Jayesh Kannan, MBA ’18
Jayesh Kannan, MBA ’18, joins Christopher Reichert, MOT ’04, to discuss his background in computer science and engineering before transitioning to a role in finance and his journey to MIT Sloan. He also shares how Professor Zeynep Ton’s Good Jobs Strategy helped evolve his thinking and his approach to his work, as well as the importance of the MIT Sloan Alumni community and paying it forward for future Sloanies.
Sloanies Talking with Sloanies is a conversational podcast with alumni and faculty about the MIT Sloan experience and how it influences what they're doing today. Subscribe and listen on Apple Podcasts, Google, and Spotify.
Christopher Reichert: Welcome to Sloanies Talking with Sloanies, a candid conversation with alumni and faculty about the MIT Sloan experience and how it influences what they're doing today. So, what does it mean to be a Sloanie? Over the course of this podcast, you'll hear from guests who are making a difference in their community, including our own very important one here at MIT Sloan.
Christopher Reichert: Hi, I'm your host, Christopher Reichert, and welcome to Sloanies Talking with Sloanies. I'm with Jayesh Kannan, a 2018 graduate of Sloan's MBA program. Welcome, Jay.
Jayesh Kannan: Thank you, Chris.
Christopher Reichert: Before we talk about what you've been up to since Sloan, let me just step back and give a bit of a background to everyone listening here. Jay is a Research Associate at William Blair Investment Management in London. He's lived in six cities: Mumbai, Singapore, New York, Boston, Chicago, and as I said currently in London. But if you include two short stints, a summer in Nairobi, and a winter in Santiago, that would make it eight cities across five continents. So that's pretty international.
While at Sloan, Jay's focus was on a finance track. He was a Martin Trust community fellow, an Entrepreneurship Center community fellow, Co-President of the Sloan Investment Management Club, Co-Chair of the Sloan Investment Conference in 2018, and a Finance Track Student Advisory Board member.
Before we get into your work in Sloan, Jay, let's talk about your travels and the insights you gained from them over the years in those many cities and probably others that are not mentioned.
Jayesh Kannan: Sure. Thanks, Chris. And thanks for the wonderful and kind introduction. I think some of this starts before my journey at Sloan. As you rightly mentioned, I'm originally from Mumbai in India. I went to Singapore on a scholarship for my undergraduate studies in computer engineering, worked in finance in Singapore and then in New York, right before heading to Cambridge, to Sloan. Then after that I spent some time in Chicago. Most recently moved over to London with my employer last summer. I'd say a lot of it is more fortuitous and perhaps a factor of luck and circumstance as opposed to design. I feel lucky and fortunate to have the opportunity to not just have lived in all of these cities, but also to have traveled a fair bit during my time in college, work, and after.
Perhaps I'd say this lends to a unique sort of maybe global perspective—I think a unique cultural lens helps me in my job. It helps me to evaluate the investment attractiveness of companies around the world. But also perhaps from a personal standpoint, it's taught me to be a little more adaptable, open to continuous change, perhaps a flexible mindset, maybe a little more openness in terms of ability and willingness to connect with people. And finally I think it's fun; I have developed a little curious mindset about new travels, places, people, processes, and hopefully maybe some element of creativity thereabouts.
Christopher Reichert: I totally agree. I've traveled a fair bit in my life, but I've noticed that, if you read about places, about having been there, you can build up some sort of impression that may or may not match with reality. But one thing I've noticed in my own travels is that whether it was in Southeast Asia in Thailand, or Malaysia, or in my years in Australia, or Europe, where my parents come from, that at the end of the day people are very similar, they have similar aspirations and pressures and stresses, and a desire to connect. I think going there really opens up your own mind for cultural changes, but also gives you an ability to sense those changes not as something to be afraid of but actually something to embrace. I'm not sure if you found that in your travels as well.
Jayesh Kannan: I think I concur with that assessment, Chris. I think having gone to a number of these places, it helped me connect better with some of our Sloanie classmates who came from different parts of the world. Perhaps it helps lend a little bit of a cultural lens, or a bridge. And like you said, I think at heart, most individuals have common aspirations, common ways of thinking about things, even though that might manifest itself in different forms of expression or actions that they take in order to realize those aspirations.
Christopher Reichert: Let’s turn to Sloan for a moment. How did you pick Sloan? How did you make the decision that Sloan over other schools?
Jayesh Kannan: The preface to this is when I was in Singapore or prior to my move to the United States in 2014, I had known about MIT and Sloan, but it wasn't something that was front and center in terms of here's where I want to be and here's the game plan for me to get there. But I'd say once I was living and working in New York, I had the opportunity to interact with a fair number of Sloanies, both current as well as alumni. I was fortunate that a lot of folks in my business or the business I've worked in, which was financial services, in and around Wall Street, happened to have a Sloan connection. During that time, I traveled to Boston pretty often for work. A couple of those times I did take the opportunity to visit Sloan, visit a couple of my friends who were there at the time, sit in on classes, so on and so forth.
I think that opened my mind, of course, to Sloan and MIT, but also to the concept of business education, MBAs, and how that would be unique but be very additive to where I was in my life journey and career at that standpoint.
Now why Sloan specifically, I think a couple of things that stuck out to me. One, I'd say I self-identified with a lot of the people I met and the values that they either embodied or aspired to embody. Most notably I'd say a lot of Sloanies and folks in the community came across and wanted to self-identify as just good natured, kindhearted men and women and human beings before they self-identified as particularly smart or successful. Of course, all of that existed as well. I'd say that was point number one.
Point number two was where I was and sort of unique to what I was looking for in business education. My background and training were computer science and engineering, and then I worked in financial services. My aspiration post-business school was to try and work towards a combination of these things, which is what I do now, which is technology investing. I felt Sloan would be a good way given its history as a strong powerhouse of finance, which I think is actually quite underrated when you think about Sloan or think about perceptions about Sloan in the broader community. Along with, of course, the more common perception of Sloan as an engineering forward, innovation forward, maybe tech-heavy sort of school. I think that combination attracted me.
Christopher Reichert: I think it's worth reviewing some of the history of finance at Sloan. It has a long history, just as a kind of a teaser for our listeners, Black Scholes and Merton Option Pricing Model came out of Sloan, the Modigliani-Miller Theorem, continuous time models of consumption and portfolio choices, applications of option price, theory of real estate investments in corporate finance, equilibrium models of interest rates, binomial option pricing. Maybe you can translate some of those for us.
Jayesh Kannan: Yes, and in fact I'd say of course a lot of a modern finance history came from Sloan. But I'd actually add a lot of current financial research and cutting-edge financial theories. Case in point being the Adaptive Market Hypothesis, which Professor Andrew Lo proposed not too long ago, have also come from Sloan. I think it's a fantastic place where both academics as well as practitioners have put together a lot of rigorous discipline around finance theory. But more importantly, they've tried to attempt to reconcile some of these economic theories, whether it be the efficient market hypothesis, with new and more emerging concepts in finance like behavioral economics, which by the way is what Professor Lo has done with adaptive markets.
Christopher Reichert: You mentioned that you started out in the sell side of the business, and now you're actually in global equities, in emerging and developed technology sector specifically, right? Media and telecom sector.
Jayesh Kannan: That's correct.
Christopher Reichert: You mentioned a different asset class compared to one of my first podcast interviews, Sam Epee-Bounya, where he's in the dead investing side. Maybe you can talk about, so sell as opposed to what buy, tell us a bit more about that?
Jayesh Kannan: Sure. So prior to Sloan, I worked for Morgan Stanley, which is a pretty large Wall Street investment bank. I worked on the sell side of the bank, which in other terms means that I was part of the investment advisory division of the bank. Essentially what I did was to be part of a team that sold investment related services to investors. So helping investors with the tools, maybe data, the research, the processes that help them make decisions related to investing in different asset classes, whether those be equities, or bonds, and whether they be in the U.S., international markets, emerging markets, so on and so forth.
Christopher Reichert: And that was for individuals as well as institutions? Or where was your focus?
Jayesh Kannan: The focus is primarily on institutions. By institutions think a typical client would be a hedge fund, a pension fund.
Christopher Reichert: Right, so large dollar amounts.
Jayesh Kannan: University and government, so essentially asset managers who manage pooled capital on behalf of their end clients, who could be retail or could be institutions.
Christopher Reichert: I'm curious, so you have a very technical background; computer science, computer and engineering. And finance has obviously a huge mathematical and research component to it. I'm getting around to the question of what changed, how did Sloan change you? You talked about Zeynep Ton, some of her research in the Good Jobs Strategy, by the way, what an awesome name, right? Zeynep Ton.
Jayesh Kannan: Yes.
Christopher Reichert: But tell us about that and how that kind of factors into the work that you do now? Psychology-wise. Actually, before you start, I noticed that I just read an article today in Inc magazine about a Google project, Project Aristotle, I don't know if you're familiar with that, where they spent years studying 180 teams to try to figure out what made a good team, what was it? One of the key components was emotional intelligence. They defined it really as being in a psychologically safe space to make mistakes and not feel that you're going to be assassinated, so to speak, for it. So to be comfortable enough to be yourself. Does that resonate with what Zeynep Ton was talking about in her Good Jobs Strategy?
Jayesh Kannan: Yes. I think the core underlying basis, both of these concepts maybe ring a similar bell. But let me put some context to this the way I saw it and approached it and then what changed at Sloan or how my thinking evolved at Sloan. Like you mentioned, my background was pretty technical, so I studied computer programming. My final year thesis was on developing and coding complex algorithms that can help solve or simulate ant colonies, bee colony optimization techniques, in order to solve real world problems. I was good at it, so I realized pretty quickly that I could be a programmer and I was a fine programmer and my grades were fine, but I didn't see myself doing that as a career choice for the rest of my professional life.
What was unique during the time that I was in college in Singapore was that we had the global financial crisis, and as a result of that, Singapore was growing as a global financial center. I spent a fair bit of time during college reading the Wall Street Journal, The Economist, and learning more about the world of finance, which I found extremely fascinating, not least because asset prices and the entire market was collapsing globally at that time in 2008, 2009. That got me to my first internship at a large Wall Street bank. I realized it was something that I enjoyed, so I enjoyed the ambiguity, the daily volatility of how financial markets were impacted by pretty much everything around us. Macro events, micro events, economic, political, social as well, and you'd like to say in today's context maybe environmental and we can come to that a little later.
That was the way I started my career in finance. And then I realized a lot of the skill set that I had picked up in my engineering major were pretty transferable in terms of the analytical ability, being numerate, just thinking about concepts in a containerized fashion and a logic based approach to problem solving.
I'd say heading into Sloan, this is where Good Jobs and Zeynep Ton and her theory helped evolve my thinking. I was a lot more quantitative in my approach. When I think about company's investing, profitability, or a sustainable competitive strategy for a company, I'd often think primarily about investors, shareholders, or folks who owned a stake in a business, and how that could be maximized, or how value could be created there primarily from an economic perspective. Now the Good Jobs Strategy, similar to Google's Aristotle Project that you mentioned, thinks about operational choices or the companies in which we invest from a more deliberate and thoughtful approach. It's typical for example, or conventional wisdom suggests that, you know, bad jobs, and let's define bad jobs, right? So think low wages, minimal benefits, little training, chaotic schedules.
Christopher Reichert: Mm-hmm (affirmative).
Jayesh Kannan: Of the only way that typical companies that employ large number of frontline workers, so think retailers like Costco or Trader Joe's, these companies can keep costs down and prices low. If companies were to offer better jobs, customers would often have to pay more, or companies would have to make less profits. Now what this class discussed and what the theory and the concept shares, so it makes the compelling case that even in a very low cost setting, if one leaves employees behind with bad jobs, that is a choice, and not a necessity.
Christopher Reichert: Mm-hmm (affirmative).
Jayesh Kannan: What a lot of Professor Ton's research showed that with operational excellence, companies can offer lowest prices to customers while still ensuring good jobs for their employees and superior results for their investors. So win-win, win all the way around for employees, for customers, and investor. And this may not be mutually exclusive. That's the punchline of what this concept taught me.
Christopher Reichert: I imagine it has to be constantly monitored. Maybe that's the challenge for organizations thinking about quarterly results or bottom line profitability. Adding this in might be a change to their thinking. I was thinking of a couple of organizations which are famous for customer service. Neiman Marcus, for example or the Ritz Carlton for how they handle their guests' experience. Southwest Airlines, which is famous for enabling and empowering its staff to solve problems at the front line. Those are some good examples. But I was thinking about how organizations, well, I guess in the research that you do when you are investing, an invest decision or, you know, buy or not buy, right? Invest or not invest.
Jayesh Kannan: Correct.
Christopher Reichert: The human element is probably the most difficult to quantify and probably justify at crunch time. How do you factor that in as some sort of multiplier? And by that, it's an element in the decision that would make it as either a discount or it's a bonus in the whole decision process. How do you make that somewhat irrational you could say component factor into what is otherwise a very rational quantitative decision-making process?
Jayesh Kannan: I'd probably describe it as the art and the science or the qualitative judgment which aids and adds to the quantitative judgment, which largely is a factor of earnings and profitability. Like you mentioned, public filings, returns, margins, growth. So aspects that we can either tease out or we can compute or calculate. These are pretty objective with some element of judgment on where they go in the future, so when we forecast returns or profitability of a company on a forward-looking basis. Now the qualitative part is a little more tricky. I think there's a little more of human judgment involved here. I think aspects like what you just mentioned, so whether it be good customer service, maybe good and positive Glassdoor readings that the company might have online, perhaps employee satisfaction surveys, a tradition in the company, and things like that. Or the benefits they provide to employees, not only executives, but also front line employees who work with customers and who work at the front lines of the company on an everyday basis.
When we think about that, and when I specifically think about that, I think a lot of readings, concepts around either good jobs or either around looking at successful companies, some of which you mentioned. And looking at operational choices that they have made and what we can learn from them in terms of them being consistent, repeatable, perhaps disciplined, is the playbook that I have started to build. I continuously try to update that every time I read something new, learn something new, or for that matter make a mistake and then learn from that failure.
I'll give you another example, Chris, which is very often in my investment research. I have the opportunity to meet with CEOs, founders, management teams of a lot of companies that we end up investing in, or companies that we find interesting, and are potential investee candidates. And very often a large part of the engagement and the meetings that I have with them are centered around some of these qualitative aspects. How do you hire employees? How do you retain, promote internal talent? How do you think about leadership succession? How do you make sure employees are good at what they do? So, they have continuous training, cross training opportunities, mobility opportunities, but also enjoy what they do, so that this is more a choice and a preferred employer of choice as opposed to a venue where they spend nine to five every single day of the week, that it pays the bills at the end of the month.
Christopher Reichert: I was thinking about the fine line between this notion of a good work environment and then that has all kinds of ingredients that some of which you've mentioned. And potentially, distraction. I was thinking about, for example, most recent example was WeWork, you know, there was an infamous story, let's say, right?
Jayesh Kannan: Mm-hmm (affirmative).
Christopher Reichert: But there seemed to be elements of excess in terms of their annual parties, which turned into sort of sloppy messes and all sorts of things happened there. Even down to the controversy of we're no longer having beer between Monday and Thursday and that sort of thing. Then I was thinking about one of the people that you met while you were at Sloan, Warren Buffet. I'm thinking about one person who can really define a culture or help define a culture. And his annual letter to shareholders, and then his personal style, which seems to me from what I observed from a distance is quite humble and down to earth and approachable. Tell us about meeting him and maybe what I've just talked about there in terms of the setting the culture and tone?
Jayesh Kannan: Yes, Chris, in fact that's a good segue to bring up Warren Buffet. I'd say there were 20 of us in my year-
Christopher Reichert: Do we need a segue to bring up Warren Buffet? I'm kidding!
Jayesh Kannan: There were 20 of us in my year at Sloan who had the opportunity to visit Warren Buffet and spend a few hours with him in Omaha, Nebraska, in a closed door, pretty candid conversation, where he shared many of his insights. You know it was a Q and A, he was pretty candid. We did not have to submit questions in advance, so he was pretty off the cuff and in the moment. I would say that for someone who is an investor who aspires to do well in this career path, I mean meeting Warren Buffet is a sort of meeting God at the Gates of St. Peter, right?
Christopher Reichert: Right.
Jayesh Kannan: I'd say that was a significant highlight of my time at Sloan, as well as a number of us from the Investment Club who had this opportunity.
Warren Buffet, as you rightly mentioned, Chris, is very, very down to Earth, despite the long-lasting professional success that he's had over a multitude of decades in investing. You mentioned his annual shareholder letter. In fact, this past weekend was when his most recent letter was released to the public and once again, he talks about pretty much everything from his view on financial markets, to, in fact, a more personal topic which he discussed this year for I think maybe the first time or he's not done it pretty widely, which was largely around leadership succession at Berkshire Hathaway. As many of us may recall, Mr. Buffet turns 90 this year, his partner Charlie Munger turned 96 on New Year's Day. And he talks very professionally, but very humanely as well, about what happens after and as they think about the future of Berkshire.
I think that's one of these qualitative qualities when leaders think about some of these aspects in terms of passing the bit on to the next generation, making sure that there's continuity in terms of business and management thinking, so on and so forth. But I'd say his words of wisdom to us, business school students, when we visited him back then is no different from what he shares pretty widely, which is to be thoughtful, to be deliberate, which is to think about investing as a thoughtful, deliberate approach towards not being shareholders and stakeholders, but also partners with the companies that one invests in. So thinking about investing as a long-term partnership and journey as opposed to a shorter term tactical trade or a quick rich sort of success story.
Christopher Reichert: Yes, I would love to be a fly on the wall when Warren Buffet and Bill Gates are meeting and talking about the things that they can accomplish given their financial and notoriety, and the power that they have there.
Jayesh Kannan: Yes, fun fact, Chris, they often visit the Dairy Queen or McDonald's in Omaha when they're together.
Christopher Reichert: I love it. And I saw a photograph of it.
Jayesh Kannan: You know, it might be a good ground for you to park yourself in.
Christopher Reichert: And I saw a photograph of Bill Gates waiting for his hamburger to be cooked in Seattle a few years ago, maybe it wasn't so long ago.
Christopher Reichert: So, then take me back at Sloan, if you get to have a do-over, what would it be?
Jayesh Kannan: I would say, thinking back, I had a pretty fulfilling experience at Sloan, but if I were to do something differently, the academic front I would say that I would have taken a few more courses on sustainability. So S-Lab, which is the action learning lab centered around sustainability, is a course that Sloan's pretty well known for and I think as a thought leader in as well, just in terms of the content, the way the course is put together, the experience that many of my classmates had during that time at Sloan. And most importantly, the increasing consciousness and importance that environmentalism and sustainability has in the world today. I'd say that's perhaps one thing that I might've done more of and spent more time learning, thinking, sharing, if I had the opportunity to go back to Sloan.
Christopher Reichert: Excellent. And you talked about now that you've graduated, you talked about paying it forward for future Sloanies or for your fellow alumni. So tell me a bit more about your thinking is there?
Jayesh Kannan: I'd say that part of the Sloan experience is the two years that most of us spend in Cambridge during our time at Sloan. But thinking back and as I transitioned from being a student to an alum, I think the Sloan experience is about the lifelong rich network experiences and the opportunities that being part of the Sloan network helps one further share in. I'll give you an example. Most recently, I think three weeks ago here in London, I had the chance to meet many AdMITs, and this is the class of 2022, so AdMITs who've received acceptance to be part of the program. And it was very enjoyable, just spending time with six or seven of these AdMITs, learning about their stories, their aspirations. And paying it forward in a way where I had the chance to share with the aspects of Sloan, whether it be academic, career, social, or otherwise, that could help them realize their dreams as they think about Sloan as a choice for their MBAs down the line.
I'd say that's one aspect of it. I think staying engaged with the community is something where we can help each other. I'll give you another example. In fact, this past weekend I was in a ski trip in the Alps. And it was a Sloan ski trip, so I was there with six of my closest friends from Sloan. We've been doing this every year since we graduated. It was a great time for us to spend together, but also learn and share, and many of them are in the same business or do similar things to what I do, but at other firms. We helped each other share best practices, think about our careers, and help each other out over candid conversations with just advice, or thinking about areas we can explore, things as such. I'd say that's perhaps the second aspect.
I'd say that there are numerous opportunities, having been in all of these different places that are far away from Cambridge, I've still been able to contribute and pay it forward, whether it be in terms of future Sloanies, current Sloanies, or being part of just alumni events, or grabbing a drink with professors when they come through to town for conferences, and things as such.
Christopher Reichert: Well, so thanks very much for all that. I would love to get your thoughts on post-Brexit now that it's just happened, and how's that affecting your work?
Jayesh Kannan: I'd actually say, Chris, that Brexit has been a non-event for the most part, at least over the past couple of months. I would say this was discussed, it was in the news for a couple of years. Then it was a typical Friday evening when Brexit happened. Then I think most folks just woke up on Saturday and it was business as usual. So of course in a more serious note, there are wider implications for businesses in terms of the customs union, in terms of more regulations around movement of labor and capital and so on and so forth. But a lot of that is evolutionary. I think there is a transition period for the new regulatory framework, some of these rules in negotiations to be worked out and finalized. So nothing's changed as of now, but I'd probably say watch the space for more because there's likely more to come down the road.
Christopher Reichert: Absolutely. Well, on that note, thank you very much to Jayesh Kannan, a 2018 graduate of Sloan's MBA program for joining us on our first remote recording. We hope that this is the first of many, and will allow us to do a more recording of podcasts with alumni from around the world as opposed to just here in Cambridge. So I'm your host, Christopher Reichert, and this has been another episode of Sloanies Talking with Sloanies.
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