EP 019 - The Nation-builder CFO with Arvind Agarwal, CFO at PayU India

“Fundamentals of finance is the unit economics.”

“Chase an opportunity, but don't be opportunistic. Work in a mission mode and leave a legacy behind.”

“Ultimately you need to measure ROE, return on equity or return on capital employed. I think that's a true measure if you have to compare different business models, there's only one unifier which is ROE or ROCE. Other metrics apply differently in different businesses.”

“I think there are three things that needs to tick off (for a successful IPO). And the first thing is market being ready. The second thing is business being ready. And the third thing is your processes being ready.”

“Have a strong CFO on your side from day one.”

“The first 10 years were more of formative years and I did various things there also, but basically I didn't know which path I am headed to. I had a vision but not a strategy.”

“The vision that I had was very simple… I want to become CFO and I want to do an IPO.”

“(For an IPO), I think what CFOs need to do is to build strong finance team, quarterly reporting processes, board governance, and then ability to track the performance through very clearly defined measurable matrices that are auditable.”

“So first 10 years in infrastructure, then 10 years in telecom, then 5 years in e-commerce and now in financial services. So they are very different sectors. But then there is one thing in common. All of those companies where I worked were very high growth, tech driven and consumer facing organizations. And that's what excites me.”

“That career is never a straight line, it is always a zigzag. And you need to do lot more lateral movements and it's not necessarily a vertical growth that you will get.”

“The thing which was now coming to a positive inflection curve was e-commerce because there were four things that happened around the same time. The first thing was 4G which means affordable internet to every Indian. The second thing that happened was UPI. And as you know that in India, not too many people have credit cards. And only 5% people have credit cards. So UPI change the game. You can actually pay online through UPI. The third thing which happened around the same time, 2016, 2017 was GST. And before GST, it was State-Wise Texas. But because of GST, you could actually have one India pricing. So India became one market. And you don't need to accept different pricing for the same product across India. So that is a big enabler for e-commerce, I must say that. And the fourth thing was infrastructure. So even physical infrastructure improved and we could deliver things in three days anywhere in the country.”

“I learned people leadership and process excellence in Vodafone… but what I learned in Amazon was customer centricity and operational excellence. So there are a lot of mechanisms they have which make sure that in case of dilemma you choose a path which is right for customer, it is assumed that it will be good for shareholder also. And operational excellence which means that you keep improving every day so that you know you are better and better.”

“We are professional entrepreneurs building an enduring institution.”

“Retail business like Nykaa, I think EBITDA of 10% will be fantastic because the return on capital will be 30%.” 

“I don't think anybody gets a license by being called a startup or new-age business to shy away from discussion on profitability. I think that's inherent in any business model. Otherwise, why do you call it business?”

“You need to identify the potential and the stronger aspect of the skill set in one individual and then harness that rather than focusing on the weak areas.”

“Look for behaviors and look for skills rather than a functional domain expertise when you do the hiring. That is the learning I have and I think it works.”

“The ability to experiment goes down dramatically once you are a listed company. If you want to experiment, continue to be private and there is enough private equity available.”

“CFO should take all the burden of IPO, such that business teams are not distracted from what they need to build and perform on them.”

“We make a mistake in thinking that IP is an exit event. It is not an exit event. It is actually an entry event. You're entering into a market where different sets of investors will come and judge you.”

“One should think of CFO as somebody who can help in creating value, not just unlock value.”

“You need to survive in short-term to thrive in long-term.”

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