Q & A with Pooja Malik, CEO and founding partner Nipun Capital

May 10, 2022

Excerpt from the podcast series AAAIM High ELI with Johnny Wu, sponsored by the Association of Asian American Investment Managers, better known as AAAIM.

Pooja had a very successful career at Barclays Global Investors, (BGI), where Pooja was promoted quickly to become one of the youngest managing directors at the firm after successfully turning around BGI’s active small cap equity strategy. Pooja has been a perennial underdog all her life but has tackled every conceivable obstacle and overcome them by leaps and bounds. As the middle child and daughter of a strong Indian mother who raised her family as a single parent after the death of her father when Pooja was just 12, Pooja learned a lot about grit and determination from her mother. As a woman and minority, Pooja is a role model and an inspiration for all of us in the AAAIM community. I’m so happy to have had the opportunity to speak with her. She believed enough in herself to launch her own hedge fund almost 10 years ago and took the time to share her story with us. Below is our conversation with Pooja Malik.

Q:

You’re a strong, confident, independent woman, but let’s start from the beginning, because everybody has a story. I think upbringing is really important. You’re from India initially before coming to the US, but talk a bit about your early days and your early influences.

A:

Like you said, I was born and brought up in India and I think one of these sort of early influences in my life, and the role model for me was my mom. My father passed away when I was 12, and so I was brought up pretty much by a single mom. In those days in India, even today actually given gender inequality, it was hard for my mom as a single mother to bring up three daughters. My mom had never worked in her life. She had never driven a car, so I really got to see how much drive, motivation, and grit can do for you. Because she went from being, stay at home, so a very domesticated person, to “I’ve got to do everything to make sure my kids can succeed.” That lesson of grit and perseverance has always stuck with me.

Q:

Your mom must be a very strong woman. She had never worked before, and then after your dad had passed and she had to kind of enter the workforce there. Especially whether it’s India or other societies, there’s some societies today where women can’t even drive cars. I think about India, very male dominated. What was that like?

A:

We were very young. I was 12 and my youngest sister was only six. My oldest sister was 13, so she did not talk to us. I think we were not old enough for us to really comprehend what she was going through. Culturally also in India, there’s not an environment where you talk to kids about the things in life, at least at that time. She did not, but we saw it. So much about parenting is role models. We saw it, even though she didn’t talk to us, we knew what she was going through and we know the sacrifices she made for each of us.

Q:

I’m curious, so you go through the educational system in India. I haven’t heard of your undergraduate college before. Well, a lot of my Indian friends who are mostly men, it’s like if you’re not in an IIT school, then it’s just like… So talk to me a bit about that. Were you an underdog even in your early college years as well, too?

A:

You’re totally on point. Because when I was in high school… In India, after 10th grade, you have to decide whether you’re going to choose to study sciences, business, or liberal arts. When I was going to school, all the top performing students chose to study science. If you are in the middle of the group, you studied business. And if you were bottom of the class, you studied liberal arts, and that’s how the system worked. When it was my time to decide, I wanted to study business. My dad was an entrepreneur. It was in me. It’s what I wanted to do. But my teachers and my family, everybody thought I should study sciences because I was a good student. So you’re very right. I think from the beginning, maybe it was the underdog thing, like you said, but I was clear that I didn’t want to do just what society expected me to do. I wanted to do what I wanted to do. That’s how I ended up studying business, even for my undergrad.

Q:

Then you decide directly after undergrad to go to business school and get your MBA?

A:

Yes, and that was common in India in those days. When I went to get my MBA at the Indian Institute of Management in Bangalore, maybe only 30 percent of the class had work experience.

Q:

Your first job working for ICICI, your title on your LinkedIn profile is credit and relationship officer, but you were actually managing the credit portfolio then?

A:

Yes. My first job out of my MBA program was at ICICI Bank, which was a terrific learning opportunity for me. I managed a loan portfolio for about $150 million across 20 clients, and these were old clients, Johnny. My clients were in real estate, in LNG plants, in chemical plants, polyester plants, sugar, cement, autos. I really got to see how real world things work, and we were giving them project financing, working capital debt. Think of it as sort of a very diversified credit portfolio, but I got to do everything. I got to do the investment diligence. I got to do the relationship management. That for me was a terrific experience.

Q:

Then the transition, I know there was a stop at the Indian School of Business before you moved to the US. I’m very curious, because oftentimes the way for opportunity, a lot of really smart Indian expats that come to the US, they apply for graduate school, whether it’s the sciences or an MBA program, engineering program. You didn’t take that path, although you did get exposed to some of it. Talk to me about that process and leading up to coming to the US.

A:

That also a very long story, but the short version of it is I had a really good education. I didn’t feel the need to come here to get another masters. I think a lot of the reason people do that is for the network, not so much for the education. I was too young to understand the power of networking at that time, so I felt like I didn’t need another master’s degree. The way I moved here was that in those days, which was the height of the tech bubble in 99 and early 2000s, there was a US financial services firm that was looking to hire talent out of India. And they gave me an offer, but by the time things materialized and I moved here, the bubble had crashed and that firm had gotten acquired two times over. Pretty much as soon as I came here, I didn’t have a job. That’s when I found my role at Barclays Global Investors, and I joined them in February of 2001.

Q:

That sounds a little bit like a disaster, in terms of… It’s great that you ended up at BGI, but the stress around getting sponsorship for the green card, I’m sure, etc. How did that play out? Were you in fear of, “Okay, these guys are no longer honoring their commitment because of the dot com crash”? What was that like then?

A:

I think the most interesting part of it was the experience of getting laid off and not having a job. Because culturally in India, in those days, especially, there was no concept of getting laid off. When you said you were laid off, people hear it as you got fired, and that’s terrible. I think the whole transition was an interesting experience. I found this job at BGI pretty quickly, probably took a couple of months. I actually had multiple offers at that time, so I think all in all it worked out well.

Q:

So you land your job at BGI. Talk to me about your growth and development there.

A:

My first job there was in the Corporate Strategy and Finance Team, because I had the finance background. It was a small team. We were only maybe four or five people, which really gave me an opportunity to do a lot, see a lot, contribute, but also learn. My direct manager, she was the CFO of the organization. She was a very strong mentor to me, even to this day. She’s been absolutely fabulous in supporting my career. Being part of the corporate strategy team meant that I could see what was going on in the entire organization. Where we made money, where we had challenges, what really was the core expertise that we were good at. I think early in your career, being able to have that exposure is fantastic. At the beginning of this podcast, you mentioned advice for women or people that are earlier in their career. And I think this is a fantastic takeaway for a lot of people is early in your career having broad exposure, it’s fantastic. Because then you get to figure out really what your passion is.

Q:

You were on the more institutional side, what BGI historically has known as the quant business, if you will. Making that transition, you spend a couple of years in corporate strategy and then did you raise your hand and say, “Hey, I want to learn to be a PM”?

A:

My two years in the Corporate Strategy Team were really fantastic because of, like I said, the exposure and the opportunity to build senior level relationships. Because all the projects the corporate strategy team did either were directly for the CEO or for the CIO or the Head of Distribution, so I got to build a lot of senior relationships. I did that for two years and then I was ready to move on. I was not a career consultant. I really wanted to do things and build and get my hands dirty. After two years I was done and I was looking to move out. At that point, a lot of my senior colleagues that I had gotten to know said, “Why don’t you explore opportunities within the firm?” The only thing we did really well was manage money. We did a lot of other things, but I think there were a lot of other organizations that were also good at client service at marketing and operations at technology.

But Barclay’s Global Investors, BGI, we were really good at managing money. And so I said, “Well, if I’m going to do anything, that’s what I want to do here, because that’s the thing we do really, really well.” I started to explore opportunities on the research team. That was also an interesting transition, because as you mentioned, the firm was known for quantitative investing and everybody on the research team had a PhD. Everybody was a quant and I wasn’t. I had never managed a single dollar in equity assets. I knew very little about statistics. I could not write code. It was a transition, but I think it was a very supportive environment. I literally went to the Head of Research and I said, “Give me an opportunity. Let me do it for a year. If it doesn’t and work, I leave. I don’t want to spend my life doing something that I’m not going to be good at. But if it works, we can reevaluate and take it from there.” For me, it was such a big turning point in my career because not only did it work, I loved it. I loved what I did. I learned every part of the business. I learned to scrub data. I learned to write code. I think that opportunity that I got really changed my life.

Q:

That’s interesting because you weren’t going to be a better coder than the folks that studied computer science and they were gurus. You weren’t going to be a better data scrubber than the folks that naturally manipulate data from an early age. But learning the nuts and bolts of that, it’s really important to kind of inform the process in terms of understanding, running an overall business.

A:

It was a very academic organization. I think as long as you were intellectually rigorous and intellectually honest, then you got a lot of support. I actually had no concept of the outside world. I just did what I did, and I think it was one of those phases in my life where the less I knew the better it was. Because I’m sure people had these biases, but I was totally clueless about the bias in the workplace. I just put my head down and I got things done. This was nitty gritty, but I had to do the nitty gritty to just build credibility in the organization.

Q:

You must have done something really right. Because for them to graduate you right from being in research to being actually a portfolio manager, that’s a big step as well, too. Talk a bit about that.

A:

Yeah, that was really all thanks to Dr. Charles Lee, who’s now my partner at Nipun. He joined BGI as a Global Head of Research, and he was putting together a global team to look at all of the various strategies. He picked me to be on the team because I think he wanted a different point of view. That experience was really, again fantastic for me. Because now, even though I was in research, I got to see equity strategies across the firm globally, be part of a global review team. I got to travel, which in those days was a luxury, so that was nice. I think as part of that process and the exposure I got, I realized that I really loved the portfolio management piece of it. Again, it’s more accountability, it’s more concrete. The timeline is different. I really, really love that. I think Charles saw in me the potential to take on a portfolio management role.

Q:

You were a portfolio manager and you had shared that you were one of the youngest managing directors as well within BGI. How did that kind of come across among your peers? Did people look at you in awe in terms of she’s a superstar or what was that like?

A:

When I got this opportunity to be on the portfolio management team, this was for a strategy that had been struggling for the last three years, so it was a turnaround situation. The great thing about being in a turnaround situation, is you get a lot of freedom. Because from the outside, people think everything is broken, so you can only do better. Because if you go to a product that’s performing very well, then nobody wants you to change anything. But this product, they had a difficult stretch and they really wanted someone to come and turn it around. I did with my team. My team was exceptional, even then. I had a team of six people. We turned around the strategy, we made a bunch of really radical changes, but I think that laid the groundwork for my promotion to Managing Director.

Q:

So now you’re no longer at BGI. You’re at BlackRock. What was the kind of difference in performance?

A:

We structurally sort of evaluated every piece of the investment process. For a quant manager, Johnny, you probably know this, we’re model driven. The key parts of our models are there’s an expected return model that’s forecasting an expected return for every stock. There’s an expected risk model, that’s forecasting for every stock. And there’s a transaction cost model. Then the ultimate portfolio is an outcome of how these stocks rank on these three models, the expected return model, the risk model and the transaction cost model.

With my team, I revamped each part of these models. We looked at the expected return model and we found that it was a good model, but was not really tailored for US small cap stocks. So small cap stocks trade very differently from large cap stocks, which sounds obvious. But I think the big difference is that large cap stocks trade, or at least in those days, traded really on fundamentals. Because large cap stocks had reasonably forecastable cash flows. You can say what the next three year cash flow is going to be. But for small cap stocks, these are very high growth, high failure rates. Small cap stocks really traded more on investor sentiment. We redid the models in a way that made them more relevant for the small cap model. That’s why we felt very good about what we did, because we turned around performance, but we also structurally laid the foundation for success.

Q:

“You’re younger, you’re a woman, and you’re not American. And it’s like, who is this person? She’s from research. She’s smart, but is she going to be the person that turns around the portfolio?” But you did it.

A:

I did it, I was at that point becoming more aware of the environment around me. There were people on my team that got paid more than me, but I didn’t really care. I was there for the learning. I wanted to have an impact. And coming from a very middle class background in India, I was getting paid more than I ever thought I was going to make in my life. I wasn’t worried about people on my team getting paid more than I was or having less resources. I didn’t care about that stuff. I really just wanted to have impact.

Q:

You managed through the crisis, through the end of 2010, at which point you leave BlackRock at that point in time, and then decide to start your own business. What type of advice did you get then? “Oh, don’t worry, Pooja. You’re a woman. You’ve got good return. You’ve got this great turnaround, still the youngest MD. You’re going to turn on the lights and the billions are going to start coming in.

A:

No, people told me don’t do it. People said, “It’s not going to work. Nine out of 10 startups fail. Don’t do it.” And I just didn’t believe it. Because I’m based in Silicon Valley, I’m seeing these 20 year olds get funded and I’m like, “You’ve never run this product before. You know nothing about this technology. How did somebody just give you a hundred million dollars?” I can’t reconcile this. I looked at myself and I’ve been doing this for 10 years. I know what I’m doing. I got it. That disconnect, I just didn’t reconcile those two things. That disconnect was very large. Even though people kept telling me, don’t do it, I just couldn’t comprehend why it would not work. Because I was thinking I have a great team, which I really do. I had really interesting investment pieces. My track record is proven. The investment philosophy is proven. I could see no reason why it wouldn’t work. So I just took the punch and I jumped in.

Click below to listen to the complete Podcast

Q & A with Pooja Malik , CEO and founding partner Nipun Capital

by AAAIM High ELI with Johnny Wu, sponsored by the Association of Asian American Investment Managers