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Stanford Graduate School of BusinessStanford Graduate School of Business

MasterCard CEO Ajay Banga on Taking Risks in Your Life and Career

During his View From The Top talk at Stanford GSB, MasterCard President and CEO Ajay Banga emphasized the importance of communication, taking risks, learning from everyone around you, and surrounding yourself with people who think…

Ajay Bangaguest
Jun 13, 201449mWatch on YouTube

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Transcript

  1. 0:00 – 0:05

    Intro

    1. SP

      [on hold music]

  2. 0:05 – 1:14

    Setting the agenda and opening banter

    1. SP

      Thank you so much for being here today.

    2. AB

      Mm.

    3. SP

      It's a real pleasure to have you. And before we dive in, I wanna, uh, have a brief roadmap of where I wanna go with today's conversation. I wanna begin with your career and its trajectory to date, 30 years, Nestle, PepsiCo-

    4. AB

      You're giving away my age very quickly.

    5. SP

      [laughs]

    6. SP

      [laughs]

    7. SP

      So Nestle, PepsiCo, Citi, and now MasterCard.

    8. AB

      Yeah.

    9. SP

      Then I wanna move on to in the last 10 years at Citi and now MasterCard, you've had a chance to develop a global perspective, and I wanna explore-

    10. AB

      Mm-hmm

    11. SP

      ... that a little bit.

    12. AB

      Okay.

    13. SP

      And finally, I wanna pivot to some more personal things like work-life balance, family, diversity, et cetera.

    14. AB

      Okay.

    15. SP

      Now, before I begin, I also have a deal for you. If you can forgive half my MasterCard debt, I'll stick to the easy questions.

    16. SP

      [laughs]

    17. AB

      And what if I double your debt? [laughs]

    18. SP

      [laughs]

    19. SP

      Okay, hard questions it is, you guys.

    20. AB

      [laughs] Sucker punch. [laughs]

    21. SP

      [laughs]

    22. SP

      So let's start 30 years ago.

    23. AB

      Okay.

    24. SP

      Uh, you graduated.

    25. AB

      Yeah.

    26. SP

      You went to Nestle as your first job.

    27. AB

      Yeah.

    28. SP

      And you spent 13 years there. At the time when you were choosing your first job, how did you choose Nestle as, as the first place you wanted to work?

  3. 1:14 – 2:53

    Why Nestlé was the first job: learning, ethics, and multinational culture

    1. AB

      Yeah. So, uh, my wife and I were classmates in business school. She's sitting right there. We were, uh, both... You know, when we were in business school, this is a long time ago, 1979 to '81. Uh, in India, India had just begun to open up to the advent of multinationals coming in to build a lot of businesses there. Some had stayed on over the years and had changed their ownership model. Nestle was one of those. Unilever was another one. Others had left when the Indian government wasn't as, uh, conducive to foreign investment as it is in the period in between. And so when we were graduating, multinational corporations like Nestle, like Unilever, were places to work in of great attraction. They were terrific for learning the business. They were great for understanding the culture of a company that operated across the world. They were great for comprehending the concept of high quality products, of high ethics in how you worked. And all of us looked up to those companies as where you wanted to be because you would learn the things that you needed to learn in your early years of working life. And we guys, unlike you all who work and then come to business school, we didn't. We used to go those days straight from undergrad to business school. We were very young. I was 21 years old when I finished my business school career. And so when you think about that, it... You think about the people in that frame of mind, Nestle was a very attractive learning place with lots of strengths and attributes that I still think the company has. That's how I ended up there. Getting in was not easy because everybody in the, in the class would apply for these few jobs that were available, and they were very competitive. But I'm lucky.

  4. 2:53 – 6:35

    What 13 years at Nestlé taught him: breadth, mobility, and learning from everyone

    1. SP

      And then you ch- you chose to spend 13 years there.

    2. AB

      Yeah. So clearly it takes me a long time to learn it.

    3. SP

      [laughs]

    4. SP

      [laughs]

    5. AB

      But the, the, uh, the really attractive part about Nestle was that you were able to move in different parts of the company very quickly. It was part of why I went there. It's part of what I've tried to build with all the recruitment programs we run here as well as in Citigroup, when I had a chance to influence the kind of program. Is I try and build the chance for people to go across the company in different places, geographically, functionally, opportunity wise, so that they don't get stuck on where they joined is where they're gonna be. And I think that's a big part of what Nestle did for me. It took me into sales. It took me into marketing. It took me into factories. It took me into product management. Took me into running a region, and gave me the chance to work on changing the entire inventory system of the Indian company and to manage inventory and working capital better. Things that I don't know that a lot of our companies would have given me that breadth and depth of knowledge. And I lived in all parts of India. As I said, I-- It is the one time you got paid to travel. Not the most attractive places, but you got paid to travel.

    6. SP

      Sure. And so now, 30 years later, when you reflect back on that time at Nestle, what are one or two things that you really learned over that, over the course of those 13 years that set you up for so much success later on in your career?

    7. AB

      I'd say that Nestle taught me, uh, a lot of things. Uh, the, the guy-- I still say that the guy who was the managing director of Nestle when I joined, many levels above me, a guy called Barry Ryan, is still one of the people I've learnt the most from. And I think people make the difference, not just companies, and you'll see that'll keep coming up in a conversation with me, that one individual can make a difference. And Barry Ryan made a difference to the Nestle that was there when I joined. In his view, aside from the company's commitment to quality and ethics and standards, his view was never take no for an answer. There is always a way to get to the right solution if you apply your mind. Don't take the hurdles that come in your way as the reason why you would move around them or give up. Or as in India they say, "Jugaad." Jugaad means you adjust for everything. He said, "Don't do that. That's the wrong way to do business. Go for it. Never take no for an answer." And the second thing that he taught me, which I think was tremendous, was that you're one at it. You're one person, but you're one person, you can make the difference. If you have the energy and the passion to drive in a direction, and if you know how to communicate well, which by the way is the most underrated attribute when you're young, but the most important attribute as you grow is your communication. And if you can do those two things well, then there's a whole new world out there. And I think Nestle taught me that really, really well. Thanks to him. And the last thing I think I picked up was that I was a young MBA entering a company which traditionally had been run by people who had grown up there from being a sales rep all the way to being the boss. And, you know, I was among the first few groups of young MBAs to come in, and therefore there was always the resentment about this young kid who would learn from me and then come back in a six months time, green behind the ears, if you could find my ears, and then you would sort of, you know, have to be listening to this kid tell me how to do my business. And I learned that that's the worst way to start your relationship with this company. And instead, if you take the approach that you can learn from everybody, 'cause they've all got something to teach you, and then you can bring the value you bring. But you gotta learn from everybody. It changes everything. And so I, I guess that's the two or three things in Nestle.

  5. 6:35 – 8:52

    Career transitions: when to move, risk-taking, and avoiding stagnation

    1. SP

      And then, uh, you chose to leave Nestle for PepsiCo. So 13 years at Nestle, two years at PepsiCo, 13 years at Citi-

    2. AB

      Yeah, yeah

    3. SP

      ... now four to five years at MasterCard. Uh, that's quite a few career transitions that you've had. I think many of us expect to also have a lot of career transitions.

    4. AB

      Yeah.

    5. SP

      As you've gone about your career and made these big jumps, have you thought about timing and reasoning for when you leave one place and go to the next?

    6. AB

      Timing very poor. I just make the jump when I think I'm ready to make it. I, in truth, in my, my generation, you sustain careers for a long time, 30 years in one company. You guys are different, and I think you've got the right approach to it. Because if you don't try out new things, if you're not willing to take a risk, you will achieve very little reward out of the system the way it's constructed today. And so I'm a big encourager in saying you, if you wanna move jobs or you wanna move roles within a company, or you wanna move companies or industries, think about it, but go for it. Don't, don't, don't procrastinate forever, and don't hesitate forever. So timing in my case was more about when I felt that I had learned what I could, and I wanted to do something different. And my mind felt that I was reaching a point where I was stagnating. So the Pepsi thing is a different one. That is only two years because Pepsi decided to spin off its restaurant business, KFC, Pizza Hut, and Taco Bell. That's what I joined to start in India, and I didn't wanna work for a franchisee. I wanted to work for a large global organization, not for a local Indian franchisee. And so that was a decision that kind of came my way because the nature of what Pepsi was going through. But both at Nestle and Citi, I kind of stuck it through, but I did many different things in each of the companies. From, I told you about Nestle. At Citi I did everything from joining in marketing in India to running, uh, the region, Central Europe, Middle East, Africa, to coming to the US to run the lending businesses, then the consumer business. Then I became the chair of the global consumer business. Then I moved to Asia, as the dean was doing in his introduction, but I ran every one of the, uh, businesses in Asia through the financial crisis, actually. And then left and came here. And each time it's been something to do with my mind feeling that I had more to give and more to do, but maybe not where I was.

  6. 8:52 – 11:47

    Why he left Citi for MasterCard: technology, globality, and ability to drive change

    1. SP

      I, I find the transition from Citi to MasterCard to be particularly interesting. Uh, it was on, on the heels of the financial crisis, uh, a bit later in your career. Uh, I imagine there was a lot of, uh, stability a- and kind of, uh, community that you had with the Citi, with the Citi group.

    2. AB

      Oh, yeah. I knew everybody there. I was in there, that's true.

    3. SP

      Yeah. And still you made the choice to pick up and try something completely different.

    4. AB

      You know, at Citi, if I had stayed there, I was clearly being prepared to be the next CEO of the company. That was what I, the board had told me. That's what the CEO, Vikram, who came here to speak at one of these events actually, was the CEO at that time, and that's what he told me as well. And everybody told me that, and I didn't know that I wanted to be the CEO of a bank over the next 10 years. 'Cause I think banking's gonna be a, an industry where, uh, you're actually contracting and shrinking and dealing with an increasing regulatory environment rather than innovating and expanding and doing fun new things. And MasterCard had technology and data and, and I've, even though I didn't do technology when I was a young kid, I did in school, but not in college, I just love the space. I think I'm half a geek somewhere deep inside, and I enjoy the stuff, and I enjoy data, and I enjoy making connections, and I, I love globality, and it's got all that in it. And it's got this interesting mix of B2B and B2B2C, which I found really fascinating. So a lot of work for me in my head at that time, which allowed me to think about this company. And at the second piece was that MasterCard's number of employees are relatively small. Citibank had 290, 300,000 employees around when I was leaving. Uh, and at a point of time, 200,000 of them used to work for me. And it's impossible to make change with 200,000 people in your three, four, five-year span. But if you've got 5,000, 2,000, 10,000, 15,000 people working for you, you can touch them, feel them, put your arms around them. They know who you are. They can understand you. You can make a difference. You can actually change things in that company. I was telling the dean when we were talking just a little while ago, when I joined MasterCard, we had 9% of our population was millennials. It's now four and a half years later, we closed last year, 34% were millennials. I could never have done that at Citi. I just could not.

    5. SP

      Can you argue millennials and stock price are correlated?

    6. AB

      [laughs] Uh, not on buying. Maybe on doing something about it.

    7. SP

      Okay. [laughs]

    8. AB

      [laughs] Yeah, that's true. Our stock value has quadrupled in these four years. That is true, right? But that, I think, has to do with the fact that we're doing two things well. We're laying out a clear strategy which is simple to understand, and we're executing against it and putting our money where our mouth is. And if you do that well over a period of time, stock markets tend to compensate you well.

  7. 11:47 – 14:46

    How he thinks about success: humility and taking risks in life, not just work

    1. SP

      So I'm gonna try something a little bit different. Let's take humility, put it in a box, and throw it out the window. You're now CEO of MasterCard. Citi had you on deck to be C- uh, CEO of Citi. Um, Fortune had you as one of the top businesspeople of 2013. Uh, you are a big deal.

    2. AB

      [laughs]

    3. SP

      [laughs]

    4. AB

      Where's, where's my daughter? Is she in the audience?

    5. SP

      [laughs]

    6. AB

      If she's here, I want her to hear that.

    7. SP

      [laughs]

    8. AB

      Oh, there she is, hiding. Yeah.

    9. SP

      A- a- and so now with all this professional success-

    10. AB

      Sam, don't laugh, man. [laughs]

    11. SP

      What are one or two things about you, personality traits, personal characteristics, that have set you apart and let you have so much success where others have stalled or kind of, uh, reached dead ends in their career?

    12. AB

      You've gotta ask somebody else who would evaluate me on that. I would tell you that I would think humility is actually a big part of it, so you can't throw it out the window. 'Cause if you're not willing to learn from people and adapt and adjust and progress in your mind, you're always learning, you can't be in a company like this and succeed. You know? It just doesn't make any sense. That, I think that's important. I mean, I think I picked that up over the years in some ways from people I saw and watched. And Barry Ryan, for example, used to have the ability in Nestle to deal with the junior-most employee and the senior-most with as much interest of purpose with each of them. Uh, the, the gentleman at Citi, Sandy Weill, who was the chairman and CEO and the founder of the merged Citigroup, has exactly the same attitude. He can deal with the gardener in his vineyard. He can afford vineyards, so that's ... He's done well. And he can deal with a gardener in his vineyard with the same interest and purpose and passion as he does with a president of a country. So I don't know that you can divorce that from success. I think it's actually a key part of who you are and how successful you can be. I think you can be successful without the humility, but you won't enjoy it as much. So that's kind of one big part of it. I think the second part of it is, uh, you've gotta be willing to take risks with your life and your career. And you guys do that. This school produces entrepreneurs and people who want to take a risk, but so it's a little preaching to the converted here, but it wasn't that way some years ago, and it w- isn't that way with a lot of your colleagues and friends and pals who don't take the same risks. And by risks, I don't mean changing jobs only. I mean where you live and what you do. I ... You know, Aditi has been to eight or nine schools before she left high school, around the world in different places. And her sister, the younger sister, had been to a similar number. We've lived as, as a family, Ritu and I have moved I don't know how many times now, and we've lived in a house of our own for the first time after coming to the US. Other, it's always been a rented house somewhere, rented by a company, moving around. And I moved from different functions and different companies. You have to take those risks. So I'd say those two probably are the most striking.

  8. 14:46 – 15:54

    Are you ‘born that way’? Growth mindset, learning, and self-discipline

    1. SP

      And so I spoke to your daughter yesterday, and she mentioned that you love Lady Gaga. And so-

    2. SP

      [laughs]

    3. SP

      So my, my question for you-

    4. AB

      And you believed her.

    5. SP

      [laughs]

    6. AB

      Do I look like a Lady Gaga kinda guy?

    7. SP

      Is it true? [laughs]

    8. SP

      [laughs]

    9. AB

      Actually, I do. I do.

    10. SP

      [laughs]

    11. SP

      [laughs]

    12. SP

      A- and so the question is-

    13. AB

      Among others

    14. SP

      ... among others.

    15. AB

      Just to be clear. Yeah.

    16. SP

      Do you think that you were born that way?

    17. AB

      [laughs]

    18. SP

      [laughs]

    19. SP

      Or was there-

    20. AB

      Yeah

    21. SP

      ... or was there a point in time when you made the decision that-

    22. AB

      [laughs]

    23. SP

      ... "Ajay, I'm gonna be more humble and take more risks"?

    24. AB

      [laughs]

    25. SP

      [laughs]

    26. AB

      I'm thinking about the meat dress, but never mind.

    27. SP

      [laughs]

    28. AB

      [laughs] Uh, I don't know. I don't think you're born that way. I think this thing about you're born this way, you're born that way, is given too much credence. I think your mind is capable of a great deal of learning, adapting, and comprehending and disciplining and operating in a method that you care for. I think what your early experiences and the values you pick up, yes, that makes a difference, but I don't, I don't believe in this born that way stuff. I just think you pick it up as you go along, and you're capable of changing who you are as you go along.

  9. 15:54 – 19:17

    Most exciting global dynamics: optimism on the US and a strong bet on ASEAN

    1. SP

      That's inspirational for a lot of us in the audience, so. Uh, moving forward now, uh, to the last 10 years. At, at Citi, uh, you had a, you had a job that had a very global perspective, and now at MasterCard, obviously, uh, very focused on, uh, rolling out the business globally. In your time with, uh, on, on this, with this perspective, what do you think now is the most exciting thing happening in the global economy?

    2. AB

      [laughs] Actually, I'm a big bull on the US, and I've been that way for years. Through the decline in the financial crisis, I was speaking at a commencement ceremony for a MBA school at that time, which shall remain unnamed because it's a competitor. But the, uh, the focus of my speech was innovation is alive and well in the United States, and you better watch out because it's coming. And that was in the height of, I would say it was 2008 or '09 that I did that. The ... I still think this is the most exciting economy in the world, for various reasons. I think it's taken the adjustment and the pain to a larger extent than some of the others after the crisis. Banks have come out of the crisis with their balance sheets in better shape. Arguably, they need to do more. Households have come out with their balance sheets in way better shape. Companies have got enormous amounts of cash on their balance sheet, and you look at our balance sheet, there's no debt. It's all cash. And we're not the only ones. You're surrounded by companies like Apple that are trying to find ways to give it away these days, right? And so when you think about the, uh, the environment here, the environment's in a stronger footing than anything else. At the same time, productivity is at very high levels. Innovation is alive and well. So there's a lot going on here that I think will make the US still a terrifically exciting economy for the next five, seven, eight years. Who knows after that? Because the world changes much faster today than it ever did in the past. That's one of the most exciting. The second part that's interesting to me is actually Southeast Asia. I know everybody talks about China and India, and I, uh, I, I think that you gotta go beyond that. I think those are large markets, and they'll be very exciting to look at and do things with, but people are missing out the next five, seven, eight years. ASEAN will be an unbelievable driver of growth in that region. The ASEAN Ec- Economic Community is coming together, and when it comes together, those- Nations ranging from Laos, Cambodia, and Vietnam to Singapore and Malaysia and the Philippines and Thailand are gonna create a economy that's gonna be $3 trillion with 600 billion people. And the way they're connecting it is through rail links and bridges, and they're building bridges across the sea all the way to connect South China with, with the ASEAN countries. And when they start putting money into there, they're talking about $500 billion of infrastructure in the next five years. That community, with good governance by the way, because countries like Singapore and the like, excellent governance, excellent methods of working, you're looking at a huge burst of growth from ASEAN. So I think the US, ASEAN, the US and North America, Mexico would be interesting too, but the US and ASEAN are the two that people don't pay attention to. Everybody talks about China and India and blah, blah, but it's beyond that. It's beyond that.

  10. 19:17 – 21:29

    Where to build your career: US opportunity vs. home-country realities

    1. SP

      All right. Uh, and a good number of MBA students are international, from different countries across the world. And I know many of them struggle with the question of, "After I graduate, should I go back to my home country and build a business there, or should I stick around the US and try to find a job here?" How would you think about navigating that decision, uh, from where you're sitting?

    2. AB

      That's a personal conversation. A lot of it has to do with your proclivity in terms of what do you think you can do well and the kind of place you wanna be and the dreams you have and the aspirations you have. I would be the last one to say you shouldn't go back and try and do something there, because probably you will stand out even better there where you came from than you would in the US where there is a very large number of people who have different opportunities that you're competing for, right? There's, to that extent, why would you not go back? But I tell you, this is the place where you can really get things done. This is the place where the environment allows you to think about expanding and growing in a way that you can't do in other countries. You, I'm Indian by birth, and I was educated there. I have no education overseas. My, my daughters have done me proud because they do stuff I couldn't do. But when you kind of get out of here, you get out of schools like this, and you go back to, uh, to going back to India to work, I don't know that I could deal with the infrastructural issues of opening a business where power's not available and where permits are a problem and where... I joke with people that when China, when you shake hands with a leader and you want to open the business, they roll out the red carpet. In India, they roll out the red tape.

    3. SP

      [laughs]

    4. SP

      [laughs]

    5. AB

      And it's just, you know, there's 600 more mouths to feed kind of thing, and it's just a, it's a nuisance. But if that's what inspires you, you should go do it. It just doesn't work for me. And for me, the globality and the ability to do things on a global scale out of places like the US, the impact, the openness, the opportunity in this environment and this marketplace are way too attractive for me to easily give that up and go somewhere else. I would do it as part of my, my career and my future, but I would never do it as where I would live for my life. I couldn't do it. And I worked 14 years in India before leaving, 15 years before leaving and coming out, and I've kind of seen both sides of this game, so.

  11. 21:29 – 25:52

    Competing in payments by focusing on the ‘world beyond cash’ and financial inclusion

    1. SP

      Coming back to the United States, uh, two, two of your largest competitors, Visa and Amex, uh, and you guys have kind of-

    2. AB

      Those are bad four-letter words.

    3. SP

      [laughs]

    4. AB

      Both of them.

    5. SP

      That's true.

    6. SP

      [laughs]

    7. SP

      You guys have coexisted in this space for a while now.

    8. AB

      Yeah.

    9. SP

      And one thing that I think would be interesting to hear is how you think about competing with such established companies in a mature market.

    10. AB

      So actually, the market's not mature. Uh, 85% of the world's retail transactions are cash and check. Only 15% are electronic. And everybody focuses on the 15 and the scrap for market share and the 15, and that's important. You must focus on that. But you gotta remember there's 85% out there, and by the way, in the US, that number is 50% cash and check. And in Germany, it's 78%, and in Japan, it's 80%. So this is not a developed world, developing world thing. This is cash is still king for various reasons, good and bad. And I'm a believer that actually there's more bad than good on the cost of cash, and I could go into that for as long as you like. But the idea is that, that I think there's a huge opportunity in this industry. So it's actually not a mature industry. It's got a great opportunity, and the example in Nigeria that the dean was describing was an example of getting financial inclusion to be part of this change. There's 2.5 billion people in the world who do not have what you and I take for granted, a bank account, an identity, a card, things that you think just work. You just go online, and you want to order a, you know, food from Kim Cao or from anybody, and it comes. Well, it doesn't work that way for these people. And so their lives are different. And that's gotta change because non-inclusive growth will destroy the feeling that I'm talking about of prosperity and growth in the US as well. The US, by the way, has 40 million people who do not have a proper bank account, just to be clear. This is, again, not a developing world issue. Developed Europe has 93 million people who do not have a bank account. And so there is an enormous opportunity to get people an identity and the self-respect that an identity brings, and add that to electronic payments, and take out the victimization that only the poor feel by not having that access. Cash is the friend of the p- of the rich man, not of the poor man because it's the rich man who uses cash to suit their needs, not pay the correct taxes in many countries, uh, indulge in the kinds of things that only cash can provide you the chance to do, and that's a misconception that exists in society for a long time. So I'm a big believer that there's a huge runway in this industry of growth, and the question is, are you gonna focus all your attention on the 15% or on the 85% as well as the 15? You don't pay attention to the 15, you don't get to fly out to places like this and speak to people like you. But if you don't pay attention to the 85, it won't be a great company 10 years from now. And that's the simplicity of our vision. Our vision is a world beyond cash. That's what I'm focused on. That's what the company's focused on. Every one of our employees, if you ask them, "What's the strategy of this company?" It is to get to a world beyond cash. And that's as simple as it is. Once you get that, how do you compete with everybody else? Well, I'm not sure they have the same perspective. So that gives me space to play, hence the Nigeria example. South Africa, where Yadin comes from originally, we've actually gone and given every South African who gets Social Security payments an identity with a card issued by the government with biometrics on it where the money can be given to them every week without somebody getting in the middle. There's an estimate that 42% of the money that goes from a government to an individual through social programs gets stolen along the way. 42%. And the World Food Program loses 40% of the food that it takes from farmers here to distribute to refugees. You can change all that if you do it smart. So how do you compete in the 15%? There you compete with things like technology, which we're investing a great deal of money and effort on. You compete with data. You compete with a good differentiated product, differentiated analytics with consumers. That's how you compete in that. And that I'm comfortable competing in. It's the 85 that is a big opportunity.

  12. 25:52 – 29:00

    The hidden costs of cash: printing, handling, tax evasion, and anonymity

    1. SP

      So with that 85%, does that make you allies with your competitors in making the, helping these 85% become banks?

    2. AB

      Uh, competitors that exist today as well as new ones that are constantly being formed by young people like you who want to go and find a way to disintermediate us tomorrow, and that's a good thing. Because if you think about producing new technology, it's not just the... Don't focus on the disintermediation. That's the 15% again. Think about the 85% that's in cash. There is an unbelievable opportunity in the world to get to revenue out of disintermediating cash, which to me is public enemy number one. And I'll, I'll tell you why I say that. People think cash is free. Cash actually costs between .5 and 1.5% of GDP for the central bank of a country to print it, to secure it, and to distribute it. This country has a GDP of 15 trillion. 1.5% of 15 trillion is a shitload of money.

    3. SP

      Yes. [laughs]

    4. SP

      [laughs]

    5. AB

      You could do a lot with that money, which we're not doing, right? So there's that.

    6. SP

      Mm-hmm.

    7. AB

      And then if you go past that, what's not in that cost is the cost of banks to pick up that cash from the Federal Reserve's vaults and move it around. And by the way, that all comes in armored trucks with two people. And if you ever look at a Brinks armored truck that delivers cash to your ATMs here, there's always two guards. And why are there two? Because if there's one, the damn thing disappears, right?

    8. SP

      [laughs]

    9. AB

      It's the whole cash is fungible. It goes away and gets lost and hidden. And then if you go beyond that, tax evasion that I talked about, you can't evade taxes long term without using cash. The US is one of the lowest tax evasion countries in the world, and even here the estimate is that 20% of the economy is underground. In India, it's a blood sport not to pay taxes. The only guys who pay taxes are people like us who are salaried. And that can't be the right way for India. It needs revenue for the government to do real things with infrastructure, education, healthcare, water, all the stuff that India needs to have a demographic dividend, not a demographic liability, which is what it's gonna get if it doesn't sort itself out. And so when you get past all this nonsense about cash being free, then you come to the worst one. You guys have studied on a campus in the United States, and some of you were undergrads here, and no doubt you encountered drugs along the way. But guess what? They come from certain countries into this country. And by the way, which of you paid for those with your credit card? You pay for them with cash. Not just you. How it comes into the country and how guns go out, and they're showing up in Mexico in the gang wars, all guns manufactured in the US. You think they go in exchange for a Bank of Nova Scotia wire transfer? So there's a hidden cost that society is bearing for the use of cash, for the anonymity that cash provides. And I don't think that's the right cost. I just think there's a new dialogue to be had about what should be done with cash versus other things. So 85% is cash. That's the one to go after.

  13. 29:00 – 31:38

    Keeping innovation alive at scale: Labs, protected budgets, and risk-tolerant culture

    1. SP

      And getting to that 85% requires quite a bit of innovation. I've heard you say in other speeches that innovation is mission critical. At a large company like MasterCard, how do you ensure innovation continues?

    2. AB

      Very tough, but it's critical completely. So if you, if you're in an industry where technology is innovating around us very rapidly, and, and we've got to keep pace, and in fact, in some ways we've got to be drivers of new ideas in that space. So we're doing two or three things. One is we created a group inside the company called MasterCard Labs, which is headquartered in Dublin. It has locations in the US and in Singapore and Brazil now in an effort to get innovation from around the world to flow into what we are doing. And these guys are, uh, they're actually kept safe from the lunatics who run the asylum inside of MasterCard, right? So, so they have a budget that I give them which only I can change. My CFO is not allowed to question it. Nobody in the company can change it. It's my budget. I give it to them. They work with that. They have, uh, they don't have to give me any spreadsheet for any project. Because you guys have all worked earlier. You can produce a spreadsheet. It has 24 sub-spreadsheets. You change the number on the 23rd one in row, like, you know, seven-

    3. SP

      [laughs]

    4. AB

      ... column 14, and your ROE on the first page becomes 35% instead of 3.5%.

    5. SP

      [laughs]

    6. SP

      [laughs]

    7. AB

      I'll never find it. I won't know which number you've changed. That, it's a waste of my time. So I told them, "Here's the money." You choose the projects. I need commercially viable two products after two years. If I don't, I'll fire the whole lot of you and start again.

    8. SP

      [laughs]

    9. AB

      It works. I now have four products in incubation, and I was telling the dean, three of them, by the way, are run by women. So, so much for women cannot succeed in technology. That's another bunk that, like cash is free, that should be dispensed with. And three of them are run by women out of the four, and they do a great job, by the way. They're kicking ass on those, on what they're doing in the company, and that's what I'm trying to do. That's part of innovation. But the other part of it is, it's gotta, you know, seep into your bloodstream. It's gotta be ... You gotta have an osmosis layer on this. And so they're putting money into venture capital firms that show us many more new technology pieces than we ever saw. We have, uh, people working inside the company on being told that if you try something new and it doesn't work, that's fine. You can take a risk and you can lose the money and move on. And it's the, it's the culture you build. It's not just creating labs and giving them money. It's the culture around it that we're trying to build.

  14. 31:38 – 34:59

    Work-life balance: enjoying the work, showing up for family, and being present

    1. SP

      Great. So at this point, we're, uh, have about 20 minutes left. I wanna switch gears a little bit to more of your personal life. And so, uh, one big topic at the GSB is work-life balance, and you obviously have a very busy career, a very global career.

    2. AB

      Why do you guys have a topic at the GSB? You've got a problem with work-life balance here?

    3. SP

      We're just really worried about it in the future. [laughs]

    4. AB

      Your students?

    5. SP

      [laughs]

    6. AB

      I want your work life, man.

    7. SP

      [laughs]

    8. AB

      Oh, this is for the future.

    9. SP

      For the future.

    10. AB

      Ah.

    11. SP

      For the future.

    12. SP

      [laughs]

    13. AB

      You're already planning for your work-life balance. I got it.

    14. SP

      [laughs] We're trying to protect what we have right now.

    15. AB

      I got it. I got it.

    16. SP

      And so, and so how do you think about, uh, balancing those two things in your own life?

    17. AB

      Work-life balance is a very personal thing. You know, there are guys who work 12 hours, 18 hours a day and think that they've got balance. There are others who work six hours a day, and they think they've got balance. So I don't know how you define it for yourself, but for me, work-life balance requires, I guess, a couple of things to happen. One is you've gotta enjoy what you're doing. You really have to. It's really, really critical. And if you don't enjoy what you're doing, it's time to do something different, and that's part of the reasons why I've changed what I did over the years. Because if you're gonna work as hard as we work, and I travel probably, uh, two-thirds of the time, and if you're not gonna enjoy what you're doing when you travel, why the hell are you doing it? And so work-life balance starts with enjoying what you do really well. At the same time, you've gotta have time for yourself and the people who matter to you. I mean, uh, by that I mean, you know, not just helping Aditi move into a dorm room in Harvard, which by the way, was up four bloody flights of stairs with no elevator, with a room partner who had a stupid shipping trunk that was bigger than my car that I had to carry up the stairs.

    18. SP

      [laughs]

    19. AB

      And I used to call that the two Advil evenings, right? You kind of had them, and then you had two Advils so you could wake up in the morning without a broken back. Yeah. But that, you've gotta provide time for that. You've gotta provide time for their, for their, their play with their acting in it on the small part that's third tree from left because it's important to them. And so if you're not going to be there when they need you, then you've got no balance. So coming ... I, I was living in Hong Kong for a little while, running Citigroup in Asia, and I used to fly back from Hong Kong for one evening to be able to spend the time that was required if one of them or Ritu were doing something that was important to us as a family. So I guess you gotta enjoy what you're doing, but you've also gotta take out the time for the people who matter to you. And when you're with somebody, spend the time with the person. You know, this stupid habit of having a BlackBerry and an iPhone in your hand all the time, honestly, you're not spending time with the people you're with. You're spending time with the instrument, and the instrument isn't your work-life balance. It's actually, in some ways, an invasion on your work-life balance. It's useful. Don't get me wrong. I use the darn thing all the time, but it's an invasion if you're not careful. So finding the right space that says, "When I'm with you, I'm focused on you. You matter to me, and I'm gonna spend time with you," as compared to, "I'm doing that but also doing this, looking at my email, doing phone calls, taking out paper, working on the weekends." You've gotta, you've gotta figure out how to find that balance. That's what work-life balance is. The rest all kind of works out.

  15. 34:59 – 39:07

    Diversity and being a visible minority: confidence, support, and redefining ‘diversity’

    1. SP

      And then another topic that we speak about pretty frequently is diversity. And for you, uh, you've always been a visible minority, uh-

    2. AB

      [laughs] Yeah

    3. SP

      ... throughout-

    4. AB

      Hadn't noticed that.

    5. SP

      [laughs]

    6. SP

      [laughs]

    7. SP

      Throughout your career.

    8. AB

      Yeah. [laughs]

    9. SP

      And, and has that ever presented any challenges for you in the workplace?

    10. AB

      Not really. Uh, the United States, because of the way it's constructed, actually truly, genuinely gives you a chance to succeed, no matter where you came from and what you look like. But what matters is what you do and how you do it. Both those, what and how matter enormously. You can't just do the what and not the how. But what and how you do matters, and I believe that passionately. I would say it would be more challenging if I'd been in continental Europe in some ways, but that's not the case in the United States. So that's not as much of an issue. In your ... In fact, you know, you do stick out a mile when you look the way I do, and you kind of walk into a company which is a Fortune 50, Fortune 100 company, and you've got, let's say, 200,000 people at Citi who work for me. You just ... You've gotta get comfortable with your skin and have a little bit of confidence in yourself as compared to worrying about what the other person is thinking about you. You're gonna get stared at. I walked in today, I was telling you, and I was, I was walking into your cafeteria, and why the hell is everybody staring and looking at me? And then I discovered you'd put my photograph on every table.

    11. SP

      [laughs]

    12. SP

      [laughs]

    13. AB

      Which is the most embarrassing thing in the world. And, and, and, and I walk in, there's this damn tent card everywhere.

    14. SP

      [laughs]

    15. AB

      And I'm like, "Oh, God, no wonder they're staring at me."

    16. SP

      [laughs]

    17. AB

      That's not a good thing. But you can use that to your advantage if you care about talking to people. It's a great conversation opener. I've made friends who've talked to me about why I look the way I do, and they're still the best friends I've had out of a casual conversation. So not in work life. In your personal life, yeah, it can be quite, uh, interesting thing. I mean, look, there are times like after 9/11 when life was very complicated for me, and I lived in New York City at that time and, uh, I'd say the best way I could describe it to you is I got shouted at and abused with verbal abuse, no physical abuse, fortunately, many times. But, you know, you find your way through it because you realize that only .5% of the people or smaller than that are doing that. The other 99.5% of the people around you are actually on your side, and they cared deeply about what you're feeling at that time. And so that kind of-- if you have that strength, you can get through a lot of stuff. I mean, I-- look, I still get randomly pulled out for checking at TSA. I'm the ultimate random check guy.

    18. SP

      [laughs]

    19. AB

      But, you know, I-- so what are you gonna do? You can't, you can't fight that. You gotta just take it with you. So personally, a lot of things come around you. You know, my, my boss at Citi at that time was boss's boss's boss, was Sandy Weill, and he called me the second day after these issues erupted in New York City and said to me, "Listen, you're not gonna fly commercially for the next few months. You can have the company plane," which I was not entitled to at that time, "to go wherever you've gotta go. I'm not taking a chance with you getting caught up in security at the airports. You're not gonna do that, rule one. Rule two, you need a car to bring you back and forth from home." I used to walk in Manhattan to work. "You can have my car." And I still walk to work because dealing with it is more important than hiding from it. And yes, I got the looks and I got the odd comment, but I walked to work, and I walked back. And once in a while, my boss used to come to my house and walk with me to work. That's pretty cool. That's leadership. And it matters. So you can deal with it. It's more of a challenge in that personal side than at the work front. The work front was never a problem.

    20. SP

      It sounds like having people that really cared, uh, really helped out a lot too.

    21. AB

      It helps. It helps. But people do care. I'm telling you, 99.5% of the people around you really care about how you're feeling and thinking. They're sensitive to you. People are-- humanity is sensitive. Don't get taken in by the animals who aren't. That's the issue.

  16. 39:07 – 49:03

    Audience Q&A: ‘disintermediation,’ MasterCard misconceptions, and changing the company narrative

    1. SP

      At this point, I know my classmates also have questions. I wanna open it up a little bit. Uh, I'll go to Steve first with a Twitter question, and then we'll go to the live audience.

    2. SP

      Okay, so the, the first question from-

    3. AB

      By the way, how is somebody supposed to tweet you if you've told them to put the phone away?

    4. SP

      [laughs]

    5. AB

      I was trying to figure that out when you were speaking, but I...

    6. SP

      So following directions. So the, the laptops away, phones silent.

    7. AB

      Ah.

    8. SP

      Phones are allowed. So the question from Twitter is, uh, it says, "Tough times. Uh, seems everyone is trying to disintermediate you, uh, Google, PayPal, now Bitcoin. Uh, which of these make you lose sleep, and why?"

    9. AB

      Uh, the only reason I lose sleep is my wife snores. I don't lose sleep otherwise.

    10. SP

      [laughs]

    11. AB

      Sorry. [laughs] She doesn't. So just to set the record straight. Uh, I, uh, I actually don't consider most of those as competitors. I think they're part of the ecosystem being developed. Uh, at the end of the day, we're not-- we're-- our technology connects billions of people with millions of merchants, uh, with tens of thousands of banks in 200 countries. Whether you use a card or a mobile phone, in fact Google is a big partner of ours. Apple's a partner of ours in so many ways. All these companies, Square, which Jack Dorsey I know has been here to speak, Jack and I are very good friends. We work a lot together because Square enables new acceptance. And so there's a perception that they are disintermediating us. Actually, they're a part of what enables us to attack the 85%. Bitcoin's a different issue. Bitcoin's also not a disintermediat-- if it disintermediates anything, it'll disintermediate dollars, and God forbid that ever happens. But, but I don't think I-- I don't think of these as disintermediation. I just don't. So it doesn't bother me. I think of them as possibilities to work with. We've got a bunch of people in our company who spend their time building relationships with all these new opportunities that we think of.

    12. SP

      I think you partly answered my question, but, uh, uh, as an Indian, um, there are certain characters, there's a way of thinking, uh, you're born and brought up with, and you said, uh, and you basically learn, not born and brought up, but, uh, over the 25, 30 years of, uh, your life. And, uh, how does that hinder you from, you know, when you think about business today, or how does that present opportunity for you when you are looking at global businesses?

    13. AB

      You know, as I said, you learn as you go along, and you learn, and you adapt. And if you learn from everybody, you'll get to a very healthy place in your life. You can look back. I'm 54 now, and I kinda look back on having worked overseas since 1997, right? And, and in India before that. And I kind of, I think I'm a mix of all those things together. But I'd say India dot did teach me a couple of things, and one of the things it taught me very, very strongly was the idea of always having a plan B and a plan C and a plan D because in India, plan A will certainly get sabotaged either by infrastructure or some damn corrupt bureaucrat or politician or somebody. And so you need a plan B and a plan C and a plan D, and it actually serves you in good stead, even in an environment like the US where competition's moving very quickly and things are moving around you very quickly, and having a plan B and a plan C is a smart way to think through the opportunities and the risks that you're working with. That clearly it did. And I think the second thing I picked up in my- Time in India, which I still use very carefully, is that I took diversity in India for granted. I just took it for granted. I grew up in the army. My dad was an army officer. I was an army brat. We moved regularly. You, you know, you went to things in the local mosque, in the local church, and I went to midnight mass, and I, I did all that. And I took it for granted because around me, people were Indians, but there were Sikhs, and Hindus, and Muslims, and people from the south of India are as foreign in some ways to a guy like me because the language. But we're all Indians in some way. And I took diversity for granted. Then I came overseas and found that people make a big deal out of it. And I actually resent that in some ways because I'm diverse, as you said, and if somebody told me I got my job because the way I look, first of all, I think they would need a head examination, but if they did say that, I would be very hurt and I would leave instantly from that company. Instantly. What I don't want to be is a tech mark in a box saying, "I've got my Indian American who's got this, the guy who looks different, two women, four African Americans, three Japanese, two Chinese." What? This is bullshit. That's not what life's about. Diversity is about having people around you who don't think like you, don't walk like you, and don't talk like you. Whatever looks like a duck and walks like a duck, it must be a duck. You need ducks, and geese, and mynahs, and sparrows around you in God's aviary. And that makes for an outstandingly diverse population who think differently, come from different backgrounds, have different experiences. And by the way, if you choose carefully, all the other formal aspects of diversity will fall into place if you have sincerity about surrounding yourself with these different kinds of people. And I took that for granted in India, and I'll never take it for granted again. I focus on it with a great deal of energy to surround myself with people who are different from me.

    14. SP

      Is it on? Hello? Oh, okay. Um, so you run a huge, successful company and, and the way you talk about it is very inspiring that you're providing identity and, and financial stability to people who need it most. But I'm willing to bet that if Jack Dorsey were here, or even, I don't know, the Snapchat CEO, who's like an obnoxious 18-year-old whose company makes no money, there wouldn't be an empty seat in the house. So-- And I think both sides are partially to blame. Do you think there's something wrong with our mentality about business and which countries and industries are most important, which companies, I mean? Um, and also you as the CEO of MasterCard, are there things you can do and should do, um, in terms of how you present yourself-

    15. AB

      Yeah. Yeah

    16. SP

      ... and market yourself to us?

    17. AB

      It's a great question. It's a great question. And I, and I would tell you that one of the reasons why I'm doing things of this type is to help change the perception of who we are. We're perceived right-- When I joined the company, every time you read anything, it was credit card giant, MasterCard. I don't issue a credit card. Um, we don't issue a single card. Banks issue cards. We don't. We're actually the technology infrastructure on which the electronic payments rail goes. And by the way, I make less, less money on credit cards than I make on prepaid commercial and debit cards, each of those. So first misconception. Second misconception, we decide the fees on your card. And so when you guys get a, a big debt load on your MasterCard, as we started the joke, I actually have no clue what the debt load is. I actually don't know your name. In the database I have, your name never comes to me. It only goes to your bank and your merchant. What I get is a 16-digit account number, a time of the transaction, a dollar value, and a merchant code. It's completely anonymized by the nature of the data. I don't have to prove that I have a Chinese wall between two parts of the company. And yet people think that Big Brother is watching you because I know everything about you. I don't actually. I can make good conclusions from the data I have. And so, yeah, misconceptions about our company abound, and they're caused by various reasons. But one of those was we were owned by the banks till our IPO seven years ago. And so we were seen as the mouthpiece of the banks in the electronic payment system. It's not the case today. Banks own two percent of the company, and we are now a $90 billion market cap company. I'm sure they're very sad they sold their shares, but the fact is they own two percent of the company, and yet we're seen as a financial services company, which we're not. And so there's a lot of misconceptions about us, and what I'm trying to do is through a series of activities, public speaking, but more importantly, by the actions we take. I'm trying to demonstrate that we are not what people thought we were, but we are truly a technology and data company that can make a difference to how people work, that we can do well and do good at the same time. One of the secrets about our company is when the IPO happened, 12% of our stock was put into a foundation that's run independently. That foundation today is the second largest foundation in the world after the Bill and Melinda Gates Foundation. It's headquartered in Toronto. And at this, they, they tell me that I'm the gift that keeps giving because as the stock prices performed, their corpus has kept increasing. They now have a $12 billion corpus as a foundation. People don't know that about us. And so that's our fault, not yours. You're the audience. It's the message I give you that you will take away. And so I'm trying to change that with what we do as well as how we speak about it. The fact that the audience is not here in full number, I, you know, doesn't bother me. People will come if they want to. [coughs] And you can't force somebody to come. They'll come if they're interested. And I, I've never got fussed about that. I'm delighted you guys are here, and you're actually asking me questions like the one you asked because it gives me a chance to explain how I think about this. So thank you very much for doing that. I appreciate it.

    18. SP

      Ajay, thank you so much for coming.

    19. AB

      That's all right.

    20. SP

      Really appreciate it and-

    21. AB

      Thank you. Thank you very much. Thank you all. Thank you. [audience applauding]

    22. SP

      [upbeat music]

Episode duration: 49:03

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