Dear Entrepreneurs, I Just Do Import / Export
As somebody who grew up an entrepreneur professionally and has now turned investor and as somebody who has been exposed to the elements in our nation’s capital – Delhi, I can’t help but draw parallels between investing and Import / Export. There are scores of people in Delhi who would import some stuff from one place - and export to another. This may not be always international - its just “idhar ka maal udhar aur udhar ka maal idhar”. Translates to “transfer stuff from here to there and from there to here”.
Some parallels of Import/Export with Equity investing are:
- You are always spotting an idea. Traders interact with a lot of people and are always in the idea-spotting mode. They have a knack of predicting demand. So you can ship me 1,000 bottles of olive oil? Yes, go ahead and ship it at a good price.
- Traders seldom look closely at the quality of the asset: The key question is – can I sell it at a premium to someone else. As long as that is true, I am good as a trader. This may sound a little harsh to investors, but we regularly follow the herd and do wave investing. Consumer Internet was 14/15 and now its SaaS and others. In the Bay Area, you really can’t get funded anymore unless you have AI, Deep learning, machine learning or at least a Bot in your slide deck.
- They make the market: It would be hard to price assets without the trading community. They can price anything. It’s efficient market hypothesis at its finest – demand and supply.
- Just like there are some fine specimen in the trading community, there are some in investment community as well. They are able to spot trends, price risk, take risks and make large gains for themselves and the eco-system. Many times, both lose money too.
One of the key differences that I have seen in many investors behaviorally is the need to coach. Add value. Mentor, guide and polish the diamonds that entrepreneurs are. Traders don’t really attempt to do this. As an investor, I have made money on investments where I literally didn’t do anything. There are other investments in which I have worked hard and not made money – or made relatively less money. And then there must be a few where I accelerated their eventual mortality.
My note to you entrepreneurs is – At the time of investment, I will hesitate in investing in you if it feels that you need my help. You know more than me, I am just a trader in your equity, market maker, price fixer and so on. However, if I do invest in you and you come to me for advice... well, you asked for it. I will give it to you, whatever may happen.
For entrepreneurs where I am not invested in, and you need my advice – it is free. It is free since I have no clue what it will lead to. If it works out for you, we can price it later. Or you can pay it forward.
