Fundamentals of Business with Piyush Gupta, Group CEO of DBS Bank

INSIGHTS

The myth of speed to market

Piyush reflects on his startup days, challenging the common notion that being first to market is crucial. He argues, “Speed to market is overrated,” encouraging entrepreneurs to prioritize value creation over rapid expansion.

Technology as the core of business

Drawing from his experience in transforming DBS Bank, Piyush emphasizes the central role of technology in modern businesses. He asserts, “Technology is the business,” advocating for a shift in perspective.

Designing organization culture

Piyush’s mantra for culture-building is “Cultures don’t happen. You can design cultures.” In his first three months in DBS, he spent time with senior executives on determining ways of working – called “rules of the road”, asking questions such as “What are the big decisions we need to make and who’s best equipped to make the decision?”

TRANSCRIPT

Shailendra Singh: Hi, good morning everyone. Today I have the honor of welcoming Piyush, the CEO of DBS Bank. DBS Bank was rated the world’s best bank by several global publications. It’s also rated the world’s best digital bank by Euromoney. Piyush has had a 27-year [long] career where he was Chief Executive of Citi for Southeast Asia, Australia, and New Zealand. He was named one of the world’s top and best performing Chief Executives in HBS (Harvard Business School), in the CEO 100. Actually, all of these accomplishments are incredible, but I think Piyush is just a great person. If anybody can get a chance to talk to him for 10-15 minutes, he’s a terrific individual. He’s so humble, down to earth, and full of humor, as you guys will see. So very honored to have you. We think it’s a great privilege every time we can host somebody who’s sort of a role model. 

One thing most people don’t know about your background is that you tried to do a startup. So maybe you can talk a little bit about that part of the journey before we get to DBS. And we’ve, of course, lots of questions about your leadership of DBS and running a big bank. But, what was that [startup] like, and what did you learn from that?

On leaving Citi to launch a startup [01:18]

Piyush Gupta: You know, my startup journey is actually… Those were the first internet days, the dot com days. And, I was an unusual banker because I didn’t grow up in the classic lending side of the business. I grew up, and I had done product management, technology operations, and data centers. In the late 90s, I set up some of the first e-commerce platforms, none of which worked because they were way ahead of time, but for Citi. And so I was running Indonesia for Citi, and some friends of mine who ran a fund in India called Indocean — they were seed funded by JP Morgan. They did a deal with the Bharatiyas from Hindustan Times (HT). And so, the idea was Hindustan Times would provide the media content, these people would put the money, and they were looking for a team to run it. So they basically hired me as a founder CEO, with a stake in the company, of course. And so, I decided to quit banking on my 40th birthday and go try and set up this thing.

I wasn’t very smart about the terms and conditions. They put in four million bucks and then they said enough, not doing B2C. And so I had to… I scrambled for seven, eight months. We did a few things but it didn’t work. So I pulled the shutters down. In hindsight, and I’m going to talk about that, in those six, seven months, my idea was to try and create a Yahoo-lookalike using the media thing on top. Actually, HT is the second-largest newspaper group in India. 

So there were some parts of that content which I thought we could create verticals around. So the classifieds; the paper is so big, but so much [of it] is classifieds. And so, we could really use classifieds to create something. So the idea was to create a job portal because the bulk of the classifieds are jobs. This is about the time Naukri was getting formed in India, and so we brought in a company called People One, Ajit Isaac, and integrated it. 

Then the second thing was, that we wanted to create a matrimonial portal because the other part of the classifieds is all matrimonial. So like, Shaadi.com eventually. The third was to create a cricket portal because cricket is a big deal. The fourth was a ticketing thing, because a lot of people went [for that], and the fifth was security services. We created a grouping of these five verticals. We did quite a few things in those six, eight months. Hired 150, 200 people, but it didn’t work out. Now, I came back to banking. I came back to banking because when I was leaving Citi, John Reed, who was the CEO, tried to talk me out of it, then he blessed me, but he said, “If it doesn’t work, come back”. And we have a job for you whenever you want. I took five things away from my startup journey, which might be useful.

Speed to market is overrated [03:54]

So the first thing is, even though I set up these five companies, I didn’t create a good platform. And that’s because I started creating a tech platform, moonlighting when I was still sitting around in Jakarta and trying to put the piece together. And the reason I was trying to do that is because of this whole thing about speed to market. You know, the buzz in those days was, “One week in internet time is equal to one year in real time”. So you’ve got to get there first. So my first lesson eventually was this, speed to market is overrated. I don’t think speed to market matters that much. I think you need to really be able to focus on a good, solid, sound customer value proposition. And if your customer value proposition is better, then it doesn’t matter if you’re number two, number three, or number eight. Google was number 14. The first 13 search engines didn’t win. So you’ve really got to focus very hard on a really good, sound customer value proposition. More important than trying to beat the next person by two weeks or four weeks. At the end of the day, it’s a long haul. It’s a long game. And those two, four, six weeks matter a lot in your brain. But in reality, if you get the customer value proposition right, it’s not the end of the world if you’re a few months late. So that’s my first [lesson]. The second [lesson] is linked to that.

Make technology the core of your business [05:07]

Technology is the business. So I call it today, in DBS as well, “Business is equal to tech”. In banking most people talk about a front office, a back office. So, “Tooth to tail ratio is a good thing. All the RMs are the tooth and everybody else is the tail”. I banned all those words and language in DBS because of this belief, [that] technology is the business. Technology is the front office. If you go and look at the Google org chart, you’ll… And some of it is obviously wordplay… Most big companies have 10 business managers and one CIO (Chief Information Officer). Now, Google shows 10 CIOs and one business manager. So, you’ve got to focus and make sure that your best and most…if you’re not a techie yourself, the most important person you need is your CIO. You’ve got to get a strong tech CIO, second lesson.

Find the right partner [05:51]

Third lesson, we partnered and got a promoter, HT. So it’s effectively a strategic investor. And I realized after that there are ups and downs with getting a strategic investor. So you’ve got to be very thoughtful about your choice of strategic [investors] because you really want to have the flexibility and nimbleness to create something. You’re going to figure it looks often like the strategic interests are aligned with yours, but sometimes they’re not. And [there are] a lot of deals I’ve seen where a strategic investor comes in and then they have an agenda which is not consistent with your agenda. So, when you think about who you’re bringing into the company as a strategic partner, it’s not obvious, you’ve got to think about the culture of the strategic [partner]. 

Having a safety net is not always a good thing [06:30]

The fourth one to me is that having backstop safety nets or options is not always a good thing. In my case, one of my challenges was that I hadn’t cut my cord. You know, I had this option of going back. And so when things didn’t work, I bailed out and decided to go back to banking. Now, in hindsight, those five verticals that I set up, one of those verticals was HDFC securities. We had a 29% shareholding in that. One of the verticals, PeopleOne, became a unicorn about 12 years later. The third vertical was in ticketing. It was called BigTree then, and now it’s called BookMyShow. It’s another unicorn at this stage in time. Cricket [vertical] didn’t go anywhere. So my fundamental point is that if I had not cut my losses and gone back, if I had stayed the course with things, I would have spawned one HDFC security and two unicorns out of the street. It wouldn’t have been a bad track record. So, sometimes having options and cutting [your losses] and moving on is not the right answer, necessarily. You know, I got lucky because I wound up being CEO of DBS. It’s not a bad thing. But, you know, that’s one of the big lessons I took away.

Change your attitude towards failure [07:39]

And the last thing I took away, and that’s really formed me as a person for the last 20, 25 years. My attitude to life and work changed. And your attitude to failure changes once that happens. You know, you’ve seen the bottom of the barrel, how much worse can it get? And I think for most of you, if you fail, it’s okay. Because it gives you the resilience and the fortitude to say, you know, I’ve seen this, how much worse can it get? But the other thing on the other side, it also changed my approach to work. I mean, for those of you of Indian origin, what you read in the Gita, which is a spiritual book from India, it essentially says, “Focus on the work, don’t worry too much about the outcomes.” I really embraced it after that. So my work became more about how I make an impact, how do I solve a real problem, and how do I try to create value. And the outcomes will come. So actually, it has helped guide me. Sorry for the long answer to your question.

The fundamentals of being a great CEO [08:29]

Shailendra Singh: No, this is amazing. This is super amazing. And I think lots of people will resonate with different parts of that. So I’ll switch now to the second part of your life and actually Piyush, we’ll keep it more on your personal leadership style and so on. So, people here have had…most companies here have had a terrific start. A large number of companies have a few tens, some have hundreds of millions of revenue. And I think founders are on a journey to be great CEOs. So it would be super nice if you could share any leadership philosophies that you think helped you be that great CEO because that’s the journey most founders [here] are on. 

Piyush Gupta: So I think, you know, the fundamentals of leadership are quite straightforward, right? And so most leaders do that. So you set up what you call a mission or a purpose, and you figure out what the company’s about. And you set up a strategy. Strategy is essentially about how you will compete differently, and why will people come to you instead of going to somebody else. And so, that’s the first thing. 

The second thing about being a CEO frankly, is even more important than setting direction, is you’re responsible for the culture. So how do you create the right culture in the company? The culture not only defines a value system, but if you have the right culture, it gives you the capacity to empower people and grow at pace. Without the culture, you can’t do that because you need to worry a lot more about control. So culture is the second big thing you need to worry about. 

The third thing you need to worry about, which very few people think about consciously, and I’m a big believer of it is that you’ve got to think about what is your management system. What the management system means is actually how you run a company. How are you going to manage it? It is a science. You’ve got to think a little bit about the underbelly of the company, whether it’s…I call it the plumbing. So how will the plumbing of this company work in a resilient and fundamental way? And so, setting up a management operating system is definitely a big part of a CEO’s job. You don’t have to do it, but you’ve got to think a little bit about what your operating system is going to be. Creating the right team for growth. So the leadership and people thing is the obvious part. 

On strategy, it’s a fine line, but to me, one of the most important things about strategy is, I guess two things. One is alignment. I often say the DBS strategy, we wrote it on a piece of paper and it took us a few weeks to come up with what we wanted to get done. We wanted to be in Asia, [be a] commercial bank, etc. The biggest thing was strategy alignment. How do you make sure that everybody in the company is aligned to a common strategy and is brought in to, “This is what we will do.” But equally, this is what we will not do. The hardest part about strategy is what you will not do. So, how do you stay disciplined? Because that’s where your source of competitive advantage and value is going to come. And that is very hard. If you’re an entrepreneur by nature and your sense is to go for the next thing, “I go for the next challenge. Oh, this is a little opportunity.” And, you could get lucky, but if you really want to scale and build a really good business, it’s hard to spread yourself thin. At DBS, one of my biggest challenges was that. When I joined DBS, even for 10 years before me, the whole idea was [that] we would be an Asian bank. And, nevertheless, in 2010, my first year, we wrote off a billion and a half dollars in Saudi Arabia, Kuwait, Qatar, Iceland, Portugal, Los Angeles. What does that have to do with being an Asian bank? So it’s very easy to drift, and my biggest thing in the last 15 years has been how do I keep people disciplined to what you want to do and not do. So how do you focus on core competencies and stick to those if you can? 

The thing about culture is what [Peter] Drucker said, “Culture eats strategy for breakfast” is completely true. I spent an enormous amount of time on building culture and I’ve got this mantra which says, “Cultures don’t happen. You can design cultures.” So culture by design, I call it, which means you have to think about what is the culture you want. There’s a third thing. A management operating system is really important. In my first three months in DBS, we spent some time with the strategy. We spent a lot of time getting the senior team together and agreeing on how we would work. We called it, ‘The rules of the road’ and we wrote a five-page document which laid out how we’re going to work as a team, which started with decisioning authorities. And we said, “What are the big decisions we need to make and who’s best equipped to make the decision?” 

In big companies, the challenge is always the matrix. What do you want the company to do? What do you want the function to do, etc. So we went to first principles of who’s best empowered and equipped to make the decision, and we worked it out from there. Everyone was like, “Okay, this is how we will work. This is how we will…” We wrote down how often we would meet as a team, what we would expect to do in these meetings. So we have a management committee of 20, we meet every fortnight because that’s the most strategic team. Then I have a smaller sub-team. We’ll meet every week, and it’s more to figure out blocking and tackling. What are the day-to-day issues? What are the authorities we want individuals to have? What are the things we want to discuss together as a group? Creating transparency around that was very helpful. What do we measure? What are the MIS systems going to be? What is the underlying technology? And then I’m a big believer in scorecards because that’s the only way you push alignment around things down to the bottom level. We’re now, you know, 35,000 people. I can say what I want and email what I want [but] people don’t understand. But getting a scorecard that people can touch, feel, and understand how their role links to the top of the house, is crucially important. It’s perhaps one of our secret weapons. We’re anal about the time we spend on making sure everybody’s aligned to a common scorecard. So, that’s the operating system.

I find that as founders, as you grow to big companies, you cannot manage by the seat of your pants anymore. It cannot be done because you’re running it by yourself. Scale means you must have operating systems. Scale means you must think about culture and design for culture. Scale means you must put in alignment and disciplines around a strategy. Otherwise, it’s very hard to grow and become a large-scale operator.

Focus on your strategy and learn to say “no” [14:30]

Shailendra Singh: Amazing, so many profound ideas. I want to double-click on what you talked about, “Saying no to things”. Give us a few examples of that because you’re exactly right. Founders have a desire to say yes to many things. Also talk about the value of patience, because to your point earlier when you talked about your startup journey… And I think there’s a lot of impatience and very few people truly think in multi decades how the world will play out. So maybe these two things would be awesome. 

Piyush Gupta: So in terms of saying ‘no’, I’ll give you two or three examples. So in strategy we figured that we’re going to be a commercial bank, we’re going to focus on Asia, the big country, the four big markets, China, Taiwan, India, Indonesia. Now that  throws up a big question every time. So when Deutsche Bank was trading at 0.3 times book, Credit Suisse was trading at sub 0.4 times book… Standard Chartered—people kept asking me—they were 0.3, 0.4 times the book and the big question was, “Why don’t you go into a merger? You’re running a good bank, your currency is strong, you’re trading at 1.2 times, you can buy and become global in scale.” 

And the truth is that if we’d done any of these deals, like the UBS-Credit Suisse deal, people would’ve called it the deal of the century because we’d be buying assets for real cheap. And we’ve consistently said, “No”. And we said, “No”, because you go back to strategy. Our strategy is we chose to be an Asian player for a reason. Banking is very hard to run globally. Every global bank has failed in the commercial and SME space. In the large corporate space, you can do it, but in the commercial and SME space, it is very hard. The regulatory environment today is very complex. The cultural nuance at a country-level is very difficult. And therefore, to try and run a global operation in this case is very hard. Sitting over here in Singapore, could we really run a big bank in Germany? Do we know how to run a Swiss bank with Swiss people and Swiss things? And the answer has always been, “No”. 

And so, while it is very seductive, every investment banker comes and pitches the idea to me [but] we consistently have said, “You know, this is going to distort what we think we can be.” We’ve been named seven times ‘The world’s best bank’. I’m pretty sure if we went and bought one of these banks, we would never get there, because we just would have been distracted. We wouldn’t have been able to make things work. [Here’s] another example, so we chose very early not to be an investment bank. We have an investment banking operation in Singapore. And collectively, that’s like 2% or 1.2% of the bank. And we figured early we’re not going to do this. We’re not going to do this because the value pools in Asia and investment banking are actually not large. The biggest pools are in the US. And if I can’t figure out a way to make money, there’s no point, you know, saying, “Okay, I’m in the glory game.” So, again, consistently, people have said, “How come you’re not in investment banking?” Because, frankly, I don’t know how to make money in it. So, if I can’t make money, then what’s the point? So, that’s a strategy question.  

But I’ve also said “no” often, consistently, to a culture-thing. So, in M&A, for example, the first thing that we look at… Not the first, we look at scalability etc., but one of the most important things we look at is how will the culture of this M&A impact our culture. And we passed on at least a couple of interesting M&As because we figured it’s going to distort the culture of what we’re trying to build. And that’s very important to me. I’ll say, I think we spent 15 years building a very precious kind of culture, so there’s no point getting another team and then destroying the culture entirely. So, I think you’ve got to figure [out] whether a strategy, or whether this thing, “What is it that you don’t want to do?”

But the flip side of that, Shailendra, is if you’re convinced that this is going to work, then you’ve got to be willing to play the long game. And particularly for those of you in B2C. 

B2C is a long-game business. By definition, the curve every time goes like this. It’s a long exponential curve because the cost of customer acquisition is high. So, one of the reasons you’ve got to say “no” is because the ones that you want to bet on, you’ve got to have the firepower to stay there for the long term. And if you don’t say “no”, you’ll run out of firepower. 

So in our case, we’ve been trying to, we figured we’d try and grow SME and consumer in India and Indonesia, you know, two, three markets, but with this thing, it is going to take us seven, eight years, which means you’re going to burn money for seven, eight years to get to where we want. And I can only burn that much money in two, three markets. I can’t burn the money in six or eight markets. So I better say “no” to the others because otherwise, I’ll get nothing. I won’t be able to grow anywhere. So, you’ve got to have the tenacity and patience where you want to bet. You know, focus your attention, but then you’ve got to play the long haul. It takes time to get both the customers and the scale.

Engaging with regulators and policy-makers [18:58]

Shailendra Singh: I think people have seen that even in India, in e-Commerce, in FinTech, that it’s a long road. OK, one last question. In India, the regulators are very smart and very hardworking. Sometimes we wonder [if] they embrace [the idea of becoming] a startup nation and also are experimental. And so I think, our founders spend a lot of time with regulators. I don’t think at any point in our last 15, 17 years, we had founders spend so much time [with regulators]. Now you have been running a public company and a bank for all these years. Any advice for founders? Sometimes founders will complain here, “Hey, are we spending too much time with regulators?” and so on. Is that a core part of their jobs? How should they think about this experience as their companies grow, and dealing and interacting closely with regulators?

Piyush Gupta: I think it’s a core part of the job. I think the governments, which means therefore the regulators, are going to be a lot more intrusive and a lot more directional. So, I think you’re beginning to see a shift in the world from a laissez-faire free market system to a policy-guided system and that’s true, always been true in Asia—Japan Inc., Singapore Inc., but it’s been true even in places like the US. So the US was never US Inc., but you look now with the Inflation Reduction Act, that a lot of the stuff the US is doing is policy-driven, and so the minute you figure the governments are going to use policy, quasi shades of industrial policy to drive the economy, then you’ve got to figure the regulators will be active. If regulators are going to be active, then the best thing to do is to embrace it. You know, and the truth is, today, most regulators are actually quite pragmatic. If you embrace them, you can shape policy, you can shape regulation. If you engage regulators, you can persuade them to at least appoint you in a way of thinking. So, that’s really helpful. 

The second thing I’d tell you is, you know, most times we generally, especially if you’re doing well in the thing, you start top-down and [with] regulators, you can’t start top-down. You’ve got to start bottom-up, right? Because I can tell you there’s no regulator who will overrule something that somebody’s put up to him from below the system. So if it’s already baked in below the system and gets put into somebody on top, I can tell you chances of getting it reversed are very, very slim. It can be done, but very slim. So, the best thing is you got to actually put in the effort at where the policy is actually being thought and written. That’s where you have to really attack. So you have to have a relationship at the top, but you have to have one or two people who are working with the people who actually are doing the heavy lifting. Because if you can shape their thinking, that’s what gets put into a proposal or policy. I think that’s the best way to operate. 

Shailendra Singh: That’s very insightful. Piyush, thank you so much. This has been amazing.

Piyush Gupta: All right. Really grateful. Take care. Thank you.

This transcript has been edited for clarity.

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