Tim Jackson, Ph.D.
Jul 5, 2016 · 7 min read

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.

This interview delves into issues of how Wealthsimple grew as a business, and how Michael Katchen built and developed his own skills as a leader during this journey of intense and rapid growth. This is Part 1 of 2. Part 2 will appear next week.

Q: What were you like as a youngster growing up, and what milestones, significant events, or critical learning experiences stick out for you, that helped shape who you are today?

A: I grew up around entrepreneurs. My grandfather was an entrepreneur. He was at one point one of the largest employers in Calgary, where he started a meatpacking business, back when it was a town of 10,000 people. He was an entrepreneur, my father was an entrepreneur, and my elder sister was an entrepreneur. So I grew up around people that loved to start projects and businesses.

There are two milestones that are most significant in how I got to Wealthsimple. One is that I became really interested in the stock market and investing at a young age. I actually won my first stock picking contest at 12 years old. My father entered me in this charity stock picking contest, which sparked a lifelong interest for me, and I started learning about it and have been doing it ever since.

The second milestone was moving to San Francisco, and being part of the tech community out there. When I started my career I was in consulting at McKinsey doing strategy work for big banks and financial institutions. A couple of my former colleagues got into YCombinator in 2010, when nobody knew what YCombinator was. They invited me to move to the Valley and help build a company. We did that for a few years. That gave me the chance to really help understand what it was like to build a technology company and product. I got really immersed in the tech scene in San Francisco.

I pulled those two things together, a new found love for technology, and a long-standing love for investing, into Wealthsimple. And that’s how this all came about.

Tell us about your path to becoming the CEO of Wealthsimple. How did you get to where you are today?

Honestly it’s surreal to think about where the company is today. The business came about very organically. I was living in San Francisco working at this company we were building called 1000Memories, and we sold that company to Ancestry.com.

When we sold that business the colleagues I was working with made a little bit of money for the first time in their lives. They were confronted with the need to do something with it. They all knew that I was an investor, and that I had a system of how I built portfolios, and they all asked me for advice and input.

As a friend, I built them an Excel model that showed them how to build a portfolio of ETFs, so they could manage their own money, and wouldn’t have to hire someone to do it for them. I shared it with my colleagues, and a small subset of friends that have always been asking me for investment advice over the years. And the feedback was “Mike we love this system, thanks for sharing it, but shoot we’re lazy. Could you do it for us? We’d be willing to pay you for it.”

That was a cool experience because I had this group of customers from Day 1. People who wanted something, who were willing to give me feedback, and could shape what the service could look like. I decided to pursue that further. Those became the first customers of Wealthsimple.

I built the first version of the product with those folks in mind, trying to solve their needs and my needs as investors. I think that’s one reason why we’ve been so successful from Day 1, is that we’re very clear about the problem we’re solving and who we’re solving it for. The customers are very much people like us. Young professionals that want to do something smart with their money, but don’t want to spend time on it. That’s the ethos of our product development, and our strategy for marketing.

And the cool thing about that is that all of those first customers, are all now employees at Wealthsimple. They’re part of the team here. Many of them moved to Canada to help build the business even though they’re all Americans from the Valley. It’s been a cool experience working with those guys and girls.

Was the spreadsheet you built for your friends based around ETFs and the practice of rebalancing them? Because I thought that was supposed to be the ‘passive’ way to invest, and yet your friends still wanted you to do it for them.

That’s the crazy thing. The portfolio was simple. You would do a little risk assessment and then it would show you a portfolio of ETFs.

The key to smart investing is discipline. It’s getting on a regular savings pattern, so you’re putting money in regularly, and not making changes to the portfolio.

So the goal was that every month you’d put more savings toward your portfolio, and you’d plug in the amount you’d be investing in the spreadsheet, and it would show you how to invest those funds to rebalance the portfolio.

Once or twice a year you would use this tool to rebalance and make sure that you were back on your target weighting and in the right asset mix for you.

That’s it. It was super simple. And they were still too lazy to do it.

Time to build a company right?

Yeah exactly. The data is very clear on this as well. People that manage their own money are often terrible investors. The sad part is that the professionals that manage money are often terrible investors too.

But people end up making all sorts of emotional decisions when they invest. They get excited when markets are at their peaks, and panic when they’re at their troughs, and do exactly what you shouldn’t do like buy high or sell low. All of that leads to terrible outcomes.

Having an advisor like Wealthsimple help you automate it, and be disciplined, and take out the emotion, and help you create a plan you can stick to can add a tremendous amount of value to someone’s portfolio long term.

It doesn’t sound like much, because it’s simple, but it can be very powerful.

You’ve been on a crazy journey of growth with Wealthsimple since you started it in 2013. Now you have about 50 employees; $500M assets under management; you’ve raised $30M in funding from Power Financial. Big banks are trying to copy your service. During this growth process, how has your own leadership style changed and evolved?

The honest answer is that I feel like the whole company, and my role in particular, change every couple of months. That’s one of the most exciting and challenging parts of scaling the company. We used to be a few people sitting around one table. When that was the case I spent most of my time on product management, marketing, and compliance.

Now we’re 50 people and I don’t get to do any of those things anymore, unfortunately, except the compliance stuff. My role ever since we were 3 people and grew to 10 was how do we bring in people that are way smarter and more capable at whatever the role is, compared to me or anyone else on the team. We always look at each hire as an opportunity to upscale and to bring in a totally new set of talents and capabilities into the team.

I am not a visionary, I am not a Steve Jobs or Elon Musk kind of person. I need those people around me and the company to do really innovative things. I think we’ve been fortunate with some of the people we’ve been able to bring on board. That’s the thing I see as my most critical role in the company right now — is how do we continue to bring on visionary people on products, design and investment management, to build a world-class service that changes the landscape for clients. I feel fortunate we’ve been able to do that so far.

How do you contribute to that effort? Are you directly involved in recruitment and interviews? How do you ensure you get the best people?

Until about 3 weeks ago, I did all the recruiting. I sourced candidates, I interviewed all of them. That was my biggest responsibility, I spent 60% of my time on recruiting. But we recently hired a people manager, and one of her responsibilities is recruiting.

That’s the other thing that changes, I take on these responsibilities, take them to a certain place, and then hire someone way better to take it over. That’s what we’ve recently done with recruiting, so it’s now someone else’s responsibility. Though I still try to meet every candidate before we make an offer.

Are you still involved in recruiting or have you passed it off to your new people manager?

No I’m still very much involved. I’m no longer the driving force of it. I think it’s important. The challenge now, given how fast we’ve grown from 5 to 50 people, is ramping people up so they’re productive. You’re building the company as you’re doing this. It’s probably the most challenging thing about this process.

So where I try to spend the most time now, is on onboarding, culture building, and values. Making sure people are very aware of the company we’re building and that they adopt the values from Day 1. And that’s a really important part of how we’re able to build this company so quickly, is to make sure that that’s consistent across every person.

— — —

In Part 2 of this interview appearing next week, Michael talks in more depth about his own transformation from entrepreneur to business leader, and how he approaches professional development.

The Leadership Pad

Advice and inspiration for developing leaders in organizations going through change. Hosted by Jackson Leadership Inc.

Tim Jackson, Ph.D.

Written by

President of Jackson Leadership Inc. | Building leadership capacity for companies facing change from strategic shifts to rapid growth.

The Leadership Pad

Advice and inspiration for developing leaders in organizations going through change. Hosted by Jackson Leadership Inc.

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