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Q&A: Wealthsimple CEO Mike Katchen talks process, culture and scale pressure

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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.

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?

Katchen:

  • “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.

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Betting on yourself with entrepreneur Tanya Gough

Armed with a passion for narrative literacy and a knack for content architecture, creative-industry entrepreneur Tanya Gough is driven to help make the writing process more interactive, collaborative and social with StoryBilder.

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“Whatever you do will be wrong…until it isn’t,” says creative-industry entrepreneur Tanya Gough, about navigating other people’s feedback while building a tech platform. 

Armed with a passion for narrative literacy and a knack for content architecture, Gough has created StoryBilder. It is an adaptive story-generating platform that transforms the way writing happens. The platform is aimed at helping storytellers build out their plots, characters and entire worlds to make the writing process more interactive, collaborative and social.

Gough is one of 50 women across Canada selected for the first cohort of the BANFF Spark Accelerator for Women in the Business of Media. With support from Western Economic Diversification Canada, this new program offers training, mentorship and market access to women entrepreneurs ready to grow or launch their own businesses in screen-based industries.

Leigh Doyle, partner and VP at DJG and a fellow cohort participant, interviewed Gough as part of a series showcasing the entrepreneurs in the BANFF spark program. 

Leigh Doyle: You’re a big believer in narrative literacy. Can you tell me a bit about what is narrative literacy, and why do all of us need to sort of relearn it?

Tanya Gough: Narrative literacy is the ability to recognize and understand narrative structure in the stories around us. It matters because we’re surrounded by story, and it’s an incredibly persuasive format for transmitting information. When we understand story, not only are we better able to express our own stories and be heard, but it also gets easier to recognize when we’re being manipulated or lied to. And that gives us better defenses against fake news and makes it easier to differentiate between fact and fiction.

Doyle: How did the idea of StoryBilder come to you?

Gough: I was hanging out with a friend of mine who is a game designer, and we were brainstorming for an app we were working together on. At that moment, StoryBilder just happened for me. I knew exactly what it had to be. 

I wanted to create an environment where people could not only write their stories, but that could also help them organize their thoughts and ideas. And, if they were new to writing or didn’t know what to do next, there would be support and tools to help them improve their craft. I also wanted to ensure the platform would foster creativity, which I think is missing in the market.

Here’s what it is and how it works: 

Doyle: Who is StoryBilder for? 

Gough: StoryBilder is currently designed to support creative writing, particularly for fiction novels. But the technology is adaptable. I’ve already got screenwriters who want to use it as a planning tool for their scripts. I have game developers who want to use it for world building. I even had a D&D master ask me if he could use it to build campaigns — and the answer to this is yes. StoryBilder is built around a narrative construction model that can be applied to any storytelling format. It can be used for a lot of different things.

Doyle: What author would you be thrilled to see using StoryBilder? 

Gough: It’s so hard to pick! The obvious answer is George RR Martin. The idea of this huge epic world, with tons of characters spanning multiple books and managing all of the interconnected pieces, is a long-term ambition of StoryBilder. But, personally, from more of a literary geek perspective, I would say Michael Chabon who wrote The Amazing Adventures of Kavalier & Clay. It’s probably my favorite book of all time. Chabon writes these incredibly dense, complexly structured storylines with interconnecting plots and massively detailed backgrounds. This is the type of narrative I’m keeping back of my mind as I develop StoryBilder. 

Doyle: When will StoryBilder be available to the public? 

Gough: Right now, we’ve got beta testers helping me find the last of the bugs, and I’m doing some extra design work. Then we’re launching this summer. I’m looking forward to getting it into the market and getting the word out.

Headshot of Tanya Gough, founder StoryBilder

Doyle: You’ve owned a boutique CD and video store, the world’s largest Shakespeare video catalogue and created content for companies like BlackBerry, Shoppers Drug Mart and more. How have you seen the entrepreneurial landscape change for women over the course of your career?

Gough: If five years ago, you asked me if there would be any substantial change for women in business in my lifetime, I would have said no. And clearly I won’t see parity in my lifetime — just look at the numbers. But what I have seen — especially in the last few years — is a rising opportunity for entrepreneurial women to connect with each other. This is thanks to social media and groups on large networks like Facebook. 

The women in these groups are not only talking about their challenges in a really honest way, but they are incredibly generous about helping each other and supporting each other through not only the bad stuff, but making sure that we’re all succeeding together. Change is happening now. It’s not going to happen as fast as people hope, but it will happen as long as we continue to support each other and continue to speak openly. Support and solidarity are incredibly empowering.

One of my big drivers for creating StoryBilder is this knowledge that more women need to have businesses to create a path for the next generation to follow. Someone needs to be out in front. And that’s where I need to be, with the rest of the women taking the hits and leading the way.

Doyle: What lessons do you have for entrepreneurs building tech platforms like Story Bilder? 

Gough: The first is to forget about funding. Sure, there are stories about people getting funded at the idea stage, but it’s rare, and you’re new and inexperienced. Find another way and don’t waste all of your time chasing the money until you have something solid in hand.

The second is whatever you do will be wrong…until it isn’t. Take the time to experiment and try new approaches to make sure you’re solving the right problem in the right way. Likewise, if you are looking for funding, be prepared to hear you’re not ready — a lot.

Finally, do it because you love it. Starting a business is way too much work to do if you don’t wake up every morning excited to be working on it. Which isn’t to say you’re going to love it every day, but if you’re waking up every morning not knowing if you’re building the right thing, go do some market research or get out.

Connect with Tanya and StoryBilder on social media: 

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Digital transformation for a more sustainable world

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Sure, they’re confronted with business challenges every day, but the world’s top business leaders have a significant part to play in solving the world’s challenges — economic, technological, societal and educational. 

As Christian Klein, Co-Chief Executive Officer of enterprise application software company SAP succinctly puts it in a blog post for the World Economic Forum, “Companies today don’t just prosper based on their financial performance, but on how they make a positive contribution to society.”

Ahead of the World Economic Forum’s 2020 meeting — taking place Jan. 21-24 — Klein outlined how digital transformation can be a force for good in the world, and be a way to create a more sustainable world.

Critical minds, he starts, might wonder why companies would take the time, considering their primary goal of making money. “These critics should not underestimate the power of the consumer,” he argues, explaining that while customers do consider their decisions based on products or price, but the company’s values. Employees act in a similar way, choosing to join companies “that embrace their responsibility towards humankind and the planet.”

Almost every person on the planet knows that technology plays a profound effect on just about every facet of our lives, from jobs to wages to health to security. Meanwhile the need for business to undergo digital transformation, simply to stay relevant and alive, is hardly big news anymore. 

“But transformation is also about a change of culture, which requires a radical rethinking of people, processes and technologies,” Klein writes. Included in this are “tectonic changes” that go into a company, and how employees interact within the whole system. 

“And just like a business cannot digitally transform unless – or until – its people transform, I believe that, while they come with their own environmental costs, technology and digitalization can play a crucial role in developing solutions for a better tomorrow.” 

Some examples? Blockchain’s potential to add traceability (and by extension, trust) to food supply chains. The empowerment of people with disabilities through AI, which, when properly applied, can reduce bias in the hiring process. Smart cities, powered by everything from sensors to open data to better supply services and protect resources.

[Related reading: How 5G and the Internet of Things can create a winning business]

“There is no doubt that technology and digital transformation break down silos and create transparent and unified data for objective decision-making,” Klein writes. “But even more so: they change how companies manage their relationships with the wider world.”

Creating a sustainable world requires us to look beyond corporate borders, toward the communities around us, creating an ecosystem of trust “that allows us to exchange ideas to create a safety net for the most marginalized.”

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DX survey reveals high levels of enterprise-consumer disconnect

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A new survey looks at the global investment and effectiveness of businesses’ digital transformation efforts. The survey shows a disconnect between enterprise investments and consumer experiences.

The survey is titled “The Kony Digital Experience Index (KDXi) Survey”, and the main takeaway is that while businesses have invested nearly $5 trillion on digital transformation initiatives, only 19 percent of customers have reported any significant improvement in the experiences offered to them.

The Kony Inc., survey included 1,600 responses from business leaders and customers across the U.S., Europe and Asia. The responses were used to gauge the target digital project implementation efficiencies in banking, retail, utilities and healthcare. The research showed a disconnect on both sides and a potential misalignment around investment priorities, and highlighted the impact this could potentially have for businesses.

Among other things, the study found that consumers are underestimating the number of businesses that are investing heavily in every customer experience outcome by at least 50 percent. This means that while business are spending money on digital transformation projects, consumers are not necessarily noticing a difference.

The survey also reported that 62 percent of consumers say that they spend more with companies that offer effortless digital experiences, while 56 percent of consumers indicate that they will switch if a retailer does not deliver the digital experience they want. This signals the necessity for businesses to continue to invest in the digital experience for the customer. However, in doing so they need to start making an impact.

As the report states: “It is critical for businesses to have a greater focus on understanding and aligning with customer needs and priorities to ensure that they are driving the agenda for the digital technology they create and fund.”

In terms of what businesses should be doing, the basis of a strategy includes:

  • Embracing innovative thinking, ambition and a commitment to improvement
  • Prioritizing investment in digital outcomes, not digital initiatives
  • Getting their foundations right before evolving
  • Building for now, but investing in a roadmap that leads to the future
  • Saying no to silos and yes to integrated digital strategy
  • Setting a customer-centered digital transformation agenda

This means companies should work to provide web experiences that make it easier for users to navigate, and for websites to be more engaging and intuitive to use. There also needs to be comprehensive online and mobile facilities so that users can do everything online or via their mobile device. Furthermore, to truly step forwards, businesses need to begin offering digital experiences such as AI, chatbots and augmented reality.

Summing this up, Thomas E. Hogan, chairman and CEO, Kony, Inc. states: “Improvements in costs and efficiencies are always welcomed and clearly important to project funding, but the real returns and real impact of digital starts and stops with its impact on the customer experience.”

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