Going back to zero - what it really takes to reinvent a business from the inside with Sujata Bhatia (ex-Monzo COO & Index Ventures)

0:00I actually don't think COO is a real job. It's kind of just a catch-all for a role that is a counterpart to a CEO. So what you need in that role just depends on the CEO that you have.

0:16Sujata Bhatia:Well, a big warm welcome to everyone to this very special 40 Minute Mental Live. As a COO headhunter, our guest today is someone that I've been looking forward to getting on the podcast for a very long time. So Siddhartha, thank you so much for being here and sharing your mentorship with us. I can't wait to dive in. But we probably should start with intros. I don't want to speak for you. So do you mind telling our audience a little bit about your sort of career story and any threads that kind of tie it all together? Sure. I am American, but I've lived here for 25 years. You just can't tell from the accent.

0:48I do have an English passport. Early years was all kind of training, accounting, banking, consulting, all the typical EY, Goldman, Bain. And then I spent about 16 years at American Express in a broad range of roles, some functional, some GM. So like strategy, marketing, data, things like that, payments. But I also ran some regions. And then in the dark days of 2020, I decided to jump ship to become the CEO of Monzo, where I spent five years on the slightly rocky, but ultimately rocket ship. And the common threads, I think you asked me. So common threads are basically pretty eclectic careers. I think you would say I'm really attracted to strong cultures and brands.

1:28Every role I've ever taken has been because it has the right balance of learning and impact. So opening the aperture, helping me expand my skill set, but also somewhere where I felt I could meaningly contribute and bring what I had amassed in terms of skills to the party. And then I think the last bit of that is pretty clear is I'm a generalist. I go selectively deep, but definitely a generalist.

1:47Sujata Bhatia:I love that. Thank you very much. And there will be lots of generalists listening to this, so they'll appreciate that. You mentioned you joined Monzo at a challenging time. So take us back in time to that moment. What was going on and what attracted you to that role? Why did you go for it? Yeah, it was an interesting time. It's pretty well, I think, documented in the ether what was going on at Monzo at the time. And the company was burning 10 million a month, had 3 million customers, had the founders stepped away. They had had a down round. They started to do a reduction in force. The regulators were kind of closing in as they'd become a regulated bank and were struggling with some of those responsibilities.

2:22And they hadn't shipped any product in like a year. So it was a rocky time for the company. To counteract that, you know, the attraction was hard problems, but they had this incredible customer love that was very rare. I'd seen it at Amex and Monzo also had that. You'd find these incredible evangelists everywhere you went that talked about how much the product meant to them and how much the company meant to them, which is super rare for a bank. So when I was looking at that, to me, it felt like there was this incredible customer asset that was rare and problems that, while painful and hard to solve, were possibly solvable.

2:55So the challenge was there.

2:56Sujata Bhatia:So it sounds like an easy gig then. Not stressful at all those first few weeks. No, it got a lot worse before it got better. No, I mean, hats off to diving in at such a crazy time. So what were those first few weeks like and what were some of the gnarliest challenges you had to overcome? It's kind of like childbirth where you try not to remember it so that you would be willing to do it again. But I'll try to reconstruct. So because the founder had stepped away, you had a lot of people that were at home. Their average age of the company was 29. They were scared. This was the only gig they'd ever really had.

3:26They'd been on this rocket ship up until that point. It was hitting a wall. They were sitting at home, possibly in flat chairs, trying to figure out what to do. And the whole world had shifted underneath them. So I think there was so many challenges. And every day was a new fire. Like it would be exhausting to even replay all of them. But I think the fundamental two challenges, one was really the rebuilding the culture. There was almost like an internal civil war between engineers and tech teams and in a regulated bank, what it means to be regulated and compliant and safe. And those, I almost would describe them as people on the opposite sides of a boxing ring at odds with each other.

4:04And so trying to fuse that culture and create like commonality and common ground and move towards a common goal. That was probably one of the most significant challenges. And then the other one is when everything's on fire, and it was literally every single thing was on fire, you have to like dig for momentum. Momentum, particularly in fintech, but probably in tech more broadly, is this gift. It's a bomb. And once you start to get momentum, it builds on itself. And people start to believe and you get more and more and more. And it's a wonderful acceleration. So trying to create markers of momentum, both for the teams, I literally called it, I think, what winning looks like.

4:44And I would stand up in front of the whole business, virtually, because we're all at home, and say, this is what winning looks like for the next three to six months. If we just do these things, it will be winning. And just breaking it down for people to understand, like, this is what the markers of momentum are that will ultimately get us somewhere, both for ourselves and for the broader team, for investors, for the press, for all the regulators. You needed sort of these markers and little building blocks of momentum. And I think those were probably the two hardest things.

5:13Sujata Bhatia:I love that. That sort of clarity of this is what we've got to do and getting everyone aligned to the same thing. It's not an easy thing, but clearly getting through that first rookie period led to a lot of great success. Every single COO search that I've ever worked has been completely different. It's one of the great joys of doing what I do, the variety, but it's also one of the challenges. So can you talk us through like the scope of your COO role? And then I guess for any aspirational COO or any COO that would be interested, what are the skills that you had to develop that sort of set you up for success in delivering?

5:45Yeah, it's a controversial thing to say to a firm that focuses on COOs, but I actually don't think COO is a real job. It's kind of just a catch-all for a role that is a counterpart part to a CEO. So what you need in that role just depends on the CEO that you have. For TS and I, I had a really special CEO and I had the gift of that where we had a wonderful relationship that was built overnight and forged in fire. But that role, my role, my specific responsibilities changed a lot over the five years. I had everything from operations and fraud and AML at a really fun time and to the people function to marketing design, user research and customer experience.

6:23It went on and on and on. So I had a lot of different things that sat under me and it changed almost every year. So I think what made that relationship very special. And in fact, Jonas, who was the founding CTO, when he left, he got up in all hands and said something that T.S. and I were surprised at, but then realized was true. He said T.S. and Sujata are the refounders because they came in and had to refound this company at a really difficult time. And I think that kind of spoke to our mindset of how we work together, like absolute trust. I always say in those relationships and in executive teams in general, you have to have short toes so nobody can step on your toes.

6:59It's really about have high accountability in your lanes, but it's not about territory or turf. And then we had some incredibly complementary skill sets and then some overlapping. And that was oftentimes how we split the role depended on capacity, sometimes personal interest or strain. And that changed over time. But what it required was clarity on like who's got this and who's doing what. And also a really shared understanding of your leadership values and what good looks like. So that was the roundabout version. So please don't aspire to be a COO. Like I don't think that's a thing. What I think it is, if you are a generalist, a COO-ish kind of role really requires is low ego, high accountability.

7:42Those are like the two fundamental skills and a real willingness to get your hands dirty and dive in. You should potentially have the skills to be a generalist, but go very, very specialist as needed and as required in a role.

7:55Sujata Bhatia:Love that. Thank you. It certainly sounds like you had an incredible partnership and a lot of trust, which is so important. that CEO-CLO relationship. It's certainly a transition going back to building again, especially when you've got a large business that's very well known. So what did that look like day to day? And how did you balance going back to building almost from scratch with certain things to running the BAU of a highly regulated, very visible business? It requires you to take a pretty hard, unflinching look at what's a sacred truth and what's a sacred cow? Like what doesn't serve you anymore?

8:28And what are the real truths that are going to be able to take you forward? So that I think is probably the most important thing is sort of breaking that down. So I give some examples about the culture needed to change in some ways, but there was some beautiful parts of the culture. It was an incredibly customer centric place. Every single person that was in the company started with customer and started with a customer need. So that piece was a sacred truth that was definitely like a moat and an asset for the company that we needed to build around. So doing some of that diagnostic, it also included thinking about who needs to be here for this stage?

9:02Who are the most critical people that need to be in this room rebuilding this company with us? For example, at the time, our platform was failing a lot. So who were the people that were really going to be able to make sure that this was a bulletproof platform to make the reality of a digital bank and the trust that it requires from a customer come to fruition? So spending a bunch of time actually on talent and figuring out who are the people that we need to put our arms around, that we need to make sure are in it with us, that have complete clarity around where we're headed and feel that they have a mission that they're on and accountability for things that are going to make a difference in the company, spending a lot of time on that.

9:38And then finally, it really came down to a ton of communication, but again, curation and clarity. So breaking it down, it's very overwhelming when you have a big company and a lot of things going on. You cannot assume that everybody has context. I always say like a great leader provides context, clarity, curation and care. So you need to know that you trust this person to do the right things and they share their values to do the right things for the company. That's the care part. Curation, we are going to make tradeoffs and these are the ones that we're going to be able to lean into. People need that.

10:11They need to know that it's not and and and. The clarity piece is like how well you communicate that so everybody can be on the same page. And context is the why. A lot of people skip that, which is like, what is it that's making us do this? And in Monza's case at that time, it was super existential. It was really easy. But even then, you'd be surprised. It'd be someone, particularly sitting at home, maybe in the north of England, that wouldn't know that the regulators weren't happy with us on a financial crime perspective. So why were we swarming a bunch of people to go rebuild that capability?

10:39Because they're busy with their day job doing their thing. So providing that context would help people understand, like, why you're making these tradeoffs, why you're doing these things as a company. And on a day-to-day basis, those are the things you're always doing.

10:50Sujata Bhatia:Yeah, that's absolutely gold dust. I hope any executive or CEO listening to this writes that down and takes that into their business because you can see how that can lead to just more clarity and more buy-in and great results. With the speed at which AI is being developed and deployed and rolled out across all businesses, it feels like a lot of companies are going to be going through this cycle of rebirth and evolution. so for any founders listening to this that might be kind of at the start of that journey or operators that are kind of trying to drive that change what is your advice to them i think i find it really interesting right now i love being on the bench a little bit and not being like fully immersed in the full-time operator role because that theme of refounding i feel like is coming front and center now you have a lot of this very interesting cohort of course you have the ai native companies that are coming up and getting quite complex quite quickly and having to deal with the issues of scale very fast.

11:40And you have big companies that are just trying to figure out who do they partner with to be able to help transform their companies. But you have this really interesting cohort of technology companies that are at scale or scaling, but aren't AI native. So for them, I think this concept of refounding, I see a lot of parallels to that for them. Those founders have to go back to basics and go through that sort of diagnostic. What is my asset, my moat? What is my right to win as a company? And are we confident in that? What we had was just this incredible customer love and advocacy and brand. That was one of the modes.

12:14It could be distribution and relationships and C-level relationships for your product. It could be a lot of things, but understanding exactly what that asset is and how that builds into the new vision of what you're going to be. And then the second part of that, again, looking at your sacred truths and really questioning them and having an unflinching look about like, which ones of these will serve us in the new world and which ones won't. And it can be as basic as what is the typical size of a product team? Do we need a product leader in charge of this thing? How do we structure? It could be as basic as that, which just sounds basic, but it's actually quite transformational.

12:51And questioning those pieces and saying, like, what's actually going to help us now when we need to be nimble and we need to be curious? What's our sacred truth about, or how's about talent? And who survives in this world and who doesn't? And going back to that drawing board. And then kind of what we did, you have to sit down and say, like, who are the 20 people I want in this room with me if I'm going to rebuild this business and I'm refounding it and I'm starting from scratch? Level agnostic, organization part agnostic. It's not about that. It's like if we had to build from scratch right now, who are the 20 people that need to be here?

13:24And put all of your talent strategy and time and effort into those people and make sure that they're on that mission with you. Because if they're that good, they're probably looking elsewhere to figure out, is there another rocket ship and what's going to keep them there and on this mission with you? And then back to communication, like tell everybody what you're doing and why. And as founders or leaders, whatever that is, put your time and your effort, like show, show what's important. So I think in this version of an AI era, it's important for the leaders to be skilled in AI and show that they're curious and that they understand and that they're building.

14:01and I think that's sort of a non-negotiable for the whole organization to follow you. So show them what you're spending your time on, where you're spending your time and therefore like allow the company to both have that communication of why you're doing it and see it in action and that's kind of how you over time, it's not easy but how you shift the world.

14:18Sujata Bhatia:Great advice, thank you. You've stepped away from Monzo and you've had a bit of time probably to reflect on all the ups and downs. I'm sure our audience would be very curious to hear some of your personal highlights and also some of the biggest challenges that you overcame and what your learnings have been in both of those. I think from highlights perspective, I'm really proud that I think we proved that you can have this insane commercial customer love and commercial discipline and they're not at odds with each other, particularly in a regulated context, that those two things can still lead to a thriving and fast growing business.

14:53I think one of the things I was craving when I joined Monzo and I certainly got in spades and as a personal highlight is just watching incredibly talented people do very, very hard things. So I talked about platform failures. Monzo now is 100 % available, will never go down because they've built such a unique capability that's like an industry first and no other bank has it. That's cool to like have been a part of that. Similarly, some of the products that were deployed like gambling block or things like that, where you see like other companies starting to copy you because it's something that's actually really good for customers and proving that you can be a business that cares about customers and still grow.

15:26And then really, it's kind of the people and the customer stories. So I love watching the people that I worked with like develop and continue to thrive either in Monzo or elsewhere. And then hearing the customer stories of the person that did give up gambling because of the gambling block or the ADHD customer that now can manage their money really well because of the budgeting features that we have in the app or the person that was a victim of economic abuse that was able to get out of that because of the share with us feature. Like there's all these amazing little stories. If you're on a worthy mission, you can see lives transforming as a result.

15:59Sujata Bhatia:That's so impactful. And on the flip side, not to turn a positive into a negative, but what have been the biggest learnings, maybe from a leadership perspective or other, that you kind of you'll take forward for the next part of your career? I think I had a lot of leadership learnings coming out of Amex because I lived through it in the global financial crisis in a really interesting job at the time when the company almost became bankrupt. I was there when a senior leader died and I was there during a CEO transition. So I took all of that learning to Monzo, which was incredibly valuable as I was going through these different eras.

16:30I think the thing that at Monzo I particularly honed was a lot of lessons around hyperscaling and what I call like momentum killers and learn them sometimes painfully by making the mistakes. So the idea that as you continue to scale, there are all of these kind of micro regressions on momentum. And those can be processes that spring up in your company that are attacks, meetings that are attacks, new ways of having to syndicate that are attacks. And they slow people down and they don't always add value. They're an inexorable force pulling your company this way towards adulthood, but slow adulthood.

17:10So it's in my nature anyway, but I probably became even more vociferous and known for trying to stamp out all of those taxes. So I used to get up on stage every year and people would then ask me to do it at some point. But I'd give my Marie Kondo speech of like, clear out your diary. Everybody in January 1, like stop all the recurring meetings, look at it again, make sure that everything that you're doing is actually a good use of your time. Please don't have FOMO, things like that. I would make everybody spell out acronyms because if you're hiring a lot of people, then actually it's quite exclusionary when people turn up and they have acronyms that they don't understand and then that slows them down.

17:46So it's the tax on momentum. I used to not allow project code names. I mean, sometimes I get overruled, but often I would try to not allow them because the second you use something like a code name, it's going to take six months to do and everybody wants to glom onto it. And I'd be like, no, this is just a thing that needs to be done. Let's not call it a project. And they sound super anal retentive and they kind of are. So I probably overbuilt this muscle, but it was because I felt so strongly that every time you do something like that, you see the impact it has and disproportionately on your top performers that really just want to get on with the work and get moving so that's the thing

18:20Sujata Bhatia:that I learned the most it's a great lesson I love the idea of Marie Kondo in your diary I mean if it doesn't give you joy a lot of meetings don't give me joy so it's a very this could be an email there are so many things for the Monzo story but we don't have unlimited time so I'd love to talk about teams and performance and culture because it's obviously a topic that's very dear to my heart and I know to yours as well. Specifically on hiring, how have you seen hiring practices evolve over the last few years? And how has your own approach to hiring sort of developed, particularly at Monzo but just over the years?

18:53I think it's changed a lot and it's changing a lot right this second. So I think you had Sandra and Charles earlier that will give you the deep dive on all the different hiring practices that are changing. But I guess at its essence, in a big stable company, what you're usually hiring for is culture, leadership, experience, and some kind of fit of some kind. In a hyperscaling company, sometimes hiring for experience because you don't really have time to train people on the job per se, that can be a benefit. But at best, it's a nice to have. And at worst, it's actually like a poison chalice, right?

19:28Because things become like we do it this way. So often what I found myself indexing towards is learning agility, nimbleness, high degrees of accountability and curiosity. And then if experience was required in the role, like that experience, but that was table stakes, kind of. So those attributes, testing for those in interviews when people are pretty well coached on how to talk about it is hard.

19:53Sujata Bhatia:Yeah, definitely. And I think when we spoke a few weeks back, you talked about how you feel every hire should raise the bar of the average, which I absolutely love. Well, because ultimately it kind of goes back to that inexorable force. When you're growing, the inexorable force is trying to dilute your company. Dilution is the outcome of that, right? So you're communicating to more people. Your message can get diluted. You have more customers. The feedback loop can get diluted. You have more silos or businesses inside your business, like bringing that context clarity and the threads, the golden threads can get diluted or worn.

20:29So never is that more true than on the talent lens. That's like your one place where if you add someone to every team, you must be kind of creating a concentration because otherwise you're adding to that dilution. You're already fighting that fight. You cannot dilute the talent in your organization on top of that because each job is harder to do. So I think there is this myth where everybody's like, oh, the next hire is how I'm going to be able to do that thing. And that's just never the case. If you're hiring, it's important. You must hire. You must spend the time on it. But the people that you have with you right now are the people that are going to do the job right now.