For those who prefer to read, below is a transcript of the video.
Meet Asish and Ruchi (Beginning of video to 1:23)
Asish Mohapatra: Hi, I'm Asish Mohapatra. I was at McKinsey from 2006 to 2010 in the India Office, but I largely worked out of the Delhi office. I worked in the pharma and medical product space.
My company OfBusiness is a marketplace for raw materials in India. It aggregates raw materials of a bulky nature – huge metals like steel, aluminum, copper, zinc, petrochemicals like bitumen emulsions, industrial chemicals, a few silica scales, food grains in agri – and takes it from their sources, which are largely manufacturers of these raw materials, and distributes it to small and medium businesses.
Ruchi Kalra: Hi, this is Ruchi. I joined McKinsey in 2007 and was there until 2015. I worked in the Delhi and Mumbai Offices, primarily in the Financial Services Practice. I continued my passion for financial services to what I am doing today.
Oxyzo, which is the financial services arm of Ofbusiness, essentially is into working capital solutions as well as other financial services in the small and medium enterprises and mid-corporates in India.
Problems they are solving (1:23 to 2:42)
Asish: In the markets that we serve, B2B marketplaces and B2B commerce, commerce and credit go hand in hand. So almost all of our transactions, more than 95% of our transactions, involve some amount of credit and some amount of commerce.
Our customers are typically small and medium enterprises with annual turnovers ranging from US $1 to $2 million to roughly $20 to $25 million. So these are really small companies, but these small companies are B2B themselves, which means that they deliver a product or a service for a large anchor. They are the backbone of India's economy, but they tend to be almost 40% of India's GDP.
The problem we are solving for small and medium businesses is that they get the raw end of the stick in the commerce value chain, which means that they buy these materials at a higher price than what they should if they were all united. And they also buy it at exorbitant credit terms and hence end up spending a lot of money on the supply chain that serves them. What we do is disintermediate the entire supply chain and take the raw materials right from the manufacturer and distribute them to the SMEs.
Multiplying forces: Personal and professional partnership (2:43 to 4:49)
Asish: I met [Ruchi] a couple of months after she joined in 2007. Not only did we meet, but we liked each other, both personally and professionally.
At least for us, [both being unicorn CEOs,] it can be one of two things: It can be a force multiplier or extremely divisive. It's been the former with us, in classic McKinsey style, for three reasons: We are great critics of each other, so we find out what the other person can be better at. We are great learners of each other's styles – we are known as "Yin" and "Yang" in our friend circles in terms of both our professional and personal approaches to life. And the third reason is we get inspired by each other's deeds. So what happens is that, if she does something great, I also want to achieve a similar benchmark to maintain the same amount of affection and respect. So put those three things together. You get a force multiplier.
Ruchi: I'm quite awed by Asish's answer on that one. The good thing is that when we are in a professional setup, we are quite professionally oriented. If [there is someone who doesn't know we are married], they wouldn't be able to figure out that there is a personal connection. And I think being at McKinsey helped that. We can wear those different hats, which is what keeps us healthy.
More importantly, when you work together, you have that respect and that trust. And hence for me, the force multiplier comes with the fact that yes, you can go ahead and do your thing, and you know that there is a co-founder, a partner, and a professional partner who supports you, and at the same time, you can trust that support to be there. You don't always have to analyze whether you're doing the right thing. I think that helps both of us, in terms of both the space being there, and the support and trust being there.
Keys to finding value early (4:50 to 6:04)
Ruchi: All the key criteria that we have laid down were around things like, how much operating expense do we have? How do we turn profitable quickly? How do we make sure that both businesses, on a standalone basis, would be profitable in each transaction, or for that matter, that the financial services business would be profitable from day one?
So I think we'll attribute it more toward the ideology, which led to the kind of principles that we laid down for ourselves in terms of building the enterprise itself, which in turn led to the outcome of what you see in terms of profitability.
And then you have that thought process where you try to make sure that everything – whether it's the operations, the kind of people that you hire, the kind of technology that you're deploying, and the cost associated with it – it all leads to that one outcome, which is profitability.
Asish: We started with organizational DNA, wanting to be profitable. We also kept in mind key business segments where if you're not profitable, you probably won't exist. As Ruchi pointed out, our focus on this continues to this day.
Economic uncertainty (6:05 to 7:26)
Asish: I think in these uncertain times – particularly the ones that are happening right now, with issues such as COVID, and credit squeezing, and global economic slowdown – it is very important to first believe in yourself. You need to "stick to your own knitting" and not really chip and change too much around your core areas of functionality.
It's also important to consolidate your business toward what you provide as a value prop for your customers, and not try to do many different things.
We also believe that in these uncertain times, it is critical to stick to your core team, which is not just your founders, but almost every single manager or employee at your company. Those are the guardrails that we think are important to lasting in these uncertain times.
Ruchi: I think if the fundamentals of the business right from the start are laid in the right fashion, then it helps to navigate any uncertain times. And if you build a business to last for the long term, it helps you. If you look at the last four years in India, there have been waves of economic upswing and downturn. And within four years, we've seen the kind of vintage a 10-year entity would see. If you get the fundamentals and the building blocks right, you can navigate through stressful times.
What I learned at McKinsey (7:28 to 9:45)
Asish: McKinsey was a very important building block in my professional career. The first thing I learned from McKinsey is how great leaders and managers think about life, professionally and personally.
The second thing is the word "impact," which has been very close to me in my professional career post-McKinsey. To aim for impact and to measure yourself by it at all times is something I learned at McKinsey.
The third thing is the ability to network efficiently and deeply. The people at McKinsey, as well as the alumni network at McKinsey, is very closely knit, and very deeply involved, and I'm privileged to be a part of it.
Ruchi: McKinsey is a great place to identify what your real strengths are, because every time you are put into a situation which is a little new or could have a very different context, you can actually figure out what the analysis is, what your hypothesis is, what the problem statement is, and then how you should present it to the client.
And all this, which happens very early in your career, helps you understand your real strengths. Then, whatever you do in life going forward, you can build off those strengths. I think that that has been integral in the way I work and my management style.
There are a lot of times at McKinsey wherein [early tenured consultants], or people who've just graduated from business school, can be put into very different situations that might not match their specific experience.
And that's something that we've applied at Ofbusiness and at Oxyzo as well. It's not just about your prior experience, but it's more about your intrinsic skills, and believing in and backing those intrinsic skills is something that McKinsey taught us and has worked very well in our current organizations.