The Graduate CFO

Akshay Sarma: So I am born and brought up in Hyderabad, born into a traditional South Indian family where everybody’s a doctor and engineer. At a fairly young age, I decided that my interests lay in economics. I think I was influenced by my uncle, who was a Chartered Accountant and actually was the GM finance for Central Warehousing Corporation, ECIL growing up. So, you know, I think some part of what he used to do, talking about accounting and finance had its influence on, oh, there’s a whole new world. And I still remember the first time we got internet at home back in, I think it was 97 or 98. And I kind of was Googling finance and I came across the world of investment banking and derivatives and these fancy words that kind of, my brain just kind of ran going like, what is going on in the world, right? So yeah, and then I kind of went up to my dad and I said, hey, I think I want to do finance. I want to… want to understand this world. And my dad being my dad, basically said, look, I don’t know anything about finance. Why don’t you just go to Bombay for your undergrad and figure things out yourself? Because I can’t help you here at all, right? So the best thing he did was kick me out of Hyderabad and send me to Bombay, where I did my undergrad from Podar College. And while studying there, started out doing my Chartered Accountancy, cleared my level one. But somewhere when I was doing my PE2, as they called it back then, it kind of… became clear to me that audit tax and accounting weren’t necessarily the areas that I found interesting and that was the areas of why I decided to pick finance. So I again started talking to a few folks saying, yeah, I want to learn about derivatives. I want to learn about M&A. How do you go about doing this? And again, a few seniors were like, hey, why don’t you get out of the country, go to a masters and join an investment bank. That’s a faster way than to do your CA, then an MBA finance and then kind of, make your way to an investment bank. And I was like, sure, let’s do this. And obviously I was drawn to two major financial capitals of the world, London and New York. And London was relatively easy for me to pick because I had three undergrad degrees. So you want to get into a good school. The US is very keen on four-year undergrad degrees. So by design, London just became the choice for me to kind of go in. I think I got into City University, they have a business school that was then known as Cass, today it’s known as Bays. I did an MSc in investment management there and joined Deutsche Bank straight out of that, right? And just as the housing crisis was unfolding. So it was fun. I had to go through 10 rounds of interviews. There was a hiring freeze at Deutsche Bank. A couple of really, really great people whom I owe at the start of the career to. They fought for a fresher to get a job. It was amazing. So you need a lot of strokes of luck in life. You need people to back you at the right time. And I found them very early. that they actually got me into this role, which was only a TA back then, rather a trader’s assistant. But they were like, no, you need to come in, you’re good, you’ll get it, and you’ll learn fast. So I was really fortunate to have them. And I kind of, you know, had to go to 10 rounds of interviews, fight a hiring freeze and get into the job. And then six years at Deutsche Bank were fun, you know, I worked across London, Frankfurt, Singapore, and then Bombay, went from TA to being on the structuring desk for derivative transactions to trading GSEC bonds in India. structuring asset-backed financing in Southeast Asia. It was a fun journey. But after about six, six and a half years, I think I kind of started questioning, you know, in general, everyone has this, what am I doing? Why am I doing this? Is there more to me? Or am I meant to be in an investment bank or a trading flow forever? Six years ago, I would have paid anything to see myself in this position. But now that you’re here and you’ve done it for two years, you’re like, well, you know, is this it? Is this it? And so I decided to go away and do an MBA. Again, I was very keen on exploring the world of startups. My brother had introduced me to the world of tech and product. We kind of jammed together on a couple of ideas. So working with tech guys, working on MVPs, working on mockups, I was just like, oh wow, this is like really cool. It’s a very different world to anything I’ve done. So I was very keen to go and say, hey, let me go spend some time with the startup ecosystem, right? See. what this is all about. Do I like it? Is it something I want to do? And I think that’s how I picked Cambridge. I applied to Oxford and Cambridge, got into both. Again, I’d saved up money for a one year MBA. I was eight year, didn’t have money to do two years, didn’t all want to take a loan. So kind of saved up fun money, went in, did my MBA at Judge Business School at Cambridge. And I think that was a very, very influential year in terms of me understanding myself, me understanding the world of startups. me kind of saying, okay, this is the kind of person I am. This is what I like. This is what I don’t like. So that one year really helped me. I worked with almost 14, 15 startups when I was there, kind of plunged myself in the ecosystem, everything from business planning to, fundraising strategies. It was fun. It was a great, great one year that kind of taught me that startups is where I want to be. Came across the world of alternative lending back there. So, back in 2014, 15, the lending clubs and the- funding circles of the world were really, really popular. So we were very keen on, I was very keen on understanding what they were doing. And obviously the moment I kind of understood what was happening, I looked at India. I was fairly confident nothing of this magnitude would have taken place in India because we move slowly. Regulations are a little bit more on the side of consumers. They wanna make sure lenders aren’t taking people for a ride. But I thought it was an interesting place to go and try something different. And during the course of my research, I came across Axio, which was then known as Capital Float. They just raised Series C. And I think they were looking to kind of build something unique in the alternative lending platform. I Googled the founders, saw both Gaurav and Sushant, who are from Stanford. And I’m like, if someone’s trying to do something different in lending, it has to be these guys. They’re coming straight out from the Bay Area. So I. I actually saw posting for a job on the SAIF partners or the elevation partner, elevation capital website back then just dropped an email. I shall remember that email, I got a reply and went like, how do you hear about us? And I’m like, well, I was looking at alternate blending platforms and I found you guys. Two phone calls later, one with Sashank, I just had to move to Bangalore and then kind of build. What in our head then was this unique marketplace where you could do micro debt syndication, right? That was the thesis is, if you can syndicate loans for a thousand crores for big corporate houses, what will it take for us to syndicate loans as small as 10 lakh rupees using technology, allowing banks and more traditional players to give money to folks whom they normally probably wouldn’t have given money, right? How do you build an efficient vehicle that can use to move capital from… from the haves to the have nots, if I may use that parlance. And yeah, so I set out building this platform. And as life would have over the last eight years, the rules evolved from building, scaling this platform, leading liabilities, capital markets, managing cash flows of the organization through COVID, et cetera. And I guess I owe a lot to Gaurav and Sashank that they basically said, hey, do you want to come and take over the title of CFO despite not having an accounting background? Because I think. they’re confident enough that I get the business. I understand liabilities, which is an equal part of lending, especially when you’re young as a company. And you’ve gone through all the macros that you’ve gone through of demon, GST, IL&FS, and then COVID, the uncertainty of money coming in, the uncertainty of repayments coming in and managing the org. So it kind of like worked very closely with them, right? And that kind of helped and gave them the confidence that maybe I could do this. So the last two years have been, two, two and a half years now, been a fun journey of… you know, making my way up the ladder in terms of titles. But I think more from a learning perspective, right? That’s what I’ve enjoyed the most. New challenges are thrown every day. Something comes up that someone’s never seen. And then you have to sit down and figure out how do you not make it detrimental to your core business. So yeah, that’s how I got here. And it’s been like a fun journey so far.

Rohit Agarwal: Great story, Akshay. Certainly moving up the ranks and sort of putting in the hard work have materialized for you and I’m sure pretty interesting years to come. Let’s go back to your sort of formative years. You mentioned you kind of, you know, saw your uncle who was a GM in finance. Tell us a little more in terms of What attracted you towards finance in those early years? It’s not like you know what it is, you know what exactly he does or maybe your father does. So it’s all fuzzy. We just hear words and it’s like, hey, this looks interesting. So what was those first memories in your head?

Akshay Sarma: I think it was a lot, very honestly, like, you know, when you’re a kid, I still remember like 92, 93, he was in Delhi, and I’d go every summer holidays to spend time with him in Delhi. And you’re drawn to what you’re drawn to, very typically as an Indian kid growing up in the 90s, right? You’d have all these office boys running around him bringing files home late in the evening, you’d have the ambassador car with the curtains and the little fan. And as a kid, you’re like, what is going on over here? Like, what does this man do? Right. Because dad was in the merchant Navy. So he would I know how my dad worked because he was at ship working. So the only closest person I saw working was my uncle. So you were fascinated by this man who was doing something very unique, which allowed him to travel in a car. I had a driver. So you were like, what is this world? Right. And then you slowly come to know that it’s finance. How little do you understand the nuances or how wide the field is. But I think two things, you know, in the formative years, my dad was an engineer. So I thought all engineers left home to earn money as a kid. Nine months you would be away from the family. So I think that kind of made me say I don’t want to be an engineer, just subconsciously somewhere, because all engineers left home to earn money. As a kid, I think that was the first thing that I had grasped onto. And then I was very fascinated with what my uncle was doing, which was this amazing thing. You’re drawn to everything and whatever you wanted was done for you at home because he was a central government employee and things worked well. So you were like, oh, so I think subconsciously, those choices were made when I was very, very young. You kind of rationalize it as you grow older, but you look back now, I think there was a certain element of, oh wait, finance is interesting because things happen for you. And I think another major, even I should remember was in my sixth or seventh grade, there was an ad in the newspaper for, I think it was a Panasonic HD TV, one on the wall mounted. And there was this really cool guy sitting in front with this photograph or model obviously going. And it said something, comma, investment banker. Now you’re like, okay, what is investment banking? And you walk up to your dad and your dad’s like, I don’t know, it’s a stock market, stay away from it. I mean, you tell a kid who’s 13 to stay away from it, he’s probably gonna go running towards it 10 times faster anyway, right? So I think that’s, you know, the move towards finance or picking that as a career had a lot of subconscious events over time. And then as you kind of start studying economics in school, I was just drawn to that world, right? It just felt like, oh, this makes sense. It was very logical. , and while I never, I never graphed physics as a kid in eighth and ninth and 10th, I go, I graphed economics with logic very well. So I kind of immediately was like, this makes sense. This makes sense. So the, I think the education part of it kind of, kind of drew me more and more. And as you felt like you understanding the subject better, you kind of more like, oh yeah, this is what I want to do. Or you go, this is not what I want to do. Because when I finished 10th, I was very clear physics was not meant for me at all. Math I love because math is logic. It’s black and white. There’s no in between in math. So when you say, okay, what are the options I have without physics? You’re kind of by design pushed to do math economics, which takes you into this world, right, very naturally. So I think series of events, some funny and some ridiculous when you look back, but you got where you got to at the end.

Rohit Agarwal: If only you knew something like COVID would happen and all engineers would be working from home almost perpetually.

Akshay Sarma: Or the tech boom would be so big that you could make more money than an investment banker. I’m sure you would have thought about life very differently back then.

Rohit Agarwal: Two times, two times in my life that I felt I should have done engineering. One, when I first landed in San Francisco and I realized I’m in the wrong profession. And then number two, when I started Creo, and that’s kind of when I felt that I should have known how to code would have, would have helped a lot.

Akshay Sarma: I still ask myself, do you think you should learn coding? I’m like, well, we’ll deal with it another time. We’ll answer this question later.

Rohit Agarwal: Very cool. Tell us now, kind of when you came out of your undergraduation, what was the impetus to join Deutsche? Is it is it more you were kind of drawn towards trading by sort of some interactions? Or is it more of a process of elimination and saying I don’t like that? I didn’t like that. So thereby, let’s use this.

Akshay Sarma: I think I was drawn to trading as soon as undergrad got over. I was picking out, looking up, I was reading about what people do. Funnily enough, though, I was drawn to the word of trading of equities. I thought that is what I would want to do. I said, I was like, I hold two bonds. It’s so boring. It’s just, that’s not what I want to do. But that’s until I actually started studying during my masters and the world of fixed income kind of opened up in front of me and I was like, Oh, wait, what is going on over here? Because you have one bond. and you’ve built these beautiful products on top of it, right? You have swaps, you have cross currency swaps with an underlying of a bond, you have derivatives on top of it. So I think as I was continuing my studying, I was just like, oh my God, I wanna be working on the trading floor and trading derivatives, and I wanna get into fixed income. So I kind of narrowed it down. Now, hand to heart, I think back then, I did try getting into a lot of graduate training programs, the investment lines do have them as a source of getting in. Unfortunately, I… not taking anything away from gas or base, but it’s not really one of the top schools. It’s very hard to do it. They only take five, six, seven guys every summer in an internship and you’re up against the LSB undergrads, the LSE undergrads, the Oxford and the Cambridge of the world. So you’re probably kind of like, you know, schools matter, whether you like it or not, especially at undergrad. I think it’s changed a lot more today. People are willing to, you know, give folks more chance. I don’t know if that was the case back then. So I wasn’t able to crack any of those undergrad, or graduate training programs. I got interviews. I got waitlisted at Barclays, Goldman’s, and JP unfortunately couldn’t make it because I guess higher caliber university students were then picked up. So by design then I started interviewing in places. The one thing I knew very clearly was trading flow was where I wanted to go. I was just very naturally drawn to the subjects, the theory of it. So I was very keen to kind of explore the world of the practicality of how a swap is traded, how do you structure a swap, how do you build on top of it. So, I think that one year of studying kind of opened my mind up in terms of like, it’s not equities that’s interesting, it’s actually fixed income. Because the equity is what you know, right? In India also back then, in the early 2000s, you were trading the stock market, DMAT accounts were being opened up and you were like, this is awesome. But fixed income was, I was like, it’s a world that not many folks understand even today, both as an investment product or how to use it. But I was drawn to it from day one when I started studying it, otherwise it was equity. And hence- you know, the love of wanting to get onto the trading flow.

Rohit Agarwal: then what precipitated the move from London to Mumbai?

Akshay Sarma: I think two things, right? I think I spent about three and a half years in the middle office back then. And I was a bit like, well, you know, I think I’m ready to kind of go onto the front office and I want a front office gig. And back then, obviously investment banking, post-Lehman’s was a very different world, right? And people are trying to figure out what to do, how to do this. They gave me a stint in Frankfurt saying, you know, we’re trying to move a few things. Why don’t you go to Frankfurt and try and build something? So I spent about six, seven months there. Then they asked me if I wanted to stay back in Frankfurt to continue doing this. And I’m like, I do not want to be stuck here. I want to be more client facing. I want to do more things. And then an opportunity in Bombay kind of popped up. One of the trading desks guys were like, why don’t you go to India and work for the structure in desk from there. And then we’ll find you something within a year. So I said, sure, as long as I’m getting to learn, I don’t mind, I don’t care about geography. I’m not obsessed with being out of India. I still am not, I’m more, but I’ll follow wherever I can learn. So I moved back for a year. I worked with the Southern Europe Structuring Desk. You know, we worked, we were selling products in Portugal, it increased in Spain, spent, was traveling up in London, in Bombay, and then one of the traders I worked very closely with, he was moving to Asia. And then he’s like, Hey, I’m moving. I want you to come. And there’s a spot up on the trading desk on the India GSEC flow. Why don’t you do that? and some Southeast finance structuring for me. I think it’ll make sense from a learning perspective for you, Wanda, can you move? So I said, sure. So for two years, I did 15 days a month Singapore, 15 days a month Bombay, traveling up and down, learning a lot more about capital controls in Southeast Asia, how MNCs kind of structure transactions to make sure they’re able to move their capital without breaching compliances and government controls. So it kind of just… happened with folks kind of thing, Abe, why don’t you come and do this? I like you, you work with me, why don’t you come and do this? And I was what, 24, 25, 26, then all these guys were in their mid-30s, late 30s, early 40s. So they were all like, a young kid who wants to learn, why don’t you come? So you need a few of those, you know what I said, you need a few people to back you, right? And life saying that, okay, you’re showing the ability to do it, can you step it up a notch? And then it’s in your hand. So… You put in the hard yards to kind of show people you’re ready, but then you need those people who are going to give you a chance, right? Whether it was me at Axio today with Gaurav and Sushank always backing me, I think, or, you know, back then, a whole range of people who kind of helped the career. So it kind of just happens when you have enough people saying, you know, why don’t you try it? And then it’s on you, whether you kind of, you know, able to prove it out or not. But that bit of luck, the right people to kind of say, you know, you could, you might do this even though you don’t necessarily come from all the right backgrounds. I think those are important things.

Rohit Agarwal: How is this experience on the trading floor, both in London as well as then in Mumbai, has helped you so far and is helping you now at Axio?

Akshay Sarma: Oh, I think the biggest thing that trading flow gave me was ability to multitask. , you know, you would be looking at, I think at the peak, I had six screens that I would look at simultaneously at any points with alerts in different colors for different news items. So you constantly just looking for those, those red flash of the blue or yellow flashes, and you know what news has flashed, um, while doing a whole bunch of other things on the site, right? , I think that. ability from the trading floor and obviously like mental math. It’s something that, you know, I think mom got into me as a kid and continued on the trading floor. Is there quickly jumping to numbers fairly quickly? Those were I think these two things, um, you know, were kind of like pushed polished on the trading floor and today you know the role that I do it’s every to kind of move from one topic to another to another to another and at the same time keep in your head go deeper thinking did I miss something? Did I miss something? And then if you feel it go back to the team and we’re like, is someone looking at this? Is someone checking on this? Because we might miss this particular thing, right? So I think that multitasking ability was something that I’m convinced came more from the trading flow than from anywhere else, because where else would you get to do like four, five different things at the same time, right? You become aggressive as a person, something I want to tone down. I’ve gotten a little better, I think, at it over the years. I don’t think I’m 100% there. If you ask my team, they’ll tell me I’m not there at all, I’m sure, but you do become aggressive because you want things done. I think it’s made me who I am. And there’s a little bit of edges I don’t wanna lose. There’s some mellowing then that requires the balance to everything in life. You’re trying to find it and you’ll kind of get there eventually. But I think these things have kind of shaped me in my thought process and how I functioned to a large extent. So yeah, it’s been important years, I’d say.

Joining Axio and the modern CFO#

Rohit Agarwal: introduce Axio to the listeners maybe in a minute so that you know people have context in terms of when we talk more about things.

Akshay Sarma: Axio is probably one of India’s leaders, online checkout finance provider. We offer marquee products such as Amazon Paydata, Axio Paydata to customers. We offer small ticket checkout loans and then cross-sell personal loans to folks who need them. We also have a PFM app, which was earlier known as Walnut. Today, it’s known as Axio, where we help people manage finances. understand where money is coming and going, track their budgets a lot more effectively. So yeah, that’s what we do.

Rohit Agarwal: Very cool. Let’s talk a little about what is your definition of a modern CFO? How do you think about your role at Axio and operate on a day-to-day basis?

Akshay Sarma: Look, I genuinely believe that titles are a way to introduce people to, you know, to the external world as in which area does this individual specialize or oversee. But I think beyond a certain level in companies, especially in smaller organizations, there are no JDs, right? People work together across functions. And this is true for, I think, the entire core senior team that we have at Axio as well, right? There’s the ability to ask questions across the board. So for me, the modern day CFO. with that title is someone who is everybody’s partner and it’s probably the biggest enabler of business in the organization, right? Because right from structuring of pricing to making sure the cost of funds that come in to running cost based projects to ensure the organization isn’t bloating up too much is false under your purview. But can a CFO do this all by himself? Absolutely not. You have to work with business. You have to work with every HOD, because everyone has their needs. So what’s important is to you put your perspective of why that need is not needed today, or why it’s needed and how do you achieve it in the most optimal way for the organization, right? So for me, the CFO today is probably the CEO slash founders biggest partner slash ally in executing things within the company, keeping in mind the big picture. or the pitch that has been made to investors. So I definitely see this role as somebody who’s, you know, working with business. You know, I’ve been to a lot of conferences, etc. over time where folks are like, finance is the brake. You can’t just accelerate. I find that very hard to believe. Finance cannot be a brake because if finance is the brakes, everything just stops and the car just cannot stop, right? So what you need finance to do is to actually act like the heart. of a human body, right? You need to pump blood to every part of the body. You need to ensure there’s no blockages. You need to make sure every part of the body is getting enough blood. You need to make sure that’s working well and it’s smooth. So for me, I look at this entire role of finance to be proactive in giving right insight into different teams to make sure they’re doing things the right way. both from their perspective and the company’s perspective. So yeah, that’s how I kind of see this road.

Rohit Agarwal: Akshay, I love the analogy to the heart. Tell us, I mean, of course, Axio is a financial services kind of a lending business. There are some specific functions that are only present in a lending business, right? Like a risk management business or a underwriting function, so on and so forth. Are all those also kind of reporting into you or are those separate business verticals? And…

Akshay Sarma: Go Zyre.

The lending business — balance sheet vs co-lending#

Rohit Agarwal: whichever way, how kind of you intersect with those functions.

Akshay Sarma: no, they are completely different vertical. We have a Seattle, a really good friend of mine, Amrita, heads the function. I think in the lending business, your folks who had risk and your folks who had finance are people who have to work the closest because when things shake up on the risk side, they inadvertently shake up on the PNL. So I’ve been very fortunate. think at Axio to work with our earlier CRO, Ankit Satsangi, our earlier CFO, Rajesh Srinathan. They had a very good equation. And in my younger years at Axio, when I was learning from both of them, I think it dawned on me the importance of these two roles to be in sync for the organization to function at its best. So they’re independent units. But Amrita and me, we chat every day. on every small thing, kind of saying, hey, what’s going on here? I heard someone trying to do this. Did you know about this? And I’m like, hey, do you know about this? And especially for Axio, because we work on the co-lending model very heavily, which falls under me, and directly impact even the liabilities that we raise. It’s even more intertwined, right? Because a change in a policy might not be something that a co-lender wants. So we’re kind of sitting down and going like, okay, how do we kind of work towards convincing the co-lenders, or is this the right thing even for us to do? So these are roles that you don’t have to oversee, but you 100% have to work with, right? Because she’s independent, there are times that we disagree on a bunch of things, and it’s very important that we disagree as well. I’m sure a lot of times you come across as two peas in a pod trying to say the same thing because the roles are that way. But between us, we catch up one-on-one so often, we finish our fights in private, which I think is important, because we need to have our fights. If we’re just… singing each other’s tune, then it kind of becomes pointless of having two people. So we do have our fights in private, make sure that then we’re going and talking to the right set of people about the right things, but it’s a very, very important role and a very, very important partnership from an organization perspective, especially a lending one.

Rohit Agarwal: Makes sense. Can you kind of… what’s the word I’m looking for? Maybe can you decouple the concept of lending in terms of balance sheet lending, off balance sheet lending, co-lending, and sort of tell the listeners in terms of what all these different business models mean and how do they work differently?

Akshay Sarma: So lending is probably the second world’s profession in the world, right? You borrow money at 10%, you lend it at 15%. You need to make sure your losses and optics are 3%, 4%. So you have a 1% spread that you make. This is like the most vanilla definition of lending anybody can ever give you. Obviously what, one of the very important things that drives lending is the cost at which you are able to borrow money. You are able to raise money, right? because that determines how much money you can take or how much more risk you need to take or what are the products that you can actually lend in the market because there are certain benchmarks for certain products that are there in the world today. So the ability to raise money at a low rate is what drives that. Now, when do people lend to you at a low rate? When you are a lower risk borrower yourself, which means somebody who is, think of an SBI, they are probably your strongest, biggest bank. oldest, almost a replica of the government of India, if I may say so. So if someone wanted to put one of the safest lending bets in India, SBI is a good bet to make, right? They’ve been around. So they would, they’re probably raising money at the cheapest. Obviously, they’re a bank, so they have savings accounts that don’t necessarily need to go out and raise money. But you know what I mean? Similarly, think of someone like, you know, the Bajaj Finances of the world, right? Again, huge. organizations, very successful, almost look at a marquee of Indian consumer behavior, how their Diwali sales go, etc. So the ability to raise money at a low rate drives everything. So when you’re a young startup, you’re not going to get money at a cheap rate, right? You will raise equity from a few marquee names. So people are like, okay, they’re doing something interesting. But the only thing that proves, I think a lending company’s ability to stand out. is vintage, right? Have you seen enough lending cycles over time for you to say, I know how to withstand a lending cycle, a down cycle around my business, I’ll still be around when everything kind of happens, right? So that’s very important. Now, when you are young and you’re trying to raise money, you’re probably going to raise it at like 14, 15%. No one’s going to give you money at seven or eight or 9% because you’re considered to be slightly high risk even for the guy who’s giving you money. When you’re raising money at 14, 15%, by design the products that you have to go after now are higher buckets, higher tenure, not higher tenure, see, but higher interest rates. And that means that now you are now stuck in this loop because high interest rate products are supposed to be riskier products, right? So you have to now manage that risk along with the cost of funds and make sure it’s still able to make some money. And this is where I think… what we want to build from a co-lending perspective was very interesting because we said, hey, if I’m going to move out and people are lending money to me at 14, 15%, what if I get someone not to lend to me, but lend to the eventual borrower whom I will underwrite and I will be able to raise money at a lower rate because the eventual borrower’s risk assessment will be a more granular. You know, you’re not, it’s not a, you know, when I borrow, I borrow 20, 30 crores. Here, you’re giving a 10 lakh rupee loan out. So suddenly you’re helping. a lending company build a very granular portfolio, which is always the idea, right? Everyone wants a retail portfolio because it’s granular, the risk is easier to manage and it’s not lumpy. If one organization goes down, in wholesale lending it has a very big impact. Here you need a macro event to kind of happen for it to go down, right? So it helps you manage risk a lot better. So the idea was, can you go out and partner with folks who will give you money at 12%, right? So you suddenly have 200% more to play with. and you are able to kind of now do products that are 200 basis points lowered in rate, hopefully 300 basis points lowered in risk, and you’re now kind of automatically increasing your margins, right? This was the main thesis from a lending perspective as to why on balance sheet, off balance sheet lending is different. And I think as a company grows, matures, and you want to, let’s say, do a secure product, right? Now secure products by design at a lower interest rate, right? So you need to become a profitable organization. climb up the rating ladders, you know, you go from a triple B minus, which is investment grade, all the way to triple A, which is your SBIs and the Bazaars of the world. There’s a whole spectrum of ratings that you have to kind of keep moving up for your cost of funds to drop. And that’s a journey. You know, even in the best of times, it’ll take you three, four years. God forbid you see macro events like we did in the first seven years, we saw seven macro events that hit us. So that journey then becomes longer because you’re navigating every other storm that’s been thrown at you. So, co-learning helps you maneuver this, right? It helps you kind of make sure you’re playing in the right space. And I think the most important thing from a lender’s perspective is it helps you manage leverage, right? I am not borrowing money directly on my balance sheet. This is money that I’m picking up, giving to an end borrower, giving back when he pays. So there is no liability on my balance sheet to make an EMI payment every month. So when COVID happened, what really helped us as an organization were able to manage our cash flows a lot, my friend, because I was levered only two, two and a half times. So it helped in making timely repayments. We never defaulted on a payment because all my folks had lent to, you know, the eventual borrower. And whenever we were collecting, we were passing the money on, right? And everyone understood COVID was a one-off macro event, which the world had never seen, right? If you want to live in a world where businesses shut down, no one’s ever going to lend anymore. So everyone understood that there was work to be done. And obviously put in the hard yards back then to kind of get the board rolling. I think that managing your leverage, ability to stay nimble at about two, two and a half X lever, three tops, not go to the four, five, which some of the bigger balance sheet players can do. I’m not saying it’s right or wrong when you’re at that scale. It makes sense to be able to raise cheap money. Why would you want to go out and give up yield? But when you’re us or a smaller company, I think it’s the right business model for us to grow in.

Building the product portfolio#

Rohit Agarwal: Makes sense. As you think about moving from one product to second product to third product, I think that’s also a key lever to continue to get those margins that you’ve been talking about. How do you think about that in this kind of an evolution that you spoke from an early stage startup to maybe continuing to a growth scale and then maturing into a business?

Akshay Sarma: Look, I think we’ve obviously I think from a company perspective, we’ve been on a very different journey, right? I think we tried a number of different things and then we said, no, post-COVID, we’re going to sit down and double down on a segment that we really believed was seeing a behavioral change, which consumer lending has quite significantly, right? So when we’re thinking about more products today, we’re constantly thinking of how does this fit into what I’m offering already? How does this fit into? what the customers want. I think that is the biggest thing, because everyone’s cross-selling loans all the time. So how do you make sure you are picking borrowers who are good, number one, how do you make sure you’re offering it to the right set of people? How do you know the timing of offering it, if it is right? How do you structure the process, the design, et cetera? This is why working with a product team becomes very important, because they’re the guys who are facing the customers. And at the same time, you want to make sure you’re designing this in a manner that is sustainable to everything the company is doing. the economics of it are working the right manner, fits into the whole scheme of things. So I think any product offering, anything new we want to do has to tie in with the theme of what A, what the customers want and B, what we as a company believe have an edge in offering that product. So I cannot in all fairness today go and pick up, I don’t know, think of some of the most traditional lending product or home loan. Let’s pick that. I as Axio cannot offer a home loan today. That’s ridiculous. I cannot offer eight, seven, eight, nine percent loans. I don’t do that. But is there a way for me to make this offering with somebody potentially down the road? Sure, I can work with a bank down the road. Are we doing it today? No, way down the road, maybe. But you know, this is how we think about our next product. So we’re offering checkout finance, personal loan was a good thing. What’s the next product our customers need? What will help? us be a bigger part of their life, et cetera, kind of, kind of comes in. So that’s how we’re kind of thinking about it. Because sometimes it’s not necessarily about making margin on the product, but making sure your good customers are using your product good enough, long enough for you to make more money off the good guys. Right. I mean, that’s how, that’s how a credit card works. Think of it, right. They, they, they want you to keep using, right. They love rollovers, folks who payment dues and then kind of pay interest on top of it, but never actually go bad. Right. So. You want your good customers transacting, because that’s low risk money that you’re making without having to worry about calling them, chasing after money, et cetera. So the product offering has to not only fit into your margins, it has to fit into what your customers want and should be something that they should be willing to use more often as a part of the day-to-day life. I think when you’re able to bring this stuff together, then automatically you will launch products that will kind of take the company and the customers who are using your products in the right direction.

Rohit Agarwal: Make sense, yeah? LTV to CAC, I guess that’s ultimately what we’re trying to solve for. Tell us, of course, Indian financial services ecosystem has gone through massive transformation from a technology standpoint. Do you consider yourselves more of a tech company or more of a financial services company or a mix of both?

Akshay Sarma: Always again, hope you’re with again. I don’t know if there is a financial company that isn’t a tech company today. Right. Look at Kodak, look at IDFC, the banks. I still remember when UPI was launched. I was, I think I’d gone to Pondicherry and I was coming back and at random hotel in the middle of the highway had this sticker which said UPI available. I still remember I yelled at the cab guy. They had a big board. For some reason, they had a big board saying UPI available here. I yelled at the cab guy to stop. I got off the car and I’m like, I’m just getting a coffee for the heck of it from this guy, right? I kind of scanned and made the UPI payment and I was jumping around and my wife was looking at me like I had lost it. She was like, why are you so excited to pay money for coffee? I was like, you’re not understanding this. This is going to change. This is going to change the way this country operates. Right. From there to today, where, you know. You cannot make a financial services play without a tech player. Right. People are making those investments. So fintech was a theme. Fintech is a way of life today. I asked literally the 10 years or the eight years that I’ve seen India grow. You cannot be a financial services company today and say there’s no tech. Now the two kinds of tech, there’s a consumer facing tech and there’s tech to run your organization. If you want to be fast, nimble, you need to have tech on the inside. If you want in today’s or let’s say 10 years from today to be a relevant organization when a 20 year old who’s getting his first job today is using a product 10 years from today, he’s on his phone. He is not walking into any branch. He’s not picking up the phone. They don’t want to talk to anybody. They don’t want to see anybody. They want their two thumbs to talk and you need to be there. So if you are entering this world to be a nimble organization, to have customers who are, who want to use your products. you’re a financial company that is powered by technology. So you need to lend because the basis of lending don’t change which tech. So that always remains core 101. But if you’re not making your investments in technology, you’re not going anywhere either because that’s the world we’re in.

Rohit Agarwal: Makes sense. What kind of technology, from a maybe productivity, efficiency, workflow perspective, do you use? If anything in particular or in general, how do you think about it?

Akshay Sarma: I don’t think about it from an efficiency perspective because look, in lending companies, efficiencies are very easy to track. There’s very little room to hide because you have certain amount of disbursements to go, you have collections to make, you have money to raise. These are very bland metrics in terms of how they’re kind of done. Obviously, I’m sure my product team uses a whole range of products to monitor workflows, journeys. to see how far work spending, et cetera. The finance team, not so much. We are more about consuming the data, presenting it to the relevant teams at the right amount of time. Excel’s still our best friend. All the admin technology, and I don’t think I’ve seen too many things that beat Excel today. There’s also bias because a lot of folks learn how to use it very easily. So it’s about being able to move, run your models fast enough on Excel for us, unlike the risk team who have Modeling software has to do a whole bunch of different things. We don’t do that kind of modeling. But no, I don’t. Productivity for me, maybe I’m a little old school that way, but productivity for me comes down to the ability to get things done at a fast enough pace. Now, if someone comes to me in my team and says, hey, I could use ABCD tools, for example, for Bank Recon, I could use a particular tool, or for Accounts Paybuilding Automated, I can use a particular tool. I’m like, sure, let’s go get it. Because it’s allowing you to spend more time being more constructive, not doing things which someone or something can do faster and better. So it comes down to that. How your productivity is defined is, are you doing what you’re doing best? Which ideally for human beings should be able to look at data, consume, get insights out of it, and present that to the relevant stakeholders. So maybe I’ll look at that a little different.

Raising debt and equity for a lender#

Rohit Agarwal: Makes sense. Let’s talk about fundraising a little bit. As a lender, I’m sure you are constantly looking to not only raise equity, but also debt, right? How do you think about fundraising readiness? And do you do any things in particular to kind of always be ready to be able to have those conversations with different stakeholders?

Akshay Sarma: look, I think debt in a lending business, money is raw material, right? Which by design means you need it every day. So I have a very small team of about five, six people, constantly raising money always, right? There are standard playbooks that most lenders, standard data packs that most lenders look for. We look to diversify our liability sources, right? So as a company, we have three levers that we’ve kind of built over time. We do cold lending, which is a direct source of money for the disbursements that we need to make. We’ve created a base of H&Is through whom we raise NCDs, offering them rates better than what they would get in the fixed income market because it’s an investment from their perspective. So we kind of structure that really well. And then on the third piece, we do traditional debt raising from banks, NBFCs, term loans, CPs, NCDs, like some financial institutions. So I have three teams that work on these three verticals. who are constantly talking, engaging, trying to see what’s new, trying to see how we can kind of obviously raise more money, but lower the cost of funds at the same time. What’s the right time to go raise money? So you’re constantly having these conversations. You’re constantly obviously talking to the business team to make sure the disbursements are what you want it to be because you don’t want to raise a buttload of money and then suddenly just not have enough to disburse or at the same time suddenly you’re disbursing so much that you’re running out of money to kind of fund the entire… channel, right? So it’s a lot of communication, three way communication between the business teams, your debt raising team and your eventual lenders to make sure that everyone’s kind of singing the same tune and making sure that you’re understanding you’re raising the right kind of money at the right rate for the right product, right? Because you’re doing loans from one month all the way to 27 months on average to 36 months sometimes. So the tenure at which you’re borrowing money. has a different rate and has a different economics. So you need to make sure you have the right mix that you’re able to repay lenders on time when your borrowers are repaying you, right? Which is your standard ALM. So you wanna make sure that is an absolute harmony. And that’s pretty much the endeavor most of the time.

Rohit Agarwal: Very cool. You have gone through this journey at Axio from almost kind of starting up at the ground floor and then moving up to be the CFO. You must have seen a lot of people in sort of finance organization coming and going during this time as well. Tell us how do you think about building a winning team? What constitutes the right kind of traits at those early stages of a startup’s evolution? and how do you need to continue to evolve or scale people so that they are relevant at maybe, you know, a more mature kind of growth stage company.

Akshay Sarma: That’s a great question, actually. Look, I think at the early stage of startup especially, you want folks who are… always not afraid to get their hands dirty, which means that if you’re someone who loves delegating because you’re a thinker, you’re not so much doer, startups, especially in the early stages, aren’t the best place for you, right? So what you would ideally want from your team, from their growth perspective, right, is for them to start off as doers and then for themselves to graduate as folks who can then extrapolate the doing to the thinking. Right? Because when you are operationally sound, strategy becomes easy for you to kind of build. , that’s my thesis, that’s my thesis, because that’s how I’ve, my career has kind of panned out. I know a bunch of folks out there who’ve never been operationally involved, but I’ve been normally when it comes to thinking it through and that works for them. Right. And I think it’s a mix because unfortunately I don’t think there’s, there’s one way to skin the cat, there are a gazillion ways to skin the cat and it always kind of depends within the organization and the teams that you’re kind of building. So the one thing that I always try to make sure my team knows really well is they know the ins and out, the nuts and bolts of the machineries that we’re working with. And then I try to get them away from doing, so I’m very keen that folks have their hand dirty for a couple of years, show me you understand the nuts and bolts of it. If I’m able to pull up an Excel sheet and do some math quickly, you should be able to do that as well, right? Now, sure, because of experience and the normal, let’s say… the things I know about what different pieces moving in the company, I may have more context, but given the limited context the team has, are you able to still give me what I think you should be able to give me in terms of deep diving, understanding problems, knowing where things are kind of stuck? I think that becomes very, very important.

The first 100 days#

Rohit Agarwal: Very cool. Let’s think about a hypothetical situation where if I’m joining as the CFO of a startup, let’s say a lending business, what should be my plan for the first 100 days?

Akshay Sarma: Oh, that’s such a good question. I don’t know if I’m the right guy to do it because I’ve never just joined somewhere as a CFO, but I think I’d assume and I’m going to guess here. And I’m sure there might be better people than me to answer this question. But I think you want to spend some time getting to know the team, the processes, the books. I think that is number one. The first thing I’m guessing any CFO would do, because you want to understand what you’re dealing with, the machinery, how it functions. before you do a deep dive on the business. The thing business you will understand faster, understanding accounting policies, accounting treatments, understanding the team on how they’re doing certain things, how is the MIS prepared, how is that going out? Because that’s the backbone to everything else that is there. So you wanna go in and make sure the backbone’s all right. Or according to you is all right, because every CFO has their own way of functioning, their own style of functioning, right? So you wanna make sure it’s in line with what you believe is the right way for a finance function to move. So I would definitely if I were to pick up a job tomorrow morning in a CFO in any company While you check a lot of other things before getting in once you get in I’d be like sure Let’s sit down with folks who are kind of dealing with the machinery To make sure the machinery is running the way I expect it to or if you’re seeing any leakages Or you don’t like something then you want to go back and have that chat as early as possible if you want to change It but I think I’d start with the basics Look, I always look at life that way. I believe complex things are a sum of a lot of basic things together. Right. So I, my brain, I don’t think I’m the sharpest tool in the toolkit. So I like to dump it down to a level where I’m like, okay, let’s start from here. And then I kind of build my way up layer by layer by layer. I think, okay, now I get the whole picture. Uh, but I like to really go down to the basics because the way I look at it is if the foundation of the basics aren’t really super strong, then the whole thing is going to shake. . at some point, right? So you wanna make sure you’re constantly checking the basic stuff, right? Like for example, your leverages, your ALMs, is that in line? Is there a potential risk to that blowing up and causing immediate risk to the organization? So, just check the basics of everything first.

Growing into the CFO seat#

Rohit Agarwal: Very cool. At Axio, you have started at, again, kind of down-floor and then moved your way up. And the founders hired you, right? It’s, you know, different people have different ways to kind of manage these things and maybe evolve their psyche. But, you know, very often it’s easy to say, hey, this is the kid that I hired. And, you know, this is the kid that like… did a bunch of things for us. And now you are like a peer, almost like a partner to them in a bunch of different things. How did that mindset evolve, both from your perspective as well as from their perspective? And does it take time? Does it happen with the title? What has been your experience on that front?

Akshay Sarma: Oh, that’s a great question. I don’t know if I can give their perspective 100%, but I’ll try. I’ll tell you what worked for me. I think from day one, I work a lot closer with Sashank. I’ve started to work a lot closer with Gaurav over the last two, three years. But because Sashank, by design, would look at liabilities more with me, we do bank meetings together, we spend more time on the road together. So. I think a lot of it came down to wanting to build a marketplace in the early days. Right. We said, this is something we want to believe that I think a lot of such young and me always said that this is something we want to believe. This is a muscle we want to build for ourselves. Right. So I think it started with that core belief that this is something we want to build. And I think over time, it takes time. Number one. , I think you have to prove yourself to founders. I think that’s always a better position to be in. I’m not somebody, and this is a personality trait for me. I’m not somebody who goes in and says, pay me X and I’ll do Z for you. I will do Z and then say, Hey, I think I deserve something else in life. Right. It’s just generally how I operate in a lot of places, right. It’s about kind of showing what you can do and then putting your hand up and saying, I would like to be able, I would like to do something if given the opportunity by demonstrating your ability. I think with Govind Sacham, that’s how it’s constantly been. And like I mentioned in the earlier, I think they’ve backed me at the right time. Also, right. There have been times when they could have easily picked a lot of other options that were available. They’ve kind of, you know, I’m sure had the chats between the two of them and gone like, hey, I think this is he’s showing the right intention. He’s showing he thinks the way we want someone in this position to think, whether it was someone who was building a marketplace or heading capital markets or in the title of the CFO. I’m sure they felt something at that point of time to feel like, wait, why not take a chance with Akshay and see if he can do it. And from my perspective, I always believed. I still believe that if the company wants me to do something, I would do it. So the more I’m able to show that I understand the business really well, I understand the company, I understand the culture really well, the probability of me being able to do more things in the company increases. Right. And I think that’s how it should be in most organizations is I never chased after a title. I, in fact, I still remember in the early days when I joined and I would sit down with some of the then senior team and they’d be like, so what do you want to do in your career? Like, where do you want this to go? And I was like, I actually have no idea. because I was told categorically that if you’re not a chart accountant, you cannot become the CFO. So I was like, you know, that’s, that’s a title that’s never going to come my way. So what else can I do? Right. What else do I learn? What else skills that I do? Where is my career going? So I never thought about the title. In fact, one of the strongest debates, I keep having with myself is how do you kind of do away with titles and kind of still, you know, do this, the way it’s a complex question, I think, but I’d love, I’d love to live in a world because titles do weird things to people. So if there’s a way to kind of do away with that and focus on growth and learning, I think it’ll be fun. But I guess that’s for another day. But yeah, I think for me, the way it’s kind of worked out is look, it took six years of working with them before they were like, hey, do you wanna take on this role? It took about four and a half years of working with them before they felt, I think. that this guy is someone who will come and tell us things as they are. , and one of the things that I really respect a lot, and I’ve spoken to a few founders over years and you know, you get, you get calls for different job offers and I never turn a call down. I make sure I go talk to different people because you’re learning something with every conversation, how they’re thinking, what they’re working on. It’s, it’s, it’s nice to kind of have a chat, um, and, and see what problems people are trying to solve. The one thing that always stood out for me. with both Gaurav and Sashank is their ability to actually listen to somebody who’s not a founder, an employee of the company, and take it in the right spirit because they understand that I’m coming, or at least I’m presenting information which is, according to me, in the best interest of the organization. That trust doesn’t get built, no matter what you’re building. Even if you walk into a large startup today, it is your equation with the founders. or folks who are reporting to me, it’s very important in terms of actually growing and delivering the right things, right? And I think with both of them today, at least you’re at a point where you’re having very, very honest conversations, very blunt, direct conversations. And I think it helps. It helps in the transparency. There’s no sugar coating of things. You call a spade a spade. You like the spade sometimes, you don’t like the spade sometimes, but it’s a spade. What are you gonna do about it, right? So… I think that helps. And, you know, I’ve always had that kind of respect for both of them that they do definitely listen to you. They do take it. Sometimes they might do something exactly the opposite because they have a rationale for why they’re doing it. And sometimes they, and more often than not, they change the course going like, I understand what you’re saying, but we need to do this or you know what, you’re right. Let’s just do this. You know, I think that is very important. The flexibility the entrepreneur shows you. is equally important for your growth. Because if the entrepreneurs are rigid and they come to the table with, I know everything, it becomes very hard for you to kind of put forth ideas because then you’re not putting ideas in your executing. And they’re founders who actually do know everything. So there’s nothing wrong in that. It’s just about how the equation grows and how both of you are kind of growing in that.

Rohit Agarwal: Very cool. Tell us, how do you define a successful career?

Akshay Sarma: I think if you can go to sleep believing you achieved your potential or you’re living up to your potential, I think that’s a very successful career. I think that is the most important thing. But again, different people have different yardsticks. And living up to your potential could be anything from driving a Lamborghini to owning a 17 bedroom, sea-facing apartment in New York. Who knows? But If you know you gave it your 100%, it works sometimes, sometimes it doesn’t work. But if you know you’re fighting battles that are testing you when you’re growing and you’re learning, I would, I would call that. I think if you start questioning whether your potential is being fulfilled and this can happen at different points, right? This can happen when you’re 22, it can happen when you’re 35, it can happen when you’re 55, questioning whether like, Hey, am I like short selling myself? It can happen at any point in life. But the day you get that question, if you’re acting towards changing that. I think you’re constantly moving, right? Learning is everything for me. So if you’re constantly learning and you’re able to test yourself with new knowledge that you’ve acquired, I think that’d be a pretty successful career.

Rohit Agarwal: Is there anything that you would change in your career so far?

Akshay Sarma: Uh, no, no. Uh, cause I think everything’s got me to this point. , you know, it’s, it’s easy to want to change a lot of things. Sometimes I’m like, maybe I should have gone abroad from undergrad. Maybe I should run an MSc, BFC mathematics. Maybe I should have done this. Maybe I should have done that. But, you know, every decision you’ve taken has resulted you working with certain set of individuals, befriending certain individuals has shaped your personality. that has got you where you are. Right? I’m a big believer in destiny. I’m a huge believer in destiny. I genuinely believe everybody will get what their destiny will do. It will come at a different pace. Everyone wants to be rich at 25. Not everyone does get rich at 25. But I think if you know you’re giving it your 100% constantly and you are working towards the opportunity when it presents itself. I think that will automatically do things for you, right? And for me, I’ve put myself in a position that something came unable to grab it. So I don’t think I’ve changed too much about anything because the goods and bads of me are all a mixed bag that have come from the same set of experiences and altering anything might alter me as a person today. Which if you ask my wife might be a good thing still, but I don’t know. So it might still work either ways.