Why you Need a Performance Coach | Dan Eberhard, Founder of Koho

Dan (Guest) 0:00 And I had , I picked this guy because he'd been on Oprah. I literally didn't know. I was like, "If you've been on Oprah, maybe you're legit," and he was not. Intro 0:10 Welcome to the product-market fit show brought to you by Mistral, a seed stage firm based in Canada, I'm Pablo I'm a founder turned VC. My goal is to help early-stage founders like you find product-market fit. Pablo (Host) 0:25 Today we have Dan, the founder and CEO of Koho, a FinTech company that offers a free spending and savings account with standard features like cash back as well as very unique features like a tool that helps you automatically improve your credit score every month. Koho is based in Toronto, they have about 200 employees and have raised over $130 million. The topic of today's episode is about performance coaching. We'll talk about how and why Dan decided to have a coach from day one, how it's helped him in his business, and how he's scaled the coaching program at Koho to make it available to all 200 employees. Dan, it's a pleasure to have you here. Dan (Guest) 1:04 Thanks so much for having me, man, happy to chat. Pablo (Host) 1:07 Let me start at the beginning, maybe just provide some context. Advisors and having advisors is pretty well known, well understood. I'd even say it's common. Some startups don't really do it, but I would argue most founders know, generally, that the value of having advisors. And it's pretty clear. You need an expert in digital marketing, you find an advisor in digital marketing, and they help you with that topic. Coaching is something that's quite different, and I must've made even myself, I'm not a hundred percent sure what exactly a performance coach does, and how and why you might leverage it, and who is that person on the other side? So, I'm really looking into digging into this with Dan's first coach Pablo (Host) 1:50 you. When did your coaching journey start? When did you get your first coach? And just tell me that story about how you did it? Why you even did it? When it was? I'm really curious to learn how it all starts. Dan (Guest) 2:01 I guess my first coach was, I would probably say seven or eight years ago, and I didn't know where to start. I didn't know... Pablo (Host) 2:12 This was, just to be clear, before Koho. When exactly did Koho start? Dan (Guest) 2:15 Before Koho. Koho's about five and a half years old or something. Let's talk about some underlying fundamental beliefs, I guess. One of them is Michael Phelps has a coach. Every elite athlete has a coach, whether you're an individual or team-based competitor. And so, it made sense that there should be coaching in this world, which, I think, is a world of high performance. I think thing number two is, I'm a big believer in self-awareness. And I think a coach is one important lever, not a necessary lever, but an important lever in self-awareness. I think self-awareness is a coefficient for every interaction we have with people. It just feels a worthwhile thing to invest in, whether that's coaching or therapy or any of that kind of stuff. My own journey to coaching was based on that belief. Then I didn't really know where to start. I'd never had a coach, any of that stuff. And I found some service, and it paired me with a coach, and I picked this guy because he'd been on Oprah. I literally didn't know. I was like, "If you've been on Oprah, maybe you're legit," and he was not. I literally started that manually for me, and within a couple of sessions, I could figure out that this probably wasn't a good fit for me. I think, and we can talk about this, but one of the things about coaching, and I think you're alluding to it, is it's a super broad term. And there's a lot of loosey goosey people out there who call themselves coaches, and then anybody can call themselves a coach. And it's a very different thing to have a structured performance-based approach and accountability-based approach about rigorously try to get a little better every week. Pablo (Host) 4:04 We'll dive into how you really use it now because I'm What drove Dan to get a coach Pablo (Host) 4:07 sure you've learned a lot, but back then, and your first coach, what really drove you to say, go from just thinking about it to saying, "Hey, you know what, let's get a coach"? What were you trying to accomplish? Dan (Guest) 4:15 What I was trying to accomplish was, at the time, I probably would have been advising a startup, so, did my quick bio, co-founded a wind energy company sold that, started another company, ran that for a while, ultimately didn't like it, round it down. And then at the time, I think I was helping a company in the United States raise money in the renewable energy space, and I think it was just a function of not a lot of sounding boards. I didn't really have a network, I didn't really have mentors, I didn't know that many folks. So, I wanted to have a forcing function, try and better understand the challenges that I was facing as an individual and as a professional. I think it was pseudo therapy in some ways, but, that was the initial impetus anyway. Pablo (Host) 5:02 You found this person because they signal , they were on Oprah, and they weren't good. What does that mean they weren't good ? What did he do? And we can then dive into what a good coach would do. But what were those first coaching sessions were like? Dan (Guest) 5:13 I think a big function of a coach is relatability. So, my version of relatability requires somebody who has a relevant set of experiences that they can draw on that lets us speak the same language. If coaching is a function of both maybe professional decisions that you're grappling with and personal decisions as it relates to that world, you're missing a huge chunk of the puzzle if they have no understanding of what the professional world looks like for you. There was a lot of education involved and frankly, a lot of hand-wavy nonsense kind of woo woo terms around energy, and just stuff that was not particularly actionable and not particularly tactical , and that's just not really the way that I think or operate that well. It felt like I just wasn't getting energy or clarity out of it that made me more effective. Pablo (Host) 6:09 You do a few sessions, it's not that helpful. I'm assuming you fired him or let it go at some point. Then you look for your second coach right away. Do you take a break between them and when you... Are you all in on coaching, or no, okay, this is not the right person? Dan (Guest) 6:25 Yes, because I think it wasn't binary. It's not zero value. It's just not the value that I was hoping to get. Especially when you're funding this out of your pocket and most coaches overcharge. It's probably analogous to dating, and we learn what we like and what we don't like, and where we have trust and where we don't have trust. That's just part of going through the process. You take what's working about that, and it lets you be more explicit and clear in coach number two. I've probably worked with - if I was just going to count coaches - five different coaches now. Each time, I'm a little bit clear on what I want. Advisors/Mentors/Psychologists vs Coaches Pablo (Host) 7:02 You put advisors and mentors and even mentors in a different bucket. And I just think about, you've got therapists, if you're just psychology, it's not about work, or it's about whatever you want it to be. You've got advisors who are very focused on, let's say, a digital marketing advisor, you're only going to call them for that. And then you've got this kind of grey line, you've got mentors, that's getting pretty close to coaching. How do you draw the line? How do you think about one versus the other, and what makes a coach a coach versus a mentor, let's say? Dan (Guest) 7:31 It's certainly a gradient, and they are blurry lines. I think a great therapist and a great coach are pretty similar. A therapist only focuses on the internal components and the psychology, I think that's missing part of it. And if a coach only focuses on the external and the business functions, that's missing part of it. So, they're interchangeable, I've worked with both. So, it's a gradient around along your own internal psychology through your external. And I think the overlay to that, too, is a mentor or an advisor is... With a coach, if I'm talking to a mentor in some ways I feel a little bit guilty about that because I feel like I'm trading on their time selfishly, and there's not the same degree of accountability, but if I'm going to pay somebody 150 bucks an hour, whatever the coaching rate is, for an hour a week, you better show up, they better show up. And, and there's a different kind of accountability in that relationship, and I can be more selfish in that relationship because I'm paying for it. You know what I mean? So, the relationship is just a little bit clearer and that creates better conversations. Pablo (Host) 8:39 Would you go as far as to say that a coach is like a professional mentor, or are there other things beyond just you pay for it, and therefore they show up prepared? Dan (Guest) 8:47 It certainly can be a professional mentor, probably coach number four, that we've worked with. We hired him because he had been the coach at Shopify and the first coach at Shopify from when they went from 60 to 3000 people. You obviously can draw on a wealth of experience from somebody like that. You know what I mean? I think the big thing about coaching is, you have to find the right environment of coaching that works for you. There's some direction there, but there's also a process of trial and error there, for sure. Pablo (Host) 9:11 Your first coach, you just didn't really know what you're doing, so you went and got somebody. Your second coach, was it a bit more of a process by that point, a bit more structured in terms of what you were looking for? Dan (Guest) 9:21 You learn much more from the stuff that doesn't work or rubs you the wrong way than the stuff that does, unfortunately. You can reverse engineer into a better understanding of what a great coach relationship would look. And the next one I think was much more successful. His name w as Stephen. He is in Vancouver. He ended up being the first on retainer coach a t Koho for the whole team when we were four people. I worked with him for probably 18 months. And the other thing is, coaches have a time horizon. They have a certain philosophy about the world or a certain perspective. And my belief is you get to diminishing returns on that at some point. Pablo (Host) 9:58 If you think about the analogy of a basketball coach. Does a coach need to be a great player? Pablo (Host) 10:00 Well, a basketball coach tends to be a probably pretty, usually not always, but a pretty good player. It doesn't need to be the best one, but they also have a bunch of other skills. And they're management skills, leadership skills, they get respected as a basketball player. When you think about, and hear, coaching specifically for startup founders. Do these coaches need to have, do they have startup experience? Dan (Guest) 10:20 No, not necessarily. I think the other thing is I have much more proximity to mentors who have done things that I really admire professionally. That availability of information is easier for me to draw on. But it really depends on the founder, how you think about EQ and all these different kind of things that how beneficial a coach is. If I have a perfect understanding of my business world, I don't really need a coach to do that. Obviously, I don't, but it depends on there's just a needs basis to it. There's a huge intangible, mushy stuff around, do you trust the person? Do you actually have chemistry with them? You want to have hard conversations about all the shit that's scaring you, or anything like that. There's just a relationship dynamic component, for sure, too. Pablo (Host) 11:09 You meet this person once a week, really, really early days of Koho. What are you doing in each session? How are they structured? What do you tend to talk about? Who comes up with the agenda? Dan (Guest) 11:20 The best ones in my experience are one of collaboration in terms of, obviously I have to bring my own perspective for the things that are weighing on me. Within that, I think that there should be a super formulaic approach in so far as accountability with clear action items, clear takeaways. Especially when you're the founder, it's a pretty blurry line between the issues that you're dealing with the business and your personal life and your personal wellbeing and a lot of senses. At least the way I operate. Wiser people than me would probably be able to create more boundaries there. But it's very difficult to completely isolate a thread between a business issue and a personal issue. So, a good coach will provide a mirror to understand if I'm thinking about this business issue, what are my trends and tendencies, and things that I'm working on on a personal level or business level, to kind of just be a thought partner as I'm thinking about these decisions. Pablo (Host) 12:14 I'm wondering if there's a story that's not all that sensitive, whether it's recent or old, doesn't really matter. You can share, I came to the coach with this type of problem, and then this is the kind of plan that we discussed, and this is what happened as a result. Dan (Guest) 12:28 This one's probably a couple of years ago, we were talking about how functional our leadership team is. The way that I think about a leadership team is there as, N plus one relationships. So, right now, our leadership team across all departments, it's 13 people. That means that I have 12 different relationships times 12 people on the team, there's 140 relationships on this team. This was a couple of years ago, leadership team was smaller and all that kind of stuff. We were doing this work as a leadership team around how to build and improve trust and all those things. The results came back mixed, some people felt had the right posture around trust and communication and candor and all those things, and other people didn't. That's always kind of the case. But what I did do with my coach in that situation was diagnose the issue and come up with a playbook. And part of that conversation is I think, as a founder, when you feel things aren't good within your team, you inevitably take that personally, and you feel like it's your failure. There's an element of, hang on, put that ego stuff aside. We don't know if this is about you yet or not. This is an anonymous survey within your team. Pablo (Host) 13:30 And that's what they're saying? That's where the coach is helping you. Dan (Guest) 13:32 Yes, exactly. This would be an example of the dialogue I'd have with the coach. And then within that , taking the personal, let's call it blind spots off, and then now coming up with a playbook and being like, "How do we diagnose the issue?" Pablo (Host) 13:47 Yeah, that's helpful. It does strike me, some people will say, when you think about therapy, a lot of people say, "Why would you talk to a therapist if you could just talk to a friend"? And the reality is there's something about the third partiness, the objectivity, and the fact that you're paying them. That just makes that dialogue so different. I mean, a friend has self-interests, and I don't mean that in a negative way. It's just, they're there as your friend, and so, they're going to deal with it in a certain way. A therapist is very objective, their only goal is you. I'm just wondering how much of that is similar in coaching, where it's you get to be so much more objective. Dan (Guest) 14:21 Yeah. I think people kind of have some bad intuitions around therapy and coaching in so far as, your friend is your friend. That is a very cluttered relationship in terms of how honest they're going to be and why they're going to be honest and their consequences for being honest. It's obviously deeply informed by their view of the world. If you think about the unlock for getting it right, and let's just say you, as a result of therapy or coaching or whatever, you get 2% better at your decision-making, or 2% better at stopping and taking a breath or better understanding yourself, and that compounds over a years and a career, it's a no-brainer in that regard. Pablo (Host) 15:03 I'm just wondering, you've done it, and obviously, you found value in it, that's How important is coaching Pablo (Host) 15:07 why you've kept it. But how critical do you think it has been to you and Koho in general, especially in those early days, scale of 0 to 1 to 10? How important is coaching in those early days? Dan (Guest) 15:18 It's kind of math. Let's say you're working 50 hours a week as a founder, maybe more, maybe less, whatever. If you're going to spend an hour a week or an hour every two weeks, which is totally fine, that breaks down to 30 minutes a week on a 50-hour week. Or let's just call it an hour a week and say you're super aggressive on coaching, that's 2% of your time a week. If that helps you make one better decision that week as a founder, then it's probably going to accelerate the company more than 2% that week. But when I'm doing the math about, for the team at Koho and the ROI, sometimes it's difficult to quantify. But the way that I think about it is right now, the ratio of employees to coaching utilization is about 40 to one, and about half of Koho team uses a coach. We're at two and a half coaches right now. But let's call it 40 to one on those people. That's two and a half percent of employee to coach ratio. Are those people going to stay at Koho two and a half percent longer? They're going to be two and a half percent more effective? Probably. I think they're probably going to be 10% more effective. Pablo (Host) 16:23 Is there any kind of conflict or tension between managers and coaches? I think about a manager's leadership, part of the role, and there is... obviously we were talking about this before, a manager's goal is not just to coach you, they've got a bunch of other objectives, but there is a coaching element to management. How do you guys think about that? Is there even a tension there, and when does an employee say, "I'm going to go to this with my coach, but I'm going to go to this to my manager," and so on? Dan (Guest) 16:49 I think the tension comes from that. That's a really high trust fit. You know, people are having conversations with the coach a t Koho, being like, "How do I know if I w ant to stay here?" And that's a hard conversation to have. But it's also a super useful conversation to have, and people should be having that conversation with their manager and be super open about it and, using a tour of duty model or whatever. But I think that what coaching facilitates is it almost acts like a lubricant in the company around conversations that can and should be happening. Why coaching is not that popular Pablo (Host) 17:17 Coaching, it's not a new concept, I think it's gotten a lot more popular, but, especially, if you think about the analogies in sports and all these other places, very few people have a coach, very few companies have coaching, at least startups . Do you have any insight as to why that might be? Dan (Guest) 17:33 I think that there's a bunch of quack life coaches out there. And I think that's like repellent to a lot of people who are outcome-driven, and there's definitely a lot of noise to sift through. I think this is changing, but I think there was a stigma around coaching, and more specifically therapy. And I think coaching, obviously it's adjacent to that world, which I think is changing. And you touched on another part , which is, "Hey man, we're all busy. It's hard to carve out the time, and it feels indulgent." Pablo (Host) 18:03 What's your tips to a first-time founder, early stage, and they're going to do this coaching thing? Where do they go, and how do they find a way to get a good coach? Dan (Guest) 18:13 I think there's a couple of things. I think one of them is just expectation management. You're not going to get your perfect coach in day one, especially if you're paying 150 bucks an hour. I think a really good proxy question, or the proxy conviction that you need to come to, is that they know what elite performance looks like. And that you have good chemistry with them. Pablo (Host) 18:33 Okay. I got it. So, in a sense, similar to any other. You want physio, whatever, you want to go to a platform, find people, look at reviews and then try them out and spend some money, and... Dan (Guest) 18:45 Yes, man, MVP it, spend 15 minutes talking to 50 coaches or 10 coaches or whatever. Lots of them will do free consultations or intro calls, and you can spend 15 or 30 minutes. Ask them, "Hey, what should I be looking for in a coach?" It's a great question. Pablo (Host) 19:01 What about turnover? I'm curious. Do you have a similar stat on turnover of people that take coaches and people that don't? Dan (Guest) 19:07 I don't know it offhand. I do know that I pushed the coaches regularly if people feel they're not thriving at Koho. It is their job, they are performance coaches, and it's their job to coach people out of Koho, and de-stigmatize the relationship and say, "Hey, this might not be the right place for you. And let's figure out what an exit plan looks like", or something like that. I don't know the stats, but I do know that that's a consistent push. Attrition is way too stigmatizing. It shouldn't be. We have healthy attrition, it's 10% a year, but coaching is part of that. Maybe I'll leave you with a few of the other ROIs that we think about that, that I wasn't necessarily expecting. Coaching and employee retention Dan (Guest) 19:46 We've talked about the math of how this works from a 40 to one basis. I think it's a big asset from a recruiting perspective in terms of people having coaching. I think it's the right thing to do. If you can help people have more career self-awareness or personal self-awareness, that seems like a good thing to invest in, just personally. And then one of the things that I wasn't expecting is, and the coaches have to be mindful of this, I can download cultural context on these coaches, and they're going to have 20 or 30 one-on-ones a week. And they can beat that drum around what performance looks at Koho in ways that I necessarily can't in a one-on-one environment. A coach might be, "hey, a lot of people feel like we're slipping on transparency. I've heard this a lot." And so, you get to have a bit of a thematic window into your company, which is useful. Pablo (Host) 20:31 And actually, on that note, because it's almost like you're getting a lot of... there's these tools, and the name just escapes me, but they're paying a lot of these survey tools. And they'll ping everybody in the Oregon, they'll do a survey on, how different things. Are you using that plus the coaches to get this quantum and qualitative, deeper insights into what's going on? Because that'll tell you that trust is down, but I won't tell you any why's. And so, the coaching, I would assume, does. Dan (Guest) 20:55 Yeah, it does. You have to be careful that not over-rotate on anything that's anecdotal, it's just something that comes with killing a company. But, yes. So, we have, we, I think we use 15Five, which is our engagement tool and looks at 80 different parameters across the company with different surveys and stuff. And then you can map that to coaching, and you can also map things like likelihood of performance and likelihood of retention and all these different things with people who have coached. Something like 70% of the people who got promotions have worked with our coaches at Koho. So, there's clear ROI and that kind of stuff, whether that's cause or correlation is unclear. There are Recap Dan (Guest) 21:33 interesting datasets that you get out of it. Pablo (Host) 21:33 And well, look Dan, this has been a great episode. Quick recap , you've been using performance coaching for seven, eight years now, certainly since day zero at Koho, and it's made a considerable impact to your performance, to the other founders' performance and to employees to the point that you've scaled it now, and coaching is available to all employees at Koho, which I find is very unique, certainly for a startup, and I'm sure very appreciated by everybody that works there. Thanks a lot, Dan, for sharing that story. I'm sure will be very helpful to a lot of founders out there. Thanks so much for listening. If you want to see more content, check out pmf.show.