In three-and-a-half years, Wealthsimple has raised $165 million in capital from the Power Financial Group and scaled from three employees to 175. And in early 2018, the company announced a milestone of more than $2 billion in assets under management and cemented itself in the vanguard of Canada’s new breed of financial services businesses.
“I’m on a personal mission to build a Canadian company globally,” says Co-Founder and CEO, Mike Katchen. “I want to see more companies in Canada take on the world and build long-lasting global institutions.”
Wealthsimple’s scale-up story is the stuff of legends (you can read our piece on their journey here). As part of #ScaleStrategy, Katchen spoke with Bilal Khan, Managing Partner of M6ix Ventures and the founding CEO of OneEleven, about the pressure, pain and pleasures of growing rapidly.
Bilal Khan: What has the experience of scaling your business been like?
Mike Katchen: I think the hard part for me is that we’ve never done this before. We didn’t really know what good process looked like. I like to think that 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. Today, we’re trying to introduce structure to make people more productive, but we still have a ways to go on that front.
Khan: And you’re happy to let team members build the processes themselves?
Katchen: I’m very hands-off. I’m here to support our people to do the best work of their lives.
Katchen: If they need my help or support, they want to problem-solve things, come to me. But I am not going to drive the agenda for each individual team as to what they’re supposed to accomplish, what they’re working on, what their goals are. I’ll encourage them to push their thinking, but it’s not up to me to set each person’s ownership over their parts of the business. That’s a key point of our style.
Khan: Was there a time when you realized a certain process or system that you were using was starting to become disastrous and you had to introduce something new there?
Katchen: On the people side, I led HR and recruiting for the first 50 hires. It was really important on the recruiting side, but a terrible idea on the HR side. Quickly after that, our first HR leader came in and helped to structure some of the “people process” that we have here, which made a big difference. At some point you transform from being a small, scrappy family-like team to building a company where things like career paths, trajectory, titles, salary and benchmarking become really important. As soon as you hit a certain size, you have to think about what the company starts to look like rather than just a group of folks trying to will something into existence.
On the product side, in the early days, you go by your gut. You build the things you want. That’s still is a part of our ethos because we are clients of our products and we love to build things that we want to use. At the same time, you start to pay real technical debt if you build things you’re not going to commit to, and you become much less nimble as you scale. In the last year, we really tried to implement a better product planning process where anyone in the company can pitch what we build, but we have a process in place on how we decide what to build, what to kill. This is important to help us stay focused on building the right things.
Khan: Tell me about a scale pressure that was a hard nut to crack.
Katchen: Last year we were unprepared for the enormity of tax season in Canada. The industry talks about taxes being super seasonal and that tax season is the busy time of year, but we never experienced that before. We didn’t anticipate this huge spike. During last year’s tax season, we were wholly under-resourced on our customer support team, and this led to some poor experiences and delays that we had to crawl our way out of it. People were working 120-hour weeks for a couple of months straight to try and dig our way out of that hole.
This year, we tried to be a lot more thoughtful about it. Rather than hiring an army of customer service people, we threw a technology team at our customer support operations and 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.
What we found is that last year, there were something like 35,000 interactions in the month leading up to the RRSP season deadline. This year, we have more than three times the amount of customers but only had 40,000 interactions. All without a bigger team.
Khan: How do you continue to be innovative, test new product offerings without impacting the business at scale?
Katchen: We get really excited about big ideas and probably throw too little resources at them and don’t always see the ideas all the way through to where they need to be: robust and scalable.
We need to focus on maintaining our positioning and growing our market share, keep optimizing to deliver a better experience, keep improving to make the fundamentals of our business better. But our aspirations are much bigger than just that. We want to build a business around the world that truly transforms the landscape of financial services. That requires some big bets and not all will pay off.
So, one of the new things we’re introducing is an analogy from one of our team members: Garden and Plant. This describes those two activities of growing market share and making big bets. We need to be smart about how we resource between those two activities. To do that, we’ve decided that 75 percent of the company resources should go toward gardening activities that support business growth, and 25 percent should go toward planting or cultivating new ideas. I think it will bring some more discipline to allocating resources.
Khan: How do you manage culture with 165 employees and growing?
Katchen: We’ve done a few things right with culture at scale.
Katchen: We still have an all-hands meeting every week, and we’ve iterated a lot on the content of that meeting and who leads it. I used to lead them all the time, and then my co-founder and I started sharing the responsibility, and now it’s everyone on the leadership team can run them. I think people enjoy that different team members from other parts of the business get to share how the company is doing. It adds perspective on how things are going that I think is valued.
And at that meeting, we try to do things that ensure that people know where we are going. We remind people of the company priorities and how we’re doing moving against them. We talk about metrics.
Specifically, we have a concept called FUD, which we stole from Stripe, who we really admire for their culture). It stands for Fear, Uncertainty and Doubt. It is a chance for anyone in the company to publicly or anonymously share what we call “an existential concern” that they have about the business. It’s a pretty jarring thing for people the first time they hear it. But I think it inspires a culture of transparency and enforces that it’s okay to have tough conversations here.
Khan: Have you had the conversation around potentially bringing in people who have done it before.
Katchen: Ah, the grey hair question. We’ve been fortunate and managed to grow very quickly. Boards are happy when you grow fast. For me, I’ve always had the mindset that there might come a day where it makes sense to bring in someone. To me, there’s no ego about it. I’m here because I believe in what we’re building at Wealthsimple. I believe in the team. I want to see this through to building a truly transformative company that makes people’s lives better. Right now, I am probably the right person in this role. If that changes, that’s cool, so long as it’s for the right reasons and it’s the right person.
For Wealthsimple, we gave up control as a business. We sold the majority stake to Power Corp., which is a really unusual thing to do for a business of our size. And the reason why it’s okay is because to take a company all the way to IPO, you’re going to have to do that at some point. For us, hanging on to control is less relevant. It’s a question of “how do you set up your business for long-term success?” We tried to find a partner that we trusted and believed could be a long-term partner to help us get there. It made that trade-off a lot easier. They share that trust with us and our management team.
Khan: What books helped you in your scaleup journey?
- “Why Mexicans Don’t Drink Molson” By Andrea Mandel-Campbell. This book was a huge wake-up call on the need to think big and do things differently. I talk about the book a lot because it informs a much of my thinking around Canada and how we need to build global companies.
- “The Lean Startup”. By Eric Ries. How many businesses get built where people spend years of their time on products and projects that don’t have fit because there’s no market for it? They never test it. Everyone has to know that.
- “The Hard Thing About Hard Things” by Ben Horowitz. In the first year of scaling, I remember reading what he wrote about hiring friends who have been a part of the business from the beginning and how much that sucked. And it does, it’s heart-wrenching.
Growing world-class scaleup hubs through global lessons
Dean Hopkins, CEO at OneEleven, discusses how global scaleup hubs can learn from each other in order to build outstanding scaleups.
Any time a new global city or region emerges as a technology or innovation hub, the inevitable comparisons to Silicon Valley begin. New York as Silicon Alley, Israel as Silicon Wadi, and Toronto was recently dubbed Maple Valley to much scorn.
But it’s time for globally emergent innovation hubs to look beyond Silicon Valley as they work to build scaleup success, with each location learning from the specific lessons of one another to help all players in the community succeed.
Outside the original Valley, collaboration, diversity and connections into other ecosystems are major strategic advantages for any hub that wants to scale faster – more connections, more funding, more talent, more resources and more stories to share to teach others.
Just look at Stockholm: With a population of only one million, it has developed more Unicorns per capita than any other innovation ecosystem outside Silicon Valley. Among other things, connecting into other major hubs helped propel growth and seed opportunity.
With OneEleven now established in the UK, we’re applying lessons from two leading hubs — London and Toronto — to guide our strategy and propel our value. Both cities embody hard-earned scaleup lessons, like specialization, building ecosystem partnerships and leveraging the power of diverse leadership, that we believe are key to ecosystem and company success.
Focus on growing the greatest verticals
London has built an ecosystem around its strengths.
The city is by far the leading source of fintech innovation worldwide: it has the greatest concentration of fintechs and the largest workforce in fintech — it dwarfs everywhere else even New York. In the first quarter of 2017, London saw $421 million invested in its fintech industry pushing New York out of the top spot for fintech investment. The City of London has worked with a variety of institutions to rally behind this emphasis on fintech, bringing together government, educational institutions and various sources of funding to embrace the fintech ethos.
The lesson to be learned from London’s focus on fintech is that innovation hubs need to concentrate their efforts in certain sectors where they already stand out as a global leader.
In Toronto, we’re starting to see a lot going on in the deep AI tech space, through the Vector Institute and other organizations building on a research base of over 30 years by Dr. Geoffrey Hinton and his colleagues. Of course, there’s room for improvement. While research labs are popping up regularly, with big partners involved, Toronto and Canada are lagging when it comes to patents and application of AI tech. As we build up this sector of our innovation ecosystem, we have to develop a well-rounded AI industry that includes a robust IP regime to keep AI innovation in Canada.
Diversity in leadership
Both London and Toronto also boast the highest demographic diversity of global cities, and demonstrate how valuable entrepreneurial leadership from all over the world can be. Forty percent of London residents classifying themselves as other than white according to a 2011 census, and that diversity powers the tech and innovation ecosystem in the city. Recent research shows that immigrants and people from minority backgrounds in the UK are twice as likely to be early-stage entrepreneurs.
Toronto is similarly diverse in its population, and talent is one of the reasons the city is seeing global recognition as an innovation hub.
Canada’s fast-track visa program prioritizes highly skilled workers and entrepreneurs and was created as a talent magnet for Toronto especially – last year MaRS released survey results showing 45 percent of Toronto tech companies made international hires in 2017 alone, and 35 percent of respondents used the visas to hire.
Other scaleup hubs could build valuable leadership and collaboration from a similar approach to entrepreneurship: one which looks to bring in more diverse, global talent on the leadership side, as well as the wider talent side. Scaleup communities have to be competitive on the world stage by inspiring people from all over the world to come and build their businesses there, as a lack of immigration and global perspective can starve an ecosystem of oxygen.
Culture of collaboration
We’re very fortunate in Toronto to have a culture of collaboration that starts at the earliest stages of entrepreneurship, and continues throughout company growth. There’s a strong expectation that you will work together, and for that reason, forming a community in Toronto is almost a matter of course.
Hubs like MaRS, 111 and the DMZ, for example, have opened up prime real estate to provide space for young companies to grow and to foster their developing businesses. Canadians have proven they are wired differently and Toronto’s collaborative and inclusive culture is one of its strongest competitive advantages.
In London, there’s a hyper-competitive environment for businesses, and perhaps not as naturally collaborative of an environment. That might just be because the city has only just recently seen an effort made to boost that kind collaboration from organizations like the Scaleup Institute and Tech London Advocates.
But collaboration between government, academia and business is one of the things that makes London a world-class scaleup hub.
Collaboration between groups tends to be verticalized in the UK, with TheCityUK being a prime example; the industry-led body that represents UK-based financial and professional services companies showed that collaboration between financial institutions and fintech companies can speed up the process of creating innovative products and services. By looking at IP, regulatory compliance, data protection and privacy, TheCityUK provided seven possible models for collaboration between banks and fintech companies.
Big scaleup success stories can also influence the effort to increase collaboration in scaleup hubs — and London has some amazing stories to tell.
Renewable energy company Bulb grew from 85,000 customers to 870,000 in the space of 12 months, becoming one of the fastest-growing scaleups in the UK. The company’s founders Hayden Wood and Amit Gudka are immensely proud of their place in London’s ecosystem. This is how how big names in a scaleup hub can advocate for an entire community.
For our part at OneEleven, we’ll work hard to build up that kind of collaborative community and collective effort as we continue to expand into London’s innovation ecosystem. We want to ensure that the success of these companies continues past their early stage, into growth and on into the billion-dollar club. The middle chapter is currently not being written in London — despite early stage support for companies and big success stories — and that’s what 111 is here to address.
Global scale through collaboration
Innovation hubs around the world can also work together to take the friction out of companies expanding between markets. Furthermore, cooperating markets can increase their competitiveness by promoting an exchange of innovative business practices, and reap the economic benefits that scaleups can bring to innovation ecosystems.
London and Toronto are a good example of global collaboration, as they the two cities have begun to explore greater cooperation when it comes to facilitating expansion between hubs.
The Mayor of London’s promotional agency London & Partners has opened an office in Toronto to better encourage Canadian businesses seeking to expand to consider London for their next destination, and to support UK businesses seeking expansion into Canada’s market. Over the last decade, the organization says 44 London businesses have expanded into Toronto and 118 Canadian businesses have set up shop in London during that same period.
This is only the beginning when it comes to proper cooperation between these two cities: government, academia and innovation hubs should work together to encourage scaleups in their efforts to expand between international markets.
Greater than the global sum of our parts
At OneEleven, it seems to us that the unique evolution, and now collaboration, between the London and Toronto ecosystems signals the rise of a global network of innovation that is in its early stages. Such a global network, powered by the diversity of each market, promises to have a dramatic effect on the ability for scaling companies to access talent, customers, investors and partners much more easily. We are excited to be a part of the rise of this globally connected and collaborative ecosystem that builds on what was started in Silicon Valley, but brings innovation into the more global and highly connected digital present.
#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.
“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:
- We’re high-performing and humble.
- We’re trustworthy and team-oriented.
- We love learning.
- Act like owners.
- 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?
3 Things to Know About Scaling Culture Through Values
Co-founder and COO of Borrowell on the power of values
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:
- We’re high-performing and humble
- We’re trustworthy and team-oriented
- We love learning
- Act like owners
- 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.”
Get more #ScaleStrategy
Sign-up to notified when the next #ScaleStrategy story about these amazing entrepreneurs, intrapreneurs and companies is published.
Transportation2 months ago
BMW pushes the limits of the IoT
Manufacturing2 months ago
Dow Chemical envisions the future of manufacturing
Leadership1 month ago
The great buy-in: How to learn to love AI at work
Events2 months ago
The mesh conference is back, new focus aimed at digital transformation
Leadership2 months ago
20/20 Armor brings Street Fighter dreams to life with innovative tech