My Worst Investment Ever Podcast Amit Somani – The Same Analysis Won’t Apply Every Time
BIO: Amit Somani is managing partner at Prime Venture Partners (PVP), a Bangalore-based, early-stage fund. For 20 years before this, he held leadership roles at Makemytrip (NASDAQ: MMYT), Google, IBM Silicon Valley Labs, and IBM Research.
STORY: Amit’s company came across this company that had a great product but didn’t have a business model. Amit’s company decided to back it anyway. It didn’t go well. A few years later, they came across another company with a great product and a great team but, again, no business model. Having lost the first time, they decided not to back the second company. It went on to become a unicorn in three years.
LEARNING: The same kind of analysis or rigor will not apply every time you’re investing. Don’t just extrapolate from a past pattern. Have repeatability in your investing process.
“You can’t borrow conviction; you have to get your own conviction because it’s subjective.”
Amit Somani
Guest profile
Amit Somani is managing partner at Prime Venture Partners (PVP), a Bangalore-based, early-stage fund. For 20 years prior to this, he held leadership roles at Makemytrip (NASDAQ: MMYT), Google, IBM Silicon Valley Labs, and IBM Research. Amit was part of the leadership team that took Makemytrip public on NASDAQ in 2010. He was also the head of various teams focusing on search, mobile, and advertisement products at Google. One of his products, the search-based keyword tool, even won the Google Founder’s Award. Prior to his role at Google, he was the Director for the Enterprise Search and Discovery business at IBM San Jose, California.
Worst investment ever
Amit’s company was looking at a great company around 2015/16. It had a phenomenal product in the women’s health space. They did their usual due diligence, spoke to the entrepreneur, and decided to back the company. However, one thing was missing, which was the lack of a viable business model. They decided it didn’t matter as long as the company was building something that people love.
Unfortunately, this was a big mistake. They should have thought a little bit harder about how the business model would come out or the ability of that team to manifest the business model. Things didn’t work out well for the company.
Fast forward a few years later. Amit’s company met another fantastic company in the FinTech space. Again, there was no business model, but the product looked great, they had an incredible team, and the market was big in terms of the people they could serve. But still, no business model. Amit’s company decided not to back this one due to the experience they’d had with the previous company. Then it went on to be a unicorn in three years.
Lessons learned
- The same kind of analysis or rigor will not apply every time you’re investing. You’ve got to factor in the timing and not overly pattern match because things change, markets change, dynamics change.
- Evaluate things from the first principle basis. You do not want to just extrapolate from a past pattern.
- As long as you have repeatability in your process, in your method, in your sourcing, and your checklists, overall, you’re going to be just fine.
Andrew’s takeaways
- There’s going to be a point where you’re just going to have to make your play.
Actionable advice
In early-stage investing, you can’t borrow conviction; you’ve got to get your own conviction because it’s subjective. There’s got to be something that’s off the charts that should catch your attention.
No. 1 goal for the next 12 months
Amit’s number one goal for the next 12 months is to launch his new fund and continue investing in a few new areas, including AI, crypto blockchain, and applying that to financial services and gaming tech.
Parting words
“Be insanely curious, be a learning machine.”
Amit Somani
[spp-transcript]
Connect with Amit Somani
Andrew’s books
- How to Start Building Your Wealth Investing in the Stock Market
- My Worst Investment Ever
- 9 Valuation Mistakes and How to Avoid Them
- Transform Your Business with Dr.Deming’s 14 Points
Andrew’s online programs
- Valuation Master Class
- How to Start Building Your Wealth Investing in the Stock Market
- Finance Made Ridiculously Simple
- Become a Great Presenter and Increase Your Influence
- Transform Your Business with Dr. Deming’s 14 Points
Connect with Andrew Stotz:
Further reading mentioned
- Atul Gawande (2010), The Checklist Manifesto: How to Get Things Right.