#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.