Leadership factory at OfBusiness

Rajinder Balaraman
MANAGING DIRECTOR
No items found.

Episode transcript:

Ankush Jain (Sales Head @ OfBusiness) & Vasant Sridhar (Co-founder & CSO @ OfBusiness) talk to Rajinder about the construct of their management trainee progrA Matrix Momente and the Leadership factory they've built out at OfBusiness. Tune in to know more.

Key takeaways from the episode:

Why is an MT (management trainee) program critical?

  • Scalable model to recruit and retain great talent
  • People are your brand (especially in B2B sales led companies) and uniformity of brand is key
  • Culture gets mirrored across new businesses, regions as you expand

How to measure success of an MT program?

  • Very large % of entry level management positions are filled through the MT program
  • Very high (70%+) of senior leaders in the org are graduates of the MT program
  • The MT program lays foundation for the culture of the company
  • internal bandwidth for new business expansion from a cohort that can mirror processes and culture in these new business
  • Keep costs in check – MTs are cheaper than lateral hires
  • Negligible MT attrition after 1 year

What makes an OFBian?

  • Top institutes but not the top 3-4 institutes. Top 20% but not necessarily the top 5% at these institutes
  • Find underdogs – someone who has something to prove and have the hunger to succeed
  • Hustle and humility – necessary ingredients to learn
  • Ability to sell – want to be the best salesperson in the room

MT Program Structure

  • Central induction in HQ (1 week)
  • informal night out similar to college
  • Regional induction (1 week)
  • informal night out
  • Shadowing for 6 months within the region
  • No targets, no accountability other than learning
  • Spend time with central and regional leaders on-the-job
  • Formal training
  • 50 modules across topics with monthly exams
  • Orient new joinee to company processes
  • Post 6 months MTs get their first role

Rajinder:        

Hi, welcome to Matrix Moments. Today’s podcast is titled Leadership Factory at OfBusiness. i’m really excited to do this one with both of you. Vasant and Ankush, thank you. Vasant is a cofounder of OfBusiness and now Oxyzo, congrats on the latest round.

And Ankush is actually part of the first management trainee batch at OfBusiness and is now senior leader in Oxyzo. He handles the entire north region. And so today’s podcast given that it’s focused on the Leadership factory and the management trainee program specifically it’s fantastic to have you, i know, Vasant, you were instrumental in building this as well.

Vasant:

Thanks Rajinder, interestingly Ankush actually takes care of the entire management trainee program so he’s the right guy to share his opinion on what we’re building and the Leadership management at OfBusiness.

Ankush:          

Thank you. Thank you so much for the lovely introduction, Rajinder. So let’s dive straight into the discussion. Why is the podcast topic today of Leadership Factory at OFB so very important.

Rajinder:        

Actually Vasant you should take this one, this one is your idea.

Vasant:          

So first of all thanks, Rajinder, for this podcast. So i think fundamentally recruitment and training is a problem that every startup today grapples with, right, whether it’s a large organization or whether it’s an early stage startup i think fundamentally they’ve not been able to scale up, fundamentally because they’ve not had great people there. The other issue that’s also very important is that in a B2C company you obviously have a product which gives a great customer experience, right, it’s a uniform customer experience.

But in a B2B startup like ours where the front facing of a customer is today individuals how do you ensure that you have a program where everyone gets trained, there is uniformity in the way they approach every customer. Today a customer who works with us from Faridabad to a Trichy to a Bangalore to a Pune how do you ensure that for him the front facing person represents OfBusiness in their truest way. So i think that boils down to the importance for having a great recruitment and a people management solution and i think that’s why this conversation is very, very important to us.

Rajinder:        

Well put. i actually would like to start out come backwards, right. First and foremost very few Startups hit scale. Not many of them reach the scale that you all have. Even fewer actually hit the scale where there are two large independent businesses which are now both unicorns. So congratulations to you both and to everyone at OfBusiness and Oxyzo. i think in the india context i can think of now four examples, there’s Flipkart, Phone Pe, there’s Ola, Ola Electric, there’s Firstcry Xpress Bees and now OfBusiness and Oxyzo. So i think it’s not by accident i think it’s down to the people who are part of the team. And core to that is basically i think in the OfBusiness case at least the management trainee program that you all have.

i guess if i take a step back what’s a successful MT program, right, how should one measure it. At least in my mind it would be a very large percentage of entry level management positions are filled through the MT program. A very large percentage, let’s call it 70-80 percent of senior leaders are actually folks who graduate through the program. Obviously this program lays the foundation for the culture at the company. A large part of the competition is healthy, it’s internal, people who know each other for many years.

And then finally i think there’s this enormous bandwidth that gets created for expansion and you’re also able to keep cost low while you expand because MTs are much less expensive than lateral hires. For OfBusiness actually when i look back all of these actually check out, right. You have been able to make sure that all of this works and frankly the expansion into new businesses like Oxyzo are also down to the fact that there is this internal org bandwidth that is there. i know that the cofounders get a lot of credit, Vasant, but for everyone who’s been involved from the investor side there’s at least like 10, 15, 20 people now who we all know and who we all recognize as being key contributors to the success of the company.

And so i would say that this is what’s special about the company and you guys should talk more about it. Ankush, you were part of the first batch, now that you run some of this MT program like where do you all go, who do you look for, who is a fit at OfBusiness, how do you all integrate them. Actually you should share some of your own personal journey as well.

Ankush:          

Sure, Rajinder. Actually this is a very pertinent question, this is thrown at us at campus after campus year on year. So as to what is it that we’re looking for, why is it that we hire people at a particular campus who are usually not the ones believed to be an OfBian. Now to take you back, taking that step back, there are people who would have wanted to be at a place at one particular point of time in their career who would want to succeed in their own eyes and have not succeeded from their own very perspective.

Somebody wants to get to a role X role or a Y role to get a certain position but he could not achieve that. When we’re talking about such people we’re talking about the top 1 percent of the management students who get into the best B schools, the best of iiMs etcetra. But somebody who wanted to get to an Ahmedabad or an iiM Bangalore or a Calcutta but did not get there went to a different school like an FMS or an iiM Rohtak and he feels that he’s an underdog in life. He always has the hunger to succeed just because from societal perspective he’s one of the achievers in society but in his own eyes he always feels that he missed out in life. And he’s the one who has a point to prove wherever he goes.

it’s not that he’s dissatisfied but he always wants to be better at what he’s doing as compared to his peer group. That’s why hunger is the most important ingredient that we look at in anyone that we hire. Vasant, don’t you agree.

Vasant:          

Yeah, absolutely. i think you can’t reinforce how important hunger is but i think we also have to give due credit to Matrix because i think we took the framework from them. i think fundamentally we look at four things, right, hunger, hustle, humility and the ability to sell. These are the filters that we look at when we’re trying to recruit somebody. incidentally because of being out of Gurgaon we started going to the likes of your FMS, your iiFT, your iiM Rohtak, your iiM Lucknow but what has happened is there’s been so much fan following and a sense of fraternity that’s been built out because today from every college there’s almost 20 people out there in the organization from each of these colleges.

So great sense of brotherhood and fraternity has been built that we end up going to these colleges. We have had a great experience and so they’ve had a great experience with us that today we’re getting the top 20 percent from these colleges, because we’ve seen what seniors, batchmates have all been able to perform. Now the other things that matter to us apart from hunger is humility because we’re obviously working with SMEs who’ve been in this industry forever and we believe that people who you get from colleges can be groomed towards it.

We also are very, very execution heavy, don’t like giving gyan, like getting our hands dirty and doing things and believe that hence freshers fit right into that culture. And i think at the end of the day all of us are want to be the best sales guy in the room. And we believe that again talent that we get from these colleges can be groomed to be very salesy and i think that’s the type of recruitment we do and that’s the filters that we keep when it comes to Hiring.

Rajinder:        

You know, i think the camaraderie and the frank and brutal honesty sometimes is very, very evident in internal interactions. in like some boardrooms, you know, in boardroom discussions there’s actually people starting one sentence and the other person finishes that sentence. So it’s very clear. Talk a little bit about the evolution of management trainees in their first two years in the program.

Vasant:          

So we actually have a good 6-month exhaustive induction program for all of them. The moment they join there’s a central induction that happens at Delhi which is followed by the infamous drinking induction goes all night long and i think that’s very much like the college culture that’s associated with it. i think being in iiT you know that ragging how it works and i think that’s the type of culture we try to build in here too.

The initial week is followed by induction that happens in the different regions. Now this goes for six months. The best part is for six months it’s almost non evaluative, there’s literally no target. They end up mirroring and shadowing senior folks across the organization for different meetings and they sort of realize whether they want to be here and whether the aspiration is to become one of them. in panel we also have a induction module and this is digital content that’s made by all of us. 50 modules with exams where they go through every month.

At the end of six months you have someone who has mirrored every senior folk in the organization who has learnt every trick in the trade who has been taught everything from how to negotiate, how to start a meeting, processes, products. And i think he has been well equipped with everything to succeed. And i think that’s the induction program that we have sort of made.

Rajinder:        

But, Vasant, all this sounds too very rosy. There must be certain downsides to it as well i think we need to know.

Vasant:          

Yes. So i think as an organization we’re very hard on people who come laterally because we end up using the same framework for them, we end up checking that are they hungry, do they hustle, do they have the ability to sell and is there humility. And you often realize that people who come from the industry believe that humility they believe that it’s very tough for them to unlearn. So humility doesn’t tick the checkbox all the time. The other thing is that many of them don’t like to hustle, they like to get things done rather than do it themselves. So that sort of doesn’t filter well within the organization.

But for us what’s more important is whether someone comes through an MT program or whether someone comes through laterally i think these four filters are very important. We also have i think almost 5-6 senior folks across M&A, across DNBFC, across of commerce who are people who have come from the industry. But i think irrespective of the domain experience that they bring in i think what’s important that they check out is that these four filters always check out for them and i think that’s what made them successful within OfBusiness.

Rajinder:        

How many MTs succeed?

Vasant:          

So what happens is the transition happens between the six month to the one year period. i think that’s where we see the transition because after six months one is well equipped to succeed and then they also realize whether this is where they want to be. So after six months some people realize that this is not their bread and butter, they realize this is not what they want to be doing and then we see some attrition there. But beyond one year whoever has been there in the organization today our attrition is i mean less than 2-3 percent, some for personal reasons.

All these management trainees i think after two years we believe in a concept of caring meritocracy which means we will care for you after being meritocratic. The first two years you’re evaluated based on numbers but the moment you prove your point and you prove yourself then the world is an oyster i mean you can do whatever you want. All of them end up becoming new geographical leaders, some of them become empire builders, have 50-60 people reporting to them, case in point being Ankush. And today if you look at OfBusiness we have our commerce business has grown about 3x, our lending business has grown 2x. We have gotten into multiple new products, multiple new categories, we’ve even got into manufacturing ourselves.

Everything today is led by a management trainee who’s been with us for three years. And so that’s the type of growth that management trainees see.

Rajinder:        

i think fantastic, and i think this is actually very instructive and it’s an actual fundamental org building choice that all Startups have. You know, we’ve all been part of different organizations, you were from iTC, i was from Unilever, we’ve all read of these famous management trainee programs in traditional industries. But in the startup ecosystem it’s actually very rare. And you’re one of the few companies that actually does it.

Now the reason it is hard is because most Startups are actually trying to scale really fast and so for them the cost of failure is too high and so they typically hire someone from industry as a lateral who has this particular skillset, who can execute a particular charter and once that person has executed that charter for the next 1-2 years the reality is there may not be that next role for that person. So that’s where there tends to be a lot of people moving from org to org and you’re constantly as a founder in this loop of Hiring and building the org again. And so that’s very time consuming.

i think the model that you all have actually setup for yourselves is actually very sustainable long term and i’ve increasingly been telling most of the Startups that i work with that start thinking about this almost from the time that you’re kind of hitting kind of series B. Because now you’re at a scale where you can actually go to campuses and actually recruit 10, 20, 30 people as part of your first empty batches. i don’t know, how big was the first empty batch.

Vasant:          

The first empty batch was five.

Rajinder:        

See. You can actually start as small as five, right, and still get it right. But when you go through that route it’s A, it’s very scalable, you can actually scale from 5-40, there are enough great campuses out there and you can hire from the best or you can hire the best from the next best institutes all of that. i think the other thing is that you can actually induct these people and scale them at your own pace. There will be a lot of internal competition for growth but there is a clear system by which everyone is evaluated.

Ankush:          

One thing i wanted to add, Rajinder, to your point, all Startups know that this is the right way to go about it but they’re not able to implement this model that we’ve implemented. And one reason for this is that we take the best practices from the industry but we do it in our own way. So we call it internally the OfBusiness way of doing things. Google also has a startup within a startup model it’s called intrepreneurship. But we do it in our own way in the manner of being hands on completely and that’s why these MTs and the MT management program has scaled so well because it’s not merely taking up the best practice from what’s being done outside but molding it in our own manner as per the needs of our system and the industry choices.

Rajinder:        

Yeah. And i think there are large companies out there that obviously have very large teams. But what ends up happening with the MT program is that it’s usually an afterthought, right, where you say okay, i’m doing my overall planning for the year, i need to be whatever 300 new people that we need to hire this year. Okay, then you go out and hire largely laterally and then like okay, let’s hire also some 30-40 MTs. And then these MTs kind of fit in somewhere, maybe they’d have some kind of a training program but they’re part of our larger org in a machine and so they have to find their place. Versus i think at OfBusiness the MT program is the core and so that’s where actually most of the growth happens within the firm and like you said a lot of the businesses are now today led by MTs.

Vasant:          

i’ll also add one point to this i think while a lot of people we’re seeing try to imbibe a similar management trainee program i think the problem is ultimately these guys are freshers, right, so it’s very important that the boundaries and frameworks are created for them to succeed. You can’t put them in the middle of a problem and tell them to solve it without telling them that hey, these are the people to go to, these are the processes in place, these are the systems in place, these are the boundary conditions that you have to work under so that they can actually succeed to their greatest potential.

i think the problem with many Startups is because they are not very process conscious there isn’t captive knowledge within the startup easily accessible to the management trainees, they’re not able there often they’re trying to manage internal systems rather than succeed to their greatest potential. So what’s very important is that you ensure you hand hold them, guide them with the right processes, give them the right framework so that they can succeed to their greatest potential and that’s important for us.

Rajinder:        

Okay, it’s a good learning. Because you have an MT program you’re saying the default is that you’re very process driven.

Vasant:          

Correct.

Rajinder:        

And in some ways the fact that you have these 50 learning modules means that you all will actually have learning objectives against each of these that are defined and people are actually then evaluated against them.

Vasant:          

Absolutely.

Ankush:          

We started out as in the first batch when five MTs were hired at that point of time it was not too very structured, we learnt on the job and then along the way we realized that we have to give it a structure wherein certain modules need to be there and essentially throughout the program the DNA that we wanted we ought to carry that translated through the MTs and they gelled in such a manner that even down south from the HO at Gurgaon till anywhere Trichy, Coimbatore if there’s any MT you can be rest assured that the same DNA is flowing throughout the east, west or the south.

Vasant:          

in fact you won’t believe it, you know, it’s freakishly weird that sometimes when you go for meetings with people who you’ve not seen you see them pitch the same way you would have pitched directly. And like no, i’ve not gone for a meeting with him but why is he using the same dialogue i use. You know, i think that level at which it penetrates into the culture i think is a testimony of how this form of our building actually works.

Rajinder:        

. Guys, i’m going to flip to Oxyzo. Congratulations, great round and honestly it’s a testimony to the quality of the business that you all have built. Tell us a little bit about what was the initial idea behind setting up Oxyzo and why build this as a separate business now?

Vasant:          

So when we started we realized that any B2B business has layered credit associated with it whether it’s for retention, whether it’s for scale, whether it’s for profitability you cannot build a B2B business without a captive financial services as a part of it. But i think over the last four years what’s happened is with $2 million of disbursements, very good origination, great credit monitoring network and more than 10,000 notes that has come from the captive business today less than 30 percent of our lending business caters to the captive commerce business. So we realized that the opportunity is so large that this can both raise capital independently and also scale independently and i think that’s the process to have raise that in Oxyzo.

Ankush:          

To add to that, Vasant, the SME opportunity in itself wherein the market being so large there are manufacturers, there are government contractors, there are service providers, people from as low as a 10 crore topline to a 200 crore topline. So that opportunity because SMEs being the back bone of the manufacturing sector that is where the need for credit is so humongous that it will take us a lot of time to cater to that. That is why a different arm, a brand in itself Oxyzo a different company catering to that need was so very critical.

Vasant:          

Ankush, you should also given that you had four years in Oxyzo you should definitely cover a little bit about who our customers are, what our positioning is, you should definitely cover your experience in Oxyzo.

Ankush:          

Thank you, Vasant, sure. So Oxyzo four and OfBusiness overall five years and during this journey as a MT who was under one year of experience i’ve had various transitions wherein the first 3-6 months were basically about learning the fundamentals of the business. Then the Entrepreneurship idea wherein learning hands on on the business came in wherein from -- we wanted to focus on the consumer durables sector, the fan manufacturers, the cooler manufacturers. in the north that’s a very big sector and that’s a business where focusing on the customer we reversed and we got to the product, connected the need for working capital at that end of the business to manufacturers at the other end of the business wherein the entire supply chain was connected and a channel was built. And all of this in a matter of 3-6 months me being under one year in the org and the entire ownership of the sector and the channel was given to me.

So this is what the MT program and OfBusiness is all about. From then on we’re adding various sectors like contractors, service providers, adding various products in terms of bill discounting, work order financing, tenured products, purchase financing against lapse. All of these are different types of working capital products that we offer but this transition in these four years has been so well and i must say has been so enriching that this has been largely a similar experience to other MTs who are leaders in their own right.

Rajinder:        

Guys, i have this question. You have now seen demonetization, GST, the DHFL crisis, then Covid crisis frankly you have now seen four cycles over the last five years. And through each of these cycles actually the quality of the book has held up. Even today the NPA percentage after the new provisioning norms are still under 1.2 percent. What’s the secret, how did you all actually crack such a high quality book?

Vasant:          

i think there are three reasons why our book is held in great quality i think first is a function of the choice of customers that we do, i think a lot of people focus on new to credit but we consciously focus on the bank customers because we always believe that they’re underbanked. So we focus on customers in manufacturing, in contract manufacturing. All of them who are not unbanked who are not new to credit but who have banking history and relationships but are obviously underbanked because there’s a large credit shortfall in terms of requirement in india.

Second, the sectors that we focus which is manufacturing and infrastructure even after Covid you’d realize that the greatest bounceback has come from these sectors. Unlike sectors like retail, you know, service providers etcetra who have still struggled after Covid. i think these sectors have given the greatest bounce back whether it’s because of more manufacturing in india, whether it’s becoming another designation apart from China, there’s a lot of growth and this sector has held up much more resiliently.

i think third its also the nature of the product that we do, right, we control the end use, there is constant credit monitoring, our payments come back to us in 90 days. So the way we’re able to control credit and constantly monitor credit is also the reason why our book is of great quality. i think these three attributes are one and i think the softer aspect is again i would boil down to the management trainee program. i think the ownership and the company first approach that today the folks on the ground take is extremely high. Because today the guys on the ground not only do they source but they become the first level underwriters, they also become the first level collectors.

in fact when a portfolio even goes a product little overdue they will run to the customer and ensure that it is collected not leave it to some other team to collect and that ownership to not lose a penny is also fundamentally why our credit quality is extremely high.

Ankush:          

That’s true. Actually we again and again come back to the MT program. There’s an analogy that i use whenever i train MTs at the end of a program and the analogy that i use is that just the way the indian Administrative services is to the country that’s the steel framework on which the British ruled india but now it’s been governed. Similarly the MT management program and the MTs are literally the iAS officers of OfBusiness, they’re the ones who carry the DNA, who ensure that everything runs in order and that’s how we’ve been successful all these years and we will be. Because that is in place and is a winning formula for us.

Rajinder:        

Fantastic. i think lots of learnings on this podcast. Super. Appreciate you guys taking the time out. i hope Startups and founders who are hearing this choose to actually setup a management trainee program. i think the learnings that you all shared in terms of who to hire, how to integrate, how to train, how to then review all of those also matter. And frankly the organizational bandwidth that it has created for continuous innovation and down the line ownership is what is most exciting about OfBusiness.

And i think you have now setup a second business that has gone on to become large. i think there are hopefully many more businesses that you all will. i think there are some already-  you should actually add a quick line on that, Vasant, but seems to be like there’s continuous innovation that keeps happening internally.

Vasant:          

Absolutely. i think this agri business which today within a year it’s the most resilient business after Covid. And today that business is a $500 million business itself. We’re also forward integrating into making our own brands selling online, building a distribution network. So it’s phenomenal to see how that business is great. We’re also having other interesting businesses that’s being built across garments, across textile and you’ll see that we’re a much more forward and backward integrated player as we scale.

And I think I’ll want to obviously use this podcast to reach out to a lot of business school grads. I think we’re still recruiting for our management trainee program, so do feel free to reach out to us. I think there are enough immense opportunities across different types of businesses and we’re always looking for as we said hungry, hustling talent out there.

Rajinder:        

Thanks, guys. Super.

Vasant:          

Thanks.

Related Content

When to bring in an external CEO
When to bring in an external CEO
Rajinder Balaraman
When to hire a chief of staff?
When to hire a chief of staff?
Rajinder Balaraman
When should a founder announce their fundraise?
When should a founder announce their fundraise?
Salonie Ganju
Rajinder Balaraman
Rajinder Balaraman
MANAGING DIRECTOR