Potential financial return: If the investment can yield a good return, then it’s worth investing in. The projections must also be reasonable based on proven assumptions? What’s the exit strategy? Especially when it concerns strategic sales given that only a handful of businesses have attractive IPOs. Facebook is a good example. It grew at such a rapid rate and dominated an industry where the return was inevitable. The investors were happy and went home smiling.
As part of our series about “5 Things I Need To See Before Making A VC Investment” I had the pleasure of interviewing Mohit Tater.
Blackbook Investments founder Mohit Tater strived to become THE investor, he wished everyone had access to. Specialising in cash flow businesses, Mohit buys and runs several websites and blogs and over the past 8 years, he has built a seven figure portfolio.
Mohit isn’t just about the sale — his goal is to bring people and opportunities together and help build successful businesses. He puts a team in place for each already successful business that he buys, and collects the income, whilst watching it grow. Through his extensive knowledge and experience of flipping websites, Mohit can help you earn whilst you learn, and gain a higher return by investing in online businesses and digital assets. From 4, to 7 figures, Mohit and his team have scaled up various sized businesses, and will help you build your profile both quickly, and robustly.
Investors that faithfully invested in Mohit and his websites at the beginning, are still with him, and are continually building their digital profiles, showcasing the trust that they have in Black Book Investments, and digital assets in general.
Mohit believes that digital investments are the future, and we are just at the beginning of this digital journey. Blackbook Investments has the advantage of being an early adopter. Cash flow businesses will replace retirement packages, with many already turning to digital investments to fund their lifestyles, and Blackbooks are right there to help them financially grow.
Thank you so much for joining us in this interview series! Before we dig in, our readers would like to get to know you a bit. Can you please share with us the “backstory” behind what brought you to this specific career path?
I’m excited to be here. My backstory is that I have always been passionate about investing and entrepreneurship, even before I knew a thing about them. When I was a child, I was fascinated by TV commercials, especially when they were from a known brand, but I loved the thought of being an entrepreneur and starting businesses from scratch. It’s been an interesting journey since. Interestingly, this adventure of mine has been fuelled by two important questions that help in my daily quest for success: what options do I have to work on something new, and does it allow me to drive change?
Is there a particular book that made a significant impact on you? Can you share a story or explain why it resonated with you so much?
Leadership has remained the most evergreen topic in the business space. Yet, it’s a difficult topic to master. Every year, different authors publish new books to keep the subject fresh, and bring their varied perspectives to the target audience.
The varying thoughts range from the musings of theorists to some of the most thorough research volumes from students of Churchill and Lincoln, and more.
Leadership is a broad subject. Learning to Lead: The Journey to Leading Yourself, Leading Others, and Leading an Organization by Ron Williams and Karl Weber has been particularly poignant for me, and has redefined what I knew about leadership.
Ron Williams shines a greater light on Leadership. As a child, Ron grew up in segregated Chicago and navigated through life to become a top healthcare executive, and also served as the CEO of Aetna. In this book, Williams made it clear upfront that Learning to Lead isn’t ideal for executives wanting to climb even higher; it’s best suited for readers starting their careers — especially those that are struggling to get on the right path to leadership. Some of the lessons that Williams shared range from broad and philosophical (“Don’t allow other people define who you are, what you can become, or what you can accomplish”) to more focused and practical (“Seek out jobs in sectors that are growing”); he goes a step further to illustrate his point by sharing stories of high adventure in healthcare, a field that nearly grew 50% during his tenure.
Do you have a favorite “Life Lesson Quote”? Do you have a story about how that was relevant in your life or your work?
Most people go through life living in regrets and dwelling on the negative things of the past. It can be quite frustrating to shake off what has held you back and move forward to attain your goals.
But as long as you’re stuck to the negative baggage from yesterday, it’s going to hinder you from achieving any milestone. It takes courage and consistency to win the battles of life.
Here’s my favorite life lesson quote:
“Courage is the most important of all the virtues because without courage, you can’t practice any other virtue consistently.” ― Maya Angelou
How do you define “Leadership”? Can you explain what you mean or give an example?
There’s a popular saying that “without leadership, all other business elements lie dormant.” On one hand, a true leader can help a company scale and maximize productivity and achieve business objectives. On the other hand, weak leadership can be a dead-end to any organization. It can hinder productivity and put the health of the business in jeopardy.
I define Leadership based on the style I use the most to lead my team:
Leadership is all about coaching others to identify your vision and work towards bringing it to fruition. My leadership style is about directing my team to achieve the vision. Through coaching, I sell an idea and vision to my team. I do my best to communicate the objectives, build excitement, motivate and get members ‘powered’ up for the assignment.
How have you used your success to bring goodness to the world?
The little things we do can make a world of difference in our communities and beyond. Community development has been my ultimate pursuit, hence, I served as an advisor to a community development corporation, which gives me the chance to serve low-income people from the various stratum of society.
Ok, thank you for that. Let’s now jump to the main part of our discussion. The United States is currently facing a very important self-reckoning about race, diversity, equality and inclusion. This is of course a huge topic. But briefly, can you share a few things that need to be done on a broader societal level to expand VC opportunities for women, minorities, and people of color?
It’s now obvious that the venture capital community must have an effect on both the investment team and General Partner profile to bring onboard more women and some minorities. This is the easiest way for funders to identify with, and be ready to attract diverse founders. White males currently dominate the venture capital community. Essentially, it’s our responsibility to encourage the limited partner community that fosters venture capital companies to keep driving their diversity goals and bring more colleagues with diverse orientations and backgrounds when making investment decisions. It’s paramount for investors to reconsider their recruiting approach, how they train, and their strategy for retaining this pool of talent that we often overlook.
Some organizations such as AllRaise and Women-in-VC are working hard daily to leave a lasting impact on promoting VC opportunities. SWAT Equity Partners is one of such organizations that is playing a key role in this respect.
Can you share a story with us about your most successful Angel or VC investment? What was its lesson?
We’ve recorded tremendous growth with our angel investments. I thought I should point out a couple of steps we take to achieve success. First, we channel a lot of effort into the due process that encapsulates the branding, operating, and finance aspects of expertise with the investment team.
We also take ample of steps to identify how a company’s product or service offering can stand the test of time; its differentiation, and how much value it delivers on a larger scale. We also like to pay close attention to the company’s financials because we understand that early discipline when it comes to sales, margins, and investments can cause an organization to attain profitability earlier and reduce its dependency on future capital raises.
Secondly, developing strong leadership skills is essential. We’re excited to discuss the achievements and challenges founders are juggling within a rapidly evolving environment and how we can help throughout the process. A key lesson we’ve learned and had to repeat to ourselves daily is staying disciplined around our due diligence and team assessment activities.
Can you share a story of an Angel or VC funding failure of yours? What was its lesson?
Failure is inevitable. It can be failure after multiple Angel Rounds and Failure after Angel and VC Rounds. We can identify some reasons why there can be negative impacts on a company’s growth trajectory and how it raises more capital.
One of these reasons is constantly chasing sales opportunities without having an understanding of the profitability of the account or the channel in question. For instance, when a retailer asks you to launch and you discover there’s significant margin and inventory risk that may affect the entire company.
The second reason is acting sluggish when it comes to investing in roles that will support the team to achieve high growth. Although there’s a balance to managing a company’s growth, when we invest in a startup, especially at the early stages, we strongly believe the founder has a responsibility to invest and harness the potential in people to unlock growth opportunities.
Can you share a story with us about a problem that one of your portfolio companies encountered and how you helped to correct the problem? We’d love to hear the details and what its lesson was.
Truly, funding is critical for driving the economy, improving technology, recruiting the right team, and launching a complete marketing strategy to capture an aspect of the market. Sadly, sourcing enough money to start your new venture can be quite challenging, and impossible sometimes.
As entrepreneurs, we’re not immune to challenges while seeking the funds. It’s tougher when you realize you have an assignment to convince investors that your idea is a solid investment.
One of our portfolio companies faced the problem of scalability.
Creating a scalable business model is key. But we didn’t realize that on time. It doesn’t matter what you’re hoping to achieve — whether you’re getting a loan or going for a round of venture capital, a scalable business model is vital. Investors take scalable business models seriously and will only fund this type of business. Ensure that your business model has the potential to increase the revenue with minimal expenses as the months and years go by.
It’s critical to build a business model that can be replicated; don’t rely on using your competitor’s model. This business model should be able to support growth goals in your company. Staying competitive is key here, as it allows you to approach from a different angle.
Bluestone, for example, an online Jewelry startup from India attempted to compete with the traditional brick and mortar jewelry business market. The eCommerce brand focused on a made-to-order business model to avoid managing an expensive inventory. They sought investment opportunities to develop a world-class facility and supply chain that could allow them to design online orders in real-time.
Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that story?
Yes, I have regretted not investing in several companies. After looking at companies that did extremely well, taking action to invest was rather difficult. We failed to follow up at a later stage, for various reasons. Funny enough, 95% of these companies you passed will look elsewhere for funding.
I once met the founders of a bag brand that employs a disruptive manufacturing angle. The brand also had a clear sustainable edge and creativity in their supply chain. Although I was fascinated by the nascent business model, I couldn’t invest at the time because the company was too early in its development, and we were running to raise our first fund. Needless to say, the bag brand became a huge success. The brand didn’t fit our scope at the time, considering our minimum revenue threshold. I have no regrets but I’d be happy to have some flexibility to make smaller investments in the future.
Super. Here is the main question of this interview. What are your “5 things I need to see before making a VC investment” and why. Please share a story or example for each.
– Potential to dominate a high-potential industry: VCs are happy to see ventures with huge growth potential. When a venture dominates an emerging industry, it’s a thing of joy as more money will be made. Ventures that fail to dominate usually fall by the wayside. For example, Google dominated other search engines including Bing and Ask Jeeves. Facebook and Instagram beat MySpace to the game.
If you look closely, you’ll agree with me that the majority of VC successes have been recorded in emerging industries or an emerging trend. That’s why it’s hard to make a successful VC investment without one of these. Some examples include Cisco (telecom), Intel (semiconductor), Cisco (telecom), Google and eBay (Internet 1.0), Facebook (Internet 2.0), Microsoft and Apple (PCs), Genentech (biotech), Uber, etc.
– Entrepreneur Aha: In the past, it was all “management, management, management.” This simply means that effective management builds businesses and bad ones destroy them. To practice this system, a lot of VCs replace entrepreneurs with professional CEOs.
In my analysis of entrepreneurs running million dollar companies, I found that entrepreneurs can be inspired and trained to build big businesses with reduced needs without resorting to VC. This will enable them to control their venture and keep their wealth. The major concern is whether the entrepreneurs have the right skills or are willing to learn. Some real-life examples: Michael Dell partnered with a mentor who assisted him in leading Dell. The famous Page and Brin also partnered with Schmidt to develop Google.
– Strategy Aha: A closer look at the startups that had a “first-mover” product (i.e., product Aha) have been overtaken by businesses and entrepreneurs with a smarter strategy that lets them dominate the emerging industry. Some examples are Jobs, Dell, Gates, Zuckerberg, and Walmart. Kalanick embraced innovation on his own business model and navigated through the model of renting cars to building a cab business without cabs. A venture that relies on technology needs high-potential technology with strong intellectual property rights.
– Emerging industry or emerging trend: The majority of VC success can be traced to emerging industries or an emerging trend. Making a successful VC is difficult without one of these. Some examples include Genentech (biotech), Cisco (telecom), Google and eBay (Internet 1.0), Intel (semiconductor), Microsoft and Apple (PCs), and Facebook, Uber, etc. (Internet 2.0).
– Potential financial return: If the investment can yield a good return, then it’s worth investing in. The projections must also be reasonable based on proven assumptions? What’s the exit strategy? Especially when it concerns strategic sales given that only a handful of businesses have attractive IPOs. Facebook is a good example. It grew at such a rapid rate and dominated an industry where the return was inevitable. The investors were happy and went home smiling.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
If I could inspire a movement that would make the most impact on people, it would be educating and empowering children to achieve their potentials, manage their emotions and feelings, and become the best they can be. I’d develop programs focused on inspiring and teaching children how to manage their feelings and emotions. The major focus will be on cultivating empathy, understanding kindness at a tender age, mindfulness. Kills will be able to get support, feel comfortable, and coordinate the inner thoughts of being different vs. being bullied.
We are very blessed that some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might see this. 🙂
Naval Ravikant: An amazing leader and CEO of AngelList. He’s one of the smartest investors and entrepreneurs in Silicon Valley. He taught himself how to leverage blogging to grow his venture, and founded AngelList, a social network for investors and startups. I like his leadership approach of directing and building a responsive team to actualize his vision.
This was really meaningful! Thank you so much for your time.