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How Wealthsimple grew to more than $2 billion in assets in less than 4 years

Founder and CEO Mike Katchen on the crucial balance between steady growth and creative innovation when scaling a financial services company.

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Mike Katchen, CEO, Wealthsimple
Mike Katchen, CEO, Wealthsimple
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#ScaleStrategy is produced by DX Journal and OneEleven. This editorial series delivers insights, advice, and practical recommendations to innovative and disruptive entrepreneurs and intrapreneurs. Our in-depth Q&A with Mike Katchen can be found here.

It’s February 2017 and Wealthsimple is woefully unprepared for tax season.

“We didn’t anticipate this huge spike,” says Mike Katchen, Co-Founder and CEO, Wealthsimple, which got its start at OneEleven. “The industry talks about taxes being super seasonal and it’s the busy time of year, but we never experienced that before. During last year’s tax season, we were wholly under-resourced on our customer support team, which led to delays. People were working 120-hour weeks for a couple of months straight to try and dig our way out of that hole.”

Since its launch in September 2014 with 3 people, Wealthsimple has grown to over $2B in assets under management, 175 employees, and raised $165 million in capital from Power Financial Group. In 2018, it landed on the 2018 Narwhal list, a University of Toronto report that highlights Canada’s 50 most financially attractive tech companies. The story of its scale up is filled with moments of challenge where Katchen and the Wealthsimple team learned on the fly how to best balance steady, consistent growth with innovative leaps forward.

For tax season this year, Katchen wasn’t going to make the same mistake twice. It was time to innovate.

“Rather than hiring an army of customer service people, our technology team tried to figure out if there was software we could build that would both support our customer support resources as well as eliminate the need for customers to call in,” says Katchen.

It worked. In 2017, there were more than 35,000 interactions in the month leading up to the RRSP deadline. In 2018, despite tripling their customer base, there was only 5,000 more interactions and no additional customer service people. “People were working harder than they normally worked, but nowhere near 100-hour weeks and it was a very manageable process,” he says.  

Gardening vs Planting

Tax season 2017 is a stark reminder for Katchen that Wealthsimple must ensure it is two things: robust and scalable.

“Historically, we like to do a lot of things,” he says. “We get really excited about big ideas and don’t always see the ideas all the way through.” Katchen realized that they needed to be selective in what they pursue because “real technical debt accumulates if you build things you’re not going to commit to, and it becomes more difficult to manage as you scale.”

In the last year, Wealthsimple has refined their product planning process to better activate the great ideas within their team. Now anyone in the company can pitch their ideas, but with a process in place to determine what actually gets built and what gets killed.

In an effort to balance growth with innovation, Katchen recently introduced a new framework for thinking about how teams can be more disciplined about allocating resources: “gardening” and “planting”. Gardening is about tending to the current business. Planting is about new ideas.

Katchen says 75 percent of team effort is now spent on gardening in order to grow their market share, optimize on delivering a better experience to customers, and to continue improve the business fundamentals.

The other 25 percent is reserved for planting new ideas to support Wealthsimple’s much bigger aspirations.

We want to build a business around the world that truly transforms the landscape of financial services. And to do that requires some big bets,” he says.

Whether gardening or planting, Wealthsimple teams are empowered to build processes and develop solutions to get work done. Plus, some of Katchen’s favourite moments are when his team accomplishes something he has no involvement in.

“The ethos of building a team is to find people who are way smarter than you,” he says. “If I feel the need to exercise control, then I’ve hired the wrong people. If I am exercising control over people who are much smarter than me, then I am not letting them reach their potential and I’ll never know what they could possibly bring to the table. I want the company to do great things that I have nothing to do with.”

Power of Transparency

One key way Katchen supports his team to get work done is with practices that promote and support transparency.

Consider the company’s long-standing weekly all-hands meetings; not only does everyone on the team get to hear at the same time how the business is doing that week, along with priorities and challenges, each of the members of the leadership team also take turn leading the meeting. This allows for different perspectives to be openly shared.  

Another example is a practice from within the weekly meetings called FUD (which stands for fear, uncertainty and doubt). The practice invites anyone in the company to publicly or anonymously share an “an existential concern” — aka a fear, uncertainty or doubt — that they have about the business. Katchen was inspired to adopt FUD by Stripe and believes it re-enforces that it’s okay to have tough conversations at the company.

The last transparency practice is a bit unorthodox: Katchen makes Board documents accessible to the whole company. Again inspired by Stripe, Katchen says that when smart people are given access to information, they make better decisions. Katchen would much rather err on the side of transparency than hiding things from people, or labelling documents “privileged information.” The only thing he removes is highly sensitive content such as compensation, but company financials are available to any employee who wants to see them.

As a first-time entrepreneur Katchen readily admits that Wealthsimple has more work to do around building a scalable process. “[Good process is] something you can’t even see. It’s just a way of operating that makes everyone better, but not something you pay attention to or gets in the way of work,” he says.

As he continues to grow Wealthsimple, Katchen welcomes the unforeseen challenges and remains committed to his larger vision.

“I’m on a personal mission to build a Canadian champion globally. I want to see more companies in Canada take on the world and build long-lasting global institutions,” he says. “The only thing that’s true is that if you’re scaling a business, every six months it’s going to be a different business. In order for you to be successful in your role, you just have to keep learning and stay one step ahead of where the business needs to be at the next journey.”

Up next: Learn more about Wealthsimple’s ScaleStrategy story in our Q&A with CEO Mike Katchen

#ScaleStrategy is produced by DX Journal and OneEleven. This editorial series delivers insights, advice, and practical recommendations to innovative and disruptive entrepreneurs and intrapreneurs.

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#ScaleStrategy Q&A: Borrowell’s Co-Founder on Why Scaleups Need Values More than Culture

Eva Wong discusses how the credit and fintech company keeps applying their values to support growth.

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Eva Wong, COO, Borrowell
Eva Wong, COO, Borrowell. - Photo by Tom and Keidi Photography
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#ScaleStrategy is produced by DX Journal and OneEleven. This editorial series delivers insights, advice, and practical recommendations to innovative and disruptive entrepreneurs and intrapreneurs. 

Humility and half an hour saved Eva Wong, co-founder and COO of credit and fintech company Borrowell, nine months of tough learning.

“I remember having a half hour conversation about building a sales team with our OneEleven office neighbour. He took me into a board room and wrote out everything that he learned and the mistakes he made in the nine months it took to build out his team. That’s just one example of our first value: humility. Admitting there’s someone 15 years younger who’s been in business way less than I have been, but who knows way more about this than I do,” she recalls.  

Wong says values and the culture that emerges from them can help companies scale by bypassing cumbersome process and bureaucracy that can slow growing organizations. As Borrowell has grown from 4 to 45 employees, Wong says she has learned that values are more fixed — and crucial — than culture.

In the early days, we talked about culture fit. Now we talk much more about culture contribution. [New team members] don’t have to fit into the existing culture. As we grow and change, the culture will too. The values are more important to hold true to,” she says.

Recently, John Ruffolo, the chief executive officer of OMERS Ventures, caught up with Wong to discuss why scaleups need to pay close attention to culture, how it impacts hiring and how to scale it as the company grows.

John Ruffolo: Why is culture so key for scaleups?

Eva Wong: There’s a really popular quote that says “culture eats strategy for breakfast.” Culture is what keeps larger companies agile. If people don’t intuitively do the right things on their own, you have to add process and that slows companies down. For us, as we grow, a really strong culture involves ensuring people understand how they help us continue to scale in a way that avoids bureaucracy.

Ruffolo: How would you describe the culture at Borrowell?

Wong: Culture isn’t about perks. It’s not about things we do for fun. Or how the company has shared interests. For us, it’s clearly tied to our values. Our values are:

  1. We’re high-performing and humble.
  2. We’re trustworthy and team-oriented.
  3. We love learning.
  4. Act like owners.
  5. Diversity makes us better.

Ruffolo: When the initial team came together, did all of you share those values?

Wong: I don’t think it was as explicit. When you come together as co-founding team, you just click. It was more implicit. We did read the Netflix culture deck and said “that’s what we want our culture to be!” We knew we’d have to articulate it one day because people were asking what our culture is and we wanted to be consistent in how we described it.

Ruffolo: How did the culture shift as you grew from 4 to 45 employees?

Wong: We didn’t have our values established or written down when we were four people. That came when we were maybe 16 to 20. It was a collaborative, organic, bottom-up approach where we asked employees, ”What’s different about working here than other places you’ve worked?” People shared different things and we came up with the values that way.

But as we continue to grow, culture is naturally going to change and we’re okay with that. It has to change. What we don’t want to change are the values. We want to add people to the company who add to the culture, not necessarily stick in the lanes. We recognize that as we grow and become more diverse those values can manifest differently. We still want people to act like owners, but it just might look different compared to where we were when we started.

One thing our VP Talent, Larissa Holmes, launched within the company is a competency matrix, which explains what behaviours we expect from team members at each level of the organization. For example, if you’re a senior director what does it mean to be ‘high-performing and humble’? It’s also a way for employees to know what competencies are needed to move from a manager to a senior manager to a director and how those things are tied to our values. Employees have to get better at exemplifying the values to move up in the organization.

Ruffolo: Do you think culture is playing a role for talent wanting to work with you?

Wong: One hundred percent it is. A lot of people will check out Glassdoor before they come in, so they already have a sense of our culture and values. We take the interview process seriously as well, since it will be their first real taste of our culture. On Glassdoor, people can actually post reviews of the interview process, even if they’re not hired. There are posts from people who we turned down but who wrote positive reviews of their experience. We try to make sure that people we are interviewing see and meet various team members from different levels within the organization. That’s important to us.

Part of the interview process is doing an assignment, which exemplifies our values as well. It’s not just about who can talk a good game. You have to produce good work, too.

Ruffolo: In interviews, how do you describe your culture to a candidate?

Wong: Like any company, you can put values on a wall. But you need to give specific examples of how you actually live them. Our value ‘act like owners’ is a pretty good way of encompassing us. We really do encourage everyone to think about what they would do to make the whole company successful — to put on their CEO hat and think about what’s best for the business. It encourages people to avoid thinking in a very narrow sense about their role.

Our ‘high-performing and humble’ value is a big part of who we are too. Humility helps us recognize that although we’re all really smart and capable, you can’t just operate as an island. You’re dependant on your teammates, and we need to listen to our customers. Humility allows people to be able to take a step back and have their ideas challenged by others.

Ruffolo: Is there one of your five values that needs to be taken to the next level?

Wong: The value — ‘diversity makes us better’ — is something that we’re working to improve on. Our goal is to have a gender-balanced company, and we’re not there yet. We’re currently at 40%, which is not bad, but it’s not evenly distributed within our company. We’re continuing to track as we grow as a team at different levels and different departments.

Obviously, diversity isn’t only about gender. There are a number of different metrics we measure, including the percentage of employees that are born outside Canada. Since we have this focus on diversity and inclusion, I think we’re more likely to attract and retain diverse talent and to promote people with different backgrounds and experiences.

Ruffolo: Which entrepreneur inspires you the most and why?

Wong: There’s an entrepreneur named Kim Scott who has written a great book called “Radical Candor”. I admire her because she’s been very effective as a business person and operator without losing her humanity. She still cares very much about her team, and I think she would say those two things reinforce each other, whereas some people think you can either be a strong operator or a good person. She said in order to be an effective operator, you have to care about your team and have authentic relationships.

Ruffolo: Are there are books that helped you in your scaleup journey?

Wong: I read a book by Adam Grant called “Give and Take”. He talks about people falling into one of three categories: givers, takers, and matchers. Within givers, there are smart givers and there are pushovers — those who give but not in a smart way. They tend to burnout and get taken advantage of. Of all those groups, those who do the best are the smart givers. At Borrowell, we ask ourselves: “how do I give smart without burning out or being taken advantage of?”

Ruffolo: What is your number one piece of advice for a founder in the scaleup stage?

Wong: Constantly reevaluate what you’re doing and make sure you’re still working on the highest value things. When you’re scaling, things are constantly changing and you have to keep reevaluating your role. Are you spending your time doing the most high value activities?

#ScaleStrategy is produced by DX Journal and OneEleven. This editorial series delivers insights, advice, and practical recommendations to innovative and disruptive entrepreneurs and intrapreneurs.

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3 Things to Know About Scaling Culture Through Values

Co-founder and COO of Borrowell on the power of values

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Eva Wong, COO, Borrowell
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#ScaleStrategy is produced by DX Journal and OneEleven. This editorial series delivers insights, advice, and practical recommendations to innovative and disruptive entrepreneurs and intrapreneurs. 

“For us having a strong culture that’s linked to our values has been key to being successful,” says Eva Wong, co-founder and COO of credit and fintech company Borrowell, an alum of OneEleven.

As Wong has helped grow Borrowell from a team of 4 to 45, she has learned that being clear on values is more important than maintaining a culture through scale. Culture emerges from a company’s values, she says, and both together help companies avoid the need to create cumbersome process and bureaucracy that can slow down growth.

Values and culture are what keeps larger companies agile,” she says. “If people don’t do the right things on their own, you have add to process and that slows companies down.”  

When Borrowell was first founded, they didn’t have their values written down, says Wong. As they grew, they needed to articulate those same values clearly for the scaling team.

“We first did it when we were about 16 to 20 people. It was a collaborative, organic, bottom-up approach where we asked employees, ‘What’s different about working here than other places you’ve worked?’ People shared different things and we came up with the values that way.”

About a year ago, as growth continued and Borrowell raised another round of funding, Wong and the rest of the management team knew they needed to add one more value: diversity.

“We care a lot about diversity. Checking off a diversity box and getting them in the door isn’t enough. We want diversity of opinions and to retain diverse employees,” she says.

Today, Borrowell’s values are:

  1. We’re high-performing and humble
  2. We’re trustworthy and team-oriented
  3. We love learning
  4. Act like owners
  5. Diversity makes us better

For scaleups looking to refine their values and culture, Wong has three key lessons she has learned through the evolution of Borrowell.

1) Values Over Culture

“It’s more about values and less about culture,” says Wong. “We’re open to our culture changing, but want to keep our values consistent.”

In the early says, she says, the founders talked about culture fit, while now they talk about culture contribution. Employees don’t have to fit the existing culture or share the same personalities as current employees because those things will grow and change as the company does.

In fact, Wong wants to see a diversity of culture at Borrowell and is open to seeing their values manifest themselves differently as they continue to grow.

We want to add people to the company who add to the culture, not necessarily stick in existing lanes. As we grow and become more diverse those values will look different. We still want people to ‘act like owners’, but it just might look different as we grow compared to where we were when we started,” she says.

 

2) Ask About Values When Hiring  

One lesson Wong learned through trial and error was to be explicit in interviews about the company’s values and share what they mean.

We take the interview process seriously, since it will be a person’s first real taste of our values and culture,” she says. “We embedded our values into the process and we have specific questions we ask during around each of the values to make sure people are aligned with them.”

Part of the interviewing process at Borrowell is to do an assignment, which helps the team see the work a candidate actually produces.

“It’s not just about who can talk a good game,” says Wong. In addition, candidates interview and meet with various people from different levels within the organization who discuss how values are executed throughout the company.

3) Empower Employee Success with Values

Wong and her management team have taken their values one step further in an effort to support the scaling company.

“When we started, people were in contact with the founders every day. But as we’ve grown, that’s less true. So we need to define what each of our values mean at different seniority levels and not just demonstrated by the management team.”

To address this, they launched a competency matrix that defines what skills and behaviours are needed for the values at each level of the organization.

“If you’re a director, what does it mean to be high performing but humble,” she says. “We’re communicating what it takes to move from a manager to a senior manager to a director and what is expected. It’s part of the promotion process. Employees actually have to get better at exemplifying the values to move up in the company.”

#ScaleStrategy is produced by DX Journal and OneEleven. This editorial series delivers insights, advice, and practical recommendations to innovative and disruptive entrepreneurs and intrapreneurs.

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#ScaleStrategy Q&A: Managing the Growth Bandwidth

Tech veteran Dean Hopkins on what it takes to scaleup — and down — in both startups and enterprise organizations

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Dean Hopkins, OneEleven
Dean Hopkins, Chief Growth Officer at OneEleven. - Photo by DX Journal
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#ScaleStrategy is produced by DX Journal and OneEleven. This editorial series delivers insights, advice, and practical recommendations to innovative and disruptive entrepreneurs and intrapreneurs. Read the first part of the interview with Dean Hopkins here. 

While working at McKinsey in the 1990s, tech veteran Dean Hopkins first stepped into the world of the internet.

“This was 1993. No internet existed as we know it,” says Hopkins, now the Chief Growth Officer at OneEleven, recalling how he discovered the work of Marc Andreessen. “At that point in time, he was demonstrating his early browser concept and talking about how the future of the internet was going to be huge. I caught the bug and decided I would leave McKinsey and start my first company called Cyberplex.”

After a bit of a bumpy start, Cyberplex scaled quickly. “Cyberplex tripled every year and grew to 500 people with $50 million in revenue and $975 million market cap,” he says.

Then 2001 hit. “That was the peak of the cycle followed by a trough. It was the biggest learning experience of my career. I had to descale the company to survive,” he says. Over seven quarters, Hopkins took the team from 500 to 50 and brought the company back to profitability. He then  transitioned Cyberplex to new leadership and moved on to his next challenge.

For the next 12 years, Hopkins worked as a management consultant with his own boutique firm that was focused on driving global transformation initiatives for companies such as Thomson Reuters and the Ontario Teachers’ Pension Plan Board.

With both entrepreneurial and intrapreneurial expertise, Hopkins is now applying his global growth skills to transform OneEleven’s unique scaleup model into a worldwide Scale-as-a-Service model.

Read what Hopkins has in store for OneEleven’s global growth.

We recently spoke to Hopkins about tough lessons he learned at  Cyberplex, how enterprise growth is different than startup growth, and how he’s applying these lessons to expanding the OneEleven model globally.

DX Journal: When you think back to your time when Cyberplex hit its inflection point, what did you learn about scaling?

Dean Hopkins: Culture and people were the two things that allowed us to handle both the steep trajectory both up and down. Those things got us through the crazy knee in the curve and probably more importantly, helped us when we needed to descale.

Attracting amazing people that became my partners in growth was the reason we were able to scale. I couldn’t have done it alone.

Secondly, we built a culture that was accustomed to scaling and had an appetite for growth. Our culture was about resilience, and scaling, and picking yourself up and dusting yourself off. We made it okay to make mistakes, then march on.

DX Journal: Why people and culture? Why isn’t it all of the other things?

Hopkins: It’s a great question. In a culture where the decision-making takes a long, protracted time, where risk-taking isn’t there, and where people have to analyze things to death before they can make a decision, scaling is impossible. People would crumble under the weight of scale because the number of things coming at them.

To scale, it’s important to trust that people are all working toward the same goals and are empowered to make decisions.

That’s where culture comes in. It becomes a culture that can tolerate the bandwidth of needs that come with growth. If I didn’t have both of those things — good people ready to make decisions and a culture where I allow them to do it — I would have failed to scale.

The other things like technology, offices, infrastructure, are secondary when you distill it down. Companies that are successful across different geographies, industries, offices, become that way through empowering their people and building a culture that tolerates growth.

DX Journal: When you moved out of Cyberplex and into Thomson Reuters and you were managing a large-scale transformation. How did you manage scale within an environment as big and complex as Thomson Reuters?

Hopkins: The first thing I noticed was pace slowed down dramatically. What used to take me a week or a month now took 6 to 8 or 12 months. Large organizations only have the capacity for so much change. Once I did get the ship to turn in a new direction, I moved a lot of people, revenue, cost, and dollars. I had to be patient enough to let it take hold. The experience was much more of a marathon where I had to think multiple chess moves ahead and let the game play out.

DX Journal: How do you know when to modify your approach or give up when dealing with  transformation in a large organization?

Hopkins: I didn’t do a great job of it at the beginning. I pushed an entrepreneurial agenda at an entrepreneurial pace, and very quickly ran headlong into blockers. I had to adapt and use an experimentation model. I tried different levels of throttle until I got to a point where the organization was willing to accept it. I learned to read the frustration on peoples’ faces saying “okay, no more, Dean. I can’t take any more of this” and built relationships with people where they were able to tell me that.

I was able to adapt and adjust my own style to better reflect the environment. Then over 12 years, I gradually increased the tolerance for risk-taking and for change within the organization. I would work with specific people to help them increase their ability to drive change. What was first gear early on, became second and third gear closer to the end of my tenure. Ultimately, the organization became much more comfortable with making change at a higher rate.

DX Journal: What’s a scale lesson you learned the hard way?

Hopkins: I learned to hire slowly and fire quickly based on fit. One rotten apple really can spoil the bunch. As part of this, I learned to listen very closely to my people. The people on my team knew about someone that didn’t fit long before I did. By listening, and taking quick action, I saw the immediate positive impact on culture.

Finally, I learned the value of getting out of the way. By fully trusting people, providing them good direction and support when needed, it activates them to reach their full potential. All of these were learned through many failed attempts, and I have the scar tissue to prove it.

DX Journal: What signals do you use to know you’re on the right path when you start to scale something and you’re trying to measure if it’s working?

Hopkins: One of the reasons we were able to survive at Cyberplex — both the growth and the decline — is that we had very good leading indicators of the business. We had invested heavily to try and understand what our funnel looked like, what our planned capacity was, and we had the metrics dialed in. Every month and every quarter, we constantly refined our ratios so we had a really good sense of what was coming. When things started falling off the cliff, we trusted our instruments and started acting accordingly.

Read more about Dean Hopkin’s plans for expanding OneEleven globally.

 

DX Journal covers the impact of digital transformation (DX) initiatives worldwide across multiple industries.

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