S2 E11 - A Banker Turned Startup Strategist

Speaker A: Welcome to the Chief Future Officer podcast. I am Indus Khetan. Um, joining me today is Karan Chadha. Karan heads margin strategy at noom, the world's leading behavior change company disrupting the weight loss and healthcare industries. With over a decade of experience, Karan has held various finance roles across startups and corporations. Karan, welcome to the show.

Speaker B: Thank you for having me Indus. It's a pleasure to be here.

Speaker A: So Karan, your profile is super interesting. I was looking at your LinkedIn. You're uh, looking at your early career. How does a transition happen between banking to high growth startups?

Speaker B: I've come across all of my positions and roles through my network and the relationships I've built across over time. And um, the transition actually happened when I switched from M and A, um, starting in corporate development, then into investment banking into strategy execution consulting. And I started in strategy execution consulting uh, at a firm called bts. And I was actually originally introduced to the firm through my uh, through my friend Mihir Kunamo. Um, he was working at the firm at that time in the New York office primarily supporting the, the um, financial services and TNT sector. So I'd applied for a position in the New York office to join him um, at that practice. And um, unfortunately, and I would actually say correct myself and say fortunately, um, at that time when I was offered that role there was not an opening in New York. Um, so they asked me if I wanted to move to San Francisco. And um, I think I thought about it for about five minutes. Um, and I knew that the technology space was the place to be and it was all happening in San Francisco. And um, I was definitely nervous, I was very anxious, I'm not going to lie, I was very anxious. Um, but I knew that if I didn't take the role I would eventually regret it. So um, I took the opportunity to go work at BTS in San Francisco and primarily work with SaaS companies. And um, we got to work with some really interesting clients. Um, my first client was actually um, a TMT client who got to work for T Mobile. Um, after that I got to work with um, um Salesforce. I got to work with Intuit. And um, my last client at BTS was Zendesk. And um, my engagement with them went so well that um, I was really excited to help support the initiative that I was a part of building with them while I was at bts. So I decided to go and join the finance and strategy team at Zendesk. And um, that's how I went from um, starting out a uh, career in M and A on the east coast, um, and really ending up in tech and SAS and uh, uh, spending some time on the west coast in San Francisco.

Speaker A: Got it. Thank you for that. So you did your undergrad from Rutgers and was finance always the dream career?

Speaker B: No, I think I'd had four other aspirations before. Um, you know, growing up, I thought, um, what do I want to do? I, uh, love cartoons. So my first ambition was to be an animator.

Speaker A: Oh, wow.

Speaker B: And, um, then I realized I was terrible at art or. Or traditional drawing and painting. So that went out the window. Um, after that I had a really terrible experience when I had a cavity, um, as a child. So I said I want to be a dentist and make sure no other children have ever had that experience. Um, but I quickly moved past that. And um, after that, I think like many, um, other kids, I wanted to, um, be, uh, in the Air Force. But I think, uh, I realized that, uh, as soon as I got my first pair of glasses that I think that was also out, uh, the door because you have to have perfect vision. Um, and then a more realistic choice was to study astronomy. I've always been fascinated by what's out there beyond our planet. What's the bigger picture. And that still remains a passion of mine. Um, I'm actually attending the World Science Festival next week in New York, um, to listen, uh, in on the experts talk about everything from AI to string theory to space exploration. But yeah, I'm excited. It's my first time attending. Uh, it's hosted by Brian Greene, um, a professor at Columbia who used to be on the PBS show Nova. And that's how I first really got excited about, um, first got excited about astronomy and physics. Um, but eventually I settled in on, uh, finance. I don't know how. And when I started to get really, uh, excited about finance, I wrote in my college essay that, um, it was one. I started to be the banker, uh, in the game Monopoly. And I don't know if that's true, but that's what I wrote in my college essay. Um, but, um. Yeah, I went to Rutgers University. I actually studied economics. I didn't end up applying to the business school because I wanted to take the time and really, um, explore a wide array of classes and not narrow my path just like, yet. And because of that I'm really glad I did. But because of that, I got to take some very exciting classes, including computer programming. Programming, um, which I think really, um. Which I think really taught me the thought process and the analytical thinking skills that I used a lot early in my career in financial modeling because I think computer programming, financial modeling are very similar. Um, and so I think I really, really learned a lot from my class. One example of why I'm glad I stuck to the School of Arts and Sciences and studied economics, so Rutgers and

Speaker A: then now at noom. Tell us more about noom. Of course so many of our listeners know about it but would love to hear from you. What does NOOM do?

Speaker B: Yeah, absolutely. Um, I think like a lot of the listeners here, I first heard about ah Noom, uh, uh, through Instagram. I was looking to uh, I wanted to change my lifestyle ah, and become healthier. And um, I came across this app uh, that really said we changed um, we change how you lose weight through psychology. I said how is that possible? So I started to read more about it, um, started to dig in and that's how I realized that there was even an opening uh, at noon that I could apply to. But uh, what really noon does is it's a psychology based program. So um, um it doesn't tell you that you can't eat something or you must do something but it really changes the way you perceive your actions, what you do and it changes your relationship with um, food in general, how you think about food. So it's never restrictive. You can have ice cream if you want, you can have fried chicken if you want but it really changes how you think about food and so you can sustain those healthy habits and eating a well balanced diet long term. And the big focus of the company is to really help people become healthy and healthy in a way that they can maintain that, maintain that lifestyle through the rest of their lives and really prevent a lot of diseases that are caused um, are caused by obesity.

Speaker A: And I'm assuming that you know every employee at NOOM has benefits that help them, helps them incorporate you know, this unique lifestyle change if they want to undergo.

Speaker B: Yeah, absolutely. I mean on day one all the employees get access, unlimited access to the program not just for themselves but also for um, a number of their friends and family. Um, and we, you know we practice with what we preach. So at you know at ah news offices in Hudson Yards of New York we have a kitchen where chef Stan uh, cooks us delicious and healthy food every single day.

Speaker A: Nice. That's quite a perk. So I'm assuming that working at a company like Noom that is so much focused on well being and change in personal approach to self care and balance and lifestyle that gets incorporated in every employee.

Speaker B: Yeah, absolutely. Um, outside of just the food and the nights, perks, uh, lunches. Um, there's really a big focus in mental health because they are. One can't have one without the other. And you know mental health is also a big part of the program at Hume. A lot of people think it's just uh, you know it's just a program focused on weight loss. But we have several modules that we incorporate into the overall program that really focuses on mental health as well. And we take the same approach, um, same approach. Um, you know I think um, we're a really collaborative environment that um, allows people to have a strong work life balance and um, even within teams, you know, if we need to step away to take care of something personal, our team is really there to cover uh, for you, back you up, anything, anything that you need. You know it's always. So it's family. It's always, I'm not going to say family first but it's always um, you know we say that there's more important things outside of, outside of work.

Speaker A: Got it. Would really love to know you um, mentioned about um Noom. How does your day look like? Let's say you know, what are the core finance functions that somebody like you is engaged in on a daily basis?

Speaker B: And I think you might have heard this before but working at a startup like Noom, I guess maybe startups not the right word because NOOM is about 10 years old. But a very dynamic company like Noom is that there is no typical day. Um, and I think that's almost a cliche now but um, there are days where I'm focused um ah on things like discretionary expense policy. There are other days where we're working through um, building out our procurement function and figuring out uh, um what is the right process. How can we have a more efficient process but also um, from being in finance, minimize cost, uh, maximize utilization of our existing tools and software. And there are other days where I'm um, supporting our new business, New Med, uh, which helps um, certain customers get access to GLP1 drugs. So I'm figuring out um, what are the financials of this new business look like? Is this business sustainable for us long term, um, um and helping provide that decision making analysis information to our leadership um so they have all the information they need to make the investments in that new uh business.

Speaker A: I want to switch topics a little bit. You mentioned briefly about AI that you're going to the science festival and learn and reflect upon many of these new developments. There's a huge chatter around application of AI and Finance how a lot of manual work going to get replaced with automation and software. Has it already impacted you? Have you started seeing that change?

Speaker B: I've definitely heard a lot about it. I think it's. And at Noom we've actually started to adopt it into our um, customer support function. Um, so how do we more efficiently answer um, customer, customer requests through AI, uh while still giving them the personal touch that they need. And I actually started to first hear about that when I was working at um, my role at Zendesk. Zendesk introduced AnswerBot, uh, their first tool as a customer support software company that helps um, customers like Noom deflect tickets through AI. Um, so it's certainly been there for a while, certainly been seeing it for a while I think in finance, um, I started to see some vendors come up that are talking about helping us automate some um, standardized um, you know, standardized monthly process. It's like our monthly business variance analysis. Uh, and we've certainly been, we've certainly been looking into that. Um, I think with the evolution of what um, FP and a strategic finance. Finance and strategy, it's the same, different words for the same function. What they really do over time has evolved and I think AI will continue to help that evolution because historically what this function used to be is just about reporting. In the past we thought this was going to happen, this is what really happened and this is why. But now we're at a point with all of the advancements in technology, all the tools that we have available and even AI is really helping us provide those insights and decision making power to the stakeholders in real time. So um, we don't have to wait till after the fact. We don't have to say oh this already happened. We can say this is happening now and this is what you need to continue to ride that way where this is, you need to stop doing this um, or will be in trouble. Um, and I know there's also been a lot of fear that AI is going to replace jobs but I think it's going to help us do our jobs better because uh, I truly believe that the true job of the finance professional is to not just build the data or build a report but to tell that story. Because there's thousands of transactions that come through every day in our accounting software. There's thousands of data, um, there's thousands of customer insights that live in our data warehouse. But it's really about, can we distill that into something that helps us make the right decision to help our company grow to Better help our customers.

Speaker A: Do you envision like five years from now? Let's say if you do the same job five years from now, 50% or some number between 0 to 100 would be not needed to be done by humans. Is there a quantifiable number?

Speaker B: I don't know if there's a quantifiable number right now. Um, but I will say that um, just with the advancements in planning solutions that we've seen over the past 10 years, um, in tools like Hyperion, planning, planning adaptive and a plan, just the advancements that have happened there, um, with moving to the cloud things. I remember a data refresh, um, from the accounting software used to take um, a full business date. Now it takes much less time. Um, restructuring our planning tool to reflect the new chart of accounts used to take overnight. Now it can be done almost instantaneously. I think those are just certain examples of how technology um, has changed what needs to be done by a person or how much less time it takes. So I certainly do think that there's going to be a good amount that can be automated in the future. And um, so the finance professional, the strategic finance professional can really focus on analyzing the information, analyzing the data and telling that story. That's my best, uh, educated guess, but also my hope, um, because I think even now there's a lot of processes that are very manual and inefficient that uh, a lot of companies have, um, that finance professionals spend a lot of time on. And actually that's one of my priorities within margin strategies. How can we improve our system, tools and processes so we can focus on work that matters and frankly work that's more interesting for us.

Speaker A: If you were doing this discussion five years ago, or let's say 10 years ago with me, and I asked you the same question, Was there any inflection point back then that would say, yep, things going to change or you say yep, there's more work, you know, using

Speaker B: the same, I'll be completely honest And I'll say 10 years ago I didn't know enough to really be able to fully grasp everything. You know, I was just um, just out of an undergrad and learning, you know, just really figuring out what, how real life is different than what you learn about financial statement analysis in college.

Speaker A: So one question there, um, do we also have a good set of audience that is still under, in undergrad school and or freshly admitted out of college? What advice would you give them?

Speaker B: I would tell them that um, going in any sort of finance, whether that's you know, investment banking, strategic finance, um, no big four accounting, going into auditing, um, no matter where you go, it's not all about who can read a financial statement the best or who can do the best analysis, who can build the coolest financial model. It's definitely about that. And that's how you really hone your core expertise. But there's, especially as you grow in your career, a big part of it is about relationship building. Really understanding who you're working with, who are your stakeholders, um, and how you can collaborate together, um, uh, to bring out the best outcome, whether that's successfully, you know, successfully building out the, uh, successfully building a project, um, or providing a recommendation, um, to your client or to your leadership team. I think that's something that they definitely don't teach you in college. Um, and it's not just about, uh, than what you learn about networking in college to get a job or to get to the next level, but it's really about true relationship building, um, and really seeing, seeing a point of view, especially one that's, that's different than yours. Got it.

Speaker A: So one of the aspects of any job in tech, my job as well, is there's so much change going on every day. AI just came M. Out of nowhere in the last 10, 12 months and then upending everything. How do you keep up? Did you read a lot? Do you listen to podcasts?

Speaker B: Do you.

Speaker A: Do you write something on LinkedIn? How do you keep up?

Speaker B: You know, I try to always keep up and read the news, but, uh, it's not, it's not always. It's not always possible to dedicate as much time as reading as you want, especially if you want to read things for fun. And so I started subscribing to a lot of, you know, daily newsletters that said, okay, spend three minutes and this is all you need to know. After a while, I started to realize I have 50 of those different newsletters in my inbox. So I think that's definitely important. And, um, but there can be a lot of information overload. And so I'll go back to my previous point. I enjoy talking to my viewers, friends and colleagues and getting their opinions and learning what they're doing. So that's what I do. And I think that's the best way for me to learn. Um, and I talked to my friends who are working at different companies. Um, I talked to my friends. Um, I talked to my friends who are doctors. So, uh, as I mentioned, um, I mentioned that NOOM launched New Med, um, which helps our, uh, Customers and patients access GLB1. So I started asking my doctor friends, tell me about GLP1. What's the deal? Um, how is Novo all of a sudden blowing up? What's this novel drug that I just learned about very recently? Um, and outside of that I talked to my friends who are in hedge funds, who are still in investment banking and okay, what's the broader market perspective? Um, how's um, the market reacting? Um, what's the IPO front? Um, what type of companies are you investing in? What type of questions are you asking as investors? So that's ah, personally the best way for me to learn. And um, I think it's certainly more interesting than um, reading a lot of different newsletters or articles though that is very important.

Speaker A: I'm going to ask you a question on that. But before, since you mentioned the market outlook, I want to ask you this question. Do you have a perspective on where we're going to be in the next 12 months?

Speaker B: I guess I'll talk about um, what's going to happen in what I think is going to happen in the software technology space. Um, you know during COVID we saw that uh, a lot of companies were doing, you know, after the initial, initial, initial downturn due to the fear of COVID saw that a lot of companies did really well. And um, we saw that in the public companies with their stock prices in private companies we saw at the rate that the investments were going up. And then in, in the second half of 2020 we started to see that cool down and a lot of the investors started to shift focus from just growing at any cost to uh, growing profitably. And I think that pivot is still happening. Um, I think in the next 12 months I believe that the companies were able to effectively um, make that pivot and really focus on growing profitably will be the ones that are succeeding, um, and the ones that are not will either get acquired or will no longer be there. So I think that's going to be the focus. Cash is king. You can never, you can never, you can never, you can never get away from that. Um, even in the tech space. Um, and I think um, I also see that as I look at the new companies that are getting funded, uh, there's still a lot of series A and Bs happening, but there's a very, very limited amount of larger scale investments that are happening that are series C or D or um, even beyond that. And of course we're seeing that in the IPO market as well. Companies aren't IPO and Like they were a couple of years ago? Uh, no, actually I didn't fully read this, but I did see the headline in one of my newsletters come up that the IPO market may no longer be as cold. So, um, I know a couple of big companies have recently filed their S1s. Um, Klaviyo being one. A really good friend of mine used to work there, um, for quite a bit.

Speaker A: Got it. Thanks for sharing that wisdom. Absolutely agree with that. As we conclude this call, one question I ask my guests is, is there a person or a book or someone that influenced you the most or has been a source of inspiration? What has been yours?

Speaker B: Karan? I guess I'll talk about the book End Person, um, which is, um, the book is Thinking Fast and Slow by Daniel Kahneman, who by many is known as the father of behavioral economics. And um, that was a very, that was a light bulb moment for me when I first really understood or discovered what behavioral economics was in college. Um, because in fundamental economics and how people think about markets, they think everyone is 100% rational and we always will behave rationally. Uh, but what this, what behavioral economics and this book in particular exposes is that no, people don't behave rationally. They will often, uh, they will often do things that are very, very irrational. And that, um, that definitely applies to not just, uh, you know, that applies to the stock market, that applies to the decisions we make on a day to day basis. Um, and that applies to, you know, and from the speaking language of the work that I do on a daily basis, the assumptions we make in financial analysis. Um, and this book really talks about how there's two sides of our brain. One is the impulsive side, that, um, instinct, that's very quick. And then there's the. But you know, it has those biases. But then there's the more rational side. That takes time to process. But you can also make errors in this process. But what I took away from it is we need both sides of that brain and they need to work together. Um, but also that none of us are 100% rational and neither is the market. Um, and yeah, so that's why I think it's very important. Uh, you know, I love reading about behavioral economics, especially studies on common things that happen to people. Uh, Dan Arielle is also a great author in that space. Uh, he has a few books. The first one I read was Predictably irrational.

Speaker A: Got it. Thanks for sharing that. Uh, I have read that book. Not completely. It's dense, it's long, sometimes kind of undulates. Being boring, but of course very exciting in terms of their analysis. Thanks for sharing that book. I will put it in the show notes as we conclude this call. Karan, where can people find you on the Internet?

Speaker B: I'm on LinkedIn and I'm, um, happy to connect and, um, just to talk about what's happening, uh, what's happening in the world, or if it's any college students. Happy to, uh, offer any advice that I can share.

Speaker A: Super. Thank you, Karan, for your time. That's Karan Chadha, our guest today, and you are listening to the Chief Future Officer Podcast. Thanks for tuning in to this episode of the Chief Future Officer Podcast. The Chief Future Officer Podcast is brought to you by column a CFO's best buddy. To buy and manage SaaS to support this podcast, please like, share and subscribe to us on your preferred podcast application. Links to previous episodes and the rest of the show notes are in the bio and I'd, uh, love to have you check out other episodes. Lastly, if you want to be on this podcast or recommend a friend, let us know in the comments below. Thank you.