Interview with Michael Katchen, CEO of Wealthsimple: Leadership and managing rapid growth. Part 2 of 2.

Michael Katchen is the CEO of Wealthsimple, Canada’s fastest growing online investment manager. Their mission is to make smart investing easy, low-cost, and transparent for everyone. Michael started Wealthsimple in 2013, and has already grown it to 50 employees, with $500M assets under management, while attracting $30M in funding from Power Financial. Before starting Wealthsimple, Michael was a VP at 1000Memories, which was acquired by Ancestry.com. He also worked at McKinsey and Company.

Part 2 of this interview delves into how Michael Katchen evolved from an entrepreneur to an enterprise leader, and what professional development tools he uses to keep his skills sharp. Part 1 of this interview appeared last week.

Q: As startups rapidly scale, one challenge many founders face is transitioning from ‘entrepreneur’ to ‘business leader’. This seems incredibly tough. Can you talk about this transformation process? How does a founder do this well?

A: It’s very hard. It’s one of the most frustrating, most emotionally taxing challenges. One of the things that is hardest is the people side. When you’re trying to get your business off the ground and you’re a small team, you really do feel like a family. You’re all working as hard as you can. You have a dream, but with no clients or traction, and you’re just trying to make it work. Then if you’re fortunate and growing, suddenly you find that you have to grow up, and you cannot think about your company as a family anymore. You never fire your family. But what happens when you have to start becoming a professional sports team? (I’ve always found that analogy useful.) You do need to make changes to the team.

It’s incredibly difficult. What if you have to let go of somebody who was the third person to join the company, and gave their heart and soul, and cares so deeply about everything, but is no longer a fit? That is so emotionally difficult. But you have to do it.

It’s difficult but you feel like you can’t be everybody’s friend anymore, and you can’t be this family that’s just out for each other. Now the first priority is the company, and doing what’s best for the company and the clients. And then you have to figure out what the team needs to look like to support that. It’s a tough transition.

It’s a little bit of trial by fire, because there’s no way you can prepare for that. And you need balance, because you still want to create this amazing environment, where people do feel like a family, and want to come in to work every day, and work really hard, and care deeply about the mission, and have fun and are super productive. That’s all important and the only way you’re going to win.

The way I’ve been working on it is trial by fire, hiring awesome people (we’ve hired an HR person who’s been through this scaling exercise before), and I work with a coach.

I’ve never been a CEO of a company before. I’ve never even been in a company or on a team this size — I was at McKinsey and it’s a much bigger company, but the teams you work in are small. So I try to get help in leading from wherever I can.

A VC here in Toronto told me that one challenge founders face during the growth-stage, is that they have to develop themselves and their skill sets at a faster rate than their company is growing. What do you do to develop yourself professionally, and to accelerate your rate of learning?

I find the coaching helpful. It’s a little like talking to a psychologist. It’s like therapy because you can be open with your coach in ways that you can’t be open with anyone else in the company. So it’s a great channel to clear your thoughts. But if you also find a coach that’s been there and done that, and I’m fortunate that I have, there’s a lot of business support that comes with that too. Someone that can challenge your thinking, and help you develop an independent perspective that’s removed from the politics or feelings that brew within a company. So that’s useful.

In addition to that, I’m also part of a great group of forum mates who are other founders of companies that are at similar stages or farther along. We get together once a month. It’s kind of like YPO, but with a founders and technology focus. That’s been really great, to have a group of peers to bounce ideas off of and to learn from their experiences.

What about from your investors, do you get mentorship from them as well?

Totally. We’re fortunate that we have an amazing group of investors and advisors around the company, several of which are very dear mentors of mine. We would not have been able to achieve the things we’ve achieved without their support and guidance.

Ten years ago, most startups had no interest in using professional development resources like coaching. Now Shopify has 8 internal coaches. A recent article I read stated that 60% of growth-stage tech CEOs now use executive coaches. Why do you think there is a greater interest now, among tech companies, in professional coaching?

I’m not sure. I don’t know the stats. “60% of CEOs use coaches today” — is that different today than it was in the past? Or did founders in the past just not talk about the fact they were getting coaching?

And the thing I’d say is who knows if it’s right? One of the hardest parts about building a company, is that there’s so much written about how to do it, with startups in particular. And so much of it is contradictory.

You can’t build a business by perfectly following a playbook. So how do you filter through all of the great advice, wisdom, data, and blog posts, to find what’s right for you, to build your company? Ultimately, your company is a unique thing, tackling a unique problem, with a unique set of people. You have to find and build what works for you. Sometimes that’s listening to what other people have done that’s made them successful. And sometimes it’s doing something completely different, and having the conviction to stake your own claim. Those stats are interesting, and it’s helpful to be validated by successful peers at other companies. But one of the cool things is figuring out where you want to place your bets and be different.

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I want to thank Michael Katchen for speaking with me and generously sharing his ideas on these topics.

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