Fintech Growth Insider

Carlos Caro Reveals How Credit Karma Turned Free Credit Scores Into a Billion Dollar Business

When Carlos Caro [https://www.linkedin.com/in/the-carlos-caro/] joined Credit Karma [https://www.creditkarma.com/] in 2016, the company had 50 million members and was generating $500 million a year. By the time he left, in 2020, Credit Karma had grown to 110 million members and nearly a billion dollars in revenue and was sold to Intuit for $8.1 billion. Carlos was born in Venezuela, and his family relocated to Washington D.C. when he was three years old. The son of two engineers, he was a strong student, and eventually landed a fully-funded scholarship at Columbia to pursue a PHD in economics. But one year into his PHD, he walked away, because the work felt too abstract. He worried he’d spend his career writing papers that only a handful of peers would ever read. After a year spent playing pro poker, a high school friend convinced him to apply to Capital One. The process included no less than 9 interviews, and a lot of hard questions, but Carlos got in. There, he encountered a data-driven culture that would prepare him for his role at Credit Karma more than any other. Carlos Caro: There are executives who lead based on intuition and gut feel. There are very few of those at Capital One. Everyone’s belief is grounded in real data. If they believe something with conviction, it’s because they’ve seen a result that says this is how the world works. There’s a culture there to challenge, doubt, and pressure test everything. As a senior executive, you can’t get away with a point of view that isn’t grounded in reality. When you made a decision, and I was responsible for many of these, they’re called credit decisions internally, there was a rigorous deck that explained what we’re doing, why we’re recommending it, and then a sensitivity analysis of all the possible outcomes. We’d lay out a pessimistic, optimistic, and base case, and each scenario was pressure tested and standardized. Julien Brault: Capital One has long positioned itself as an option for people with bad credit. How do you avoid negative selection in that model, where you end up attracting only the people everyone else already rejected? And what did you do on the customer acquisition side to mitigate that risk? CC: That’s probably one of the keys to Capital One’s early success. I don’t think they started with a website and a TV ad saying “we have subprime cards, come find us,” because that might have attracted exactly the negative selection you’re describing. But if instead you go to the credit bureaus and say you want to look at their data and mail people that fit a certain profile, now you’re proactively getting in front of the user you think is going to perform. You’re avoiding a lot of the risk of attracting unwanted attention. Capital One was very good in the early days at leveraging targeted channels like direct mail. Over the years, as their brand matured and they expanded into prime products, they got more comfortable making their products open for public application. But I would still guess a very healthy fraction of their book is direct mail and targeted affiliate channels like Experian, Credit Karma, and others that allow you to target based on credit profile. JB: You joined Credit Karma in 2016, when the credit card business was already doing $500 million a year. Were you walking into something that just needed scaling, or did you have to figure out how to get from $500 million to $1 billion? CC: The business was cranking when I joined, for sure. I relocated from DC to San Francisco for the position. What I quickly noticed when I looked around was that the results and performance of the business had outgrown its staffing, at least in my functional area of partnerships and business development. I saw opportunity everywhere. I saw the opportunity to do more business with existing partners, to bring on more partners, and to do more innovative things. Lightbox was one example of that. JB: I have a question about Lightbox. What was it? CC: Lightbox is essentially a targeting platform for marketers. It enables a marketer on Credit Karma to determine the eligibility criteria for who sees their ads. What Karma was solving for with Lightbox was to drive up approval rates. I remember the CEO being very clear that he wanted approval rates to be 100%. So anyone who applied for a product on Karma should get it. In practice they’re not 100%, but they’re very, very high. The reason they’re not at 100% is that the data issuers have and the data Karma has to make decisions can be slightly different and refreshed at different dates. But the rate is extremely high. That was one of the big initiatives that, when I looked around, we just didn’t have enough people to execute on. A lot of my job during my four years was to hire the right team. JB: As VP of Credit Cards at Credit Karma, what was the scope of your role and what was your main KPI? CC: My KPI was top line revenue. The scope was to manage all the lender partnerships. At the time, Karma’s sole source of revenue was lender partnerships. We were essentially a media seller. These lenders wanted to advertise on our platform and we sold media to all of them. JB: So you were focused on cards specifically? CC: Yes, I was on the card side, though at the time we also had a personal loan business, an auto refinance business, and an insurance business. My job was to make sure our lenders felt good about the ROI they were getting on the platform. What usually happened is they would come back asking for more and more. They wanted the growth, and then our marketing and engagement team would have to do the hard work of finding more Credit Karma members so we could serve the demand from the lending side. JB: Not long after you joined, Credit Karma entered the Canadian market in 2016 and then the UK market in 2019. Those markets already had established credit monitoring apps. How did Credit Karma differentiate itself there? CC: I’ll caveat this with the fact that I was very focused on the domestic business. But what I observed is that we more or less migrated the same playbook from the States. In the US, the free credit score was the hook to get people to register, ongoing monitoring was the hook to get them to come back, and monetization was the lender ads on the platform. It was more or less the same playbook in Canada and the UK. JB: At the time, what was driving Credit Karma’s growth? CC: Our secret sauce was brand marketing. They started doing some experiments on YouTube and programmatic TV. There was an ad they recorded very cheaply, something like $50,000, that started to move the needle on web traffic. And then they just kept leaning into brand marketing. That was one of the bigger drivers for membership. JB: When did they make that shift toward brand marketing? CC: That was around 2012. There was a real inflection point after they figured it out. The shape of the growth curve really hit an inflection point after that. JB: You mentioned Lightbox earlier. Was the goal to increase revenue per member? What was its impact on the business? CC: It was really designed to drive better outcomes for all three constituents of the marketplace. No one likes to shop for credit card offers and then get declined. That actually runs counter to Credit Karma’s mission, which is to help people make financial progress. If they’re encouraging someone to apply for a product and that person gets declined, it actually hurts their credit score. From the lender perspective, operational costs go way down the higher the approval rate is, because they have costs tied to website maintenance, credit bureau data, and a bunch of other things they pay for on a per application basis. So the higher the approval rate, the better off they are from a cost perspective as well. When we launched the business we were really keyed in on measuring outcomes across all three constituents: is Credit Karma growing, are customers getting a better experience, and are lenders achieving a lower cost of acquisition? We found all three to be true. JB: I’m curious about this, because if you look at the numbers, in 2016 it was 50 million users generating $500 million in revenue. When it sold to Intuit, it had 110 million users and about a billion dollars in revenue. The revenue per user was flat or had diminished over that period. Why do you think that was? CC: It’s a really good question. Those comparisons are hard to make, but I think it’s the right math to calibrate on, like a yield-per-user metric. I would suspect if you continued to draw that curve past 2020, the picture would look different. A couple of things to consider: Lightbox was still fairly early in its maturity when Intuit acquired the business. The very first year it launched was 2017, and the acquisition was early 2020, so Lightbox had only really been in the market about two years. The penetration rate across the industry was actually still fairly low. I would say the majority of issuers had not yet adopted the technology. Right now I think it’s at maturity, so if you did the same math today, you’d likely see a different result. JB: During that period, what was the definition of a “member”? Was it a monthly active user? CC: It was a consumer who came to the app and was a verified, credit-active consumer with the credit bureau. You had to go through identity verification, and the bureaus had to match you against a record in their database. So it wasn’t enough to just be a real person. JB: So they may not have been active, but we knew they had checked their credit score at least once. During the period you were there, Credit Karma launched new products like tax filing, insurance, and mortgage. Was this a way to get more data on the user? How did it fit into the business? CC: The tax move seemed entirely connected to the mission of financial progress, and I think Intuit still thinks about it that way, because they do a lot of cross-promotion between TurboTax and cards. Some very high percentage of consumers, maybe around 50%, don’t have $400 saved in an emergency fund. When we looked at the tax business, for us it was a way to actually create some of that liquidity for our members, because most Americans’ biggest one-time windfall is actually their tax return. Most people overpay and then get back $500 to $1,000 when they file. The idea was to be there at the moment people filed, not only to help them file, but so that when they got the return, they could make smart use of it. Maybe use it for a secured credit card to improve their credit. The other part of the story, which maybe isn’t talked about enough, is that the product was 100% free. No upsells. If you’ve used some of the other “free” products out there, you’ll notice they charge you something when you need to file for your state. Karma’s product was totally free, all in the spirit of creating financial progress for people. JB: You left a few months after the Intuit transaction for $8.1 billion was announced. Did you make some money with your stock options? CC: Yeah, I did. There were some options there. It’s always nice to feel like you got a little extra in return. I always felt like Karma paid and compensated people very fairly, that was one of the things I loved about working there. But having an exit is always icing on the cake. JB: Why did you decide to leave Credit Karma? CC: It had been a little more than four years of working really hard, because the business was being prepared for some kind of exit. I wasn’t in the very small group of executives that worked on the deal with Intuit, so I could sense the pressure and intensity without fully understanding the reason for it. I could feel it in my hours, in how much I was traveling, in the scrutiny when we missed a KPI. Had I known we were being prepared for a sale, I would have understood that a little better. But in retrospect, all startups are like that. Karma was founded in 2007 and the exit was 2020, so that’s a 13-year journey to the liquidity event. I just happened to join in that last four-year sprint. I was tired and a little burnt out. And candidly, the prospect of working for a multi-billion dollar company at the scale of Intuit wasn’t going to be for me long-term, because I’d worked at Capital One as a mega company and my DNA is a little more wired toward act first, ask questions later. I like smaller companies for that reason. When I left Karma, I wanted to start a business. In retrospect, I think I could have stayed two or three extra years, because according to friends I have inside Credit Karma, the culture didn’t really start to change for several years after the acquisition. JB: Six years later, membership went from 110 million to 140 million, so growth really slowed down. Is that market saturation for credit monitoring apps? CC: Their revenues have actually grown pretty steadily through the post-acquisition period. But I think you’re pointing at something different, which is membership. I was always a little worried about this, even when I was there in 2016, because there are only about 200 million credit-active individuals in the US. Some people are immigrants who don’t yet have a credit file, some are too young. So there’s a theoretical max audience. It would make sense that at some point there’s an S-curve where rapid growth flattens out. My guess is they’re just in the maturity of that cycle. Their brand is probably as strong as ever on the consumer side. Even now, when I ask people what they use to monitor their credit, I often hear Karma as the number one answer. Although there is a close competitor now in Experian, because they’ve leaned into their marketplace and have real scale there as well. JB: After leaving Credit Karma, you launched a newsletter called The Free Toaster [https://www.thefreetoaster.com/], and then a marketing agency called New Market Growth [https://www.newmarketgrowth.com/]. Are there growth strategies you learned at Credit Karma that you now teach your clients? CC: Yes. One thing that was very notable when I was at Credit Karma was that the lenders who tended to do the best fell into a few patterns. One pattern was a lender that came in and served an audience nobody else wanted. That was almost always a success. For example, a subprime card issuer targeting a highly risky segment that generates above-average losses, but finding a way to underwrite that customer through a security deposit, cashflow data, or by connecting the product to a payroll account. There are certain audiences that are too risky to lend to on an unsecured basis, but if you secure the product in the right way, you can actually serve populations that don’t have access to credit at all. And if you can be the first mover to deliver that on Karma, you can get outsized rewards. A second pattern is doing the same thing as everyone else, but with very low marketing friction. Your application process is excellent, your approval rates are high. When Credit Karma’s algorithm runs, your offer is viewed as the most efficient and rises up in the rankings. A third pattern is genuine innovation, doing something fundamentally different or better than everyone else. The Chase Sapphire Reserve launch is a good example. Chase made a concerted effort to challenge the Amex Platinum, which had long been the go-to card for elite travellers. Chase came out with the same annual fee but packed it with benefits and a 100,000-mile sign-on bonus worth about $1,500 in travel. It was a compelling offer the market hadn’t seen in a long time, and that kind of product tended to perform very well on channels like Karma. JB: That brings me to a question I’d like your opinion on. I used to run an affiliate publisher, and one of the things I thought was a good idea was asking credit card issuers to give me a better welcome bonus in exchange for a lower commission. How should affiliate managers at fintechs think about balancing those two levers when the total customer acquisition budget is fixed? CC: This is really tricky. Let’s create a tangible example. Say the card issuer pays you $300 per conversion and they’re offering a $100 bonus to the customer. You’re describing a world where the bank pays $200 to the publisher instead of $300, and $200 to the customer instead of $100. The total spend is the same, they’ve just redistributed how it gets paid. I’ve seen instances where the publisher is better off when that happens, and instances where they’re worse off. It tends to be a function of how well the bonus is promoted and who you’re getting it in front of. There’s a sweet spot where you can drop your payout a little as the lender, give some back to the consumer, and everybody wins. But that requires a lot of iteration and testing. I’ll give you a recent example. A client ran a test comparing a zero dollar sign-on bonus, a $50 sign-on bonus, and a $100 sign-on bonus. My instinct was that $100 would beat $50 easily. But the result showed the $50 bonus captured most of the response benefit. Their initial response rate was around 2%. With a $50 bonus it went to 3%, a 50% lift. But from $50 to $100, it only moved from 3% to 3.1%. This was a deep subprime audience that wasn’t used to getting any bonus at all. Once they saw $50, that was compelling enough. The difference between $50 and $100 barely moved the needle. The issuer would have been throwing away that extra $50. So their ongoing strategy is $50. But they wouldn’t have learned that without testing. I don’t have generic advice that unlocks this for publishers universally. JB: Some credit card issuers are scared of welcome bonuses because they don’t want to attract churners, people who just take the sign-up bonus and cancel the card. CC: I got that question a lot from the big players. “How can you guarantee that if I get a customer on Karma, they won’t churn onto some other product a year later?” We were never able to guarantee anything. That was just a reality. JB: Is churning a significant cost, or is it a small population and a cost of doing business? CC: I actually think it’s a valid concern. I’ve seen publishers that say, “if you have these two products, you should cancel them and get this other product instead,” directly encouraging churning behaviour. There are issuers that will refuse to work with a publisher that does that. It’s going to capture some baseline churn, but that publisher is actively encouraging the behaviour, and that rubs issuers the wrong way. That said, in practice it’s usually a small percentage of users and, for those users, it is a cost of doing business. But issuers have gotten much smarter about it. I apply for a lot of cards, partly because I enjoy the bonuses but also because I like to experience products firsthand. I’ve been declined for products where the reason given was that I’d already received a bonus on that issuer’s product before. I noticed Amex handle this particularly well. They said I was approved, I could get the card, but they couldn’t offer me the sign-on bonus because I had received one on another of their products too recently. They didn’t decline me flat out. They said I’m qualified but they can’t justify paying a bonus again. More and more issuers are building systems and policies to defend themselves against this. JB: You recently wrote in The Free Toaster about the shrinking credit card business at NerdWallet [https://www.thefreetoaster.com/p/can-nerdwallet-outrun-the-ai-disruption?utm_source=publication-search]. It’s not just them; a lot of affiliate publishers are shrinking. What channels should fintechs that want to grow fast be looking at? CC: To add some colour to NerdWallet specifically, that situation is happening because their SEO traffic has been taking a hit. They even admit it in their earnings, and they’ve announced they’re investing more in paid media, paid social, and paid search to replace the organic traffic. That’s a very different ballgame because organic traffic costs you far less than paid. They’ll have some challenges adjusting to the new normal. As for the channel mix I normally see across fintechs: it’s fairly heavy in direct mail and affiliate marketing. When you roll up Karma, Experian, LendingTree, Bankrate, and the rest, affiliate marketing tends to account for about 40% of account generation. Another 40% is direct mail. JB: Direct mail seems like a strategy from the 80s. Is it still actually working for fintechs? CC: I’ve worked with 12 lenders at New Market Growth, and I can only think of one that hadn’t either tested or had a rollout program in mail. And these are predominantly fintechs. I actually hosted a dinner in New York last week where the topic was direct mail, what’s going on and what’s working. Sixteen executives from 11 different companies showed up to talk about it. It’s very much not dead. It’s about 40% of most fintech books. The remaining 20% is some mix of paid search, paid social, and maybe a little brand. Most lenders are underinvested in brand and social. I talked to a VP at a well-known, publicly traded fintech that’s been around since the early days, and he told me brand and influencer marketing is a really big part of their strategy. Most fintechs are under-penetrated there. JB: Would you say direct mail is actually working better today? I’ve never received so much email, but I get very little physical mail anymore. CC: The number I most recently heard was that $2 billion per year is spent on direct mail advertising in consumer lending alone. The affiliate category is larger, somewhere between four and six billion, but direct mail is very much alive. And I have a counterintuitive prediction: I actually think AI might create a renaissance for direct mail. Digital advertising is going to get way more competitive because everyone is going to have a bot or an agent running digital ads. It’s going to get really crowded and competitive because you can just automate it away. And then people are going to start looking at direct mail again with fresh eyes. JB: That was Carlos Caro [https://www.linkedin.com/in/the-carlos-caro/], former VP of Credit Cards at Credit Karma [https://www.creditkarma.com/] and founder of New Market Growth [https://www.newmarketgrowth.com/], a marketing agency specialized in affiliate marketing in the lending space. Thanks for listening to my show. Make sure to follow Fintech Growth Insider on your podcast app so you never miss a new episode. 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Maxwell Nicholson Reveals Why He Abandoned His Brokerage Plans to Build a Social Network

I‘m Julien Brault and on the show today, how Maxwell Nicholson [https://www.linkedin.com/in/maxwellnicholson/], CEO and co-founder of Blossom Social [https://www.blossomsocial.com/], built a social network for investors with over 160,000 monthly active users, 3.8 million dollars in annual revenue and a weekly newsletter that generates 500,000 dollars per year. Maxwell was making $120,000 a year at McKinsey with a clear path to double that within a few years, but he couldn't shake the feeling that he was meant for something else. He grew up in a small Canadian town called Grand Forks in British Columbia. His dad was a welder and his mom a stay-at-home mom. He and his brother were the first in their family to graduate university. So, when he landed a job at McKinsey, his grandma thought he was crazy to even consider leaving. But in 2021, at the height of the pandemic investing craze, Maxwell walked away to build a social stock trading app for Canadian investors. Maxwell Nicholson: I knew that I wanted to leave, so it wasn't too difficult of a decision for me. The senior partner of the McKinsey Vancouver office was actually one of our early investors. So I owe a lot to McKinsey and I loved my time there. Julien Brault: In 2022, you raised a pre-seed of $750,000 and it included two Canadian stock market YouTubers, Brandon Beavis [https://www.linkedin.com/in/brandonbeavis/], who's now a co-founder, and Shay Huang [https://www.instagram.com/humbledtrader/]. How did you find them? Because at the time Blossom was not a household name. I don't even know if they had heard about it. So how did you convince people or did they reach out to you? I'm just curious because I do think raising from influencers can create leverage. So I'm curious to hear about that. MN: Well, Brandon joining the company was a huge turning point for us. I think at that point we had less than a thousand users, maybe less than 10,000. Brandon was really the one that has driven all of our growth to this point. We had reached out to him on LinkedIn because we were just looking for anyone who had investing in their bio on Instagram or LinkedIn and just cold DMing them. So we cold DMed Brandon. He hopped on a call with us and then he told us his rates to sponsor a video. We were like, "Wow, we can't afford that. We definitely don't have the money." Then I had another opportunity where a friend of a friend invited me to a barbecue that he was going to be at. I built a more personal relationship with him and sold the vision. JB: Did he just say, "Okay, I'll do $100,000 worth of media, influencing videos, and you just give me stock?" Or did he actually sign a check? MN: We were raising our pre-seed round, so Brandon invested $50,000 of his own money. He invested and we granted advisory shares. Over the course of the year, he started driving immense value. I think a lot of times a startup might see someone driving all this value and think, "We got him for so cheap, we barely gave him any equity. That's great for us." But for me, I was like, "Wow, there's a huge mismatch in the value he's driving and the equity he received." So I actually had a meeting with him and said, "Hey, we're going to double your equity from the advisory agreement." He just continued to deliver incredible value and we kept increasing it. Eventually the three co-founders had a conversation and said, "Hey, Brandon's basically operating like a co-founder. Let's officially make him one." We had a few beers and I put my arm around him and said, "Brandon, we got to have you on as a co-founder." And he's like, "You better not just be saying this because you're drunk, man." We had a few beers and I put my arm around him and said, “Brandon, we got to have you on as a co-founder.” JB: When was that? When did he join full-time as a co-founder? MN: I think it was pretty early. It was either a year in or a year and a half in. It was probably like six months after that press release you mentioned in 2022. And I'll touch quickly on Shay, the Humble Trader, who's another incredible YouTuber [https://www.youtube.com/@HumbledTraderOfficial]. The only reason she invested was because Brandon invested. So Brandon and her had sushi together. Right off the bat, day one, Brandon brought in an incredible investor. If that doesn't speak to the early signals of him being an incredible value add to the team, I don't know what does. JB: You initially started with the social component, a little bit like Robinhood. A lot of people don't know, but Robinhood launched a non-trading app at the very beginning. The plan was eventually to launch a brokerage, a little bit like what Dub is doing. Then later on you announced that you're happy to be a social network and you don't want the regulatory hurdles of operating a brokerage. So what changed? Because today it's probably easier than ever. There are players like white label, API-driven players like Alpaca [https://www.fintechgrowthinsider.com/i/162331379/alpaca-raises-52m-to-bring-its-embedded-stock-trading-solution-to-canada-and-other-markets] that would allow you to basically add this without getting an introducing broker license. So what made you change your mind about allowing trades? MN: I believe at the time, and maybe it's different now, Alpaca didn't even support Canadian stock trading. So that was a no-go if you're targeting the Canadian market. We sat down and looked at the numbers. If you look at Robinhood [https://robinhood.com/]'s public financial statements, where brokerages make most of their money isn't on equity trading. Equity trading has almost become a loss leader for them at zero dollar commission. They make most of their money on options trading and crypto trading. So even if you can get over the hurdle of the brokerage license, which is maybe a two to three year journey, now you're entering a competitive market with Wealthsimple [https://www.wealthsimple.com/en-ca] and Questrade [https://www.questrade.com/]. Wealthsimple is an incredible product, by the way. Our only differentiation that we really had was that we were going to be a social broker, which in hindsight, I don't think is a true differentiation point to switch someone from Wealthsimple. There's no way in our initial version we're going to be as seamless and simple as they are. I had told all our investors that we're going to be a brokerage. So pivoting was very hard. I remember calling our investors and saying, "Hey, I don't think this brokerage path is the right path." And they said, "Okay, well, how are you going to make money then?" And I was like, "Well, I don't really know." I remember calling our investors and saying, “Hey, I don’t think this brokerage path is the right path.” And they said, “Okay, well, how are you going to make money then?” And I was like, “Well, I don’t really know.” Now, we make a lot of our money through advertising and ETF partnerships. We had some early indications of that, but not enough where I could confidently say, "Hey, we're going to grow from $300,000 to $4 million in two years," like we've done. When we pivoted, that was very unclear. So it was in a sense a very risky pivot. JB: When you were mentioning the competitive landscape, you mainly mentioned Canadian players. What's the share of your users in Canada versus the US? MN: At the time we were fully focused on Canada. Then when we pivoted away from the brokerage path and went to be a pure play social network, we were like, "Okay, now we can actually be a truly global company." Within six months or so, our audience was 60-40. But I think we're getting closer to 50-50 now. Canada has always been our core market, but we see the US as the next frontier. Obviously there's a way bigger opportunity in the US and that's been a big focus for us over this year and will continue to be over next year. JB: You raised $7 million with a substantial portion of it coming from equity crowdfunding. I actually had a similar experience with my own fintech and I know for a fact it's not an easy path. Did raising money from the crowd become a hurdle or did it actually end up being an advantage? MN: Having a community of 2,000 super fans is massive. I will send out emails like, "Go upload or repost this LinkedIn post." When we got featured in Forbes, I sent out an email to help boost that. But I think the biggest example of it was our events. So we held an event at the Rogers Center where we had over 1,400 people come out. Probably a good third of those people who came out were shareholders. When you're a shareholder of this company, our event almost has a dual purpose: it's like a conference as well as almost like a shareholder meetup. JB: Were you charging for the event or was it just for making money? MN: The event itself was break even. In fact, I think we lost a little bit of money on it. But we charged $60 for the event to cover the cost. Obviously Rogers Center, for context, I think cost us $250,000 to book out. I think they're telling us we might have to pay more next year if we do it there again next year. But yeah, that was epic. JB: In a recent LinkedIn post, you mentioned that the Blossom newsletter, The Weekly Buzz [https://news.blossomsocial.com/], is generating over $500,000 in annual revenue on its own. Most fintechs actually have a newsletter, but it's mostly for product updates and re-engaging existing users. How did it become an actual profit center? Can you tell me the story behind this? MN: The story behind it was two years ago I remember seeing in the news that The Peak sold for $6 million to Zoomer [https://mediaincanada.com/2023/06/09/zoomermedia-acquires-business-newsletter-the-peak/]. I remember seeing that and I had seen The Peak's media kit because we had considered advertising in them. So I knew how many emails they had and I was like, "Wait, we have almost that many emails from our users who obviously joined our mailing list and everything." So I was like, "Maybe we can do something like that." And obviously we took inspiration from Wealthsimple TLDR [https://www.wealthsimple.com/en-ca/learn/tldr-newsletter-signup] and some of these other great newsletters. So we started really putting time into it, giving a weekly recap of the markets. Since a lot of our business comes from advertising and partnerships with ETF providers in the app, it was very easy for us to add in newsletter advertising as part of those packages. So I think we do have it easier than other companies, because obviously the sales side of it is the complicated side. If you're just a random fintech, you're not really going to set up a sales team to start selling ads. We were already selling the ads, but it's just given us additional inventory to sell our partners. And the other thing that's really nice about it is that newsletter advertising is very understandable for people. We've had clients where they've started by advertising in the newsletter and then we've been able to shift them to more in-app advertising. But yeah, it's been awesome. I still write it every Sunday, much to my girlfriend's dismay. JB: Why do you still write it as the CEO of a 30-plus person company? And what do you do differently than other fintechs? Because I think a lot of fintechs, like you mentioned Wealthsimple TLDR, but Robinhood has also invested in newsletters. What's the secret ingredient? MN: I think the secret sauce is to figure out what your audience actually wants to read. What are they reading and write a newsletter to mirror that with maybe your own spin. The spin with The Weekly Buzz is that it's actually much more like deep dives into a single story versus Wealthsimple TLDR is more high level. We go deep into one story rather than just the high level, which I think makes it unique. But in contrast, a lot of fintechs or just startups in general are just like, "Here's a product update or here's a sale or whatever." Find out what it is in your niche that people are actually reading and write about that. Because then when you have an announcement, you can just slot it in. I'll slot it into our newsletter as if it's an ad. And the reason that's important is because even for us with the newsletter where we have such a successful newsletter and my open rate on the regular newsletter send is 55-60%. I clean the list regularly, so this 300,000 number is post-cleaning. JB: So how many active subscribers to the newsletter? MN: The active subscribers is 330,000. Anytime users haven't opened it in a month or month and a half, I'll just remove them from the list. But what I was going to say was even with that list, when I try and send out a product announcement, Google still sends it to promotions. So Google's gotten so good at telling whether something's promotion or not. And I don't think it has anything to do with the sender. It's like its own algorithm. But if we slot it into the actual newsletter as our own ad, then it will go to the primary inbox. And I know I'm going way into depth on this, but if you go to the promotions folder, it's basically like you may as well have not written the email. JB: Apart from the newsletter, how do you make money? You mentioned advertisements, but is it just banners inside the app? Can you explain to me how you actually make money? Because banners are almost impossible to make money on today. MN: Yeah, they're ineffective and users hate them, right? So I think we've been very thoughtful in how we've built our ad units into the app. One of our core ad units is our “Learn and Earn” section. ETF providers make these short educational lessons about their products. Users can complete the lessons and they earn a small reward. I wish I could say this was my idea, but I stole that off of Coinbase, which had a similar feature for learning about crypto tokens. I was like, "Okay, well, why can't we do this with ETFs?" We also have our premium ETF pages, where the ETF providers can basically buy their ETF page in the app and then customize it with their colours and their resources. JB: That's really interesting because social trading apps are usually about stock picking, but you're telling me a lot of your revenue is actually coming from ETF providers. That's a bit confusing to me because people who just index, let's say the S&P 500, don't really have much to talk about regarding their investing strategy on a social network. So how does that work? MN: It's a funny nuance about Blossom and it's really tied into our ethos of building the platform for long-term investors. We have about $4 billion in linked assets to the app and 60% of that is held within ETFs. And ETFs and dividends are the most talked about, they're the most followed topics on the app. So we've actually geared the app to be specifically for long-term investors and dividend investors. JB: So that's your differentiator with Dub. You're not the Wall Street Bets crowd. You're more the investing crowd.MN: Yeah, exactly. If you think about the industry, Dub would in my mind fall more in the copy trading bucket. Dub [https://www.dubapp.com/] and eToro [https://www.etoro.com/] have social elements, but they're more geared around explicit copy trading. And then you have something close to Dub in the US, which is more of the Wall Street Bets crowd, called After Hour [https://www.afterhour.com/]. So all of those, I think, are great platforms, but for a very different audience. If you love Wall Street Bets [https://www.reddit.com/r/wallstreetbets/], Blossom probably isn't the best place for you. JB: Do you allow your users to monetize and sell access to their trades? MN: No, and it's for the exact reason we're talking about. A lot of the conversation is more around people learning how to invest, people encouraging each other, sharing milestones, encouraging each other on their journey, rather than me saying, "Hey, I'm the best investor in the world. You should follow everything I do." So we build more of a true community around the app, which I'm very proud of, and more transparency and knowledge sharing, rather than stock picking. And I wouldn't even say stock picking, more like aggressive swing trading. Because we still have people doing stock picking, more like long-term investing, fundamental, more Warren Buffett style. JB: You mentioned that you wanted to double your user base within about a year. What are your main acquisition channels to get new users in the door right now? I've seen that you're advertising on TikTok and Meta, but I'd like to hear about what's the mix and where your users come from. MN: Our three main channels are paid advertising. Meta is number one by a fair margin. And then we do TikTok, Google Ads and experiments on other channels as well. We have about 150 finance content creators who are sharing their portfolios on Blossom. And then in any of their videos, they say, "Hey, you want to see what I'm investing in? Come check me out on Blossom." So that's a huge channel. And then, just by nature of being a social network, you have those network effects, people tell their friends. The paid advertising is the most predictable channel. I think it's the one where I can say with confidence that we will double by next year. Because with consumer apps, as you know, your LTV to CAC ratio is very important. With our paid ads, we hit about on our marginal spend about a 3 to 4x LTV to CAC with less than a one year payback period. So it's very profitable and we're testing probably a thousand different creatives at any time, not a thousand different videos, but Brandon will have five or six different variations of the same video with different text, different targeting. Every time I say this number, he always says that I got it wrong, but yeah, he showed us a slide in our planning where he'll test like 60 different creatives to find one winning creative. So we have that down to a really good science. JB: And how do you use AI to get there faster? MN: The most interesting ways that we use AI, I think one of them is even in our moderation. We've built really good AI moderation to tell if something is scammy or promotional, because I think a lot of platforms, maybe they've adapted now, but if you look on Instagram or especially TikTok, you'll still see all these scam comments. And it's often finance scams, right? AI has been pretty good at telling whether that's a scam. We used to play whack-a-mole with keywords. So it'd be like, "Follow Julien Brault on Facebook for all your trades." And you'd get the keyword, but then they'd find all the different ways to spell your name with different characters. So AI is pretty good at that. JB: I think a lot of fintechs probably want to get in the influencer game. How do you start this? How do you scale this? MN: One thing that I is unique about our affiliate program is that a lot of companies say "We're only going to pay for a funded brokerage account." The problem, when you're paying for a funded brokerage account, is that influencers have no control over this process. It's not their fault if your funnel is bad. So our view is, let's just pay them for what they basically have control over, which are the downloads. But the other thing I'll say is that influencers in general don't like affiliate deals. So it's going to be very hard if you're trying to convince influencers to do affiliate deals. JB: Is it purely performance based? It's not like, "I'll pay you a thousand dollars to do a creative and then on top of that X dollars per app downloaded"? MN: Yeah, for us it is. The way we've done that is by building relationships with a lot of the influencers. About 20 of them have actually invested in the company. The beautiful thing about our affiliate channel is that our product can fit into any of their organic content, which is not generally true for most fintechs. So our call to action can just be "Come see what I'm investing in on Blossom." So Blossom is really just an extension of their social profile. JB: How much do you pay per download? MN: We started at $5, which is the same that we give to refer a friend. And then we have a tiered system that as you hit certain milestones, it'll go up. And you can also unlock other perks too. One of our perks is our ambassador retreat, which we're doing in Tulum this year. I don't think this is applicable for most companies because it is quite difficult to get influencers bought into an affiliate program. Me and Brandon and the whole team, we're friends with many of them now. So I know they hate affiliates. One of the things Brandon has done really well is found up-and-coming influencers who are maybe smaller but on that growth trajectory. That's a really good one to target rather than just going for the biggest ones in your niche. So that's one practical tip I have to give. And then two is obviously look at their recent views and their recent engagement, their recent ad units too. Because yeah, don't just look at followers. That's not a good way to do it. JB: I see more and more people using street interviews to promote products and I don't know if it's ads, but I saw you shared a video about Santa Claus asking people how naughty people like Warren Buffett or Sam Bankman-Fried were. It catches your eye for sure. Do you do ads in this format or is this pure social media engagement? I'd be curious to know. MN: We've experimented with the street interview format before too. The Santa one, I'd say, I don't think we're running any of the Santa ones as ads. That was more of a fun one. And for the listeners' reference, we did a campaign called Wall Street Santa where our marketing coordinator dressed up as a purple Santa and went to Wall Street. We have a couple good collab videos coming out. We have one with the Einstein of Wall Street. That was more social media engagement, more of just doing something fun and creative, rather than a pure download push. JB: When you raise venture capital, investors expect a billion dollar exit. Blossom Social has about 160,000 active monthly users, but given the fact that you're only making money on ads and newsletter sponsorships, how do you become a billion dollar company? What's the maximalist version of Blossom if everything goes right in the next 10 years? MN: The best comparable I'd say is TradingView [https://www.tradingview.com/]. TradingView is also a social network primarily for traders. I think they just raised at a $2 to $3 billion valuation. They're a truly global company. So I think that's the next frontier of Blossom is becoming truly global. At our current level, we're doing about $4 million in revenue, 50-50 Canada-US. There's at least a 5 to 10x opportunity in the US by just doing what we're doing. So that will bring us from $4 million to $20 to $40 million in revenue, which already, you know, at a 10x valuation puts you at half a billion. I think within even the near term, there's a lot of potential there. Pinterest is an $18 billion company. Obviously they're a very successful social media platform, but my open question is, if we can truly be the social network for investing, I would argue that's more valuable than a Pinterest. It's the same with LinkedIn. They built the social network for careers. I'm sure that idea, when it started out, sounded ridiculous. Any niche social network generally sounds kind of ridiculous. And generally it kind of is. If you're doing a social network for dog walkers or something like that, the problem is that the audience isn't that valuable. We're niche compared to Instagram, but we have the most valuable audience. If you look at our average revenue per user compared to Reddit, it's like 10 times higher than Reddit. So we can be a tenth of the size of Reddit and be as valuable. JB: That was Maxwell Nicholson [https://www.linkedin.com/in/maxwellnicholson/], co-founder and CEO of Blossom Social [https://www.blossomsocial.com/]. Thanks for listening to my show. Make sure to follow Fintech Growth Insider on your podcast app so you never miss a new episode. And if you're interested in stealing proven growth tactics from your fintech competitors, please sign up to my newsletter at fintechgrowthinsider.com [https://www.tradingview.com/] Get full access to Fintech Growth Insider at www.fintechgrowthinsider.com/subscribe [https://www.fintechgrowthinsider.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4]

Simon Lejeune Reveals How Wealthsimple Reached $100B In Assets in 10 Years

Born in Belgium, Wealthsimple [https://www.wealthsimple.com/]’s Chief Growth Officer Simon Lejeune [https://www.linkedin.com/in/simonlejeune/] wanted to be a journalist growing up. His parents did not think it was a great idea, and Simon decided to study business engineering to keep his parents happy, with the secret goal of, one day, owning a newspaper. He moved to Montreal after graduation, and held various marketing jobs that led him to become head of user acquisition at Hopper, a flight booking app now valued at $5B. In February 2020, a few weeks before Covid paralyzed the airline industry, Simon generously agreed to meet with me at the Hopper [https://www.hopper.com/] HQ in Montreal to give me some growth tips for my own fintech venture. The Chinese economy was starting to grind to a halt, and I asked Simon if selling plane tickets was harder as a result. I was surprised when he said conversion had never been as high, as airlines were discounting their tickets. This bonanza did not last, though, and Hopper ended up making deep cuts to weather the storm. Simon left Hopper to start a growth marketing agency and Wealthsimple quickly became one of its top clients. Founded in Toronto in 2014, Wealthsimple was initially a robo-advisor offering low-cost ETF portfolios. In 2019, it ran with Robinhood’s playbook and launched the first zero-commission trading app in Canada. It was an instant hit, but it became more than that after Covid hit. People were bored and flush with generous government aid cheques. As a result, an entire generation got into stock trading using the Wealthsimple Trade app. When Simon was offered a full-time job at Wealthsimple in 2021, he did not think twice. Simon Lejeune: I worked for like eight to 10 different clients. Wealthsimple was one of them, and I was super close. I was seeing the rocket ship was about to launch and I was on the launch pad. Don’t stay on the launch pad when someone offers you a seat on the rocket. I really liked Mike [Katchen], Brett [Huneycutt], and Rudy [Adler] in marketing. I thought they were super smart and knew what they were doing. So I decided to fully join Wealthsimple with a couple of people who were working with me at the agency at the time. We’re still working with Wealthsimple now. Julien Brault: Did you move to Toronto? SL: No, I stayed in Montreal. That was also interesting because it was during COVID. Wealthsimple really grew during COVID and went from a couple hundred employees to over a thousand. We’re a super distributed team. My leadership team in growth marketing, I have someone in New York, someone in Vancouver, someone in San Francisco. It’s very remote first. We do have a core office in Toronto where people go. JB: You joined Wealthsimple in 2021, and at the time Wealthsimple was known as the robo advisor. I think they had started Wealthsimple Trade, so they were a little bit like the Robinhood of Canada. It was around $10 billion in 2021 when you joined, and now we’re talking about $100 billion. There was a 10X growth. How is marketing different to go from 0 to 10 or 10 to 100 in a fintech? Obviously you cannot just do the same thing to get so much more assets. SL: Totally. It was a super important pivotal year for Wealthsimple, a pivotal moment for sure. I think the success was already sort of baked in at its inception because it’s the same people, the same mission, the same culture, and the same naive ambition of trying to become the largest financial institution in Canada. What is also still the same is a very high quality, high bar for product. We’re a very product led organization. We still grow mostly by expanding our product suite or improving existing products. What hasn’t changed is our brand strategy. It’s the same people making still unbelievable, unique, different ads. JB: I had a question I wanted to ask you later about that. I see a lot of fintechs that reach a certain scale and all their marketing budget was performance, Facebook ads, TikTok ads. Then they realize huge companies like Airbnb are investing so much in branding, and they start to say, “Okay, we should probably put a percentage at least of our budget into branding.” In the Wealthsimple case, I’ve followed them since pretty much the beginning. They always had care for branding. I’ve seen billboards since way before it was worth $10 billion. What’s the role of branding at Wealthsimple and why do you think they invested in branding since the beginning? SL: Yeah, I think there’s multiple ways to tell this story. When I think about it, it’s because that’s what the people at the time in the marketing team knew how to do. Rudy [Adler] [https://www.linkedin.com/in/rudyadler/] was one of the three co-founders, and he worked in ad agencies in New York. He was this very creative guy, and he hired a bunch of people from very creative backgrounds. They didn’t really necessarily have the performance marketing DNA. In a way, that’s how we’ve operated. Hire really smart people and then let them do what they’re really good at. They’re really good at brand marketing. In retrospect, it was kind of interesting because it is an industry where you need a lot of trust and credibility for convincing people to move their life savings to you. All that brand investment they did in the first few years paid a ton of dividends. All that brand investment they did in the first few years paid a ton of dividends. When we went from $10 billion to $100 billion, we started to really accelerate with growth marketing. We had a lot of that trust and credibility and brand love in the bank, so to speak, to make those performance dollars go even further. The way I think about brand and performance marketing is that they have different time horizons. If you’re an early fintech startup, I usually would still advise you to invest first in performance marketing. I think Wealthsimple is maybe a bit unique in that sense, unless you have a crazy filmmaker on the team who can make amazing films, then let them do that. But you do performance marketing because you don’t know if you’re going to be alive in five years. Why would you invest in a brand that might not be around in two, three years? Eventually, as you gain confidence in your trajectory, you want to start investing in brand slowly and more and more. I see it as like a portfolio of investment where you need to have dollars going into next week, next month, next quarter’s results, but also start investing more in brand for the next two, three, five, 10 years. It compounds everything else. JB: Do you know what the percentage of investments in branding versus measurable ROI driven performance marketing is today? SL: We do more growth marketing, more performance marketing. I don’t know the exact percentage, but the way I think a brand marketing investment is sized, you set a budget based on how big your company is, how much you can spend without obviously bankrupting the company. Maybe you’re going to put 10, 20, 30% into brand. Whereas performance marketing budget, you don’t necessarily have a set budget to spend, but you have a target you want to hit in terms of return on investment or payback periods or IRR. If you find a pocket of profitable investment, you start to really press your advantage. It’s not even a cost center, it’s more revenue generating investment. We have found a few pockets like that, and we’ve been able to scale our investment into growth marketing to a point where it started to take over any other investment at the company at some point. JB: How do you decide if you should invest in a campaign about the cash account or the trading account or the tax account? How do you make those types of decisions? SL: In terms of growth marketing, we try to be a little bit more agnostic and say, how are we going to deploy our budget to get as many clients through the door in a profitable way? Eventually, what we’ve seen is once clients get through the door, they slowly but surely adopt most of our products. JB: So if I understand well, the goal is to get as many new clients as opposed to being like, “This line of business is a little more profitable.” It’s not really a profitability calculus, but more how much it costs to get someone in the door. Maybe it’s not the most profitable product, but then the lifetime value is high, so you can cross sell. SL: Yeah, it is a business, right? So we are trying to drive revenue growth to allow us to grow as a business. We do look at each product line and profitability. But like you said, the keyword we’re looking is lifetime value. There’s no point in you joining, getting burned into a very profitable product for us that was a bad fit for you, and then you’re going to leave after six months. JB: As a marketer who manages millions of dollars per month in ad spend, what keeps you up at night? SL: The fraud on Meta is out of control. I don’t know if you saw the recent report that about 10% of their revenue was potentially coming from fraudulent ads. If you go into the Facebook ads library today and you type the keyword “Wealthsimple,” there’ll be more fraudulent ads, but that works with any fintech brand, by the way. You can try Questrade, any, even the banks. There will be like 10 times more fraudulent ads than legitimate Wealthsimple ads. They use the name Wealthsimple in the copy and images. They use fake AI avatars of [Wealthsimple CEO] Mike Katchen [https://www.linkedin.com/in/mkatchen/] or whatever. We report them every single day. We try to warn our customers about this, but it takes several days to take them down. JB: Their AI is not able to do a simple keyword search? SL: Clearly, their AI is able to do it, right? So it’s not about whether they have the technical capability. Google clearly allowed this a long time ago, where you can’t use my brand in your ad copy if I register my brand. Facebook just needs to do the same. I almost want to tell our customers “Never click on an ad online about Wealthsimple,” but I don’t want to say that because I still want to use those channels. JB: I don’t see ads for financial scams on TV. Does it inform your decision as a strategist? On one hand, you want the performance, but on the other end, you might actually hurt your brand. SL: Totally. We’re definitely thinking about that. If Meta is not moving fast enough, we will have to make decisions. JB: I was listening to a podcast where you were interviewed and you were talking about an idea. I think you never did it, but the idea was to organize a Taylor Swift concert and use Taylor Swift tickets as a sign up incentive, a little bit the same way that you’re offering iPhones or other kinds of sign up incentives. Did you actually contact Taylor Swift? I wanted to know why it didn’t happen and are you working on another show or something like that? SL: I haven’t heard back from Taylor Swift yet. So if she listens to your podcast, I would love for her to text me back. I do have a long list of ideas. There’s nothing I love more than spending my marketing budget and putting those dollars back into our clients’ pockets. It’s just amazing. I love my partners at these digital platforms, but if I can give my money to my clients instead of giving my money to Facebook or Google to convince my client to use my product, I’ll do that every day. The math works really well for us right now. We are contemplating a lot of ideas. I always talk to my clients like, “What’s the most exciting thing we can give you back?” Cash is fun and a lot of people love cash, but you also want to grab the attention and shift people’s perception. JB: How do you figure out what’s the right sign up incentive? For the iPhone, I guess you have all the data in the world. You know what device your clients are using. But for Taylor Swift or other incentives you’ve given away, do you do surveys? How do you figure it out? SL: We do surveys, we read our clients’ feedback. We are our own clients, so a lot of the times it’s like, “What would we be excited about?” Then it’s a lot of testing. We try to validate a lot of ideas with small groups of clients before we roll it out to large groups of clients. Two out of three ideas are just not working and we’re not rolling them out. That’s kind of how we do the market analysis. We look at what seems to work elsewhere. We’re all fintech nerds, we’re all bank nerds. We love to dig into offers that exist in other geos. We love to look at offers that existed in the past. I don’t know if you know, but banks used to give toasters in the fifties and the sixties to new customers. Nothing is ever created, right? It’s just the same idea over and over. JB: It was the old iPad. SL: You could literally bring a friend with you to the bank. The referral program in the past, and you would get some kind of catalog with appliances because that worked and that still works. I don’t know if you saw recently, we gave away the biggest thing you can think of. We gave away a house, a million dollar house. JB: I missed that. Tell me more about it. SL: We’re fascinated by giveaways and how they work in general. How do we find the most exciting one? A lot of our clients are saving for a home. We are the number one institution in terms of number of FHSAs market share. We also recently launched a mortgage product with Pine, another fintech in Canada. So, how do we combine all of these things? Mike, actually the CEO, is my number one idea guy at the company. He sends me new ideas all the time. He was like, “Hey, we should try this.” He had heard it on a podcast from another company. We went from idea to buying the house, furnishing it, staging it, organizing it, doing the microsite, the rules and regulations, and everything that goes into this in like six weeks. JB: So how did someone get the house? How do I get the house? I don’t have a house. SL: You could participate in October. Every dollar you deposited was an entry into the draw. Now it’s closed, but we still have clients who initiated transfers. That’s another big friction point in fintech. Those can take sometimes up to 60 days to complete. Most are like five days. We are waiting for everything to complete so we can combine entries and do the draw. The deadline has passed. JB: Where’s the house? SL: Keep your eyes open because it was the most successful campaign. The house was in Prince Edward County, a bit north of Toronto. We have a lot more ideas. If it’s not Taylor Swift, I’m sure we can make it almost as exciting as that. JB: I mean, Drake is an investor. Is that telling us something? SL: Yeah, maybe, maybe. JB: On another podcast, you said that about 90% of your marketing budget is going in the pockets of your clients. I was like, how is it even possible? Because you need people to know they could win a house, or an iPad, or a concert ticket. Tell me more about how it works. SL: I’ll give you a two part answer. First, it’s part of the shift that happened right after COVID. We acquired very quickly almost 2 million clients, but they only had a couple thousand dollars with us to buy a few stocks on crypto. A lot of our strategies since then, and that’s kind of how we went from $10 billion to $100 billion, was getting those clients to consolidate, to transfer assets to us. We built so much into our transfer products. I joke sometimes with my product colleagues that we are a transfer app with some banking and investing services attached to it because we innovated so much into how people can transfer their accounts from elsewhere into Wealthsimple. We don’t need a ton of advertising to reach those customers because they are our customers. I think we have a great email notification and in app messages strategy that people pay attention to because we try to keep it interesting. People love our brand, they love the tone, and they love our offer, so they keep paying more and more attention to it. Once we launch an offer like that, we can get 500,000 people, a million people from our client base to already pay attention and participate. That’s the first part. The second part is we do a little bit of ads just to kick things off and get the word out. But most of the outside growth comes from word of mouth. A lot of our thinking goes into crafting offers that can go a little bit viral with your friends, with your Instagram DMs, with some forums on Reddit, on RedFlagDeals, et cetera. You get the word of mouth distribution instead of having to pay for it. If you’re giving away a house, a one million dollar house, you don’t need to do Facebook ads. It’s a good story, right? You might tell your friends. We also work a little bit with influencers to spread the word, but influencers are like paid word of mouth in a way. JB: I feel like we’re touching the key of how you get from $10 billion to $100 billion. Just convincing the guy who put $1,000 to put $100,000, right? That’s really interesting. Is it different? Because it’s a different type of marketing. Do you have a team that is just like, “How do I get more asset management from existing clients” versus people that are trying to get people through the door? How does it work structurally? SL: Yeah, precisely. My team is basically client growth and deposit growth, assets growth. I changed that maybe a year ago where it was like the acquisition team, the email team. No, let’s structure teams with goals and let them figure out the tools they want to use or become experts at. We have the client growth and deposit growth teams, and they have very different strategies. Most of our promotions and offers are run from the deposit growth team. If an offer has a goal of acquiring new customers, like the referral program or the affiliate program or SEO, SEM, that will be run out of the client growth team. JB: Now that we’re talking about structure, in marketing there’s a bunch of titles around, and each company works differently. You’re Chief Growth Officer. I assume Wealthsimple also has a Chief Marketing Officer. Are they the same department, different departments? Do you have engineers working for you, or do you need to convince the CTO to lend you some engineers? How is it structured at Wealthsimple? SL: If you work in tech in any company and it’s not the engineering department, half your time is trying to convince and lobby the CTO and the engineering team to work on your priorities, right? Growth marketing simply sits within the marketing team. The marketing team is like three big departments. It would be the creative group where you have brand marketing, creative production, art direction, et cetera. You have product marketing. They work very closely with the product team. Every time we launch a new product, they work to position it and have the page ready and have a bit of a go to market strategy. They also run our events at Wealthsimple Presents. Then you have the growth marketing team who will run the incentives, the ads, the referral program. It is part of the creative ecosystem. JB: Is branding part of your team or part of the creative team? Do you have your own engineers or do you need to fight for them? SL: Yes, we have a handful, I don’t know, like four to 10 engineers at all times who will help us work on these in product offers or new features where the first priority or the reason we’re launching the feature is to, for example, allow clients to more easily share the app to their friends, make the onboarding a little bit easier, make the transfer process a little bit easier. Growth oriented features. JB: Wealthsimple has one of the largest dedicated communities [https://www.reddit.com/r/Wealthsimple] [for a fintech], 121,000 members, last time I checked, on Reddit. I know some companies in fintech like Ramp hired a head of Reddit. Do you have a dedicated person? Also, is your community owned by Wealthsimple or is it owned by random fans of Wealthsimple? I’d like to hear about your Reddit strategy. SL: It’s completely owned and operated by clients. We’re not really actively policing it or giving any sort of influence. We’re super lucky. We have awesome clients and fans. They participate in moderating the sub, and it’s a big part of the feedback loop. They’re super active. Every time we launch a new product, the joke internally is, “How quickly is it going to show up on Reddit?” Usually it’s a few minutes before someone posts something we just shipped, and it’s great to hear the feedback and read it. JB: So you don’t even need to pay for community managers. What do you think about that? SL: No, no, we don’t. We have started to engage with a few Ask Me Anythings, and the response has been great. I love our Reddit community, even when it’s hard to read. It’s important. Some weeks they say I should get a raise. “The guy who came up with this should get a raise.” But the next week it’s like, “This guy who came up with this should get fired.” JB: In 2024, Wealthsimple became profitable for the first time since it was founded in 2014. Did Wealthsimple becoming profitable had an impact on your ability to do crazy growth campaigns? SL: It hasn’t really changed that much other than it was a great moment and signal, because I think especially for Mike, he has been hearing from the start, “This business can’t go anywhere. You can’t make it work with such low fees. You’ll never be able to get market share from the big competitors.” As long as you’re not profitable, these critics can still say, “Sure, you can probably subsidize this growth and whatever in this product, but there’s nothing there.” I think the profitability is just a great validation for the team, for the business, for the customers as well. We’re here to stay. We don’t need anyone’s help or support if we don’t want to. We are a sustainable business. On the growth and operation side, it’s still full gas. That has not changed. If anything, now it’s more like we can be a little more comfortable and decide, okay, what level of profitability do we want to reach and how much do we want to invest? We’re just getting started. $100 billion is great. I think we’ll start to be happy if we reach a trillion in assets and start becoming one of the largest institutions. JB: You guys keep repeating you want to be the largest financial institution in Canada. So how do you get there? You don’t have a banking license. Is it part of the plan? And how do you get from $100 billion to a trillion? SL: We want to be the largest institution in Canada. That’s the first step at least. There’s two ways we look at this. First, in terms of clients, the major banks in Canada all have about 10 million plus clients. That’s one way we want to compete. We’re at 3 million plus and growing really fast. That gives you a measure. The other one is assets under administration. That includes assets under management and then self directed assets. Some of the banks are at $1 to $1.5 trillion. Some of the smaller ones are at $300 to $400 billion. We have 3 million clients. The way I think we get to 10 is by advertising more, by building more features around trust. But also we want to show up more in the real world so people understand we’re not just an online website to go buy a bunch of crypto. We’re a much more serious institution. On the banking side, this is our fastest ever growing product. It’s basically now just getting to parity with your traditional bank account, but we’re already seeing tens of thousands of people who use Wealthsimple Chequing account for their day to day banking needs, and that’s just getting started. I think we’re going to see a massive acceleration there in the coming years. Both the investing and the banking side of the business will compound to get there. We can for sure triple. It’s a matter of time. For me, it’s more like, how quickly can we triple versus can we actually triple? Also, don’t forget, time is on our side. We have the generation. For example, FHSA, a new account type that started. We had, I think at some point, more than 40% of market share in FHSA. JB: Wealthsimple has 3 million clients and you mentioned Canada’s largest banks have 10 million. Given your previous growth trajectory, it seems likely you can triple your customer base. But if you want to become Canada’s largest financial institution, you need to do something much harder. You need to convince your clients to make Wealthsimple their primary bank like Nubank did in Brazil [https://www.retailbankerinternational.com/news/nubank-dethrones-banco-do-brasil-as-brazils-top-main-bank-with-digital-first-innovation-and-financial-inclusion-says-globaldata/]. How do you do that, given the fact that Canadians are known for being very loyal to their bank? SL: I use that as a proxy. I don’t know the exact numbers. I don’t have the market data, but if we can get about half of Canadians who start investing to start investing with us, it’s kind of a matter of time until we can get half of the market. But we don’t want to wait for that. The other thing is you have the great wealth transfer from the boomers and the generation after that who are going to eventually share their wealth with their kids, their millennial kids who are in Wealthsimple. We also have that going for us. But then I think what’s interesting to me is, is the strategy to go from zero to 3 million going to be the same to go from 3 to 10 or 15 or 20? Or do we need a different strategy because this audience is a little different, is a little more reticent to use an online product? That’s something I’m very focused on trying to figure out. And then, how to make you use it for your daily banking. At its most simple, we need to make the product 10 times better, 10 times cheaper. If I try to think about it very simply, only then can you get a chance at someone to switch their primary banking. Nobody wants to change their primary bank. It’s so annoying to move away, to transfer your e-transfer contacts, your payees, etc. There is a ton of work that goes into this so you could switch in a click. The same way we are almost there on the investing side, the same thing could happen with banking. But if the product is 10 times better, 10 times cheaper, and not only can we catch up with the features parity that we need to with the banks, but we can start innovating and creating unique features on the chequing account. I’m happy to share that with you, but we are seeing more new chequing account clients on a daily basis than new investing clients, despite chequing being a much younger product. The line is just going straight up and to the right. This is really exciting. We are seeing more new chequing account clients on a daily basis than new investing clients, despite chequing being a much younger product. JB: You said in the past that the head growth of a startup is always the CEO. So my question is how closely do you work with Mike Katchen, the CEO of Wealthsimple? Mike is awesome. He sends me growth ideas almost every day. One simple question that he asks often is, when you pitch an idea to him, “What’s the way more ambitious version? What is the 10X version of this idea?” It’s a great thought exercise to make your idea maybe not 10X bigger, but 20, 30, 50% bigger than you initially imagined. JB: About six months ago, Wealthsimple announced the launch of a Visa card with 2% cashback. Within weeks, you had 200,000 people on the waiting list. Demand exceeding supply is generally a good thing in growth, but then people started to complain it was taking too long. As of now, how many people got the card so far? SL: I can’t share specific numbers, but we do have a lot of demand for the card and it’s growing because I think the card is now in the wild in the hands of tens of thousands of people. They see how amazing it is and share it with their friends, which is creating a bit of a bigger headache for us, to be frank, because we have so much demand that we need to manage. They see how amazing it is and share it with their friends, which is creating a bit of a bigger headache for us, to be frank, because we have so much demand that we need to manage. We are rolling out. If you are a Generation client by the end of the year, you’re going to have the option to apply for the card for sure. Or if you’re a Premium client, that’s $100,000 plus with us and you have your paycheck with us. Generation Client is $500,000 plus. So people with a lot of assets probably already have the card. Well, at least if you are with us with a lot of your assets, you will have access to the card. The third category of people we are prioritizing is people who have been with us for the longest, our most loyal clients. But yeah, it is a challenge. It’s not a simple product. It’s probably the most complex product we have launched so far. JB: Why did you go with the waitlist approach? I know you used it for Wealthsimple Trade. Robinhood was launched with a waitlist. Is it to create scarcity? Because you could have done a private beta and waited and tried to keep it somehow secret and then said, “It’s open and now you’re able to send 50,000 cards a week.” But it would have taken probably much longer. SL: We did a lot of testing, right? It was first with employees and then with small groups of people, and then eventually we opened it up. It was not to create scarcity. It’s just that there are constraints when you launch a credit card program. You want to build a bit of a track record when you launch a new credit product. We’re a bit new in the borrowing space. We launched margin, we launched a portfolio line of credit. We’re launching a credit card. It is a different business and we want to get it right. We don’t want to mess it up. We want to make sure we care about the trust that our clients put in us, but also our financing and funding partners put in us, because ultimately we are allowing you to use a card and paying us a month later. We want to make sure everything happens properly. JB: Do you have a mechanism where I can invite my friends to the list and get up higher? What are the marketing benefits of the waitlist? SL: Right now, we’re just really focused on giving it to Premium Plus clients who moved their paycheck to us, Generation Plus clients, and our most loyal clients. We have a small amount of cards that we are reserving for growth experiments. What you’ve heard from me is we’re doing a lot of these small growth experiments. They’re not too big, to be honest with you, and they’re not really scalable because we have that waitlist. But we want to make sure we experiment with enough things so that the moment we can open up to more clients, we’ll be ready. JB: That was Simon Lejeune [https://www.linkedin.com/in/simonlejeune/], Chief Growth Officer at Wealthsimple [https://www.wealthsimple.com/]. Thanks for listening to my show. Make sure to follow Fintech Growth Insider on your podcast app so you never miss a new episode. And if you are interested in stealing proven growth tactics from your fintech competitors, please sign up to my newsletter on fintechgrowthinsider.com. Get full access to Fintech Growth Insider at www.fintechgrowthinsider.com/subscribe [https://www.fintechgrowthinsider.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4]