- Good evening everybody, and welcome to the Fuqua School of Business
Distinguished Speakers Series. We are incredibly fortunate
to be joined by Ajay Banga, who is now the Executive
Chairman at MasterCard after having had an
incredible 11-year run as CEO. Just to give you a sense of
some of those accomplishments that make me describe
it as an incredible run, during his time he tripled revenues, net income went up by a factor of six and market capitalization
by a factor of 10. All the while outperforming a similar peer in Visa and dramatically
outperforming the S&P 500, which itself had a pretty
good run during that time. This is not Ajay's first visit with Duke, we're really happy to bring him back. It's been about three and a half years since he last joined us. The last time he was able to
be with us in the building, this time he's with us virtually. But what I can tell all
of our listeners is, we've had a number of extraordinary guests in our Distinguished Speakers
Series over the years, but I would say that we've never had, a speaker who's had more impact, on the Duke community, on the
Fuqua community than Ajay has, as he is the one who first talked about the importance of decency
and a decency quotient, something that has really
remade the business school, around those principles. And so, I'm incredibly grateful to Ajay both for what he's done and for his willingness to rejoin us. And so, Ajay welcome, and of course this is an
interesting transition time for you after having spent 11 years as CEO, and now moving into the
executive chair role. And so the interesting
thing about this is, that you've been working hard
to work yourself out of a job for a number of those years
almost from the very beginning, you're worried about succession planning. And so, now that you're there, what's the hardest thing
about no longer being CEO? I mean, all the conversation is about, how do you get to be CEO? But there's actually
an important transition to no longer being CEO. So, what's hardest for
you in that transition? - Now first of all thank you
for having me again Bill, and I'm glad it's not
my first rodeo with you. So I'm enjoying that and
congratulations on your own, incredible run at Duke,
you're a terrific guy and I'm so glad I've got to
know you over these years. Lucky I came there with Jud, when I did and got a
chance to meet with you and have that session at Duke. Going out of the job of CEO to exec chair, is actually a little bit of a transition because in actual fact, if I'd just gone completely
out of the company, I think I may have had a
completely different experience. Right now I'm still in the office, so I'm here, I feel like
I'm part of the family but I've worked very hard to ensure that there's lots of space between the CEO who's taken over and me. What I don't want is, the
people who used to work for me, to feel somehow, that they have to be, coming to me on the way to meeting him. That'll be a really bad outcome, of a well-planned succession. So the hardest thing to do
actually is to manage that. Because by being here, I've gotta work doubly hard to make sure, that there's clarity on
what I do, what he does, how I don't really want to be in the flow of today's business, how if I'm here and someone
comes to me for advice, I'm able to give the advice
without crossing the line, between what I don't want
to do, as the ex-CEO, if you know what I mean. If I'd just left the building and gone, I wouldn't need to worry about all that. That's the hardest single thing, because it requires you
to be alert and careful, all the time because by
nature, over the 11 years, I've got used to giving
guidance and instruction. Listening and then giving guidance. Now it's kinda listening and saying, well, why don't you
think about it this way? And maybe you should go back
and talk to that guy like this, as compared to, let me tell
you what you should do. It's an interesting transition. - What's the best thing,
about the transition? - The best thing is watching
Michael do his thing. Michael's our new CEO, and over the last year
when he was the president and during the virus
and the crisis of COVID, we were transitioning. So he and I would work every
day, here in the office. And I watched him grow into
his new responsibility. You know when, it's very interesting Bill, when you're successful as a CEO, what will be the
measures, of that success? No board, actually wants
to make the change. Because they're content
with what's going on. And now you come up to them and you press the buttons
every year and say, let's plan for succession the right way and I think we've got internal guys and let's look at a few
outside and do it the right way by creating a description of the skills and culture and character
matrix of the incoming CEO, and we did all of that. We hired an external firm,
we went through all that. But despite all that,
even when they were voting for him to be anointed the
president and the incoming CEO, there was always this
feeling inside saying, man will he be able to do, what Ajay did? And that's because, when
you're successful (indistinct) the board never gets to see, the number two and number
three and number four people, with the same openness that
they do, when you're the boss. And I kept telling them, he will show you that
and he will grow into it. And I've seen him do it, and it's the nicest thing in the world. Because I can feel good about the process, I feel good about the decision, I feel good about him, and I feel good about the
people in the company, and you know, what more can you hope for at the end of 11 years? - Fantastic, so, this
will not surprise you but I want to come back
to this theme of decency that I mentioned in your introduction. So, when did the light-bulb
first go on for you, that decency was as important
in running a business and building something as
some of these other things that they teach you in business school? - (chuckles) I didn't
think of it as decency, to be completely honest. So, there's two answers to that question, when did it convert into
the idea of being decency and then the DQ, the
decency quotient idea? That was somewhere in the middle
of my tenure at MasterCard. When I was trying to explain
to employees time after time, in town halls and
meetings around the world, that I wanted them to bring their heart and their mind to work. I wanted them to not
just think numerically about what is to be done, but think as much about how to do it. And do it in a way therefore
that you didn't justify the end, no matter what the means. But that you cared about the
manner in which you got there, as much as the getting there itself. The journey was as important,
as reaching the destination. And I was struggling to hear
these are complicated topics, you keep repeating them
different people intake the idea differently. And one day, I'd just come out of watching Warren
Buffett's annual meeting, and he'd been eating ice cream,
made from Dairy Queen, DQ. And as you know I have a
slightly veered sense of humor, and so, I was explaining this downward to somebody who asked
me, how do you describe the idea of decency,
what do you mean by that? And this thing of heart and mind? And I said you know, when I was young, what mattered was your IQ. You had to be very smart,
high IQ, you were there. And then when I was
going to business school the idea of EQ had come up, where it said, you gotta
deal with ambiguity, you have to deal with
difficult circumstances and how you conduct yourself, the equanimity with which you handle it, the ability to deal with difficult bosses, difficult colleagues,
challenging circumstances, but that's your EQ, that
makes you a superior leader. So what I'm telling you now,
is to bring your DQ to work, and no I don't mean Dairy Queen, although that's pretty good. You can bring that to
work I'll eat it for you, but what I really meant is, bring your decency quotient to work. Because then people will follow you to the ends of the earth. Because you're worth following, because you have your hand on their back and not on their face, you will give them a level playing field and then allow them to run to win. That's all they want. They want transparency,
level playing field, hand on the back, that's what they need. And it's stuck. I found people were nodding their heads, and I could read the vibe in the room, and when I left I got these emails from people all over talking about how that made sense to them. And I think you know what,
I'm gonna stick with this. That was about I think,
five, six years ago, I'm not quite sure. And that stuck as the DQ idea. The decency part, I
mean, I don't know how, it goes back to my, I don't know, when I was growing up, my dad, my mom, my friends in school, my teachers. I just believe that
treating people as equals, is not a bad place to be,
there's nothing wrong with that. And if you do that and you
give yourself the privilege, of listening to people because you're gonna learn
from them, then you do better. You know, I'm a Sikh, right? (indistinct) six in our Holy book, there's one very important saying, which it kinda gets embedded in you, which is that you sort of reward
yourself by serving others. That idea of rewarding
yourself by serving others, that's decency, in its own way. These are all different ways of describing human
connectivity, (muffled speaking) - So, what's interesting is
that oftentimes when you talk about decency and being
decent people assume, well this just means
that you're always nice, but I've noticed, that the decency doesn't
mean you're always nice, it may be that you're
honest, you're transparent, and you're willing to push people. And so, as an example, your current CEO asked
to rotate into a job, that you thought PP would have
been fantastic in that job, - Yeah, yeah - And you turn him down. You wouldn't let him take that job, even though he would have been fantastic. Can you explain, I mean,
that wasn't very nice of you? - (laughs) So actually first the
core of the point is that, nice and kind is not equal to leadership. I think you should be fair, I think you should be transparent, I think you should be open and honest, I think you should be
willing to tell people what you think when they do well, as well as what you think when
they haven't done as well. So they can get a guidance
from you because, you know, I mean, Bill leadership is a privilege. You're not born with that
privilege, you earn it. And so when you were working for somebody, you looked up to them to guide you and help you when you were challenged, when you were facing a crossroad or you know, they're
offering you a new job and you kinda didn't know
whether it's a good idea or not, you took that opinion. So you gotta remember
when you become that boss, it's time for you to do the same. And I think therefore you started with exactly the right point, nice, kind, not equal to decent. Leadership not equal to nice, kind, equal to fair, equal to
honest, equal to transparent. So Michael, I knew Michael from earlier, he'd worked with me at
Seri at a point of time, then he'd left and joined Barclays and when I joined MasterCard back in 2009, I went to Dubai and one of my first trips, so Michael was running Middle
East Africa for Barclays. And he came for a client
dinner and he came late. And therefore he seated in one corner. And I hadn't seen him for a few years. And at the end of dinner I
took him out for a drink, and we were chatting and catching up and I asked him if he'd like to rejoin and come work with me. And he kinda said, really? Yeah, he said, well let me think about it. Called me back in a few days and said, for the right job why not? So a few months later, Middle
East Africa, that region, they'd made a change in leadership, Michael came in, he did a terrific job. He just, he was amazing. And four years into it, and I've been traveling
with him every year, a couple of times, and I started to talk to
him, what do you want to do? And (muffled speaking) he comes to me and he says, I'd really like to run Asia. (indistinct) it's the future, it's where everybody's going, it's you know, China, India,
Asian, it's the big deal, I wanna go and do that. So I looked at him and said,
you are an (indistinct). (laughing) And he said,
why am I an (indistinct)? I said because, how does
that make you more valuable, as a leader for the
future of this company? If one day you wanna be me,
you're just doing another job, which is in your zone of comfort. Let me take you out of that and put you in a job that takes you out of your comfort zone, stretches you, pulls you, you might fail a little
bit at it, good for you, you need to learn failure and let's see how you behave,
and give it a try Michael. And he said, what's that job? I said I have one for you. And I told him to come
and work here in the US, to run our products. And then I added in
innovation and new launches and a bunch of other things and he took it all on and
he stretched and stretched and he stumbled and he
stretched, and did really well. And you know, one of the criteria, that tilted the scale in
his favor with the board, was not just his geographic diversity, a German who'd worked in Eastern Europe, Middle East, Africa, and the US, but the ambiguity of the different jobs that he had dealt with. And now he looks back and says, best decision I ever made, was when you pushed me to come here. - How do you find that balance between you pushing people
and supporting people? - Well, you gotta push
them enough for them to feel stretched out of
their zone of comfort, but it's an art, It's not a science. You know, you gotta know
when you're being so pushy that they're only saying
yes because you're the boss and they're scared of you. That would be a bad thing. Because then you would
get the wrong result, even though your intentions were right. And so, finding that balance
Bill, there's no right form. You have to know when you think that you're pushing too far, and taking to account what constraints that person may be having. Michael had his own personal
constraints as well. We managed those, and when
those constraints fell away, he was far more enthusiastic about it, and then I found that worked well. And so, it's different each time, and you know, when you're talking to somebody who's much junior to you, you gotta be even more careful, because they will be nervous,
about saying no to you. So, you have to deal
with this with humility, because you do carry a big stick, even if you don't realize it. - So I think that humility
is probably another, dimension of decency. Now you've tried to simplify another term that's been very important and
relevant in the world today. Which is, and I quote, you said inclusion is a
fancy word for human decency. Can you elaborate on that? - Yeah, I mean, I think
of the world's problems. Let's step back a second, you know the United Nations has 17 SDGs. My problem with 17, is that
I can't remember 17 things. My attention's (indistinct) and drops off at number three or four. And so, I try and put
things in a simpler way, and one day I sat down and said, I need to translate these 17, into what I can get my arms around. And I tried to put them on
three sides of a triangle. So one side of the
triangle, is the tradeoff between one and many,
that's the inclusion. Whether it's financial inclusion, ethnic inclusion, gender
inclusion, sexual orientation, growing up on the wrong
sides of the tracks, emerging markets, developed world, whatever (indistinct) terms that we use to fragment our society, that is on one side of the triangle. And the other side of the
triangle is man versus nature. And I call it man versus nature because men are more destructive than women are of their environment. It's just, you can step back
and look at it dispassionately, you will find that to be true. But even if you were to be
one generous and call it, humanity versus nature, that
whole climate, ecological, water, every breed or fear
leaving behind for our children, that's the second side of the triangle. The triangle stays up because the bottom
unfortunately is very strong, and that's the tradeoff between
long-term and short-term. We are applying bandage
short-term solutions to very long-term problems
of one versus many and humanity versus nature. Whether you are a politician or a CEO, a teacher or a student,
a parent or a child, short-term solutions are
what we tend to apply. And in this current world of technology, everything is binary. You're either a friend or not, you're the included or canceled,
you're either liked or not. That, that world, which is very powerful, is doing a lot for society. That world is also
driving binary behavior. And so one of my concerns in life was, this inclusion, exclusion issue, how do you get people to identify with it and how can you tolerate exclusion? I tell people jokingly, all you need is to be a father of girls, and you will never
tolerate gender exclusion. It changes the way we think, forever. Now if that'd be so, then
why not embrace the idea, of saying that, decency is equality and equality is equality of all types and you and all people want, but I really believe this,
is a level playing field. There's no woman works for me, who wants to be told that she got a job because she looked different from you. And there's no way that I
would stay in this role, if I was told I got my job because I looked different from Bill. That would just destroy
my own self-confidence and my pride in myself and I would leave. So, I don't wanna hand up,
I'm not looking for a leg up, I'm just looking for a level
playing field and let me win. And that level playing field is equal to equality and equality
and decency and humility, these words are all intertwined in the make of human kindness, and it's just, behave is what it's about. Just behave, it's not that difficult. And by the way, don't get
me wrong, I make mistakes. I say things I shouldn't have
said, I can get angry people, I make all the mistakes you make, though I'm not holier-than-thou in this. But I'm willing to acknowledge
them and try and fight them. And I do them sometimes well, sometimes I make the same
mistake a second time, and then it hurts. And so this is not easy,
but it's really important. - So what makes you optimistic that we can reverse this
pattern of exclusion? And so, one of the
things that we've talked about over the years is immigration and how in this country, all of a sudden, we shifted from being
welcoming to unwelcoming. How do we move in the right direction, in bringing people together
with common purpose? - I mean, but I think the
fragmentation, separation, I think that they've been
part of society forever, just forever, right? And what is it that Martin
Luther King said, right? The arc of the universe is long but it does bend towards justice. I'm paraphrasing, but
basically it may take time but it does bend towards justice. And I think society is always
at its veered divisions. Religious divisions, ethnic divisions, these've been with us since
time immemorial, right? So I don't think, I think
we ascribe too much to, this has happened in the
recent past or the last decade or the last four years
or the prior six years, I think what's really happening,
is intolerance is going up, not the fragmentation. And intolerance, this lack of willingness to respect differences and
points of view, is going up. I was talking to somebody the other day, and I was reading a book during the pandemic written
by, somebody I admire, I'd been on a panel with
him once and rockstar, guy called Amartya Sen. Who wrote his famous Indian
economist, jurist, thinker, kind of philosopher in many ways. And he wrote the book
called The Idea of Justice. And actually responds to Rawls theory, that there is one ideal way of justice. And he's basically saying no, no, no, there isn't an ideal, by the
way, it's a tough book to read, it took me a lot of reading. I had to get back in a few times. But I finally understood it because I had to first
go and (muffled speaking) why I'd never had in my education, right? So I went back and read
a little bit of that, rather hard enough and then I read this, and what I understood was very interesting in the middle of the book he says, he describes three kids, with the flute. I wanted to say, hey,
the flute should be mine, because I don't have any other toys. And one kid says, hey,
the flute should be mine because I'm the only one
who can actually play it. And one kid says, hey,
the flute should be mine because, you know, I'm
the one who found it, so I should keep it. Now, you could call one of
those guys an egalitarian, one of those guys a libertarian, and one of those guys a utilitarian. On any day of the week, I could
find a way to convince you that one of them was right or convince myself, that
one of them was right. But actually I'm not sure one
of them is right all the time. The circumstances will
dictate, how I feel about it, and that maybe understand, and little later in the book
he talks about democracy and how democracy is not just elections, it's democracy by discussion. And I think they're losing
a little bit of that in our society. This willingness to have a
different point of view to, you and I don't have
to agree on everything, but we can still be great friends because we have the willingness
to stretch each other's mind by disagreeing, but with respect. There's nothing wrong with
respectful disagreement, there's nothing wrong with challenging me, there's nothing wrong with
pushing and pulling me, I just think I grow by that. And so, back to your question, of society, I'm not sure we have a
problem with division, I think we have a
problem with intolerance. And so, I don't think we should wait for our leaders to change, I think you should look at
yourself, every one of us, and say, are we being
as tolerant or dissent? Or is it my way or the highway? How often do you hear people telling you, you don't understand, you
need to really get this right. Well, no I don't, I don't
need to get it right, just because you tell me it's right. I need to get it right because I need to understand what's right. I think that willingness
to go through the pain of discussion, it's painful. It's easier to just surround yourself with people who look like you,
walk like you, talk like you and agree with you on everything. But guess what, that's not diversity, and that's gonna kill innovation. Because innovation comes when
you don't have blind spots and blind spots come and
people challenge you. You know, they get killed,
(indistinct) challenge you. So, I don't know, it's
a long way of explaining but it's gotta live in my head, this book is live in my head, this idea of justice is
live in my head, is just, - Okay, so, to try and
transition from that to something where there's conflict or different points of view, we've seen a lot about this transition, from shareholder capitalism
to stakeholder capitalism. And so this means that
oftentimes you're having to balance these different
priorities, these competing views and you were doing an interview
where you were asked about, how do you balance your employees, versus the company interests? And your answer was, the
first thing you have to do, is look after your people. And so, there was a clear priority there. Explain how that works for you, in terms of this overall balancing act. - So Bill I think attaching
words like stakeholder and conscious capitalism
in front of capitalism. I actually vehemently disagree with that because that implies that
somehow capitalism is bad and you need to find a good
word, to preface this bad thing. So I (indistinct) a
fundamental disagreement with that, right? As a person, I believe that
capitalism has done pretty well, to lift people out of
poverty, and by the way, as my friend Dov Seidman was
saying to me earlier today, in a different conversation, he said, our world has become a world, where there is not a problem
with how much we have. We had 50 years ago,
famines and not enough food and not enough this, that, and the other. He said, how much we have plenty of, what you've problem with is how. How do we conduct ourselves? How do we deal with things? How do we behave? That's his way of describing
the decency quotient. So (indistinct) in a different context, we were discussing it, but the idea of capitalism
needing an objective, causes me some angst. Because I do agree needs guide rails. I think every system,
unfettered, allowed to be run by vested interests who
benefit disproportionately at the cost of others, they will then bias it towards
them, that's a bad idea. You need guide rails,
whether those are government and regulatory guide
rails, societal guide rails or a combination of both, you need them. Does capitalism need that, 100%. Has capitalism done well, 100%. Could it do better, 100%. I agree with all three of
those statements, right? And so, that's where I'm coming from. Now, on employees versus stakeholders versus consumers versus
customers and all that stuff, I think this versus word, is a bad word. Because that someone makes it feel like you gotta choose one over the other. And I don't believe in that either, because which company exists,
to not serve a consumer well? And which company exists,
to not provide a good return to its shareholders or giving you money? And by the way, how can
you do either of those, by not having really cool employees, who are working their (indistinct) off, to make you as the CEO, look
good, how could you do it? And therefore if you don't start, with the foundational
plank of your employees, how are you gonna get the other ones done? That's how simple a trade-off
it is, there's no trade off, it is the only way to do it. You start with your employees,
you look after them, and you give them the power
and the authority to do things. Give them a clear vision, repeat that vision in simple language, ad nauseam, standby
over, celebrate success, give them the place, give them measures, and then get out of the
way a little bit, you know, gotta be with them. It's not, management is not that hard, it's a set of simple rules. The hard part is yourself. 'cause you, and if you're a control freak, then it gets a lot harder. And so that's kinda my way
of answering this is that, I don't see any other way. During the pandemic Bill,
the first thing I announced, with Michael, was we would
lay off no employees, because of the pandemic last year. Our revenues did suffer, we lost profits, some of those numbers you talked about, actually got damaged in my last year. But you know what? We have great employees
and they're still here. And once they were able
to get out of the fear of looking off their job, and focus instead on their
health, their families and their customers, they were just fine. And that's true of
everything we do with them. You know, if you've got a minute, I'll tell you two other things we do. Small things, but they're
actually very big. In our company, if you contribute 6%, to your 401(k), from your salary, I'll give you 10, into your 401(k). You put in six, I'll give you 10. There are very few companies that do that. It cost me, hundreds
of millions of dollars. The logic is, if you save 16% a month, and you enter around 55K, and you retire at 55,
(muffled speaking) plus, which you will get to our company, if you do the math of compounding on that, with a small return per annum, you'll actually end up with
a decent pension equivalent. As an annuity, when you retire. Otherwise you can't
retire (indistinct) 401(k) in this country. We have a retirement crisis
looming in our country. We've got that as another problem. Similarly, in our company, you get 16 weeks of paid, fully paid, no Pro Rata Bonus (indistinct) leave, whether you're a mother
or a father of a child, biologically born or adopted,
gay or straight, I don't care. You got 16 weeks paid leave, either genda. And in the beginning managers
fought me because guess what? They had to carry you for four
months, and not fill the job. And I told them, by the way, what if it was your daughter or your son? How would you feel about me right now? Changes, everything changes. So, that's decency and my
company believes in this. You can come to any
employee in my company, and they will tell you, DQ, they will tell you
16 weeks paid leave, they will talk about the six and 10 match, 97% of my employees, take and save the 6% because they get 10%. - So I wanna follow up on this in terms of has anything really changed in terms of the role of a business? When you were looking
for your replacement, you said that you needed
someone who had a strong sense of social mission. Because this is a role that you believe corporations play now, in society and that, that
will continue in the future. So, is that something that has changed during your time as CEO, where the social mission of the company, has become more important, or
has that always been there? - No, no, I mean, what happened was that, part of it is always there,
to give you an example, when the IPO of this company happened, which was two years before I joined, my predecessor, constructed the IPO, (indistinct) I think was
brilliant in its simplicity, where the banks that used
to own our company earlier, put aside 12% of their shareholding, to create a foundation
headquartered in Canada, run independently on this company, but has the name and the logo, MasterCard Foundation, 12% of the stock. That 12%, at the time of the
IPO, was worth 550 million. Today, so when I retired as
CEO to become exec chair, our company had multiplied
17 and a half times, not 10 times in 30 years. So, we (indistinct) 50 billion
was the market cap that day, 31st of December. 350 billion, that foundation is now worth, having sold some shares
along the way, $38 billion. It's one of the biggest
foundations in the world, and it's devoted to the cause
of creating jobs in Africa. That's what it's spending its (indistinct) So I would argue that social mission, existed at the time of the IPO. What happened was, along
the way when I came here, we were still defining competition as our electronic payment competitors. The other firms like Visa,
American Express, Discover, China UnionPay, the local
schemes in every country, those were the ones we
defined as our competition. But electronic payments in
the retail payments business, forget about B2B, that's
another game altogether, just in consumer to
business, was 85% cash, then, and it's still 80%. So I kind of said, why
are we focusing on the 15? Let's focus on the 85,
much bigger marketplace. And we started focusing on cash and we started studying the cost of cash and our cash got created. And we discovered that one of the biggest ways cash got created, was the payments of governments
to their own citizenry. Veterans Affairs, social
security, health benefits, pension benefits, subsidies,
pharma purchase prices, minimum supports, FEMA
payments, you name it. They were all coming out of there. 30% of the cash in the economy, was created by the government
paying its own citizenry, single largest chunk. So, and then we discovered that 2 billion people in the
world didn't have an identity. And they were therefore
effectively excluded from what you and I took for granted. You don't have an identity, you
don't even get counted Bill, you don't exist, right? You may as well be in
prison, nobody cares. And so, the task here is
you can't just to say, hey, you know, I have a mobile phone, I can use mobile phones to include people. Because guess what? You can give them a phone to make money go from
them to their mother, but you can't really get
them financial inclusion because nobody will give them credit, nobody will give them insurance, nobody will give them an identity, and by the way if you
don't have an identity, bankers don't open bank accounts for you. So that led to the realization that we could use our technology, in some way to help create identities, and it started out actually
with Michael Myburgh, in South Africa, with the South African
social security system, that wanted to give its
citizenry, a biometric identity. They gave the identity, we
put it on a chip on a card, one side was the money loader,
one side was their identity, and all over a sudden, this
poor woman in Johannesburg, in Soweto, who used to get
money in cash from an agent, which meant the agent had sticky fingers, and he would keep part of
the money, as his commission, for giving you your
money, all that changed. And she would now get the
money electronically in a card, go into an ATM, and take out the cash or go use the card to buy
rice and potatoes and wheat and whatever else she wanted
to buy, everything changed. I met this one woman, (muffled speaking). It's a big article in the (muffled speaking) front
page article me talking to her, and I talked to her and she told me you
gave me back my dignity. And I realized I was onto something, then came back and started talking to people in the company saying, hey, what Michael is doing with this, I'm gonna do this around the world. Three months later, I was on the stage with
the World Bank conference, with the CEO of the world
bank at that time Jim Kim, with Christine Lagarde
of the IMF at that time, and with Queen Maxima of the Netherlands, who was the nations (indistinct) for sustainable growth, for inclusion. And I made a comment, that I
would reach 500 million people, with my partners, by 2020. This was in 2014 and I had
no idea how I'd get there. But we got there, and how we raised that commitment to 1 billion, including 50 million micro
SMEs and 25 million women, and Michael's gotta get it done. And my point with all this is, that's when it became part of our fabric. Because we realized, it was
part of our business model. If you're not gonna compete with cash, we needed to get these people
into the financial mainstream. And the only way to do that, was to help them to get
financially included. And so we wouldn't get
paid back for this work. I told people, for the investor community, my successor will benefit from this. So I told Michael, your turn bud, you're gonna deliver against
that and find the next thing, that your successor will
benefit from, that's the idea. - So you've had incredible
passion around this issue of inclusive finance and as you said it makes sense as a part of
your long-term business model. How do you make decisions
about things where the connection may be less
obvious or less direct? The example being, that MasterCard has made
significant commitments in the climate change space? - Yeah, well, again I connected it back to the business model. So, first, remember the one versus many, humanity versus nature thing? So the one versus many is our effort with the billion people and the 50
million micro SMEs and that. They made commitments
around small businesses, $250 million for them, they've made commitments around the black community in America, they said they put $500 billion to work to help them, all kinds of things there, that's on that side. The other side was humanity versus nature, and I kept scratching my head about, how can I help make a
difference, at scale? So, we made a commitment to be net zero by the right time, we made
a commitment to 1.5 degrees, we've made a commitment
to scope and scope to, we've done that, but being on a company with
a large carbon footprint. So that's interesting but it
wont change my daughter's life. And so finally, we stumbled on the idea of using our network capacity. So our network is what makes
us reach a billion people, we're not doing it ourselves, it's with banks and telcos
and governments and all that. They're the ones who
actually have the consumer. I'm not a consumer company. So I said, can I do
that for climate change? We got up with the idea
of what we're calling the Priceless Planet Coalition. So we got to meet a company
called Doconomy in the Nordics, that actually, we've now
invested in as a company, that has an index that
allows you as a consumer to get an idea of your carbon footprint, when you spend something. It's not completely accurate,
it's got challenges, but it's still pretty cool because now, carbon tax, carbon
markets, carbon credits, consumers don't understand that stuff, it's kinda ephemeral. But if I could make you understand, how much carbon footprint you have Bill, and your family has, maybe I could incent you
to behave differently, by saying, for example, don't take a paper statement,
take it electronically. And I'll plant a tree for you, because trees help capture carbon. Don't take the taxi take
an underground train, I'll plant a tree for you, every time you tap with your
MasterCard, and so on, right? And so, that would require my banks and my merchants to
become partners with me. So we committed, we get to 100
million trees to be planted, in the next few years with partners, and other 40 partners
signed up, banks, merchants, we got American airlines signed up, we've got banks signed up, we've got all kinds of
folks in this community and I'm looking for more. So if you've got ideas give
them to me, I'll take them, and so the idea is to
get to 100 million trees and make a difference with them. And so we've signed up a
scientific advisory board, we've created partnerships
with people who know, how to handle the planting of trees and nurturing them, in the right way. So you plant the right trees, and you nurture them the right way. And so Conservation International
is one of our partners, to do that and so on. - Okay, that's an extraordinary way, you've pull things together there. So I'm gonna shift gears a bit into some of the technology issues
that you've had to confront. So, MasterCard has been
in the news recently for embracing cryptocurrency, and I just wanna ask you to
contrast the recent decision to support cryptocurrency
with your decision, not that long ago, to pull out of Libra, which was the Facebook attempt at a CryptoParty.
- Yeah - So what's happened?
- Yeah - So step back a second, and the context of this
whole thing is that, we've been investing in
distributed ledger technology for a while. In fact, we are one of the larger patent holders in blockchains, which is one use of distributed ledgers. And cryptocurrency is one
use of the blockchain. And Bitcoin, Ethereum,
are all examples of that. So it's kinda like an inverted pyramid, on distributed ledger,
blockchain, cryptocurrency and then different examples. The underlying technology of the blockchain and distributed ledger, we are big fans of, because
we believe that somewhere along the line this will lead
to some interesting ideas and fighting counterfeit goods,
fighting proof of origin, proof of authenticity,
cross-border trade maybe, I think there could be
a lot of uses there. My problem as a company,
our problem as a company with cryptocurrency per se,
was that the original forms of cryptocurrency like Bitcoin, had two or three fundamental problems, which tend to allow them to be in my mind, viewed as currency. First, they were volatile
as heck, they're still are. I mean, in the last two months the currency has gained double in price. And by the way, it's done that a few times over the last few years, it does this, right? So, to exaggerate a little bit, if you bought a Coke
from a merchant for $2, and you paid in Bitcoin right now, and then tomorrow that was worth 20 cents, and the day after it was worth $20, that's a pretty difficult
business proposition. For you as a consumer, for
that merchant as a businessman or for the distributor of
Coke or for Coke itself. So volatility, you know of that type, is not okay in a currency. As an asset class, it's a different issue. You're a sophisticated investor, you wanna buy bulk berries
and make money, go ahead. You wanna buy Bitcoin and
make or lose money, go ahead. But don't tell me it's
a currency, it's not, 'cause a currency implies stability, as a medium of exchange. Similarly, you need to have compliance with transparency of rules
that are know your customer and anti-money laundering. The way Bitcoin was designed, it was designed for it's
anonymity, which is interesting, there's a use for that. I'm not disputing that,
but not for currency in the public tender. And so, there's a whole
lot of things there that didn't work. And that's why, I publicly
said Bitcoins aren't currency it's an asset. Then came Libra, and Libra was different, they were trying to solve
for the stability point, by connecting it as a stablecoin, to a basket of fiat currencies. So that took away some
of the volatility issues, but they still had the issues that are, know customer, anti-money
laundering, transparency of who was holding the
wallet, as well as some degree of discomfort and explaining,
how your data might be used. So that led to us saying, why
don't you go sort that out, when you do, we'll come back in. So real active conversations, with a number of players with that type, who I think are making a lot of progress in those spaces of stability,
compliance with local laws, as well as compliance with
data and how that data is used. Go forward a little further, and what Michael was talking about is, effectively stablecoins interesting if they also do these other things, but central bank digital currencies, of which China is already attempting one, but the Nordic Sweden is
attempting to look at it, Canada is looking at it, Singapore is looking at it, different countries even
the US Federal Reserve, is beginning to think
about it in some ways. I think central bank digital currencies, in which by the way, we have
a number of patents as well. Probably the single
largest payments player with those patents. We've created a sandbox for
regulators, commercial banks, to investigate how to play
together in that space. That to me holds the most promise, because first of all,
it won't be volatile, or it would be more volatile
than a central bank currency. Central bank currencies can be volatile, look at the Turkish Lira
in its difficult days, or the Brazilian Real
or the Argentinian Peso, they've had tough times, right? So they can be volatile, but you're already in that currency. So, to me, they're not more
volatile than the fiat currency, second by virtue of being
central bank currencies, they really comply with know your customer and anti-money laundering. And then, they will comply
with data laws of that country. Because there's no central
bank that's gonna go against its own country's data laws. And so to me, that's another use. So, what Michael was trying to say, is that we think central
bank digital currencies, may actually be a great outcome of this, but in the meanwhile,
these other stablecoins, including Facebooks, may
actually get to the point, where they solve for
a lot of these issues. In which case, we can be
helpful to connect them to consumers, to merchants and to banks. - So, this is just one example of how, your life is complicated with
these changes in technology and what's possible. And the last time we spoke, we
talked a lot about Apple Pay, and was Apple a customer or a competitor? And of course since then they've
introduced their own card, which I believe runs on your network. - It's a MasterCard, yes. - So, you're clearly still you know, cooperating with them in a positive way, but you also are aware
that I guess at any time, these big tech players, who
have an insatiable appetite for growth could become a
switch from friend and foe, And to paraphrase a quote, the person who has the
biggest shoes is going to use them to extract
whatever they can from you. And so, just tell me where
you think that stands in terms of your ability
to negotiate this future with these big tech players. - Yeah, I think the whole of technology is really
interesting, big and small. I mean even new innovative players, there's always somebody who's
gonna be out there trying to figure out a way, to do
what we do better than they do. And my first approach to that is, that's kinda what they
should be trying to do. And what we should be trying to do, is to figure out a way to
not give them that space. Which means do your job better, and keep reinventing yourself. So for example, back to that earlier topic of cryptocurrency, we've
said out that publicly, we are not a card company, even though we have card in my name. I mean, you know, Apple
doesn't sell apples, right? To talk about Apple and Amazon is actually a river in Brazil. But, you know, what's in a name, right? So, (muffled speaking) I don't
know how to give you a card if you ask me for it, I'll
have to send you to a bank. But we are, what I've
said very clearly is, our job is to provide choice, and make the payment experience
safe, simple and smart, and frictionless for
merchants, banks and consumers. So we've said that we're
multi(indistinct) company. We will let you pay directly
from your bank account, by instant payments, if you own Vocalink, which is of course the largest
instant payment provider in the UK, but we're also
implementing it in the Nordics, in Saudi and in the Philippines
and Peru, and a number of, in the US, the clearing house
uses our technology for that. So what our vision is, you
wanna pay by card, go ahead, You wanna pay by account
to account, go ahead, You wanna pay by blockchain
and cryptocurrency, go ahead. Our job, is to give you one pipe to connect into all those options. Your job is to choose,
whatever suits you better. That logic applies with technology. Big players, small players, if you engage with them,
with this approach that says, I've got something to offer you. What do I have to offer you, technology that works across
any rail, of this type. One pipe to connect into few, that connects you to 100 million merchants in the world, and that connects you,
across 200 countries, where we have made sure, that we therefore follow the
legal rules and regulations of every country, on payments. Because that's the (muffled
speaking) that could be there. Then you, Mr. FinTech or
Mr. Apple or Mr. Amazon or Mr. Google or a smaller player, you get the chance to do what you do best, which is figure out how
to give the consumer the world's best experience. And you can write our rails and we'll make the rest of this possible, 'cause I'm not in the business of competing with you for your consumer. I'm not a B2C company, I'm a B2B company, and over the B2B2C mentality, right? So I get consumer insights
into the interaction of B2B. But I'm not in the business of competing with Apple or Amazon or Google, I'm not. In fact, that's one of the reasons why I think
Apple partners well with us, I actually think they're amazing. And, it's not just their
card, but even Apple Pay, runs on the rails of all
of us card players too. PayPal, which everybody
thought would be a competitor, Dan Schulman of PayPal. PayPal is one of our best partners. Dan is one of my best friends. Google, has now just
announced along with Citibank, that they will use us for
entering into the opportunity to offer banking services
to their customers. And so, I don't know, Rakuten in Japan or Grab in Asia or PTM in
India, they're all partners, and I understand, that therefore
when you partner with them, there's one more person at the table. And therefore the economics
will be shared differently. Banks, merchants, us
and this digital player, will need to share the
economics, and that's okay. I can't reach consumers without
them, that's simple as that. - So in terms of the digital revolution, there're clearly are
enormous benefits to society. And it's incredibly helpful
in terms of reaching this goal of inclusive finance,
but you're also concerned about it creating the,
intensifying the digital divide. So how do we make sure that
we don't leave people behind, with the revolution?
- Yeah - That's the one thing
first I'm very clear on is, I think the internet and
digital is amazing stuff. Just don't get me wrong at all, I think that technology of this type is the ultimate democratizer of
access, it's just amazing. So when I was younger,
you had to find out where the Galapagos was, living in India, you had to get an Encyclopedia Britannica, to understand not just where it was, but what was there. And an Encyclopedia
Britannica was expensive, and my parents couldn't afford it. And so you got second-hand
or third-hand booklets. And, you know, that's what you got, and you were lucky if you got that. Today, you can Google it and you'll get every single
piece of information, that's in the public realm, about the marvels of the Galapagos. The same with medicine
for your grandmother, the same with any information
you want on any topic, I think it's amazing. If you're a small
business, in the pandemic, the only reason they survived, was because of digital technology, 'cause they were able to go online and enable you to buy things online. And you know, big businesses have vis of reaching very far distributed places, through building distribution,
which they can afford. The internet and digital has removed the arbitrage benefit of that. That's why small businesses are competing with big ones all day long. There's nothing wrong with them. So, let's start from that. Now the issue is, on the other side, yes, there's the digital divide, we just saw it in the pandemic, where, forget about rural America, urban America, in Harlem,
kids had challenges, getting school education, because they didn't have broadband access or they only had one phone in the house or I get it. So, that's not a good place to be. But I think therefore, what we
need to do with this internet and digital is recognize
the benefit of it, and then work the hardest we can, to address those three
sides of the triangle, inclusion on all forms, climate
change and what it could do and do it to the longterm view. And so, whether it is in
the case of digital divide, whether it is investing in building out, digital infrastructure in countries. Which is why I'm a big supporter of the infrastructure efforts that need to happen in this country. Our physical and digital infrastructure, don't look like a first-world country, and that needs to change, right? And not just because
you and I will enjoy it, but because those who do not have the privilege that you and I have, will be even further left behind, if they don't make the
effort, that's the point. And so, I think infrastructure
is very important. Education is very important. You're gonna educate folks on what they can do with this technology, and how well they can use it, and one of the best ways to do that, is to make government services
available on this technology. Because every citizen will then interact with government services, on
it and say, oh, this is cool. And then comes the issue of, can you give away enough
computers and phones at cheaper enough prices, to
enable those who cannot afford the expensive ones, to still
get access to this technology? That to me, can be solved by
philanthropies, subsidies, that kind of stuff. But the other two, those
are hard nuts to crack and we need to get going though. And so, one part of it
is, the digital divide, another part of it is, how
your data will be used. Because one thing I will not subscribe to, is that somehow now,
big brother should know, whether I bought a pink
tie or yellow shoes, at Bloomingdale's, when I
used my card or my Apple Pay or I paid with my forehead or whatever the heck is tomorrow's
way of doing it, right? I don't want that to happen, I don't want anyone..
that's my information, it's my privacy. So, I think having data principles, which is kinda where
the European Union went with GDPR, which we all
decried, we shouldn't. The principles behind GDPR
are actually excellent. There are 18 States in the United States, all trying to enact their
own version of that, that's a bad idea. You need one federal rule,
you don't need 18 rules, where you need to stop your
car at every state border, and sign a new document
before you can go inside, that would be nonsense. But, the idea of GDPR is very simple. We as a company have
published our principles, we're trying to collect a
coalition of the willing, like the Priceless Planet
Coalition, to make this happen. We've got a few companies signed up. What are the principles? You as a consumer, it's your data, and you deserve to
benefit from it, rule one. Rule two, you need to know
what's being collected about you, in simple English, not at the end of an 18
page legal disclosure, that you scroll down
and you click, I agree, without reading or even worse,
there's an I agree on top, you don't even have to scroll, right? So, you need to know what's
being collected about you. Third, you need to be able to say, I don't want that to happen, stop, desist and delete,
what you collected about me and you need to be able to
do it in simple English, not in some legal document. Four, I as a company, If
I'm doing business with you, I should collect the minimum
I need, to do my job with you. So for example in my company's case, when you shop on your card, whatever form factor Apple
Pay, PayPal, physical card, contactless, online, whatever,
I do not know your name, I don't get that, your bank gets it, and the merchant gets it. They deserve to, I don't. I don't know what you bought, only the merchant knows,
even the bank doesn't know. All I know, is a 16 digit
code, which is your card number or a token protected code, that comes from PayPal or Apple Pay, which we provide them
services of tokenization. Which is gobbling the numbers, so they can't be used again. That's kinda spreading as a way of safety, and I know a dollar value, a merchant code and a time, that's all I know. So I should collect the
minimum I need to do your job. And finally, what I do
collect, I should give safe, hence the tokenization. I'm trying to do it now
across our entire system, both at motion and at rest
data, to be tokenized. So even if a thief gets in into a weak point, at a
merchant or somewhere, they can't reuse that data. So, these are not difficult, your data, you should benefit from it, you deserve to know
what's being collected, you have a right to stop and delete, and by the way in English or
whatever language you prefer, whatever I collect, collect
the minimum and keep it safe. It's not that tough, but it
will change the business model of the way the internet is developing. And I believe it will
change it for the better because it will give the
consumer back their privacy. And yet allow them to
engage, when they want to, you see what I mean? So if you talk to Tim Berners-Lee, who many credit with being one of the original thinkers of the internet, who I'm friendly with a little bit and I know I'm a little bit, he would described this as trying to create privacy pockets
for you, on the internet. Where Bill allows me as a friend to access certain things about Bill, but not your taxes or your healthcare data or your financials or
your grades in school. Your wife, is allowed to access more because you chose to give her that access. Your tax accountant differently, your government something else, that's the idea of this. - So, I have so many more questions and sadly we've run out of time, but I am just so grateful
that you've joined us and given these insights to our community. I have to say that we
talk in our community, as I said, we've really
adopted this notion of IQ, EQ and DQ, and RJ, you are off the charts in the most positive sense
of being off the charts on all three of those dimensions. You're just an incredible business leader, and we have so much to learn from you. Thank you so much for being
with the Duke community. - Well, thank you it's a privilege and you're giving me way too much credit, but one thing is that don't forget that DQ also has an excellent ice cream. (members laugh) - All the best Bill, thank you. - Thank you.
