Thinking Big and Building Trust: Michael Katchen’s Wealthsimple is Breaking the Hype Cycle

Michael Katchen is revolutionizing how people invest.

Three years ago, Katchen founded Wealthsimple, a digital investment platform that helps users navigate the often complex finance world by simplifying and automating investing through a custom plan. They take pride in their client-first approach, calling themselves the most human financial services company in the world.

Once dismissed by the big banks, Katchen is giving them a run for their money—literally. The business has rapidly grown, hitting $1 billion in assets earlier this year.

Katchen always knew he wanted to start a business. He had his first taste at Ivey Business School where he won a case competition—and nearly dropped out. After dabbling in private equity consulting, he moved to San Francisco where he helped build and sell a company to But building a technology business wasn’t something that occurred to him until after his time in the Valley.

As Canada’s leading digital investment advisor, Wealthsimple cracked into the international market earlier this year, launching in the United States in January and the UK just last month. Now Michael’s eyes are already set to 15 years ahead where he sees Wealthsimple hitting $1 trillion under management.

In the meantime, his success has earned him some serious accolades. Katchen was crowned Entrepreneur of the Year—twice—and called one of Toronto Life’s 50 most influential people. He’s only 29 years old.

You spent the early part of your career in the Valley. What was your biggest take away from your time in the US?

The Valley is a special place. There are people that are naïve enough to think that they can change the world and there are several companies that are actually doing it. And that energy is pretty crazy to feed off of.

The biggest thing I took away from my time in San Francisco was finding a great group of colleagues who became my cofounders at Wealthsimple. It’s also where the idea for Wealthsimple was born.

Some of the colleagues that I was working with at the time were coming into a little bit of money for the first time in their lives and thinking they should do something smart with it. I’d been investing ever since I was 12. I’ve always loved it. So they all asked me for advice and support. And it was through trying to solve that problem for them that we figured out there was this way of making investing easy for people. And they became the first clients and the first employees of the company, and I’m very grateful for that.

Why did you move back to Toronto to start Wealthsimple?

A lot of people start businesses today on the hopes of flipping it. That’s kind of your ambition. I didn’t want to do that. I wanted to build a business that made a difference, had impact, and was lasting. And to do that, you have to be committed to staying somewhere to build it for 10 years. I had to ask myself the question: “Am I going to do this in San Francisco or is it time to go home to Canada?”

I saw what was happening in the Canadian technology space and I got really excited about being a part of it, trying to contribute to what I think is just a fundamentally important part of how our country needs to succeed over the coming 20 years. And I never looked back.

Wealthsimple had organic traction right out of the gate. What was that like?

I love businesses where you solve problems. I had this group of people that knew they should be investing, but had no idea what to do and didn’t want any solution on the marketplace. And the first way I tried to solve it was wrong. I built a spreadsheet that showed you how to build your own portfolio of ETFs. I gave it to my friends and I said, “Here you go. You never have to hire someone to do it for you.” And their feedback was: “Mike, we love this approach but we’re lazy. Just do it for us.”

And I still wasn’t convinced. I started hacking nights and weekends with a friend of mine who was also at that company. Just a simple web app that every month would send you a set of instructions: here’s what share to buy, here’s what to sell—just do this.

The feedback was again that they got lazy or forgot or just didn’t get around to it. They said, “Just do it for me.” So I asked, “Would you pay me for it?” And the feedback was yes.

To actually manage someone’s money, you need a license. It’s a huge responsibility to take someone’s life savings. How the hell do you even do that? I never worked in that industry before.

But when it was a little bit validated that there was something in this idea of making money easy for people to understand, and making investing accessible and simple, that we decided to go pursue that route wholeheartedly.

You’ve scaled quickly, growing from a team of four to more than a hundred. What were your biggest challenges in the company’s first year?

In the earliest days, success for us was if we could get one client each week. And then it was can we get five clients and then 10 clients. Those were the challenges: can we just prove that people want this and can we actually onboard them.

We were a nothing business with no funding, no clients and no assets, trying to convince people to trust us with their life savings. Our first week in business, someone opened an account from several million dollars. We were like, “What the hell are you thinking?”

When we launched, we were trying to build a really simple way to manage your money. It had to be a digital solution. We were a tech company, and so a big part of that is you should be able to open an investment account online. But everyone in the country refused to work with us on this.

So we basically threw up a website and people would sign up. Then my cofounders and I would sit there by the computer, print off every application that someone would sign up for, sign it by hand, drive it up to our custodian’s office and drop off a stack of paperwork—every single night—so that we could pretend to have this digital onboarding experience. For us, it was hack after hack of just trying to deliver this experience, even though the tech wasn’t there.

Our biggest challenge in the earliest days—when we didn’t have assets or clients—was how do we convince people to trust us and that we’re a credible institution. So we did everything we could to build trust. I would try to call each registrant within 30 seconds of them signing up. You’d get a phone call, “Hi, I’m the founder of Wealthsimple. Thank you so much for signing up. How’d you hear about us?” People would be like, “Holy crap! That’s amazing! You really care about me.”

These things weren’t scalable, obviously, but that didn’t matter at the time.

Wealthsimple CEO Michael Katchen at Techvibes LIVE, July 21, 2017.
Katchen at Techvibes LIVE, July 21, 2017.

How much of an uphill battle was it to get people to actually trust a scrappy startup?

I think there’s two ways you can build trust. And big companies have a monopoly on trust because they’re old and big, not because you actually trust they will do what’s in your best interests. You just trust that they’re not going to go away. We’ve got a long way to go to command the sort of trust of a 200-year-old institution.

I think the other way to do it is to earn it. Our approach to earning trust has really centered on a couple different things. The first is how a brand and a product really relate to each other. We spend a lot of time and energy on building a brand that—in its simplest form—is really just the promise you make to the market. What is it that we’re promising to do for you? And your product is the way you deliver on that promise every single day.

The more consistently you deliver on that, and if you do it every single day really well, over time that’s how you earn trust.

Do you see a shift in the financial industry where people are starting to believe in digital investing?

When we launched the business, banks were really dismissive. They thought, “This is a cool idea. Cute little company. If they get any traction, we’ll buy them or we’ll crush them.” And they said this very explicitly.

I think over the last year, we’ve seen a total change in their mindset where two banks have launched directly competitive products to ours. They’re pouring significant marketing dollars. All the other banks have intentions to launch directly competitive products to ours. And now several are approaching us about, “We don’t think we can beat you at this. We’re not great at technology. We’re not great at design. We’re not great at this way of just constantly iterating to better products and services. Can we partner with you?”

And it’s been a really interesting evolution to see where despite the competition that’s come of the Canadian market, today we have an 80% share of the Canadian market in this space of digital advice. So for some reason, we’ve managed to crack something that even notwithstanding the greater amount of competition and attention the space is getting, we’ve managed to carve out a nice niche for ourselves.

Technology is changing financial services in meaningful ways. How do you stay on top of providing digital advice?

Creating a human experience around investing is a really powerful component of our service. The industry likes to call us a robo-advisor and the media loves to call us robo-advice. And we’ve always hated the term because we like to think of ourselves as the most human financial services company in the world. And we do that in a few different ways.

One is our business model is one where we combine really great digital tools that just make investing simple and straightforward. But you also get access to human expertise and human advice if you want that too. And the combination between human advice empowered by technology is a really powerful value proposition.

Second is in the way we talk about money. We don’t talk about things like oil prices, interest rates, and outlooks on next quarter. Language that doesn’t really make sense to most people. We’re trying to humanize that whole experience.

While I think technology is automating so much of financial services, we actually think that there’s a really important role of humanizing the experience around it, which is important to success.

Millennials think about money in a different way. What is the challenge of marketing to them?

There’s a lot of hype around the way millennials feel about money. While millennials get a bad rap, they’re actually pretty thoughtful and do a lot of homework and research. But when it comes to money, the things they care about are very different, and that insight is actually really powerful.

They care about experiences. They want to be smart about their money but maybe not to buy a boat someday. But maybe because they want to take a trip or they want to buy a small cottage property in the middle of the woods. When we think about investing, the only reason investing matters is to help you live the life that you want, whatever that is.

So we have to broaden the set of why money matters and why investing matters. I think we’ve tapped into that, which is we try to help you live the life you want and we try to paint a really sexy picture about what that could be. At the same time, our investment approach is pretty boring, and it’s a funny balance where we try actually to remind people that smart investing is actually about being really boring.

Being Canadian player in the global market, do you see that as an advantage?

I care very deeply about this topic. I think we as a country need more big thinking in our entrepreneurs to build really big, global champions. We have one of the most talent-rich communities in the world, especially when it comes to technology, especially when it comes to some of the most transformative technologies on the horizon like machine learning, AI and quantum. These are really transformative, cool technologies that are going to transform many different industries. We’re extremely well-positioned to do it.

We’ve got an incredibly supportive government at all levels, which want to see the tech sector be successful. We have a great investor community that wants to scale up our businesses.

So how do we figure out how to put all that together in some recipe and win? And I think one of the missing ingredients for that is just some naïve, big thinking. Like what right do we have as a three-year-old technology wealth management company in Canada to think that we can win in the US and in the UK against these other technology companies that are trying to do it and many 100-year-old institutions that dominate markets?

On the flip side, what are the hardships of being a Canadian company?

That we’re a Canadian company (laughing). We don’t have that many people in Canada that have scaled businesses from 100 people to 200 people and have done that on an international scale. We just don’t have that much talent here that’s been through that kind of scaling. So that’s one big gap that we’re trying to solve.

There’s also a marketing challenge. In Canada, we’re kind of a known company now, and that wasn’t the case in the start, but we’ve kind of done it. We’re not going to be able to do that in the US and the UK. At least, not yet. We’re working on it. And that means we’re fighting from behind rather than being the first company the press thinks about when they want to talk about the space.

And so we thought hard and long about it and found a few spaces where we felt we could win, and our experience to date has been that there was a lot of hype, but actually when you peel back and look behind the curtains, the space is still wide open in the states. It’s really popular in New York and California, but there’s a big country out there, and you just have to pick your spots and be really thoughtful about how you go after it.

You’ve had quite the journey. What are some lessons you’ve learned along the way?

Think big—but, really, think big about solving a problem you care about. That’s probably the thing that’s most important when you get started.

The second lesson is about the group of people you work with. There’s a whole different set of problems I could be excited about working on, but if I got to work with a group of people I loved coming into the office with every day, I could work on just about anything.

If you get to put those two things together, work on a problem you care about with a group of people you love to work with, that’s when magic happens in the office every single day.

This interview took place during Techvibes LIVE Tech Meetup in June, 2017. It has been edited for length & clarity.