Jan 30, 2020
Emerging and high growth (EHG) companies will have to successfully navigate various obstacles as they attempt to scale. From hiring employees to raising capital, the journey to reaching a successful exit is challenging. One company that EHG companies may want to emulate is Osler client Wave Financial, which reached a successful exit in 2019 – one of the largest ever Canadian tech exits. Wave is a Toronto-based FinTech startup that provides a suite of financial services and online software for small businesses.
In a fireside chat with Chad Bayne, Co-Chair of Osler’s Emerging and High Growth Companies Group, Wave co-founder and CEO Kirk Simpson explains the ups and downs he encountered as his business scaled and the valuable lessons he learned along the way. Kirk discusses everything from how his business started with a simple idea, to how “incredibly difficult” it was to get that first round of seed financing and how gruelling it can be to build a successful business.
Watch the fireside chat below:
This presentation is part of Osler’s Emerging and High Growth Companies 101 series, designed to help emerging ventures navigate through the various issues and legal requirements they will encounter throughout their growth cycle.
CHAD BAYNE: Talk about raising a series A, and I think it's very apropos given the fact that Wave was sold last year to have Kirk come in and donate his time and ultimately talk about the Wave story and ultimately how he started the company and ultimately got to the exit that happened last year, which was for Toronto being a relatively young ecosystem is a landmark transaction. And it's one that companies in the ecosystem ultimately hope to aspire to in terms of replicating and hopefully surpassing as well over the next number of years.
So, over the next little bit, we'll talk about Wave and Kirk's story and the story of the company and ultimately raising money and ultimately the exit. And then we'll leave some time at the end for questions if you have questions for Kirk. And then we'll ultimately go and have a reception after.
So, I think, and for those who don't know me, I'm Chad Bayne, and I founded and I run our emerging and high growth companies practice, but I think most people here know I am. So, Kirk, why don't you just introduce yourself. Just give you a bit of background about yourself in terms of where you grew up and the background leading up the Wave. Then we'll get into the Wave story.
KIRK SIMPSON: Yeah, so briefly I'm 45. I have three kids-- 14, about to be 15, 12, 13, and 10. They're all having birthdays right now, so I'm keeping up with it. Live in Toronto. Originally from Montreal.
My parents moved in the brain drain to Cambridge, Ontario of all places and ultimately made my way to Toronto after traveling and that kind of stuff. I dropped out of university twice. Made my parents very, very nervous and disappointed my mom a lot through the process. She was worried. So was I at times.
Started my first business in 1997, when I was-- if we do the math-- like 23, I think. An adventure listing directory that turned into an adventure webcasting company, which was a terrible idea in the year 2000. But we did some interesting stuff and grinded on a whole bunch of things and learned some interesting lessons.
We went bankrupt, of course, in the dotcom crash-- that was no surprise. And started a second business along the way, while also going to work for media companies that were transitioning from print to online. And through that learned from a couple of great leaders, a woman named Carolyn Meacher and a guy by the name of Blair Graham what it was like to lead big teams and believe in people and allow them to do great work. Very formative for me.
When we went bankrupt with adventurelifestyle.com, this woman, Carolyn Meacher, reached out to me and said, I hate to be a vulture, but what are you going to do next? And I went to see her, and I was incredibly grateful to have the opportunity to meet with her because I had no university degree, was now $40,000 in debt, and she gave me a job right away. And within five years, she was just so formative in my career.
And as we thought about starting Wave ultimately and thinking about the culture, that was really what I really aspired to build was a culture that mimicked what Carolyn had done for me and my career, which was believe in me, give me more rope than I likely deserved at the time, allowed me to take risks and chances, and essentially have very formative parts of your career happen at Wave, and that was really the most gratifying part of the entire journey.
So, we started Wave in 2009, got serious about it in 2010. Funny story, I had two kids at the time, my wife and I just stretch to buy a detached house in Toronto. She was pregnant with our third child. She was an equal breadwinner to me. She was about to go on her third mat leave, and we decided to start the company. Which you know you've got a supportive spouse when that kind of stuff happens. And lots and lots of ups and downs through the process, but ultimately culminated in that event in 2019.
CHAD BAYNE: So, what ultimately made you start Wave?
KIRK SIMPSON: So, I'll never forget that on multiple days over multiple months, probably over a couple of years, I just remember feeling like every time I was-- after I took a shower in the morning and I was shaving and looking at myself in the mirror, I thought to myself, I've got to do something else. And the conversation that I was having with my wife at the time was kind of, we bought this really nice place, we stretched to get it. We drive a nice car. I would much rather have a smaller house and not as nice a car and be happy and fulfilled doing what I want to do.
And thankfully she believed in that. And ultimately, thankfully, we didn't have to sell the house, but it was really just about a burning itch to go out and take more chances and put yourself out there and see if you could do something.
CHAD BAYNE: And what was the inspiration ultimately for the business itself in terms of how it started in terms of the direction you took?
KIRK SIMPSON: Yeah, there's not really a fascinating by any stretch founding story. James and I, my co-founder who we started the business together-- we started the business together in 2009-- our wives had gone to university together. They had been friends for a long time. I got to know James. We started traveling as we had kids together and that kind of stuff. And ultimately, we just started talking about doing something.
And we had lots of different ideas over the course of a couple of years. And ultimately, the work that he was doing at the time and some of the consulting stuff I was doing on the side, we started talking about this space and seeing what a big market it was. At the time was kind of peak Mint-- so Mint was doing really, really interesting things on the personal finance side, had innovative ideas around going to market free. We all take it for granted now, but they were really the pioneers in getting people to trust that you should be able to put your online credentials into a third-party site and screen scrape your bank data, which in 2010 was remarkable, and now we all take it for granted, but they were really the pioneers of that.
And we started seeing what was happening on the personal finance side and believed that small business was more ripe for long-term retention and a bigger business. And so, all of that culminated in us going, wow, the market size is huge. There seems to be a time and place that seems to be happening now. And most small business owners use nothing. QuickBooks is not the dominant-- what's dominant is apathy and spreadsheets and shoe boxes. Let's go after it.
CHAD BAYNE: And if you have any experience in finance or accounting?
KIRK SIMPSON: No, and I Brinn used to work at Wave. I'm thankful he came and showed support, but he would know, I still to this day know nothing about accounting.
CHAD BAYNE: So, what were the biggest challenges you faced in the first couple of years with respect to business in terms of getting it off the ground? I'm sure lots of people have similar stories, but it's always interesting to hear--
KIRK SIMPSON: Yeah, so I think a couple of key themes. If you go back, many of you in this room maybe might not have been around the ecosystem at that time, but the tech ecosystem in 2009, 2010 was drastically different than it is today.
CHAD BAYNE: Wasteland.
KIRK SIMPSON: Yeah, and what's cool is having a view on how much it's changed. And even to this day, I meet founders who were like me in that no pedigree, no previous experience with startups. I wasn't coming out of Uber and raising a seed round at like $20 million valuation. It was a fucking grind to get the first seed capital in 2010.
Incredibly, incredibly difficult. We probably made 100 pitches to just some really unsophisticated investors that were really, really challenging to will yourself to go see yet another one who was going to ask stupid questions and not understand what you were doing.
And one guy literally during a pitch was opening his mail as I was trying to pitch and then made some sexist comment. It was a wasteland. There was not a lot of sophistication around the seed stage. So, getting that first seed round, which ultimately in April of 2011 culminated in OMERS joining. OMERS had just-- we were their first investment. But that first round was so, so difficult.
And I think it's still difficult for, as I said, people without pedigree or without warm connections and that kind of stuff. But in general, there's so much more seed money in the market, which is great to get ideas off the ground. But that was probably the hardest.
And then the second part was we raised the seed round, then we raised the A, then we raised the B all in '11, '12. And I would say hubris of managing everybody, every signal is telling you like it's a rocket ship. And you're hiring all these people, and you're getting all this outside validation about how great you are and how great your idea is and all this kind of stuff. And at the time, we had raised probably $35 million of capital, mostly from US VCs, which, again, wasn't happening very often.
And you're hiring all these people and boiling the ocean about what's possible. And you're probably not paying attention to the signals as closely as you should be, or at least I didn't. And that first layoff in 2013 was the most painful experience ever.
Essentially, if you think about it, you've sold these employees on coming to join. They've been feeling like it's a rocket ship, and then suddenly you've got to tell them that contract and bond that you had was-- you've got to sever it. And the remaining people are now like, wow, I thought we were on this ride, now we're not. Do I stay? Do I go? All that kind of stuff, that was the worst part.
CHAD BAYNE: So, let's go back. We'll touch on that-- we'll come back to that, but let's go back to the beginning in terms of raising the funds from investors. How ultimately did you choose your angel investors and then OMERS ultimately to bring in [INAUDIBLE]
KIRK SIMPSON: I didn't choose them. They were the only ones who would give me money.
CHAD BAYNE: And I think that's an important point, just for the ecosystem is like there was no choice 10 years ago
KIRK SIMPSON: Yeah, but also, I would argue, quite frankly, on a couple of our rounds since that time we didn't have a choice. And the really great companies that are scaling the way they should be and all that kind of stuff, they have lots of choice, but there's a whole bunch of businesses where the founders don't have a lot of choice.
And we glorify the idea of multiple term sheets and you get to pick who you want and all that kind of stuff. And when the going is good, that's fantastic. But there are times along the way where we had no choice, and it was like if you're willing to write a check and you're a reasonable human being and you will sign the paperwork, you're it.
CHAD BAYNE: So, your first investor, OMERS, ultimately join the company, so maybe you can talk about your relationship with Peter.
KIRK SIMPSON: Yeah, so this is, as I said, going back to 2011. OK, do I just keep talking? OK. This is going back to 2011, so OMERS was just kicking off, and John started the fun with OMERS and he done it with a guy named Peter [INAUDIBLE]. And I met Peter, and he was the first person to truly understand what in our mind what the platform could be over time.
And so, he took a chance, wrote the $500,000 check, and ultimately had a parting of ways at OMERS in, I forget when, call it 2012 probably and went back into the ecosystem. All the way along, I leverage Peter's expertise on all the hard decisions that we had to make. He was an advisor all the way along and ultimately joined the business three years before we sold, I think.
And it was just an amazing ally to have somebody with his expertise around venture capital, around acquisition, around scaling companies. That trusted advisor, it's one thing when they're outside the business and in every conversation, you have to get them up to speed on what's happening and all those kinds of things. To have him sitting next to me was just an absolute blessing and ultimately played a massive role in helping us sell the company the way we did.
CHAD BAYNE: Yeah, for those who don't know, Peter is one of the, I guess, one of the key individuals has been in the ecosystem for multiple decades. He started at big industry at Lotus, which ultimately it was sold to IBM, wasn't it? And then he was at Microsoft for a period of time and then he was at Venn Growth, which is one of the precursor funds to the modern ecosystem.
It existed in the labor-sponsored investment fund days of the 2000s, and then he joined OMERS and then he was at Next, and then he ultimately joined Wave. So, he's been he's been very visible in the ecosystem over the last 20 plus years.
KIRK SIMPSON: The thing the thing that I want to call it with Peter, because he deserves this, is what I admire about Peter is he is not a chest thumper. He's actually the opposite, sometimes I would argue to his detriment. And he's just an authentic, genuine, cares for the ecosystem type of person, and he was just invaluable to me.
CHAD BAYNE: So, you raised $500,000 from OMERS, and then who was your next investor was Charles River? Right?
KIRK SIMPSON: Yeah, CRV.
CHAD BAYNE: So maybe if you can go into a bit of a contrast of the types of investors you've had. You went from OMERS to Charles River to Social Capital. Then who is after that? It was BDC?
KIRK SIMPSON: ADP.
CHAD BAYNE: Oh, ADP, yeah, that's right.
KIRK SIMPSON: strategics, then BDC.
CHAD BAYNE: So maybe contrast the different rounds and the different dynamics at play because most companies here have raised multiple rounds of financing-- only a few have been so lucky. A lot of companies here early on in their life cycle, but contrast the different investors, the different personalities, and how you've interacted with them throughout the life cycle of the company. How involved some were, how little some were involved.
KIRK SIMPSON: This is being taped, right?
CHAD BAYNE: We don't have to name names.
KIRK SIMPSON: Is that what I remember? So yeah, so we went from OMERS and Peter, which was amazing, to probably-- well, not even probably, my best, most consistent, most incredible investor, which was Devdutt Yullurkar at CRV. And the firm CRV was by far the best firm that I worked with through the time. What I saw from them, which was so inspiring as an entrepreneur, was all of the firm was behind you and supportive.
And at multiple different rounds-- and some of you may already have gone through this-- you do partner presentations. So even when they're doing their pro rata, let's say, they're the A investor. When they were doing their B or their C, you'd go back to the partnership and pitch for them to ante up on the pro rata.
And every time with CRV, it was the same thing, which was you sent out the deck in advance. Every single partner had read the deck, had questions prepared from the deck, showed up on time, had no devices present, asked great questions, and then gave you an answer at the end. It was by far the best firm I ever worked with.
And you contrast that with other firms where it was like, you show up, they're late, they're ill-prepared, they have massive opinions with nothing backing it. It's just night and day. So CRV was amazing. We hit, in some ways, peak Social Capital. So, this is Chamath Palihapitiya, an amazingly-- just an incredibly intellectual, charismatic individual of which I've never met before or since, but very highs and lows in our relationship.
And Mamoon, who was on the board, highs and lows in our relationship. Peter Misek at BDC, a very forward-facing, like hard-driving guy, but every time he told me he was going to do something, he did it. The strategics were interesting. Lots of good, some difficult. And then I will mention we also added an independent to our board, Joanne Bradford, from SoFi, the CMO of SoFi, who was an incredible add as well.
CHAD BAYNE: How did you decide to take money from-- so you took money from a number of strategics over the life cycle of the company. ADP was one, but also later on from RBC and NAB as well. How are those decisions made in terms of bringing those parties to bear and the contrast of raising money from a strategic who moves generally quite slow and ultimately has strings attached to that relationship rather than dealing with just financials?
KIRK SIMPSON: 2015, when we did the deal with ADP, which was our first strategic. We had no choice whatsoever. We were weeks away from being bankrupt, and we were so pleasantly surprised that the deal got done. To your point though, on something like that, you had to negotiate the term sheet, and you had to simultaneously negotiate the commercial agreement, which can be super challenging and very much as you described, they're very connected. And looking back on it, it's pretty remarkable we got a decent commercial agreement because we were going to sign that thing at all costs.
So, you contrast that with the strategic round, where they invested along with others in 2017 with National Australia Bank and RBC. And I think at that point, the fintech revolution had really come about in call it '15, '16, and you look at the Google Trends on the search term "fintech," and it just exploded as of '15, '16, and the banks started thinking about it in '17. I think there and with ADP, the lesson for that I would just give for working with strategics based on my experience of, one, is you have to have massive executive support at the highest levels to get anything done.
So, with ADP, we had the president of small business who reported to the CEO, and he was the deal champion, and he was doing it. And every single roadblock that we would run into, if it became difficult enough, I would just surface it to him, and he'd cut it down. The same thing with RBC, where Mike Dobbins did the deal, and we had strong support. And quite frankly, we launched that partnership probably three or four months after close, which was remarkable, and it was because of his support.
And then you look at National Australia Bank. We had no executive support, and nothing ever got done. But in '15, we just we needed them to close.
CHAD BAYNE: So maybe let's go back to the process of scaling this business and the ups and downs-- I mean, you touched on the layoffs you had to do in '13. But maybe just go through that cycle of ultimately growing this business and the different ways that business pivoted over the years in terms of getting into different areas and ultimately scaling the business, how you started, and the business model at the beginning, which then ultimately evolved.
KIRK SIMPSON: Yeah, so I've talked to a bunch of founders about this, and one of the things that I think has been consistent about the companies that have raised quite a bit of money in the Toronto ecosystem is they have one slide that makes an investor stand up and go, wow, I don't see that every day. And so, if you think about some of the examples, for us, it was by going free on the software, we had a customer acquisition story that almost nobody had seen before in small business.
Meaning that at the A round, we were signing up 850 small businesses a day all through organic unpaid channels. And that was the slide that made people go, what, how is that possible? And over the years, that grew.
And so for the first, call it to 2014, the whole story was about acquisition of small business owners onto a platform and what you could do with that data. And isn't it remarkable and all this kind of stuff. Meanwhile, all of our revenue strategies were failing miserably to scale. And when I look at board packs of what we had promised we would do, it's pretty embarrassing versus what we actually did.
In '13-- in 2012, I believe, we hired a guy by the name of Les Whiting, and Les had as much of an impact on the business as any of the founders did. And his vision right from 2012 was ultimately over time, this software will morph into a bank. And that was ridiculous at that time, and now you see-- he was very prescient. Like all a bunch of software manufacturers or builders are going into that direction.
That culminated in 2013 with us partnering with Stripe in the early days of stripe to start embedding payments on invoices, which was pretty new in our space. And then as we started to see that scale in '13, '15, let's call it '15, we started building all of our own money movement capabilities such that we could swap out Stripe and start taking all the economics ourselves. And at the end of the day, in my belief, any founder who doesn't talk about luck being a massive part of why I would be sitting here this time and could be sitting on the street next time is just luck.
And we got super lucky around the fact that what we were doing and what we were building perfectly lined up with where the market was going in '15, '16, '17. And quite frankly, what were headwinds in 2014 started turning into tailwinds in '15 and '16 because the market was going in that direction. All the investors were now starting to talk about fintech. We started changing our investment decks from being accounting software to new type of fintech company and--
CHAD BAYNE: You changed the name of the company too.
KIRK SIMPSON: Yeah, exactly. And so, we just rode those tailwinds. And so, payments started turning into other forms of money movement, which then we started telling a story about how we had all the data to get into lending and new alternative lending was the hottest thing. And we just kept riding that wave, no pun intended.
CHAD BAYNE: Maybe talk about the challenges of scaling a team. Like you went through layoffs but like in terms of building out a core senior management team and just building the team underneath and the challenges you faced over the last number of years, and then as you got to where you got to near the end.
KIRK SIMPSON: So, there was another really important hire that happened in 2015, a woman named Ashira Gobrin, who came in and started building our people and culture team. And for me, that was one of the most important hires I ever made. First of all, because she had all sorts of effects on the ground in terms of just making us better. But the second is that she was also wired to make me better.
Meaning that we spent a lot of time talking about how I could be better, how I could leverage more of my skills, and not focus on the weaknesses, try and hire for the weaknesses, all that kind of stuff. So, she really unlocked a whole bunch of-- I mean, if you look at our Glassdoor reviews as an example, I mean we were probably pre-Ashira at like 3 and 1/2, and she came in and we got to like 4.97 or something like that. And my rating went from like 60% to like 99% or something. That's all her.
And I think it just speaks to those important senior hires that make you better. So, she was really important. Also in 2015, quite candidly, I almost got thrown out of the company. And it was a conversation with Devdutt where he said, you need to hire more senior more strong people around you.
And the company, there's no surprise that the company, not only from a Glassdoor rating perspective, but what that manifested in terms of the performance of the company changed as well dramatically. And I always knew that I had that thought around culture that I had talked about before, but I probably was really terrible at putting it into practice. And I think we as a company just really matured in terms of what we valued, how we talked about it, who we hired, who we fired.
And somewhat overused expression but we really, really got focused on missionaries not mercenaries. And it didn't matter what the performance was like. It was if you're not on the train of like what we're trying to do and how we're trying to do it being as equally as important as what we're doing, you just didn't last.
CHAD BAYNE: So, let's change topics a bit and start moving towards what ultimately became a very successful outcome for the company. So, a lot of companies ultimately wonder, how do you meet the eventual buyer? So maybe you can talk about how you connected with H&R Block and that process.
KIRK SIMPSON: Yeah, so this-- you would know-- kind of abnormal story. And again, just call it luck. We had met H&R Block back in, I don't know, 2015 when they were going through an RFP process and ultimately partnered with one of our competitors in some ways zero. And through that process, it was just the typical RFP blah, blah, blah, blah, blah, and we quickly knew that the fit wasn't there, and we'd probably lose it anyways, and we did.
So fast forward to December, I think, or January 2019, and I get a message or Peter got a message-- he was heading up biz dev and strategy, corp dev and strategy. And he got a message from somebody at H&R Block saying, our CFO's in town. Would you sit with them and him and the biz dev guy and just walk them through your story.
So, we sat with them. The CFO's a guy by the name of Tony, and Tony was great. And he was very transparent about what they were trying to do, and we told him the story. I basically took him through the pitch deck. We were raising money at the time. And the chemistry was good.
And we told him we're raising it around-- we think that the path from accounting, bookkeeping software into tax is super important. There's obvious synergies there, and so let's continue the conversation if there's something to be done. We didn't hear anything; we didn't reach out.
And in March, early March, we got a message-- so March of 2019 we got a message saying-- from the CFO saying the CEO wanted to come up and meet with us based on the conversation that we had had. So, we scheduled it for the second week of March. That got cancelled due to weather. We did a two-hour Zoom call, I met Jeff Jones.
And he and I immediately connected, and he was very values-focused and very mission-driven. Former president of Uber in 2016 who, first of all, was in a company that was the company of our time at the time. Was the guy out of anybody that they could have hired to be the president of Uber, he was the guy that got the job, number one. So incredibly intelligent, skilled, pedigree, all that kind of stuff.
And then two, maybe just as importantly, seven months later left a wack load of money on the table, made only one public statement, and that was I'm leaving because of values. And to me, that said everything you need to know about the person, and Block brought him in 2017 to really transform that company. So, I met with him over Zoom second week of March. Third or fourth week of March he ended up coming up. We spent another three hours together, and the deal got closed on June 11.
So that was a gift to get a deal that complicated done-- kudos to you and the team-- to get it done in that short a period because we had come close to being acquired in 2014, I believe, like very, very close. And it was absolutely devastatingly difficult to go through that entire process, put in all of the work to do that and all the blood, sweat, and tears to get to the finish line essentially on that, have it be pulled, and then know that you're out of cash in six months and have to rally back was absolutely one of the biggest low points of this journey. And so, to have this transaction go through, be pretty seamless in the grand scheme of things, quick, somewhat painless was pretty remarkable.
CHAD BAYNE: You're going through a financial crisis at the time and this all happened serendipitously. How did you go through the thought process of deciding it was time to sell?
KIRK SIMPSON: So--
CHAD BAYNE: Because there was-- you were going through a financing process.
KIRK SIMPSON: Yeah. So, I remember having a conversation with Tobi at Shopify-- this was way back when-- and I was talking to him about investors and all that kind of stuff. And I asked him like because, they were always in the enviable position of having a lot of choice. And I remember asking him, how did you make the decision on who to choose?
And he said, I went through a whole mental exercise of mocking the board meetings and thinking about how each of the board members would potentially respond to given situations. And I was like, wow, that's why Tobi is so much smarter than me. A guy like him, very, very detail-oriented, very methodical in his approach, just breaks down the problem, all that kind of stuff. I am much more intuition based. And we sold for $537, and he's got a company $55 billion, so his approach probably better.
But it was a combination of looking at the market and thinking about where I thought the market was going and whether or not there would be a correction and whether or not the path to IPO for our type of business at our gross margin level, at our burn level was going to continue with the market remain open. Quite frankly, nine years of scars and a lot of hard work. And thinking about the shareholder base-- employees, early angels who believed in us when no one could or should.
My co-founder, myself, and honestly in that kind of order. And thinking to myself, I think this is a very good deal that is likely good for both parties. And I kept wanting to wake up in the morning with a clear answer. It never was abundantly clear, but I was moving in that direction. And ultimately just-- I will say that one of the lucky things and the thing that every founder wants is what happened.
Meaning that the board, the investors, my co-founder all did what you would hope they would do, which was we will follow you in whatever you want to do. And that is the most enviable position that is the most difficult. Because ultimately you feel like you've got to make the call. And just looking at all of that, my intuition said, this is the right thing at the right time. And quite frankly, I think in hindsight, it probably was.
CHAD BAYNE: So, let's talk a bit about the process in terms of the actual process of getting the company sold from basically negotiating a term sheet to the end point, and how did that differ for you from the multiple rounds of fundraising you did.
KIRK SIMPSON: I will say-- so a lot of it very similar. The data room and going through everything with the acquiring company and all that kind of stuff. The one difference-- and maybe there will be more that come to me, but the one difference was very much-- and you would know this better than anyone-- I am actually shocked that as much M&A actually happens as it does.
Because when you get into the weeds of all the things that need to be figured out and the amount of work that that takes and the amount of work post-transaction that has to happen, you're like, wow, I'm surprised that more deals don't fall apart.
I don't even remember some of the details, but like a US company buying a Canadian company and looking into the fact that what are all the employment laws that we've got to know, and what are your employment contracts on side? And are we OK with this level of risk or that level or-- on and on down hundreds and hundreds of items. I'm shocked that as much M&A happens as does because at multiple points, it just felt like, is this going to be the straw that breaks the camel's back where they put up their hands and say, I don't want to do it? So, I think it's just the amount of detail that has to happen that was different, and we were just lucky that we always had really good momentum.
CHAD BAYNE: So, if you look back over the last nine years or 10 years now running Wave, what are the key things that stick out from just a learning perspective that you can bestow on the other people in the room here?
KIRK SIMPSON: So, we made a ton of mistakes along the way. I've talked about this a couple of times, and so I hope I'm not repeating it for many in the room. But the first was, we let "free" be more than a marketing tactic. We let it leak into our product quality.
And I think in hindsight, there's a lot of reasons why that happened. I mean, we quickly-- I guess not quickly, but after a few years really had to find out the revenue model, and so we had to put more resources against that. But man, our product was shit for a long time. And there's nothing worse than being the CEO of a company that you're not fully proud of the product.
I mean, I'll tell you a very quick story. This neighbor of mine, he was like-- well, he still is, but he's like six foot four, 240 pounds. He's like this general contractor. He's like tough as nails. And I ran into him one day-- this is, call it 2014 or something-- and he goes Kirk, Kirk, I found your product. It looks amazing. I'm going to move my entire business off of FreshBooks and put it on your platform.
And the only thing that I could think of was like, oh, shit. And there would be times where-- there was one time, literally, I will always remember this where I was walking home from work, and he was at the front door of my house knocking on the front door. And I'm like, oh, jeez, I don't know whether I want to go home. He's probably going to tell me all the problems in the product and how pissed he is about having to move back off of wave on to FreshBooks.
But that was the feeling is that the product was not good enough and that we weren't sucking the oxygen out of our competitors because the product wasn't good enough. Why was somebody choosing to pay $20 a month versus use our software for free? Because it wasn't good enough. And I would argue, we're still not all the way there.
And I would build it as ideally as possible to be proud of the product. And I think there were times where I succumbed to board pressure around things where I knew in my gut and my instinct that we shouldn't be focused on those things. We should make the core product better. So that's number one. And that's a big one, and I wish that we would have gotten that more right.
In 2015, when I almost lost the job, I basically went to the board, and I said, we're not getting off this until it's better. And I was like, if I'm going to do this job, which is so damn difficult, I might as well do it the way that I'm proud. And if they fire me, then like my life's going to get easier, not harder. And so, I think I wish I would have done more on that side.
I think the other thing, and I just kind of touched on it is, I wish I would have taken more control of the board earlier. I think I was in some ways a typical Canadian. I was kumbaya, I didn't like conflict, and I was willing-- and I don't think I had the self-confidence to believe in myself enough to push on things that I should have been pushing on.
And I think there's a very fine line, by the way, between the founders who over-index there. And I think the danger there is you get the reputation of being inflexible and those kinds of things. I think there's a really nice middle, but either side of that is not good. And I was way over on this side, and I just I wish I would have taken more control, and I wish I would have learned the lessons of building a great culture, focusing on a diversity of thought amongst the team far earlier.
CHAD BAYNE: So, I think we're going to wrap it up very shortly. I want to ask one last question of Kirk and then open up to the floor. So, after all this, after 10 years, after the exit, everything, do you feel that you have the itch to do this again?
KIRK SIMPSON: So, I'm really happy where I am, and we're building Wave for at least the next few years. And the short answer is right now, I don't think so. Part of me hopes that that changes. But I think the thing that I am so, so grateful for is that over those nine, slash, 10 years, I feel like I experience every part of startup life other than ringing the bell. And I will always kind of be sad about that, but every other part I feel like I experience.
And man, I put every part of myself into the business, and I loved every minute of it. Not really, but that's what I tell myself romantically. But I did. I loved the journey, but I just now I know what it takes, and I just don't think I can do it again.
CHAD BAYNE: Well, I appreciate you coming in and talking to the group. Any questions on the floor? Ron?
KIRK SIMPSON: Right. Yeah, so I'll say a few things. Number one, I am incredibly fortunate to work with Jeff at HRB. And what I mean about that is, you will all know that it's kind of lonely. And you've got to really pick your places to learn from, and you've got to be brave internally. And what I'm excited about with Jeff is that I'm learning from him and he's making me better, and I really believe that's a gift.
Secondly, they have been amazing about saying, we want you to keep your brand, we want you to keep running against the mission. You're no longer on the fundraising treadmill every 18 months. We want light integration only where it makes sense. So as an example, they have 1.9 million small businesses they do their tax returns-- awesome opportunity for us to get some of those on the platform. We thoroughly believe the integration into tax is really a win for our customers and will make our platform stronger. So that light integration.
So, I couldn't be happier in terms of the buyer, who they are as people, and the opportunity in front of us. But it's just different. So, a few things happen. Number one, a lot of our long-tenured people looked at it as an opportunity, they had made good money, and looked at it as an opportunity where it was kind of like, I put my heart and soul into this place, and it's just time for me to learn somewhere else and just experience something else.
By the way, what a bunch of them are figuring out is that the grass is not greener on the other side and our culture is pretty awesome. And so, we're starting to see and hopefully we'll see more come back. But I always felt like-- and I don't know if you feel the same-- I always felt like when somebody left, a little piece of my heart died. Brinn would know. I told him that when he left.
By the way-- yeah. We'll talk after about-- thanks for that. But I had to pivot my thinking a little bit around these were people that helped get me there, and I'm happy for them. So that changes.
And I would just say at a very high level, there are two things for me. Number one is, I feel like I ran a marathon, and now I've got to keep running. And so, I've got to make sure that I'm continuing to motivate myself to achieve the mission and really service our customers.
And the second is, just financially it changes. And so, it's an emotional-- it's a much more emotional experience than I ever thought it would be. I always thought, you sold, it's the high of the mountain. You just ride off into the sunset. And it's not only the things I described. It's also that so much of my identity over the last 10 years has been deeply tied and woven into Wave. And so how do I separate myself over time from that? What does that look like? It's just lots of things, lots of emotions that go into it that were surprising for me.
CHAD BAYNE: Any other questions?
AUDIENCE: What was reason for acquiring [INAUDIBLE]
KIRK SIMPSON: Yeah, so you'll see our reasons in a couple of months. But if you were here before, I was talking about fintech moving in that direction, and I think it doesn't stop at payments, embedding payments. You're starting to see Square came out with a Square card. Starting to see Wealthsimple came out with a bank account. I think software and banking are merging, and they gave us an incredible leg up in that area.
AUDIENCE: Yeah, thank you so much for the talk about [INAUDIBLE]
KIRK SIMPSON: Yeah, that's a great question. So, one of the things that Ashira and I did together very early on in her tenure was figuring out figure out what my core values were, because oftentimes they are very tightly woven into the fabric of the company. But we did that to better unlock my thinking around how I could be a better leader, and I would have liked to do that work earlier.
Because my belief is that really unlocked me to-- this sounds kind of trite-- but be my authentic self at work. Get myself into a zone where I can be the most effective. I got really comfortable with what I'm good at and what I'm not good at and didn't pretend to be good at things I wasn't. But I knew where I was good, and I doubled and tripled down on leveraging that in the business.
And then it was just going down the list of how are we hiring, and where are we making mistakes, and how can we be more iterative in our approach of finding the right people? How are we assessing talent? How are we investing in talent? We were so the company that did what you so shouldn't do, which is take the best performer on a team and believe that they should be the team lead.
And you do two terrible things through that potentially. So, if they are a great leader, that's great. It works out beautifully. If they're not, you're doing two things. One is you're screwing up the whole team because the leadership isn't right. And two, you're taking your best performer and turning them into a low performer because you're changing what they're being graded on. And not investing in them through that process is like ridiculous.
And she would say to me, this is ridiculous. You're an idiot, and it's true. If you think about it, that's the worst thing you could do on multiple dimensions. So, it's just things like that of going down the list and saying, how are we investing in people? How do they feel like they come to Wave and their career grows and blossoms? How are we helping them think about leadership and leadership development, all of that kind of stuff? We're byproducts of what she brought into the organization.
CHAD BAYNE: Any other questions?
AUDIENCE: How did you ever decide to [INAUDIBLE]
KIRK SIMPSON: Yeah.
AUDIENCE: Have you ever let it separate [INAUDIBLE]
KIRK SIMPSON: So, in general, I felt like vacations were really, really important on two different levels. One was to just recharge a bit from the business and two was because I didn't want to get divorced, and I wanted to be present for my kids. And I felt like I was a better leader if I was feeling like my entire life was in sync.
And there were plenty of vacations where and for some reason every fundraise somehow got tied to a vacation. And it was just like, oh my gosh, when we booked the vacation, we didn't think that it was any chance that the fundraiser would take that long but it did. And suddenly I'm not going to break my promise, but I'm doing calls and all that kind of stuff.
And I just set expectations with my wife going into a vacation like, unfortunately the fundraise has gone long and we're in this midst. Can we do 8:00 until 10:30 in the morning where I'll just go and I'll bang it off as best as I can, and then I'll be as present as I possibly can through the rest of the time? My co-founder felt very much the same way, and we just prioritized it.
CHAD BAYNE: Any other questions? Yes,
AUDIENCE: When you went through the acquisition, was it like here's an offer, here's a price that we're going to pay you. And then let's go through all the details and try to whittle that down, or was it like, we want to buy you. Let's go through all the details and kind of come to one place. And did it change at all from the beginning as you went through the process?
KIRK SIMPSON: We were going through a fundraise process, so it made pegging the valuation easier. And they were incredible to work with where the price didn't really change. And we were in the enviable position of being able to say, we'll just complete the fundraise. So, if there's one thing-- and this is obvious, but I'll say it anyways, if there's one thing I learned through the process of every fundraise, et cetera, is how do you create some sort of scarcity slash just pressure on timing as much as you possibly can without lying about it or--
CHAD BAYNE: Or without looking desperate.
KIRK SIMPSON: Or without looking desperate or painting yourself into a corner where you say that things are going to close by this date, and then they don't, and then you're like, well, I just lost all my leverage. So that I would say is like art and science but is incredibly, incredibly important to think about on every single transaction. How do you create some sort of forcing function that makes people move?
Because the bottom line is with a startup, theoretically you're always growing, and so there is always an incentive to just wait and see, and that's death. So, it's how do you create that tension where people feel like there's scarcity and they want to get in?
AUDIENCE: If you were in the middle of a raise and so that's sort of a dual type process, [INAUDIBLE]
KIRK SIMPSON: Sure. But we were in really tight windows, but I would say that that is an argument for making sure that you've got relationships at those places where you can call and quickly get a pulse for whether or not there's anything interesting there. Because oftentimes you'll be dealing with very short windows and you want the right answer.
CHAD BAYNE: There's an art to it as well in that there's always a tendency in these types of situations to be greedy in your negotiating. And you have to very much balance the bird in the hand potentially versus the two in the bush in that, it's trite to say, but you don't want to lose the financing because that could mean sudden death for the company.
In a growth stage company that still is not cash flow positive, if you lose that financing, there could be sudden death. And you're basically rolling the dice on something potentially bigger. You're playing Let's Make A Deal, taking door number two. So, you've got to be very, very careful how you play all the parties and make sure that you come up with an outcome, regardless of the outcome, at the end of the day. So, and that was some of the dynamic that was at play here ultimately.
AUDIENCE: How did you and your cofounder break up the work? [INAUDIBLE]
KIRK SIMPSON: So, James left the business in 2015 and remained on the board. So pre-2015, I basically handled the financing, and he handled running the business. And obviously there was overlap there from the perspective of all the data required to populate the charts and build the decks and all that kind of stuff. There was a lot of overlap there.
But generally, I was out telling the story and trying to close the fundraise, and he was trying to make sure that the business ran smoothly. In 2015 on, when he wasn't at the business, it just became much more of a distributed teamwork from the perspective of the data team, the finance team. When Peter joined the company, obviously he was incredibly useful to me in terms of his knowledge. He would come on the pitches with me, get a read for the room.
I was super lucky in that he was essentially our internal lawyer because he was so familiar with the docs, and then we would work with Osler. I am useless with legal docs. You're finding and you've heard, I'm useless on a bunch of fronts, but legal is definitely one of them. And so, Peter would run with that. So, I was much more of the storyteller and the relationship and the negotiator and then had a lot of support around me to get it done.
CHAD BAYNE: Any other questions? Go ahead.
KIRK SIMPSON: So, I grew up with a father who was a sales leader, and so I think I always kind of loved it. I would say that-- and hopefully Chad experienced this-- I don't want to win at somebody else's expense. And so, I want to do-- like if we say we're going to do something and there's an opportunity to maybe push that line later, I would rather do what we said we were going to do. So, I think some of it is just values.
But if there's an opportunity, I'm also competitive, and so I want to get the best deal. So, I think it's the culmination of those things, where I want to work with good people, I want to do it the right way, and I also want to maximize.
CHAD BAYNE: Anyone else? Good.
KIRK SIMPSON: Thank you all for coming. Appreciate it.
CHAD BAYNE: Take care.
KIRK SIMPSON: Awesome. Thank you.