"I am a strong believer in serendipity. You let life take you to places and in most cases, it is better than where you were"
Vijay outlines what he looks for in a start-up
Growing up in a middle-class Indian family, Vijay Thomas, the CEO for Tangentia Ventures, broke barriers and familial expectations by taking on the hard entrepreneurial route. The fact that Tangentia is 100% bootstrapped, Vijay shares his philosophy on long-term disciplined agile startup growth and how taking traditional business models and practices can sustain cash flow and still drive success. He also takes us on Tangentia’s process and how he has helped and supported startups create long-term, profitable business models that get attention.
Technology Entrepreneur, Supply Chain Expert, Engineer and Dreamer
Specialities – Enterprise Software, Outsourcing, eCommerce/ B2B/ EDI, Supply Chain, Sales Forecasting & Planning, Business Analytics & Cloud Computing.
The full #OPNAskAnAngel talk
VT:Okay, that’s a lot that I have to think about but anyway, some of it nobody would know it be a tough one but let me just start with the other ones, the simpler ones. My name is Vijay Thomas. I, you know, grew up in in India. I was born and brought up in India. I lived in different parts of India. I, you know, started my career there. I have a mechanical engineering degree, I have an MBA in finance, and I ended up in the IT industry. You know, put all of that together you know, I am a strong believer in serendipity. You know, you let life take you to places and in most cases, it is better than where you wereand you know, I, you know for whatever you know, I’m not a you know, big planner. I don’t think I know what’s going to happen, you know two years from now, five years, and I don’t even know what’s going to happen you know 30 days from now or you know tomorrow. So I think there’s a little bit of serendipity that I firmly believe in and I’ve let life take me to places, and it just is actually being, not too bad. So you know I started as a mechanical engineer, did some MBA. I should have been in finance people say you’re good at it and this was the end of the late 90s. There was the whole you know, finance was not doing very well, so I didn’t get a finance job. But you know the Indian and I did my MBA in India, so the Indian IT industry was doing well but thanks to Y2K, along came in and IT companies that said, “Hey, you wanna join this thing?”, and I said, “Okay! What’s on offer?” “You could possibly travel the world, you can do a lot of things, we got projects,” or I said, “Hey, fantastic! Sign me up!” and that’s how I went in there and you know, people always ask you, “How do I land up in Canada?” The same IT company joined, sent me to Boston this was you know, 2001 or so, at that time you know I was on an L-1 visa. The spouse couldn’t work in Boston, so you know this was just I think George Bush had just talked taken over it was it was kind of you know, a different time of the world. We, my wife and I had not married us then but I told her, ”Hey, you know you want to come to the US?”, she said, “I’m not going to come if I cannot work,” and I’m like, “Okay, this is a big problem.” So went to visit a friend in Montreal which is only four hours away from Boston, and the guy says, “Okay, you know what? Are you interested in Canada?” I said, “Okay.” I told him, ask him one question, “Can the spouse work on a work permit in Canada?” and he said, “Yes,” I said, “Okay, send me in. sign me up!”. So I went to the company was Bombardier, I went to the for an interview to Bombardier, the next day they hired me. They said, “Okay, you can join tomorrow.” I said, “No, no I can’t join tomorrow.” “You gotta do some paperwork and all that stuff.” I go back to India, we get married, they send the paperwork. I come back to Montreal and you know, I started working in Montreal, my wife was in marketing. Now she can work, she can officially work, right? She’s got the paper that allows her to work but she’s in marketing and in Montreal, little did we know that if you want to do marketing Montreal, you need to know French. So she didn’t get a job, so we’re like, “Okay, you know, now, what do we do?” So we, you know, she applies to some company, she gets a job in Toronto. So we just come to Toronto and you know, no regrets! I’ve been in Toronto since and you know, I then started a software- I was working for a software company and this is a..I just had this and I don’t how much time you have this was a company that was out of Paris, France and I was their h=Head of Operations in Toronto. And I went to India once and an I said “Okay, you know what, I’ll come back,” and this was I think Christmas, and I came back in January, and I tried to reach the company, the vice president I reported to, and I was only guy in in Toronto, and I reached out to him and said you know, “Hey, what’s happening?” You know and then I only got voicemail said, “You know the company shut down so nobody’s there.” I tried calling a couple of people but I started- I was still being paid. So I said, “Okay, everything seems okay but I can’t reach anybody,” and finally remembered, there was a HR guy in Quebec City. I call this HR guy and tell him, “Hey, you know what, what’s happening? I can’t reach anybody coming,” he says, “You don’t know?” and I said, “Yeah, I don’t know,” what he said the company is sold and he said, “There’s only two people in Canada left. That’s you and me. And he saying, the HR guy said, “But I wanted to put in my papers and I’m quitting,” so I said, “Okay, this is not good news. What do you mean only you and I in the company?” and he said, “Don’t you read email? I said, “No, they’re all in French so I don’t read them.” So it’s quite funny. So you know and the previous year we had won rookie of the year from Canada Dealer News. So it was done very well. So the guys in Paris were kind of saying, “You know, do well. You’re doing well.” and I said, “Okay, do they have any plans? are they- do have any budgets for doing this?” They said, “No, no they want you to build this company by yourself. Ground up.” and then I said, “If I will do this myself, I might do it on my own. Only thing I am not going to get is my salary, okay because they were not really.. there was no budget, there was no growth equity, there was nothing, there was nothing in there. So I said, “You know what, I’m quitting as well.” So the HR guy said, “You know what before you quit, here’s my resignation as well.” So we won’t quit and that was it, so I went on my own. Totally jumped into the- in the pool of water not knowing how it’s hot or cold or whatever. I always wanted to do something, so that was 2003 come to you know 2021. So the company I started in 2003 was Tangentia. We’re now a global you know, IT consulting company. We operate in primarily US, Canada, and India, and we do automation, B2B, EDI, and digital. So those are core cure areas. We’re around 150 to 200 people worldwide, and we all started from a one bedroom condominium at Bayview and Shepard, so I’m one of those stay hungry, stay foolish kind of guys, and as we go along you know, I’ve invested a little bit and you know, as we go along somebody came by and said, “You know, you want to invest in a startup?” and I’m a sucker for entrepreneurship and Angel investing, you don’t need a lot of money to start off with and I think I was mentioning that on that panel, I actually started investing in India because the Canadian dollar although you think you know, especially when I came to Canada it was almost $54.00 and 54 cents to the US dollar, but you know it was still goes along way in India. It doesn’t go as much in some other places but it goes a long way in India, so you know that’s where I started doing a lot of my Angel investing, you know you hit one or two out of the park, and then you know, you build some street cred. You know, how this thing works and that’s come through maybe couple three years back, I kind of started a venture capital, private equity, kind of you know of our business. It’s not a separate company, it’s got Tangentia Ventures and we’ve got some investments now specifically in the India-Canada corridor, so that’s the area that we we kind of operate in and you know, it’s not been bad so I’ve got two real businesses, one is Tangentia which is our original business and we’ve got an Tangentia Ventures and you know, I’m now learning more about venture investing. It was more you know, gut-feel, more seat of the pants, more you know, just you know almost like a startup but almost like a you know, not with not knowing anything but just standing there for them, you know putting in some money, helping them you know grow. Now, I’m figuring out. There is a whole science to this. Okay, there is a science to how some of this is being done so I’m learning how some of that is being done and you know one of those people that I want to you know learn something from is going to be you as well. So after we’ve done this you know, please, you know be ready for me asking you some questions. May be out of the show but I want to learn more as well, of how this is done by the professionals. I’m one of those guys are kind of just got into this without knowing much, just basic fundamentals which is you know, kind of not being bad but you know, we could have done something a little differently I guess on hindsight. But that is it Jeffrey. I know, I remember taking longer than you probably wanted, but that is.. that covers everything.
JP:No, that was perfect! Oh man, keep talking! You got high energy. I love it. So one thing about you that no one would know. I’m sure you’ve had some glimpses in there that you want to share.
VT:I think I.. people think you know, I do believe you know, sometimes some of these things you know, I people do think you’re you know, my.. I, sometimes you know people think you’re very confident in, you know, you do it. I am a glass half-full guy but every time I do something, I am quite scared. I’m quite afraid that it might actually fail. Now, there’s something I don’t tell people but I do think and sometimes I am prepared for that. I’m- what’s the worst case? All these things is going to blow off, right? So the- I do have a worse case. People have a… like a happy place, I have a very sad place, you know. What is this sad place for me? I have a sad place, people have a happy place. I must say I have a sad place, I have not told this to anybody.
JP:And so this, I guess, this sad place, is it more reflection space? Where you’re going in and just kind of figure out, “Hey, I just did all these things,” and then you’re kind of trying to coach yourself through, “Don’t worry. You did the right thing. This is good.”
VT:I’m also like, no I’m listening. I sometimes say I worry. This can all go very bad, right? And I’m like, “Okay”. So it is kind of, I don’t know. I don’t think there is a… there’s any you know, science to this but I’m actually saying, sometimes telling myself you gotta worry. (Laughter)
JP:Yeah, I know, you totally do. It’s.. and I kind of will align with you on this is that I don’t have a sad place, but what I will think is that it’s a strategy to keep yourself motivated and driven, and we find real mechanisms. And for myself, I always say that I’m always living on the brink of destruction because if I’m not, I don’t have the drive to keep moving forward. So I’m always having to put myself into a position of panic that I have to make a call, and if I’m not fixing today’s problem, tomorrow it’s gonna drive me and fail me. So I have to always be thinking, ‘what am I fixing today? So that I’m better tomorrow,’ and every day I have to live that way because if I don’t, then I find that we just get 2 easy going on our business or morals, everything, and we don’t really tackle or challenge anything, so we’re not really moving forward. So you gotta find a way to keep yourself motivated because you’re a self-owner, business owner. So unless you’ve got other people above you, or advisors, mentors, and people that you’re working for you, try to have a way to drive yourself. So you gotta find those mechanisms.
VT:Yeah, so maybe that is mine. I- there you go
JP:Yep, oh that’s good and it’s helpful. Really, it is. Look where you’ve got yourself to today and like I think I saw one of your videos, you said, “Hey, if I can do this, you can do this.”
JP:Yes. That’s awesome and very well put, so I kind of want to take a step back to kind of the experiences that you have because I think experience really dictates kind of your future and being an engineer that means you’re always mechanical, you’re trying to figure out solutions. So you’re already a solutionist which is awesome. Being in the software world, even more incredible because you can understand how things are operating and moving, what takes- how software can be built to change and revolutionized an industry or product, and all those great things. So when you jumped into Tangenia, what did that turn into for you? What was the pivoting point where you started your own company, and he started this massive consulting firm globally, how did you find that position going in as an entrepreneur? And what is- what have you grown and changed over the years or have you stayed the same way? You know, dedicated, driven, driven, driven, or have you pivoted yourself personally as an entrepreneur? And what kind of learnings do you have from that?
VT:Yeah, I think you know, again I come from a very middle-class Indian family, where you know, growing up in India especially, in the 70s eighties 90s, was very you know, you’ve got to you know, entrepreneurship was not meant for the middle classes, right? You went, found a job, you did your stuff, you know. Those- there were people that had turned entrepreneur in a previous life or you know, previous generation. You know, there were people that did things a certain way but nobody in my family, nobody even today. There’s a probably and my mother keeps telling me this, she used to tell me this like, “Nobody ever succeeded in our family with entrepreneurship, right?” And so I had to actually go a little beyond some of those things. I had to break a lot of barriers, I had to break a lot of taboos, I had to break a bunch of things to do that. So in that sense, I think the early few days were more like am I out of the woods? Is this really going to work, right? You know, should I apply for job at IBM? I probably can make vice president easily, right? I mean you know, you always look at the options possible. I never really you know, pulled the trigger on it because I was so driven to doing something. But you know I’m sure it costs the minds of you know, my family sometimes looked at me and said, “Hey, you’re working 18 hours a day for the last 17 years, right? Could you do something else? Right? I mean you could look at the other guys, they’re playing golf. They’re doing these things. You’re not, I mean, they’re spending more time with the kids, doing things whatever. I mean there’s always.. the grass is always green on the other side. So I think somehow, I was so driven that I never saw all of those things. I mean it did come by and I saw this but I always enjoyed what I did. And so work was not work, so in that sense have I really pivoted to having you know plateaued and now have more golf time? I don’t think so. Do I really think I’ll get to that point where it might be? Maybe I’m not so sure. However, I do enjoy now the Tangentia Venture side of the business, where I don’t get actively involved, maybe for some of the business where I’m involved in I might be little too actively involved for some of their liking. But I’m still less actively involved than as I am in our main operating business which is Tangentia, right? So quite involved there, where we’re getting more people, more you know professionals in different parts of business. People came to me before and said, “Who’s the CFO of your company?” I said, “You’re looking at him.” “Who’s the CMO of your company?” “Hey, you’re looking at him.” “Who’s the chief revenue officer?” “Hey, you looking at him.” So again, when I looked at it from a pure you know business standpoint, each of those designations cost a lot of money. So at the end of the day, end of the year when we actually do the the the balance sheet and the PNL, there’s a lot of money that actually ends up staying in the company which, hey I have found a way to to rationalize it, not that I don’t know about the benefits of a CFO the benefits of CRO, benefits the CMO. I also know the benefits of not having those guys and I’m willing to articulate that to somebody one day. It is a very difficult position to take, but I’m willing to take that position in any business school. I will stand up to scrutiny and I will show you that, yes, it does mean somebody is going to work harder, but it is possible at the end of the day, that you can do it. Now you do have to have the smarts, you should have the skills, you should also have the ability to work that much harder but if you can do it, it is possible and I’m telling you, I’m living proof that it’s possible. Now is gone a little beyond that so I have you know, we’ve got a bunch of people that are coming in and help out with some of this but to a certain point and that certain part is quite large, Okay and I’m saying until you’re $20 million in revenue. You really don’t need any of these things you know, man when somebody comes to me and shows me a plan for like $1,000,000 in revenue and they have a CRO, they have a CFO, they have a CMO. I’m like, “What are you doing? So who’s this one guy? Like why do you need all these guys?” Okay, so I think I’ve you know, there’s a point at which we need to so I am getting to that point and I’m enjoying doing some of this company once where we’ve got other the key drivers are the people in the companies. The people who have invested, who are the key drivers in those investee companies of ours, so I’m quite enjoying that part of the my my role.
JP:Vijay, I love it. Very well said. I’m sure that we can compare notes but I completely agree with you that, I think a lot of the times, and startups do this a lot, is that they envision what they would look like when they’re a big large organization and try to bring too much of that at the lower levels. And investors look at them trying to treat them like a large organization when they’re in a startup phase, and a lot of those roles are needed. The roles of support driving operations growth those with things that are going to really benefit the company in part time CFO’s and-
VT:Absolutely, absolutely. No, I’m not saying compliance is not required. I’m not saying take shortcuts but there you go part-time CFOs get people you know, just pay for service. Don’t have take fixed costs, as lean as possible.
JP:Agreed, yeah. No, that’s very well said. So in this process of building up your company, what I really enjoyed about our conversations were that you started this venture firm but not just that you started this venture firm, is that you started taking risks and started investing in companies in India. Just seeing what happened and I had some pretty fascinating stories and some great things that came out of it, and you were saying, “Well, I’m no professional,” but you’ve done quite well in lots of your investments. So I think there was a lot of good learnings that would have come out of that and like you said, you talk about having companies be more lean. Is there other things that you learn from that investment standpoint? That really helped you in your own business because you started investing in early stage companies.
VT:Yes, at you know some of these companies that I invested in, you know, because I ran Tangentia in a very old school, you know, cash flow you know, not let’s burn, you know, what’s your burn rate kind of thing, right? We never had a burn rate thing because we never raise money. Tangentia is 100% bootstrap, okay? Tangentia Ventures is 100% bootstrap, okay? So we’ve raised even the capital that we invest, we raise it bootstrapped, okay? So philosophically, I’m a very old school and a traditional entrepreneur, and then I look at some of the companies that we invested in, and what I learned from there you know not that I could take but I also learned that you know, they were the power of you know, where you actually invest a lot of money, try to gain something. There’s a risk involved where you go for absolute you know, you go for what’s the word I’m looking for? Market share. You know dominating market share, right? You know I was you know, maybe not as much of a believer in lesser people like Facebook and you know all of these guys were. They went and burned a lot of money initially, but they went, they got dominant market share and now they’re gushing cash. So- but I still don’t believe that everybody can do it. There’s probably a few that can do that but everybody’s Uncle and his dog thinks that is the model for success, and I’m sorry to say. I’m not- I don’t buy it. I just don’t buy it. It is not going to work. However, what I tell most people that I invest in, I’m looking for companies. So I’ve coined this term call long term, agile, discipline, growth. Long term, disciplined, either- sorry it’s the other way. Long term, disciplined, agile, growth. LDAG: long term, disciplined, agile, growth. So long term, firstly, have a very long term view so when you have a long term view what is more important is the business plan not the exit plan that if you go to Silicon Valley the whole Silicon Valley view of things is, how do we get to you know to maximization? How do we get this as quickly as possible? So what happens is the exit plan becomes your first thing. You first started your exit plan,”Okay, I’m gonna create something. Who do I sell this to?” – Is your number one thing. Then okay, now let’s build a business that this guy is going to buy. I’m like, “Are you guys.. You guys have this upside down. Okay you know and to do that, then they go around doing it and sometimes it works, sometimes it doesn’t, and most times it doesn’t. However, with the long term disciplined, agile, growth, you will make money in the traditional business sense. You will make net profits, you will have cash flow, you will do all that stuff, and then you know if you want to get growth capital, you bring those in, whatever. It’s a more little more old fashioned way of doing it but you will succeed. you might not hit a rocket ship but you will. Now I mean, so in a sense maybe we’re not investing in Facebook’s, we’re not investing the next big one but we investing a bunch of different things from a probability standpoint. Our probability of success is higher, okay. We’re not investing in 100 companies and you know 98 of them go bust and two of them hit rocket ship, we’re investing in 10, 20 companies of which 15 do well, five fail. It’s a different ratio. Okay, so we’re taking less risk but the ones that are succeeding are succeeding. So it’s you know, one or two of them might really do well. Okay, so it’s a whole different take on an Angel investing, whole different take on- and so it’s philosophically different and we’re not only looking for companies that are looking at that as well. So we said, “No,” to a lot of companies. We said, “No, you got to go to somebody that has a different way of looking at this, somebody they can take you know go from one round to another round because they’re going to teach you how to burn money. I don’t know how to burn money. Okay, my whole flaw, I almost think it’s a sin to burn money. I’m like how can you even think of burning money? This is stupid. Okay, so again if you’re in the burn money thing, we’re not the VC for you. Okay, we’re absolutely not the VC for you. We almost, you know, we almost pay homage to money. We’re like, “This is sacred. We got to make it go as long as it can or as far as much as it can.” The most bang for our buck.
JP:And I think that that phrase might have been coined by Peter Russell
VT:I don’t know, sorry I but which one?
JP:He’s the comedian.
JP:He’s a comedian and he always talks about that.
VT: Yes, okay. Go on.
JP:He says, “Indian guys they like to find ways to save money not spend money, and when they have a deal, they’ll tell you all about the deal,” and I.. but I 100% agree with-
VT:Russel Peters, Russel Peters, yes.
JP:Russel Peters Yep. I said it backwards Peters Russel. Yeah, well, I guess that’s my joke for his joke but what I liked about this model that you’re doing, it comes down for the way it shapes is that you’re kind of, and correct me if I’m wrong here, but what you’re doing is you’re taking a company that has really hyper focus and you’re saying, “You’re going to go to market with this and you don’t need a rocket ship to build this. What you need to do is learn from your customers, grow your business, do it sustainably. You don’t need a lot of investment at the beginning you know, take some of my money and will help you build slowly.”
JP:Get into a position where you’re getting that really good growth and then you’ll just kind of- in five years you’re gonna realize this is where my business is, this is how I’m doing. 10-20 million, you’ve really done a great job and then if you need hyper growth at that point because you really figured it out, owned in on what your skills are good at, you built a nice solid team, then go raise some funds but at that point you’re really far into the path and then you can take off and do the 10, 20, 40 million.
VT:And at that point, you can also decide you know, on 20 million… if you’re making 5,000,000 in profits, you know what we can just do that as well and make sure it is you know, it doesn’t need to again, philosophically, you don’t need to go to hyper growth. Why do you need to go to hyper growth? If we put in the money, we’re going to get you know, by the time within five years, in most of our cases, we actually get our money back.
VT:Okay and after which, these things are gushing cash.
JP:It’s true. I learned this line when I started my company back 15, 16 years ago. My software company and it literally was what I just started and I had landed from three months of backpacking through Asia and I landed in the Dominican for a friend of mine’s wedding, and I met his sister’s fiance and he owned 5 mailbox companies or those mailbox stores. And he said to me, “Jeffrey, you won’t know you’re in business until you’ve been in business for five years,” and I was like, “Really?” He goes, “You’ll never know because you’re gonna pivot, change, alter, and by the time you get to five years, then you’re going to realize that you’re a company, and up until that point you have too many things to work through to learn what you’re doing.” So in your philosophy, I think what it does is, it protects the business. It allows the business to figure out how to do something in an environment where they’re not burning cash, they’re not losing cash, and they’re hiring the right people to manage and grow based on their scope of being able to manage multiple people. Sometimes we see with startups is that as soon as they get cash, one, they feel invincible. So they decide they need to hire 20 people because it’s first, a new to them and they’re not really envisioning. “I’ve got 500,000, I’ve got a million. Who is the most optimal person I need to hire right now? And who’s going to help me move that line up and grow? Not who are the 1st 10 people I need to hire right now, so that my payroll goes from 10,000 a month to 200,000. Now all of a sudden I’m in danger of not being able to meet my numbers in a criteria.” So it is a different mindset and I appreciate that.
VT:Yeah and Jeffrey I think the VC industry because of their whole philosophy of fail fast, they want people to burn money right? They want people to burn money. It is I think.. it- they want to understand, will this stand scrutiny or not? And will it get new money? It’s a way of them you know, trying to weed out the wheat from the shaft kind of thing. So I think there is a method in the madness. The reason they do it is a certain thing but you know, we’re willing to take the long term. They’re not willing to look at it that long term. They’re like, “It doesn’t work. We’re not putting any more money. These guys are no good. let’s throw them out, okay?” “We’re not going to find-” “Go find some more money. We’ll get you in the next round,” so they’re just playing the game, right? So in a sense the owners is now on the entrepreneur to say, “I’m burn this and I’m still- I made it all work, okay?” It’s very high risk which I think you know if you really have a rocket ship it helps, but not everybody is on a rocket ship, right? Not everyone’s on a rocket ship. Everyone thinks they’re on a rocket ship, okay? Everybody you know thinks or wants to be on a rocket ship and I think that’s a problem. So- but these some of these are good businesses that if they only had to think of themselves as a normal standalone business that we only want to get to 20 million or 30 million or 50 million, they would have probably made it.
VT:But they’ve been drinking this Kool Aid that they can be the next Facebook and guess what, they get little you know, they get dropped by the roadside because they just can’t make it there-
JP:They can’t control. They can barely take control.
VT:They can’t control, right? It’s too much in the hole by then to do anything else. So that’s when-
JP:How do you find environmental issues support this? Like COVID and other things with the companies that you invest in? How did you find COVID? Did it affect in your businesses? Did you find that, “You know what, really we were already pretty strong on the books. So COVID was actually just another way for us to pick up and just find another way to be better.”?
VT:I think you know, again, I sometimes am embarrassed by this because I look around and some people have not done as well but you know most again, I’ve been doing a lot of things very differently from what Management Business School books would tell you or conventional wisdom will tell you. For Tangentia, for a company our size, we were quite diversified. In fact you know people came to a lot of them you know they always keep sending us notes you know because we were on profit 500 fastest growing companies in Canada six years in a row, okay? It’s not easy to be on that list for six years in a row but we did it. So we had sustained high rates of growth but you know, when people came to us and said, “Okay we want to buy you,” okay for a few and as it was quite a nice feeling when in some of them are bigger companies said we want to buy you and I’m like, “Okay fantastic! People want to buy us,” I had a few conversations with them and then they realize, “Okay, this is a very complicated business you know. It’s not a simple business. We bought this, I don’t think we can run it,” I said, “Okay, hey, I never said this is simple you said you want to buy us”.
JP:Yeah, but that’s what diversification does.
VT:That’s what diversification does. So for a long time I was like, “Maybe we have got this wrong. Maybe you know, what maybe these guys are right,” until COVID hits and diversification came in handy. You know some things went down some things went up, and believe it or not, 2020 was one of our best years ever. Okay it’s the best years ever so it really did help and so I tell people you know, you’ve got to have your own philosophy. Don’t follow everybody else and you know, you have to have the courage of conviction that your right I mean, in you know, you’re right I mean until you’re proven wrong but everything, there’s no fundamental right and wrong right at this there’s a lot of things that work in some places sometimes don’t work. So I think we were able to just- we were able to pivot and again. I went to my sad place or I will call it my panic place now. As you know after this conversation, it- think ‘sad place’ sounds a little not too you know doesn’t sound sad-
JP:Let’s do lowkey. Yeah, panic room.
VT:Yeah my panic rooms. I go- I went to my panic room in something middle of March. You know, I said, “Oh my God this could be the end of the world you know this is so bad what do we do,” and then I started really pushing a lot of things right? And you know so really putting effort on a bunch of things and some of the paid off. Rather than panicking and go back from the cocoon. We actually started pushing, we started selling, we started doing a lot of other things, and I think a lot of that did come in handy.
JP: Oh, that’s good and I think with this philosophy, it also, one, I think you mentioned earlier it creates a lot more work for you generally.
JP:Because you are doing different things which means it’s different focuses and we’re very similar in that aspect even from investing. we invest in different verticals but we’re trying to trim those down a bit to where we can put a focus to it a lot better, but we still have to talk with everybody ’cause we’re bringing everybody into the funnel to help them get funding and I find it the focus really does allow you to hone in on where you’re going.
JP:And you mentioned that when you are trying to build somewhere especially, this works very well for a startup, in specially in your model for investing, is that when you’re holding in that direction and you really hyper focused on it, there’s a really good opportunity for you and your team to align and know the direction you’re going. So how important do you find it even when you’re talking to your startups that you really get them to hone in on their core business of understanding and use that as their mechanisms drive forward?
VT:Absolutely, so again, a lot of these businesses that we work on, we try to make them you know like a single line business, you know, some of stuff that we did again was very long term. Okay. Tangentia took 18 years with 17, 18 years right? I mean you know again, this is one of the learnings, we’re not that long time window as well. So in five years, we’ve got to get somewhere, so you really can’t do too many things and I think, as I said, you know I had some limitations as well in understanding. So now you know, I didn’t really know first generation entrepreneur. You know, no mentor, new country, no old you know, old boy network. Nothing, right? Total had to do this you know ground up. So you fighting a lot of battles but I think some of those things you know, I’ve kind of landed to a point where now I think I can help someone for these businesses that we invest in you know, not go through some of those battles, right? You don’t really have to go through some of those things. You know we could filter those things, help them filter those, and you know go really hammer and tongs, and on one or two aspects of the business. You know have some diversification but that diversity would be in customers, you know diversity again is key. I love diversification. It doesn’t have to be different businesses you know. Like you know we’re invested in a PPE manufacturing, right? So it came out of nowhere and we invested. Now we’re, out of nowhere, we’re probably among the largest, in the top three at least hospital gown manufacturers in Canada. Okay. Making Canada PPE and we stared out of nowhere and you know, so we were able to do that as part of that thing. We also got access to a laundry network, okay, in Canada. believe it or not you know, and then I looked at it and said there is innovation possible in even old businesses in a traditional businesses and you bring technology, and there’s some exciting things that might happen, and well you stay tuned. You know there is a lot of innovation possible in a lot of industries and a lot of these are ripe for consolidation, right for growth, right for you know, some player to come in. So this bunch of these things that we’ve looked at and we think there’s a lot of opportunity there.
JP:I love it. So kind of in this journey that you’ve been on with and again, a lot of this goes back to how in the philosophies on the investment side, are there certain industries that you’ve been focusing on investing? And do you look at these investments as attentional opportunities to buy them and move them into your business to keep that business moving forward? I’m just saying. I’m not saying that that’s your philosophy, but hey, it sounds kind of like it could work quite well.
VT:It could. It could, yes. I mean again, I probably didn’t say this but at some point, I’m a big Berkshire Hathaway believer. I mean in, you know, believe it or not Berkshire Hathaway, their model is a fantastic model. In fact even Alphabet in Google, they stole the holding company model from Berkshire. Okay. So Berkshire you know in Omaha, have an office and then they are the real main office is only 14 1/2 people, and it’s 14 1/2 because one guy only works half a day, right? So you know, so 14 and a half people control a conglomerate of like 300 or 400 billion. How do they do that? Right? So it’s something that you know, it’s always been something that has been in the back of my mind, like how do you build a structure for- you can have a very lean, top-end management team that can run multiple businesses in desperate different areas. You gotta find that connecting- the thread that connects all of it together. You need to find a governance model that puts all of it together. So it does you know, we’re not there as yet but it is something that does cross my mind. Is something that I would like to see happen, you know if I can do it or not is a different thing but definitely something that we would aspire to do. You know put in place some kind of a model like that. A very lean in our team at the top and then leave the operating companies to have their own freedom, and you know provide some kind of guidance and you know, basically investment smarts in terms of where should the money go, right? Where should the heat map be on this business, right? You know from money allocation. You know focus allocation as well as you know just strategic focus.
JP:Well, Vijay. I love it because you’ve taken your philosophy, you really honed in on it, you’ve grown your business, you spent 18 years mastering this, you’re influencing a lot of younger start ups, you’re investing in them, you’ve got a big picture view, and you’re giving them a different form of training than the the old school VC Angel look on businesses. I think it’s awesome, so congrats, it’s beautiful. We’re gonna kinda- and I love learning about it. So it’s awesome and it’s a great way to look at companies. We’re gonna switch just quickly into the rapid fire questions because there’s a lot of things I think will pull out of there that are going to again, really support kind of what you’re doing today. So I guess that you kind of touched on it a little bit on the first question, but what got you started in interested in investing in startups? They’re high risk.
VT:Serendipity. I’ve always been but you know, I’ve always been an investor kind of thing when I was in high school, my dad you know, got me you know he never invested but he’s you know.. I once asked him a question about some stocks and you know, there’s a page in newspaper that had stocks on it. and I just learned about stocks, right? and this was the early 90s and I still remember this. so I kind of kept asking my dad and he said, “okay let’s go buy some stock,” and then he did buy some stock. it was when initially the you know in India, the middle class had just found, had discovered stock market investing, and you know I kind of learned a bit and helped him with it and then I started getting some of our neighbors to help you know, I said, “you know, I’ll help up.” I, you know, I used to get so involved in it. I knew the closing numbers of all the stocks in the Bombay Stock Exchange at one point. I knew that much level of detail I should read up on everything so it was something that I learned at a very early age, so it was there. and then for a long time, when I started up the business and all that stuff you know, complete honesty I had no money to invest. okay. so I had no money to invest but come some time, when I’d built a little bit, a friend came along and said, and he was my engineering school roommate, and he had gone to INCEAD in Paris and INSEAD is a very big Angel network, and so they have a very big- so he’s like, “As part of the INSEAD Angel network, here are some things that come to me. Are you interested?”, and I’m like, “You know what, I don’t really have much money.. blah blah blah,” and he said, “Okay, it’s not much,” and I said, “Okay,” so that’s for the first one. Then through that network I got a one or two more and I said, “Okay, this is not too bad,” and one of the first ones, we actually exited. so it was good I was like, “okay this is now not too bad this sounds like..,” okay so that’s how that thing started off again, but you know at the back of my mind, stock investment, you know this is you know, was always there and this is something that I- and I’ll tell you one, if you’re- when I was in engineering school and then if some of my classmates are out there they will know this, I you know, in engineering school in India, you have to pay fees. You know in the- for every semester like the first time has 6 months you got to pay your fees and you pay fees and six semester. So people got their fees for the first semester and I found a loophole for only like 100 Indian rupees. Okay. which is nothing, which is like 2 Canadian dollars that was the late fee. You could not pay the first semester and pay it all together in the second semester and you paid a late fee of only ₹100. I don’t remember the exact amount but very little. So I told him, “Hey guys give me all the money.” Okay and I took all their money and we invested it in stock in engineering school. Okay, we invested in some IPO’s and we actually made money. So- but this could have gone so horribly wrong that if we didn’t make money not only would all of us not be able to go through engineering school. So but anyway it was one of those things-
JP:You could’ve ruined a few careers but a few families would have been upset.
JP:Awesome story. I did something very similar. I took my student loans and I did the same thing on the stock market. I played it for years and years and years that I felt the only way for me to put myself through school is I need to figure out ways to make quick money. So I stayed up 24 hours a day and all I did was scurry the Internet, figure out where I could invest everything, and it worked out quite well. there’s a lot longer story to that but I love what you did. It’s fantastic, it’s innovative, and very entrepreneur. Alright, what’s your favorite part of investing?
VT:I think the favorite part of investing is when I see the smiles on the entrepreneurs faces, right? When I see, you know, one is sometimes you know and then and the biggest one is when the checks come in. when the money comes in right? And I’m very old school. I’m like, “Did the money come in?”, I’m very cash flow oriented. I’m like, “Did the money come in?” you know, run it by cash flow. You know so when that you know, when a big check comes in, you see the smile on the entrepreneurs faces, that’s golden. And that’s I think, it’s really out there. I mean and it’s not and this is real money. This is money that the business earns, it’s not investment money and this is the part where I think I have a big problem with people really you know congratulating each other or you raise more money. I’m like that’s just ******** that you raise money, that you- that is more equity, that’s more debt, that’s more thing that you owe somebody something for, right? You should be happy about that. You should be happy when your customer pays you money. That is in my opinion, in my book, that is the happiest moment for a business and that’s what really brings joy to me and you know I think it should be enjoyed to any business.
JP:I love it. How many companies do you invest in per year?
VT:Maybe two or three at the most.
JP:Okay, do you take board seats?
VT:I do take boat seats. On some of them the bigger where the investments are. Where we have maybe you know, some of them, we do put in the board seat clause but I still don’t take it. But there’s boatswain clause in our you know, investment but if it goes about 25% you know and some of them we do take a higher stake more than 25%, we do take a board seat.
JP:Okay, do you have any preferred terms that you like when you’re making an investment? Like common shares, equity perhaps, shares, anything in safes?
VT:Okay, as I- when I started off, I told you, we we’re done this very old school without really doing a lot of homework.
VT:If I were to do this again, I probably do a lot of preferred shares.
VT:Right now, we have a lot of common equity which you know for wonderful term, I didn’t know better. Okay? I did not know better, I guess, I’m gonna say this out there, I did not know better.
JP:Hey that’s okay. You learn as you go, so there’s another one with that.
JP:Do you lead any rounds?
VT:Again good- you know lead any rounds, again, I only learned that you know, what is “lead any round” really mean? Okay. You know again we’re amature turned, we’re trying to turn professional on this. So we’re learning some of the terms and I had to actually ask this you know, maybe it was like six months back somebody said, “You lead any round?” and I’m like, “What do you mean?”. Like you know so I had to get to the bottom of it, so I have now figured it out, we have not led any down until now but you know when I look at what people do have, do we have the smarts to lead around? Do we invest enough money in terms of the size? Yes. We can lead a round but we’ve never done it. But now that I’ve learned what “lead a round” means and is there any benefit for us to lead a round? I’m still not convinced about that. Maybe I’ve got to have some a little much to chat with you to understand that but you know if there is some benefit to leading a round, maybe, why not? You know we’re not you know, I’m not you know again, something that we can do it, and if you’re really convinced, and we can get more people to come along why not? Some of these we’re doing as a sole investor. Many of these were the sole investor.
JP:I love it. No, that’s good and I love the fact that you’re learning as you go and it proves it that you’re a manic conviction. You’re driven, you’re going to make it happen, and you’re going to learn it, and make keep making investments. So I love it. Last question, is on the investment side, is there any preferred piece when you’re making an investment that you really want to make sure that’s there? If it’s the team, is it the paperwork? What things really lock in the deal for you?
VT:One is the business itself, right? We want to make sure there’s two parts to this. One, is the business in the right segment, right? You know, is it a growth area, is this something that we believe in? #1 right? And 2nd, is the team or you know what it could be they’re saying at the same level. The theme is important but the business is important as well. You got a great team you know, they can’t really push thing uphill. You know, are they you know headwinds or the tailwinds you know, in the business? so we’re looking for places where this tailwinds. Right now, we’re you know as I said, some of the businesses that we’ve invested in have been need a lower risk, lower growth, you know I mean high growth, possibly high growth but not rocket ship growth. Okay, so there is again, this marketable nuances to growth you know are we looking at high double digit growth? Yes. But I was looking at the pool and quadruple digit growth? No. That those required different kind of skills, right? Are we investing in the next Facebook? No. We’re not investing on the next Facebook that we don’t have the skills for that. Now if somebody does come in and somebody’s leading a round and we need to put some money? You know what, it’s one of those things that people is entirely risk. It’s like investing in you know taking a big risk it’s like buying a lottery ticket? We will do. It once in awhile. But is that our business? It’s not. We would put in the money but we don’t know enough about it.
JP:Okay, no there’s nothing wrong with that. Those are all great answers. So we’re going to kind of shift into one kind of exciting and I know you got a great story on this, and then we’ve got a couple personal questions before we wrap up. So the big question for you is, we like to look for and we love hearing kind of those emotional real winner stories once where you were working with a startup and they just were making it happen, or they were on the verge of failing and then they just pivoted and they crushed it, or they didn’t. You know we like stories that just kind of really draw you in to make you really understand what’s going on, is there- do you have one of those stories where you know you just couldn’t believe it but the entrepreneur just pulled one out of the hat and made it go awesome?
VT:Yeah, I think this is a couple of those one, is I think so invest in a company that is in India’s largest a pet dog. In a dog food and everything related to pets you know, marketplace. It’s the largest marketplace in India. They kind of went down the whole burn route, the you know the whole VC thing, thing they raised a lot of capital, they burned a lot of capital, and then you know the problem with that is at some point somebody, even you next round doesn’t happen. You got to shut it, right? There’s nothing else. So they spend a lot on the build something quite well and then you know the founder wanted to actually quit and I said, “You know what, you built quite a bit. Now can you look at this differently?” So I had to have a conversation and say, “Can you look at a little differently and look at it long term. Is this a business that can actually sustain itself? And all those guys are told you to go burn money, forget about them, right? What if somebody gave you new money and told you this can be run in a sustainable fashion, would you be interested?” Right? Rather than go and be an employee somewhere else and somebody was paying him good money to go and become an employee. So we had a chat about it you know, he got one or two other ones, maybe this was one where we were a lead now that I mentioned, we were a lead in this one. So we brought together a new set of people, they restructured the capital and hey they’re going concern now. They’re doing well. It’s been you know, a year, two years now since. It is you know turned around. Are they on a rocket ship? Maybe not. Are they growing? Yes. Are they having fun doing it? Yes. You know as an investor, am I happy? Yes, so those are things that matter and would we- am I confident that we will actually make our money on it? Yes, so I think these are the whole points that we should look at and we’re looking at a long term you know, this is another aspect of this today we don’t have as many investors, outside investors so we can be a little more patient. But we’re looking at raising some capital ourselves in our venture capital business. we’re looking at also possibly creating a fund, so that will bring its own you know problems or its own you know it’s own you know pros and cons but you know we’ll approach them as we go along. But we’re looking basically looking for patient capital in that as well, so you know stay tuned we have some announcements to make in the near future. Tangentia ventures as well as Tangentia Ventures. We’re looking at some you know, funds that would invest in specific businesses.
JP:I love it, Vijay. Awesome. We’re going to pivot just into a couple of quick questions and these are more about the personal side. So I tried to learn a little bit more about the people that I get to spend time with, so first question, favorite sports team?
VT: Favorite sports team? A good question let me think.. the Packers.
JP: The Packer’s, alright. I was kind of expecting it because of your background being from India that you might be a huge qriket fan.
VT:Yeah, qriket as well but Packers, I don’t have a reason for the Packers. It’s one of those only teams where anybody can become a shareholder, so you know, you could buy a share in the Packers. You know so you really could you know become a you know and you know, they had a good story. so you know, I kind of got you know, but again I’m not a big you know. I don’t follow, if you tell me I asked me for scores and stuff. I don’t know any of that. Okay, but you know so I like the story. I do follow them a little bit but not too much.
JP:Awesome, your favorite movie and what character would you play in the movie?
VT: Forrest Gump.
VT:I would play Forrest Gump.
JP:You would play Forrest Gump? Alright.
VT:Again, I’ll tell you why.
VT:Serendipity. I love Forrest Gump for serendipity. You go where the world takes you, you let things happen around you, and in most cases it happens for the best.
JP:I love it. I love it. I’m- I’ve got a lot of movies to catch up on and watch but I find that it really does- the characters really do play and people do match themselves up quite well to the character they pick in a movie. So I’m glad that we got to connect and chat Vijay. I learned a lot, took lots of notes as I always do, and I appreciate all your time, your energy, and all the great things you shared. I love the philosophy. I love the theory that you’re using and you’re going out for the hypothesis of how you’re making investments, how you brew your own business. Keep it up! Brilliant! We are going to chat again because I think there’s lots of stuff that not only do we have in common, but at the same direction, and goals, and where you’re headed. So we will connect there but just like we do and in fashion of our podcast at Ask An Angel, I want to leave the last comment to you. So anything you want to share to entrepreneurs or to investors, the floors yours and thank you again for your time today.
VT: Thank you Jeffrey and you know, I think if you’re in- if you want to be an entrepreneur, wanna do it. My thing is follow the Nike slogan, just do it. Just go and do it and make it happen. Don’t think about it too much, just do it. Okay, on that note Jeffrey, thank you again.
JP:You bet. Thank you very much Vijay. I will be in touch. Thank you.
JP:All that was awesome! Lots of great stories. I like the end with just do it from the Nike symbol for the entrepreneur and he’s right, all that you’ve got to put together a long term strategy and if money is going to help you grow and propelled, and that’s where you’re gonna take it and move, but sometimes you gotta figure out is how can I do this, and grow this business myself and understand where I sit, and where I’m going. And then from there, decide on those next strategic steps you’re going to help you grow your business. A little bit outside the Angel VC model but at the end of the day, it grows sustainability and it grows your business. So cash flow driven. I love that but great conversation and he’s doing a lot of great things in the entrepreneur world and building his own business so thank you very much again Vijay and everybody, have a fantastic day!
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