71. Legends with Arkadi Kuhlmann

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You are listening to the Entrepreneur Podcast from Western's Morrissette Institute for Entrepreneurship powered by Ivey. In this series, join me, Eric Morse, as we uncover the stories of our entrepreneurial legends. These Western founders have revolutionized industries, built recognizable brands, and added richness to lives across Canada and beyond. Discover their origins, their greatest moments, their deepest challenges, and what makes each of them tick. Welcome to The Legend series.

A pioneer, and legend in the banking industry, Arkadi Kuhlmann first introduced the world to direct banking when he founded ING DIRECT Canada in 1996 and ING U.S. in 2000. As Chairman, President & CEO, Kuhlmann created the largest savings bank in the U.S., with more than $88 billion in deposits and 8 million customers. Since then, Kuhlmann has gone on to launch six startups in the banking sector.

A painter, poet, and prolific author, Kuhlmann has gained a reputation for putting together effective teams through his focus on culture and leadership.

In this episode, we explore his illustrious career, lessons learned, and the new challenges he is tackling in today’s business environment.

Eric Morse 

I'm really excited to talk with you today. We've known each other quite a while, going back and I've known you during a couple of the startups that you were involved with, but I know your history goes beyond mine in terms of your entrepreneurial startup. How did you get involved with ING Direct Canada was the first one that I know of, and was that your first kind of real entrepreneurial (No) endeavor? So tell me about when you got into entrepreneurship?

Arkadi Kuhlmann 

Well, actually, it's really an interesting way. When I graduated here, I stayed for a year and taught, (right) And then I ended up getting a job with the Canadian Bankers Association in Montreal, (okay) And that introduced me to the Royal Bank at  Place Ville Marie in Montreal. And I ended up doing a consulting project for them on a learning program for bankers, which had, like a credit module and operation module and so on right. And that basically then led me to getting hired by the Royal Bank. And I was with the Royal Bank for seven years, and I ended up in the commercial banking division. Got appointed assistant general manager and then VP of national accounts. And I was challenged by the time from one of the senior executives, Alan Taylor, who said, Can you come up with something that would actually help us compete against the other big banks? Okay, come up with something new. Yeah. So I really liked that challenge, and I somewhere around I came up with cash command, which was a an on the very first online terminal data transmission to corporate treasures. (Oh, really, okay) DDA, lock boxes and all that kind of stuff, (fantastic). And we literally Jimmied that together behind curtains with manual interfaces and all the rabbit wear you could imagine. But I was really in that time. I was really an intrapreneur inside a very big organization, yep. So that kind of got me the taste of, like trying to come up with something new and then put it together and build it and so on. And I did approach it, I remember distinctly, and even today, looking at the brochures, which I still have sure in those days, was just like the kind of methodology we use for looking at cases. Okay, really, I literally looked at it like, you know, here's the company, here's the challenge, here's the strengths and weaknesses. This is what they'll do. And so I really use that case and now analysis kind of approach that a student would here at Western and and then I got itchy after that, there was like, well, it was working. And it started really going fantastic. And then it was like, Well, you know, help implement. And then sort of, I felt like I was going back from the Marines, back to the army, and I didn't like the army, right? The army was all about sitting and reporting and filing and all that stuff. (Let's take the beach head) Yeah, there's a bit of that, and that suited my personality better, okay? And, and I was always a bit sort of against the grain, and I learned that here at Western because I was sort of like a b minus student, until I got into, into, into Ivey, yeah. And it didn't take me very long, maybe a month or so, to figure out that, wow, in these big class discussions on cases, how do you get noticed by the prof, and then how do you win the day that you actually had the prevailing answer? You know, you you made the biggest impact on the conclusion. And it went down to two factors which were really illuminating. Number one was, you have to have more data points in your quiver to win arguments or support hypothesis. Number two is, you don't have to be right. And up to then, I thought academics was all about like you have to have the right answer. Answer two times two is four right. And when you come into the business world two times two, I mean, could be three or five. I mean, so, so then the third part of that was, can you actually persuade your fellow students, and certainly the professor, yep, that you had a pretty good handle on the situation, and you could actually plead the case right, or come up and defend the solution and fight off other other views, right? Right? Well, that suited my personality. Terrific combat right in the classroom over who's got the best answer on this case, right?

Eric Morse 

What I love about that story, and I do love this and it it ties to your most recent book "Above the Clouds," because I think that's something that has differentiated you your whole career, is that ability to step back and say, Wait a minute, what game is being played here? And how do I win at that game? And I think so many people just get so busy in playing the game that they don't take that time to go up and say, Wait a minute, you know? How do I. Really win at this, what's happening, and then figuring it out from there. And that's, that's, I love, the way you approached the case method.

Arkadi Kuhlmann 

Well the faculty I've always really loved at Western, because being in this environment, from a faculty point of view, was, how do you challenge the students like they would in real life, yeah. And how do you give them some insights that would make them pause and think, sure, right? And you're trying to basically stir up their not only imagination, but also their skill in terms of how to how to grapple with problems. Yeah, absolutely. And I think, well, look after, after that with the Royal Bank, I ended up taking a job for I took over as CEO of Deak International. And you know, the my first time at 33 I got to be CEO because the chairman was assassinated and and I ended up being the ranking banker in New York, and that's how I ended up as CEO. And went on to do seven acquisitions, and there's a long story to that, but I ran that for eight years, and we went from a billion to 3 billion in valuation, and it was very international, yeah, and being a Canadian, you know, that really worked well, right? Because we ran a private bank in Switzerland. We had refining operations in Australia. We did foreign exchange in China and Hong Kong. I mean, so it was a commodity foreign exchange, precious metal Trading Company from South Africa. And from that, I ended up in there's a story about how that all all ended, but we ended up selling the different pieces to Barclays, ended up in Phoenix, and usually between all of my sort of startups and chapters, I always went back to teach. So my whole idea was to take a break. But then what you wanted to do, you wanted to get back into the academic environment. You wanted to think, you wanted to basically refresh yourself and kind of put the back chapter behind you with a good post mortem. Yeah, you know, I'm thinking about and then kind of taking fresh eyes, right? (It was supposed to your sabbatical). It's kind of Yes, yes. And it was great talking to students and and looking at things again with, we are new here, you know, it's like a fresh start, right? Yes, and, and that actually, for me, was always a very humbling thing, Eric, because I basically said, Look, whatever I might have accomplished and whatever money I've made or done is all great, but we're really basically at the starting line again. And so it got you away from not coasting. It got you into actually thinking about, Okay, what should I challenge? So then a couple of times in my career, I've actually said, Well, look, I know this business so well, I'm kind of inundated with the content. If I'm really a good manager, which is the way we used to teach at Western right, to be a manager to a manager, yes, then what I really need to do is actually go into a different industry and look at different content and see if I can get different and better perspectives. So from commodity, precious metal trading and foreign currency, I went into water. Okay, so this is Aqua Australis, okay? And I had I met people out of Queensland, yeah. And I ended up befriending a power brewing, and I ended up with clear beer bottles, and we put Artesian water in it with a hint of of orange and lemon, and we made that fashionable to drink, but it was non alcoholic. It was water, right? So people, especially in LA California, didn't want to drink alcohol, but, you know, they wanted to drink something, what didn't want to drink? Soft drinks? Yeah, so we're selling it in the restaurants and in the bars. Fantastic. It was Aqua Australis. And I ran that. Learned a lot about the water and retail, retail business and all that stuff. And finally, after a couple of years of running, running that I just didn't have the staying power to scale up, right? So I sold that to to a bottler, and then I got a call. I was in Phoenix at the time, and I'd already done three years of teaching at ASU. I had a call from from North American Life. Okay? They said, We have North American Trust that's in problems. Bill Bradford called me, said, Arkadi said, Can I get you to come back to Toronto and see if you can fix this for us? Okay, so I came back to Toronto and and basically I took that on and turned it around in two years, and then sold it to Laurentian Bank, and then I took a sabbatical for a year in Japan. And so I taught at UC University, okay, in Japan, and that was kind of interesting, and consulted with Nomura and all that stuff. And then met my current wife, and then I came back and um, I met the guys from, from ING okay, actually, I was wrapping something up. There's something in between there. Now missing. I was wrapping something up. Oh yes, I was wrapping up North American Trust. And in between there, there was a gap of time where I did some work for Laurentian Bank. But the big part was I, they came to me and they said, Hey, listen, you know, we hear, we hear, you're kind of a startup guy. You know, we want to basically do something in Canada. You think you can put together a business plan? I said, Yeah, but what do you guys want to do, right? I said, Well, we're getting killed here doing this. Can you come up with some kind of a retail concept, really? So I came up with a business plan and went over there and pitched the regular the Dutch regulators and pitched them and raised 250 million and and basically it was me in a briefcase and 250 million. Applied for bank license and started that, and then I ran that for for four years, until it broke even. And then I and I basically went to the US and started the US.

Eric Morse 

You just took on the bigger challenge.

Arkadi Kuhlmann 

Well, like all of us Canadians, right? I mean, we're, we're, you know, we do, well, it's actually interesting. Out of the seven startups that I've done, right, I've never been able to raise any money in Canada.

Eric Morse 

Is that right? that's a shame.

Arkadi Kuhlmann 

But I've raised money, and I've raised money, and I've raised money in Japan and Switzerland and Holland and Germany and in the UK.

Eric Morse 

Well, we're getting better here, but it's still, we still lag behind, for sure.

Arkadi Kuhlmann 

And I think part of it is that, and there's a bit of that in the US, but it's always about, well, you're one of us. You're Canadian. Like, why would you know something that we don't know? Whereas, whereas if you, whereas if you end up going to, well, right now we're all running to Dubai and go there, and they say, like, who are you? And they say, are you an American? I said, No, no, I'm a Canadian. And so they say, Well, I said, well, listen, here's the latest and the greatest. Yeah. And so that helps you sell. And as the guys in the Netherlands always say, right? Arkadi, you're you're an American, but you're the only one we can trust

Eric Morse 

Yea I love that in the book!

Speaker 1 

It's actually totally true.

Eric Morse 

Just don't tell them!

Arkadi Kuhlmann 

But there is a lot about students in terms of self awareness, right? And half of the battle here, I think, is at the age level that people are at, and the education they're getting exposed to, is learning about yourself and what you're really good at, absolutely. The other half is, do you really have the ability to size up the people in front of you, whether they're going to work for you, or whether they're going to fund you, or whether they're going to partner with you, whatever, right, right? And I think those skills be good if you have some of that naturally in your personality type, but if you don't, or whatever you do, to hone that to a really on that right level is really like, a big deal.

Eric Morse 

That emotional intelligence piece is critical. And, you know, I want to take that to your books a little bit. I've enjoyed all three. There is maybe one other business author where I've read three of their books. So that's... you are in good company

Arkadi Kuhlmann 

Well given your time limits. I'm impressed, okay!

Eric Morse 

Well you've done this over a year, so, okay, you know, I really enjoyed Above the Clouds, but I'd like chapter 10 for me, actually was really interesting, just some stuff that I'd never thought of. And I really liked that piece. Liked it all. There was some refresher from some of the previous books. You know, culture is something that we all talk about, but it's something that you've really lived and I think, been purposeful about, and maybe that's the right word for me.

Arkadi Kuhlmann 

That is the right word.

Eric Morse 

So tell me a little bit about how you came to that and how you came up with the principles that you talk about in your books.

Arkadi Kuhlmann 

Well, it's funny how life tends to be binary. Now I have a funny sounding name. Well, not today, but let's go 30 years back. Okay, it was, it was funny sounding, okay, sure. I'm an immigrant, like a lot of other people, right? And so, you know, I was always the outside person, and I had to fight my way in, and I had to perform, yeah, to get accepted. And so when you feel that you're a bit of the outsider, which we as all immigrants feel at some point, right? And we're trying to get accepted, and we're trying to belong, we're trying to figure out how to basically fit in, right? You know, that actually gave me some sort of, let's call it street smarts, yeah? You know, way to, how to, how do you make things work for yourself, right? Sure, and and when you roll that forward, and now you get in a position where you have funding, you're trying to build a team, you're trying to build, you know, camaraderie, you want to be colleagues and so on, those lessons of disappointment and difficulty and challenges, you know, get you to be very empathetic and very sympathetic to what other people are going through, trying to actually fit in, yeah? So you've actually seen both sides of that sort of equation, right? And so then the question is, well, look, you can't order things. You can only influence them. Yeah, you have to actually do it by example, yep. And when you do it by example, you have to kind of walk the talk, and if you're going to be very demanding, you have to have sort of both sides of that coin. On the one hand be a very difficult task master. On the other hand, you got to be very human and very warm, and you got to come up with new techniques, like I talk about casting, right? Yeah, I don't fill an org card, and I've had a lot of situations, I'd love to have your skill set, but your personality is not going to not going to work in this play. It just doesn't work. And even though I love you as a friend, yep, it's not going to work. Okay, so the casting mentality was really great about setting some of the cornerstones of a culture and then actually reinforcing about why are we doing this? And you can't talk about profits and compensation and money and getting awards and so on. It's all about, what do we want to achieve as human beings, and do your personal goals align with the mission that we're on? So I talk a lot about mission and the journey. And if you get on that, whether you win or lose at the end of the day, but if you're totally 100% committed, you're going to actually find that it was worth the fight. Yeah, you know, and, and I think we put a lot of emphasis on success. I understand that. I'm I'm guilty of that too, but you can't always succeed, but you can actually build some really meaningful experiences. And that the penny dropped when, when we had to finally sell ING Direct because of macro issues, right? Was because of the 2008 and 2013 we finally sold the US, and there's still a couple entities. People always come back and say, well, well, well, what did you get out of that? Right? I mean, did you make a lot of money and all that? And say, yeah, yeah, I did all those normal things. That's fine. But here's what I tell you, it really is. I've got eight and a half million customers that I'm proud of, and I'm not ashamed of what I did with them, right? And they're very appreciative of what we actually were able to deliver to them. Absolutely. It was really different, and that's the reward, right? Because at the end of the day, did you make a difference, and what did you set out to do? Sure? Now, did I sacrifice for that? Yeah, did it create a lot of turmoil in my personal life? Yeah, it did. I definitely felt more relaxed at work than I ever did at home. Yeah. Why is that? Well, playing with a three year old with blocks is very stressful. Figuring out a discounted cash flow is not stressful. So take your take your pick, right, right?

Eric Morse 

Well, and you talk about that a little bit in this book. I thought it was more you were more open to your personal experiences, a little bit more with this one, I thought, Yeah, but it's a good read. It's one that I recommend really all the entrepreneurs coming through here read, because I think it's got a lot of really important lessons in there for entrepreneurs.

Arkadi Kuhlmann 

Yeah, well, the last thing on this, I think it's really, if I can just tell you my view, yeah, please. It's pretty clear about what the book was supposed to do. And yes, it is building up on other things. What I felt really strongly about Eric was, you know, my love for students starting the journey and putting doing the good fight right to get there and all to whatever abilities or desires they want. But now that we have so many social issues going on, and without getting into the judgment of those, whatever they are, sure, how do we actually build a team? Now, we do a lot of stuff here at Ivey about leadership and character and personality, and I think there are great lessons in there that we can actually talk about and understand and learn from. But the second part is, how do you build a team? And everybody that I work with in Silicon Valley is all about the strategy, the white space, scale it, funding, right? And everybody wants to get in the ring and win. I get that. But guess where everybody's stumbling trying to put the teams together. Yeah, and we have no DEI (diversity equity and inclusion) conversations in India or in China. This is a unique sort of North American kind of thing, right? So I'm saying, Okay, if you don't want to get into that, you can't. Maybe not can't is the wrong word. Maybe we shouldn't, because there are a lot of dead ends there in terms of effectiveness and outcome. Okay, only effectiveness and outcome. Then, on what basis can we pull things together? Now, in the past, we could say, well, we all grew up in the same neighborhood, we all had a lot of similarities, right? But now that we have more differences, on what basis? So I put forward some principles this. Say, well, doesn't matter what your background is or what your philosophies are, we can basically deal on this principle, yeah, and we can basically agree on that principle, yeah. So let's celebrate our differences, but if we're going to work together, let's be pretty tough about the principles. We won't we won't negotiate them, or we won't marginalize them, right? That's the drive of the book, right? And now, when I go in and I'm pitching now on some funding for Zenbanx, 2.0 which is fascinating story, when they look at me and they say, well, so how much money do you want, and how are you going to do this? Well, it's not hard to talk about the technology. It's actually not even hard to talk about the strategy, what we're doing, and saying, I can put the right team together. That'll take anybody else you're going to fund. It's going to take them two years, if they can put the right team together, and then I come to stumble 18 months out; I got the right team together. Nice. So, so I'm encouraging the students here to say, whatever your plans are and your pitches are, what if you put the culture and the building of the team, you know, first, and try to figure out how you would do that? Yeah, and then look at the strategy and the technology and the funding and all the other pieces that go together for it.

Eric Morse 

I think there's a big part of in this book, and I think your other writings as well, Arkadi, of make sure you understand what you're about as well, what's important to you, what's your why? your purpose? and be true to that. That's not a committee thing. That's that's you. And then find people that that buy in to the principles and the beliefs that you have around that 'Why?'

Arkadi Kuhlmann 

When people ask me, What do you ascribe to your success? It's because I am 80% right on people, and get to be a really good judge on people. That's not to say that you're not going to be betrayed or have someone stab you in the back.

Eric Morse 

Chapter 10!

Arkadi Kuhlmann 

Yeah! The guy's got, basically the guy that assassinated Jesus was not some guy from far away, it's somebody around the table, right? You'll find that out in your boardroom too, okay, but it really does make a difference, right? And I have some very unique ways of trying to accelerate how much I can learn about you. Data points that give me insight, not to invade in your privacy, but for me to spark a conversation, to know what really makes you tick, right? Because if I accept that your skill levels are there and your experience is pretty good, and you do have the right kind of character or personality or hobbies or something that would cast into the team, right? Then I really want to know your goals, but I know that you're on good, good behavior, and so am I right? But, but I'm trying to get some sense about you now, once I work with you for two or three months, I get a pretty good sense, sure, but how am I going to do that in two hours? Right? Right? I'm going to do that over lunch. Yeah, I gotta make a call. And so the adage is, is hire slow, fire fast, right? Well, if I'm going to do hire slow, I'm going to be fair to you, (yep) but also fair to me. And by the way, as a side note, Eric, when I go back to the alumni from my different startups, Yep, yeah, and we're talking about it. And they say, "Arkadi, here's your big mistake." I said, Okay, give it to me, like, where have I failed you? I said, Well, look, you know, you've been a great guy to work with and for us on, but you there are guys that were on the team that you let in, right? You should have got rid of them. I mean, Uncle Bob showed up, right? And, and it always comes back to haunt me, because I won't basically, you know, pull the trigger, because I tend to be pretty loyal to people, right, and pretty committed, yep. And at times I've failed.

Eric Morse 

It is always true that the team knows the person should have gone before you do. It's always true.

Arkadi Kuhlmann 

Amen, you totally right, Eric, you're 100% right.

Eric Morse 

Well, I know we're running out of time, but I you know, I do want to go back to one of the things that I have always admired, and I think you really do it well, and you do it purposefully, is is that time to step back, reflect and think about what is... what is happening, and how do I make sense of it before you jump in? And I just don't think that's a skill enough of us practice, and it's so critical to success, particularly in entrepreneurship, is to really get a sense of what is happening here before you jump in.

Arkadi Kuhlmann 

Well, you know, look entrepreneurship and you know, you know, I think you're a master here, seeing all these different initiatives, right? Is that, you know, we have a, you know, a desire for action. We have a desire for getting going, right? Yeah, we like to be in the battle, right, yeah. And it's like, it's like, any battle, right? The hard thing is, waiting, right? It's like, I. Even if you're in the Olympics, right? I mean, the hard time is when you're waiting the locker room to get out on the field. Yeah, right. And, and, by the way, it's a certain skill set also to actually think like that, you know? So here's how I actually do that. I have two hobbies. Actually have a number of hobbies, but two of them that helped me with this one point. Okay? One is, I'm a, you know, I'm a painter, right? I paint. And what painting does is it actually forces you to slow down and think ahead. So that's actually a really sort of slow thing, because you can't rush it. Yeah? Chefs might do the same thing, yeah? And the other thing is poetry, because poetry you gotta like, you gotta think through, you slow down, right? So if you have a couple of hobbies, could be music, could be whatever, right? Gardening, right? Yeah, if you have something, that would be a good thing to actually lean on your hobbies to slow you down and see if you've figured out as much of the angles as you can.

Eric Morse 

Yeah and hey, let's not be wrong. Action is critical, and it's what differentiates the entrepreneur. But I think it's that purposeful action, it's that reflection, it's the learning. And you know, the best entrepreneurs learn the fastest.

Arkadi Kuhlmann 

Oh, yeah, yeah, yeah. We may be talking to differential here of of minutes, not years, right? Exactly. We're not with a robe and sandals on, right? We're not there. Okay, we're not there.

Eric Morse 

Thanks so much for this. It's fantastic. It's great to see you. Great

Arkadi Kuhlmann 

Great talking with you, Eric, and good luck with everything.

Eric Morse 

Thank you. You too.