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Episode 47 / January 12, 2020

Adith Podhar, Gemba Capital

hr min

Episode 47 / January 12, 2020

Adith Podhar, Gemba Capital

hr min
Listen on

 

 

 

#100xEntrepreneur
#Podcast with Adith Podhar, Founding Partner, Gemba Capital

Adith belongs to a typical Marwari family from Mumbai, after completing his MBA from the University of Mumbai, he worked with ICICI Bank handling fundraising for individual investors in Private Equity.

During 2013 to 2017 he also headed Motilal Oswal Private Equity as their Vice President. In June 2017, he finally decided to start his own journey as an Early Stage Investors and started Gemba Capital.

Some of his portfolio companies are myHQ, ClearDekho and HoiFoods.

In this podcast, Adith shares his experience of operating as an Early Stage Investors and his learnings.

Notes –
00:42 – Journey from Typical Marwari family to experiencing different stages in Entrepreneurial Journey and finally becoming a VC
05:11 – Why he started Gemba Capital?
06:48 – How did he develop his Priority Sectors and created his Investment Thesis?
11:40 – Investments, Vision & Thesis in Fintech
13:19 – Difference between companies which have scaled faster compared to others
15:10 – Macro Factors behind Scaling faster and larger for a Company
16:44 – Why is Cashout / CreditLine model becoming a popular product in Fintech?
17:55 – How to crack your Distribution Channels suitable to your Products?
22:04 – Ideal Co-investors
24:20 – Overcoming Challenges and Hardships as a VC
29:57 – Is the Sequoia Surge Programme a Threat to Small/Early Stage VC Firms?
30:52 – Overcoming biases as a VC while Investing
33:22 – Mistakes & Learnings as an Angel Investor

Read the full transcript below

Siddhartha Ahluwalia 00:00

This is Siddhartha Ahluwalia. Welcome to the 100xEntrepreneur podcast. This episode is brought to you by Prime Venture Partners, an early stage VC firm led by Amit Somani, Shripati Acharya and Sanjay Swamy. Prime is often the first institutional investor in category creating tech startups in FinTech, SaaS, healthcare and education such as MoneyTap, Happay and Mfine. To know more about Prime, visit prime.vp.in. Today, I have with me Adith, the managing partner, Gemba capital. It’s an early stage family office, investing in angel rounds in startups. Adith, Welcome to the podcast.

 

Adith Poddar 00:41

Thank you for having me.

 

Siddhartha Ahluwalia 00:43

Would love to know more about your journey right from your graduation days to how you end up becoming a startup investor?

 

Adith Poddar 00:48

Sure. It’s a long journey. So, I try to keep it as brief as possible. So, I’ve been born and brought up in Mumbai, typical business family of Marwadis. So, we’ve always had discussions around businesses in my life on the dining table as well. Somehow, my father because of the struggles he’s seen in life, he wanted me to become a proper salaried person. So, my first job was with ICICI bank, and it was like a training ground for everything. It was amazing. In fact, I was handling international private banking at that time and I’m talking about 2005. And it was what my parents dreamed of. I used to wear a tie, go to the head office, traveling to many countries. So, it was really interesting. I learned a lot there. What we were doing there was raising money for private equity funds in India through our network of HNI relationship managers across wherever ICICI had a presence, whether it’s Europe or Middle East. So, my role was of the product guy. We had a couple of funds raised large amount of capital as well. I visited Japan and Japan had significance impact on me. I came back and I wanted to start something of my own. I was doing well. But I quit. I realized that I cannot be on two boats at the same time. I started a QSR called CrepeArea. Crepes were very popular in Japan and when I went there, I really loved them. Although, they are originally from France. I came back and I’m a foodie and I felt that this is something which I should do. Malls, at that time, were coming up in Bombay. So, I took up some seed capital and that was my first entrepreneurial journey, wherein I started a QSR chain. This was 2007. I ran it for almost four years. We franchised it out. We had, at one point of time, seven outlets in Bombay, two In Pune and a couple in Hyderabad as well. We added a lot of things on the menu and soon, when you started realizing that how difficult it is to scale a QSR business, how to make the Hero product, crepes to become popular, which was not happening. Most of my sales were coming from other products like salads and sandwiches and all. But, being operationally intensive on the ground taught me a lot on how to manage people. I sold it off to one of my franchisees itself in the fourth year and moved to investment banking. I did investment banking for a couple of years and realized that is not my cup of tea. I wanted to be on the buy side and moved to a private equity fund. In private equity fund, I spent almost four and a half years and that’s where my entire investment thesis was developed. Here, I was on the board as an observer for four companies at different stages of their life. One was we exited through to an IPO then there was a listed auto ancillary. The other two were really growing companies. So, I got a taste of life cycles of a company, how things move and what is important at what stage. That was a very good experience. Then, in 2017, after spending four and a half years with the private equity fund, I decided to move on. And that’s where I got into startups and entrepreneurship point to point. And I founded Gemba capital with one of my relatives. The reason behind doing this, if you look at my journey, was I’ve been an entrepreneur, I’ve been an investor, late stage private equity classic investor, I’ve also been an investment banker, so, I’m actually seeing all the three sides of the table, and my passion is talking to young entrepreneurs. I know, I can probably help them as well. I can add value because of what I’ve seen in my experience. And this is the most exciting place to be. If I have 15-20 years of my career left, I want to be somewhere where there is tech enabled businesses. Technology is impacting every common person’s life. People are building brands, businesses platforms, and I would rather be part of their journey, rather than probably invest 200 crores in a 2000 crore company. So that’s why we started Gemba capital.

 

Siddhartha Ahluwalia 05:11

What’s your purpose in life?

 

Adith Poddar 05:14

So, purpose in life is more on the lines of why I started Gemba capital. If I would want to do something, which I love doing, that would automatically translate into happiness. And I think most humans want default state of happiness in their lives. And that’s where I feel that meeting founders, whether I invest or I don’t invest, I hope that usually takes away something from the time they spent with me and if it’s a one hour call, and somewhere I would make a difference in the end. if I’m able to impact positively to three such companies in my lifetime, who have been given jobs to 10,000 employees somewhere I think I’ve done my part and on the way also enjoyed it.

 

Siddhartha Ahluwalia 06:06

and as an early stage investor what’s your check sizes

 

Adith Poddar 06:19

So, we started off with checks as small as 10 lakhs-15 lakhs because we were building our own investment thesis. As we moved ahead, we increased our check sizes. So, being a single family office, we’ve not gone out right now and raised funds and have third party investors or LPs with us. We still prefer 25 lakhs-50 lakhs kind of a check sizes. It will slowly probably increase as well. I think, sweet spot for us is participating in a half a million or a million dollar round with our 25 or $50,000 kind of cheque size.

 

Siddhartha Ahluwalia 06:59

Let’s talk about your portfolio companies and how did you develop specific sector thesis early on in the fund?

 

Adith Poddar 07:06

So, when we started off, we focussed on four to five sectors where we felt that there will be a lot of action happening. One is AgriTech, EdTech, HealthTech, FinTech, ConsumerTech. And these are the areas which we understood. But as we move ahead, we realized that we are a very lean team, me and one of my associates Kamini sits in the Bombay office. So, it would not be possible for us to actually deep dive into five sectors and kind of pull out interesting deal flow. So, we have now over the last few months developed an investment thesis, which we truly believe in. And it’s two fold. One is that we are very keen on the domestic consumption story. And that is something which we would want to see the deal flow in. And why is it because let’s say by 2020-35, we’re expecting 200 million households in India to be earning between 1.5 lakhs to 10 lakhs per annum. So, it’s a huge number, even if you take two or three people per household, it’s almost 500-600 million people. So, lot of the core problems which are still not solved in tier two, tier three cities, those will get solved. Startups need to take up the lead there and the infrastructure is there, whether it’s FinTech, content, distribution, everything. So, that is one area where we will focus on and the second area where we want to focus on is SaaS. We truly believe in the potential of Indian companies building world class products right from India and shipping it globally. We’ve seen the past few SaaS companies doing well, and I see as we move ahead, there will be many unicorns and Pure product tech plays in SaaS, whether it’s vertical SaaS, horizontal SaaS. SaaS enabled marketplace in payments, lending. So, these are two areas that we focused on now. Coming to my portfolio, we’ve made 13 investments, few of the thesis which we’ve had, in terms of our investments show out and these investments, like for example, there’s a company called MyHQ. What they do is that they convert restaurants, lounges, pubs into co-working spaces. Again, it goes with our thesis of the freelancing economy, the unfunded startups, the bottom of the pyramid, lower middle class if you look at the consumption pattern. So, these guys are doing very well. In fact, now there is in second round, which will be at around 7x of our valuations of what we invested around one and a half years ago. Then, there is a company called ClearDekho, which is again into the budget eyewear retail category, which is a huge market in India. There’s only one probably optical store for 70,000 people in India, and India is a blind capital. So, I don’t see anyone in that PR budget category. So, that’s again going along with the team where we were invested. Then, there is a company called Hoi Foods, our cloud kitchens. And we see that trend happening and more and more people are eating out. And there will be large companies who are in this space, because economics and the feasibility is much better than a probably QSR or that so. And there are a lot of interesting areas where you can move them into. So, they are doing well. They are now raising another round at almost 7x of our valuations. Clear Dekho should be closing in few months time which is 5x of our valuations. So, these are all in the same theme if you see of budget, middle class, lower class, low income groups, but large markets. Now you can reach them because of the infrastructure which we have now, whether it is FinTech. These are so many other companies we have invested in, I could probably take to each one of them at some other time.

 

Siddhartha Ahluwalia 11:04

And what’s your thesis regarding FinTech? What are your investments in FinTech?

 

Adith Poddar 11:09

In FinTech, we’ve invested in a company called Karma. And we’ve also now invested in shorted company, which would come under, let’s say financial services. We are looking at the space. Karma, basically, lends to the gig economy workers, salad class people who are earning less than 30,000 rupees per month. A lot of people are targeting these people. But they’re trying to build a book. You can’t build a lending book and that’s why they are giving them one lakh rupees, 50,000, two lakh rupees, but they actually don’t need 50,000 rupees . What they actually need is 5000. (They will say) today, I have my child’s birthday, or some medical emergency, my bright bike broke down, I have some festival in the house, last few days of my month, I have some 5000 rs short, that is what they need. And they have to ask from their friends or from the local moneylender or some store, which is high interest rate. So, what karma does is next to them, obviously does under underwriting. And these kind of models are there in the US and China as well, when it lends to them through WhatsApp within 30 minutes. And then it’s like a line of credit. If you repay back in time, you always have this option to next time also take it. And if you take it three, four times in a year. And it’s like a personal overdraft facility with the bank, probably, is also not given to you on a savings bank account. And you make money because when you ask for a return, it’s your salary when it comes you have to give it back. You can also go B to B to C and connected with the employer as well. But when you ask for the money back, you ask them to pay tape. You don’t really charge a processing fee or an interest rate when you ask them okay, I’ve given you 4000 apiece, how much would you want to give it back? And guys like okay, I’ll give you 400 rupees back and give you five rupees more individual back If you look at the matter, it’s almost 10% per month. And if we’re able to rotate it five times in a year, you’ve recovered your CAC, right. So, and you have a customer for life stickiness. So, these are kind of business models where we are keen on ML side as well on the FinTech.

 

Siddhartha Ahluwalia 13:19

And which companies have accelerated very fast and what has been a difference between those companies and other companies in your portfolio?

 

Adith Poddar 13:27

So, two-three things are very clearly differentiated. One is companies which have operationally very intensive work. They do some takes longer in acceleration. And operational intensity also sometimes creates an entry barrier. It’s so operation intensive , a new founder probably would not want to get into that space. Like for example, so he is operationally intensive as well. But if there’s a tech background strong, you can scale fast, right? So, a pure technical scaled up faster, B2C have scaled up faster than B2B because the sales cycles and the lead time to convert. So, that is again, we know the slower side. But it’s not just about the growth, right? It’s all about a sustainable growth and while you’re growing, what you’re building, right. Even if you’re growing slow, but if you’re building a fantastic product and creating a moat around it, that’s fine. Probably your hockey stick will happen after two years, but it will for sure happen. Right? Rather than just blindly spending too much on the CAC and just growing too fast. So, a founder is to understand for himself what works, what not works, but in the end, it’s the founding team. How fast you can hustle, how aggressive you are, how you’re able to kind of come up with creative solutions, which probably your competitor has not thought about it. If you’re thinking from first principles, you probably will be able to on ground understand customer better and come up with newer ways which has not been an earlier and that gives you a slight edge to grow faster than your company. You might get some insights which others are not. So, these are the key subtle differences between a very, very fast growing company and a normally fast growing company.

 

Siddhartha Ahluwalia 15:11

And among the companies, which have accelerated very fast, what has been the macro factor which has played the market?

 

Adith Poddar 15:21

I’ll give an example again hereSo, cloud kitchen company, which we’ve invested in, they’ve gone really fast. Now, why they’ve been able to grow so fast is because the macro economics of the delivery model, whether it’s swiggy or it’s Uber Eats. So, this is really an ecosystem there, which is creating a demand and people are now more and more eating out. For those the macro economics which are playing a role there, where you’re able to ride on the wave and grow very fast. Similarly, there is a company which is into B2B ecommerce. So, they have been able to grow again very fast because there’s a need for something like that. For example, a small Kirana store or a retailer guy, it’s an Amazon for him he can just order products and the next morning the products are at his place. He doesn’t have to deal 10 different salesmen. He can stock less in terms of quantity wise. So that, he can have more SKUs and you know, everything is on the tech and the POS is integrated so it makes life so easy. So it’s easy to convert because you’re catering to a pressing problem. And now on the macro side, payments are there. UPI is there. There are so many ways to do that. Internet is cheap. Data is cheap. So, all these macros have also played a role in givnig wings to the companies which are in the right place at the right time.

 

Siddhartha Ahluwalia 16:44

Let’s talk about the company which you mentioned is giving 5-10,000 rupees loan. Why is salaries class taking more loans these days?

 

Adith Poddar 16:57

Firstly, it’s not even a loan because it’s like a cash out. The way the product is positioned is, you are working every day. But you’re getting paid on the 30th day. Why it should be? If you work today, you should get paid today. It’s this the cycle where people are used to it that companies do pay at the end of the month. Now, what we’re saying is you take that money earlier, if you want. You want 5000 rupees earlier on the seventh day, you take it. But the moment you get your salary, you give it back. So, it’s more like a product. It’s a financial product, where you’re giving him something in which he gets his own money, which is kind of taking it earlier, and that’s the positioning of the product. And you return it back with some interest. So, it’s not a loan per se, but it is something which is a sachet credit, you could call it, which I felt, is a huge demand in the market.

 

Siddhartha Ahluwalia 17:55

And how has these companies been able to distribute rapidly? What have all insights in which companies will scale fast, what distribution engine they have built?

 

Adith Poddar 18:09

Distribution is a challenge. But the way you need to think about distribution is at what stage what is right for you. So, for example, we have invested in a company, which is an online mattress space. So, it’s a B2C product, which is direct to the consumer. Now, initially, they started off with selling on their own website, and they put it on Amazon. So, they started getting good traction on Amazon and then their own website and then some other websites as well. Now, after a certain point of time, we will probably plateau, because there’s so much you can do when you’re doing a pan India distribution only through online. It will keep on growing. So, that’s where they’ll probably at series A or somewhere series B, they will think, “Okay, let’s look at offline.Let’s probably set up some experience centers or some small pop shops, and then start getting business there as well. The normal digital channels are already always there, but you need to look at it what’s right for your own product. I was talking about prescription eyewear. This is only category where there is no fixed standard sizes. So, everyone started online, even lens got started online, but the returns were as high as 25%. It just doesn’t make sense to do it only online distribution. Immediately, everyone realized when to do normal channel mode, went to offline stores as well. People spend at least 30-40 minutes, get someone along and then buy something because it’s bought twice a year probably. So, every company has realized how it works, what works for them. There is a company which is into content, social media network for vernacular. So, they are basically called Khidki and they are a hyper local network. So, for them the DAUs and MAUs increase all organic. They are doing fun kind of content. So, they will have dialect recognitions for example, if they are in Gujrat and Gurrat has Kathivadi also and Kutchi also and two-three other dialects which are spoken. Now, if you identify yourself from the Kutch region, then the content which you will get is in Kutch which will not be normal Gujarati. So, these are the places on the tech which you need to do and to understand, to kind of grow and reach out and do the right distribution.

 

Siddhartha Ahluwalia 20:34

And which are the markets or say the macro factors that you invested in that didn’t turn out well.

 

Adith Poddar 20:42

I would not say didn’t turn out well, and we invested in a health care at home company, phenomenal market, because it’s a large market, and there’s a need. Everyone wants to reduce their hospitalization cost post the surgery, and even the hospitals want the bed to be emptied because after surgery. The average revenue per bed really reduces so they want a new patient to come in. There is need,in nuclear families, you have someone elderly at home and not well how do you take care of that? So, it was a bet which we took on the macro factors but challenges in that business is that it’s difficult to differentiate even if when you go and buy pharmacies from your a chemist he says, okay, you need a nurse? I will get a nurse for you. the hospitals also probably themselves have some tie ups. So, there have been Portea and few other players in the space. So, I would say this space is large, but operationally intensive, growing is difficult. You cannot just grow really fast. You’re talking about skill, people availability training them ,you’re talking about people’s health out here, we have to be a little cautious. You cannot make as many mistakes as you can probably in other startups right. So, these are the things which impediments, you have to be very cautious. Any market really doesn’t favor you, you have to go out and hustle and do your stuff.

 

Siddhartha Ahluwalia 22:04

And who have been your ideal co-investors or who will be your ideal co-investors?

 

Adith Poddar 22:12

We come early on. We come in the angel rounds, and we’re a small team. So, at any point of time, we can manage five to six companies, it would be humanly not possible for us the way our thesis is to actually get involved and help the founders in building up. We cannot have a portfolio of 30-40 companies. So, we would ideally like to have co- investors who can take the baton from us after series A Series B so that we can again focus on the newer companies which we have to invested in. So, typically guys who can actually participate in further round series A B, C, would be the ideal co-investors for us. Because it just takes off the pressure from us for fundraise. Second is obviously domain experts. So, I would love to have India Quotient investing with me if I’m looking at a Bharat story or a vernacular content story because they understand the space well. We’ll have to have Pi ventures if I’m looking at an AI company, or DSG , if I’m looking at a CPG company, so some of them through their portfolio learned the right ways and right things to do and those are the right co investors for me to kind of participate with.

 

Siddhartha Ahluwalia 23:15

How do you make the deal flow happen for you?

 

Siddhartha Ahluwalia 23:21

The way we do it is, we mostly rely on reference. And we mostly rely on our own thieses and reaching out ourselves. So, we do get deal flow from the platforms like let’s venture or lead angel or AngelList and these platforms but somewhere, if a founder is recommending us some other founder, we would definitely do a call or even meet. So, that is one area. Secondly is we ourselves think that Insurance tech is a space that you should look at or gaming for vernaculars which we should look at. Then, we, proactively, look for startups in these areas, probably who are in stealth mode, and see whether we can reach out to them and give our point of view. And if people to add value probably will participate in the round as well. So, these are two focus areas for us besides the regular deal flow which happens

 

Siddhartha Ahluwalia 24:20

Coming on to a more personal side of yours, what challenges or hardships have you faced, which most of us don’t know about? And what are the learning for the other entrepreneurs for them?

 

Adith Poddar 24:30

So, I have faced a lot of hardships in my first stint as an entrepreneur also when I was working in a private equity fund, but one thing which I can recollect is I was weak in accounts, and I’ll tell you why. So, I’ve done BBA and MBA and then ICICI bank happened, Private Banking, four years of entrepreneurship, two years of investment banking briefly. And then I joined a private equity fund. So, when I joined a private equity fund, the first thing obviously we do is we look at the annual reports, we look at the cash flow statements, balance sheets. And then my team, I had people who are like CA Venkars and who understand day in day out, what every entry on that balance sheet means. And everyone who used to discuss and to assume that everyone would know it. Now as an investor, I should have known it and I was lost. I’m like, how am I going to do this? I don’t know what is this deferred revenue expenditure? What is this? And how does this goodwill accounting happens and how should I whether it’s right or wrong, I actually went into it. I pushed myself hard, worked on weekends, ask silly questions. My colleagues helped me a lot, I asked them how does this work? How does that work? And then over a period of time, I got comfortable with it to that and then I became confident that okay, I can make Cash Flow Statement pretty Fast, pretty quickly. So, it was a need for that particular time for that particular job. I initially struggled but then got it. So, these are the things that help me right now as well. But for everything new I have started it initially five months, six months been a struggle. It’s only the right mindset and attitude which probably can take you through that.

 

Siddhartha Ahluwalia 26:24

And there’s an interesting story where you are not leading a round but circumstances were there that the first check backed out, tell us more about the company and how it’s been doing

 

Adith Poddar 26:35

I’ll not be able to name the company. But, it was interesting because I met the founder at WeWork. So through one of my common friends, he just introduced me and we just got chatting. And we were chatting about, businesses, technology’s role in humanity, his tweets, and how he learned most things about first principle. So, we had some common areas, which we both were interested in. And then he said that my round is almost done and it’s closed. And you know, my check size is too small for the round. And then, somehow what happened is because he felt a comfort level with me, he said, “Okay, why don’t you participate?” I said,” Okay, I’ll participate because I really like what you guys are doing. Let me evaluate it and we had a long one day meeting, we evaluate it thoroughly. And we then said, Yes. The lead investor backed out after a month or two, after we are committed and everything. And along with us, there were other angel investors and other investors. We were not sure whether the company will survive also or not, because if the lead investors backing out, everyone else will also back out. So, at that time, when I spoke to the founder and said what is to be done I believe in you. There’s nothing changed materially. There’s no materially adverse change as the founders are the same, the product is fantastic, you are getting customers day in day out, everything is fine and probably some issue which others should be okay with and this investor has his own reasons we’re not okay with it. I said okay, what is to be done? You want me to lead it? And he said, ‘Yeah, can you lead it? I’m like, I can lead it but my check size is one of the smallest in the entire round. There are other investors who have larger check sizes. He said I don’t think others should have an issue with that. I said,”Cool, let’s do it”. So, because I wanted the round to happen and these guys has struggled, these guys understood what mistakes they have done, they’re willing to rectify it. And we believe in the story, the people and the product. I led around entirely from doing the diligence to the term sheet ,the SHA, SSA, and I’m happy to say that the round closed in fact, after we closes another round of 1CR, which happened in the same year. In the same round, and they were able to raise almost half a million and I think this is where these things give you some kind of satisfaction that you kind of save one company. Now let’s see how it goes from here.

 

Adith Poddar 27:28

That’s an interesting take because suddenly you became the lead and you had to show confidence when others backed out. And typically, among the 13 deals, how many have you led, like you were the first term sheet or the first check?

 

Adith Poddar 29:30

So, this is one company which I mentioned to you about. There is another company where I was the lead on behalf of an angel network, leadAngel. So, I was not leading the round but I had to answer all the angel investor calls, give them out my investment memo and thesis and build some confidence for others. So, I was a lead there as well. So, at our check size, it’s just two companies as of now.

 

Siddhartha Ahluwalia 29:56

And do you feel that Sequoia, is coming in very early like Surge It gives you a stiff competition at the very early stage.

 

Adith Poddar 30:03

No, no, it’s good for us. And I’ll tell you why it’s good for us because I can hand it over to Sequoia. I’m sure all founders understand that doing small checks is an option, not a commitment. There is a difference and for us it’s commitment. And they value that. It is good for us because a lot of my companies who have raised half a million can very well raise, go through Surge program and raise one and a half from them and another 1 million from other investors and again, do a two and a half million round, which is what normally all series A rounds in India. So, it’s just another investor for us. It’s good for the ecosystem.

 

Siddhartha Ahluwalia 30:52

And how do you grow yourself daily or monthly, evaluate yourself as an investor and take measures that grow you?

 

Adith Poddar 31:01

So, there are a lot of biases which investors have to fight. And that is what I constantly try to fight when when I’m evaluating companies. I get higher confidence in something which I know but something which I don’t know, I don’t have any kind of confidence. I would look at both things very differently. So I need to understand what my comfort factor is, what I understand and what I don’t. And then what I should try to understand. So, I do that by reading blogs or building my own kind of thesis, following the right people on Twitter and seeing what the trends are happening, what underlying things are happening in the economy at a macro level as well. And then kind of probably fighting these biases. There was a recent case of one investor who didn’t invest in Flipcart because Sachin wore Chappals for the meeting. So, these are the things that you would not want to probably get into. He would have had probably his own thoughts that the guy is not serious enough or is not probably meticulous enough or whatever. But you need to have a very broad mind, cannot be judgmental at the same time, keep observing, and I observe a lot. I think that’s one area where probably some of the insights can come.

 

Siddhartha Ahluwalia 32:26

And if you were to say a couple of companies really missed investing. What are those companies?

 

Adith Poddar 32:38

So, there’s a company called ShopKirana, we invested in this round, and I think we should have invested earlier. So, I still feel it’s a rocket ship from here as well and there is a good enough upside from here because the market is very large and the guys are really good. But we should have done it earlier. So, this is one area and there are a couple of more. But it’s been two years since we started off. So, I would not say that we have an antiportfolio yet. I’m sure we’ll have it but it will still take a couple of years to for us to realize, this is the company, which we missed, become like really big.

 

Siddhartha Ahluwalia 33:22

And if you could reflect back, what are the mistakes you have made as an angel investor, and how are you learning from them?

 

Adith Poddar 33:31

Sometimes as an angel investor, you write off too early, or you approve too early. That’s a mistake. Because on the face of it, sometimes it might not come across. But underlying it, there is a strong thesis which is building. So, that’s one mistake I have done, a lot of quick rejection sometimes in fact, the quick approval as well. For example, if there is one space, which we have really, really positive about, let’s say vernacular, and then the next deal comes to you and you feel Oh wow, this is good. Because you’ve already made up your mind. So, probably, you’ll have a little bias again because of the space and you fail to evaluate the founder to the level you would have probably or the business model or whatever. So, I think those are the mistakes which many investors do in the end. I think it has to be in depth.

 

Siddhartha Ahluwalia 34:48

And what habits would you attribute to your success?

 

Adith Poddar 34:51

Hunger for knowledge, that curiosity should always be there. Because if it is not there, as an investor you would miss out on a lot of things which are happening around you. So, if there’s anything new which is happening or anything interesting, which is coming up you need to get into it and you need to be able to observe it and then figure it out whether or not this should work. Like, we invested in co-working space MyHQ and co-working is now mainstream. If co-working can be mainstream, why can’t co-living. And it’s not that you think through analogies, you think through first principles. One of the problems millennials are facing are the problems you’re getting in finding a rented house. And wouldn’t you want to probably live in a place where some things are taking care of the housekeeping and has a large community of like minded people who are sitting with you in the evening. You are having an event. There’s no issue of the tenant and stuff like that. Let’s say co-living is a thesis, which we kind of were positive on, because we saw it, we observed it, and then we want to take a bet. And then we invested in a company called StayAbode as well. Now, similarly, why not senior living. Seniors have an issue. They don’t have like minded people. They want friends. They’ve seen so much. Probably, the children are working in some other city and they don’t want to move. Can it be a business? Can you give a high ROI business there? What are the challenges there? So, constantly thinking, constantly evaluating, seeing where problems are still there and not solved? That’s what probably a founder does. And that’s what even an investor should do. So that you get the same place.

 

Siddhartha Ahluwalia 35:28

Was there any point in your life where you felt lost and what helped you to recover from it?

 

Adith Poddar 36:59

One such example was when I just recently joined a private equity fund and I was completely lost because there was a meeting happening and people were making balance sheets, verbally. So that is where I felt lost thinking what’s happening, but I kind of recovered by learning it myself. In my entrepreneurship days as well, when I was running a QSR, there were some events wherein I was completely lost. One such incident happened when I had finalized a location for a central kitchen and it was a good 1500 square feet space. We built out the map, the layout, place where the equipment will come this, where the partitions will come, where the cabins we made, we did the signing, the security deposit was given to the landlady and everything was done, and we also ordered custom specific equipments for the case. But when the interior work was going on, the landlady would come to the place every day to see what’s happening. And so, even if we have a drill a hole for a nail, She would say Why have you done this? Why not this? Why have you done this and she used to scream at my people, what are you guys doing to my place? And then I confronted her that you are aware of what we are doing, everything was crystal clear. But she couldn’t listen and I was like what am I supposed to do? I’m not going to live like this for whatever number of years we will run the business. And I’d already spent like five months in shortlisting this location, in terms of the other things, the location, the licenses, and now to say no to her. And again take 5-6 months to hunt for a new location which will delayed everything. So I had to take a call. And that’s where what helped me was, again, simple, logical first principle thinking that if we can do that, what are the what are the possibilities? And if we don’t continue what is happening and what’s my maximum downside? And what’s the margin of safety? What are the controllable factors or the uncontrollable factors? If this lady is uncontrollable then what is under my control, and then we finally took a call to move to another place, and we lost a lot of money as well. So,this is how I think I tackled it.

 

Siddhartha Ahluwalia 39:35

Thank you so much, Adith, for sharing your life journey, your experiences as an investor and we wish that you grow 100x from here.

 

Adith Poddar 39:42

Thank you so much, Siddhartha. Wish you the same.

 

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