Canada: Q&A With Daniel Eberhard: 28 Year Old CEO And Co-Founder Of Koho, A Vancouver-Based Financial Technology Startup

How did you enter the startup world and what drew you to it?

I studied business and consulting in Calgary and Europe and was drawn to the idea of solving problems, and creating value for people.

In 2010, while in school, a friend and I started a company as a final project. We developed a business plan that looked at wind farms, removing points of friction in selling private small turbines to farmers. Financing was the biggest hurdle and we believed that with a better leasing model that leveraged future revenues, we could achieve sales and growth. We were mildly successful, but through that process pivoted to another opportunity with a larger wind farm development in coordination with the Government of Saskatchewan. In the end we developed a 20 Megawatt wind farm which now provides power to 20,000 homes.

The actual initiation process is intimidating for many, yet that seems natural for you.

Things are always more challenging on a massive scale – you don't dive in wanting to build a wind farm, you begin wanting to learn, and continue to solve one problem at a time. With incremental steps, you find yourself in a position of developed market expertise. I also tend to operate with the assumption that there is a better way to do things.

How does risk play into that?

It's a question of how you define risk. For me, the idea of not doing something I am passionate about is a risk. The risk paradigm also shifts as we get older and start to lose flexibility from the things we attach ourselves to.

After renewable energy, what came next and how was the transition?

Renewable energy is amazing in terms of value creation but it is capital intensive and, due to a lot of regulation, slow moving. I wanted to continue to solve problems but at a faster pace with something that would scale more easily. Tech was the natural choice and Vancouver is a great city with a growing tech community.The tech world is different and took some learning. There's so much happening and it's exciting to be a part of because it is driving commercial value and many improvements.

Tell us about Koho.

It's a banking product, geared to millennials, but can create value for anyone. You get a Koho card, web app and mobile app, and can do everything you usually do with your normal bank account: direct deposit, bill pay, ATM, e-transfer, etc.; your core banking experience remains unchanged. Then we layered three fundamental value propositions on that:

  • If you use this bank account the right way, you'll never pay a bank fee again. That was our initial attraction to the industry – we saw an injustice in Canada where people with the least assets pay some of the highest fees to some of the most profitable bank institutions in the world, an insane misalignment.
  • We use design and technology to empower people to do more with their money. We help them set savings goals, understand their finances, transfer money easily between friends, project cash flow, and more.
  • We are not a bank. A financial institution holds your funds, so it's just as secure, but we don't treat you like a bank.

What are the barriers or difficulties that you've experienced being part of a startup?

With a startup, you need capital and it requires you to sell a vision, not a business. Investors either agree or don't. What we did well was validate our vision to eliminate risk as much as possible prior to raising investment. We launched the website, startup video, had conversations and created a compelling story so people believed we could build it and were excited. But that can always be done better, and it's always a challenge pre-product when you don't have anything to show people.

What sort of learning experiences have you enjoyed so far?

Every day is about learning, and I appreciate being challenged. If you aren't overwhelmed in a startup, you're not doing it right. It's part of the process to be understaffed, under-resourced, and just figure it out. Perspective is a huge part of it and it's a matter of how you frame the challenges in front of you. Eventually the business catches up to the idea.

Have the other startups you've been involved in challenged convention?

Yes. I don't know why you'd take on all the risks of a startup if you weren't going to change something. With the wind energy project, we were more agile in the government proposals we submitted because we were so hyper focused on our market. Now there's a 'use case' that I can look back on and say, with assurance, just because there are big companies in that space doesn't mean they are doing it well. And in many times they are not doing it well because they are so established.

When do you know that the startup is a success?

While the goal should always be to build a profitable business, from a personal standpoint, it's when we start creating value for people and they do more with their money; when we're operational and improving enough lives for the time and the energy to be worth it.

Any advice for others?

Everybody has things that motivate them, and I think where people struggle is either finding a problem that excites them or framing their current situation in a way that excites them. I suggest being patient until you discover what aligns with you. It does take your best work and your best work requires you to do something that gets you excited, every day.

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