Ep710: Mohit Tater – You Don’t Know What You’re Getting Into Until You Are in It

Andrew Stotz 00:02
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning. In our community we know that to win an investing you must take risk but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives. Join me go to my worst investment ever.com and sign up for our free weekly become a better investor newsletter where I share how to reduce risk and create grow and protect your wealth. Fellow risk takers this is your worst podcast host Andrew Stotz from a Stotz Academy, and I'm here with featured guests, Mohit Tater. Mohit, are you ready to join the mission? I am yeah, I'm excited to be here.

Mohit Tater 00:47
Yeah, happy to be here. Thanks for having me.

Andrew Stotz 00:49
Yes. And I'm glad to have you on and it's been fun already talking about some stuff. So I think we're gonna have some fun let me introduce you to the audience. Mohit is a serial entrepreneur, investor and consultant. He founded black book investments and quickly became a recognized expert investor in online businesses and digital assets. Mohit has extensive experience in SEO, content marketing, social media marketing and conversion rate optimisation. He has worked closely with brands such as eBay group on Microsoft, Nokia, and many more on their digital marketing strategies. Today, Mohit lives his passion as an investor growing online businesses for himself and his client, Mohit, take a minute, and tell us about the unique value you're bringing to this wonderful world.

Mohit Tater 01:36
Thank you for the fabulous interaction. And you can describe it better than anyone else, I think. So yeah, I am more than from India, from a city called Jodhpur salt About the Blue City, I run a company called Black Brook investments. It's a micro private equity company through which we buy and operate and grow a portfolio of online businesses. And we do this for ourselves our own portfolios and our clients portfolio. So we do this as a service for investors. Also, we offer online businesses as an investment class to people which hardly, you know, five or six people in the world that I know do that. People do it on their own for themselves, but they don't do it as a service to other investors. So that's our unique proposition, we help you it make it easy. We democratize investments in websites and online businesses, so that you can, you know, rest assured and be totally hands off and reap the benefits of this amazing asset class.

Andrew Stotz 02:36
It's fascinating. I mean, that's a very interesting model. And one of the things that I I tell young people these days is that if I was in your, in your shoes, as a young person coming out of university, I would study Facebook ads, Google ads, Twitter ads, LinkedIn ads, because it is so damn hard to find somebody that can really deliver on, you know, advertising on these things. And if you therefore consolidate a bunch of businesses that are online that need these, it's like, you get a higher level of economies of scale that you can spend and really focus on that stuff. Let me ask you, the question in that is, are you really getting actively involved with these companies? Are you focusing mainly on helping them get financing? Are you focusing on how do you grow their sales? Or what do you what what's your involvement,

Mohit Tater 03:31
we buy them outright, we don't invest in them, we buy them outright. And we take over the everything operations, marketing, sales, everything, and our team, we have about 25 to 30 people full time, they basically take over the operations and start, you know, running and managing the business from there on standby out, basically. And we buy companies valued at about from starting from $100,000 to about $2 million.

Andrew Stotz 03:58
And how do you value a company like that? Is it like looking at the revenue, they're making the profit? Or how do you think about that type of business? Yeah,

Mohit Tater 04:05
it's mostly it's mostly a multiple of the sellers, discretionary earnings are multiples of the beta. We buy anywhere from three to 4x of the EBIT, da.

Andrew Stotz 04:14
And what let's just imagine that my audience has some people that have their websites, and they're making some money on those things. And they're getting up to the point where, you know, they're in your space, what is it that you would look for to say, our ideal customer, our ideal acquisition is x.

Mohit Tater 04:33
First of all, it should not be made to sell. We try and avoid, you know, businesses that are made to sell. We want, you know, businesses that have been started by their founders because of their passion, because they had extensive knowledge in that subject or area. And they wanted to share that with the word, though they did not specifically start, you know, with the aim to sell it, but now maybe they've outgrown it or maybe they don't have the time or maybe they need to rethink Export buying houses or something. So these should be, you know, individual LED businesses, not, you know, created and made by a company to be sold. That's one thing. And the topic should be within our area of expertise. We cover a wide array of topics, because we are writers and you know, experts on pretty much a lot of topics, but it should not be an obscure topic that we cannot get expert score, because to continue running the business, we would need expertise in that particular area. So these are some of the to push and also it should be growing. We don't like to buy declining businesses, I don't fancy turning around things. I'd rather buy a rocketship and strap myself to it. The growing businesses should have history for three to four years at least of revenue. They've been around for four or five years, if not more solid, seller, solid, you know, individual who's selling them and not created for the purpose of selling.

Andrew Stotz 05:58
And then you buy it outright, are you keeping the founder involved or you get the founder out.

Mohit Tater 06:05
So more recently, we have been keeping the founder involved with the bigger deals, let's say happen in dollars and above, we tried to buy 80% equity and keep the founder and a half the founder KEEP 20% OR 25%, for which they get a fourth and dividends quarterly dividends per share. And they also help us out with the ongoing growth tactics and marketing not like full time, but they give us a support like a mentor. And our team, you know, got the

Andrew Stotz 06:32
legwork. And what is your team's skills like some teams are really good at like the operational stuff. Others are great at selling others are great at you know, how do we massively increase this? Or what would you say is your main addition that you bring to it once you buy it?

Mohit Tater 06:50
Yeah, our team's expertise is content marketing, basically, SEO and content marketing. We come in, and we have experts, expert writers, expert editors, we have content managers. And then basically, their job is to make sure that the content machine continues. And we only put high quality content, we hire expert writers, whatever needs that is we don't do not hire generalist. So if it's let's say a content website, we'd make sure that we have expert writers in that niche for that we pay top dollar for good quality content. So you know, that is what my team's expertise where my team's expertise lies, because as for the sales part, there is not much we have to do because for these content, businesses, sales come in when people find our website, through Google. And then they read the review of a product and they go to Amazon to buy that product, we make a commission out of it, or they read an article on our site, and we get paid by the ads, like from the ad company. So it's not ACTIVE SELLING involved, and what are selling that is involved, right, take care of that, because I think I'm good at sales, my team's expertise to run and manage and grow content based businesses with content marketing expertise.

Andrew Stotz 08:04
And since I've got a Content Marketing Expert online, I'm Kent, you gotta gotta ask the question like, how is artificial intelligence going to impact content, marketing or content in general on, you know, on the internet,

Mohit Tater 08:20
I think my two cents on that would be the short version is that generate content, which has been regurgitated from other articles and, you know, compiling to know your article is going to suffer various original content is going to be, you know, more valued now, because there's less of that, there's more demand for that. So if let's say you're an expert in archery, and I have an archery blog, so only you can give me the insights from your years of experience, and you can write about that. And AI only would use that to come up with their own article. So AI needs original content to work on, basically. And that original content is going to be valued more and more and generic content is going to be devalued point four orbignya. So I think AI is going to reward high quality content, whereas it's going to be detrimental to generate content. So there's nothing to be afraid of, because we only do high quality content. I think it's going to augment our efforts and only be a benefit and a boon in the long run. I'm not like you know, I'm actually positive.

Andrew Stotz 09:20
When I look at AI, I start to worry that there's a lot of people in the middle class, let's say that are making money out of things that are potentially going to get done by AI. And I think about that. But I also know that you know, over the last three months, since chat GBT, since I learned about it, I literally use it every single day. And I'm not using it to come up with original content. I'm using it to kind of get structure some outlines, think about things. I use it as an editor. So I write something and I usually have an editor. That's pretty good. But now I just basically go make this flow better grammatically, or something like that. And it's amazing how much It's helping me. And so I see the value of but I also see that what's going to become more and more important is the unique value that you bring to the content. And so, for instance, in my case, I have a coffee factory. And when I teach finance and accounting, I go to the factory. And I say, here's a picture of a green coffee bean that is a raw material. And we're going to put it in this machine. And that is a fixed asset. And I realized that like that is the personalization that I can add to my content that nobody else is going to do. And it isn't, it's not going to get flooded. Hit, there's 50 People saying come to the factory to learn accounting. Oh, wait, what?

Mohit Tater 10:43
Yeah, no one does that. Exactly. So there has to be a USP. And, yeah,

Andrew Stotz 10:50
well, it's fascinating. And for those people that want to follow you contact you, where's the best place to go?

Mohit Tater 10:57
You can find me on Twitter or LinkedIn. I'm active on both platforms at mo HIV TT er, I can put the links, we can put the link in the show notes. Great. And you can email me as well, you can find my email, we can put that also if you want. Yep.

Andrew Stotz 11:16
All right, well, great to learn about your business, what you're doing, and your thoughts on AI and all that I think there's a lot of value there for anybody. And if somebody's built up a website, you know, that's making the money. And as well. One thing I want to say, before we go into the big question is you said something that is very rarely talked about, you know, I have a presentation that I give where I talk about how there's 50 million businesses or whatever that number is, I can't remember right now in America. And it appears that there's a lot of businesses, but when you start to realize that most of those businesses are single person businesses, you can reduce that massively, then you realize that many of them are under 10 people, so they're small. And then you end up with a very small number of companies, let's say a million companies in America out of a population of 330. But if you then go and look at which ones are consistently paying dividends, my estimation is that in the US, you're probably talking about 50 to 150,000 companies. That's it. That's about it. And dividends are the ultimate key for anybody out there. The number one challenge I have for everybody is produce dividends out of your company, even if it's only 5% of your profits, 10 Because I know I gotta reinvest because you're fine, then just do 5%. But I dare you to consistently pay dividends, then you have a real business. So I love the fact that you said that.

Mohit Tater 12:46
Yeah, totally. If you have been given to me, you know, to be honest, we pretty much give out, you know, a good chunk of the profits as dividends. And that turns out to be almost 20 25% IRR for our investors as dividends every year. So

Andrew Stotz 13:01
it's fantastic. So, ladies, gentlemen, take the challenge, take the dividend challenge. If you got a business, make sure you're paying a dividend. Well, now it's time to share your worst investment ever. And since no one goes into their worst investment thinking it will be take a minute and tell us about the circumstances leading up to it. And then tell us your story.

Mohit Tater 13:22
Sure, so that's a very unique question that no one asks actually. And I'm glad that I'm on the pod like that. So my worst decision ever was not related to my business, it will raise another business that I write starting, I would build up. Our build up to that was, I was regularly at a pizza place in my city. And I just you know, grab pizzas from there, everyone up so often. So once I just got talking to the manager there that okay, how many pizzas do sell every day? What are the operations? Like? How much does it cost to start a pizza shop? Like this one? Are you guys getting a franchise or something? And the numbers he shared with me were like, very lucrative. And I was like, Okay, what am I doing? I could be selling pizzas. And then I set up a meeting with the owner of the franchise. He seemed very positive and the numbers look good. He had the whole business plan mapped out for the expansion. So we, me and business partner of mine, we you know, we said okay, let's do this, because he is here to give us support, he'll help the team for us. They'll make sure that the operations are running smoothly, even though we don't have to finish with the this business. But we'll learn eventually and hopefully we'll turn around and make a profit. And so we got going in, you know, almost kind of $100,000 setting that up. And before it was just about to be ready and ready to reopen the owner of the franchise. He got a stroke and he went into a coma. And he was the brains behind the brand and the marketing and everything basically, without him we were like sitting ducks. So we had no option but to continue with the plan, because we are already spent a lot of money into building it. And then we had the team who was supposed to come to us and help us run it. So they came and they try to run it as efficiently as they could. But we are not turning on profit. I mean, we're just putting more money every month into sustaining and not breaking even, or marketing was lagging. And since we both did not have any experience with the f&b industry and running a restaurant, we were like pretty clueless. So we could we try to do as much as we could. But eventually, it failed, because the person was still in a coma for a few months. And it was bad, like we had a stroke. So we were sitting next we had a lot of money put in, we had to pretty much write it off, because we could not sell it for much. So it was a total write off for us. Both of us, you know, decided that this is not for us physical business, we have both been doing online businesses. So let's take that and let's not go where we don't belong, or we don't have experience in so or maybe if you want to do it, let's come in with more experience. Let's come in with someone who has a lot more experience than us. So that was something that, you know, we thought we could, you know, make money just by investing some money, but turned out it was not the case.

Andrew Stotz 16:17
So how would you summarize the lessons that you learned from that experience?

Mohit Tater 16:21
What I would summarize is that to not, you know, go or venture into an industry, you don't understand chasing like high returns, because it's not as easy as it looks from the outside. So unless you have good experience in that industry, don't bother putting your money at stake. That's or learn about it first, then go into it. Yeah.

Andrew Stotz 16:48
Yeah, it's a little bit like buying a house to rent or an apartment to rent or a condo to rent. If you don't like it, you're not gonna ever be able to live there. It's like, exactly,

Mohit Tater 16:58
exactly, exactly. Yeah, yeah.

Andrew Stotz 17:02
Maybe I'll share. You know, one of my thoughts, as I was thinking about, is when, when my best friend and I set up our coffee factory in Thailand, we started in 1995, I was already a leading analyst in Thailand, and you know, really great career. So I had the funding, we set up the business. And basically, you know, it went pretty well for the first year or so. And then in 1997, we had the Asian financial crisis. He just completely caught us off at the knees. And then Moe had to make matters worse, I lost my job as a big shot investment banker or financial analyst. And next thing, you know, we're living in the factory thinking we got to cut costs, and just hold on here. And we grabbed on to kind of a life raft and Dale and I went to the factory, we set up a bedroom, in the accounting office, move the stuff out, put two bunk beds and two beds in just like we were back at university, batten down the hatches to survive. And we did survive. Now. It's 20 years later. Yeah, but but the point that I want to make is that we were clueless, I mean, about that particular crisis coming, and I was even a financial analyst. And in theory, I should have been able to predict it. But the truth is, you have to be prepared when you go into a business, that unexpected things are going to happen. And you have to be able to say, can we sustain this or that? And here we can see, could we can sustain? If the founder just ran away? Let's just say, Yeah, you know, the founder disappeared? Could we sustain if our customers 50% of our customers went away? Do we have the capital to survive that to rebuild that or whatever? And I think that's kind of the big bigger picture lesson from it. And anything you think you would add to that?

Mohit Tater 18:54
Yeah, I think you summarizes pretty well, you don't know what you're getting into until you are in it? If you know. Yeah. So summarizing pretty well, I'd

Andrew Stotz 19:02
say. Yeah, I mean, the point is, is that you think you can control all the variables, we think Yeah. And I like to wait, you know, the way you demonstrate what you learned from that is that you explained in your business that you buy the businesses where you understand and you understand where you can add the value and you can add value to the core of that business. So you know, that's exactly.

Mohit Tater 19:21
Yeah, I mean, if we could date the talk was I you know, it could be cool to own a restaurant and also make a good profit. But yeah, it was not the case. You got to dedicate time because both of her both of us had our businesses so we could not dedicate time also. So that was another problem and another mistake that we did.

Andrew Stotz 19:41
So based upon what you learn from this story, and what you continue to learn, let's think about a young person that's facing this opportunity. Something comes along. What's one action that you'd recommend that they take to avoid suffering the same fate?

Mohit Tater 19:56
I think it sounds difficult, actually. It sounds easier to say, but it's more difficult to execute is try and stick to what you know, that's one thing and try and stick to something that is already working for you. Maybe it's got some traction, but it's working for you. What I did was I chased all these shiny objects in the first five years of my business, you know, and did not focus on my main business, which was Blacklick investments. And that led to the delay in the growth, I could have gotten much more growth before if I focus solely on running and growing this business blackbrook investments rather than chasing after other objects. But once I realized that, and once I put my, you know, head mind body into it full time, and you know, with full pocus, it just took off. I mean, I did not value it as much, I said to validate much more. And I should have hired earlier for my business. Also, that's another mistake that I did. I did not hire early, I was trying to do everything myself for the first four or five years. So another mistake there. I could have achieved the same growth much earlier. So but those were lessons learned. I don't take I don't regret it. Those are those are some financial lessons, some some time based lessons, but those are lessons standard, nonetheless, yeah.

Andrew Stotz 21:09
Fantastic. And what's the resource that you'd recommend either of your own or any other resources?

Mohit Tater 21:15
Yeah, you can go to our website, black book investments, and you can click on the investor questionnaire to just get your form in. And we can see if you're a good fit to, you know, invest in online businesses, because it's not for everyone, I'd say it's a high risk investment. So you can do that. And we're more than happy to jump on a call with you to explain in detail to you that how we do it, what we do, and discuss that, whether this asset classes for you or not,

Andrew Stotz 21:43
and investing in like a fun or a limited liability company, or incorporated company, and how is the work,

Mohit Tater 21:51
it's a multi member LLC, you can be a part of if you come in on it. So it's like a pool of funds. And we buy multiple assets using that we also work one on one with investors, the minimum to work with us was $100,000. But now we're raising that to half a million dollars, so that we can make a portfolio for you buying one single after the one single business is very risky for US dollars. So I am discouraging everyone from doing that. So either if you don't have a handle, you come to us, we put you in the pool, and we buy multiple assets using that one. And if you have a half million that I can create a portfolio for you or your family that has two or three assets in it. So your risk is somewhat diversified. And yeah, so that's what, you know, we can do for you. And we want to go to you can also go to movie theater.com. To read some of my writing. I don't write often, but yeah,

Andrew Stotz 22:42
okay. And I'll have the links to all that in the show notes. If somebody was to invest in, in your instruments, or your company or they you were to manage their money in investments as an example. What type of returns Do you think that they would earn over the next five or 10 years is like what what roughly do you think is a reasonable return that they could get? All right. Not sure what happened there, but we're just going to continue on. I'll cut out that section. So my question I was asking is like, what is a typical return that someone should expect in that kind of investment asset class or, you know, that type of thing?

Mohit Tater 23:50
Yeah, so historically, we have been giving out 2021 22%, probably 25% dividends. For the past 567 years that, you know, we've been catering to investors. And that's been consistent. We also work with a company called Web three, which was formerly called Empire Flippers capital, which was an offshoot of Empire Flippers, who are the biggest marketplace for buying and selling online businesses. They started a new company with, you know, Empire Flippers capital to match operators, fund operators like us to investors. And then that company spun out into its own, which is called Wet street now, they basically raise money from investors. And third and give that money to portfolio operators like us to buy and run businesses. We have done three rounds with them. And we raised $4,000,004.1 million with them to buy businesses. So we also worked with them. And they're also giving out in the 20 21% ROI and realized grandmasters but having said that, this is a risky investment. So I would say prepared to lose, you know any project or money. If you're ready to do that on then get into it. Otherwise, I'd advise not to get in Do it. It happens like less. But there's always chance of that happening. Because there's a lot of factors that are not in your control, like Google changing its algorithm, or Amazon cutting down its commissions overnight. These factors are not in our control. So the risk is inherent, the risk is there, because, of course, high risk high returns. So only if you're ready for that only then get into it be turned down a lot of investors because they're not ready for it, so they don't take their money.

Andrew Stotz 25:25
So that makes sense. That makes sense. So last question, what's your number one goal for the next 12 months.

Mohit Tater 25:32
But the next 12 months, my number one goal is to, you know, I have so many, so many systems in place, have systems in place that my team is able to manage the business without me. I'm at a place where I don't have to give much time to the business. I'm mostly talking to investors and doing sales. But I want to be at a point where I'm pretty much not needed. And my team is so capable, that they're able to handle everything. And we're quite there already with the help of my wife. So he's good at managing people. So she's helping me build this team right now that we have, and he's doing a great job. exciting,

Andrew Stotz 26:07
exciting. Well, listeners, there you have it another story of loss to keep you winning. Remember, I'm on a mission to help 1 million people reduce risk in their lives. As we conclude Mohit, I want to thank you again for joining our mission. And on behalf of a Stotz Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Mohit Tater 26:33
I think yeah, do what you know best. And stick to it until it works for you.

Andrew Stotz 26:40
Great, great advice. And that's a wrap on another great story to help us create, grow and protect our well fellow risk takers. Let's celebrate that. Today. We added one more person to our mission to help 1 million people reduce risk in their lives. This is your worst podcast host Andrew Stotz saying. I'll see you on the upside.