How To Get a Job With a Contrarian Investor

I haven’t blogged consistently as much as I would have liked to in the past few weeks. However, as I started writing the answer to a question asked on www.showmedamani.com/ama, it went from a short form answer to a full-blown blog. It was the best trigger to restart my daily blogging habit.

The question asked: How can I learn more about investing? How can I get a job with a marquee investor?

The first question to answer is, who is a marquee investor?

A marquee investor is someone that consistently beats the market over a long period. Anyone that has invested for a living will tell you that beating the market is not easy; therefore, the select few that do, do it by refusing to follow the market. These investors few enter (or exit) investments against market sentiments because they figure out that the market has mispriced a stock, sector, instrument, etc.

Investors that invest against the market sentiments get branded as contrarian investors.  I consider myself to be one too.

I  understand why finance or investment professionals want to learn from contrarian investors, and it isn’t about the money.

Contrarian investors represent something far more significant, the ability to speak up (through their investment decisions) against the majority and – win. At its very core, contrarian investing is the classic underdog favorite story of David vs. Goliath.

It isn’t a surprise many contrarian investors get bombarded with requests for “ability to learn” from them. What is surprising (to me) is how individuals that want to emulate contrarians do it by approaching them conventionally. They send resumes with cover letters praising the portfolio picks, but their resumes and praises get lost in a pile of many deserving candidates.

So how can a candidate stand out?

The biggest challenge for contrarians is to find people that want to challenge the status quo. It takes a lot of guts to develop a contrarian thesis and an even stronger constitution to hold onto that belief. Contrarian strategies look incorrect for a long time before they look correct, and a contrarian can lose employees, friends, family, and investors by holding onto that belief.

Michael Burry’s predicament in The Big Short is an excellent example of how lonely (and frustrating) it can be as a contrarian holding onto their predictions.

Therefore If a candidate wants to showcase that they can think, act, and hold onto contrarian views, it shouldn’t it reflect in their attempt to seek a job?

Here is an exciting approach that I thought of (and could work on me, possibly):

  • Study your target investor’s thesis and learn how they pick their investments.
  • Try to find the next investment that would excite your target.
  • Prepare an in-depth investment recommendation note for your target.
  • Your note should highlight your ability to research, analyze, model, and recommend.
  • But it should showcase your nonconformist approach to investing, the ability to find information where no one is looking.
  • Most importantly, it should put it on display that you do not think about where the ball is right now, you think about where the ball is going to be.
  • Send that note to your target with a detailed cover letter explaining why you chose the investment you did and how you went about your process.
  • If you have gone a step ahead to tie up the investment for them too – major brownie points.
  • Most importantly: do not ask your target for a job or an opportunity to work with them. Just ask them for feedback on your investment note.

This approach requires effort. However, if one wants to run ahead of the crowd, like Usain Bolt, they must practice harder than everyone else too.

My Funding Picks For Last Week (W29)

Every Monday, I sit with my team to review the funding activity of the previous week. From that list, I pick out three companies that I would have loved to invest in or find founders that are doing similar things. Click here to know about my rationale behind this weekly exercise.

It has been several weeks since our ecosystem breached the 2 deals/day average with 17 startups raising $106 million last week. The bear market rally in the global stock markets has increased investor’s liquidity positions, and many are looking for options outside of the listed spaces. Founders must start thinking about how to make deals while the running is hot!

Out of the 17 deals, 16 were in the early-stage rounds (compared to 10 last week), which made the cut for my weekly analysis. After sifting through the news (aggregated from Tracxn, Inc42, and YourStory), I pick these three as my favorite funding news from last week!

 

Name: GigIndia

Amount Raised: $975k from Incubate Fund India, Beyond Next Ventures, S. Ramadorai, Ravi Nigam, Sakshi Gudwani, Shantanu, Kiran, & Shashank Deshpande, and Dr. Pratap

What does GigIndia do?

Edited from Tracxn: GigIndia is an online student network and micro-jobs platform. Users can get paid by completing micro-jobs called gigs for companies like writing a blog, designing a logo, or completing a survey. Students can also search for internships, perform tasks, and get hired after evaluation. GigIndia also offers a platform for students to connect with mentors and learn about various career opportunities.

Why do I like GigIndia?

With several parts of our country going through fresh lockdowns, the days of WFO (Working From Office) are a dream that is far from materialization. Companies, big or small (Indian or global), are looking for ways to cut fixed costs and rationalize spending through a project or task-specific costs. This new paradigm is where a GigIndia type platform comes in. In contrast, one could argue that there are several competitors like Fiverr, TaskRabbit, etc. I like GigIndia’s problem-specific solutions for businesses, like marketing, operations, sales, recruiting, and others. They aid businesses in breaking down a complex task into smaller gigs and then help owners manage them.

An interesting approach that we might try out for ourselves and our startups!

 

Name: Decentro

Amount Raised: Undisclosed from Y Combinator, Plug and Play, Upsparks, and other notable angel investors from the Indian and APAC community.

What does Decentro do?

Edited from Tracxn: Decentro provides open banking API solutions to banks and financial institutions. It offers APIs for KYC & onboarding, AML & compliance, digital lending, online payments, and more. It enables banks to build products such as neo banks, lending platforms, finance management, and more.

Why do I like Decentro?

I am a fan of open banking APIs as I have previously liked YAP and an early investor in Karza. Therefore, Decentro is on this list as I believe that Indian banking is not only broken; it is holding Indian businesses back.

Must I explain more why I am interested in platforms that solve this broken experience? 🙃 

 

Name: Zomentum

Amount Raised: $4.1m from Accel and SAIF Partners

What does Zomentum do?

Edited from Tracxn: Zomentum provides client relationship and sales process management software. It allows users to design and process sales process, retain them, and improve client relationships. It enables users to manage personalized reminders, set metrics and track performance of the teams, and share leads with other teams. Other features include sales funnel management, catalog management, branding, and identity management.

Why do I like Zomentum?

At Artha, we use Pipedrive and Salesforce to manage our sales processes. It does an excellent job for us, except that we must pay a lot of third parties to automate our sales processes. These addons significantly increase our monthly bills, and we must monitor the addons for errors, especially if the APIs are updated.

While I haven’t had a chance to test drive Zomentum (yet), I like their fully integrated approach. If it reduces my monthly costs and my operational overhead – I’ll switch!

My Funding Picks For Last Week (W28)

Every Monday, I sit with my team to review the funding activity of the previous week. From that list, I pick out three companies that I would have loved to invest in or find founders that are doing similar things. Click here to know about my rationale behind this weekly exercise.

 

For the past several weeks, the ecosystem is plateauing at barely double-digit transactions per week with 10 startups raising $36 million (amounts raised for the last 4 weeks: $65m, $31m, $27m, $92m). Early-stage investors have clinched their purses due to the lack of cool-down in valuations despite a marked tempering in funding interest. How can founders fix that? Stay tuned for my post on the subject next week.

Out of the 10 deals, 8 were in the early-stage rounds (compared to 11 last week), which made the cut for my weekly analysis. After sifting through the news (aggregated from Tracxn, Inc42, and YourStory), I pick these three as my favorite funding news from last week!

 

Name: BRB Chips

Amount Raised: $1m from Secocha Ventures, Globvestor, First Cheque, Kashyap Deorah and Vijay Sivaram

What do BRB Chips do?

Edited from Tracxn: They are a brand of extruded snacks offering chips as a snack.

Why do I like BRB Chips?

There is a lot of branded packets food plays, and while there’s no defensibility to vacuum fried chips, the list of entrepreneurs that decided to start this venture is impressive. The co-founder’s credentials include ex-Bira co-founder, ex-Forbidden Foods co-founder, ex-Coca-Cola, and ex-Schlumberger. As this team raised a significant amount of startup capital, I believe they can build an alternative snacking brand that would fold into a larger FMCG player. The key will be meticulously managing working capital and judiciously investing venture capital.

 

Name: Bold Care

Amount Raised: Undisclosed from Rajesh Ranavat, Abhishek Shah, Kabir Kochhar, and Mohit Satyanand.

What does Bold Care do?

Edited from Tracxn: Provider of an online doctor consultation platform for sexual health

Why do I like Bold Care?

I met a prominent Silicon Valley angel investor last year who increased my interest in the men’s sexual healthcare space. It’s a significantly taboo subject in India, but on average, about 5% of men above the age of 40 have erectile dysfunction. Many quacks (read: hakims) and online platforms sell glorified multi-vitamin tablets in the name of cures. Whether a company like Bold Care can get the sexual health conversation started could be a differentiator. Combining a thoughtful content strategy with the right product mix would reap great rewards from India’s untapped market.

 

Name: Inspekt Labs

Amount Raised: Undisclosed from Rajesh Ranavat, Abhishek Shah, Kabir Kochhar, and Mohit Satyanand.

What does Inspekt Labs do?

Edited from Tracxn: Inspekt Labs provides AI-based solutions for a car damage assessment. It provides an AI/ machine learning API that automates the car assessment. It offers solutions like damage detection, text detection, claims assessment, and fraud detection.

Why do I like Inspekt Labs?

Due to the way their technology works, they can quickly identify errors and emissions with a (claimed) 98% accuracy rate. I see a big space for this technology in insurance, product QA, to name a few. As their algorithms improve with more data collection, there could be future applications in food packaging and warranty repairs. I am especially thrilled to find an Indian startup come up with Indian deeptech with commercial applications. Their growth will only be accelerated by companies looking for new solutions due to the restrictions enforced upon them in the post-pandemic world.

 

I have purposefully left out Piggyride’s ₹3.50 crores raise from Artha Venture Fund last week (round led by JAFCO). However, you can find out Why We Invested in Piggy Ride.

My Funding Picks For Last Week (W27)

Every Monday, I sit with my team to review the funding activity of the previous week. From that list, I pick out three companies that I would have loved to invest in or find founders that are doing similar things. Click here to know about my rationale behind this weekly exercise.

 

As we enter the final days of unlocking v1.0, VCs are starting to loosen their tightly guarded pockets. As an ecosystem, we are continually maintaining the 2 deals a day average, but this time 14 startups raised $65 million – double the amount of moolah raised last week!

Out of the 14 deals, 11 were in the early-stage rounds (compared to 11 last week), which made the cut for my weekly analysis. After sifting through the news (aggregated from Tracxn, Inc42, and YourStory), I pick these two as my favorite funding news from last week!

 

Name: Bombay Play

Amount Raised: $1.5m from Leo Capital and Ramakant Sharma

What does Bombay Play do?

Edited from Traxcn: Bombay Play is a game development company specializing in casino games. Some of the games developed by the company are Card Party, Pokemon Tower Battle, and Twenty Nine. Bombay Play develops games for Android and iOS platforms and generates revenue through advertisements and in-app purchases.

Why do I like Bombay Play?

The COVID lockdown provided the gaming sector with the right ingredients for massive user growth. Low-cost internet access at a reasonable speed and people stuck at home with little to no avenue for social interactions. Therefore simple games that do can work on inexpensive devices with minimal processing speeds can rule the roost. It isn’t a surprise that Ludo King has seen their MAUs break the 1.5m barrier!

I have learned a lot about the gaming sector through my investment in Rolocule Games and Kabaddi Adda. But I am confident that social distancing norms will cause permanent changes in user behavior, encouraging more virtual social behavior. If I am right, gaming companies like Bombay Play will be laughing their way to the bank!

 

Name: NextBillionAI

Amount Raised: $7m from Lightspeed Venture and Falcon Edge.

 

What does NextBillionAI do?

Edited from Traxcn: Nextbillion.ai offers a wide range of AI-powered hyperlocal solutions, from business mapping to data management.

Why do I like NextBillionAI?

NextBillion.ai is a company that aggregates data from the half a billion Indians who have gone digital over the last 5 years. As of December 2019, India has 450mn smartphone users, so there’s a lot of data getting collected. NextBillion.ai is trying to make sense of all that data providing actionable data for businesses.

Flashback Friday: Triggero

Triggero was an enterprise rewards and recognition services platform. Triggero worked on a SAAS model and was a provider of an enterprise social recognition platform designed to encourage the culture of appreciation. The company’s enterprise social recognition platform was easy to use. A powerful workflow engine that helped in employer could be custom moduled and self-managed, enabling leaders to drive culture and manage change in the organization.

 

Triggero was instrumental in creating a productive & motivated workforce, energize sales & distribution eco-system. Triggero had partnered with some of the prominent organizations across industries like Telecom, BPO, BFSI, White Goods & IT.

 

Founder: Paras Arora & Abhishek Singh Total funding raised USD 75,000/-
2020 status: Shutdown Number of rounds 1
Co-investors: Mumbai Angels

 

Why did you invest in Triggero?

Triggero was a powerful B2B SaaS platform in the HRMS space, looking at creating a rewards and recognition platform for in-house employees. One must remember that Triggero predated the entry of  Yammer, Slack, or Microsoft Teams in India, platforms that most of us have made an integral part of our work lives today.

Triggero also provided managers the ability to reward employees by giving them points that could get redeemed at the Triggero store for gifts. It was a unique offering.

 

What were the risks involved with the investment in Triggero?

I know now (but I did not know when I made this investment) that rewards & recognitions platforms make the best sense for companies that house large teams managed by a well-established HR department. Therefore selling to medium to larger-sized companies carried its own set of risks like:

  1. Long-tail sales cycles
  2. Larger budgets to hire experienced B2B sales reps
  3. They are competing against legacy systems and high switchover costs.

In 2012 employee rewards and recognition were unknown. Even employees associated HR with Holidays and Rangoli,’ and business owners looked at HR as a cost center. Therefore, I realize (now) that Triggero was probably too early for the Indian market. The company should have raised a much larger round of funding to buy itself time, which unfortunately at the time (and possibly even today) was not available.

 

What was the primary reason behind dead pooling Triggero’s investment?

There were a couple of factors that affected this decision. Triggero lost a major client shortly after we put in the first tranche of investment. The company started to hemorrhage money due to the loss of revenues. This investment also enlightened me on the considerable time lag between billed revenues and banked revenues in a post-paid B2B revenue model.

The founders’ plans to scale fast took a severe hit, and they could not afford the capacity that they had acquired to build their platform. Considering all the issues that the company faced, it did not make sense to continue investing in the company, and I wrote off the investment.

 

What mistakes did Triggero make, and what was your learning as an investor?

Triggero’s biggest mistake was that they tried achieving B2C growth as a B2B company. Therefore, instead of waiting for purchase orders to build development and delivery capacity, they made capacity and then tried chasing sales – a dangerously desperate situation that any B2B founder should not find themselves in. Therefore, a lot of the expenses got frontloaded before revenues flowed in.

Secondly, I firmly believe that they didn’t raise enough capital. Triggero’s angel round did not give them enough runway to experiment, and (with the benefits afforded to me by hindsight), the founders and the angels should have decided against investing the money. Instead, we could have waited until Triggero could raise a more substantial round to give Triggero the runway to become a significant player.

Third I learned the importance of tranche-based investing. It is an essential method of risk mitigation for early-stage investors in cases where the venture doesn’t go down the desired path.

 

Would you invest in a similar startup today?

I believe that the world has moved on from R&R platforms, and Triggero would have a tough time finding a niche in the corporate domains where Slack, Teams, WhatsApp, and Yammer dominate communications.

It had the potential to be an Indian version of Yammer (that Yammer/Microsoft could eventually acquire), but alas, we did not get the required scale and adoption.

 

V37.002

Flashback Friday: BookMyCab (Live Minds Solutions)

BookMyCab is an on-demand taxi service with options to rent metered city taxis as well as from their own fleet of cabs. Their taxis are equipped with real-time tracking technology to ensure complete passenger safety. They follow a stringent process of recruitment of taxi drivers and taxis. They also own exclusive rights to advertise on the taxis, i.e., on doors, and inside the taxis.

 

BookMyCab was founded in 2012 in Mumbai and operated with taxi licenses from state governments and approved taxi drivers only. They acquired CabOnClick, a Hyderabad based online taxi booking provider in Nov 2014.

 

Founder: Avinash Chandra Gupta Total funding raised USD 910,000
2020 status: Acquired by Wings Travel Management Number of rounds 2
Co-investors: Yournest, Centerac Technologies, Mumbai Angels

 

Why did you invest in BookMyCab?

It might be hard to remember, but hailing cabs in 2012 was a challenge, especially if you wanted to travel a short distance. BookMyCab offered mobility solutions to a growing target audience of people using smartphones and provided additional income for taxi drivers. The taxi drivers preferred long-range rides since they make more money on those, whereas getting a cab for 2-3 km was quite the task for the consumer. Their platform enabled taxi drivers to find passengers without having to stand in line and wait. Consumers could book a cab which would pick them up, an idea which is standard today. Investing in BookMyCab at the time was a no-brainer since they solved problems for both markets.

 

 

What was your competitive analysis for BookMyCab? As per reports, Ola had already raised 4 Million US dollars from Tiger Global when you invested in BookMyCab.

The most significant moat that BookMyCab had was being the licensed booking service for Mumbai. While Ola was utilizing tourist taxis for local travel (technically not allowed at the time), BookMyCab got the local ‘kali peeli’ taxis, licensed by the RTO. The license gave them a considerable competitive advantage in 2012, before the loosening of regulations that allowed Ola and Uber to expand aggressively. While the other platforms were working in a grey area, I thought this competitive advantage would be critical in fighting off the competition. BookMyCab had a fleet of close to 100,000 taxis they could onboard very quickly. In contrast, the competition had to spend copious amounts of capital to acquire drivers and give massive bonuses to keep them sticky.

 

What did you like about Avinash? Did his IIT Mumbai tag play a significant role in the selection?

More than the IIT tag (I’m not much of a believer in tags), what excited me about working with Avinash was that he was willing to get into the nitty-gritty. He was a part of Financial Technologies with Jignesh Shah, so he had a history of working in intrapreneurial positions. Convincing cab drivers to accept digital cash as payment was a big deal. I appreciated that he was willing to get his hands dirty.

 

The taxi market in cities like Mumbai and Kolkata is still fragmented (Yellow taxi in Kolkata and Kali peeli in Mumbai). Would you invest in a similar startup today if they are looking to consolidate the pending fragmented market?

Consumer preferences have changed today, and there already clear market leaders in this category. People would prefer to either book an Uber or an Ola due to the standardization of services, timely drivers, the cars are in better condition, and well, air conditioning. I wouldn’t change my decision to back BookMyCab in the past, but today, the market is very different from what it was in 2012. The cream-of-the-crop drivers are already on competitor platforms like Ola and Uber. By the way, both platforms also let you book kali peelis.

 

What were your learnings from your investment in BookMyCab?

Whenever you invest in an early-stage startup, they must become a market leader to cement their position. 80% of the investment, visibility, and revenue goes to the top two market leaders. Here are the learnings from my investment with BookMyCab:

  1. Push them to be more aggressive in acquiring drivers. This is not to say that Avinash was not aggressive; I should have encouraged him to be more aggressive.
  2. Early on, I focussed more on growth over profitability.
  3. Not to depend on permits as a competitive advantage. I had (too much) faith that the government would protect the license, and the competition operating in grey areas would ultimately be shut down. Public good consistently trumps legislation. I applied this learning in our investment in LenDenClub, which is doing exceptionally well.
  4. I learned a harsh lesson when Ola offered to acquire us, but the board declined the offer. Ola’s offer value grew by almost 15x over the next 2-3 years. If I had taken the deal, BookMyCab would be the biggest winner in our portfolio, but the lesson was learned. Therefore, if consolidation cements the number one position, then take the offer.

My Funding Picks For Last Week (W25)

Every Monday, I sit with my team to review the funding activity of the previous week. From that list, I pick out three companies that I would have loved to invest in or find founders that are doing similar things. Click here to know about my rationale behind this weekly exercise.

 

While the funds raised by India’s startup ecosystem (barring Jio) fell, it was heartening to note that we continued to maintain 2 deals per day average with 13 startups raising $27 million. Out of the 13 deals, 10 were in the early-stage (compared to 13 last week) rounds, which made the cut for my weekly analysis.

After sifting through the news (aggregated from Tracxn, Inc42, and YourStory), I pick out these three as my favorite funding news from last week!

 

Name: Myelin Foundry

Amount Raised: Undisclosed from Pratithi

What does Myelin Foundry do?

Edited from Traxcn: Myelin Foundry is a video distribution solution provider. It helps to deliver ultra HD zero-rebuffering streaming, on any network and reduce the time and cost to market and deliver AI-powered content.

Why do I like Myelin Foundry?

At first look, Myelin reminded of Pied Piper from the show Silicon Valley. However, after checking out their products page, I am very excited about the tech stack that Myelin is attempting to build. If they can stream HD content through EDGE network – it could be a game-changer!

 

Name: Ameliorate Biotech

Amount Raised: ₹2cr from Friends of PadUp, Villgro USA, Vinners, LetsVenture, SINE IIT Bombay, and DERBI

What does Ameliorate Biotech do?

Edited from Traxcn: Ameliorate Biotech develops recombinant therapeutic proteins and diagnostic kits. They have developed their technology to produce a recombinant protein in an antibiotic-free process. They are developing biosimilar products for treating oncology, Autoimmune disease, ophthalmology, and nephrology.

Why do I like Ameliorate Biotech?

I am not a fan of biotech startups because of the long development cycle and high mortality rates of these companies. However, I like the experience the team of Dr. Rashbehari Tunga & Dr. Binit Tunga has in this field, and I’d want them to succeed.

 

Name: YoloBus

Amount Raised: $3.3M from Nexus Venture Partners and India Quotient

What does YoloBus do?

Edited from Tracxn: YoloBus is an online platform for travelers that provides intercity bus services. Travelers can select their route, choose pickup/destination, enter travel date & make bookings via the app by making an online payment. Their app is available for iOS & Android devices.

Why do I like YoloBus?

This one deserves another mention as I had shortlisted this deal in February 2020. Intercity travel must start once again, and I expect domestic tourism to boom first. However, the quality will trump cost when it comes to matters of health, and YoloBus has a great chance to capitalize on this new trend!