Investors vs Operators: Aidoc’s Arvind Kadaba on the “Grass Is Greener” Trap and How to Escape It

Summary

Run the Numbers Podcast Summary

Episode: Investors vs Operators: Aidoc’s Arvind Kadaba on the “Grass Is Greener” Trap and How to Escape It
Host: CJ Gustafson
Guest: Arvind Kadaba, CFO of Aidoc
Date: February 24, 2025

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Episode Overview

This episode of Run the Numbers features a candid and engaging conversation between host CJ Gustafson and Arvind Kadaba, CFO of Aidoc. The focus is on the contrasting worlds of investors and operators—demystifying the “grass is greener” trap that tempts professionals to switch sides in pursuit of seemingly greener pastures. Arvind shares his journey from investment banking and private equity to his current operational leadership role. Through personal anecdotes and real-world examples, he illustrates the hardest adjustments, the decision-making frameworks he borrows from investing, and his pragmatic philosophies on shareholder value, capital allocation, and the true breadth of great businesses.

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Key Discussion Points & Insights

1. Differences Between Investors and Operators

[07:13 – 14:24]

• Arvind’s Transition Experiences:

  • The biggest surprise was the sheer number of meetings as an operator, versus the lean, quick decision-making of investing teams:

    “On Wall Street, teams are super small... In corporate, I just didn’t fully appreciate how many meetings there are.” (Arvind, 07:13)

  • In investing, even senior roles are often “individual contributors,” still in the weeds with the numbers.
  • Operators must constantly manage up, down, and sideways, assembling cross-functional teams to solve specific problems.

• Team Structure Contrast:

  • Deals in finance involve a tight “pod,” but operating requires dynamic, fluid teams, often reshuffled per project.
  • Drawing parallels, Arvind likens senior bankers to quota-carrying sales reps with targets to hit.

2. The “Grass is Greener” Trap — Both Sides Envy the Other

[16:48 – 22:57]

• Operators romanticize “calling the shots” like investors, while investors envy being hands-on and in the trenches.
• The reality: Capital markets are much more competitive now; excess returns have been “competed away.”
• Promotion in investing is increasingly rare—firms are “pyramids” with narrow paths to the top.
• Key advice: There’s no “better” path; it’s about personal preference, skill set, and how one chooses to contribute:

  “It’s really a function of what you like to do and how do you want to contribute to... capitalism.” (Arvind, 20:16)

3. “All You Need is One”

[23:36 – 24:40]

• Arvind recounts his career as a series of singular yeses—oftentimes only having one offer, which still led to remarkable opportunities.

  “Really, my entire career has been an exemplification of all you need is one.” (Arvind, 23:30)

• This mindset eases pressure and aligns with the unpredictable nature of job searches.

4. Knowing When to Change Course

[25:51 – 32:23]

• Arvind’s pivotal realization: He liked finance, but private equity wasn’t for him.
• Stressful years at Citadel led to self-reflection; he wanted to build, not just invest.
• Personal/family events inspired a desire to work in healthtech, especially after realizing the potential for positive impact and the scalability of software in healthcare.

  “The hedge fund trader framework: If your trade is going south... you double down or rip it out. And I said, okay, it’s time to rip it out.” (Arvind, 30:01)

5. Healthtech, AI, and Application Layer Explosion

[33:13 – 36:05]

• The digitization of health records (thanks to Obamacare and the HITECH act) created fertile ground for new healthcare applications.
• Now, with AI surging, innovation is rapidly progressing both clinically and in back-office automation.
• Aidoc’s focus: AI for physician decision support and systemic efficiency.

6. Build vs. Buy vs. Partner: An Operator Framework

[36:18 – 38:57]

• The “build, buy, or partner” decision is a fundamental investment judgment, requiring both quantitative and strategic analysis:

  “Ultimately, it’s portfolio theory. You’re putting your bets on the table... what’s your conviction level in them?” (Arvind, 37:44)

7. How Investors’ Frameworks Translate to Operating

[38:57 – 43:36]

• Applying portfolio theory to business operations: allocate capital to short-term vs. long-term bets, balance certainty of payback with innovation needs.

  “Even though it’s people and business units... it’s ultimately the same math.” (Arvind, 39:00)

• Example: Hiring sales reps is a fast, quantifiable ROI, while R&D investments are bigger, slower, but can be fundamental for long-term competitiveness.

• The art: load-balancing “sugar high” quick wins and “broccoli” long-term bets to maximize shareholder value.

8. Translating Shareholder Value to Daily Decisions

[44:54 – 47:28]

• Make shareholder value tangible: transparently communicate capital allocation criteria, why some projects get funded and others don’t:

  “Everyone talks about long term, but you have to earn the right to exist for the long term by putting up numbers in the short term.” (Arvind quoting a founder, 45:44)

• Annual planning is about objective and subjective judgment balancing risk, payback timing, and strategic goals.

9. Contrarian Views: Not All Businesses Should Seek VC

[48:00 – 56:40]

• The last decade saw “scope creep” in both startups and VC—venture money flowing into companies without the return or margin profile to justify it.

• Many incredible companies are, and should remain, “boring” services or cash-flowing businesses, not tech unicorns. Venture capital is not always the best funding source.

  “Venture capital for a services business is not the right capital structure.” (Arvind, 50:10)

• Get-rich-slow “boring” businesses (e.g., auto dealers, restaurant franchises) can build generational wealth without headline-grabbing technology.

10. Cash Is Still King

[56:40 – 57:03]

• In uncertain capital markets, the value of strong, positive cash flows is reaffirmed.

  “Cash will always be king. And first is don’t run out of it, right, as a CFO.” (Arvind, 56:44)

11. Lightning Round (“Long Ass Lightning Round”)

[57:15 – 59:20]

• Biggest Mistake: Not building cross-functional trust early enough in his first operator job.

  “...as a finance leader you can’t tell people what to do... you have to influence them.” (Arvind, 57:15)

• Advice to Younger Self: Get to tech as quickly as possible after graduation.

• Finance Stack at Aidoc: Netsuite (ERP), Salesforce (CRM), Siligo as connector, Aurora for sales tax, local Israeli vendors for AP and equity, Excel/Google Sheets for manual work.

• Craziest Expense Submitted: No Wolf of Wall Street moments, just “too-expensive bottles of wine.”

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Notable Quotes & Memorable Moments

• “On Wall Street... it’s a very informal, very quick interaction process. Whereas, coming to corporate for the first time, I just didn’t fully appreciate how many meetings there are...”
  (Arvind, 07:13)

• “You can only do one job at a time, obviously. Overemployed remote employees notwithstanding, of course.”
  (Arvind, joking, 24:40)

• “All my portfolio companies—the operators are doing really well for themselves, especially if there’s a disproportionately great outcome. So what’s it like, Arvind? What’s hard about it, what’s interesting, what’s different?”
  (Arvind, 18:56)

• “Product market fit as a participant in the labor market is really important... what do you like to do, what are you good at, and—of course—where do you get compensated?”
  (Arvind, 22:23)

• “The hedge fund trader framework: If your trade is going south... you double down or rip it out. And I said, okay, it’s time to rip it out.”
  (Arvind, 30:01)

• “If you only hire sales reps, you’re never going to build any new product and your competition is going to ultimately crush you.”
  (Arvind, 41:48)

• “Not all great businesses are technology businesses. No one wants to do the boring business anymore, where so many of those businesses have created, and will create, some spectacular fortunes.”
  (Arvind, 51:52)

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Timestamps for Major Segments

• 07:13 – Arvind on meetings overload and differences in team structure
• 16:48 – The “grass is greener” myth in investing vs. operating
• 23:36 – “All you need is one” career offers
• 25:51 – Career inflection: realizing the operator’s path
• 33:13 – The current state of healthtech and AI
• 36:18 – Framework for build vs. buy vs. partner
• 38:57 – Bringing portfolio theory from investing to operations
• 44:54 – Explaining shareholder value to teams
• 48:00 – Not all great businesses should raise VC
• 56:40 – Why cash is still king
• 57:15 – Lightning round: mistakes, advice, tech stack, and expenses

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Tone and Style

Conversational, self-deprecating, and honest—with “in the trenches” realism about the challenges and rewards of both investing and operational leadership. Arvind combines humility, humor, and practical frameworks, while CJ keeps the energy high with rapid-fire insights, relatable stories, and an open curiosity.

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Final Takeaways

• Don’t get swept up by envy—both investing and operating have pros and cons, and success is about fit, not following fads.
• Decision-making frameworks from investing (like portfolio theory) are invaluable in operational leadership but must be adapted to the realities of people management and strategic execution.
• Many great businesses are quietly compounding outside the limelight of venture capital and Silicon Valley.
• Ultimately, focus on personal fulfillment, business fundamentals, and cash flow—and remember: “All you need is one.”

Transcript

[A]

At least over the last 15 or 20 years, really smart people have gone into investing because of the fact that everyone sort of sees how lucrative that business has been and likely still will be. Right? It's not like it's a bad business to be in. To be clear. It's just harder to differentiate yourself right where, you know, if you want to get promoted, you have to compete with 10 people who are all, you know, summa cum laude from Wharton, you know, went to Harvard Business School or went to Stanford gsb. And that's your competition. That's a really difficult competitive set. And that's not just in the capital markets in general. That's also within your own firm.

[B]

This thing on.

[A]

Yesterday'S price is not today's price.

[B]

Welcome back to Run the Numbers. I'm cj, a CFO and a guy with a microphone. I just spoke to Arvin Kadaba, the CFO of AI Doc. He's had such a cool career and he made the transition from being this big name investor, on paper at least, to now being a successful cfo. And many investors romanticize the idea of becoming operators. But the transition isn't always seamless. He talks about the hardest adjustments he had to make when he took on an operational role for the first time. And we speak to this concept of grass is always greener. It's the stop pattern that both operators and investors honestly take when they dream about going from one side to the other. I always think must be way easier to be an investor than being in the trenches watering the plants and balance in the balance sheet over here. And he moved from a VP role to the C suite. And it often requires shifting from being an expert executor to a strategic leader. How do you navigate this transformation? It's not easy. And he's really honest with us. When he realized hedge funds weren't the right fit for him, it was a pivotal moment. What triggered that realization and how it guided his career choices moving forward. Finally, we also talk about generating shareholder value. When I'm on my deathbed, I'm going to say I wish I generated more shareholder value. Just kidding. But he talks about how many CFOs might see tools like portfolio theory is too abstract for operational decision making. This guy is smart. Hint. How has he bridged the gap between investor frameworks and the realities of running a company? Yes, shareholder value. We go deep on frameworks for that. All this and much, much more after a short word from our sponsors. Listen, being a cfo, it's, it's not always that glamorous. Sometimes I find myself watering the plants and taking out the garbage in the office and you know the best CFOs I know are true business leaders. They know how to drive growth in heroic fashion. 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[A]

Thank you very much. Cj thank you for having me. Great to be on with you.

[B]

I'm on my third coffee today because yesterday was Thanksgiving. We're filming this the day after because the the Hustle doesn't sleep and I think I still got. What do they call it? Tryptophan. I think that's what's in Turkey that makes you sleep exactly right.

[A]

Well, for me it just trying to reduce the quantum of coffee I drink. Yesterday I didn't have any and I had a coffee headache and that was a warning sign.

[B]

Yeah, I feel like there's this not too hot, not too cold where if I have less than three, like I'm I'm a mental pretzel. But then if I over rotate to four, then I get a headache as if like I didn't have enough. So I think I'm in the sweet spot right now. I'm ready to talk business, baby.

[A]

Glad to hear it cj. I'm right there with you.

[B]

So many investors, they romanticize the idea of becoming operators, but the transition isn't always seamless. You made the jump. I'm curious what the hardest adjustments were that you had to make when you took on operational roles for the first time.

[A]

I'd say the biggest thing for me when I initially took on the operating role in my first company after moving out of the hedge fund universe was really just the number of meetings. And I know this sounds super silly, but on Wall street teams are super small and managerial experience and cross functional collaboration isn't really as much of a and my sort of career trajectory as I'm sure you've walked the listeners through in the very beginning. Started in investment banking in a relatively junior role right out of college as a banking analyst and then was an associate at a private equity firm and then worked at Citadel, which is a very large hedge fund, as perhaps you and many of your listeners would be aware of. And typically the teams are super small. A deal team in investment banking is four people, a deal team in private equity is three or four people, and a hedge fund is typically two people. It's you and either your analyst or your portfolio manager, the person who's pulling the trigger and investing capital in the public markets. So as a result, like, you know, you don't have like formal meetings or you know, formal interactions. It's you go into your portfolio manager's office, you pitch an idea, you either it either gets done, there's further due diligence required, or he yells at you and tells you the idea is stupid. So there's kind of one of three possibilities and it's a very informal, very quick interaction process. Whereas, you know, coming to corporate for the first time, I just didn't fully appreciate how many meetings there are and how much, you know, both managing up in terms of one CEO, sideways in terms of peers, juniors and kind of prepping them. Cross functional juniors, cross functional peers board. It's just a ton of meetings. And that was a major surprise to me having come out of the investing universe in which much fewer meetings, much more individual contributor work, and you know, much less sort of people management.

[B]

I didn't have a way to confirm this, but I always thought like at investment banks and hedge funds, even like the managing directors were in many ways individual contributors themselves. Which is very different than like if you're a cfo, where you're managing people, but if you're a hedge fund manager, like you're making decisions, you may not be in the weeds like in the Excel spreadsheet making the model, but you're making the investment decision.

[A]

You're exactly right. And actually you'd be really surprised in the sense that even most relatively Senior investment professionals grew up in that industry, meaning, you know, they were analysts at some point or they were associates at some point, because that's what it takes. It's an apprentice model. You go from junior investment professional to mid level to senior or over the course of a very long and successful career. And my wife is a private equity investor as well and is still in the business. And you know, when she's sort of in the final round investment committee meetings, some of her partners are in the model, like you know, hitting F2 to enter for, you know, looking into formulas and, you know, just double checking the numbers. And the questions that sometimes you get is, okay, why are you modeling a five basis point, year over year, gross margin improvement in, you know, 2029, making up a number here in a scenario. But they're very weedy, they're very into the numbers because most of them grew up with that level of precision or grew up with that level of interaction with the financials. And I think as a part of that, you never let that go. That level of detail orientedness is really what separates wheat from chaff and success from failure in that industry. And so as a result, I think the more senior you get, even though there's only three or four variables that will ultimately impact an investment thesis, it's still all of those variables must be quantified and must be diligence and must be diligence very thoroughly, especially given the fact that it's your money on the line. So that level of attention and the level of analytical rigor that's required when it's your money at work, I think is such a significant order of magnitude difference than it is as an intermediary that you just never let that detail orientedness go. And I think that's what makes these individuals very successful. And I think that just continues to accentuate as those folks grow in their careers.

[B]

What also struck me about your description of working on the other side of the table is kind of the team structure and what your kind of pod is. It's much more straightforward of, you know, an analyst and a senior analyst may work with like a principal and a director. It's like the four of you in the trenches, communication all day, whereas on the operator side, it's a much more liquid, fluid team where it's not just say the finance team, it's. You're pulling in people from all over.

[A]

Absolutely. And it's, it's problem specific or initiative specific as compared to anything else where, you know, if you have to solve a problem associated with bidding a customer contract, for example, and problem, you know, as a task as compared to an actual problem itself. The team is going to be someone from sales, potentially someone from, you know, account management or customer success, someone from the implementation team to help you budget how much it's going to cost to deliver this product. Someone from the product team to say, okay, how much customer work might be required to go in and get this customer alive, you know, speaking from the big ticket enterprise software perspective. And so all of that has to be reflected in the ultimate pricing, which then is likely going to involve, you know, a VP sales or the CRO or someone, depending on the size of the contract and the level of seniority. So, and that's just one task that touches a finance organization relative to the litany of others. So every single discrete project is going to have its own miniature team that's required to go in and action whatever the decision might be. And that's going to vary decision to decision, project to project, problem to problem. And to your point earlier, I think about, you know, more senior investment professionals being the individual contributors. I think that's exactly right. I mean, think of a managing director at an investment bank is no different than a quota caring rep on a sales team. That individual has a quota, right? And in order to be able to deliver the product that they're selling, whether it's M and a advice or capital markets advisory, that's the product that they're selling to the market, which is the list of customers that they have in their call sheet. So advice as a product or financial services as a product is exactly what the managing director at a bank is selling. And ultimately they have a quota. They have a certain amount of fees that they need to deliver in order to be able to hit their own number, which is analogous to us as CFOs measuring our sales team and their productivity.

[B]

I was at PwC straight out of college. I was in their advisory group. So on the consulting side and there was this aha moment in the second year that I had where I was listening to the managing director talk to our client and essentially I was like, I think he's pitching him on another project right now, like soft pitching him. It wasn't like a hard sale. And I said, oh, oh, he has a quota. This is like he's doing an enterprise sale right now.

[A]

It's almost like Glengarry Glenn Ross always be closing. And that's also why these folks are really successful is their responsibility, abilities to identify problems and then see if there's a solution that exists in the firm, right? Whether it's PwC, Morgan Stanley EY or Goldman Sachs to be able to deliver a potential solution to that client. And we're doing the same thing right? On the enterprise software side.

[B]

Say more about that.

[A]

Walking the halls trying to figure out if there's a problem statement within the customer's rubric of many problems to go and solve for which our solution and our software might deliver the optimal solution.

[B]

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[A]

It's always the case. You know, I think it's, it's a dynamic where many operators think, oh, it'd be really cool to call the shots in the boardroom, right? And then of course many investors are like, oh, it'd be really cool to actually make decisions and be really involved in the day to day. And ultimately I think, you know, I, I've done both and you know, I. It's interesting you asked this question in the sense that I'd say the number one call I get from peers these days, especially folks that are younger than me, folks in my peer group and so forth, is what's it like? I think a lot of investors are recognizing that the capital markets are a lot different than they were, you know, 10 years ago and certainly very different than they were 20 or 30 years ago. Where the excess returns that were available to investors 30 years prior, which sounds like forever but really is within our own lifetimes, of course aren't as obvious as they are today. Meaning if you were a private equity investor in the 1990s and exaggerating by an order of perhaps, but if you didn't become a billionaire, something went wrong. And just because the excess returns were just so profound, we're even doing market deals where you're bidding market values from non proprietary deals, just taking a look at pitch decks from Morgan Stanley and paying the Highest price generated 10, 20, 30x returns on invested capital. For private equity, those types of opportunities existed three decades ago and I think the likelihood of those types of opportunities occurring today are perhaps close to zero. And the same thing is true in venture, the same thing is true in hedge funds where that level of alpha has just gotten compressed on a structural level. As the amount of assets under management by alternative asset managers has increased by 100x over the last 30 years, the amount of competition for deals has increased by, you know, 10x20x over the last 20 or 30 years as well. And so therefore you have more competition for capital, prices go up, excess returns have to get competed away. So it's much more difficult to make to generate that, you know, instead of generating that market deal, which is a 2x MOIC, to get to the 3 or 4, those career defining deals that will really separate you from everybody else. I think that's a lot harder. The third piece I think that's interesting is that at least over the last 15 or 20 years, really smart people have gone into investing because of the fact that everyone sort of sees how lucrative that business has been and likely still will be, right? It's not like it's a bad business to be in. To be clear, it's just harder to differentiate yourself, right? Where if you want to get promoted, you have to compete with 10 people who are all, you know, summa cum laude from Wharton, you know, went to Harvard Business School or went to Stanford gsb. And that's your competition. That's a really difficult competitive set. And that's not just in the capital markets in general. That's also within your own firm where the pyramid is super narrow in investing, where, you know, for every 10 VP slots, there's one principal slot. For every three principles, maybe one might make partner. And that's getting harder and harder. As one, to my earlier point, excess returns are getting competed away. And two, you know, depending on the firm, your aum and asset growth can be capped, right? Where if you have a great deal of expertise in mid market private equity, the likelihood of you raising a $10 billion fund is pretty limited. It's just a different ball game that you're playing or a different sporting league that you're playing in. And investors recognize that, that you've got your core competency in writing $100 million checks to 20 to $50 million EBITDA businesses. And then if you're trying to compete with a different landscape, it's a really different ballgame. And so as a result, they're really reluctant to write you as an LP checks that are big enough to catapult you in a different level. And what's that going to do? That's going to constrain your own ability to grow as an institution. And therefore that's going to constrain that, you know, rising Tide lifts all boats for the junior and mid level investment professionals in that firm. So it's no surprise that it's increasingly very difficult to get promoted. It's increasingly very difficult to separate yourself. And everyone's saying, okay, all my portfolio companies, the operators are doing really well for themselves, especially if there's a disproportionately great outcome. And so what's it like, Arvind? What has this journey been like? What's hard about it? What's interesting, what's different? How could I potentially replicate a similar path. And my typical advice in that scenario is it's not like the range of outcomes are going to be within an order of magnitude the same. Right? It's you'll be fine, you'll probably make the same amount of money, you will probably be equally happy. It's really a function of what you like to do and how do you want to contribute to this sounds really silly, but how do you want to contribute to capitalism? Like, do you want to help build a business? Do you want to allocate capital? Do you want to be an advisor? And that's really a function of what you like to do, what your personality set is, where you feel like your spike is, what's your differentiated skill set. And then ultimately, ultimately you're going to be successful no matter what because you're a really smart person. And it's just a function of how do you apply that talent and skillset.

[B]

I'm so glad you brought this up because I had this aha moment where I was at a private equity firm for two years, and it was kind of one of those things where in order to go up the chain anymore, you need to go and get an mba. And there are only two schools that they would accept for me to go and do that. And also, I don't even know if they would have wanted me back because if I'm like, being honest with myself, which took me a while to do, I think I was probably like a B minus, maybe a C plus there. And I'm glad that, like, I made the change to the other side because I don't know, what you were saying resonated. It was almost like I found my own product market fit on the operator side.

[A]

You're spot on, cj. I think that the concept of product market fit as a participant in the labor capital market is. Or the labor market is really important for you to think about as an individual, as a human being. Like, what is differentiated by your skill set, what do you like to do, what are you good at? And of course, where do you get compensated. Right. Because that's of course, an important part of the equation. And once you kind of put the Venn diagram together and see what makes sense, you can make a decision for yourself on the investor versus operator versus advisor path. And there's no wrong answer. It's a function of what is the best answer for you at that time.

[B]

It sounds like you had a bit of a realization too and decided to switch gears.

[A]

Yeah, for sure. I think for me it was interesting where, you know, from my Sort of career trajectory. I was not a very good private equity investor, I can safely assure you that. You know, I think writing myself as a B minus or C plus is very generous to I think my level of product market fit in that industry. And so that's why I ended up going to business school. I was fortunate enough to get into Wharton and you know, that was also the only business school that interviewed me. So I'm very grateful for the opportunity.

[B]

Not a bad one if you've only had one to interview.

[A]

Really my entire career has been a sense of or an exemplification of all you need is one.

[B]

I love that phrase. Can you say more about that? All you need is one.

[A]

Absolutely. Well, I'll tell you, when I applied for college, I got into two schools of repute and I ended up choosing Columbia. Out of that investment banking internships, I got two investment banking choices. One was Morgan Stanley and then the other was Credit Suisse to me. And everyone's opinion is going to be very different on this, but to me, Morgan Stanley was the very clear choice of those two. And you know, while I was at Morgan Stanley, I got the offer to return and I'm very grateful for that opportunity. I only got one private equity offer and then I only got one business school offer, I got one internship offer, I got one full time offer. And then after that I only got, I took my first sort of operating role at Cedar after I left Citadel. And then after that, you know, it's very difficult to load balance having two offers obviously as you're, as you're, you know, recruiting for jobs, you know, while having one. And so, you know, after that it was one full time offer for cfo. And then here I am at adoc. So there's only been one very clear choice along the way as a part of every single career step I've made. They just have so far have happened to be pretty okay ones.

[B]

All you need is one is such a beautiful statement.

[A]

And all you really need is one. You know, you can only do one job at a time, obviously. You know, the overemployed remote employees notwithstanding, of course. And you know, you can only go to one institution at a time for the most part. So you know, just pick good ones. That's all you can do.

[B]

I was going to say, I distinctly remember this conversation with my buddy Brendan Emery, who's one of my roommates at PC. And I was freaking out because we had like this, what do they call them, like those mega days where you have to do like six Interviews back to back. It was at PWC at the time. And I think the group I was applying to had two spots and there were 30 people alone just from BC applying for it. And I was, I was like, I, dude, like, I know I'm not as qualified as some of these other people. Like, I'm in corporate finance with them. And he looked at me, he's like, oh, there are two spots, that's great because you only need one of them. And. And when he said that, it kind of like took the pressure off. Like, okay, all right, somebody's got to get him out there. And like, I lucked out and that's all I needed.

[A]

Yeah, that's same thing happened to me for my summer internship at Morgan Stanley. I think they took two kids from Columbia my year and I, lo and behold, happened to be one of them.

[B]

Yeah, I don't know how I got it, but what triggered your realization and how did it guide your career choices going forward?

[A]

When I was in business school, it was interesting, you know, I was really struggling with the decision of what didn't I like about where my trajectory had led me to. Meaning, you know, I'd done investment banking, I'd done private equity. What did I like and dislike about both those experiences? And for me, it's interesting, I was really struggling with what I wanted to do for a summer internship and like, where I wanted to take my career. Because the sort of quote unquote path after college was super obvious, which is, you know, do your two years of banking, you do your two years of private equity, do your two years of business school and then figure it out later. And then, you know, I was on the precipice of the figure out later moment. I had no idea what to do. One of my really good friends, who was my cohort mate at Wharton at the time, basically said, arvind, every time you speak about finance, your eyes really light up. And that was a big revelation for me. Where it wasn't finance, that was something that I disliked. It was actually just private equity, just wasn't for me at all. And you know, I said, okay, let me try to see if I can find a role in finance. And then I interviewed for a bunch of different hedge funds and ended up getting an offer at what was then, you know, a fairly well regarded distressed debt shop called Blue Mountain Capital. And that was. That sort of led me to both credit investing and then I didn't love credit investing. And then during the internship, and then, you know, spent some time with the equities team and then realized that equity investing and long short equity investing was something that was really interested in. And so that sort of got me to Citadel. And the thing about Citadel was I spent about four years there, which is, you know, was deeply stressful in all sorts of ways.

[B]

Just giving you probably felt like 16 years.

[A]

It felt like a long time. I kind of realized after four years, like what did my career trajectory look like? It's either you stick around at one of the larger multi managers, so a Citadel 72 value housing Millennium and now there's a litany of other lookalike firms that I'm sure are all very successful and do that, spend time there, become a portfolio manager and then try to grind it out and have a few good years along the way hopefully, or you sort of join a more entrepreneurial fund and build a track record and raise some extra. So I actually tried that out for a year in between Citadel and an operating role was to sort of partner with a more senior portfolio manager and try to get something off the ground. And then to your point about product market fit, it was pretty clear after a year that the product that we were trying to build just didn't have product market fit. The track record wasn't there. The demand for a smaller asset manager wasn't really there, especially when allocators could put money to work in a Citadel or more established and reputed institution. So the thesis of starting small and then scaling to my earlier point about how the industry had changed, that's how every single one of these other behemoths had gotten started. They'd all gotten started with the equivalent of seed stage checks, you know, 1, 2, 5, $10 million of assets and then just exponentially grew over a very long period of time. I think those days are, I mean, I never say never. I think those days are largely behind us where you know, it's really difficult to start subscale and expect to build a track record consistently and with the level of proven alpha generation that enables that level of scaling. And I realized, okay, this model for success in alternative asset management just isn't going to work. And so the only real way that you can really do very well is go work at these large multi manager institutions just given. Again, many single managers themselves, regardless of the pedigree, are also struggling to maintain product market fit in this new world order. And so I kind of realized that's not what I wanted to do and that's not how I wanted to build my career as a multi manager investor. It's a very short term oriented business and it's almost like you're trading, but there's a small, not small, there's a non insignificant portion of investing, but it's a very sort of short term alpha extraction from the capital markets business. And that's just not something that I felt that I, A, was very good at, B, had a strong competitive advantage in and C, was very interested in doing. Like if I sort of said, okay, you know, leveraging the Jeff Bezos regret minimization framework, if I'm, you know, 65 years old and this is how I spent 40 years of my career, I just wouldn't feel that this was an interesting career. So I really thought that it was an opportunity to change careers after a bit of a sort of existential crisis because all I wanted to do was be an investor. So switching gears and making the, coming to the realization that this wasn't for me and this wasn't something I was excellent at, took an adjustment process for sure. And then at the same time, you know, my uncle had some very serious health issues and got me in a hospital for an extended period of time. For the first time in my life. It just made me really appreciate how much opportunity there was for deploying technology in healthcare. And so the combination of career crisis plus, you know, sort of a bit of family crisis at the time prompted me to sort of say, okay, I really don't like what I'm doing. I don't like where my career is going. I don't feel like this is an area that I could be very good at and generate excess returns for myself in. It's the hedge fund trader framework. If your trade is going south, you have two options. It's either you double down or rip it out. And I said, okay, it's time to rip it out. And at the same time, I got really inspired by healthcare technology. And then Cedar came as a really interesting job lead for my network. And the problem was awesome. It was taking medical billing and moving it to the 21st century. And at that time, my aunt was dealing with a giant pile of unreconcilable, deeply complex medical bills that no one could understand. And then I thought, okay, this is a clear problem statement. You know, hospitals and health systems look like there's so much opportunity for technological innovation and advancement. This was of course, back in 2018 and I thought, okay, and we all know software is a really good business from my time as a, as a hedge fund investor. And that's no surprise. So why not combine these two interests? It's let's find a great business that is a software business that sells into hospitals and health systems. I think that could blend both. You know, what should be a great business with a role that could be really interesting and a professional trajectory that I thought would be a lot more rewarding longer term than what I was doing earlier.

[B]

I love how you were able to stack not only your talents but your interests to get into something that you felt like had product market fit, like looking at your resume, preparing for this. I was like, this guy's, he's very smart, first of all, but he's done some amazing things. And it's very humanizing to hear you go through it as if you were stumbling through all these different episodes to find your way to here.

[A]

C.J. i could tell you that, you know, from like great success at Citadel to great failure trying to do something on my own to like rebuilding was a deeply humbling experience. And, you know, I think would like to think I'm a reasonably intelligent person in the sense that, you know, credential wise, you know, went to boarding school and I've got two Ivy League degrees.

[B]

You check a lot of boxes.

[A]

I check a lot of boxes for sure, and there's no doubt about that. But having to go and getting told by a lot of people that, you know, my CV was not a great fit and you know, I have no proven experience as an operator was a deeply humbling experience in the sense that, you know, the number of jobs for which I thought I was eminently qualified, again from a credential and horsepower standpoint, but had, don't have and didn't have the requisite experience to do so, you know, took a while to bounce back from and, you know, sort of push through. And I'm extremely grateful to, you know, my, my first boss, Florian, for really giving me a chance.

[B]

Well, I want to get into your operator stint now, which is, is going pretty well from what I can tell. And maybe you can just give people the 30 second overview of like, what's the state of healthcare technology and AI right now? Because to me, it's a black box from the outside looking in.

[A]

Oh, for sure. C.J. i think what's really exciting is how much innovation is flowing through the ecosystem right now. I think there's many companies and, you know, I can't even quantify it. Just given the fact that there's a wellspring of change that's happened just over the last five years alone, that I think makes me really excited for the path ahead. Sounds like a Lot of generic statements. And I'll walk you through it. Like the way I'm sort of thinking about the big revelation I had is every single digital healthcare startup that I worked for started in 2016, all three of them. And I think that that's not a coincidence in the sense that, you know, electronic health record software and the general sort of V1 of healthcare innovation and digitization really only got going in the early 2010s. The biggest catalyst for healthcare digitization was Obamacare and the Hitech act that was passed in 2008 and if I recall correctly, 2010 respectively, that really provided a lot of capital for health systems to go off of whatever they were using before and then standardized into an electronic health record software. So that provided like your database layer on top of which application layers could really be built. Because without that database there's nothing to build off off of. And therefore now you're starting to see this flowering of application layers for healthcare. And now some of it are third party independent software vendors and some of it are of course being built by the electronic health record behemoths themselves between Epic, Cerner and so forth. And I think to me what's really exciting about AI is that that's kind of the next layer of innovation in the space where you have certainly deep learning, machine learning AI, generative AI foundation models that are all sort of proliferating, simultaneous. And now it's just a function of of course, what problem are you solving, how big is the problem, how is that problem prioritized? And you know, what problems can deliver economic value to the stakeholder ecosystem.

[B]

That checks out from, from what I'm hearing in other industries at least, and how AI is being applied. And it's an arms race out there. And it sounds like very much so in healthcare.

[A]

You know, for us at adoc, we're much more on the clinical side. So what we're trying to do is leverage AI to help decision support for, for physicians and then of course create economic value for the health system as a whole. You know, many players are also leveraging AI for back end workflow automation. Right? So Cedar, my first employer, did something akin to that. All of which of course is no more was trying to do that for a variety of back office processes and procedures related to the electronic health record software. And now you're starting to see a lot of stuff with ambient AI leveraging a lot of the new gen AI technology to automate the digitization of chart nodes. So you know, those are kind of the three areas that are to me really blowing up right now. And I think all of them are going to be successful. And of course the ultimate winner in the space time will tell.

[B]

Arvind, I'm curious. You mentioned this proliferation of innovation that's going on at the application layer. With that being said, how do you decide when to double down on building something internally versus partnering or acquiring someone else?

[A]

It's the standard build by partner calculation that I'm sure every CFO goes through and they're evaluating the same concept. It's if you want to build it, how much roadmap distraction would it be? Is it on the roadmap or is it completely off the roadmap? And what's the opportunity cost of pulling it forward or pushing it back? And there's qualitative quantitative math associated with that. Then second, of course is the partnership equation. How much economics do you have to give away as a part of forging a successful partnership with that technology provider, independent software vendor and the acquisition? It's just a function of what the market will bear. How much is it going to cost to control the asset? Is control worth it relative to partnership, at what price? And can you generate an appropriate return relative to the partnership calculation and then certainly relative to the build calculation. So if you say, okay, it's off roadmap versus on roadmap, when is it on the roadmap? Is it in 2025 versus in 2029? Depending on how far along your product team is to going a plan, you can make a judgment call on pulling that forward and the cost of that relative to the economics that you have to give away on the partner side and the valuation multiple you have to pay on the acquisition side. So all of that, you can do the quantitative math, but ultimately ends up becoming a strategic decision on is it going to be a distraction? How much are you going to pay and can you drive an appropriate return in all those three circumstances?

[B]

I know you're not on the investor side anymore, but it's very clear that you do take a value based approach to these types of investment decisions.

[A]

I think a lot of these decisions are ultimately investment decisions at the end of the day. And I think that's a nice perk of having come from the investor side of the house where ultimately you're putting bets on the table. It's almost as if, of course, it's my CEO that's really making the final capital allocation decision. I'm certainly helping support that. But as a part of that decision support, ultimately it's portfolio theory. You're putting your bets on the table. And it's now a function of what your confidence interval in those bets are, what the payback period looks like, you know, in terms of what's going to generate an appropriate payback now versus six months from now versus six years from now. And making sure you stack your bets with an appropriate cycle time. And then how big are those bets? Right. And what's your conviction level in them? So you kind of want to make sure you have a, you know, if you have 10 chips you can put on the table. How are you sizing your bets based on the confidence interval and based on the cycle time of payback? That's literally how my portfolio manager at Citadel would construct his portfolio, which is, what's my conviction of these bets? How do I want to size them? When do I think they're going to pay back based on the catalyst path, how obvious is the payback? What's the need to believe? And then you can sort of make sure you're sizing and prioritizing those decisions appropriately and then capitalizing those decisions appropriately.

[B]

We might have to name this episode Arvind Teaches CJ Portfolio Theory.

[A]

No, please. I find that hard to believe. I'm sure you and all of your listeners are very familiar with these frameworks. It's more, how do you apply them to being an operator? I think that's where there's perhaps, you know, a bit more of a disconnect, where even this is. The concept is obvious. And I'm sure, you know, everyone is very familiar with this. It's more, how do you apply that in, in the context of, of operating a business? Because it's not like you can buy and sell stocks. I mean, these are, of course, people and functions and, and business units that you have to fund, but it's ultimately the same math. Right. Do you believe that this investment is going to generate an appropriate return? And if it doesn't, you have to have a serious conversation about what to do with it.

[B]

Well, part of portfolio theory is figuring out when the returns are going to hit. Short term, medium term, long term. How do you size up the different timelines? As a cfo, I think it just.

[A]

Depends on functions, typically. And this is where it gets a little tricky. Sales and marketing, you typically have more certain paybacks where you. I'm going to use the most silly example, which is you hire a sales rep. In theory, depending on your sales cycles, the rep will take X to Y months to get trained. And then after that, depending on the sales cycle, you'll Close your deal within three to nine months again based on whatever your facts and circumstances are. And the probability of that individual hitting quota is going to be 80% or 70% depending on what your success rate in terms of rep hiring looks like. Probability that when that person is going to achieve quota and then what their percent attainment is going to be in year one versus year too. So depending on obviously the cycle time of your business and so forth, you have a pretty decent visibility and viewpoint. Especially you know, once you kind of get to the series C to series E milestone of what that equation looks like and then using that as the hypothetical example of a sales and marketing investment, higher rep will generate a certain amount of new sales for you and therefore that's it. Then you have your R and D investments. I want to build a new, in our case, you know, AI product or I want to build a new software module for whatever my existing product is. Let's say I'm netsuite instead and I want to build. I'm going to pick on this because they don't it already exists and I don't know the first or last thing about their roadmap. But I want to go and build that ASC606 module which we all know and love as CFOs.

[B]

Love it.

[A]

Okay, you know, that module is going to cost the R and D team $10 million to build. I'm picking that number completely out of thin air. Then NetSuite is going to have, you know, 10,000 customers and the propensity to go buy this module is 30%. And the sales team and the marketing team, the product marketing team is going to say, okay, the pricing for this module is $100,000 again using these as silly examples. So my expected value is it'll take cost $10 million to build, it'll cost another x million dollars to sell, and then that's going to generate 2,000 customers at $100,000 a pop. So point being, that is a certain mathematical equation. But then you could say okay, $10 million, the real number is really going to be 20 million because of the fact that the last two times R& D promised me something, I know it's going to take more time and there's going to be a bunch of iterations to really get to those 2,000 customers. Oh, by the way, when product marketing really cut the data shoot, you know, the first 100 customers is really obvious. The next 1900 requires Y, Z, A, B, C features. That product is telling me is going to cost another 10 million so all of a sudden you kind of really thin slice the data. Okay, that's what the R&D ROI is going to look like. And oh, by the way, it's going to take a long time because the cycle time between starting a product epic and actually getting it done is going to be two years. So, okay, it's going to cost 30 million over two years, but unlock $200 million of recurring revenue for me. And the payback period is uncertain and it's going to be very costly. Whereas hiring the rep is super clear. The challenge with that, of course, is, you know, the rep hiring typically will always have a faster and more certain payback. R and D is always going to have a longer, higher bet payback. But that's how you invent the future. If you only hire sales reps, you're never going to build any new product and your competition is going to ultimately crush you. So you have to always load balance the obvious short term bet, which is almost like the sugar high versus the broccoli that's actually good for you, that might take a bit more time to digest and take more time to show up in your own health improvement using a very silly and very extended analogy. And you just have to load balance that constantly. Right? And reprioritize and prioritize constantly between the stuff that's short term, the stuff that's long term, the stuff that's obvious, the stuff that's less obvious. Within this framework of okay, I want to help directionally maximize long term shareholder value for this business. Now I have the luxury of doing that with the capital structure that I have. And that calculus would be very different, perhaps if I were speaking to you as a public company CFO where I'm accountable to quarterly metrics and putting up quarterly EPS numbers.

[B]

That was so well said. Because all things considered, every time I would probably take hiring a rep that cost 250k a year, who's going to bring me $1 million in sales versus the long term. You know, I have to float more money. It's a longer feedback cycle to see if it's going to work to create a new product. But if I don't do that, I'm not going to have anything for these reps to sell off the back of the truck.

[A]

Correct? That's exactly right. Oh, by the way, you know, if you don't do that in three years, the guy across the street is going to do the same thing again. I'm picking on netsuite for a minute. Like, what if Sage intact builds that ASC606 module a year before, all of a sudden they've got one year to go sell something. That's what I would presume is very attractive and very useful for CFOs into the market. And so all of a sudden that year long head start is huge. It's a very significant competitive advantage for them. Even if you can replicate that as netsuite. Again, silly example, silly random companies picked out of thin air, but one that I'm sure we and the audience would know very well and hopefully the analogy as a result could resonate.

[B]

So you mentioned evaluating decisions through the lens of long term shareholder value. And I feel like long term shareholder value gets thrown around all the time like, like a buzzword. So I'm wondering, Arvind, how, how do you explain it to employees to make it more tangible? Because sometimes you have to say no to them. Right? Like, we can't do that because we're trying to do this.

[A]

I think it's interesting in the sense that I try to frame it in the context of almost exactly what I described to you.

[B]

Yeah.

[A]

Which is the reason we're putting bet X on the table versus bet Y on the table. And why your project got funding and you know, John Smith's project, you know, in a different department, did not get funding is for this reason. These are the 10 new initiatives that we're funding. These are 30 new initiatives that we said no to. And this was the objective and subjective criteria in terms of why we said yes and why we said no. It's some rubric associated with, I know, quantum of capital required, probability of outcome, certainty of the business case, and making sure we're appropriately balancing long term versus short term investments. And some years that might be over indexing to the long term, other years it might be over indexing to the short term. You know, the founder and CEO of one of the companies I used to work for in my Wall street days always used to tell us, as relatively junior associates, everyone talks about long term, but you have to earn the right to exist for the long term by putting up numbers in the short term. Right. And I think for every company it's the same thing. You earn the right to lift a fight another year or another five years because of the fact that you're putting up good results in terms of your near term sales, you're putting up good margins, you're putting up an appropriate level of either actual profitability or unit profitability in order to be able to attract the right capital structure, the right capital base. The right investors that will then allow you to invest for the future. Because, you know, using two extreme examples, if 100% of your capital allocation is to six month payoff decisions, yes, it's going to generate a lot of returns in the near term, but then, you know, you eat your seed corn for the next two years. But using the other extreme example, if you end up allocating 100% of your capital to bets that don't pay off for five years, your investors are going to say, okay, I would rather sell your stock and go buy Amazon, using that as a silly example of like, you know, a sure thing in the capital markets. Point being that every company is going to make a different decision based on how they earn the right to go and attract capital to be able to put that next series of bets on the table. And that's critical. There's no business that's going to exist forever without thoughtful, contemplative, high quality management. And no business runs itself. And as a result, every shareholder and every management team needs to ask the question of themselves. What business do they want to be in? How long do they want to be in business for? And how do they want to kind of create a lasting legacy? And by the way, lasting legacy could very well be I want to exit this thing next year for a lot of money.

[B]

Yeah, that's a viable option.

[A]

That's a perfectly reasonable option. But everyone needs to be aligned between the board, the management and shareholders on what that right option is. The right option could be, I want to be an independent company for 10 years. The right option could be I need to go sell next year because.

[B]

Abc Arvin, switching gears a bit, I asked most of the guests before they come on if they have any contrarian opinions and you said that not all businesses should be venture backed and not all great businesses are technology businesses. I read it over a couple times and I think I agree with you, but I'd love if you could unpack that for us.

[A]

Yeah, for sure. And thank you for the, the very thoughtful question in advance. It took me, the reason I took a while to respond to you because I was tuning on that one for a little while. And I want to give you a comprehensive set of responses. You know, it's interesting between private equity and now being an operator for companies that are venture and certainly growth equity backed, it was an interesting shift in the zeitgeist, I think over the last decade where so much public mentioning and so much public excitement has been on the venture backed side and the technology innovation side. And no Knock on I know the phenomenal innovations that are happening and being supported by first class VC investors. It's more so fascinating to see the pendulum switch so far in that direction where certainly witnessing the boom of 2020 and 2021, there's just such a surplus of venture capital out there and so many businesses that are not technology businesses were backed by venture capital. And that was a true shock to me because fundamentally why did venture capital exist? It's because of the fact that technology and typically VC was much more focused on is that it's because the fact that there's a fixed cost to go build a technology platform or a piece of software and then the marginal cost for distributing that is known and is typically a small fraction of the build cost, meaning sales and marketing relative to, you know, there's some significant payback and ROI associated with that between the dollar you spend on the rep and the amount of quota that that individual can generate. And so as a result you stack these high retention cohorts on top of one another based on a certain fixed amount of sales investments over time. Your marginal cost of creating that foundation of recurring or reoccurring revenue is pretty darn low. And so that's the perfect business for venture capital. But then you saw that type of capital with the returns that were expected going to services businesses, going into like consumer businesses with minimal recurring revenue where your book of business on January 1st starts at zero. It just felt like there was this misconception of what it meant to be a venture backed business. So that was a big revelation to me where it's almost like the founders had a bit of scope creep, the VCs had a bit of scope creep and ultimately both were engaging in decisions that lacked product market fit, meaning venture capital for a services business is not the right capital structure. A services business accepting venture capital is not the right capital structure. And so as a result you just saw more and more and more of those decisions being made. And I wanted to to emphasize that it is so important to ensure that based on the economics of the business at scale, you have the right capital provider, regardless of what capital is available to you. It sounds great to maintain control and have an investor with a minority stake in your board or on your cap table. But if you don't have the growth profile or the unit economics that are suitable for that type of capital structure, ultimately that decision will is unlikely to prove to be the right decision over time. And so to me the other thing is so many founders and really talented entrepreneurs because of this profusion of venture capital that exists that that has sort of come into the market are saying, okay, I want to deploy my disproportionate talents and my problem solving abilities to go and found a technology business because of the fact that there's this amazing capital that's available out there. But you know, when I was in private equity, the number of businesses that were these, you know, so called boring businesses that the founder was probably worth somewhere between 5 and $800 million because they owned 98% of a business that was profitable for month six. And over time with a lot of hard work and a lot of great decisions along the way, they took six guys in a truck and turned into a $300 billion top line business that generates 80 million of EBITDA. That business today would be worth $1.5 billion depending on the unit economics, et cetera, et cetera, et cetera. Point being that that's a get rich slow approach, right? Where it takes 25 years, a lot of work and businesses that are focused on profitability from the beginning versus the let's try to build a scaled business and pull forward our TAM with a disproportionate amount of venture capital, I think results in a very different business profile that might not necessarily be the right product market fit for that founder. And so it just no one wants to do the boring business anymore where so many of those businesses over time have created and will create some spectacular fortunes.

[B]

And I do feel like there are founders from boring businesses or businesses that are traditionally service businesses or they put forward something like, it could even be a podcast just because we're doing one now. But like if you chase the rabbit all the way down the hole, the reason why venture capitalists and PE get into it are for the future value of cash flows down the line. And it's like, wait, I'm starting with that from the beginning. Why do I have to take on this dilution now to try to get there again?

[A]

That's exactly right. And if I build a business that is driving value, you know it from the very beginning and you know it relatively quickly, that there's potential for strong product market fit, that the unit economics work from the very beginning and you just go build it over time. And there's nothing wrong with time and compounding being your friend. Whereas I think just given the nature of the capital that exists in the market, I think a lot of folks have just forgotten that as being a viable path to building a scaled excellent business. That's something that was a significant revelation for me, just observing the transformation in the capital markets over the last five to 10 years.

[B]

And I also like how you said not all great businesses have to be technology businesses because sometimes I get wrapped in my small bubble of, of the ecosystem I work in and I forget that tech is the minority.

[A]

That's exactly right. And like, you know, we all think that at least in our ecosystem for sure, everyone is working for some form of technology business or you know, growth equity or venture capital business that's building something AI, something vertical software, something horizontal software, something cybersecurity. Whereas if you build a, you know, an H VAC services business, a plumbing business, a food distributor business, this type of stuff that I use to look at, diligence and potentially invest in during my private equity days, these are fantastic businesses. They've been fantastic businesses for generations. They will be fantastic businesses generations from now. So as a result, I think that entrepreneurs, founders that are looking to think about building the next generation of great businesses, I think 90% of them, if you ask them, are looking to start tech businesses and a very tiny minority are looking to start services businesses or other, anything else, you know, whatever that might be. And that's just an interesting, very fascinating market opportunity. Right. And to think about what that course correction looks like in the next generation as of course tech is always going to be there. Right. And I think tech is. Software will eat the world. But there's tons of excellent businesses that have a software enabled service or technology as an add on and not the core foundation of how value is created and delivered to the customer.

[B]

I also feel like there are more people coming out of like the program that you came out of at Wharton who are looking to go out and buy a business.

[A]

Yeah, yeah.

[B]

And, and they're not tech businesses really. Like they want to use tech to make it better, but it's not a tech business at its core. Maybe a roll up of auto garages and they want to standardize the technology.

[A]

Or you know, car washes, H VAC services business, plumbing businesses, all those, you know, are all great restaurant franchises. Domino's as far as I remember from back in the day, used to generate 40 cash on cash returns. Whoa, fantastic, fantastic business to own. Now how one becomes a Domino's franchisee I have no idea. But that's an excellent business. Auto dealerships, those are licenses to print money and they have been for a long time. Not to say that those are businesses that one can start de novo, but all those are great examples of non technology businesses that could result in some entrepreneurship or something novel occurring or some new way of delivering whatever that existing service is that could generate significant returns to scale over many years.

[B]

I think what the last five years and kind of the freeze in the capital markets has taught me too is that when times are really good it sounds great to have equity in something, but when times aren't as sure, it's even better to have something that's just a cash flowing business because it's not hard to get your money out.

[A]

Well, it's also more like what's fundamental where ultimately to your earlier point it's all about the present value of future cash flows. Right. And present cash flows have a lot of value in that framework and there's nothing wrong with building a healthy, profitable business.

[B]

It's a great reminder in PSA that cash is still king.

[A]

Cash will always be king. And first of all is don't run out of it right as a cfo. But as we think about putting the investing hat on, ultimately that's all fundamental value is. And so the more your value is anchored to fundamentals, the safer it is as you think about putting more capital behind that business versus others.

[B]

Arvind that's, that's a great way to lead us into what I like to call our long ass lightning round. First question that I ask everybody who comes on the pod is what's something you've messed up on the job before? What's a mistake you've made?

[A]

Ooh, interesting. I'd probably say mistake I made in my first job was probably not building or not like understanding the importance of building that cross functional trust earlier on. So it just took a while for me to sort of figure out what the lay of the land was and then understand that there's no hierarchy in a company. As a finance leader you can't tell people what to do, right? Especially you can't tell your cross functional peers what to you have to influence them and steer them in the right direction. And that requires a level of trust and understanding and just recognizing that and recognizing how to fix it. I was a really critical next one.

[B]

I got for you. If you could tell your younger self something, knowing what you know today, what would you tell them?

[A]

Probably figure out how to get to tech as quickly as possible after graduating college.

[B]

That's a good one. Can you walk me through your finance software stack? What tool is yours is your team using to get the job done?

[A]

Our team and company is primarily in Israel, so there's a little bit of an Israeli bend to it as you'll probably hear Netsuite for ERP Salesforce of course for CRM we use a Siligo connector. Between CRM and erp we use, I want to say we use one of the sales tax softwares. I believe it's Aurora. We use of course Netsuite for ASC606 we use a local AP vendor for accounts payable, obviously not like Bill.com or any of the ones here in the US and then we use a local equity software vendor called Slice as compared to Carter Pulley or one of the folks that one would typically use here. And I think that's mostly it. And then of course you know, Google Sheets and Excel for the usual manual work that everyone wants to automate.

[B]

Last one I got for you. What's the craziest thing you've ever had someone try to expense?

[A]

Oh, I have to say that most of our companies have been pretty disciplined. I haven't seen anything completely ridiculous over the last three years. It's the usual nonsense of like, you know, probably a too expensive bottle of wine that we have to push back on, but that's about it. There's never been like, you know, the Wolf of Wall street, like something particularly obnoxious that has made it through an expense report. I haven't seen it.

[B]

Well behaved. I like it. Arvind, I know you said this was your first podcast ever, but I feel like I could put a mic in front of you and you could have your own podcast someday. This was. This is amazing.

[A]

Thank you. I sincerely appreciate the kind words and the opportunity to both speak with you and speak with the listeners today. So thanks for the time and thanks for speaking with me today.

[B]

Run the Numbers is a mostly LLC production, yelling an intro by Fat Joe, artwork by some AI thingamajig. Podcast and video editing is done by cleancast@cleancast IO. Nothing said on this podcast is intended to be business or investment advice. It's the sole opinion of me, a guy who feeds his dog too much ice cream and has a history of net operating losses. Lol. If you like this podcast, please hit subscribe. It would mean a lot to me. And Also check out mostlymetrics.com that's my newsletter where I explore business models and financial metrics. Thanks for riding with me. Share this with your friends.

[A]

Peace.