Leading with Grit: Radhika Gupta on taking the right kind of risks, rebuilding from the ground up, & being an accessible leader.

“If you change me from being a founder to becoming part of another company and then back to being a founder again, I'm cool with it.”

There are those who struggle to lead with empathy and ambition in tandem.  

And then, there’s Radhika Gupta. 

She is the MD and CEO of Edelweiss Mutual Funds, one of India's most renowned asset management companies. She co-founded Forefront Capital, an alternative investment boutique, acquired by Edelweiss in 2014. 

Known for her lucid, simple, yet impactful writing, she frequently contributes to publications like Money Control and Mint. Incidentally, Radhika has recently published a book titled "Limitless: The Power of Unlocking Your True Potential."

She’s a successful founder. And a very prominent CEO. 

But her radical journey actually didn’t even begin in India.

Chapter 1: A Radical Upbringing

“You can put me in South Sudan today, and believe me, I'll be okay with it because I've lived through such experiences. If you changed me from being a founder to becoming part of another company and then back to being a founder again, I'm cool with it.”

Radhika has a background in diplomacy, having grown up as a diplomat's daughter and has lived in various countries.

She grew up with parents in distinguished careers, her father being a diplomat and her mother a school principal.

As a diplomat's daughter, Radhika attended schools worldwide (even in Pakistan, for starters!), shaping her worldview and allowing her to be comfortable with never-ending changes.

Radhika went to the prestigious Penn University for her Master's. After a brief internship at Microsoft and being bitten by the ‘tech’ bug, she joined AQR Capital, which focuses on quantitative finance. 

It felt like a ‘Goldilocks’ fit to her.

Radhika: “You have to begin somewhere, and then you figure it out. Every experience teaches you something, and these experiences help you find the answers.”

Although she had a fruitful time in the States, the winds of change were nearby…

Chapter 2: Welcome Back

Radhika: “I think coming back to India and becoming an entrepreneur is still the boldest thing I've done.”

It’s important to note a few things here. The year is 2008. Radhika had never really lived in India before. The country wasn’t the startup juggernaut that it is today. 

But sure, there was a strong bull market emerging. 

As fate would have it, Radhika’s scholared father was already a fan of Edelweiss and the pioneering things they were doing in the Indian market. But Radhika’s tryst with Edelweiss was still a few years away.

Radhika: “The reality was also that if you wanted to start up in financial services, because penetration is so low, you could start a lot of things. I mean, I couldn't imagine starting up a hedge fund in the US. But taking those ideas to the Indian market, which is what a lot of companies have done, seemed like a real possibility.”

Thus, the belief in the potential of India's financial services market drove the decision to start Forefront Capital, a boutique alternate investment fund with her husband, Nalin.

Chapter 3:  Don’t Talk Shop During Dinner!

Radhika: “I think the good part of being a husband-wife team is a certain amount of empathy. When two people are in the same profession, and you come home late at night in a bad mood because the markets had a really rough day, you don't need to give explanations.” 

But there are certainly some complications to it. 

It can become incredibly easy to blur the lines between work and life at the dinner table. 

Radhika: “This is an interesting point because our professions have been so similar for us. We found that we had very diverse interests…. one day, I told some folks, “Can you please get us out of the same cabin?” They said, “We thought you are husband and wife; maybe you want to share. I'm like, no, we want space from each other because we have to go back and share a house.” So I think finding points of space is extremely important, finding what X will do and what Y will do, and the boundary lines are also super important.”

Chapter 4:  Building Forefront Capital

Forefront Capital was something that India hadn’t seen earlier, at least not a lot. It was India’s first category 3 alternate investment fund. 

Radhika: “We helped co-construct the regulations around leverage and what the circular would be. That's another great part of building in India. You really get to build.”

Forefront Capital started by finding a beachhead in the highly heterogeneous Indian financial market.

Radhika: “We decided to cater to a much more high net worth market. And the ability was to bring a different style of investing that we had learned overseas to the Indian market. That business started at literally the minimum you can start an asset management business at, which is 25 lakhs raised, as I said, from friends, family, and fools. And it scaled to about 200 crores, which even today is a reasonable size.”

Her belief in India was not just limited to policy changes but the fact that it made good business sense.

Radhika: “All asset management and financial services businesses in India - and actually, to a certain extent - most businesses benefit from this under-penetration. So, if I look at my current business, it's about 15 percent AUM to GDP when the world average is 80 percent. Alternatives will be even lower. So I think all good businesses in asset management will scale.”

Chapter 5: The Forefront Sale

Radhika: “At some point in my Forefront journey, we were looking for funding. And this is not a business where someone will conveniently take a 5-10 percent stake. Of course, someone told me nobody wants to have a conversation with you- or at least, they didn't back then. So this is not a traditional founder business.”

This was true. 

Radhika: “Selling an asset management business is very different from selling a tech business because much of the value lies in the founder. So you can't run away. And so you're also evaluating a prospective acquirer not just for the financial terms, but for the fitment and potentially three, four years of a career afterward.”

Interestingly, Radhika initially felt that Edelweiss was too aggressive and different as a potential suitor. But during the first meeting, she had an inkling that there was also a strong cultural fit. 

While contemplating the strategic sale, Radhika was quite displeased with how people viewed the decision. 

Radhika: “If it's to a couple of family offices, people tell you that you'll retain control. But if it's to a strategic, you're convinced that you're going to give up independence and control and this whole, you know, you are going to go from being your own boss to working for someone, I don't buy this nonsense because the reality is whether I ran Forefront or whether I ran Edelweiss, my boss is my customer. It is my regulator. It is my stakeholder. It is my investor.”

Radhika was confident with what she had to pursue. And some life-changing decisions had to be taken soon. 

Chapter 6: Enter Edelweiss 

Transitioning from being a founder to an employee was not going to be an easy journey.

Radhika: “I had never worked in an Indian corporate before. One of the good things about being a founder is nobody does performance appraisals. Nobody gives you too much feedback, especially if you're a bootstrapped founder and that transition is not an easy one..Post acquisition, I think fitting into a corporate structure for someone who has not been part of it Is tricky. I was crying tears in my first performance review here, despite doing extremely well. I just struggled with the cultural fitment. So I don't think the transition is easy.”

This is all the more poignantly described via an anecdote. 

Radhika: “When we sold the business, despite all the wisdom and preparation, the day we crossed over from our Worli office to this office in Kalina, I was in tears at the Bandra Worli Sea-Link. I was just in tears when we were taking down that board of Forefront capital. It is a big emotional decision. It's a big emotional decision. But I think the system made me feel very comfortable.”

After some things had changed, most were the same as ever. 

After finding footing at Edelweiss, Radhika was pleased to know how the company actually functioned.

“Although there were quite a few systems and processes, the company's performance was stellar because every employee was entrusted with ownership. 

“We are still a company run by entrepreneurs who's letting people build as entrepreneurs. That is the number one thing that makes Edelweiss click.” 

Be it an associate or a C-suite, all employees enjoy significant operational freedom. 

“In this building, there is no notion of a group EFSL, which owns Edelweiss Mutual Fund. It's an investment company. We think it always considers itself an investment company that holds businesses for periods and creates values.”

As such, Radhika and host of the Blume Podcast, Karthik Reddy, also thought that bracketing companies in binaries of ‘startup’ or ‘corporate’ wasn’t the best frame for looking at things. 

There were quite a few ones in the mellow middle who were creating significant impact.

“A lot of Indian corporations are bracketed as Lala, which I don't get. And I always say within this firm, I not only became a first time CEO, I became a first time stage host. I became a writer. I did my first podcast. I did my first TEDx talk.”

Chapter 7: Building An Edge in a Commoditized and Regulated Market

Edelweiss was posed with a unique challenge. 

Banks who were AMCs had a strong positioning and financial muscle. 

What was Edelweiss’s competitive edge? How did they differentiate themselves in a market selling commoditized products under heavy regulations?

Radhika: “Products are known. The pricing is known. And I said ‘hum chappal zyada ghisenge’, which basically means we will work. We will do more outreach to distribution partners. We will be more responsive to customers when they have a problem. The CEO will be accessible on social media if you have a question. The team will just be out there and do more. Hum chappal zyada ghisenge.”

Radhika’s simple yet effective mantra of grinding harder struck a chord with the team. And with the retail investors, too. 

Reminiscent of Avis’s ‘We Try Harder’ ad campaign. 

Chapter 8: Radhika’s leadership approach. 

When asked how she approaches leadership at such a large company, she distilled her answer into three points. 

1. Being visible: Travelling and meeting channel partners. 
2. Consistent messaging: Respectfully communicating with colleagues. As few changes as possible to reduce back-and-forth and work with colleagues with candor and clarity. 
3. Being accessible: She actually created an entire activity for this: “My favorite communication tool is a simple one. It's called Leadership Connects, a very boring name, but I catch up with every department in groups of five or 10 every six months. And I don't speak. So I come, and they sit in this room or, virtually, if it's a branch, and they just bombard me with questions, and I answer them.” 

Interestingly, along with this, she also had to solve for boredom and motivation. 

Radhika: “Aap kehti ho ek lakh crore banana hai, what is in it for me? What does that mean for me sitting in the Patna branch? I think you constantly have to answer the question, " If this is what the next three years for the organization mean, what does it mean for you, and what will it deliver for you?”

It was important for what was about to come.

Chapter 9: The Tango Between Risk and Growth

Radhika: “When you're small, you can grow quietly, but in a business as public as this, when you're large, you get a lot of scrutiny and the cost of failure is very high, and in a market’s business, failure happens, regulatory failure happens. So I think the challenge of just managing risk reputation… one of the aspects of our business that people don't know I manage most carefully is brand risk, reputation risk, and PR risk. And I look at that myself.”

But as someone famously said, "Risk hai toh ishq hai" (where there is risk, there is passion).

Radhika: “I'm in the investment business, and investments are about taking the right risks. If you don't take risks, you get FD returns. So you have to take risks. We have to take risks with business investments. We have to take growth risks. What I don't want to take is brand risks and franchise risks.”

Calculated risks are important because they help mitigate risks that would otherwise completely wipe out the equity and loyalty that a brand like Edelweiss enjoys. 

Radhika wants to build a strong foundation, so no one gets hurt later. 

It takes more time and effort but is always better in the long run. 

Radhika: “In every business, there is an opportunity to take shortcuts daily for exuberant growth. And it's those questions and those choices that you make. So, I never want to over-hire and lay off people. It's just something I don't want to do. I never want to sell products for negative unit economics, and I never want to do anything that compromises the franchise. Those are the foundations you need to build for sustainable growth.” 

Right from the beginning, Radhika’s capability as an empathetic + impactful leader has been proven time and again.

Be it at McKinsey, Forefront, or even Edelweiss. 

The truth is that the most valuable asset all along has been Radhika herself. 

This was an edited excerpt from the eighth episode of the second season of Blume’s Podcast. Listen to the full episode by clicking here.