Daniel Eberhard CEO Koho #NACOSummit

Uh thank you and hello everyone. Um

good afternoon. Hope you had a great lunch. Uh looking forward to uh to this

lunch. Uh looking forward to uh to this conversation. I was just telling Dan

conversation. I was just telling Dan before we came up on stage. I've never

had a chance to meet him, but I'm a big fan. Um he's saving me all kinds of

fan. Um he's saving me all kinds of money with his LinkedIn feed. I don't

need to buy business books anymore. I

just uh I just uh I just read uh just read what uh what Dan posts. But, he does have an awesome reading list in case people do want to or have a bigger budget uh book budget than I do. Um

Uh So, Dan, I do you want to do cap gains now or save it till the end?

Uh sure. Let's dive right in.

You want to dive right in on that? I was

going to start slow, but if you want to go hard off uh the issue du jour right off the top, let's uh let's let's set the stage on fire right off right away. So, capital gains, you

have a a nuanced take on it um I've observed. So, where do you sit now?

I've observed. So, where do you sit now?

We've had a a couple of weeks to uh to think it through. I know the initial reaction was was hot. Um what are you thinking now?

was hot. Um what are you thinking now?

What are you thinking about this issue now? Yeah. Um

now? Yeah. Um

so, so maybe I should just start with uh and this is maybe a caveat, but I think it's important cuz I'm going to say some very critical things about our country today.

Um I'm a big believer in Canada. I'm

very optimistic about Canada's future. I

just fundamentally believe we get the democracy that we earn. Um and that is a function of staring the hard parts of this in the face.

Um And so, Canada let's talk about where we are in Canada. Um

GDP per capita is flat in 10 years in this country. Uh we have not improved

this country. Uh we have not improved the GDP per capita. So, which means if a Canadian produced produced $100 10 years ago, they're producing $100 today.

Um I think that this social order that we should care about is basically human rights and economic growth. Um and

economic growth I do believe heavily in the power of capitalism and you and the benefits of that. Now, just

to like ground this in and maybe make it concrete because it's very difficult to understand slow GDP growth cuz it's just like it's the boiling water it's the

frog in the boiling water, right? Um

in America, they grew GDP about 4% on average between the year 1900 and 2000.

Right?

If they would have grown that 3%, that marginal 1% of growth between 3% and 4% plus 100 years of compounding, today America would have the wealth of Mexico.

Right? And so, that marginal 1%, the surpluses of that 1% went on to create space travel, vaccines, agriculture, uh technical innovation. It's certainly

the reason that we are in this room today. Um you could argue that it helped

today. Um you could argue that it helped them win World War II, right? And so,

GDP growth matters a lot uh and we are at the bottom of the G20 uh currently.

We are at the if you look at since 2020, we are the slowest growing out of the top 50 countries in the world.

Um and the reason that I care a lot about GDP is because I care I have two young kids and I care deeply about the opportunities that they have in this country and if we don't figure out how to grow this economy, they will have a very different set of

opportunities.

So, ramp to side, risk on, burn the bridges.

The the capital gains tax was interesting.

Uh I kind of stood in the middle on this one in the sense that we took the marginal cap gains rate from 50 to 66%.

Um I don't think it's like that intellectually honest that a bunch of people that were here and we're going to build companies here are now going to leave as a function of this tax rate change.

I do think that it's powerful in that it's symbolic um in a drift between how we think the cover the government and the can and Canada should grow as an economy versus

how the government does.

And I will be critical of the fact that and this chart has been making the rounds lately, too, but you know, government employment is up 40% in the last since since 2016. We added 100,000

people to public service.

Right? Uh we have 45,000 people employed in the Department of Labor and entrepreneurship is down 100,000 people since the year 2000.

What are these people doing?

You know?

Um and when I think about that 100,000 the most I think that entrepreneurship is the best tool we have to both grow the economy and create social mobility for

lower and middle income Canadians.

Um and that's supported by angel investors and all you folks here. So,

uh you know, the capital gains tax I thought was much more symbolic. The

interesting thing is that I think it mobilized a lot of tech community and raised Sorry, is there some feedback?

Um and raised much more awareness around the issues of productivity. So, I

actually think it was a catalyst for productivity concerns, which are central to my belief as a Canadian. Okay. Um

let's take a step back then and um come back to Koho's origin story. Sure.

Um Why banking? Of all of all the paths you

Why banking? Of all of all the paths you could choose to um to to what feed that entrepreneurial urge of yours? Why would you choose that industry of all industries in this

country?

Cuz I'm a dummy. Um

My background was in wind energy uh and I was fortunate to uh co-found a business in that space that started in small wind turbines.

I've been to every town in southern Saskatchewan putting out milk and cookies and asking 70-year-old farmers to buy wind turbines from me. Uh they

almost all said no.

Um A few said yes. We got into industrial scale wind farm development and ended up selling that business and I came into capital uh for the first time in my life. I grew

up to a single mom in a very small town in BC. She drove buses, she cleaned

in BC. She drove buses, she cleaned houses, she worked very, very hard uh to give us a middle class life in Canada, which was a wonderful thing. And then as I came into capital, I started asking

the questions of like what do people do with money? Um

with money? Um and they're very important decisions.

Being in like a great financial set of products versus a bad one means retiring with 30 to 50% more wealth.

It's a fact.

And so, the way that I looked at this was like whatever a life of agency is to somebody, if you don't have financial stability, big chunks of that agency are going to be eroded. Whether that means going back

be eroded. Whether that means going back to school, putting kids through school, more time with family.

Um and we have a And so, as as I learned this and then I looked at my mom's investment portfolio who had worked very hard, she was one of these people uh and I think the majority of Canadians are frankly these people who

uh deserve a lot more financial stability than they have. Uh and that is downstream of the most heavily centralized banking oligopoly in the world. Um

world. Um and so, that was the kind of origin of Koho was can we give everybody great financial foundation? Can we democratize

financial foundation? Can we democratize access to the best financial products?

Um We started in 2015. We raised our capital first pretty capital. We

launched in 2017.

Um fast forward to today, we have a million and a half Canadians on the on the uh product. We also power some wonderful companies like Wealthsimple.

Um and we're very focused on, you know, the paycheck to paycheck segment in this country, which is half of Canadians, 53% of Canadians.

How was hard was it to raise money?

Um I mean, it's never it's hard. It's

really, really hard. But, it's kind of supposed to be hard, you know? You're

trying to do something that statistically 95, 98% of the time it's not going to reach real scale. So,

um you know, I I when I when I'm up here and I criticize the Canadian government or the banking oligopoly, like part of your job as a founder is to make no excuses, you know? The market is the market and you have to find a way to

be successful within the market. So,

yeah. It's been hard, but we've also done it.

Right. Right. Um did you So, how did you do it? I mean, it's

do it? I mean, it's and this sort of leads into a point you made about how the uh entrepreneurship is is declining in Canada for some reason. So, um let's

come at it that way. I mean,

what do you think What what Why aren't more people trying to do what uh what you did, you think?

Yeah, I ask myself that a lot. Um

I I do think that there's a cultural underpinnings to a lot of this. There's

a um you know, I I think that what part of what we lack in Canada is some equivalent of American exceptionalism. And there is a very

exceptionalism. And there is a very clear cultural belief in America that you should be risk on, that you can be the best in the world, that you can win gold.

And Tobi and there was a wonderful event in Toronto last night with Tobi from Shopify and they talked about how Canada kind of has a go for bronze culture. And

it's like we celebrate our politeness.

It's crazy.

Right? Like we should beat our chests, we should be aggressive, we should try and win. And I think we can. We have an

and win. And I think we can. We have an incredible economy, we have some of the smartest people in the world.

Like 1/3 of the talent that works at of the software talent that works at, you know, big tech companies comes from the Toronto Waterloo region.

Right? We have all the raw materials in this country.

Um and so, like I I don't have a great answer, but what I do think is like it is I do think that if you it is a luxury to be able to start a

business. If you are trying to pay rent,

business. If you are trying to pay rent, if you are living paycheck to paycheck, it's very hard to put aside three or six months of capital and to take on the risk profile, right? And so, part of this is

we have to make it easier for folks to start businesses and upstream of that is economic prosperity in this country. And

upstream of that is like GDP per capita growth. As you look back now at your

growth. As you look back now at your fundraising process, probably from from I guess the beginning, or there are there are things you you see now that would have made that easier then?

Yeah, this might be a little bit more relevant for for founders, but all of these like I think I was one of those folks who was too deferential, you know

what I mean? And um

I like I I think what matters m- the way that we talk about this internally at Koho is and I think this is true of founders, it is better to be wrong and fast than it is to be right and slow.

And so that takes a certain degree of like uh conviction about what you think you can do and like a lot of founders I and I still do, you know, you lack confidence in a lot of dimensions. And I

wish that if I could go back, most of the mistakes that I made were functions of acquiescing more than like being too aggressive and doing dumb things, if that makes sense. And so, you know, if

you think about the and you folks are angels, you know that eight out of 10 of your investments are going to go to zero or seven out of 10, right? So by

definition you're looking for outliers.

And so if you go in there in a very Canadian way, in a very sort of judicious way, I think there's no reason that they should have belief that you're

going to be an outlier, you know?

Is so did you go in saying I'm not going to be or I'm going to be an outlier or I'm going to I'm going to I'm going to you know, make the power law work for you or what was your approach? I mean I I was fortunate that we'd already had some

success. So like that there was it was

success. So like that there was it was easier to underwrite me because we did, you know, had sold the company to a public company.

Um But it is like when you as as you kind of think about the arc on an early stage or a seed bet, you're really underwriting the founder. 100% is

underwriting the founder. So people will underwrite to like a unique idea about the product or a unique skill set. They'll underwrite to people who are ultra-marathoners. Like

what is the thing that says that you will work really hard and grind on this for the next 10 or 12 years, right? And

so there's a there's a breadth of things that folks want to underwrite to. As you scale, obviously

underwrite to. As you scale, obviously you go from no data points on the business to millions of data points on the business. And then it becomes much

the business. And then it becomes much more about performance um and I think that how we think about performance at Koho is quite disciplined and but it's a

it's a very sort of more mechanics conversation at that point. Was there a investor in particular that um helped give you lift in the in the early stages or anyone that stands out and and um

really got you going? I mean they they all have. I've I've had uh so just our

all have. I've I've had uh so just our our first like real seed invest- our first uh our series A was done by Portage, uh which is now Sagard. Um and

you know, they said, "We'll give you $8 million for your series A, but it means you got to move to to my team and I said and they're you know, we had maybe six weeks of pay left in the company. It was one of multiple

near-death experiences. And uh

near-death experiences. And uh I thought that the team was going to tell me to kick rocks and you know, I said, "Hey, we can keep running at this, but it means we got to move to Toronto."

And of the 13 of us, I think nine moved to agreed in that meeting and by that night 11 folks had agreed to pick up their life and move across the country to Toronto.

Um But Portage and so that you know, that that is the risk-taking and I'm forever grateful to those folks. Portage was

very grateful in that they added a bunch of expertise and financial discipline.

Our next investor was folks out of the US called Drive Capital um and our series D investor was a some more folks out of New York called Eldridge. You know, I remember my

Eldridge. You know, I remember my Drive Capital and and Chris Olsen who's now the exec- chair of Koho has been a wonderful partner and he said to me,

uh we're doing this partnership deal and he said to me that I think you're wrong, but if you are wrong, I will never say I told you so, you know? And I thought that was like

you know? And I thought that was like exactly the right way to to posture this. As a founder, I don't think you're

this. As a founder, I don't think you're a real founder until you realize that you could take investors' advice perfectly um and if that works or doesn't work, it's 100% on you. So like

the founder mantle matters, you know?

Are there messages that you think an angel investing crowd needs to hear from a from a founder?

Yeah, I think the Canadian angel community just in my own experience like angel investing is power law driven as you folks very well know and my

consistent experience with Canadian angels was like, "When are you going to get to profitability?" I was like, "I don't even have a team yet. Like what

are we talking about, you know?" And so I think that if if you folks are you're betting on the founder and there is no business plan and there is no financials. Like I literally put

cuz our company's called Koho, some of you know Koho's a hockey stick. I put a Koho hockey stick on a revenue chart cuz I was like, "I have no idea what's going to happen."

to happen." You know, um but you're betting on the founder and so I think the right thing to do is like push the founder to be ambitious, give them confidence and support them. I

think that's all you can do as an angel investor.

It is interesting to me that you know, your first your first three main investors one Canadian, two American.

Couple of a few questions around that. I

mean what do you do you sense a a different mentality um between you know, I'll say Canadian money versus US money? I mean what's what are the differences in them?

Yeah, for sure. I mean I think I think what you'd expect to be true is true.

Our American investors are really aggressive um in terms of what they want to do with the company.

They are uh I mean it it varies. They can be a little more sharp-elbowed especially as you get later stage. Um and then our early stage folks are like they've been wonderful partners.

They're much more rigorous and structured in how they think about this.

Like I think I think that there is a tendency to pretend that we can control a lot more than we do in these businesses and that's true in Canadian venture investing where we think that we can take all these risks off the

table. The fact is it's just like it's

table. The fact is it's just like it's stuff breaks all the time, you know? And

so what I've found typically with the Canadian investors is they're looking for way more certainty uh and we call it accuracy versus precision, but Canadian investors are looking for precision, which is like how

many decimals on the zero? And accuracy

is like directionally are we going in the right way?

As a Oh, sorry. No, no.

As a founder, do you care where your money's coming from? Um particular

founder like you, I mean you clearly care a lot about this country. Um

what you say amidst this capital gains debate that you know, you're not going to talk about fleeing the country.

You're not you're not even going to pretend you don't want to go. Um

would you prefer to be 100% backed by Canadian money? Do does it ultimately

Canadian money? Do does it ultimately matter to you? Talk about talk about that a bit because there does seem to be when we when we have these discussion, there is a bit of a what? Nationalistic

what? Nationalistic uh vibe, you know, around the this debate writ large where there's like there's sort of this lament that we don't have

more Canadian investment money coming in. Let's look at the pension funds and

in. Let's look at the pension funds and and we're kind of mad at them right now for not investing enough in Canada. So

I'm just thinking about that and I'm wondering from your perspective, do you ultimately care? Do you think it matters

ultimately care? Do you think it matters where the money comes from?

Look, if if Koho works, um I would obviously rather distribute that back into Canada. And we will do that with

into Canada. And we will do that with our employees um and we've done some of that with some secondaries. We From an investment

secondaries. We From an investment perspective, for sure I would prefer Canadian capital assuming that they had kind of an American attitude, you know?

Um and uh but it's look, it's nice to have. It

matters on the margin. Um

It'd be great. I I just you know, it hasn't been there. I think that the criticisms of the pensions is absolutely valid. So

valid. So we don't have I think we've done a reasonably good job in early stage uh capital in this country. I think we've done a pretty poor job of late stage capital in this country. Okay. Um

let's talk about policy in trying to to build a company and we'll can stick with yours. Um I would imagine when you were

yours. Um I would imagine when you were dreaming up Koho and getting it off the ground, the prospect for policy looked far more helpful than than it's become and I'm thinking

of open banking, real-time rail. These

were infrastructural type things that should have helped the fintechs like yours, but we're still talking about them almost 10 years later. Um

so I mean you can address some of these things if you if you want, but I'm just like thinking was the policy environment helpful for you for you in the in the early going and and um you know, what's what's that

piece been like?

Sure. Thank you.

Um So when we actually started, there really wasn't the the big difference between Canada and the United States in banking is that you have 8,000 banks in the United States. So you have this vertical like you have this whole

ecosystem of payment gateways and providers and payments uh the the works.

Uh in Canada we have six vertically integrated banks. And so the questions

integrated banks. And so the questions we were asking when we first started was, "Is this legal?" And that was, you know, we just didn't have the regulatory clarity. Um

clarity. Um you know, and then now yeah, so just to folks, we've been talking about open banking, talking about talking about open banking in this country for 10 years.

Um it was originally studied the first time in the I think the Senate in 2017.

Okay? So we're talking about seven or eight year and there's still not a single piece of paper which says this is how open banking will work in this country.

Um and so forget all like all the waste of time that's attached to that. It's

it's a This should not be that hard, you know?

Um and there's a bunch of reasons which we can get into into why it's hard in Canada, but this is really simple issue which is, are you the owner of your financial data or is your bank?

Um and everything else is like clouding that. And I will call them out

clouding that. And I will call them out cuz I think it's a challenging organization. If you go look at the

organization. If you go look at the Canadian Bankers Association paper on open banking, which is a lobby group of our six banks in this country.

Um they have an 11-page paper and the first page says, "We're supportive of open banking." And the next 10 pages say

open banking." And the next 10 pages say all the things that could go wrong with open banking.

And it's like, of course this is the market that we got. We have regulators who can't find like the Consumer Protection Bureau and the Competition Bureau can't find, right? We have uh

a a very powerful Canadian Banking Association lobby and these banks employ hundreds of thousands of Canadians and we celebrate their share returns, but it very often comes on the back of things

that are harmful to the everyday Canadians. Like that

there's a reason our banks are 50% more profitable than the US banks.

Um, and so yeah, we have open banking and we have real-time rail and you know, like I will be shocked if we ever see them.

But I also like it'll be a nice-to-have the hand-wringing around when's it coming. Like I just don't care. It's my

coming. Like I just don't care. It's my

job to figure out how to make this work with or without open banking. I think

that Canadians are clearly getting harmed by lack of competition in this country, which real-time banking or real-time rail and open banking support.

Um, but will it ever come? I I I don't know and I'm it's probably the only part of my life that I'm like pretty cynical about. Right. Right. Um,

about. Right. Right. Um,

the the other big piece, I mean like all kinds of of of things that the government's um attempt to do to help innovation. The other big piece is is

innovation. The other big piece is is shred, the tax credit for uh research and and development and and and the like. Is that at all helpful for you or

like. Is that at all helpful for you or was that at all helpful for you? I mean

this is the government spends a lot of money on this tax credit every year.

It's supposed to be supposed to be moving the needle, but No.

Oh.

Um like I think they deploy 4 billion a year in shred, is that right?

Something like that, yeah. I'd say 80% of shred companies are zombie companies.

Um, that are there mostly to collect shred collect shred grants.

Uh, I'm going to get in trouble today.

Um, Yeah, I'm I'm writing that one down.

Yeah exactly.

I'm going to tell people you said Um, so look, everything you need to know about shred is that there's an entire industry of consultants around collecting shred. Like if you're going

collecting shred. Like if you're going to deploy the capital to startups, deploy the capital to startups and make it easy. And yes, you'll get some fraud

it easy. And yes, you'll get some fraud and you'll get some abuse and stuff like that and I get that that's politically unpalatable.

So is 4 billion dollars of which like I I don't I don't know that I think we maybe claim $20,000 in shred, you know?

Like and it was we're like this is crazy. This is way too much work because

crazy. This is way too much work because you have to justify all of your expenses and you're either going to take on the risk of venture capital or not. And

within startups there are good and bad actors and good and bad companies.

Um, I don't think it is the market's job to pick winners. I think it's the market's or the excuse me, I don't think it's the government's job to pick winners. It's the market's job to pick

winners. It's the market's job to pick winners.

And so dep give the capital to people who can deploy capital and everything else is just kind of get out of the way. Same true of IRAP.

Okay, we've got 10 or so minutes. Um,

we're going to try to take some questions from the audience I think unless we just gave the only roving mic to Dan, but um, if anybody really wants to ask a question, put up your hand and maybe we can find a way to figure it

out. Um, so in 10 minutes let's solve

out. Um, so in 10 minutes let's solve the productivity problem.

Um, you've I mean you care a lot about this issue. You've thought about it. Um, I

issue. You've thought about it. Um, I

don't mean to put you on the spot. I

don't say you should have solutions, but do you have have you surrounded at least two or three themes or two or three uh pain points that might actually,

you know, turn this uh turn the story around. I mean the the numbers in case I

around. I mean the the numbers in case I mean I'm sure everybody in this room is relatively aware, but I mean Canadian productivity's basically been not just it was always it's been stagnant for a long long time, but the the troubling

thing now is it's actually productivity growth has been essentially negative for the better part of two years.

So, you know, so what do you think Dan?

Like what are what are the, you know, a few things that um could be done to to turn this around quickly because it does feel like it's a it's a bit of an emergency. Like we need

to start taking it seriously. Yeah. I

mean, like I think it is a So, Carolyn Rogers who is the uh runs the Bank of Canada, is it I think the Deputy Minister of the Bank of Canada is a public official and she said we have a productivity emergency.

It is very very rare for a public official, particularly in the Bank of Canada, to be so candid.

Um so look, I think a few things.

Uh I think that we are I think that most of this is cultural.

Um, and I think where a lot of this actually starts is we need to celebrate capitalism a lot more as the

vehicle for good that it is. And and get a bit philosophical, but like people I think I I look at capitalism as like the best lever we have for long-term social good and then NGOs and charities and

many of these other things as the best lever we have for short-term social good. And the surpluses of long-term

good. And the surpluses of long-term capitalism um feed the short-term investments that we need to make around health care and social security and all the things that are very important in this country. Good

schools, all that kind of stuff.

Um, and so but I think we're like a bit masochistic in this country culturally around celebrating capitalism. And we do have some tall poppy syndrome and I think that what we actually need to do

is talk about this stuff all the way from our schools to our universities and have a cultural idea that like we should be really proud of the country that we have and the econom and the economy that we've built. Um,

we've built. Um, like on a more on a more tactical level, uh I think that I think that we need to elect leaders

who are not consensus builders, but have a strong and clear vision for the future. And if you try and make

future. And if you try and make everybody happy, like we dealt with this, maybe I'll just give you a concrete example. We dealt with this

concrete example. We dealt with this where we were trying to build a 50 million dollar wind farm in Saskatchewan and the amount of hoops we had to jump through because a owl flies through it once every 3 years

was crazy.

You know? And it's like we're talking about 50 50 million dollars worth of wind farm and green energy and the same is true in mining. Like we can't mine the lithium in this country because like environmentalists are critical of it.

The lithium that we mine in this country goes on to build the batteries that goes on to build electric vehicles, right?

And so there is a a lot of constituents in this country and we need political leaders who are willing to piss some of them off. Like I think it there's no

them off. Like I think it there's no version of the future that doesn't consider that.

Um, you know, I I think that we part of the reason that the capital gains tax was so frustrating to people was because the narrative of it was

we want the wealthy to pay their fair share.

And I think broadly the wealthy people that I interact with want good schools, want good places for their kids to go to to go good hospitals.

Nobody's trying to not pay taxes. I

think the reason that it was frustrating was because we're looking at a government which has added 100,000 people in the last 8 years and I don't really feel like anything's got better.

Um, 100,000 people in I know I'm in Ottawa, but 100,000 people is 10 billion dollars a year in spent. And then we're talking about a 50 billion dollar shortfall in the annual budget and then saying the wealthy need to pay their fair share. So,

fair share. So, um you know, I think that we have to be honest about how of like effective or not effective our government is. And by the way, this is not like a liberal conservative thing. It's just the size of the

thing. It's just the size of the government and the expenditures of the government, you know?

Um, I'm going to ask you to respond to what I assume Chrystia Freeland or someone from the government would would say if they were sitting here right now

and just heard that. Um, they'd say, I think, "Look, we identified and of this politics aside, we all know there's a certain there's definitely a political element to uh to everything they did in

the budget, but to be fair, there's probably also a policy element and a group of people trying to do a right thing and they have these choices to make and they chose to

go big on housing, bigger than they could afford cuz they've maxed out the credit card.

So they had to raise revenue and they chose the least bad option."

Um, I think that's what somebody from finance would say. What would How would you respond to that, Dan? I

I think that it's the least arguably, and I I would make the case that it's not, but if you're I would accept the claim that you're making the least bad option in the short term and I would say it's the worst plan in the long term. And so I think that we are mortgaging tomorrow so

that we can have a politically appealing strategy today. And I also think it's

strategy today. And I also think it's disingenuous. Like there are

disingenuous. Like there are uh you know, the this was framed as a tax that's going to impact the top 0.13% of Canadians, okay?

If you work for it it it impacts the top 0.13% of tax events in a given year, which is a very different thing. So if you work for 14

different thing. So if you work for 14 years and then you sell your chain of 12 laundromats, you spike into this bracket for a year. That doesn't make you the top 0.1% of wealthiest Canadians. It

makes you that tax event which you have worked 14 or 15 years to accrue that value.

Um, and so I would say that it's a disingenuous framing and I would say that it's intellectually dishonest.

Okay.

Uh Um, there is a mic here. Anybody has any questions?

I have more of course, but um but I don't need to hog that opportunity. Um,

just throw up your hand if you have it.

We've got another 5 or 10 minutes and I'll we'll fill them up. Um,

so the vibes are bad, but um you don't make business decisions entirely on vibes. So

what how do you feel about the the Canadian economy as it is? I mean

uh is is this the kind of place that um that you think you can make some money?

A kind of place that you think is is just going to grow in spite of itself or just how do you feel about uh the um the medium term?

I feel good. Um, I'm very critical, but I also think like as has been said, democracy is a contact sport, and I think you get the democracy that you earn. And so, I think in a weird way this capital this capital

gains tax has catalyzed a lot of people and made people much more aware of the productivity crisis that we have in this country.

Um and like economies slow down, and if you do the right things, they pick up. And I have a lot of faith in Canada and the people in Canada that we

will figure this out. I think that's kind of the only posture that you can have. Like

have. Like it's, you know, I think rational optimism is the only way to address this. Um

this. Um you know, like it doesn't really matter what I believe. It matters that we got to fix

believe. It matters that we got to fix the problem, and and you can't throw your hands up and walk away. Mhm.

Um so, how would we fix the problem if you and I were sitting down in the finance finance ministry uh today and had the had the had our hands on the levers for for a week or so?

Like, what would would be the first thing you'd do?

Yeah. Um

so, I think you want to reward uh risk taking. I think America has a

taking. I think America has a best-in-class process here. It's called

the QSPS, um where small business owners are like, which I think employ 40% of this country. It's going down. Um

country. It's going down. Um

but you want to make it as easy as possible to start a business and create the incentive structure to start a business.

Um and so, I would definitely lower taxes on small businesses, um and I would certainly lower taxes uh and I would certainly try and find something similar to a a capital gains equivalent in the United States.

You know, on our I would also uh give the Consumer Protection Bureau our Competition Bureau. I would probably

Competition Bureau. I would probably actually double the size of them and make them much more uh and give them the ability and the mandate to fine. You

know, we live in this middle road in Canada where we I I actually am not pro or anti-oligopoly as much as I am you have to then adjust if you're going

to create an oligopoly, you have to protect those that are that are downstream of it. Um and our telcos are some of the most expensive in the world.

Our Canadians pay the highest bank fees in the world. They pay $685 a year if you have more than $5,000. You don't pay bank fees, which means the lion's share of that is borne by people who are lower income in this country. That's a 2% tax

after their tax.

Who's talking about that, you know?

We celebrate it cuz it's on a bank's P&L. Um and so, I think I would create

P&L. Um and so, I think I would create So, look, what I would do is I would say open banking is live in 2 years and we're going to find you a million dollars for every day that you're not live by the end of 2026.

I would do the same thing with the real-time rail, and everybody who's not participating, you're going to get a fine of a million dollars a day until you're not live starting at the end of 2026.

They'll figure it out. You know.

It's going to be a good column coming up. Stay tuned.

up. Stay tuned.

Um Thanks, man, for doing my work for me.

Um Tell me this. I

glancing at a McKinsey report on fintech. Um

fintech. Um apparently we have a question over here.

Oh, I'll I'll finish mine and then we'll we'll take the the question from the audience. I was glancing at a McKinsey

audience. I was glancing at a McKinsey report on fintech. We seem to be suggesting that we're on the verge of a fintech moment in Canada. I mean, you can feels like that might be true. I

mean, you're having some success. You're

on a path becoming a a schedule one bank.

Wealthsimple's doing well. We've been

reading a lot about them lately. They're

experiencing all kinds of growth.

Borrowell, there's some other really impressive stories out there.

It gets back to one of my first questions is why in the hell you'd want to, you know, choose the financial services industry in Canada. But how

have you all done it? What's

What do you think explains the fact that despite all the headwinds and we've been talking about that the group of companies like yours have managed to

you know, to to stay in the fight?

So, you know, I think if you ask Andrew or Mike or myself, we would say that it was always clear that this was an option in this country. And I I totally understand

this country. And I I totally understand why it wasn't clear uh when we first came out and wasn't clear to the average Canadian. But this

is how like if you you know, Visa and MasterCard as an example, um when they launched, they had like 25% fraud rates, and they were mailing pieces of paper around the country in 1970.

Uh okay, this stuff is hard and it's messy. And Visa and MasterCard have gone

messy. And Visa and MasterCard have gone on to build two of the best tools for globalization that we have ever had.

Like, it's incredible that you can go to Zimbabwe and buy something with the same card that you use at your local Tim Hortons, you know. Um Chuck Charles Schwab got to a billion dollars in assets under

management. It took them 11 years.

management. It took them 11 years.

Today they manage 7.7 trillion. Right?

Uh and that was in in the next 25 years or something. So,

or something. So, you know, I think that we as fintech founders just recognize that it takes like a generation to build these businesses, and we're coming into the largest wealth transfer ever

in the history of humanity is going to happen over the next 20 or 25 years. And

so, I think fintechs, like the folks who are willing to to put in the work early, feel like they're well positioned to participate in that. You know,

the Wealthsimple is growing their net assets under management faster than some of the big banks. Now, they've added $13 billion in AUM in the last 6 months.

That's outpacing some of the big banks.

Like, this it's it's happening with or without open banking. Yeah, okay, that's a great story. Um there's a question back here.

Can you Can you hear me? Yeah. Oh,

great. Kevin Daniel, thank you so much.

Uh Winnie with the Upside Foundation of Canada.

You've um You've talked a little bit So, you talked about, you know, human rights as first priority, uh capital investment as second priority, and you talked a lot about macro things, and then you

actually have provided some really tangible kind of policy and actionable solutions. I'm curious, you know, you

solutions. I'm curious, you know, you just brought up MasterCard. MasterCard

um also invested part of their equity to build the MasterCard Foundation, which is arguably the largest foundation and most impactful foundation in North America with $36 billion worth of

assets.

And I'm curious about what you think this new Canadian social contract needs to be.

Uh you know, we've talked about how we need to teach this in schools, and we need to really change the mindset and have more civically engaged uh Canadians

um for all the people who, you know, don't vote. Uh we, you know, we're kind

don't vote. Uh we, you know, we're kind of in a in a room of a certain type of persona.

And so, I'm curious as to what you define that new social contract to be and how we actually deploy that outside of the, you know, 1% income earners or the 5% of the GDP that is Canada's tech

sector.

So, I just want to make you So, are you asking what is this social contract that I as a founder owe Canadian constituents? Do I Do I have that right?

constituents? Do I Do I have that right?

Yeah. And what what what you hope that to be.

Yeah. Um

you know, it it's probably true of how I think about So, so my through line as I think about my career is just to be useful at scale.

Um and and I think that's probably true of how I think about what my social contract is. And so, um

contract is. And so, um you know, I think Koho is uh can be a tool for social I I know it's a tool for real social good cuz we

see it with our users every day.

Um and I'm now, maybe this is not quite what you asked, but like I and I'm now at a place in my career where um you know, I have some pretty strong conviction around some of these things, and I I think that I

you know, I I it's not always popular for me to say these things, and we're active in a bank application and stuff like that. And and

so, I I tend to think that I weighted this of but like I I kind of feel like I'm a citizen first and a CEO second, you know. And my kids are growing up in this country. Um and so,

my social contract is to try and give them a great place to grow up. Um and

that's really all I'm trying to do. Does

that answer your question?

A bit?

Sorry, I I can't hear you.

You have a question. Yeah.

Yeah.

Yeah. So,

um if the if Okay, so the question is how do we uh how does that wash through to uh basically social mobility as I understand it and and a better standard

of living for Canadians, right? And

I actually I think that is the social I I think that that is what we're trying to do. So, I believe that like

to do. So, I believe that like productivity and a and a productive economy is the thing that rides, you know, like a simple way to think about this right is

any sane person would rather be a middle-income Canadian today than an ultra-wealthy person in the 1940s, right? And like whether you want to talk

right? And like whether you want to talk education, access to information, mobility, whatever those things are.

Like, the standard of living improved five to seven X by most metrics between the year 1900 and the year 2000. That

was driven by the greatest economy that's ever been created in the United States. That's my belief. It's not

States. That's my belief. It's not

perfect. There are many valid criticisms of it, but I think that economic growth is the thing that creates the mobility so that as we create entrepreneurs, they can deploy that capital, or as we create

into our local communities, right? And it's

really does the does is it going to be a market-driven solution or is it going to be a government-driven solution? And so,

this was kind of my criticism is of this tax is like the top 10% of Canadians pay 53% of the tax in this country.

If it moves to 56, okay, fine, but the GDP is growing half a percent a year.

So, like the pie is shrinking effectively. So, we cannot tax our way

effectively. So, we cannot tax our way out of this, right? We have to grow our way out of this, and I think small businesses and and entrepreneurship is is the best lever we have.

So, I think that is the social contract.

Question over here.

Yeah, I I was interested in your comment that you think FinTechs are on a roll in Canada and that we have a lot of smaller FinTechs and as you said it can take 20 years to build to scale.

A colleague of mine was quite actively involved with Zafin Financial which a month or two ago exited or at least majority exited to Nordic Capital

Private Equity firm out of of Sweden.

And I don't actually have the number but I know they were at an ARR of about 90 million US. So, you got to believe it's

million US. So, you got to believe it's a pretty big number. So, I'm wondering Kevin or Dan if you have any comments on that like how it impacts the FinTech the FinTech ecosystem and the good the bad

of it anything you make of this particular transaction cuz it's kind of a defining one I think in Canada. Do you

want to Um I think it I'm very happy there for the folks at Zafin. Um I think it's okay, you know, like this is it's it's kind of ties back into like the bronze culture,

right? Which is it's a it's a good

right? Which is it's a it's a good business. It's a great outcome. It's a

business. It's a great outcome. It's a

great outcome for investors.

We should ask ourselves why Zafin didn't go from 90 million to 900 million business. Like I think that's that's

business. Like I think that's that's that's a good question, you know, Wave also wonderful business sold for 530 million to US Block. Canaccord also

wonderful business sold for 400 million.

Um we don't have a lot of companies that get to multi-billion dollar outcomes. And I

actually don't have a good answer as to why that is, you know.

Sorry sorry that you had a question.

Um But so yeah, look I I think it's great for those folks. I think we need more of them. I think they I wish they would

them. I think they I wish they would have held on longer. I wish they would have kept building but every situation is different.

That's good.

Thank you.