Entrepreneurship Podcast post

Investing in a Business with Mohit Tater

George Grombacher September 29, 2022

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Investing in a Business with Mohit Tater

LifeBlood: We talked about how to go about investing in a business, the benefits of being a passive versus active owner, how to evaluate potential targets for acquisitions, and how to get started, with Mohit Tater, Serial Entrepreneur, Investor, and Founder and CEO of Blackbook Investments.

Listen to learn why great service and honesty are simple and important differentiators! 

You can learn more about Mohit at BlackBookInvestments.com, Twitter, Instagram and LinkedIn.

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Our Guests

George Grombacher

Mohit Tater

Episode Transcript

The left for this is George G. And the time is right. welcome today’s guest strong and powerful more hit Todd terrible hit you ready to do this?

Unknown Speaker 0:22
Right this jar. Thanks for having me.

george grombacher 0:25
excited to have you on let’s go ahead is a serial entrepreneur, investor and consultant with business experience from around the world. He’s the founder and CEO of micro private equity firm, black book investments. Well excited to have you on tell us a little about your personal lives more about your work, why you do what you do?

Unknown Speaker 0:44
Yeah, sure, I’ll just give a quick rundown of how I got to where I am today. I’m married, I’m from India city called Jodhpur, also called the Blue City. And I am here I’m calling from here today. I visit here often like every month, so stay close family and friends. Otherwise, I’m basically mostly based in New Delhi close nearly rather involved now. So I started my career about 10 years ago, 11 years ago. And I went to one of the top colleges in the country and did my engineering and all. And then after that, I decided to take a job for about a year. But it was pre decided that I’m not going to hold on to that job for long because I want to do my own thing, which is what I did. So I quit the job about in about one year and started experimenting with different businesses, online businesses. Starting with blogging, I was learning to create websites and learning WordPress while at the job like in the evenings, I mean, so I learned that I started making websites, blogs, review blogs, all of that started blogging. But that didn’t turn out well for me, because I could not make any money from that for about a year and a half. I tried that. And then I Yeah, then I was like, you know, there must be some way to make this online thing work, you know, make money online, like your search for it when we start off our journey and why I wanted to do something online was because I wanted time freedom and location freedom. I recently read the book four hour workweek, workweek, which most of us have read. So that was the reason for me choosing to go for an online only business gives me the time and location freedom. And why I wanted to do business in the first place was because I’d written a book called Rich Dad Poor Dad, like when I was in grade 10. So that made me You know, I want to go for doing my own business doing my own thing. I did those two books influenced my career, I’d say, and are they okay, there must be some some other way to go about it. So I came across this website called Flippa, which was a marketplace for buying and selling online businesses and websites. And I could see people selling their websites, they were making money, they were generating revenue for a multiple of their earnings. So I had some money saved up a couple $1,000 back in 2012. And that’s when I bought my first website slash business because a social media marketing company like not a company Exactly. But yeah, a service rather, I’d say. And it was, you know, I bought that for $200 ran that grow that grew that for six months and sold it for like five times what I paid for it and ultimate money in the process, like while as income while I was running it. So that was my first taste of the online business and made me realize that okay, this thing does work. I tried to repeat that replicate that thing. And I got scammed the second time around $3,000 out of pocket and got scammed by chance that is live. So I didn’t lose heart. I just kept at it, and then bought another website. And that worked pretty well for me. So that started my online business career, I’d say. And that was in 2012 and 13. In 2014, I was visiting a friend of mine, in in the US, actually, in 2013. When I saw the first website, I was visiting a friend of mine in the US and I always wanted to go to the US to you know, visit and meet friends and all. And he saw me I was living with him for a few weeks. So he saw me do something online on my laptop everyday. And he was like, what they do so he got interested. And he was like, you know, I have some money to invest. Can you invest on my behalf in a website or something, which is when the idea for black book kind of originated. And we bought a website for him. I was managing it for him. It worked out beautifully for him. And then he got his family and friends involved. And in 2014 I formalized my company blackbrook investments. And the rest is history. Right now we manage about seven to $8 million worth of online businesses across our portfolio and B are growing in quite a good pace right now. So yeah, in short, that’s what I am, where I am and what we do as a company,

george grombacher 4:50
and what a great story. Thank you for sharing that. And kudos to you for do you think that if you would have gotten scammed on the first one, that we wouldn’t be here In this competition,

Unknown Speaker 5:01
we wouldn’t be talking to me, you know? Exactly. That was lucky. You know, I do think my stars every day like that, you know, I got lucky on the first deal. And yeah, I mean, I did a thorough due diligence, everything you know, that I could do to make sure it was not a scam so, but it’s still there we’re still could have been scammed I could still a big gap. So lucky me that didn’t work out well for me first time around here

george grombacher 5:23
life is a funny thing. Is it knowable? How many profitable online businesses that there are?

Unknown Speaker 5:32
Hundreds, I mean, 1000s even actually, not even hundreds, there’s a lot of brokers these days, there’s a lot of marketplaces, this business is still this, this industry is still in nascent stage, but it’s growing very fast. You know, lots of private equity, money’s coming in a lot of even, you know, VC backed companies are getting into this, you’ve seen like companies like THRASS, you and you know, THRASS you and there’s many more likes last year, they they’re like aggregators, they come in, they have investor money, they come in and buy businesses, one after the other, and then they roll them up on the back end. And they streamline operations. And they do that for so there’s a lot of, you know, such companies and aggregators for E commerce, businesses, even SAS not so many for content based businesses, like, you know, affiliate sites or display ad websites, which is what we are doing right now. So yeah,

george grombacher 6:21
got it. Okay. So why did you zero in on the niche that you decided on?

Unknown Speaker 6:28
Because that was the most straightforward to get started with that say, because SaaS, Software as a Service still needs you to be somewhat technical, I was not technical, then he come has a physical component to it, which is, you know, you have inventory, you have logistics, you need running capital. And then there are external factors that can affect the business like in the pandemic, or shipping costs, all of that. So I wanted to be it to be as online as it couldn’t be, you know, like less tangible, fully intangible, you know, so that way. Yeah.

george grombacher 7:02
So, your, your model your, your processes, you are looking for companies that are profitable, they’re having some success. And take it from there.

Unknown Speaker 7:15
Take it from there. Yeah, we ideally try to buy and hold. We’re like, we’re long term holders. So we try to identify companies that have a solid history of earnings and that Shona go tragic tree, and then we take them over, and then keep holding them. Either it’s for our investors or our own portfolio, we also work with the biggest one of the biggest, in fact, rather, the biggest brokers in the industry, who are Empire Flippers, and we work with them on their empire, flippers capital program, we’re in the match investors with operators. So we raised two rounds of investments for them 1 million in 1.5 million. And we might do another one very soon, we take that money and put that into buying content businesses, for their investors. Yeah.

george grombacher 8:00
So you have you have it sounds like sounds like two models, one where you want to acquire and then manage them and run them and grow them and hold on to them buy and hold. And then the other is, potentially look for acquisition targets that you can build up and then sell again.

Unknown Speaker 8:18
Yeah, so both are kind of, in a way, the same we don’t buy with the aim of selling mostly, but yeah, unless an investor specifies that they’re looking at a two year horizon or a three horizon that they want to exit, we plan accordingly. So we buy assets, they have to pass our due diligence process, so there’s no differentiation there. It’s just that the amount the investor is looking to invest that changes with their investor and their holding group changes. That’s two things. We also have our in house groupbuy, or like fund of sorts, not a fun fun, but it’s a group by, and that’s for people who do not have like $100,000 to invest with us, which is needed to work one on one with us. So we have a other option, which is a minimum of $25,000 a group by when people money from multiple investors, and then buy bigger assets and multiple assets using those pooled funds. So that gives these investors their money spread across multiple businesses. So it’s less risky, and they are investing a lesser amount than they would if they bought a business themselves, one to one. So $400,000 We work with you one on one, and we identify and buy a business of your liking based on our, you know, judgment and our analysis. And it could be anything above $1,000 Because that allow us to charge the fee that we think would it would take us to you know, properly manage and grow that business. So yeah, that’s one on one. So you want the business in that case 100% whereas in the group by you own a fraction of the whole thing, basically.

george grombacher 9:55
Got it. So in the in the eye on the business 100% I’m investing $100,000. And I’m relying on your expertise to make sure that I don’t have the same experience you had with your second acquisition of getting scammed and losing my money. So knowing that you know what you’re doing, and you’re going to pick the right target that is aligned with, I assume a lot of my interests or desires. And then I’m the CEO of the company, and in my making decisions, am I operating it at all?

Unknown Speaker 10:29
It’s mostly passive for you to be honest, because most investors that work with us do not have an experience in running websites and online businesses. So it’s completely passive, I’d say you get a monthly report at the end of every month. That details the work that we did on on your business and what we’re planning to do in the next month. And how much revenue the site did all of that you get a report every every month, and you own the business, you own the domain, you own everything. So if I vanish, if my company vanishes from the face of the earth, you still have that business, and you can run it or you can hire someone else to do it for you. So you’re safe there. And even the income is that goes to your account, basically. So we’re just managers, we just invoice you for our services. Everything goes to you the income, the domain, everything you have full ownership and control.

george grombacher 11:19
Nice. So I don’t have to worry about

Unknown Speaker 11:22
when you don’t pay. Yeah, exactly. And you don’t pay me the 100,000 we do the deal, we facilitate the deal by an escrow.com escrow. And the money changes hands between you and the seller. And it’s very transparent. So you know who you’re buying from? Or who’s selling to you.

george grombacher 11:38
Nice. And as you look at the you’ve got the $78 million of businesses that you’re working with, which is that’s certainly that’s a huge number. Where are you looking at the biggest opportunities for growing that? What what’s what’s what’s kind of next for you?

Unknown Speaker 12:02
Yeah, so this, this business is linearly scalable, it’s not exponentially scalable, like a software businesses. So the more number of businesses I’m managing or acquiring, the more people I need, you know, to run and manage those businesses. And that’s a challenging thing, because you don’t find smart people, you know, who can join your team, and you know, you know, work on these businesses, because most people who know how to do this or doing it themselves, that’s the thing. So it’s, it’s tough for us to find the right, you know, people for the job, but we are, you know, able to find them somehow. So I think the opportunity lies in either going into one niche heart, and then making a dominance there, like, you know, let’s say, a personal finance. So now, you may be aggregating multiple sites, and, you know, becoming like a media company in that niche, like a conglomerate, like, you know, a new age media company, if you would, that’s, that’s one opportunity. But another opportunity we see is in the tangential, which is SAS, getting into SAS, SAS software is exponentially scalable, you know, you need to make it once and then you can sell multiple copies of that software, you know, without employing more manpower. So we’re looking to build a team in house for managing and growing SAS businesses. So that’s the next frontier, I’d say, for us at least. Yeah.

george grombacher 13:20
Nice. Well, that certainly does make sense. You’re making the decision to go deep within one industry, and then decided on on on SAS. So it’s fascinating. In the United States, we are going through this, or there’s talk about something called Quiet quitting, which is people getting really frustrated with their work and not feeling like it’s meaningful. So they kind of stop and just sort of anyway, and you reference to having a hard time finding, because a lot of people are in fact entrepreneurial. So they’re doing it on their own. You seen a shift in in Indian culture towards that?

Unknown Speaker 14:05
I have I have, you know, Earlier it used to be, you know, Why should we hire you as a company, that the script is changing, and flipping on its head, you know, now candidates are asked, like, why should we work for you that way, so, it’s kind of, you know, so you need to salary is not a motivation enough. Now, these days, you need to bring way more than that to the table to attract the best talent and with the pandemic, I think it’s gotten really competitive because earlier, like big companies maybe weren’t hiring remote only job, you know, for remote only positions, but now you’re competing with ABC, you know, Google, Microsoft, everyone is hiring remote, and that’s who you’re competing with. So small businesses like ours cannot match or offer anywhere close to the salaries that these big corporations can so truly take someone who’s truly passionate about what we do to come work with us basically they really want to do this that’s why they come come with a scruffy Of course, we all became competitive and good salaries. That’s a good And then there’s no way around it. So we need to offer more than that. So only people who are really interested in what we’re doing, they are attracted by us. And that’s the kind of people we want.

george grombacher 15:09
Yeah. And I imagine that’s also true, really, of, of, of the folks who are investing with you. And so putting their faith and money back into your organization. So what, what do you really think? Or what is your, you know, for lack of a better term secret sauce? Or what is it that you’re really good at, that attracts investors and and employees to BlackBook? Investments?

Unknown Speaker 15:34
Yeah, I’d say, usually, maybe here, you know, ROI is what we can give him, that’s an attraction to the investor. But I did not say ROI, I’d say, service, and being honest, are the two things that you know, we value a lot at blackbrook. So we provide a service that, you know, once you experienced it, you’d not want to move away from us, you know, so and we and honestly, the second thing, like I said, we just lay it out, it is you know, we we tell it to you how it is, if you’re out it is not performing or if we goofed up, or we just tell that to you. So honesty about what we are doing and what is expected, what is expected of us, or what they investors can expect, you know, we don’t make false promises, in terms of ROI, you know, what is the cherry on the top is that we have been able to provide a really good ROI historically, you know, like, almost 49 30%, annualized, based on our last seven, eight years of working with investors. So that’s, like a really added bonus. But I don’t think that’s why people work with US investors, you know, I think they come because we want to be, we are genuine, I think we’re really genuine as a company, and as people in our company. And that’s what attracts investors to us, like person that will, I would say,

george grombacher 16:53
Yeah, well, I certainly appreciate that. That’s what I think that we would rather just know what’s really going on in a situation versus trying to sugarcoat it or dance around it and not address the elephant in the room or the issues, I’d rather just know. And then we can actually put a plan together for getting past any problems that we’re experiencing. Yeah. And I imagine that those things come up all the time, because we’re talking about, you know, so many different moving parts with E commerce and Software as a Service. So there’s probably always something that’s not operating perfectly,

Unknown Speaker 17:29
exactly something or the other, there’s always a fire that’s going on, you got to put it out. So sometimes Google will act up, you know, with their new algorithm or a new update. Sometimes Amazon does laughter affiliate commission, so there’s something or the other of what’s going on, but is a fine Act of, you know, balance in balancing investor expectations with the reality. So yeah,

george grombacher 17:51
yeah. Well, I think it’s really exciting. And I think, I think what you’re doing makes sense to me as as I hear you explain it. So it sounds like it’s a great opportunity. What is the process? If somebody is says, Yeah, this sounds pretty interesting. How do they?

Unknown Speaker 18:06
How do you get started? Yeah, you just go to our website, black book, investments.com. We’re in the process of, you know, redoing the website. But yeah, you can go there and just fill out the investor questionnaire. It just, you know, a few questions that you asked you, what’s your experience with online businesses, how much you’re looking to invest, where you’re based on what your expectations are, what your goals are, then we get on a call with you, we understand your mindset, what you’re looking for, what kind of investment you’re looking for, ROI, and what kind of a general investor you are, you’re risk averse, are you you know, okay to take risks, all of that. And then we start with going out and find the right deal for you. If all checks out. And from there on, we send you deals that are pre vetted by us, if you’d like any of those, you tell us hey, Lloyd, I like this one. Can we dig deeper into that we do that then we dig deeper into that, we put more people on the team into doing due diligence on that deal. If everything checks out, we get on board with the seller and try and negotiate on your behalf. So it’s totally hands off for you even when the buying process is going on. And we get you the best deal possible on that purchase. And that’s what we charge our P for. And once the deal has been done, we start managing the business for you. And it’s totally passive for you. From there. So in short, that’s how we work. Love it. It makes sense to us. You can go to black book investments.com Or write to me at more with that BBI dot XYZ and happy to help

george grombacher 19:43
BBI dot XYZ I love that.

Unknown Speaker 19:46
Thank you. Thanks.

george grombacher 19:48
Excellent. Well if you enjoyed as much as I did, show your appreciation and share today’s show with a friend who also appreciates good ideas go to black book investments.com and go through that info Just a questionnaire and find out if this is a good fit for you and see if there’s opportunities that match up with what you’re trying to accomplish. And it’s a Mohit at BBI dot XYZ,

Unknown Speaker 20:11
Mo HIV at XYZ,

george grombacher 20:14
perfect Thanksgiving.

Unknown Speaker 20:16
Thank you so much, George. Thanks for having me.

george grombacher 20:19
And until next time, remember, do your part by doing your best

Transcribed by https://otter.ai

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