Interview: Mike Katchen
The Ivey Business Review is a student publication conceived, designed and managed by Honors Business Administration students at the Ivey Business School.
IBR: In what ways do you think your Ivey education has helped you succeed as an entrepreneur?
MK: I think that Ivey played a major role in helping me get to where I am today, and in a number of different ways.
Firstly, Ivey is really good at teaching you how to think. The Case-Method Learning encourages debates amongst your peers and colleagues when you’re in school. I learned how to think and how to be confident.
Secondly, I learned what really smart peers and colleagues look like. When you’re building a business, so much relies on the team you hire and the team that you work with. Ivey gave me a really good sense of what awesome colleagues look like.
Lastly, Ivey provided me with an incredible network. It’s interesting to say, but I currently work with an executive coach who happens to be my entrepreneurship professor from my time at Ivey. Ron Close, HBA ‘81, is an incredibly close mentor and coach of mine and I wouldn’t have had the chance to meet him without the world-class network provided by such an incredible school.
IBR: Do you wish that Ivey prepared you better in any way?
MK: Of course. I think Ivey has a lot of ways it can improve teaching entrepreneurship. I now work in technology, and I didn’t learn anything about technology and the technology industry during my time at Ivey. I think having closer ties with the engineering department to provide students with more awareness of the amazing world of startups and innovation would be phenomenal as they are changing the landscape of every industry around the world.
You know, that might be there today, but when I went through Ivey, it was certainly not a focus. I certainly did not know how to get into that world and I kind of had to find it out on my own.
IBR: Leaving McKinsey to go into entrepreneurship must have been a difficult decision. What motivated you to do this?
MK: I’ve always wanted to be an entrepreneur. Both my grandfathers were entrepreneurs, and my dad was an entrepreneur – I always had a fascination with building and starting things. I never started a business before, but even at Ivey I founded clubs and the Ivey Israel Trip. I put that passion off for a while by going to McKinsey but I always knew that I wouldn’t be fulfilled until I was working on a problem that I was passionate about.
IBR: You joined your friends in building 1000Memories. What is it about ancestry and memories that fascinated you?
MK: When I joined my friends in 1000Memories, they were just accepted into Y Combinator, which is now the pre-eminent start-up accelerator that everyone knows about. However, at that time, no one had heard about it. Through YCombinator, they raised some VC money, and I knew that the team was incredibly strong. I was excited about the team and I was excited about the problem.
The original problem that we tried to solve sounded morbid, but at the same time, was very powerful. Everyone in life unfortunately goes through losing their loved ones, whether they be friends or family. Having experienced that personally, I found it incredibly awkward online to memorialize them. Facebook for instance was uncomfortable. People post on there, then they like it – there was no dedicated beautiful space that captures someone’s stories and someone’s life. We were trying to bring that to the internet – a beautiful place for people to remember the loved ones that they lost. We found that it solved the needs of people going through tragic experiences in their lives.
At the same time, it was hard to grow a business that relied on ‘death’. I was responsible for growth, and I would speak at conferences and hear feedback like:
“We love such a beautiful idea and we’re so supportive of what you’re trying to do, but I hope I never see you again.”
Because of that, we pivoted the business based on the ways we saw people using it. We launched an app called Shoebox, that turned your phone into a photo scanner. The idea was that everyone has this box full of photos somewhere that they considered their most precious possession. But, that box sits in the closet and we’re forgetting all the stories that give them meaning and relevance in our lives. And so, we tried to help people preserve them by digitizing the process. We had a lot of success with the genealogy community. Everybody has a family history and genealogists in the family who like to build family trees. We grew the business rapidly in that community, and we ultimately sold the company to Ancestry.com which we believed was a natural fit to the business.
IBR: What were some of the most notable learning points from selling 1000Memories?
MK: Selling a business has a lot of appeal to it. From the outside, selling a business seems like a very “cool” thing to do. If anything, the learning experience is that it’s harder to sell the business than it appears. The selling process is longer than what people might expect.
Once the sale is done, you become an employee again. For a lot of people, that transition is very difficult, especially if you’re an entrepreneur and the part you loved was building the business. Suddenly, you’re an employee of a much larger organization, and with that comes bureaucracy, bosses, and a much slower pace of working. And so, most people don’t stay long after mergers. I stuck around for a year, and I learned a lot at Ancestry.com. It’s incredible to work for a company that has millions of users every day operating at such a large scale. But, I was anxious to start a new business and I was ready to leave.
IBR: You mentioned that when you co-founded Wealthsimple, you did it with a team that you had in 1000Memories. What do you look for in your co-founders and early partners when setting up a company?
MK: Firstly, I don’t think that I would be here today if it wasn’t for the fact that I had such a strong team helping me out through every part of the journey. When I first worked with my future co-founders in 1000Memories, I felt comfortable being able to delegate critical tasks to others. Finding co-founders isn’t about finding coders and programmers; it’s about finding those that you can trust. It’s about being able to find someone who’s honest and direct. Unless you can find that person, you won’t be able to grow your company effectively.
IBR: What was the fundraising process like for Wealthsimple? You recently raised a $30-million investment round from Power Financial Corporation. Why did you choose to partner with them instead of a traditional VC?
MK: Since we started, Wealthsimple went through two rounds. The first was in May 2014, when we raised a $2-million seed round. That took us 2-1/2 weeks, and we raised money from 15 investors in Toronto which included David Ossip, Dan Debow, and Roger Martin. We were fortunate to have found our investors early. Through their guidance, we were able to become the largest and fastest growing online investment manager in Canada. The $30-million investment round from Power Financial Corporation was different. We were thinking more long term regarding an online investment manager in Canada. The $30-million investment round from Power Financial Corporation was different. We were thinking more long term. Because robo-advisory was such a new concept, we needed to do something significant to legitimize ourselves.
Power Corporation is an interesting company because it’s a massive financial services business that gets what we’re doing, and because it’s family owned. Those two things came together to create a very long-term view. We were extremely aligned with the business that we were building and that’s been powerful for us.
IBR: Moving forward, how do you see Wealthsimple co-existing with the big Canadian Banks?
MK: I can’t predict the future. We’re just going to keep doing what we do. WealthSimple works very well for everybody, but we’re especially focused on young professionals, and we think that we can service that segment of the market better than anyone else in the world. We’re going to keep focusing on that segment and work to over-deliver on their expectations every day. If we do that and stay nimble, push the envelope, and push to innovate, it’s going to be hard for these banks to compete.
The banks have a challenge – they think of everybody as businesses or clients. Banks offer the same service to the 12-year-old who just opened his first bank account and the 75-year-old retiree. Trying to solve all of those experiences and all of those different needs is incredibly challenging. Moreover, banks have a legacy fee structure that’s not competitive with ours, branches everywhere, and technology that’s 30 years old in many cases. So, our benefits are much more than our competitive fees. We have the ability to focus on who our clients are and deliver a digital experience that’s exclusive to them.
So, I feel really good about where we’re positioned in the marketplace. I think that the banks are certainly signaling that they are going to work harder to come after us, but we don’t worry about that. We just worry about our clients and if we do that better than anyone else in the world, that’s how we’re going to win.
IBR: What’s your current take on the state of fintech in Canada?
MK: I think we’re coming of age. I think that it’s a super exciting time. Regulators are signalling their support for new, innovative solutions that increase access to great financial services that bring down costs and increasing transparency. The OSC recently started “LaunchPad”, a new innovative arm that helps fintech companies launch and scale up. We have massive amounts of capital coming to markets. Just within the last two weeks, two new venture capital funds have been announced.
Most importantly, I think that the Canadian market is finally ready to adopt and trust these new services and solutions that they never had before. I think this new generation has very different expectations of their banks than their parents and grandparents do. They don’t want to walk into a bank branch, and they don’t want to fill out
50 pages of paperwork to open an account. They want it to be simple, seamless just like Uber and Facebook, and I think that’s where companies like ours are able to deliver. I personally think that there’s a full cohort of amazing fintech companies that are coming up, and I think we’re at the very start of a new phase for Canadian fintech companies.
IBR: Where do you see Wealthsimple going in the future?
MK: We aspire to be one of the largest and most innovative financial services companies in the world. You can expect that we do not plan to be a Canada-only company. We are looking to build a global enterprise, and we’re very excited about that. You can expect more in terms of what we offer clients. Today we do investment management, but we’d like to help our clients be successful across all their financial needs at the same time, and bringing that simplicity and experience is what we do best. We’re just getting started.
As enablers in this industry, we have a direct-to-consumer model that works very well, and we intend to keep growing that. However, we’re not looking to eliminate financial advisors all together. We have a place in WealthSimple that’s designed to help any advisor who works in the industry offer great personal experiences to their clients.
This allows them to more efficiently run their local business, and it’s been growing exponentially. I think that it’s a powerful model for how we’re going to scale this business to support other advisors across the industry.
IBR: There are a lot of aspiring entrepreneurs at Ivey. What advice do you have for them?
MK: While you’re at Ivey, go make friends with as many computer science students as you can or pursue the dual program to learn those skills yourself. Software engineers are huge enablers in the startup space, and combining the business knowledge that you gain from Ivey with the programming skills that you learn from pursuing a dual program is extremely valuable. I’d also advise them to go build things. It doesn’t have to be a business, but you can learn what it’s like to start something from scratch and see it through.
