we just make the biggest mistake of our lives?"
Almost three years later, they move fluidly in Istanbul. At their corner table, they order in Turkish--a veal stew for Bülent, duck for Maria, a bottle of Cabernet, and they'll try those pastirma wontons too--and talk. They discuss Hrant Dink, the Turkish journalist who was assassinated a week earlier; they're eager to know if the 50,000-strong mourners reacting to his shooting were covered in the American media. That leads to a discussion of how they try to explain freedom of speech to their friends, arguing that it strengthens a nation rather than threatens its security. (Turkey's Article 301, under which Dink had been convicted, prohibits denigrating Turkey, Turkishness, or the government.) They talk about Turkey's European Union candidacy; whether it joins the EU doesn't matter, they say, but the reforms it must adopt to be considered will bring needed modernization. And they talk about women at work. At her law firm, Maria says, men celebrate the difference between the genders, opening doors and complimenting her and her female colleagues on their dresses. Because the Çelebis are from America, they bring a broad, questioning perspective to Turkey's idiosyncrasies. That same perspective is what lets Bülent see the business opportunities in Turkey, and it's also why he gets so frustrated with the inefficiencies in his new country. He doesn't want Turkey to become America; he moved here for the different culture. He just wants the country to move forward a little faster, to adopt American business practices a little quicker, to strain at its reins a little harder.
Stephanie Clifford is the magazine's senior writer.
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