Mike Katchen, Co-Founder of Wealthsimple | How to Come up with an Idea that Gets Product Market Fit

Mike 0:00 Vanguard is the company I most respect in financial services. Invented the index fund. Incredible company. They got started 30-plus years ago. Today they managed – back then it was like they managed 4 trillion. They're much bigger than that now. It took them 30 years to get to their first trillion dollars. Pretty incredible. Blackrock is the largest asset manager in the world today, and it took them 25 years to get to their first trillion. It's like the next company to get to a trillion is going to do it in 15 years or less. Let's go be that business. And here we were on day one. We had zero clients and zero assets. Pablo 0:34 Welcome to the Product Market Fit Show, brought to you by Mistrial, 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. Today we have Mike, the CEO and founder of Wealthsimple, an app that many of you are probably familiar with, and it's an app that helps two and a half million Canadians manage their finances. They are based out of Toronto, have over a thousand employees, and in the last round were valued over $4 billion. The topic of the episode today is how to come up with an idea. So it's going to be an interesting one. We'll be diving into the very early days of this company, which is really a brand name here in Canada. So with that said, Mike, it's a pleasure to have you on the show. Mike 1:27 Thanks for having me. Pablo 1:28 So let's start at the really beginning. I think it's all kind of going to tie in as listeners find out over time. Maybe just instead of coming into when you came up with the idea on where you were, let's rewind a little bit and just give us a bit of your background and and what had happened that's relevant. What had happened before in the years leading up to Wealthsimple itself. The Beginning Mike 1:50 So some people are probably sick of this story because at one point, I think we even turned it into an ad. I grew up here in Canada. I was super fortunate that I got introduced to the world of investing at a young age. So my sister entered me into a stock-picking contest at 12 years old for charity. You got to pick a portfolio of up to 10 stocks and whoever had the highest balance at the end of eight weeks won the grand prize ski vacation to Whistler, BC. So at 12 years old, I win this competition and take my dad skiing for a week. Think I am the coolest 12 year old kid around and fall in love with investing. That was a very early and formative experience for me that I owe enormously and entirely to my older sister, Jody. Fast-forward many years I started my career here. Pablo 2:44 What happened, by the way? Just in between there, do you have the opposite experience? I remember I wasn't – I think it was actually Ray Dalio saying his first stock tripled and then he throws a genius and then he lost whatever it was in the next one. Mike 2:55 I get asked – when I tell this story, I do it at every onboarding class of new Wealthsimple colleagues and I get asked often oh, what did choose? I remember, I bet the farm – my strategy was you had to pick 10 stocks and I bet the farm on one. So it was the minimum investment in nine stocks and then the maximum possible allocation to one stock. That stock was called MGI Software. In the eight weeks of the contest, the company was up 256%. I blew away the competition. Thought I knew what the hell I was doing. For my birthday that year, my dad actually bought me a share of MGI Software and I think it was trading at 25 bucks a share. I was now a 12 year old kid. I had my portfolio of one share of MGI Software. Pablo 3:45 On the road to riches. Mike 3:47 The year was 1999 and you can imagine what happened to MGI Software very quickly. I watched it go from 25 bucks a share and representing my entire 12 year old bank account savings to a year and a half later, the company was acquired for a buck-18 and learned a brutal lesson about stock picking and how hard that can be and how easy it is to fool yourself that you're good at it. So that was was my entry into investing. Pablo 4:20 In 2022, a lot of people are kind of relearning that lesson. Every 20 years or so, it all comes back. Anyways, that – but I appreciate you you sharing the other side of that. So as you're saying, you fast-forward, there are a few years and then... Mike 4:36 I had the good fortune of moving down to San Francisco, joining a few friends who were building a company out there. They hired me into that business. We built it, we sold it, and it was a modest sale. For the first time in our lives we had a little bit of money to invest. The team came to me and they said, Mike, you seem to like investing. Help us figure out what – what should we do? It was my belief The Inspiration For WealthSimple Mike 4:59 at the time that it is so easy to manage your own money. You should never hire someone to do it for you. I built a simple spreadsheet in Excel that tried to show these friends basically how to build a portfolio, how to choose a set of ETFs or stocks to build your portfolio with, how to rebalance it, how to optimize it for taxes. I gave it to them thinking I was empowering them to take control of their financial futures. The feedback they gave me was, Mike, we love this approach, but we're lazy. Please just do it all for us. That became the initial inspiration for Wealthsimple, which is people knew this was smart and important, investing, being smart about money. It's the way you live the life you want, provide the life you want for your family. Yet they didn't really want to do it themselves. They didn't really want to hire a traditional financial advisor. We thought, wouldn't it be really cool if we could use great software, great design to make it accessible, simple, human. We basically started iterating on that problem. Pablo 6:00 Maybe just to set some context, what year was this and what's the landscape at that point? Today there's just so much stuff going on in fintech, so much stuff going on for financial management, but back then I'm sure it was different. What were some of the brands and some of the things that actually existed at the time that you could look at? Mike 6:18 So this would've been probably in 2012 with this first attempt to help friends manage their money. That's when we sold the company and started exploring this concept. There wasn't much going on in the world of fintech really back then. As we got more and more excited about this idea – we worked at the company that acquired us for a year afterwards. There was some time where we were hacking on this idea nights and weekends and really thinking through it. It was during that year where I think Wealthfront in the states might have raised their first seed round of capital. I could be wrong, but that's what I think happened. That seemed to be some validation. Oh wow, making investing easier for people, that seems like something that people want. It's attracting some capital. So when I decided to move back to Canada, it felt like a extra validation that we were onto something and it was a space I wanted to commit myself to. Pablo 7:15 So what happens at that point? You've got this kind of ah-ha moment; oh, people are lazy, but they want this product. Fintech is not a thing. Now there's BAS. I mean, there's all this infrastructure. It's like, oh, I'll do a fintech app. Not so 10 years ago we're talking, so what's your next move? Mike 7:33 Well, so a bunch of things. So one is okay, interesting concept, but I've never worked in financial services before and none of the people that I know work in financial services. What do you do? I was still pretty stuck on this first idea that you ought to manage your own money. That is the best thing and you A Simple Prototype Mike 7:51 want to empower people to do it. We started building our best attempt to solve this problem of making investing easy without having to get any regulation, any licenses to operate in a space and by building tools that made it easy for people to manage money. It was at this point we had a really simple prototype. We were calling the business at that time Steady Up and it essentially was like trying to turn this spreadsheet that showed you how to rebalance portfolio into a web app that would send you a set of instructions once a month of sell some of these shares and buy some of those shares. That's how to rebalance your portfolio and keep it consistent with a financial plan. We had about 50 people using it, if I can call it that. We applied to YC. Little known fact about Wealthsimple's history at this stage, got turned down because they didn't quite believe that anybody wanted what we were trying to build. In hindsight, I think they were right because the first implementation of it wasn't exactly spot on. Essentially what happened is we had this web app, we had like 50 people using it in month one, maybe like 10 people came back in month two, and then no one came back in month three. We realized that people were intrigued by this idea of yeah, of course I want a way to make investing easy, but that actually to solve that problem for people would probably require that we go out and get a license to manage money and actually do it for people. So it was a point of having to make that tough call of making those investments, figuring out how the hell to go get a license to manage money, building the infrastructure to make that possible, which was not easy. Pablo 9:25 How much validation did you – and even in hindsight, hindsight being 20/20, did you do or should you have done? I'm coming at it from your first A Leap Of Faith Pablo 9:33 iterations of this were very much in this kind of MVP mode of what's the least I can do to get at the problem? That's where Steady Up comes up. Now you're like, okay, the least I can do is every – it's the whole stack. All of a sudden you're going to have to take this leap of faith. What's in between that and how much validation do you seek out to say I think this is real and once we build it, they will come? Mike 9:55 Well, I think the benefit we had – and one of the things that I've always related to is when you're solving a problem with a business for yourself. I found for our business, especially in the early days, that was really helpful. It was trying to figure out what do we want. We want something to manage our own money. That's who we're building it for. The first attempt of me trying to help some friends do it themselves wasn't exactly what they wanted, but taking their feedback and learning that actually they loved the approach, they loved the way we were managing money, but they just wanted to do it with the tap of a button. They didn't really want to have to do the work themselves. Made it pretty obvious that there was a group of people here who would be interested in that and maybe that group would only be the three or four colleagues that was trying to help out. As we did more research, as we invited more people to participate in this web app, it just became increasingly obvious that no one knew how to manage – no one knew how to invest and no one was particularly happy with the way they were doing it or they weren't doing it at all. There was a solution to this problem somewhere in this product space, and we would just need to keep iterating until we found it. Pablo 11:07 It does. I mean I think it's this classic solve your own problem and the more you're doing that, the easier it is to take that leap of faith because you assume there must be other people with this. I'm curious. You're also an angel investor now. When does that fail? Again, it's cliché. It doesn't always work. Do you have any insights into when does – solving your own itch is not the answer? Mike 11:30 I don't know that I have a great way to think about that. I mean, I think intuitively the way to think about that is we got lucky. I mean, we operate in financial services. Financial services is so huge that if we only build a Canadian business and our aspirations are bigger than that, even though we're focused here in Canada, we can build a really big company in financial services in Canada. That's not always true. I think the question is if you're operating in other markets, does the question am I an N of one or is there a big market behind my need that I know that if I just keep hacking away at this problem for myself, there's going to be a million or 10 million other people behind me that are going to want this to? I think we're lucky. We just operate in such a giant space that that was never going to be an issue for us. Pablo 12:20 That makes sense. Back to the common story arc here, you decide you're going to take this leap of faith. Grounded in your own personal belief that you're solving a real problem. Again 2012, what's next? You have to go get license. What's the next big hurdle? Mike 12:40 Yeah, so I moved back to Canada. We get rejected from YC. I moved back to Canada, decide to start the business and it's exactly that. It's like, okay, what do you even need? Around this time, I start meeting with other financial services entrepreneurs that I had heard great things about and really admired. One of them turned out to be Som Safe who became our first angel investor, is just an incredible partner and was the first believer in this business from the very earliest days. That provided the first set of insider expertise that – we had no idea how naive and ignorant we were until we had someone on the inside that showed, okay, these are the pieces you need to build a financial services business. You need a registered financial advisor, obviously, but didn't think of that one. You need a compliance person, obviously, but who does compliance? I didn't even know that was a profession, let alone know anybody in that industry. You have to apply to these securities commissions. And by the way, in Canada there are 10 securities commissions, not just one. How does that work? What is the license that you're applying for? So someone that just helped navigate all of that. Then that's just the stuff you need to assemble to apply for a license. Then you need to figure out the infrastructure that says where do you hold the money? How are you going to place a trade? In the US because the industry is so big, you have these infrastructure players like Apex, Clearing that if you want to start a stock-trading business, you just ask them for their APIs and you plug in. It is super simple. In Canada, none of that existed. In fact, in Canada, if you wanted to open up an investment account at that time, there were rules that said that you needed to meet a financial advisor in person for an in-person suitability assessment for that person to actually build a portfolio on your behalf and offer you financial advice. Then if you wanted to open an investment account, there was no way to do it without paperwork. Literally the final stage of trying to apply for an investment account was mail or fax this application somewhere and hope weeks later you hear back that it's open. I think that if we had known the scale of what we were trying to build at the time and hadn't been so naive, I might've just said that just seems way too ridiculous and hard. I don't know anybody who works in financial services. I don't know any of the people. I don't know any of the things that we need to build to do this thing. Pablo 15:19 Are you hitting these one by one? Here you list all of them, but you're doing the one thing and then you realize, oh, there's another door behind that and another door behind that and so on. One Foot In Front Of The Other Mike 15:28 Yeah, you just put one foot in front of the other and try and solve okay, I am trying to solve for an N of me and a few friends. We have some money, so what do I need to actually move that money into an account at Wealthsimple or whatever we were calling it back then, Steady Up I think it was still called. How do I place a trade? How do I actually enable that first transaction to happen? It was just one step after the other trying to figure it out. Pablo 15:57 How expensive was this? Did you get funded in that in the meantime, just thinking licensing, compliance, infrastructure? Mike 16:04 Yeah, we raised – we were convinced that we would need some capital to get going and so we raised, I think it was, a $2 million seed round, which at the time was a huge round. Now it's like I feel like people did ridiculous seed rounds. Pablo 16:18 Last year. This year, we'll see what happens. Mike 16:21 But at the time it was big because we thought we would need runway and capital to get the regulators comfortable and really make a go this thing. Pablo 16:30 So tell us some stories from back then. I mean, I think you – just getting this across the line, you mentioned regulators. What was that process like? Mike 16:36 Yeah, it's all these funny things. The first step was try to find a financial advisor because you can't put the application in unless you have someone registered to manage money. There's certain requirements for good reason to who is qualified to do that. Som introduced me to someone that he'd known for quite a long time, a guy named Dave Nugent, who became a founding team member and our first chief investment officer, in fact our chief investment officer and chief compliance officer. I remember we got introduced and we were scheduled to meet for a coffee somewhere downtown. Both of us showed up at an hour late to the meeting. We knew from that moment that this was probably a perfect fit. He was scheduled to leave on a trip. I want to say it was either to Costa Rica or Hawaii, the week after our meeting. He was going to be there for a week. We hit it off and I told him that we were planning to submit our application to the regulators in 10 days and that if he wanted the job as our CIO, he would need to complete these five requisite courses and pass them within seven days so that we could put his name onto the application that went with the regulators. I remember he printed off – because he didn't know he was going to have wifi at this place he was going in the rainforest in Costa Rica or something like that. Hundreds of pages of exam prep materials essentially that he studied on for his entire vacation by the pool or wherever he was so that the day he got back, he could write this exam. It was like, you better pass because A, you have to quit because you have to be dedicated to this full-time to be on the application. By the way, if you don't pass, the job's not yours, and you got to spend your entire vacation studying to to approve this thing, Pablo 18:32 How do you get – how do you convince him to do that back then? Mike 18:37 I have no idea how we did it, but it's just Dave. Dave was just an incredible partner and believed in the vision. He was a financial advisor. He'd worked in this space. He understood the need and the opportunity to build something different, and he knew Som well, which meant a lot to why he would trust me and this opportunity was that relationship. He took a leap of faith and fortunately it all worked out. Pablo 19:03 Maybe on that, was the vision – once you had spelled it out to people, was it obvious back then? People were like, oh yeah, I could see everybody using this, or was it like, that's stupid, like Airbnb type thing. Early days? Mike 19:17 I don't think it was quite Airbnb because having people sleep in your living room was really out there kind of concept, but I think people thought it was a good In The Business Of Trust Mike 19:26 idea, but were very skeptical that it would ever work because of two particular reasons. One is we are in the business of trust. We ask people for their life savings. It is an enormous ask. When I started, I was what, 25 years old, had never really worked in financial services. I had no track record. Like what business did I have earning people's trust. So there was just this giant amount of skepticism of who is this kid and what right does he have to do anything in this space? In particular, there was the second base of skepticism of who is this kid? In the context of Canadian financial services, which are dominated by these five giant banks that don't let competitors come into the market, crush anyone who tries to do it, have a monopoly on trust. People were just like, it's never going to work. It's cool concept. Sounds like young people might like it, but they don't have any money, first of all. So you're never going to be able to build a business that's interesting and B, the banks will just crush you, so no thanks. That was generally the feedback we got. Pablo 20:34 So it was really a matter of finding those people crazy enough who also thought you were crazy enough to really get this thing across the finish line. Mike 20:42 Yeah, I mean, I still remember it. It was the day we launched the company. It was our official launch to the public press release announcement day or whatever it was. We had a small meeting with a couple of our advisors at the at the office and one of them who was an industry veteran, asked me the question. He's like, “Mike, what are we doing here? What's the ambition behind the business?” I remember I said at the time something so naive, but I think that's kind of what it takes to do these sorts of things. I said, “Vanguard is the company I most respect in financial services.” Invented the index fund, made it accessible, cheap, incredible company. They got started 30-plus years ago. Today they manage – back then it was – they managed 4 trillion. They're much bigger than that now. It took them 30 years to get to their first trillion dollars, pretty incredible. Blackrock is the largest asset manager in the world today and it took them 25 years to get to their first trillion. The next company to get to a trillion is going to do it in 15 years or less. Let's go be that business. Here we were on day one. We had zero clients and zero assets, and the advisor kind of looked at me and was like, “You're an idiot.” It's super naive, but I don't know. I just think it's a little bit of what it takes is a little bit of that naive optimism or naive ambition when you're getting started to do something. Pablo 22:19 I think that's right. I think that's what gets people excited even though a lot of people will laugh it off. I have to ask, are you generally on track for that, kind of ballpark? Mike 22:29 I think if you extrapolate the compound growth rate of the business, we are ahead of what we would've needed to get there, but we're a long way away. The company's are roughly 20 billion or so today, which is nothing to sneeze at, but it's not a trillion yet. Pablo 22:47 Sure. Mike 22:49 If we keep the growth rate up – I would say that it's one of those things that along the way is interesting. Things evolve. We're not just an asset manager anymore. Our business is now something different than it was on day one where we see an opportunity to really become our clients' primary financial relationship across all of their financial needs. This idea of just growing our asset base is no longer the prime objective. Pablo 23:16 That makes sense. It actually gets segued into my question, which is what was this – first the MVP was you just help people make decisions and they do it. Once you decided, no, we're going to go all the way and manage people's money, even then, what was the first – what did you imagine your app would do on day one for someone? Mike 23:34 Well, it was just about building a long-term portfolio on day one. It was – the best way for people to invest is to build a portfolio that reflects your long-term aspirations and risk tolerance. Invest in it regularly and stick to it through market ups and downs. Best if you build that portfolio yourself, but we were doing it for you. We were offering some financial advice to help people navigate those choices and make a plan and stick to that plan. That was the initial ambition, which was just help people get into really thoughtfully constructed portfolios, help them get started. The kind of service that you get if you have a half a million or a million bucks and a wealth manager, young people that don't quite have that asset base today, didn't have access to. That was the ambition at the outset. Pablo 24:29 Okay, that makes sense. So you were going to take people's money and help them pick out what whatever make – ask some questions about what kind of risk tolerance they have and these sort of things and build them a portfolio that they would then invest into on monthly or whatever cadence. Mike 24:44 Yeah, exactly. Pablo 24:46 So tell me, I think earlier you shared with me before the call some funny stories with meeting regulators. I mean, I'm just curious what that was like. You're 25. You're new to financial services, completely new world out of – the thing about finance is so different than your traditional startup that's building software in a garage, whatever, and just putting it up. You were meeting people who are all about status quo. What was that kind of dynamic like? Meeting The Regulators Mike 25:12 The first time we went to meet the regulators, I have a picture of it that I come back to often. It's Dave Nugent, my co-founder Brett, and one of our earliest software engineers wearing suits for the first and only time we have ever worn suits to the office together because what the hell do we know? We're meeting the regulators. You got to be respectful and play the part. We were kids and wanted to appear a little bit older and more credible than we had any right to at the time. We showed up and were just so far out of our depth, but I think we benefited from the fact that the story is one that really resonated with regulators. Young people wanted an a new way to invest. They didn't want to have to meet someone in person and spend an hour with a random financial advisor to build a portfolio. By the way, the financial advisor would never spend the time with them because young people don't have enough money that that business model makes sense. What we tried to show them was that was this giant group of people who need to invest because if they get started now with decades of compounding in front of them, they're the ones that stand to benefit from this opportunity but aren't and can't because of some of the structural barriers that we have mistakenly put in the way of getting into a a thoughtful investment program. It took us a long time to convince them to give us the the account app. It took us six months to get the the approval, which felt like forever. Maybe it wasn't in a regulatory world. Then even when we got approval, we actually had all these conditions on it where we had to call every single client who signed up to do a suitability assessment. So we got them to admit that okay, meeting someone is maybe a step too far, but people have to have a phone call. You have to have a phone call before you invest. It took us another six months of showing them the data of how phone calls really didn't change the answer for people and people really didn't want – young people in particular really didn't want to speak to anybody on the phone to convince them that we could do a suitability assessment completely digitally and and make that work. So it took a lot of regulatory hacking to try and get to even the first version of the product that we maybe originally had wanted to launch the market but couldn't for quite a long time. Pablo 27:40 Just to be clear, the first product was mobile app or was it a web app? Mike 27:45 It was a web app to start. Pablo 27:47 It was a web app, okay. I'm curious on – the reason I ask that is on timing. It's a known adage that timing is extremely important. There's all the serendipity and luck elements that go into that. Did you spend a lot of time thinking about this why now question relatedly? Would you – people have ideas all the time and that, as a VC, is one of the things that we think about. Why now for this idea? When you think about you're talking to founders that are out there maybe having an idea, maybe coming up with one, did you spend a lot of time thinking about timing? Should a founder actually spend a lot of time thinking about whether it's the right time for that idea? Mike 28:22 I don't know. I think it's so easy to be wrong on timing. So many great companies get lucky that they had the right idea at the right time. You hear when No Such Thing As A Good Idea Mike 28:34 someone's successful, people come out of the woodwork and tell you, oh, I had the same idea or I did the same thing but 10 years ago and it was 10 years too early. There's probably some truth to that, but one of my co-founders, Rudy, has always had this great saying when he talks to founders, because some people are sometimes so protective of their ideas and so secretive because they worry that it's just a matter of time until someone else does it and they're going to steal my idea and move with it. He's like, there's no such thing as a good idea. In fact when you have an idea you think is any good, your second thought should be someone else had the exact same idea at this exact same time and whoever wins, game on. It's now about execution. I don't know if you can plan for timing versus is there a way that you just execute given the cards you're dealt, the market you're in, the timing that you're building something. Some conditions work in your favor and evolve to be better for you, and sometimes they get worse. We were a massive beneficiary of starting the business in a huge bull run in the markets. We were around with a stock trading app during meme stocks that was just incredibly successful. If you were starting an investment business right now, that'd be brutal, but if you execute it right for this market, it can last until the next bull market comes, because these things are cyclical. You'll probably be okay. So the timing is a thing, but I don't know how much you can plan for that or be too precious about it. Pablo 30:05 I think one of the other ways to look at that same thing is you're probably better off focusing on delivering clear value versus focusing on the why now of it. If you can deliver clear value, and that's where, when you look at some of these things – to your point, I think before Uber, somebody came up with Uber 10 years ago, but there wasn't mobile phones that were all over the place. What's really the value of having to load up your laptop or your computer to call taxi? It's just not the same value as opening up your mobile phone, clicking a button. So that's maybe a better way for people to gauge if the timing's right, or the iPhone before the iPhone right there, smartphones before the smartphone sort of thing. Again, the things weren't there yet, so the experience was actually pretty weak even though the idea was cool. Mike 30:46 I think there's truth to that. There's some enabling technologies that just unlock opportunities. To be honest, when Uber launched, I lived in San Francisco and I never thought it was going to work outside of San Francisco because – I was obviously dead wrong about that, but San Francisco, you could never get a cab. It was impossible to get a car to go somewhere. In fact if there had – if mobile phones hadn't been around and there was simply a website to go to to order a cab to come pick you up, maybe you didn't have your laptop on you at all times and that's the thing that never would've worked, but that would've been actually a step function better than what existed in the market. Maybe you could have only created a small little San Francisco local cab business that was better, but part of part of building a great company is the luck of just being in the right place at the right time. If someone was hacking on that problem, maybe they would've been the one that figured out, oh, mobile phones are coming out. We've got this great distribution system we use a laptop for and we evolve it for mobile and then they would've won. I think people shouldn't be too precious about timing. It's a hard thing I think to guess right or wrong on. Pablo 31:52 Perfect. No, that's super helpful. So fast-forward a little bit. You've gone through all these hurdles and the thing's getting ready. I'm just curious maybe if you can dive a little bit into kind of the big launch. There's always – especially in consumer, The Public Launch Pablo 32:03 I think there's always this huge thing around the the public launch. What went into that? What was that like? Mike 32:10 It was begging and pleading for press. We thought that if the Global Mail wrote about us, it would give the facade of credibility. No one wanted to be – no one wants to be the first client to an investment business. I would go and I would talk to people and be like, here's what we're doing. We're making really high-quality investing accessible, low cost, really simple. They'd say, oh, that sounds amazing. How many clients do you have? No one wants the answer to be, well, if you sign up, we'll have one. That's just a bad answer. Sounds like a big risk. It's like, oh, it seems like they have clients. They're credible. They're big. So we really did everything we could to get a lot of press in those days. Then we hustled. We hustled like crazy to try to win clients. I mean, I used to do crazy things. I used to try to – within 30 seconds of someone signing up on the website and – the first version you had to give a name, email, phone number. I used to try within 30 seconds of calling every single person who signed up and there weren't that many that were signing up that I couldn't actually manage it for a while. It would just be, “Hey, I'm Mike, co-founder of Wealthsimple. I just wanted to say thank you so much for signing up. I want you to – this is my number. If you ever need anything, you call me directly. Love to hear how you heard about us. Thank you and be in touch.” It was just hustling to try to differentiate, to try to win that little extra bit of trust that we could on every client. Those were the things we did to grow back then. Then it evolved into these – we had these lunch and learn presentations where we'd go in; we'd take free lunch into companies. We found that if I did one of these presentations, 20% of the audience would become a client, became the first reliable customer acquisition channel we found. It didn't matter how big the audience. If there were five people, we'd get one client. If there were a hundred people, we'd get 20. My job for a year became do as many lunch and learns a day as you possibly can. It was not uncommon to see me running around Toronto holding 50 bags of lunch and running between buildings, trying to stuff in three or four or five of these things back to back. It just became about hustle. Pablo 34:29 Was it hard to get PR for this? It sounds like an obvious – I mean, that's hindsight maybe speaking, but empowering the average consumer to have the tools of the big guys. Sounds like an pretty – Mike 34:40 We were lucky we got press, but we hated the press in the early days. They called us a robo-advisor and they would do these awful stock image photography of robots along with every article they wrote. We just – there was always this like negative connotation to the press of they're robots and we were like, actually we're way more human than any traditional financial advisor delivering a more personalized experience to people that – just all of it fell on deaf ears. They just were not interested in that story. We got the press, but I'm not sure it was always the press we wanted. Pablo 35:14 You launched this product. When do you feel like – when do you start to get signals that that leap of faith was worth taking, that this thing is trending towards something positive? Mike 35:25 I think I told you this when you asked me that the other day. I don't know that I ever felt that way. I'm still not sure I feel that way. I think that paranoia is probably a good thing. I knew from the very earliest days that we were solving a real problem. The first clients at Wealthsimple were my friends and my family. As I told you, I called every single person who signed up for a very long time. I think that feedback loop of hearing from people that we were the first time that they had ever thought about investing and they were doing it and they'd become investors and they found the process empowering and simple, transparent. Those were enough signs of validation that we were onto something that we could get going. As time grows on you hear more of these stories and they get even more powerful. I remember there was this one client we had early days who's been very public about his Wealthsimple experience where he has this tweet storm where he talks about how he had been homeless. This post on Twitter showed him in front of this brand new house with a for sale, sold sign on it. He said, “This is now me standing in front of the home I just bought with my mom. It's the first home I've owned in a decade. It was because of Wealthsimple that I managed to put enough money away for a down payment and saved enough. Now we just got keys to our brand new house.” When you start to hear stories of the impact you're having on people's lives, that was enough to know we have something here that is doing good for people, solving a real problem. We got to stick to it, obviously. Product Market Fit Pablo 37:02 So the early days of solving a problem, delivering real value. This is the Product Market Fit Show, so we always end on this question, which is – and especially I'm curious as a consumer app – when did you feel like you had real product market fit? Mike 37:18 Beyond the anecdotes, it might be those first times where we had a way to grow that was reliable. So it was the matching of the anecdotes of people are telling us they love this thing and they're putting they're putting money into it. That's a big signal. Someone has $50,000 to their name, $25,000 to their name and they're giving us that money. At the individual level, that was a pretty good signal that we had something, but then when we could find that we had a couple channels to scale that where we could reliably grow and it was a question of putting more – every effort you put into a lunch and learn, you get something out of it. I think that's probably the moment where we have something here. We could probably raise some capital to make this thing go faster. Maybe that would be how I thought about us getting a product market fit. Recap Pablo 38:08 Perfect. Well, thanks, Mike. We'll stop there. I mean, just to quickly recap, you started off with that classic origin story at 12 years old, winning an investing contest, then a few years later coming back to this idea, starting off with some MVPs that I think make a lot of sense from the perspective of trying to do the least to delivering the value and then effectively getting caught into the financial services world. Fast-forward a decade, now serving two and a half million Canadians and helping them accomplish their finance goals, which I think is as noble a mission as you can get. Really appreciate you sharing this story. I think founders will get a lot of it and if only learn and see that even the biggest brands had to go through a lot of little things at the beginning, which amount to something big once it's all said and done. So anyways, thanks for that, Mike. It was awesome. Mike 38:58 Thanks for having me. A lot of fun. Pablo 39:08 Thank you so much for listening all the way through. It's been a pleasure having you here. Make sure to subscribe so you don't miss the next episode.