Shalin Madan
Appearances
Code Story
S9 E32: Shalin Madan, Formidium
It's always been built to scale. One of the questions and criticisms that we got early on from venture capitalists was they didn't believe in scale. And to give you a sense of how our business has grown, we effectively saw 2,000% between the years 2020 and say call it mid-2022. And we increased our staff at that time tremendously as well. And that goes back to the point
Code Story
S9 E32: Shalin Madan, Formidium
Do you turn down business in order to basically pump your chest and call yourself a technology firm? Or do you take perhaps a more pragmatic approach and you take on business? Do you increase that, perhaps not look like what people think of a technology firm should look like, but then use that as your core foundation to build it?
Code Story
S9 E32: Shalin Madan, Formidium
So in other words, service expertise, tech team alongside, parlay the service expertise into the technology. And that's the approach that we took, partly by necessity, right? If you don't have outside funding, you have to fund your operations one way or another. It has always been our goal to scale.
Code Story
S9 E32: Shalin Madan, Formidium
It's always been our goal to be the quote unquote Amazon of our business to offer services to the guy who has a $500,000 special purpose vehicle that he wants to invest in, say, SpaceX, or to service a multi-billion dollar business. That's always been our business model. And the only way we knew we would get to that point is through a technology solution. It's like building a house, right?
Code Story
S9 E32: Shalin Madan, Formidium
First, you build the foundation, you put the frame up, and then you start putting the bricks or whatever your siding is, and you build it. And that's exactly how we built this company. Again, not without turbulence. It's been a rather turbulent time, I would say, especially the last couple of years. But we've still, through that, been able to grow, thank God.
Code Story
S9 E32: Shalin Madan, Formidium
I think that the introduction of a lot of the tools that we brought on with respect to the technology has allowed us to take on more business and make our existing staff much more efficient. I would just say from a personal standpoint, we live in an amazing time. Irrespective of what people think, it is really amazing to see what's happening. I'm bullish. I'm bullish for the future.
Code Story
S9 E32: Shalin Madan, Formidium
I'm generally an optimist. I can see technology making our staff's lives better. Not having to say use Excel, which would have been to the memory, but a little technology in our business. That is, it's amazing to see our staff focusing their time on much more productive items because the technology is taking care of some of the things that made them less productive.
Code Story
S9 E32: Shalin Madan, Formidium
The fact that we were able to build this firm. from the ground up, almost completely boosts Fred, which I think in this day and age is almost unheard of. And when I say build it, as a leader in fund administration, but in particular, the most complex areas of the county, which in this case is Cripple. We are absolutely considered the leader in that space of technology and know-how standards.
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S9 E32: Shalin Madan, Formidium
I'm super proud of that. I'm super proud of that I was able to participate in a hyper growth situation. I've never been in a hyper growth situation as either an employee or let alone a founder. And to be able to navigate, only have a few bruises and a few cuts and nicks after that in terms of the indigestion that inevitably occurs. I'm super proud of that.
Code Story
S9 E32: Shalin Madan, Formidium
We are going to be around Touchwood in a few years and Think like a rocket ship when you're starting a business. You have to escape the atmosphere in order to get into space and to your momentum kind of work on itself, I should say. If you don't, by the way, you come crashing back into the ground, which is what happens with a lot of businesses.
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S9 E32: Shalin Madan, Formidium
I'm proud that we have escaped the atmosphere in business parlance.
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S9 E32: Shalin Madan, Formidium
During COVID, it was extremely difficult to find people, hire people. And I think our process, we didn't really have much of a process. It's pretty much, are you interested in hiring? Okay, come on board. We ballooned the firm to a pretty large number of people. We hired a thousand people in the span of 18 months. I don't even know how that's possible when I think about it, but we did it.
Code Story
S9 E32: Shalin Madan, Formidium
If you recall, COVID was bad enough in the United States, everything that was going on, but it was actually exponentially worse around the world. So we hired way too many people. Whether you have automation or not, we just didn't have a grasp of our numbers. The last few years have been a process of rationalizing and reconciling that mistake.
Code Story
S9 E32: Shalin Madan, Formidium
I guess I like to say that two wrongs don't make a right. You have to basically correct a wrong, and it is what it is. You take responsibility for it. But where we are today, and I think this is why everybody should be rather bullish, is that it doesn't matter, at this point for us, how much automation there is. We need people. We need people to develop.
Code Story
S9 E32: Shalin Madan, Formidium
a service we we just need people in terms of where our staffing levels are i'm very happy with how we've been able to optimize technology our staffing our business in general and get past that mistake i'd also mention that when you are early in a business you will make a lot of mistakes and your reputation can suffer frankly for a couple of years
Code Story
S9 E32: Shalin Madan, Formidium
I remember back in the 90s, back in 95, 96, you would try to call AOL, America Online, by modem and it would always be busy and you'd never be able to get on. They lost a lot of customers. I remember I had to quit AOL and go to somewhere else because I literally couldn't get through.
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S9 E32: Shalin Madan, Formidium
So in some ways, the company's success can be a turnoff because people who might want to use your service can't use your service and or they're not getting the service that perhaps they wanted in the first place because you're just so busy. Obviously not done intentionally. This is what it is. So I think that we've been able to rectify those mistakes and get past that. And I'm very proud of that.
Code Story
S9 E32: Shalin Madan, Formidium
The product side is that the next evolution of Formidium is so if you are a company that has built internal software to service your own needs, ostensibly there is a market for others to now use your software. That is the evolution of being a service company. to actually selling your technology to your, quote-unquote, competitors.
Code Story
S9 E32: Shalin Madan, Formidium
In other words, we are perfectly willing to have a separate service business separate out our technology as a separate entity and sell it to people who might otherwise compete with us. So I think that's the most exciting part of our evolution is we think that we're at a point now where our technology is very saleable, primarily because it can be used for complex use cases in the accounting world.
Code Story
S9 E32: Shalin Madan, Formidium
we've also built it just as you very well know it is you know just building something that can be put for sale and is usable actually usable not just a nice ui that's powerful that's the vision the vision is to continue what we're doing and start redeploying our resources into kind of the sales and the marketing our software to our peers.
Code Story
S9 E32: Shalin Madan, Formidium
I also think that because of this, the leaps and bounds that we have made in our technology, I think that having disparate solutions in firms with different technologies, it might not make as much sense. It might make more sense for us and others to entertain ways to work together.
Code Story
S9 E32: Shalin Madan, Formidium
closer perhaps joint ventures and mergers and utilizing this technology stack that we have spent a lot of time on and spent a lot of money on and worked on very hard and having what i call a unified brain to to run services that are effectively the same across our industry we're all trying to sell accounting
Code Story
S9 E32: Shalin Madan, Formidium
so why do we have disparate platforms particularly when we have this one platform that is a unified solution it doesn't you don't need to piecemeal three different applications together cobble something together we have a unified solution that it lends itself to having a bigger firm that kind of answers hopefully as well that previous question you asked about scalability i think that is i think the definition of scalability when you can just simply staple on somebody else and use your existing infrastructure
Code Story
S9 E32: Shalin Madan, Formidium
Obviously, the greats. I have been influenced by the greats. I have a tremendous amount of respect. People like Steve Jobs, Jeff Bezos, Elon Musk. I can't say enough in terms of the influence that they have provided to me, to others, to go down this path, because it's not an easy thing.
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S9 E32: Shalin Madan, Formidium
On the investment side, of course, because I am an investor in terms of my original foundation, Warren Buffett, of course, is a major influence because at the end of the day, as a company founder, you are a capital allocator. You're a resource allocator. And thinking in terms of returns on investment, thinking like an investor is a tremendous skill set for any entrepreneur.
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S9 E32: Shalin Madan, Formidium
If you don't mind, I'll show myself. But I would, if I like the idea, I'd recommend that they bring me on as an advisor. I think that there's a lot of, and just put myself to it. Yeah. but put myself to the side for a second.
Code Story
S9 E32: Shalin Madan, Formidium
The one thing that I learned, and I learned this as a quote-unquote failed entrepreneur in my first business, is that the cost of having good mentors is so negligible relative to the sort of benefit you can get. Because it really makes no sense to repeat the same mistakes as every entrepreneur, which I made every single mistake in the book lab. That makes me a better person, by the way.
Code Story
S9 E32: Shalin Madan, Formidium
It makes everybody who's made mistakes, I think, is a better person for it. It's just part of life. But the first thing I would recommend is it doesn't matter. Your team matters, of course. But having a mentor and somebody to guide you and accelerate that from zero to one is absolutely the most important thing you can do as an entrepreneur, in my opinion.
Code Story
S9 E32: Shalin Madan, Formidium
I would just say from a personal standpoint, we live in an amazing time, irrespective of what people think. It is really amazing to see what's happening. I'm bullish. I'm bullish for the future. I'm generally an optimist. I can see technology making our staff's lives better. Not having to say use Excel, which would have been the primary quote unquote technology in our business.
Code Story
S9 E32: Shalin Madan, Formidium
Formidium is a fund administrator and its core business, but it's also a technology-enabled service provider.
Code Story
S9 E32: Shalin Madan, Formidium
We got started in the fund administration business, and for those who don't know what fund administration is effectively, any type of investment fund, be it a venture capital fund, a hedge fund, a real estate fund, a crypto fund, they need accounting, and that's what a fund administrator provides.
Code Story
S9 E32: Shalin Madan, Formidium
That is, it's amazing to see our staff focusing their time on much more productive items because the technology is taking care of some of the things that made them less productive. My name is Shalam Adan. I am the co-founder and chief growth officer of Formidium.
Code Story
S9 E32: Shalin Madan, Formidium
I ran into Formidia as a client, actually one of the first clients, and it was named, I had a different name back then. And I needed these services and I had my own hedge fund. I launched my own hedge fund in 2017. It was a quantitative global macro fund. We often think about technology.
Code Story
S9 E32: Shalin Madan, Formidium
We often think about investing the kind of more glamorous parts of the business, but then we don't realize that we actually need accounting. And some of the accounting use cases in a world of technology have become tremendously complex. And that's what Formidium seeks to solve, solves. And I was quite interested in it, particularly with the ability to steer a firm.
Code Story
S9 E32: Shalin Madan, Formidium
Having been an important staff for many years, I was getting a little frustrated with the people that I worked for. That was the reason I became an entrepreneur as part of it. I had been fortunate enough to at least have some savings and some risk appetite that I
Code Story
S9 E32: Shalin Madan, Formidium
plunge and to be blessed with having good partners and smart partners and a unified vision and be able to execute on that vision was tremendously appealing. I invested in the firm. I became an advisor to the firm, senior advisor. Eventually they asked me to be a co-founder and was invited as the last co-founder and the chief growth officer of the firm.
Code Story
S9 E32: Shalin Madan, Formidium
There was an interesting trend, of course, in the early 2010s of companies moving on to the cloud. What was an interesting gap in this particular part of the industry that we'll call it the back office or the accounting business was that there had not been any migration to the cloud.
Code Story
S9 E32: Shalin Madan, Formidium
And so there was an opportunity to effectively run, we'll call it full-scale accounting on a cloud-based system, effectively rebuilding an accounting platform, a fund administration platform from the ground up. So that was the original vision. It continues to be the vision.
Code Story
S9 E32: Shalin Madan, Formidium
I think that the main difference really is the capabilities, the thoughts around automation, obviously the introduction of artificial intelligence. These are all really new factors in the development process. The development, of course, at the beginning was very simple use cases, beginning being like the 2017-18 timeframe.
Code Story
S9 E32: Shalin Madan, Formidium
Trading equities, for example, trading it through a single broker like pretty simple API connection, download the data, clean it, automate it, do the accounting done. What started happening, particularly with the digital asset revolution, was the complexity and the amount of information that needed to be digested by accounting systems was simply not available.
Code Story
S9 E32: Shalin Madan, Formidium
And so we really focused our attention on that and effectively made a pivot in the 2019-2020 timeframe towards becoming a digital asset native platform. So that really is the hallmark of our evolution was focusing our attention on complexity, complex use cases for automation rather than, or I should say, maybe perhaps evolving from the simple use cases.
Code Story
S9 E32: Shalin Madan, Formidium
So this is really a question I'm going to answer from an entrepreneur example. The difference between maybe how we went about things and how other companies have gone about things is that we did not receive a tremendous amount of external funding. And that caused us to be very careful and circumspect about how we spent our money, as well as how we were going to grow the business.
Code Story
S9 E32: Shalin Madan, Formidium
So oftentimes when you hear technology businesses, especially from Silicon Valley, there's a race to build the technology, perhaps before that technology is needed or there's a true use case for the technology. At least that was my observation. We had a service side to it.
Code Story
S9 E32: Shalin Madan, Formidium
And so the trade-off that we had to make, particularly in 2020, 21, 22, which was an absolute boom year, of course, for many companies, was automation for taking in business and basically using a technology-like process to run a callback. And we decided to do that. We had to do that because we didn't have a war chest to fund it.
Code Story
S9 E32: Shalin Madan, Formidium
But I think that was ultimately the decision because it allowed us to grow a book of business, a recurring book of business within our accounting business, which we have thus far redeployed the sort of cash flows that are generated from the service business into technology with the belief in it. And eventually, yes, a pure technology solution will be the outcome.
Code Story
S9 E32: Shalin Madan, Formidium
Of course, not just in our industry, but every industry. But it's really about the pathway as to how you get there as an entrepreneur.
Code Story
S9 E32: Shalin Madan, Formidium
So is the $64,000 question, right? It's you have a limited number of resources and you have a limited number of needs and desires. The simple answer, of course, is you go with what the highest priority items are. There is a tendency with a lot of firms and people who have vision, I think, to want to build lots of products and think that would be lying perhaps if I didn't say that we
Code Story
S9 E32: Shalin Madan, Formidium
guilty of that as well. But I think that as the company matures, as your vision matures, as your product matures, you really begin to focus on that product and making it better. And that's really what we're thinking.
Code Story
S9 E32: Shalin Madan, Formidium
I also believe that, and we have evolved our processes as well along this line, is that really pairing the engineering team and the people who actually do the work, not just on an electronic email distribution basis, literally physically in the firm, pairing those people together, the people who are building the engineering and the automation around the people who actually do the work,
Code Story
S9 E32: Shalin Madan, Formidium
In North America, we have a home office in Chicago, but we have people all over the country. And then we have people in Singapore and we have a main office center in India. The firm has always really been focused around leveraging the sort of economy, the scale that we could achieve having that sort of business model. In terms of building the team, it's not easy. It's really not easy.
Code Story
S9 E32: Shalin Madan, Formidium
I think a lot of it, that thinking has changed as well. I always want to try to be as politically correct as possible. But I think that AI is a little bit of a game changer if I'm being blunt. And the philosophies around building a team have adapted, whereby we happen to be located in a secondary city in India.
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S9 E32: Shalin Madan, Formidium
Those people who know India understand that Bangalore, these are really the main tech centers. We have a very vibrant startup culture. new business formation and fellow professionals. We are located in the accounting capital, which is in another part of the country.
Code Story
S9 E32: Shalin Madan, Formidium
And so it's difficult to perhaps build the sort of teams that maybe some people are used to when you're in a secondary city that's known for accounting. We have been able to do it. It was a long and arduous process. But I think for us, it's really about finding upstanding people who are going to be loyal to the firm. We certainly have shown that loyalty back.
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S9 E32: Shalin Madan, Formidium
But people who are really looking for a nice life. It's a totally different answer, I think, than what others might give. But it's people who want to perhaps grow a family, who want to live in the same city and not have problems.
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S9 E32: Shalin Madan, Formidium
Those are the types of people that we try to find, because I think that in this very volatile world that we live in, having your staff stick around is vitally important in terms of getting the job done.