Good Morning edwardlorilla1986.paxforex@blogger.com,
If you were to imagine organisations as planetary systems, there are two kinds of objects that exert an incredible amount of gravitational force.
The first are the founders. This is by virtue of their having brought the entire system to existence and having attracted (and often repelled) most of the other planets, stars, asteroids, etc., that comprise it.
The second is the CEO. As the object charged with the system’s survival and future, they play the biggest part in its functioning.
In the world of startups, these two objects are often found combined into one—the founder-CEO.
If you’re wondering where I’m going with this, it’s to introduce Amrish Rau, the CEO but not founder of Pine Labs, a leading payment solutions company last valued at over US$5 billion.
Amrish joined Pine Labs as a CEO in 2020, after a two-decade career in which he started, ran, and sold businesses (in 2016, he sold Citrus Pay, a startup he had built, to rival PayU for US$130 million in cash). Most CEOs I interview also happen to be founders. So, I was fascinated by Amrish’s “CEO-only” vantage point.
It is hard to overemphasise the importance of a founder-CEO in organisational cultures and systems. But their importance and power often comes at a cost that is invisible to them. Think of it like an invisible dark space formed at the overlapping spaces between two objects: the founder’s, and the CEO’s.
Forged from the past, founders are emotionally attached to what they’ve built, like teams, products, business models, and organisational structures. Many consider their organisations akin to their children.
CEOs, in comparison, are responsible for the future. They are constantly thinking about how they will change or alter that which already exists. Which includes teams, products, business models, and organisational structures. Many view their organisations as evolving organisms.
Yes, I am simplifying. But this conflict is the reason many founder-CEOs give way to professional CEOs either once their companies reach a certain scale, or they realise some of their own limitations. Because there comes a stage in every organisation’s evolution when it needs a CEO more than a founder.
Back to Amrish. A few weeks ago, I emailed him, “If you had to pick *one* First Principle or mental model that you tend to rely on the most at Pine Labs, what might that be?”
We spoke on Friday.
Amrish is very easy-speaking and fluid. Many leaders have deeply-held beliefs and well-practised answers to many of the questions they get. But with Amrish, I always get the sense he’s listening, thinking, and speaking in sort of a continuous feedback loop during conversations. This means his answers often tend to evolve as the conversation progresses. I’ve found such fluidity to be rare.
The one principle Amrish says he relies on most frequently at Pine Labs is to not build products that customers are already asking for.
If that sounds counterintuitive, you’d be forgiven for thinking so.
I ask Amrish to clarify. He says many businesses make the mistake of looking to the market and customers to understand what to build. Such an approach will only end up creating me-too products that rivals have already built or can easily copy once you build them.
Isn't that too simplistic, almost like Management 101, I ask him.
“I agree it is Business or Management 101. But I tell you, we forget even this basic knowledge every day,” he replies.
But if everybody is copying each other, what is the lasting effect of building differentiated products?
“Competition will always chase you. But you have to keep trying to build differentiated products that even consumers don’t know they want yet, which allows me to charge even Rs 100 (US$1.2) more. If you build products which bring in more business via consumer footfall, or deliver timely oxygen to survive via loans, customers will pay for the service,” he says.
Does he have examples?
“We are one of the largest instalments (equated monthly instalments, or EMI) providers for appliances like televisions. We facilitate zero percent EMIs. Eighty-five to ninety percent of such transactions happen on a Pine Labs terminal.”
That market share was the result of understanding an unstated customer need, says Amrish.
“Many years ago, frauds were common on EMI sales. Dealers would claim to be selling, say, Samsung products and then claiming zero percent interest subvention. But Samsung would say, how come I am not seeing enough sales? So we said we will only start loan payments once we do a verification of an actual sale using IMEI or serial number.”
To do that, Pine Labs collected the serial numbers of products sold by dealers, then sent them to manufacturers. The manufacturers then validated the serial numbers at their end, to confirm authenticity.
“Brands loved it, because they didn’t need to worry about reconciliation. The feature has been unique to us for nearly seven years. Others are only now starting to copy us,” he says.
You can listen to my entire conversation with Amrish from November here if you want to understand his points of view as a founder-turned-CEO better.
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