10X Your BUSINESS and Build a POWERFUL Career: Kunal Shah’s UNFILTERED Business MASTERCLASS

0:01 Most people who are good at sales will be often called their shameless people. Every MBA school of India will meet Kunal Sha the brain behind great >> one of India's sharpest minds. He's not just a founder he's a fintech philosopher leading a revolution. >> What's your hiring methodology sir? >> We love hiring a lot of expounders because they're usually very self-aware on what do they suck at. So in today's day and age if somebody's let's say 16 years old or 22 years old how do you think they can create an environment around themselves to learn sales deliberately people do not follow somebody basis what is right and wrong. So what would be the percentage of people who are compounding at cred and who are not compounding at cred? >> There's there's like if it means see we

0:49 did our first IPL campaign in peak co multiple of our board members and others recommended to us that we should not do it because >> how do you create a culture where creative confidence is instilled? So which is the most brutal feedback that you've gotten from a new joining? What are the most stark observations that you made about Indian consumers which is different from the west? >> I don't want to see this. [Music] Before we dive in, a quick word for every business owner who's listening to this podcast. If you've ever ducked through crumbled receipts, screenshot

1:35 tickets from 5 months ago, or forwarded 17 emails to your CA, you already know that managing expenses is a nightmare. Lost receipts, messy approvals, delayed reimbursements, and don't even get me started on tax season. But what if I told you there is a very, very easy way to do all of this and that too without any hassle? Here's where I want to introduce you to a magical tool called ODO Expense app. This tool saves business owners hours every single week. With ODO, you can submit expenses effortlessly, whether you're on desktop, using your phone, or even forwarding receipts via email. Your manager gets full picture with no guesswork needed at all. You can even group expenses into reports and submit all at once and get approvals in just one click. So, managers can view receipts side by side and approve it instantly and add

2:20 comments when needed. And the best part is that approved expenses are automatically posted to your accounting with no manual entries and no chaos. And you can track team expenses, reinvoice clients, and keep your entire process clean and paper free. So if you're done chasing receipts and if you're ready to take control of your business, start using ODO expenses today. Your first app is free for life along with hosting and support included. So hit the link in the description and manage your expenses like a boss with ODO. Sir, you are one of the most fascinating figures in the startup ecosystem because you're not just an entrepreneur, but you're also a great philosopher. From the tweets that we all have read, it seems like you have a very fascinating view of the world and you often tweet about the Indian consumer behavior and that in a way becomes like a subject of

3:07 brainstorming for my team and even my friends for that matter which tells me that you have a very interesting view of the world and when we looked at your early life we understood that you went from selling um mahendi cones and pirated cities to then building one of the most successful fintech companies in the country. So in today's episode I have five important subjects to explore. The first is how to sell to an Indian consumer considering the fact that we are a trust deficit society as you mentioned. >> Secondly, how to hire the best talent because we all have heard great things about cred's culture >> and the kind of talent that you attract. >> Number three, we want to understand from your view how do you spot a gap in the market considering the fact that you dwell into so many subjects. Mhm. >> We want to understand the first principles of how to spot a gap in the

3:52 market >> and most importantly we want to understand the correct story and the lessons that you've learned >> which every founder must learn while building a business. So you know there are some podcasts that we often keep revisiting as a reflection. I want this podcast to be one such podcast >> first principle oriented. So as many wonderful stories you have that'll be great. >> Sure. >> That's the agenda for today's podcast. >> Perfect. So to set context, talk to me about your early life and why were you selling Bendy's and pirated CDs? >> I've spoken about it, but I'll just kind of repeat it for the sake of it like because it gives the context on why I didn't make some decisions. I think uh grew up in a large joint Gujarati family where people were involved in businesses and the family went through some

4:39 financial crisis. My dad's business did not work out. I had to start working from very early age and when I use the word start working it was basically taking care of the house like you had to have money to survive and I don't think I was really thinking I was going into these businesses I was just saying how will I make money >> so uh the all the early things from I was a part-time delivery boy I used to work as a data entry operator I have sold menic cones I have sold pirated cities all of these were like finding ways to make money >> and do well right but the thing that changed uh some of these things are basically lessons of sales right because when you are trying to let's say at that point of time the word pirated CD came much later on right but building a a way

5:24 to make a CD from music of songs that were not available in India or not heard in India was an interesting experiment on its own that okay you were able to kind of take that and and I think the the word pirated came much later in the vocabulary for most of us right okay this is what I was doing this and it was more about Would I build an established empire for that? No. The answer was like I would do it for some people here and there and make some money. >> Same thing for men cones. The insight was very simple that uh when people are going for weddings, they have a deep need to differentiate themselves so that they look different and that black men cone was an interesting way to say that okay my meni is going to be so different because I've got it black. Right? So I think it's a the human need to differentiate is something that I understood from that and it actually worked well and I would purposely price

6:09 it multiple x more. uh than the regular Mahindi so that people feel that okay not only is it differentiated it's expensive so it must be great >> and I used to basically go and sell it at stores in affluent neighborhoods where I would tell them that if you sell this and I would do a good job of packaging it put branding on it all of that stuff because we knew that if these people found value in it they will sell it and if they have enough commissions they will push for it and and it was always about freshness so we would always say that If you get an order for this, just tell us we'll get this and we make posters and get this done. And this is early days of internet. So I could leverage many of these things and just kind of put these things in place. But I think the key lesson was that if you are put into a constraint

6:57 environment where you have to work and you have to make money to survive, you'll figure out everything. Right? Most people in India are terrible at sales, right? And the reason they are terrible at sales is because they never had to persuade somebody to do well. >> Yeah. >> Or to survive or to do that. Right. So for example, uh somebody gave me an interesting example that uh uh kids who have had very disciplined parents and had to still find a way to have fun become extraordinary at sales. Hm >> because they had to constantly pursue it and find a way to do it right or they got disciplined >> right but if they did not get

7:42 disciplined they got great at sales >> right but that's not a very reliable way of becoming good at sales sometimes the constraints but I think uh sometimes a blocker comes to us that when we are forced people to do sales but if you look at entire life all the people who do well in life are extraordinary at sales >> correct You want to hire somebody, you have to be great at sales. You want to convince an investor, you have to be great at sales. You want to sell a product, you have to be great at sales. You want to convince your boss to do something, you have to be great at sales. So the core concept of persuasion is a subject that is missing from our ecosystem, right? And and therefore what we see is uh like that gap multiply further because we may

8:29 be the most smartest people but if you cannot explain if you cannot communicate clearly how are we going to create any version of success because it's like oh I wish they understood what I'm saying that's not their problem >> that is your problem true >> and I think that's something that has kind of stayed with me that like that early force nature of learning how to sell >> just gets you sharper about understanding how human motivations work. >> So not a lot of people have this opportunity to learn sales because of not having constraints and people who have constraints often see that as the boundary and they never cross it. Like you mentioned people who have boundaries but have the intent to cross it will find ways to cross it. Mhm. >> But if I was told earlier that by

9:15 crossing boundaries, you'll actually learn something extraordinary, I would attempt to cross my boundaries. So in today's day and age, if somebody's, let's say, 16 years old or 22 years old, how do you think they can create an environment around themselves to learn sales deliberately? The easiest thing to think about in life and and especially when you are 16, 17, 18, 19, your life's situation is not really to make money. You you have just basic stuff. For example, figuring out we every kid at 16 to 21 figures out how to convince parents to do something. >> And there are some people who are very good at it, some people who are not good at it. The easiest thing to do is find out from the kids who are very good at it. What do they do?

10:00 >> What do they say? How do they convince? When do they ask? What kind of stuff do they talk about? Right? And and get good at it. Often people assume persuasion is lying and manipulation. >> Which is where the gap is, right? It's not lying and manipulation. It's about understanding what the other person expects. How can you create a win-win situation? Right? For example, many kids say that, "Hey, if I get this done and I'll finish my homework, I do this thing, can I just go for this one particular thing?" just kind of make a simple thing become saying okay Ning seems that I deserve this >> right but a lot of times we go into this random fights random debates emotional dramas >> because we have no persuasion skills everything becomes a conflict >> correct >> and because everything is conflict we

10:46 avoid it so we don't change >> right but if you think about it let's say you need to convince somebody at school to join for a plan situation >> how would the best people do observing them, mimicking them, asking them to teach you in your circumstances. Another thing that you'll notice that all the people who are not good at sales and persuasion also terrible at asking for help. >> Usually connected topics, >> right? They will not go and say, "Yeah, I really need this help. I need to convince somebody for doing this for me or allowing my professor to allow this for me or do something for me or uh let me skip this particular practical inh college. Can I? And they will never ask people who are good at it. >> And that's a consistent thing you see

11:32 that people who do not grow are the ones who do not ask for help. >> Not asking for help is deeply connected to persuading because there is this barrier of looking small or feeling small by asking for help. >> Which comes from insecurities which acts as a big blocker. Many other times for most of the times you will be told no. But what does it change anything in your life? But to avoid no we don't attempt. So you see patterns that are all connected to this creating this image of ourselves. For example, what you will see is uh people who think of themselves as this but their actual substance is this are the easiest to offend >> right because you can easily do some only and they'll react quickly to that.

12:18 And in fact those the exact people we love trolling making fun of annoying them right >> but people who have this thing close to each other they're very hard to offend >> for example if somebody told me kunal you are overweight I'll say yeah that's a fact so what do we do now >> right but if I had deep insecurities about the same topic I would say like I will start defending and say I will use all the terms to protect myself from that identity >> versus I'm saying that's a factual thing so what do we do >> and What are you trying to tell me? Is there a new information you have for me? >> So you will see that some people are just hardest to offend >> because their substance and their perception is connected to each other and second they do not have the need to react to everything. >> But all of these are connected topics.

13:04 So saying that there is an insecurity that prevents you from asking for help. >> There's an insecurity that is preventing from asking for somebody to do something for you that causes the thing. So what you will see that most people who are good at sales will be often called as shameless people. >> True. >> And then you go back to the word shameless and say how did we become so worried about shame. >> Because if you are raised by constantly being told that oh if this happens somebody will say shame shame or if something happens it'll be a big shame on you. If this happens it'll be a shame. And the word shame is something that is like locia is a interesting thing that we have right. So what you do is in action I'm good I don't need to do anything >> correct >> but if you get rid of that part that you

13:50 are worried about what people will say you will compound fastest >> but most people have no interest in that they are stuck in the versions which are protecting their identity protecting themselves and therefore many of times people are easiest to offend and I'm little worried about the youth right now because uh they are getting uh to a point where no social media creates an interesting bubble where you are a unique personality in front of your followers. >> Correct. >> Right. And you create an image but the challenge is that anybody questioning that is seen as an offense. >> Right. Because you already have a formed view on who you are. Well, you are still getting formed. >> Correct. So I think I've seen a pattern

14:39 where like people who build this tendency of getting offended quickly almost gift themselves a curse forever to not grow. >> And I think that is something that is deeply connected to sales and being shameless and being connected to be successful. M. So shameless combined with humility combined with the ability to keep learning from what's working eventually makes you a good salesperson. >> Yeah. You'll notice one thing that some good people are always good at seeking feedback. >> H what do you think? What could I have done better? Can you do something almost to an annoying point? >> Yeah. >> But most people are not interested. In fact, they got offended. They get defensive when you give them feedback. In fact, think about one simple

15:24 framework, right? Imagine 10 people in your life >> and imagine you need to have a tough feedback with each one of them. In which places you feel ar that person will listen will be actually thankful which people you are like bus I don't want to go near them because I don't know what reaction I'll deal with >> right when you think in categories like that you know which person is going to grow or not grow. >> Yeah. Right. But what if you were also exactly like that for different people? >> Let's say you are a founder of this podcast and your team is extremely scared >> to tell you what your blind spots are. >> In few years time, the success will not follow. >> Yeah. >> Because everything that you've done that

16:12 you believe is perfect will stop working because the audience has evolved. But you have not because you never heard from anybody. What's the blind spot? Hm. Hitler is a classic example. >> Every success story will have the same patterns or every decline will have the same patterns that you create success where your ability to listen drops dramatically because arrogance is where your perception about yourself is growing faster than your substance >> and then you you create a shield around you for people to tell you anything. >> Got it. Sir, how can someone deliberately not create that shield? Because there's something called creative confidence that I've studied and it says that if the intern in the company can voice

16:57 his opinion without being feared without fearing the judgment of other people that is an indication of company success because if everybody can speak their mind it says that feedback is being taken eventually that results into higher probability of success for the company. But in an organization, how do you create a culture where creative confidence is instilled? >> Well, the easiest thing to do is encourage people to ask questions. >> Because the advanced stages they give you ideas, >> expecting somebody who's just joined the company as an intern to give you great ideas is going to be limited because they have limited experience. Correct. And context about your company.

17:43 >> But they may have great questions. H that will be a blind spot that you would not get. For example, one of the things I do for all the new people who join at cred, I hold a session with them and I usually tell them in the first 30 to 60 days everything that you're observing, tell me about it because they have a unique ability to see this looks random, this feels stupid. Right? And sometimes this is just happening as a ritual, but you just don't realize that it's been stupid for so long. Mhm. >> But I think if you just create an audience or and and perspective say that can you help me and one of the things that I've seen the best people do, they treat feedback like a gift. >> And and that's just literally 1% of

18:30 people who treat feedback like a gift. They show the insane excitement to receive it, insane excitement to open it, >> an insane excitement to thank people, oh my god, this was so good. so that they have the motivation to give you gift again. >> But if I'm like I don't want to see this. >> I I'm going to push this away. I'll get defensive. And people when they get feedback rarely they demonstrate curiosity. >> They most likely demonstrate defensiveness. >> But that day this happened and that's why I said no. What else? What do you think you felt? You you observed this. So what was the impact of what happened and do you see this pattern recurring in

19:16 me? Do you see me doing this again and again? >> Do you think I should fix this thing and and what do you think in which circumstances do I behave like this? And they would have observed you to tell you this patterns. >> So which is the most brutal feedback that you've gotten from a new journey that has helped you grow? means continuously like there's there's like if it means see something is brutal when you're constantly not in touch right if you are constantly in touch nothing really shocks you surprise you for example like let's say we built a ritual for an elaborate thing and we had all these teams present do all of that stuff then we realized that the onboarding process was so long that nobody had attention span for it but then it reached a point where you're

20:03 like they're just for a week just getting bombarded Hm like for example can you walk me through it so that >> no for example we had a ritual where we said okay each team will present what happens in marketing and what happens in design to the new joinies across all the team members and we realized that the sessions became this broadcast of things that I have less context or knowledge about versus maybe making sense of this if I was a little bit involved in work also >> before I've entered I've been given this like very elaborate uh context less awareness is a little bit like school >> and people don't have attention span for that like right and and sometimes you just tweak it because it was start with the right intent that let's give them color of all the teams and all the choices and all

20:49 the things that we do but sometimes it's not very helpful >> so I think this just helps like people are like coming and saying that hey what was this about why did we do this and and original intent actual execution that you're like oh my god this is so stupid now And have you has anybody given you like personal feedback that would otherwise seem very offensive? >> I don't get offended. >> No. Otherwise seem offensive. To a normal person it might seem like >> I don't know that because I don't get offended. So I don't know what would be offensive for somebody else. I I find uh feedback is either useful or useless. >> I don't understand how to attach a tag offensive to it. >> Got it. And which is the most useful feedback that you've gotten? >> Every feedback is useful because there are blind spots. Right. For example, if somebody tells you that, hey, the way you walk is causing this tilt and

21:35 causing this thing. This could having this impact. You're like, oh, that makes sense. I would have never noticed this. Somebody observed me walking and saying, hey, you have a thing where you are bending a little bit on this side and that side. And I'm like, okay, that's interesting. But if you're just curious >> as a core personality, feedback is great, >> right? But if you are non-curious, then everything is annoyance. M >> like we use the word know that like whatever it's just basically a reaction for your brain to get reshaped. If you like your brain to get reshaped all the time, every information feels like a good stimula. >> Got it. Understood. Sir, if the interaction between the founder and the newcomer is not happening, does it boil

22:20 down to the attribute of the leader of that particular team? >> 100%. a a a newcomer's confidence is a function of how they were raised, how they grew up in a household, how their teachers treated them, how their environment or their previous work treated them, right? But if you create an environment where they are like, "Okay, I think it's a good idea. I respect it. I think it's an interesting point of view." Or explain to them why you made that choice >> they think it seems to be stupid. Then they will have the luxury and the confidence to speak up, >> right? But more importantly, it's about creating structures around that, right? For example, you can just hold a meeting saying that there's a feedback meeting. No other agenda. You can't mix the feedback meeting to a non-feedback meeting.

23:06 >> Cuz you can't suddenly discuss podcast research or by the way point. >> You can't be in that mindset only. They will if they have to also find this huge reason to come up with it. That's not very helpful. So >> you're saying hold special feedback sessions >> easiest and and and the intent is to listen and not defend. The moment you go into defending, you can demonstrate curiosity that where did you see the example of this? What do you think is probably causing it? Do you have you seen this me doing things consistently or sometimes? >> Is this something that is happening in the company on a regular basis or sometimes? uh uh where is it happening where is it

23:52 not happening like something of that nature right and and if you can start thinking about the impact because sometimes you do not understand the impact >> for example sometimes you do certain things let's say you know a large org of thousand people you you do certain things in all hands and you behave in a certain way by the time somebody who's six levels junior to you understands they will not understand what happened they will only realize oh kunal was angry on the stage words were lost >> and that will not make them feel anything because they don't understand the context on why you are upset >> unless you explain what's really causing that. >> Got it. Sir as the organization scales very fast you know for a organization of

24:39 our size 30 40 people I have the liberty to interact with everyone but um as my company is growing I feel afraid because I'm not able to spend enough time with each person >> because of which you know Amit Jen mentioned something about culture trickle down >> and he said that it's a function of how much time you spend with your top leadership and eventually how much does the top leadership spend per person in the And what's that ratio like? >> The more the ratio, the better it is for your culture because the culture will trickle down faster, more accurately. >> But as the company scales, a company of your scale, how do you make sure that it happens quickly? Because as you onboard more and more people, there's a possibility that the culture may not trickle down as quick as it is supposed to be.

25:25 >> I think there are some scalable methods to make sure culture is. So for example at cred we have a few values right that we live by. We interview bases those values. We do appraisal bases those values right and our vocabulary is shaped around those values. >> Oh wow. What are those values? >> For example one of the values we have is earn trust. >> Right? >> What does that mean? It means that do everything in your capacity to earn trust of all the constituents and stakeholders you're working with. could be a team member, could be a consumer, could be a regulator, could be a partner we work with, doesn't matter. You to constantly be in somebody who can be trusted, right? And and that automatically creates an expectation

26:12 that in the interview that do we feel trust with this person? Can this person be trusted? Can the person evoke trust from other people and so on and so forth, right? Same thing in the appraisal. For example, extraordinary performance but rated poorly on earn trust. >> Should that be person be promoted or not be promoted? Right? So you see that part emerge that way. The other thing is about culture eventually means what do you tolerate? >> What do you tolerate? >> Right? If you say earn trust is a value but I do not care about it and I let it go in day-to-day behaviors and when when when customer choices are being made that this will be the best thing for the consumer or not will it help them or

26:59 not. If you do not think about these things launch fix and you don't block that launch saying that this is not good for the customer, we are going to delay a week. >> That's what sets the culture because next time somebody will not come to negotiate this with you. >> Correct? >> So you have to practice. For example, one of the things that we do is we do not we have a simple principle at credit not launch any product or service that we would not offer to our friends and family. >> Which means first we will launch it internally. We see how people are using it, adopting it, then take it to the consumers or our members. Because unless you cannot stand by it and and stand

27:44 behind it and be proud of it, be uh uh like thinking that this is something I will do that will improve and make the members win. >> Why do it? >> Correct? >> So I think this is what culture gets set again and again and again. >> Right? For example, we don't believe in doing unfinished or like non-polished product because that's an expectation. When you launch something, people say, "Oh, credit has done something. Let's see what they have done." And that can only come if you make those choices very clear that we cannot have non-polished product going out there. >> Right? Pixel, symmetry is off, colors are off. Like

28:29 these are values, right? By the way, it's not that companies who have not defined values don't have values. >> They do. >> Yours is articulated. >> Yeah. No, they exist in your behavior. For example, if I had just put 10 values at cred and my behavior was exactly the opposite. >> Those values will never be followed. only my behavior will be followed. >> Yeah, it's almost like parenting. No, sir. You can't teach your kid to read without reading yourself. >> Correct. But more importantly, it's the consistency of behavior. >> It's about reading once versus is that how you are, right? If you are demonstrating intent

29:16 towards consistency of good behavior, >> you'll able to make other people look at it. and and see humans are uh mimicking animals right like they will see something they will want to be like somebody and do it >> so that will continue to be the case if we do not set that as a culture and you do understand one thing it'll always have challenges perfect company every single company the best of the companies have had entropies in their culture >> where they had a gap where they said something did something did not explicitly say something did not expect something and that has to be fixed again. So what what you'll notice is that uh if you if you think about the difference between religion and culture, right? Is religion getting evolving like

30:01 a app? I mean, okay, now this rule is canceled. Now we are introducing this because we realize something else has changed and all of that. So but culture is something that has to constantly evolve. >> Correct? >> And realize these are the bugs, these are the features. Enhance the features of your culture. for example, okay, people trust your culture. Find more ways to create trust. >> But if your culture has these bugs, fix them on priority, right? So, think about your culture as an app. You release it again and again. >> It's not one time >> and make sure it's distributed because release and nobody got to know about the app. That's also useless. >> Beautiful. So can you please jot down the values of cred and I want to

30:47 understand your evaluation criteria and how do you incentivize for following the attributes of culture. So the first value that you spoke about was earn trust. >> Mhm. >> Which are the other values? >> So we have multiple values. I I'll I'll try and keep uh some of those things. Uh first is uh uh earn trust. We have a value called as uh being right a lot. We we got inspired by Amazon which is all about judgment. have to be great at judgment, right? Being right a lot. Okay. >> Now, this is a unique thing that you will see all leaders are respected if they have good judgment. >> It's very hard to follow somebody who has bad judgment. >> Correct. >> Right. Because people do not follow

31:33 somebody basis what is right and wrong. They follow basis their judgment and their backbone behind that judgment. >> Right? But if we do not say our right a lot like say are you good at hiring are you good at making choices are you good at uh uh picking up something in marketing picking up something in that whatever is given to you with less data can you make good judgment >> that is a leadership trait so this is a little complex for me to understand I'm I'm thinking about how did you scale this message across the organization being right a lot as in be good with judgment Okay, >> let let me explain. >> Let's say you are interviewing somebody for this value that is the person good

32:18 at judgment. You can easily ask a question that tell a decision that you made that most people were against or thought will not work out and you still made it and what did you think and how did it go? H and you will see again and again. I'll give you an example of cred. We did our first IPL campaign in peak COVID. Multiple of our board members and others recommended to us that we should not do it because IPL could shut players could get co multiple things could happen which can make the investment not work out well. >> Okay. And my thing was this is one of my moments where I have to you have to trust my judgment because my view was

33:05 that we focus on the top 30 40 million creditw worthy customers who were pretty much working from home had not seen any entertainment for a while. No new movies, no nothing had happened. And in that time that IPL could be the biggest IPL because it gives the relief to people and doing an ad at that point of time might probably the best decision and it turned out to be true. But it was a large investment for us to make in a time that was extremely uncertain and there was no precedence. In fact, when we did this particular sponsorship or ad, I think one or two brands existed and then it became normal for a lot of internet companies to do IPL sponsorships and others. And when we did that that time it was a counterintuitive decision >> and that is what judgment is all about. >> Got it.

33:51 >> So when you make this choice that's for example when we started cred we said we'll focus on 30 40 million credit worthy customers and build for that because we believe that's the market to build for rest of the market is going to take a while for building internet convenience services for them. But eventually when every company eventually found out that only the same 30 40 million customers have to serve for right now and if you see every big internet company limits their MTUs to in the same range people like oh you were right you were actually focus only on that you do not try to expand to hundreds of millions of customers and you build for these people and it actually worked out well I think this is where judgment comes in but it's also about judgment of hiring h >> so what if you interviewed 20 people And

34:36 15 of them turned out to be bad hires and we had to find a way to not work with them in 2 three years. >> Then how are you good at judgment? Because interview is an imperfect process to hire. >> Correct. >> It is probably the most archaic method of knowing somebody. But if you work with somebody for 3 months, you'll know if they're good or not. >> What's your hiring methodology, sir? If you think interview is archaic. No, we we try to get lot of data from interviews but more importantly just values right values are a good indicator but one of the things that I've seen that people maintain their slope right if you've started here got here you have something >> and it doesn't matter what this and what this is the degree maintains itself

35:21 >> right very few people change their slope degree like this >> can you explain that sir >> let's say you started from very humble beginnings and you managed to within in 15 years reached a certain position >> that mathematically seems very odd >> for somebody to get this level of growth in a short period of time. >> Those guys will continue to grow, >> right? Uh but let's say you were privileged and started from here and your growth has been only this much then you'll maintain that also >> right. So a lot of people maintain that slope the degree doesn't change >> and and that you will see again and again but sometimes what happens is somebody has a life event for example you'll say oh this guy this thing did a

36:06 startup then startup failed >> sometimes you go see them go like this after that >> because life event makes you realize what are you bad at >> we we love hiring a lot of expounders because we've seen one interesting pattern they're usually very self-aware on what do they suck So they are much more open for feedback and much faster and they have the need to be right and the need to be successful after that. >> But you don't have to motivate them. If you have to hire people that you need to motivate then your company is not going to become a big company. Imagine you building a a elite team to win in cricket and your

36:52 core problem is motivating team. you're unlikely to go on the main stage and win because what I have seen is that see motivation is very intrinsic in most cases. You can create environment where the intrinsic motivation gets even bigger. >> Yeah. >> It's very hard to make somebody ambitious also. >> Yeah. >> Right. You can enhance their ambition. You can expand their ambition. But can you make somebody ambitious? Unlikely to happen. Right? And I'm not saying that everybody should be of that type. There are all types of people who work at different things. People have different expectations from life. But you have to be very clear. What do you want? >> Right? If you are looking for very ambitious people and you've not had very

37:38 ambitious people and you're constantly making their life miserable, that's your problem. >> Correct. You could have very easy saying that I do not want to work with less ambitious people. I am a platform. So I tell people at credit that I am a platform for the ambitious people to achieve their absolute excellence. >> Okay. >> But I am not going to be the ones who will give a motivational speech and get them to be get motivated. In fact, if they need motivational speeches to get motivated, I mean they have bad news all their life. They're unlikely to do well. >> Right? Right. And that's what I often worry about all these motivational speakers that we have now which which are giving you motivation. You feel great for 10 minutes and your life is same after that. >> One interesting thing that I read in Mr. B's document is that there are only A

38:24 players and B players. >> Mhm. >> Very rarely does the transition happen from one category to the other. >> Correct. >> So initially I had this mindset you know you can motivate people, you can change people. But then eventually after reading that document I realized that it's actually a very 01 process. either somebody is an A player or a B player. Sometimes like the value mismatch might happen because of which your definition of A player might be different from somebody else's definition of A player by primarily from your lens if somebody is an A he's an A. If somebody's a B they will be a B. It's usually not a permanent state. Uh people it's harder to change states but it's not a permanent state. For example I I told you a failed founder will suddenly become an absolute A+ person because now their life's motivation is unlocked in a different way.

39:11 because they went through a setback. >> Yeah. >> How do people react to setbacks is a very good sign of A and B not their current state. >> Uh most people who are B do not have any setbacks in life only because they don't attempt any risky behavior. >> Or maybe they react badly to setbacks. >> If they react badly to setbacks, they're unlikely to encounter more setbacks. They will take more non-risisky approaches to life. >> Yeah. >> So they will have that outcome with life. But if you're constantly going and risking something, you're risking your reputation. you're risking your or your judgment. You are risking some choices, right? Uh you're automatically creating more growth for them. Look at somebody young in the company who grows well. They will consistently risk their reputation and say, "Can I do more?" And then prove they did more. So you'll want

39:56 to give do more to them, right? And their growth happens automatically because they just are constantly willing to take the risk and do something that is beyond their current capacity of doing things. >> Yeah. But most people are trying to be very close to the current capacity of doing things. So their growth will happen at that level. If you're trying to achieve something that is beyond your capacity, they will do differently. They will fail much more for sure. But how do they react to failure? Most people get deeply impacted by setbacks, right? And and it's very hard for them to recover. >> Yeah. And yes, sometimes the setbacks are quite severe, right? But the question is that if you want to be typea

40:44 player, it's your reaction to setbacks and I think that's what you will see in best athletes also. If you see some of the tennis players who make it big, they will say how do they react to a bad point or bad set? You will see them like they go exactly the opposite. >> Yeah. >> After that, some of them go the exact opposite after that. The question is that what drives you? >> Got it. And so these expounders that you mentioned, have you noticed a pattern where there are two types of expounders? Expounders who have tried and they have their own belief system which has become rigid. And there are expounders who had the values that were right. Maybe they were in the wrong market. Maybe they tried the wrong product. But those intrinsic values remain the same. It's just that after coming to credit, they have a new direction. And in that direction, they just accelerate. I think

41:30 the easiest sign is that when you ask them why did the startup fail, how much do they externalize? >> H how much do they blame the market versus blame? >> They will blame the market, they'll blame their co-founder, they'll blame their investors, they'll blame co they will blame everything except themselves that I had terrible judgment >> about almost everything. So you will see who's going to be coachable or not. Hm. Could it be a function of both sir? Terrible judgment of the market and the market being bad. >> No startup goes through a perfect journey. >> Right. In fact, entrepreneurs create wealth because they remove uncertainty from people's lives. >> They remove uncertainty from employees life. They remove uncertainty from

42:17 investors life. They remove uncertainty from customers life. >> So their life is going to be more uncertain. >> Yeah. You have to win despite that. If you are not in that game, if you are not somebody who seen as people who take somebody's uncertainties away, you're less likely to become successful. >> Correct? >> So yes, every tell me one startup that any success of any type that did not meet with extreme uncertainties. >> In fact, the prize money is to win against uncertainties. >> Correct. >> Right. But we are like oh yeah I fall yeah sure big deal but we often forget and therefore a

43:03 certain type survives as a founder by the you can see their signs early also like think what all your friends that you would say yeah this person despite uncertainty will achieve this goal or will solve this problem. Yeah, >> it instantly clicks >> or or she will just figure it out. I don't know. I need to explain how it is to be just told to her and she'll figure it out. >> Those are the exact type of people who become great founders. Or extraordinary team members. But if you cannot feel that about somebody that this person will figure it out and you will constantly coach, watch, review, check then they actually are failing in the

43:49 first strategy which is earning trust. >> Not earning trust, it's about their ability to have high agency to get stuff done. They will figure out the problem, understand the solutions and find a way to get there. They will get from point A to point B despite all the obstacles that are there on the way. It's nothing to do with trust. >> It's about I will get from a point A to point B. They have this deep need to just get there. If it's hustle, if it's solving a problem, if it's improving their skills, if it's about convincing somebody, doesn't matter. Every obstacle on the way, they will get it done. >> High agency. So sir, earn trust being right a lot. >> Yes. >> Would you also include high agency in your values? >> Yes, we we do. Uh we we we have some version of it called a skin in the game,

44:36 but high agency is a better way of saying it. Uh and the simple way to think about high agency is that there are two types of people. People who happen to universe and people where universe happens to them. >> Okay, >> it's very simple, right? This person happens to universe >> and this person always universe happens to them. >> Reactive and proactive. M no I think uh the way to think about this is that this person will make the change to universe and bend it the way they want it to be >> and this person is always victim of the environment and circumstances. >> Yeah. like like

45:25 you ask them they will have extraordinary explanation and excuses and they're right in all of their explanation excuses but the best people who happen to universe will not give you excuses they'll say I just did not get it done >> next that is so true sir every time you say something it just resonates with me so well that I'm able to figure out an example and a person with whom this has happened beautiful so you're saying hi agency and what else do we have more values? >> Yeah, we we have quite a few. We have something called as compounding. >> Are they continuous? I mean are they evolving rapidly? >> Are they somebody who are going to become a different person every 6 months, one year which comes from their own ability to learn, change, break their beliefs, improve their skills,

46:11 constantly evolve, >> right? And it's very very hard to uh uh make people evolve uh unless they are designed to evolve. >> Evolution is compounding is one of the skills that cannot be taught. You are that type. >> So we look for those types who are evolving quite rapidly on their own. They're not waiting for from workshops to be done in the company or uh uh they want to do a some somebody has to come and tell them something. They're just compounding people. They are just constantly evolving. When you tell them what has evolved, if you ask them what did you learn last month, they will have an answer, a good answer. If you tell them what did you change about your belief last month, they'll have something, >> right? And and they are changing quite a

46:56 lot, right? Uh and and evolving people are are interesting because they are able to react to environments also faster. We we're entering a world where it's changing so quickly that if you have no compounding person, they're going to be get disrupted by the current world. >> Correct? >> So compounding people are a little bit like pro protecting against inflation of the rate of change of the world. >> Mhm. >> If you have that capability, you will be always ahead. Then the world is changing. Right? For example, these are the exact same people who are using AI for everything. Not just improving the grammar. They found a way to leverage this proving something. They're not waiting for some tutorial to come. They're just there. They're just applying themselves and getting it done, right? And it doesn't matter what their

47:42 age is. >> You will see some of the sharpest people are just compounding. They're like, I need to learn. I need to figure out. I need to ask somebody. I need to figure out something. I need to check. Their reaction to new information, their reaction to a situation that breaks their belief is different. you will see that they will lean in to find out what do you mean versus who will start defending their belief. >> So I'll give you an example and you help me understand if this is how you apply this. Let's say I am interviewing for an HR position. If I have to gauge compounding and I want to apply this principle of yours, I would ask this person which are the three AI tools that you've

48:28 used to change the way the recruiting process happens in an organization because they must have worked previously somewhere and AI is this change that's happening in the world right now. And if somebody is if somebody has been an HR they must be inherently curious to understand which are the air tools which can which can make their job easier if they have this attribute of compounding. >> So the right framework is to not get bottled by tools. >> Okay. It's about efficiency. Right? If I told you that I have to solve this problem and I'm going to give you one/ird the cost, one/ird the time. How will you do it? >> AI is just one method.

49:14 >> H understood? >> Let me give you an example. Let's say I am going to give you a question right now and let's say we have your team also who have to also solve the same problem. I'm going to tell you what is the gender ratio of patients right now in the hospital that is nearby that is Kokavan hospital over here right and I'll tell you I need the answer in 30 minutes >> 30 minutes let's make it 60 minutes okay everybody will think differently right doesn't matter >> I want the answer of high accuracy in 60 minutes >> right what is is the easiest answer according to you in 60 minutes. I want high accuracy answer. >> I'll make three attempts actually. Either see if there's any publicly

49:59 available information. >> Correct. >> B call them or see go down go down and sit down there for 60 minutes. >> Perfect. So you did not use AI for this. >> M. >> But if you tell people how will you use tools then they will just worrying about AI. None of the answers required you to solve with AI. >> Yeah. >> You just found the most efficient path. The efficient path actually is probably walking up there making a request to the receptionist or somebody saying that or the billing counter saying that I'm part of this project. I need some help. I need just only this indicative information of what is the approximate gender ratio of the patients right now in the hospital. >> Most likely they'll tell you the answer. But everybody who uses all the other scientific methods are not being

50:45 efficient. >> And this is a problem of asking questions on which tool will you use. Got it. They're just narrowing down the possibility. >> How will you solve this problem in the most efficient manner? >> Got it. Understood, sir. >> And that is a real challenge for most of us because we don't think in efficiency. We are looking for some method of solving the math sum >> or maybe a cool method. >> Yeah, more than cool method is like we don't want to apply what is the most efficient path to solve this problem. You don't have to use AI. >> Got it. >> Sometimes using AI is a good idea, but often you will never see people really apply the efficiency lens. >> So the interview processes can be

51:31 problematic if you start going to ask which AI tools do you use in HR? No. For example, if you ask the same person that I have this particular position open for last 2 months. I if I told you I want to close this in 3 days, how will you solve it? >> Got it. >> So and this is what I see in startups also. Many startups will become successful because they do not make something efficient. They just say I have made AI fashion tool, >> AI stylist who will make you style. I don't care about that maybe, but I might care about how do you fix this button on my shirt efficiently and and might be interested in that problem as a large enough problem to be solved.

52:16 I don't know. I'm just making this example up. But like sometimes we apply technology and tools for the sake of it. >> Nobody wants that. >> True. For example, the reason I don't think we have found a wedding unicorn in India so far because people are not seeking efficiency sometimes, right? Our people are like okay look at the best mahi artist in Bombay immediately Mumbai like let me get no sometimes you want to ask 10 people and reach out to them socially feel good about sharing this information >> and then inviting somebody from your reference >> because it's an event to connect socially also I'm not looking for efficiency

53:02 >> I'm looking for inefficiency an excuse to reach out to people Yeah. >> So that I feel special about them making recommendations to me. >> Mhm. >> Sir, now that you've said that, while I got married, I actually made some very efficient recommendations to my wife, expecting that she'll be very happy. >> But turns out um I was the one who actually got fired because I did not understand that it's about the process and not about efficiency. >> Exactly. >> So often we tend to not understand that what is really important at what point of time. And and this is where the nuance of leading, nuance of building, nuance of creating comes from. >> Yeah. So how do you track how do you evaluate if somebody's compounding or not in your organization by design?

53:48 >> It's very simple. It's a relative term. Right? If I ask the question that is this absolutely if you ask a question is this person demonstrating the highest learning ability by the compounding people are also good at teaching. >> Mhm. You will see that people who are great at learning are also great at teaching. >> Okay? >> Right? If they're great at learning and not good at teaching, they're not able to compound because sometimes clarity comes when you explain. >> Not when you learn. >> But what if people let's look at you know some science nerds >> like I have friends who are pursuing PhDs. >> They learn a lot. They're just terrible at articulation. >> Perfect. So success may not come at the same level versus the PhDs who can articulate. M >> true >> they will have better success in non-P PhDs

54:36 >> or people who are not educated sure but will they have a disproportionately higher success because in PhD also you have to get funding >> so you have to sell >> so you have to sell so just by saying that oh just because I'm a nerd I will not be good at persuasion is not a good excuse if you have to win at any human game you have to be good at persuasion doesn't matter if you're a PhD or a scientist or a politician or an entrepreneur or almost anybody. >> The entire human game is about a human game of persuasion. >> So communication and articulation is also an important attribute to gauge if somebody can compound quickly or not. >> It's a it's a good good sign because you will see that their blocker. Imagine you're a leader and you can't teach.

55:21 >> That team is going to be always in pain. >> Yeah. >> The guy is not even explaining what has to be done properly. Neither he's or she is coaching me on how to go about doing this. Neither this person is able to teach me how to do this well the way he or she does today. >> Then they are going to have terrible experience for the people who report to them. But the best people would be you always learn something from them. They make you better. You feel oh my god I'm going to come and talk to my friends. I learned something new today. This person gave me a new insight. this person taught me something right by the big trap of the podcast world which I have often mentioned is that people have gotten addicted to just listening to the stuff and applying nothing

56:09 >> that's the worst by the way because now I feel that every time I meet a young person they are usually the last last 10 short clips or last 10 reals they have watched true >> so you ask them second order question nothing >> because they picked up some viral clips here and there >> with no depth. So what I'm worried about is they have we are entering a world of becoming sounding smart without really being able to explain with depth on what have you understood. >> True. >> And that also comes when you're able to say I'm going to become good at teaching what I've learned. >> Because the students will ask you one random question if you don't understand the subject. We all had teachers who could not explain. No.

56:54 >> Correct. >> We all had teachers like that. And we all had teachers who would be so passionate about the subject. You bring any topic here and there, they'll go really deep and explain to you. >> Yeah. >> And funny enough, the subjects that we loved were where the teachers were best. >> True. >> Nothing to do with our ability to with the subject. >> Yeah. Nothing to do with the complexity of subject as well. >> Exactly. So the thing is that therefore leadership is exactly that. Mhm. >> Let's say if you had a we work in this great company but your leader is terrible. Your experience of the whole company is bad. We will wonder why the every why the hell everybody else is happy in this company. My experience is terrible. >> And when it comes to let's say so what would be the percentage of people who compounding at credit and who are not compounding at credit because I'm

57:40 assuming it's not ideal. >> See it's a it's always a ratio right? percent of people compounding ratio of compounding at credit versus nonredit is even more important >> okay >> versus like >> I don't know I I I would like to say it's probably high and therefore we we'll probably do okay in life >> okay >> but the one clear sign of that is that we are not doing okay >> if all of our metrics are in the red >> and not growing and not improving consistently year-over-year >> then people are also not compounding >> I am not compounding >> sometimes we will have a bad year here and there every company goes through that but how do we recover from that how do we recover from a setback that's going to matter even more >> right and what you'll notice in India is

58:26 uh our reaction as a country to things that we don't understand is usually fear or mock >> okay >> right so you'll see that our early reaction to businesses is the same right we either fear oh my god like for example the easiest thing to that oh this company is stealing data >> right who would build a high reputation company if their business was like stealing data right but the thing is that it's the easiest thing to do when you cannot understand what this company does for example if I told you that we are consistently improving people's behavior with their money improving their credit scores improving the repayment of credit card behaviors all of that and make it easy for banks and merchants to discover these customers and so on and so forth and we make money

59:11 on that that's a boring answer >> hm M >> the other thing is mock right like oh this company is that but the thing is that sometimes companies let's say we we announced our results last year we are 2,000 crores plus thing but we had no revenue 3 years ago >> and how many companies in the public market more than 2,000 crores revenue. Yeah, >> these questions are not even known, right? So what happens is we will judge for the right reasons that oh we think this company is making losses. Correct? But why would somebody fund these companies who are making losses? >> That question we don't ask. >> Correct? >> If it it's safe to assume that this person who's investing in these companies are not very smart, >> but then they would not be given so much

59:56 money. >> Correct? So we have to think about these choices and and what I'm saying that learning and compounding is about asking questions. >> Why do people fund lossmaking companies? Great question versus fear them or mock them. >> And that's what creates this interesting learning experience that people embark on when they convert their fear into curiosity. Mhm. So if I have to apply and evaluate compounding to my organization of let's say 30 people, how should I go about it? What's the step-by-step process to go about it? >> First of all, uh you have to live that value. >> Okay. >> Second is that you cannot be live the value by just saying stuff. You have to be doing stuff.

1:00:43 >> Yeah. If I give all this yarn and I do nothing in the company >> and I'm not seen as somebody who's changing >> by the team who gives me feedback then nobody believes that I'm a compounding person. >> Got it. Step number one practice. >> Yeah. The second thing is that what kind of things that you pay attention to. For example, uh do you encourage asking good questions or do you ask good questions >> that makes people think? If you do a review of somebody, will that be a painful experience also a great learning experience? >> Because sometimes we think review is like boss, we have to ask people. What if it turns into a learning

1:01:28 experience also? What if they say, "Oh my god, how did this person figure this out? >> What did they see? How did they figure out this pattern?" And then it becomes a practice to live. H Right. So slowly we have to understand this and build this culture. >> So ask good questions and encourage good questions. >> Encourage good questions. And sometimes like one of the things that we have seen at least in India, we have killed curiosity in people >> is when we mock people's random curiosity. Let's say you are a 10-year-old and you demonstrate random curiosity about something that has nothing to do with your studies. And I said the parents told this person full marks.

1:02:16 >> So what are you doing? Neither they become full marks person. Neither become curious. >> Correct. >> So end outcome is net negative. >> Right? People will demonstrate curiosity towards things that they find interesting. M >> but what if you made them feel that they are so curious that they will find everything interesting. >> M >> right a simple ritual that I recommend to lot of people who have young kids is what if you asked one why question every day >> that they have to figure out an answer by tomorrow. >> Okay. >> Right. I I call it the Wi-Fi school. Whi school. Uh let's say you ask them

1:03:03 uh why is flying in planes more expensive than train? It may be intuitive to you. It may not be intuitive to somebody who 8 10 year old. >> Yeah. >> But what if you give this question and told them tomorrow's meal you will give me the answer. >> M >> and you figure out whichever way you want they'll come up with an answer. But you say I will not take an answer. I'll ask you questions further. You have to answer those also. >> So you can't give me a oneline answer. >> So that brings depth. >> That brings depth. >> But if you do this for 3 4 years consistently with one question a day, they'll become great. And by the way, in the second year, you can tell them to come up with a question >> instead of you giving the question.

1:03:49 Then you come up with a Y question. I'll say great, let's find the answer to that. come back with an answer tomorrow. What will happen naturally? They will not stop at one a day. They'll build 100

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