Distribution Beats Product: Leadership Lessons from Corporate Venture

In this episode of the Leadership Quotient Podcast, Kelvin Tan, CEO at Audax, joins The Crucible CEO Lindsay Guzowski to discuss what it really takes to build and lead a corporate venture-backed business. Drawing on his experience spinning a technology platform out of Standard Chartered, Kelvin explains why some internal innovations are more valuable as independent companies, how leadership changes when you move from operating inside a large institution to running a venture from the ground up, and why resilience matters more than expertise in the early stages of building. Kelvin and Lindsay explore the tension between structure and speed, the challenge of balancing strong decision-making with clear communication, and why leaders in the age of AI must do more than set direction, they must architect workflow. The conversation also covers Kelvin’s view that distribution beats product, the importance of learning beyond your functional background, and his candid advice for anyone considering the corporate venture path.

Transcript

SPEAKER_00 0:00

Welcome to Leadership Quotient, a podcast by The Crucible, where we explore how leadership teams and investor-backed companies are built, aligned, and scaled for impact. I'm your host, Lindsay Gazowski, and in each episode, we'll talk with the people shaping value behind the scenes, from operating partners to investors to advisors to C-suite executives, about what it really takes to drive performance through leadership. On today's episode of the Leadership Quotient Podcast, I chat with Kelvin Tan, CEO at AudEx, about leadership's enablement of problem solving through architecting workflow, distribution beating product, and why he warns people against considering a career in corporate venture portcodes. Kelvin, welcome to Leadership Quotient. Talk to me a little bit about corporate venture and how you got into the corporate venture-backed space.

SPEAKER_01 1:07

Right. So the story is actually a little interesting. I was an employee of Standard Chartered Bank, uh, and Standard Chartered was on the journey of building out a corporate venture arm to fund innovative ideas that have application back into the bank as well as potentially commercializable ideas beyond the bank and to re-engineer and rewire the DNA of banking, so to speak. And this was in 2017, uh, 2017-2018, and I had an idea, right, to effect this was pre-embedded finance, pre-banking as a service. So the idea really was banking as a service by providing balance sheet capability and entrenching and embedding those capabilities into multiple ecosystems. And then while we were looking at that as a business, we realized that the technology back end of the bank required, uh, shall we say, quite a lot of sprucing up to be able to support a business at scale and at speed, uh, you know, horizontal scalability, you know, uh, and and maintaining the cloud and uh you know live security features and so on and so forth. So, what we did was we started to rebuild the uh solution ground up. And as we were doing that, we thought through the idea and said, hey, actually, there are two things here. There is a balance sheet business, which uh the corporate venture arm was already helping uh support to build out for a new business model for the bank. But more importantly and more interestingly, there was going to be a commercializable business outside of the bank, which is the technology stack that we were building to support the balance sheet business. So in 2020, let's say, 21, end of 21, early 22, we had a conversation to say, let's commercialize this, right? Let's take the tech, put it outside of the bank, uh, with the bank as a client as an investor uh through the ventures arm, and then sell the technology stack which we've developed in a box to other banks around the world. And the great part about this was obviously having had to having been forced to deliver it uh to the higher standards of security and governance required for international bank in multiple jurisdictions, it created a significant selling point for a fledging company, fledging tech company to sell to other banks. Because clearly banks have much higher bars with regards to data privacy, much higher bars with regards to cybersecurity, much higher bars with regards to uh resilience and so on and so forth. And so what an interesting story was that one of the early clients that we were talking to uh actually was very happy to talk to us because when they came to us and said, Oh, well, you know, we have these 500 questions of cybersecurity, to which we said, you know what? Here are our 500 pages of responses to the your questions of cybersecurity that we've done for the bank. And and here you go, you should answer most of it. Whatever the gaps are, we'll we'll fill it up. So it turned out that the gaps were very minimal. Anyway, so that's how this entire story got started. And the way it got started was that the bank went on a uh journey to build a corporate venture arm, a serious one, one one that both incubates, builds ventures, but also seed funds uh and invests minority stakes in players that are working with the bank. So that's how I got into it, and that's how we are where we are. So we incorporated and ripped out the uh IP in August 2023. So we're about in four months, we'll be about three years into the journey, and it's been an eye-opening journey because prior to that I was in the bank. So it's we've been working with a number of banks, and it's been quite interesting that we've uh, at least in Asia and the Middle East, we've spent we've managed to uh work with a couple of banks that are clearly quite prominent regional banks.

SPEAKER_00 5:05

Fantastic. Um, I think a lot of businesses build build things internally to create differentiation and edge. Very few take those ideas, tech stacks and products, and then commercialize them. That takes a lot of you know, guts and foresight. What was the inspiration to say this is actually a product that we can sell outside of the bank, and it's more valuable to do it that way than it is to keep it as a differentiator?

SPEAKER_01 5:38

Well, the reality of the matter is that history has taught us keeping a technical build in-house within the bank and maintaining it for the use of the bank has never led to a good outcome because at some point that the technology becomes antiquated, it becomes legacy. Uh, sometimes internal silos stop the development of the of the tech in line with leapfrogs in the market. So that's one. The second bit of this was how do we create a situation where the bank can get two bites of the cherry? There will be a innovative balance sheet business that comes out of this, which is embedding the bank in multiple ecosystems. But this allows for the bank to realize the value of the technology built independently and not tied to a bank's PE ratio, for example. So it creates it creates value accretion for the bank in a separate stream and also, I mean, in line with the philosophical uh proclivities of the venture or the corporate venture business, at least from St. Charles' perspective, it has an instrumental impact. It could have an instrumental impact of truly rewiring the DNA of banking, because as you roll out to more banks, you do change fundamentally what goes on. And to the back to and finally back to the original point of antiquated technology being stuck in a bank, by forcing it outside, you then force a constant upgrade of the technology as you roll out to multiple clients. Because we have a single single code base, which means that every time a new feature is built for a new client, that feature gets embedded in the core code base that makes it available to clients that have already deployed our platform anywhere in the world.

SPEAKER_00 7:28

Well, that's great because it sounds like you're treating this truly as an independent business that serves the benefits of the bank, but not necessarily falling into the problems of stagnation.

SPEAKER_01 7:42

Absolutely. I think that's that's the idea. But you know, over time, who knows? Most most businesses, tech businesses as well, face the problems of stagnation. But theoretically, this should allow for it to be far more uh responsive to any leapfrog changes in technology uh in banking over the course of the next decade or so.

SPEAKER_00 8:03

When some people think about corporate venture, one of the challenges is that it's often seen as sort of a fun side project or things where, you know, hey, we'll take a chance on this because if it works, it'll be great for us, as opposed to a serious investing strategy and or revenue generation construct. How did you guys go about it differently when you were thinking about how to build a serious venture arm? Andor, you know, what differences do you see in how the two models work?

SPEAKER_01 8:43

Right. I think one would say that when people do corporate venturing, they do one of two models. One is we seed fund a whole bunch of small ventures that grow independently or grow within the warm embrace, shall we say, of the enterprise. And then we try to let them go forth and prosper. Uh, or corporate venturing means I've created a fund of some sort that invests in startups that are outside of the bank or outside of the enterprise who are working with the enterprise. What I think was slightly different in the setup that SDB made in SD Ventures was that they combine the two, uh, whereby there is a fund that invests that takes you know uh stakes in players or startups that work with the bank in whatever capacity, multiple things, uh AML, CDD, and anti-money, sorry, anti-money laundering, you know, client due diligence and acronyms. We need to try to skip those, and a whole bunch of other things. And then they've also seed funded a few things that may not have market presence in terms of those solutions and capabilities, and therefore things like uh uh uh digital asset custody, uh things like um you know tokenized uh exchanges, not not exchanges, but tokenized uh bonds, as well as things like us Audex, which is a bank in the box solution provided to banks around the world. So that combination created a very nice ecosystem of uh both minority investments that are complementary to the C venture builds within the bank. And because uniquely Standard Charter is a large international network bank, the use cases are then very pronounced and representative of requirements from banks around the world. So which means that you have a live uh testing ground to build the venture, addressing a real use case that other banks find a need for.

SPEAKER_00 10:44

Very interesting. I'm curious about how your leadership style had to change when you went from working within the bank to running a business that was commercially viable outside of the banking world. Oh I mean it's banking world, but outside of the bank itself. S CB.

SPEAKER_01 11:06

I mean, quite quite a bit, quite a bit. Um when you work in a large mature enterprise in a very, shall we say, limited capacity, because generally we are all you know cogs in a very large machine. Uh there's there's a lot of influencing involved, there's a lot of uh uh understanding the mechanics and and trying to push agendas kind of conversation involved and relatively small teams. When you become a venture uh CEO, in this case, you are running an enterprise. Firstly, firstly, subject matter expertise goes out the window. I mean, that when you are when you're uh a cog in the in the machine, there is a you know, there's an HR department that deals with all the pain that comes from people and payroll and all that stuff. There's a compliance department that tells you what to do from a regulatory standpoint. When you are an enterprise CEO, uh you have to learn to hire correctly for those roles and listen correctly, but make decisions independent of your core expertise. Because I don't have a background in HR, I don't have a background in compliance, I don't have a background in marketing, well, kind of, uh, and and you know, technology as well. So there's a whole bunch of things that you need to learn. And for me, that is the single biggest change of um biggest challenge actually of running an enterprise in multiple verticals where you really cannot claim expertise. Uh the second thing is from a leadership style perspective, it became two things, and these these are two contradictory things that somehow you need to hold side by side and make it work. The first one is the uh is to have a lot of uh strong beliefs loosely held. I mean, that is and I know I'm reiterating or reusing, I think, Jeff Bezos, if I'm not wrong, but that's really quite important because uh people look to you to make big calls, or at least most of the most of the calls in the early stages of the journey, and you need to have the ability to make the calls and understand which calls are reversible and which calls are not, and there is no room and no room and no um capacity for filibuster rigor, you know, filibuster debates uh to no end. So you have to make hard calls, you have to say, you know, uh disagree and commit, and these are the things we're gonna do. Yes, three of you don't don't agree, and but if you suck about it, you you know get the hell off the boat. So those calls that's one. So you need to hold that. But conversely, you also need to hold the ability to truly communicate the why behind you what you're doing and why that you're making those decisions and try to bring everyone across the line and and moving in the same direction. Because if you don't, you can make all the all the decisions you want. At some point, something's gonna swap up. Right? So those two kind of conflicting approaches need to be well managed and well balanced. And I can't profess to say that I've done it 100% right all the time. Uh and I've veered between the two slightly more democratic approaches versus slightly more draconian dictatorship kind of approach, depending on the circumstance. Uh, and you know, I I think all venture CEOs uh face that conundrum. And the decisions that you make in high stress environments on those two competing approaches uh will determine, I think, largely how your venture functions.

SPEAKER_00 14:46

Where did you develop the skills to be able to do these things that are extremely entrepreneurial, have you know high-level executive presence, deep communication, etc., particularly because your background's really all in banking and other large corporate enterprises.

SPEAKER_01 15:09

Well, yes, that's true. Um, I actually think the development of most of okay, I don't think I have all the skill sets required for what I do. I've been picking them up along the way. Uh my core, shall I say, differentiator is a high level of resilience. And the high level of resilience in my mind comes from I can keep hitting a wall. I'll you tell me this can't be done, I hit a wall, I'll find a way around the wall, left, right, up, down, dig a hole, whatever. I'll make it try to make something work. Uh, and I think that generally comes from my personal background. Uh uh, I'm not a straight A student. I you know struggled in school, I failed plenty of times, uh, and then I created for some strange reason I developed actually a real liking for doing difficult things. Uh I this I made choices that were almost always contrary to popular belief. So I think you know, in college, I went up into school in Chicago uh for postgrad, and you know, I was an undergrad major in in politics, political science, and I did my postgrad in international relations, but actually did most of my classes in the business school. Uh and this was the day, you know, early days uh in business school from my perspective. Uh and I was not quite the right profile for those classes, right? I uh you know this was in the early days I was still counting numbers on on Excel cells and adding them up using a calculator, that's how bad it was. Uh but I went from that to being able to build a full-fledged financial model in a couple of years. So that those challenges are quite significant. And because I've developed that proclivity, because I failed a lot in life in the traditional academic route, I think it created for me at least the ability to be able to take hits and keep rolling uh with the punches. So that was really quite helpful. Uh the corporate environment kind of just stealed me. Actually, it was very helpful because we are, because we are a corporate venture and there is a large corporate machine uh supporting us, it also means it comes with uh a significant requirement for the venture CEOs to be able to navigate their corporate machine.

SPEAKER_00 17:32

And yeah.

SPEAKER_01 17:34

So if if I I think if you were a pure startup founder and if you had uh taken venture capital and you and all you did was was to start up you know a significant amount of equity, then you may not survive the corporate venture route because you know it comes with all the perks of being funded by a large machine, but it also comes with all the downsides of being funded by a large machine. And they're usually one and the same. So for example, uh the perk of being funded by a bank like Standard Chartered is the fact that you know that the company has gone through the most rigorous governance and cybersecurity and you know takes all the boxes with regards to stability and functionality and scalability. So you don't have a problem with that, and you don't have to worry about that uh from a client standpoint. But it also, because it comes with all the requirements of the rigorous requirements, it significantly changes uh how much, well, it elongates the amount of time it takes for us to get to maturity. And and that's a uh a challenging time to try to balance both commercial aspirations externally as well as satisfying governance requirements internally. But we are all the all the more better for it, I think, overall over a longer period of time.

SPEAKER_00 18:51

Yeah, it sounds like you get the rigor and structure that you need from the bank, but it's also balanced against wanting to move fast and fail quickly and doing things that a standard startup needs to do in that space.

SPEAKER_01 19:05

That's right.

SPEAKER_00 19:07

So you noted that you don't think you have all the skills that you need to be doing what you're doing now. What are you still building?

SPEAKER_01 19:16

I think I could communicate better. I think I could hold much, you know, much stronger executive presence. I I tend to be, as a personality, I tend to be a little more irreverent in nature. I tend to like to make jokes, I don't take myself very seriously. Uh so I'm still working on on that bit of it uh because it does matter in specific uh context and circumstances. Uh I'm not very good at it, and I don't profess to be to be strong in that. Um, you know, many a time I've turned up for meetings and people assume that I was the junior junior person in the room. Uh so that's that's fine, and I accept it because it is what who I am from uh uh approach perspective. So something I'm working on. Uh that. The second thing I'm really working on is uh technical skills, like technology-related skills. Uh, I'm not a technologist by training, and certainly not technologist at heart. I'm not an engineer. Yeah, like I said earlier, political science, international relations, uh more of a humanities uh kind of guy, uh, business kind of guy. The advent of at least the significant progress of artificial intelligence and and tools in the last year has allowed for someone like me to become more interesting in terms of being able to do things. You know, if you can architect things in your mind, you can leverage AI tools to do a lot. I mean, you still can't be as good as a proper software engineer today. It doesn't really, you really can't quite replicate some of the things, but it does allow for me to accelerate my learning fast enough uh to do interesting things as a software engineer would too, and helps me understand things a little bit better. So, one of the key initiatives, well, pet projects that I'm doing, for example, is I'm getting one of my senior software engineers to tutor me on a weekly basis. Uh so I I'm I'm the junior software engineer in his squad uh on a weekly basis once a week, and where I pick requirements from the board and deliver on a very, very small feature and then put it into a pull request. So that's quite interesting. At least that's that's that's where we are headed. Uh, and that helps me understand the challenges faced by the engineering teams, as well as how how much AI can help accelerate the tooling and the capabilities and the delivery of those teams.

SPEAKER_00 21:41

So it you've noted a few things that we test for in the crucible. Resilience, that last item of it basically apprenticing yourself within software engineering is shows high levels of intellectual curiosity. But I also suspect you'd score really highly on authenticity. Because people who tend to be a little more reverent, a little more casual, and a little more themselves may lack some of that executive presence, but it's a really important thing for people to connect to. So try not to overindex on that side of becoming too corporate.

SPEAKER_01 22:17

Well, yeah, yeah. It's a balance, it's a fine balance. My CEO tells me all the time that sometimes I need to be more careful about how I say things. So it's it's a fine balance.

SPEAKER_00 22:30

Good. So you talked a little bit about AI, and I know that AudX has agentic capabilities in some capacities. How do you see the needs of leadership changing as the world evolves with more agents, with more ability to work through artificial intelligence, etc.?

SPEAKER_01 22:55

So two things, two primary things. I think one uh leadership cannot be seen as it is kind of in the old world, where you set a direction strategically and then get people to execute it anymore. I think that leadership needs to be the one not just setting the direction but also architecting the workflow of how things move, and at the first level, be able to create uh enough agents to be able to do all the day-to-day and free up time for productive users of the human mind to think through creative problems, problem solving. Uh, so it leadership needs to be hands-on, effectively. I think all of that just boils down to a lot more hands-on uh in terms of architecting solutions and executing on them through agents which you know who are effectively all super hardworking junior workers who can do basic tasks well. Basic repetitive, repeatable tasks well, in a very structured format. So that's the limitation today. I mean, obviously, who knows where that will go in the next couple of months or years, but let's that that at least from my perspective today is how that needs to evolve. We are fortunate in that Audex is small enough. Uh you know, we don't have to go through some of the bad news that you know things people like Oracle have gone through or block has gone through in the recent times. We are a small enough company that we are on this, we are on the stage of growth uh because we have we've just proven product market fit, we're getting more clients. Uh so we don't need to grow people to be able to address the demand that is coming through the door for us. So that's a that's a very privileged position to be in. What we do need to ensure is that our people grow in terms of their ability to use the tools and become a lot more productive, uh both in terms of productivity tools, but also in terms of creating a product that has all these capabilities that's embedded and endemic to the product, so that our clients, the banks, uh have pre-made things that they can deploy immediately and go live with. So that for me are the two things that are uh top of mind in terms of how leadership evolves. One is more hands-on, creating workflows, finding out where exactly the spaces are where there is a differentiator for a human being to make decisions. And then secondly, it yeah, it is also to think through strategically how to grow the company, uh, both in terms of productivity as well as uh a product pivot in the H of AI.

SPEAKER_00 25:43

Good. So, in closing, what advice do you have for people who may want to pursue a similar path? People who are you know excited about leading businesses that may be corporate venture backed or may spin out of larger enterprises.

SPEAKER_01 26:02

In all in all jokingly, don't do it. It is a ton of pain, but if you are resilient and you welcome challenges and you are happy to dig in for three to five years of your life, like truly dig in. Like you don't give up at the first sign of trouble. Uh you need to you know you need to be willing to you know to be to lose your job, you need to be willing to get fired. Uh, otherwise, don't don't don't attempt on this journey. Now, if you do attempt on this journey, having fulfilled the prerequisites I talked about earlier, then how do you what should you think about? You should really start thinking about how good you are at seeing things evolve in the next 12 to 18 months. You need to make strategic bets 12 to 18 months in advance, bets including who the key stakeholders you need to know are, and and and who do you need to influence, uh, what are the key questions that will come up at the board in 12 months, 18 months, depending on how mature your board is, what are the key things that are happening in the market, uh, how do you actually create a ideal customer profile? Who do you go after? How do you distribute? And the last point is actually really important. My personal view is that distribution beats product all the time. Distribution will uh uh an immense distribution network will always beat a perfect product. An immense distribution network with a 75% product will always beat a 100% product with no distribution. So I think Microsoft Teams and Slack is the is the most common example of this.

SPEAKER_00 27:50

And that wraps up another inspiring episode of Leadership Quotient. It was a pleasure having Kelvin on the podcast and benefiting from his insights. To our listeners, if you found this conversation valuable, be sure to subscribe to Leadership Quotient wherever you get your podcasts. You can also learn more about The Crucible and how we're helping investor-backed companies align leadership teams for scale at thecrucible.com. We'll see you next time for more real conversations on leadership, talent, and value creation.