Full Text — MasterCard CEO Ajay Banga on Taking Risks in Your Life and Career View From The Top talk at Stanford GSB
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Interviewer: Thank you so much for being here today. It’s a real pleasure to have you. And before we dive in, I want to have a brief roadmap of where we’re going to go with today’s conversation. Want to begin with your career and its trajectory to date, 30 years, Nestle, Pepsi-Co.
Ajay Banga –CEO, MasterCard: You’re giving away my age very quickly.
Interviewer: So Nestle, Pepsi Co, Citi, and now MasterCard.
Ajay Banga –CEO, MasterCard: Yeah.
Interviewer: Then I want to 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 want to explore that a little bit.
Ajay Banga –CEO, MasterCard: Okay.
Interviewer: And finally I want to pivot some more personal things like work life balance, family, diversity et cetera.
Now before we begin, I also have a deal for you. If you can forgive half my MasterCard debt, I’ll stick to the easy questions.
Ajay Banga –CEO, MasterCard: Now, what if I double your debt?
Interviewer: Okay, hard questions it is you guys.
Ajay Banga –CEO, MasterCard: Sucker punch.
Interviewer: So let’s start 30 years ago. You graduated. You went to Nestle as your first job. And you spent 13 years there. At the time when you were choosing your first job, how did you choose Nestle as the first place you wanted to work?
Ajay Banga –CEO, MasterCard: And so my wife and I were classmates at business school. She’s sitting right there. We were both, you know when we were in business school. This was a long time ago 1979 to 81. In India, India had just began 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 conducive to foreign investment as it is in the period in between. And so when we were graduating, multi-national 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 risk 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, 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 class would apply for these few jobs that were available, and they were very competitive, but —
Interviewer: And then, you chose to spend 13 years there?
Ajay Banga –CEO, MasterCard: Yeah, so clearly it takes me a long time to learn. But 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 where I had a chance to influence the kind of program is I tried and built the chance for people to go across the company in different places, geographically, functionally, opportunity wise, so that they don’t get stuck and where they joined is where they’re going to be. And I think that’s a big part of what Nestle did for me. They took me into sales. They took me into marketing. They took me into factories. 7They 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, but a lot of our company would have given me that breadth and depth of knowledge, and I’ve lived in all parts of India, as I said, this is the one time you got paid to travel. Not the most attractive places, but you’re paid to travel.
Interviewer: And, so now, 30 years later and 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?
Ajay Banga –CEO, MasterCard: I’d say that Nestle taught me a lot of things. The guy, I still say that the guy was the managing director of Nestle when I joined, many levels above me, a guy called Barry Ryan. He’s still one of the people I’ve learned 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 Nestle. It was there when I joined. And 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’d move around them or give up or as in India they say, jugar. Jugar 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 added — you’re one person, but you’re one person you can make the difference. If you have the energy and the passion to drive it in to action, 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 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 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, because we’ve all got something to teach you. And then you can bring the value you bring. But you got to learn from everybody. It changes everything. And so, I guess that’s the two or three things in Nestle.
Interviewer: And then, you chose to leave Nestle for Pepsi Co. So 13 years at Nestle, two years at Pepsi Co, 13 years at Citi, now four to five years at MasterCard. 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. As you’ve gone about your career and made these big jobs, have you thought about timing and reasoning for when you leave one place and go to the next?
Ajay Banga –CEO, MasterCard: Timing, very poor. I just take the jump but I think I’m ready to make it. I, in truth, in my, my generation you stay in 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 have a big encouragement saying if you want to move jobs, or you want to move roles within the company, or you want to 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 had joined to start in India. I didn’t want to 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 of Nestle and Citi kind of stuck it through, but I did many different things in each of the companies. From, I told you about the Nestle, at Citi, I did everything from joining in marketing in India to running the region, Central Europe, Middle East, Africa, to coming to the U.S. 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, where I ran every one of the 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.
Interviewer: I find the transition from Citi to MasterCard to be particularly interesting. It was on the heels of the financial crisis. A bit later in your career. I imagine there was a lot of stability and kind of community that you had with the Citigroup.
Ajay Banga –CEO, MasterCard: Oh yeah, I knew everybody there. I was in there. That’s true.
Interviewer: And still you made the choice to pick up and try something completely different.
Ajay Banga –CEO, MasterCard: You know, at Citi, if I stayed there, I was clearly being prepared to be the next CEO of the company. That was what 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 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 because I think banking is going to be an industry where, 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 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, the second piece was that MasterCard’s number of employees are relatively small. Citibank had 290,000, 300,000 employees around when I was leaving. 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 3, 4, 5 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% from millennials. I could never have done that at Citi. I just could not.
Interviewer: But can you argue millennials and stock price are correlated?
Ajay Banga –CEO, MasterCard: Not on buying, maybe on doing something about it. 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 are doing two things well, laying out a clear strategy. It is simple to understand, and we are 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.
Interviewer: So I’m going to 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 CEO of Citi. Fortune had you as one of the top business people of 2013, you are a big deal.
Ajay Banga –CEO, MasterCard: Where’s my daughter, is she in the audience? If she’s here I want to hear that. There she is hiding.
Interviewer: And so, now with all this professional success.
Ajay Banga –CEO, MasterCard: San don’t laugh me.
Interviewer: What are one or two things about you, personality traits, personal characteristic that have set you apart and let you have so much success while others have stalled, they’ve kind of reached their dance in their career?
Ajay Banga –CEO, MasterCard: You got to ask somebody else who would evaluate me on that, I would tell you that, I would think humility is actually a big part of this, you can’t throw it out the window, because if you’re not willing to learn from people and adapt and adjust and progress in your mind, there’s always learning, you can’t be in a company like this and succeed, it just, it doesn’t make any sense. But I think that’s important. I think I picked that up over the years in some ways from people I saw and watched. Barry Ryan for example, used to have the ability in Nestle to deal with the junior most employee and the senior most as much interest of purpose with each of them. 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 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. 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, you’ve got to 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 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. Aditi has been to eight or nine schools before she left high school. Around the world, in different places. Her sister, the younger sister, had been to a similar number. We’ve lived in 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. Otherwise it’s always been a rented house somewhere rented by a company and moving around. And I moved from, different functions and different companies. You have to take those risks. That’s it, those two probably are the most striking.
Interviewer: And so I spoke to your daughter yesterday and she mentioned that you love Lady Gaga. And so, so, my question.
Ajay Banga –CEO, MasterCard: Can you believe that? Do I look like a Lady Gaga kind of guy?
Interviewer: Is it true?
Ajay Banga –CEO, MasterCard: Actually, I do.
Interviewer: And so, the question is.
Ajay Banga –CEO, MasterCard: Among others.
Interviewer: Among others.
Ajay Banga –CEO, MasterCard: Just to be clear.
Interviewer: Do you think that you were born that way? Or was there a point in time where you made the decision that Ajay, I’m going to be more humble and take more risks?
Ajay Banga –CEO, MasterCard: I’m thinking about the me to address, but never mind. 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.
Interviewer: That’s inspirational for a lot of us in the audience, so. Moving forward now to the last ten years. At Citi, you had a job that had a very global perspective. And now at MasterCard obviously very focused on rolling out the business globally. In your time on this, with this perspective, what do you think now is the most exciting thing happening in the global economy?
Ajay Banga –CEO, MasterCard: Actually I have a big bull on the U.S. and I’ve been that way for years through the decline in the financial crisis. I was speaking at a commencement ceremony a MBA school at that time, which shall remained unnamed because it’s a competitor. But, 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. 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 in our balance sheet, there’s no debt, it’s all cash, and we’re not the only ones, we’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 environment here, the environments are on 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 would make the U.S. 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 South East Asia. I know every talks about China and India and I think that you got to 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 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 going to create a economy that’s going to 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 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 governments by the way, because countries like Singapore, they’re like, excellent governments, excellent methods of working. You’re looking at a huge burst of growth from ASEAN. So in the U.S., ASEAN, the US and North America, Mexico would be interesting too. But, the U.S. 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.
Interviewer: 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, should I stick around the U.S. and try to find a job here? How would you think about navigating that decision from where you’re sitting?
Ajay Banga –CEO, MasterCard: That’s a personal conversation. A lot of it has to do with your proclivity in terms of, what you think you can do well, and the kind of place you want to be in. 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 U.S. 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. I am Indian by birth, and I was educated there, I have no education overseas, my daughters have done me proud. Because, they do stuff I couldn’t do, but what you kind of get out of here, you get out of schools like this, and you go back to — 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 is not available, and where permits are a problem, and where I joke with people that where in China when you shake hands with a leader, and you want to open a business, they roll out the red carpet, In India, they roll out the red tape. And it’s just, you know, there’s 600 more mouths to feed kind of thing, and it is 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 that are global scale out of places like the U.S., 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 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.
Interviewer: Coming back to the United States, two of your largest competitors Visa and Amex and you guys have kind of.
Ajay Banga –CEO, MasterCard: Those are bad four letter words. Both of them.
Interviewer: That’s true. You guys have coexisted in this space for a while now. 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?
Ajay Banga –CEO, MasterCard: So actually the markets are mature, 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 in the 15% and that’s important, you must focus on that. But you got to remember there’s 85% out there. And, by the way in the U.S., 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’d 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 food from Kum Kau 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 got to change. Because non-inclusive growth will destroy the feeling that I’m talking about, of prosperity and growth in the U.S. as well. The U.S., 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 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, indulge in the kinds of things that only cash can provide you with the chance to do, and that’s the misconception of existing 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 going to 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 ten 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 is 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 your dean 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 on that, and, that I’m comfortable competing in. It’s the 85% that is a big opportunity.
Interviewer: So, with that 85%, does that make you allies with your competitors in making, helping these 85% become banked?
Ajay Banga –CEO, MasterCard: 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 the disintermediating cash. Which to me, is public enemy number one. And I’ll tell you why I say that. People think cash is free. Cash actually costs between 0.5% 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 shit load of money.
Ajay Banga –CEO, MasterCard: You could do a lot with that money, which we’re not doing, right? So there’s that. 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 Brink’s armored truck that delivers cash to your ATMs here, there’s always two guards. Why, are there two? Because if there’s one, the damned thing disappears. Right, 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 U.S. 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 going to 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 in a campus in the United States, and some of you are 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, and the gang wars. All guns are manufactured in the U.S., you’d think they go in exchange to the 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.
Interviewer: 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?
Ajay Banga –CEO, MasterCard: Very tough but, it’s critical completely. So, if we’re in an industry where technology is innovating around us very rapidly. 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’ve done two or three things. One is we created a group inside the company called MasterCard Labs which is headquartered in Dublin, has locations in the U.S., and in Singapore, and Brazil now in an effort to get innovation from around the world, to flow into what we’re doing. And these guys are — they’re actually kept safe from the lunatics who run the asylum inside of MasterCard. Right, 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 — They don’t have to give me any spread sheet for any project. Because you guys want work done here, you can produce a spreadsheet and It has 24 sub spreadsheets, you change the number on the 23rd one in roll zero 7 column 14. And your ROE on the first page becomes 35% instead of 3.5%. I’ll never find it, I won’t know which number you’ve changed. 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. 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 much more 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 got to seep into your bloodstream. It’s got to be, you got to have an osmosis there on this. And so we’re putting money into venture capital firms that show us many more new technology pieces than we ever saw. We have 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 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.
Interviewer: Great, so at this point we are about twenty minutes left. I want to switch gears a little bit more of your personal life, and so one big topic at the GSB is work life balance and you always say you have a very busy career, a very global career.
Ajay Banga – CEO, MasterCard: What you guys have a topic at the GSB, you got a problem with work life balance here? I want your work life man but this is for the future.
Interviewer: For the future.
Ajay Banga – CEO, MasterCard: You’re already planning for your work life balance.
Interviewer: We’re trying to protect what we have right now.
Ajay Banga – CEO, MasterCard: I get it.
Interviewer: And so how do you think about balancing those two things in your own life?
Ajay Banga – CEO, MasterCard: 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 balanced. There are others who work six hours a day and they think they’ve got balanced. So I don’t know how you define it for yourself, but for me…work life balance — I guess a couple of things to happen. One is you’ve got to enjoy what you’re doing. You really have to. It’s really, really critical. 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 have changed what I did over the years. Because if you’re going to work as hard as we work, and I travel probably two-thirds of the time, and if you’re not going to 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 got to have time for yourself and the people who matter to you, I mean, by that I mean, not just helping Aditi move into a dorm room, and Harvard 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 he carried up the stairs and I used to call that the two-Advils 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. But that, you’ve got to provide time for that. You’ve got to provide time for that play with their acting and later on the small part that’s third three 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 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’ve got to enjoy what you’re doing, but you’ve also got to 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 am with you I am focused on you, you matter to me. And I’m going to spend time with you as compared to I am doing that but also doing these looking at my email, doing phone calls, taking our paper, working on the weekends. You’ve got to, you’ve got to figure out how to find that balance. That’s what work life balance is. The rest all kind of works out.
Interviewer: And then another topic that we speak about pretty frequently is diversity. And, for you, you’ve always been a visible minority throughout your career. And has that ever presented any challenges for you in the workplace?
Ajay Banga – CEO, MasterCard: Not really, the United States because of the way it’s constructed, actually truly genuinely gives you a chance to succeed not 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 I’d be more challenging if I had 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 fact, 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 – I said 200,000 people at Citi who worked for me. You just, you’ve got to 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 going to get stared and I walked in today, I was telling you, and as I was walking in to your cafeteria, and why the hell is everybody staring and looking at me. Then I discovered you put my photograph on every table which is the most embarrassing thing in the world. And I walked in, there is this damned tent card everywhere. And I know no wonder they’re staring at me. So 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 ever had out of a casual conversation. So not in work life.
Your personal life, yeah, it can be quite 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 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 find your way through it, because you realize that only 0.5% 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 care deeply about what you’re feeling at that time. If you have that strength, you can get through a lot of stuff. Look, I still get randomly pulled out for checking at TSA. And I’m the “ultimate random check guy.” But I — what are you going to do? You can’t fight that because you’re going to just take it with you. So personally, a lot of things come around you. My boss at Citi at that time was, bosses’ bosses’ boss, was Sandy Weill. He called me the second day after these issues erupted in New York City and said to me, “Listen, you’re not going to 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 got to go, I am not taking a chance with you getting caught up in security at the airports. You’re not going to do that”. Rule one.
Rule two, “You need a car to bring you back and forth from home I used to work in Manhattan to work. You can have my car”.
And I still walked to work, because dealing with it is more important than hiding from it. And yes, I got the looks and I got the art comment, but I walked to work, and I walked back, and once in awhile, 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’s more of a challenge on the personal side than at the work front. The work front was never a problem.
Interviewer: It sounds like having people that really cared really helps a lot.
Ajay Banga – CEO, MasterCard: It helps. People do really care, I am telling you 99.5% of the people around you really care about how you’re feeling and thinking. They are sensitive to you. People are — humanity is sensitive. Don’t get taken in by the animals a lot, that’s the issue.
Interviewer: At this point I know my classmates also have questions, I want to open it up a little bit. I’ll go to Steve first with a Twitter question, and then we’ll go to the live audience.
Ajay Banga – CEO, MasterCard: By the way how is somebody supposed to tweet you if you told them to put the phone away. I was trying to figure that out when you were speaking but I –
Interviewer: So following directions so that the laptops away, phones are silenced. So the question from Twitter is it says tough times, seems everyone is trying to disintermediate you, Google, PayPal, now BitCoin, which of these make you lose sleep and why?
Ajay Banga – CEO, MasterCard: The only reason I lose sleep is my wife snores, I don’t lose sleep otherwise. Sorry. She doesn’t. So, just to set the record straight, I actually don’t consider most of those as competitors. I think they’re part of the ecosystem being developed. At the end of the day, we’re not – our technology connects billions of people with millions of merchants, 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 is a perception that they are dis-intermediating us. Actually they are a part of what enables us to attack the 85%. Bitcoin is a different issue. BitCoin also disintermediates. If it disintermediates anything, it’ll disintermediate dollars. And God forbid that never happens. 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.
Interviewer: I think you barely answered my question but as an Indian there are certain characters, there’s a way of thinking, you’re born and brought up way then you said, and you basically learned not born and brought up but over the twenty-five to thirty years of your life. How does that hinder you from, when you think of business today or how does that present opportunity for you when you are looking at global businesses.
Ajay Banga – CEO, MasterCard: You know, as I said you learn as you go along, you learn and adapt and if you learn from everybody you’ll get to a very healthy place in your life. We can look back, I’m 54 now, and I kind of look back on having worked overseas since 1997, right? And in India before that, I kind of think I’m a mix of all those things together. But I’d say India did teach me a couple of things. 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, a plan C, and a plan D. It actually serves you in good stead even in an environment like the US, where competition is 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 did.
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 went to things at the local mosque and the local church and I went to midnight mass, and 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 had asked foreign, in some ways, for a guy like me because the language. 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 of 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 tag mark in the 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. You know? If it looks like a duck and walks like a duck, it must be a duck. You need ducks and geese and mynas and spiders 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. 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.
Audience: Okay. So you run a huge successful company, and the way you talk about it is very inspiring that you’re providing identity 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 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 country’s industries are more important, which companies, I mean and also you, as the CEO of Mastercard, are there things you can do and should do in terms of how you present yourself and market yourself to us?
Ajay Banga – CEO, MasterCard: It’s a great question, it’s a great question. 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. And we don’t issue a single card. Banks issue cards, we don’t. We are actually the technology infrastructure through which the electronic payment rail goes. And by the way I make 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 big debt load on 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 abounded, they are caused by various reasons, but one of those was, we were owned by the banks till our IPO 7 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 2% of the company, and now we are a $90 billion market cap company. I’m sure they are very sad they sold their shares, but the fact is, they own 2% of the company. And yet, we’ve 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 help 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 Bill and Melinda Gates Foundation. It’s headquartered in Toronto. And, and this they tell me that I’m the gift that keeps giving. Because as the stock prices perform, 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, you know, doesn’t bother me. People will come if they want to and you can’t force somebody to come. They’ll come if they’re interested. And 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.
Interviewer: Ajay, thank you so much for coming. Really appreciate it.
Ajay Banga – CEO, MasterCard: Thank you. Thank you very much. Thank you all.