Wesabe was a personal finance company.
It analyzed a user's financial data to provide appropriate advice on how to save money.
Established in Dec 2005, it's site went live in Nov 2006, and they shut down in Jul 2010.
Received an approx $4M funding from Union Square Ventures and O'Reilly Alphatech Ventures.
Wesabe started generating revenue in late 2008, ran completely out of invested funds and survived solely on revenue almost 9 months before closing the company.
Marc Hedlund was the first person to start work on Wesabe and formally co-founded the company (as Chief Product Officer) with his high school friend, Jason Knight (CEO).
Jason later left due to a family illness, Marc took over as CEO; without a formal peer; for the final two years.
When the company closed, Marc wrote a postmortem on the experience.
Following is a paraphrased; & improvised with images; version of his blogpost.
In Nov 2006, Wesabe launched as a site to help people manage their personal finances.
We certainly weren’t the first to try to tackle this problem through a web app, but we were the first of a new wave of companies that came out in the months that followed, characterized but what some would call a Web 2.0 approach to the problem.
Like Flickr and del.icio.us, we relied on community and features such as tags; unlike some of the previous attempts, we tried to automatically aggregate and store all of our users’ financial accounts on the web (instead of relying on manual data entry, say, or desktop storage of the data); and most especially, we tried to learn from the accumulated data our users uploaded, and make recommendations for better financial decisions based on that data.
If every copy of Quicken started out as a blank spreadsheet, Wesabe tried to accumulate knowledge from users and data that would fill in some of that spreadsheet for you, and point you in the direction of better choices.
Even before we launched, we heard about other people working on similar ideas, and a slew of companies soon launched in our wake.
None of them really seemed to get very far, though, and we were considered the leader in online personal finance until September 2007, when Mint launched at, and won, the first TechCrunch 40 conference.
From that point forward we were considered in second place at best, and they overshadowed our site and everyone else’s, too.
Two years later, Mint was acquired by Intuit, makers of Quicken (and after Mint’s launch, the makers of Quicken Online) for $170M.
I made nearly all of the product decisions myself, and was notorious with Jason and our board as being very hard-headed about those decisions.
Wesabe launched about 10 months before Mint, but we didn’t capitalize on that early lead.
There’s a lot to be said for not rushing to market, and learning from the mistakes the first entrants make.
Shipping a MVP immediately and learning from the market directly makes good sense to me, but engaging with and supporting users is anything but free.
Observation can be cheaper.
Mint did well by seeing where we screwed up, and waiting to launch until they had a better approach.
Mint’s design was exceptional, but if other, stronger forms of lock-in are in place first, design alone can’t win a market, nor can it keep a market.
Neither of Mint nor Wesabe, bore any resemblance to a typical Silicon Valley success story, with traffic surging up and to the right (YouTube, Twitter, etc).
Mint aggressively acquired users by paying for search engine marketing (reportedly spending over $1 for each user), while Wesabe spent almost nothing on marketing; yet in the end we grew at about 1/5th the rate they did.
Their traffic dropped substantially for the 6 months after their acquisition, and has had sawtooth traffic after that.
Our patterns followed non-scalable curves (influenced primarily by press wins, economic conditions, and sometimes drafting on Mint’s coverage).
We chose not to work with Yodlee, but failed to find or make a replacement for them (until too late).
Yodlee is a company that provides automatic financial data aggregation as a web service.
They screen-scrape bank web sites (that is, read the payee and amount and date by parsing them out of the bank’s web site, writing a custom parser for each bank they support).
When we talked to Yodlee in 2006, the company was crumbling, having failed to get acquired and losing executives.
They were also very aggressive in negotiation, telling us they would give us six months’ service nearly free and then tell us the final price we’d be charged going forward.
Since they had effectively no competitors, we didn’t believe we should tie our company to a single-source provider, especially one in very bad business shape.
Mint used Yodlee (at least until they were acquired - I’m not sure what they’re doing now) to automatically get user’s data from bank sites and import them into Mint, and as a result had a much easier user experience getting bank data imported.
Wesabe built our own data acquisition system, first using downloadable client programs (partially because that was easier and partially to preserve users’ privacy) and later using a Yodlee-like web interface, but the Yodlee-like version didn’t launch until six months after Mint went live, and even then didn’t really work as a near-complete replacement for some time after.
A good friend argues that our mistake was not using Yodlee in the first place, and maybe – probably – it was.
I believe, though, that we could have made that choice as long as we immediately assumed that someone else would eventually sign up with Yodlee, and that we had to be at least as good if not better than what Yodlee provided, however we got there.
PageOnce, for instance, has not used Yodlee, but has grown very significantly in the same time, using a combination of other aggregation methods that were more effective than ours.
Mint’s dependence on Yodlee apparently suppressed their acquisition interest among companies that knew Yodlee well (such as Microsoft, Yahoo, and Google); since we had developed our own technology for aggregation, we didn’t have that particular problem, and in fact had some acquisition interest simply for the aggregator we’d built.
We just didn’t build it nearly fast enough.
Mint focused on making the user do almost no work at all, by automatically editing and categorizing their data, reducing the number of fields in their signup form, and giving them immediate gratification as soon as they possibly could.
We completely sucked at all of that.
Instead, I prioritized trying to build tools that would eventually help people change their financial behavior for the better, which I believed required people to more closely work with and understand their data.
My goals may have been noble, but in the end we didn’t help the people I wanted to since the product failed.
I was focused on trying to make the usability of editing data as easy and functional as it could be.
Mint was focused on making it so you never had to do that at all.
Their approach completely kicked our approach’s ass.
But their data accuracy; how well they automatically edited; was really low.
And anyone who looked deeply into their data at Mint, especially in the beginning, was shocked at how inaccurate it was.
The point, though, is hardly anyone seems to have looked.
Between the worse data aggregation method and the much higher amount of work Wesabe made you do, it was far easier to have a good experience on Mint, and that good experience came far more quickly.
1.
That one mistake (not using or replacing Yodlee before Mint had a chance to launch on Yodlee) was probably enough to kill Wesabe alone.
2.
Everything I’ve mentioned – not being dependent on a single source provider, preserving users’ privacy, helping users actually make positive change in their financial lives – all of those things are great, rational reasons to pursue what we pursued.
But none of them matter if the product is harder to use, since most people simply won’t care enough or get enough benefit from long-term features if a shorter-term alternative is available.
3.
A domain name doesn’t win you a market.
Launching second or fifth or tenth doesn’t lose you a market.
You can’t blame your competitors or your board or the lack of or excess of investment.
4.
Focus on what really matters: Making users happy with your product as quickly as you can, and helping them as much as you can after that.
If you do those better than anyone else out there you’ll win.
I think in this case, Mint totally won at the first (making users happy quickly), and we both totally failed at the second (actually helping people).
No one, in my view, solved the financial problems of consumers - No one even got close.
Yes, both products helped some people – ours mostly through a supportive community and theirs mostly through giving people a rough picture of where their money has gone.
5.
But when we analyzed the benefits we saw for our users, and when Mint boasted about the benefits they saw for their users, the debt reduction and savings increase numbers directly matched the national averages.
Because our products existed during a deep financial crisis, consumers everywhere cut back, saved more, and tried to reduce their debt.
Neither product had any significant impact beyond what the overall economy led people to do anyways.
6.
Changing people’s behavior is really hard.
No one in this market succeeded at doing so – there is no Google nor Amazon of personal finance.
It analyzed a user's financial data to provide appropriate advice on how to save money.
Established in Dec 2005, it's site went live in Nov 2006, and they shut down in Jul 2010.
Received an approx $4M funding from Union Square Ventures and O'Reilly Alphatech Ventures.
Wesabe started generating revenue in late 2008, ran completely out of invested funds and survived solely on revenue almost 9 months before closing the company.
Marc Hedlund was the first person to start work on Wesabe and formally co-founded the company (as Chief Product Officer) with his high school friend, Jason Knight (CEO).
Jason later left due to a family illness, Marc took over as CEO; without a formal peer; for the final two years.
When the company closed, Marc wrote a postmortem on the experience.
Following is a paraphrased; & improvised with images; version of his blogpost.
******** HISTORY ********
In Nov 2006, Wesabe launched as a site to help people manage their personal finances.
We certainly weren’t the first to try to tackle this problem through a web app, but we were the first of a new wave of companies that came out in the months that followed, characterized but what some would call a Web 2.0 approach to the problem.
Like Flickr and del.icio.us, we relied on community and features such as tags; unlike some of the previous attempts, we tried to automatically aggregate and store all of our users’ financial accounts on the web (instead of relying on manual data entry, say, or desktop storage of the data); and most especially, we tried to learn from the accumulated data our users uploaded, and make recommendations for better financial decisions based on that data.
If every copy of Quicken started out as a blank spreadsheet, Wesabe tried to accumulate knowledge from users and data that would fill in some of that spreadsheet for you, and point you in the direction of better choices.
Wesabe's website
Even before we launched, we heard about other people working on similar ideas, and a slew of companies soon launched in our wake.
None of them really seemed to get very far, though, and we were considered the leader in online personal finance until September 2007, when Mint launched at, and won, the first TechCrunch 40 conference.
From that point forward we were considered in second place at best, and they overshadowed our site and everyone else’s, too.
Two years later, Mint was acquired by Intuit, makers of Quicken (and after Mint’s launch, the makers of Quicken Online) for $170M.
Mint's website
I made nearly all of the product decisions myself, and was notorious with Jason and our board as being very hard-headed about those decisions.
While I relied on many other people in making product choices, I also hired and managed all of those people, so that group was at the least a reflection of who I thought had the right values and ideas.
******** FACTS ********
Wesabe launched about 10 months before Mint, but we didn’t capitalize on that early lead.
There’s a lot to be said for not rushing to market, and learning from the mistakes the first entrants make.
Shipping a MVP immediately and learning from the market directly makes good sense to me, but engaging with and supporting users is anything but free.
Observation can be cheaper.
Mint did well by seeing where we screwed up, and waiting to launch until they had a better approach.
Mint’s design was exceptional, but if other, stronger forms of lock-in are in place first, design alone can’t win a market, nor can it keep a market.
Neither of Mint nor Wesabe, bore any resemblance to a typical Silicon Valley success story, with traffic surging up and to the right (YouTube, Twitter, etc).
Mint aggressively acquired users by paying for search engine marketing (reportedly spending over $1 for each user), while Wesabe spent almost nothing on marketing; yet in the end we grew at about 1/5th the rate they did.
Their traffic dropped substantially for the 6 months after their acquisition, and has had sawtooth traffic after that.
Our patterns followed non-scalable curves (influenced primarily by press wins, economic conditions, and sometimes drafting on Mint’s coverage).
******** POSTMORTEM - A ********
We chose not to work with Yodlee, but failed to find or make a replacement for them (until too late).
Yodlee is a company that provides automatic financial data aggregation as a web service.
They screen-scrape bank web sites (that is, read the payee and amount and date by parsing them out of the bank’s web site, writing a custom parser for each bank they support).
When we talked to Yodlee in 2006, the company was crumbling, having failed to get acquired and losing executives.
They were also very aggressive in negotiation, telling us they would give us six months’ service nearly free and then tell us the final price we’d be charged going forward.
Since they had effectively no competitors, we didn’t believe we should tie our company to a single-source provider, especially one in very bad business shape.
Mint used Yodlee (at least until they were acquired - I’m not sure what they’re doing now) to automatically get user’s data from bank sites and import them into Mint, and as a result had a much easier user experience getting bank data imported.
Wesabe built our own data acquisition system, first using downloadable client programs (partially because that was easier and partially to preserve users’ privacy) and later using a Yodlee-like web interface, but the Yodlee-like version didn’t launch until six months after Mint went live, and even then didn’t really work as a near-complete replacement for some time after.
A good friend argues that our mistake was not using Yodlee in the first place, and maybe – probably – it was.
I believe, though, that we could have made that choice as long as we immediately assumed that someone else would eventually sign up with Yodlee, and that we had to be at least as good if not better than what Yodlee provided, however we got there.
PageOnce, for instance, has not used Yodlee, but has grown very significantly in the same time, using a combination of other aggregation methods that were more effective than ours.
Mint’s dependence on Yodlee apparently suppressed their acquisition interest among companies that knew Yodlee well (such as Microsoft, Yahoo, and Google); since we had developed our own technology for aggregation, we didn’t have that particular problem, and in fact had some acquisition interest simply for the aggregator we’d built.
We just didn’t build it nearly fast enough.
******** POSTMORTEM - B ********
Mint focused on making the user do almost no work at all, by automatically editing and categorizing their data, reducing the number of fields in their signup form, and giving them immediate gratification as soon as they possibly could.
We completely sucked at all of that.
Instead, I prioritized trying to build tools that would eventually help people change their financial behavior for the better, which I believed required people to more closely work with and understand their data.
My goals may have been noble, but in the end we didn’t help the people I wanted to since the product failed.
I was focused on trying to make the usability of editing data as easy and functional as it could be.
Mint was focused on making it so you never had to do that at all.
Their approach completely kicked our approach’s ass.
But their data accuracy; how well they automatically edited; was really low.
And anyone who looked deeply into their data at Mint, especially in the beginning, was shocked at how inaccurate it was.
The point, though, is hardly anyone seems to have looked.
Between the worse data aggregation method and the much higher amount of work Wesabe made you do, it was far easier to have a good experience on Mint, and that good experience came far more quickly.
******** CRUX ********
That one mistake (not using or replacing Yodlee before Mint had a chance to launch on Yodlee) was probably enough to kill Wesabe alone.
2.
Everything I’ve mentioned – not being dependent on a single source provider, preserving users’ privacy, helping users actually make positive change in their financial lives – all of those things are great, rational reasons to pursue what we pursued.
But none of them matter if the product is harder to use, since most people simply won’t care enough or get enough benefit from long-term features if a shorter-term alternative is available.
3.
A domain name doesn’t win you a market.
Launching second or fifth or tenth doesn’t lose you a market.
You can’t blame your competitors or your board or the lack of or excess of investment.
4.
Focus on what really matters: Making users happy with your product as quickly as you can, and helping them as much as you can after that.
If you do those better than anyone else out there you’ll win.
I think in this case, Mint totally won at the first (making users happy quickly), and we both totally failed at the second (actually helping people).
No one, in my view, solved the financial problems of consumers - No one even got close.
Yes, both products helped some people – ours mostly through a supportive community and theirs mostly through giving people a rough picture of where their money has gone.
5.
But when we analyzed the benefits we saw for our users, and when Mint boasted about the benefits they saw for their users, the debt reduction and savings increase numbers directly matched the national averages.
Because our products existed during a deep financial crisis, consumers everywhere cut back, saved more, and tried to reduce their debt.
Neither product had any significant impact beyond what the overall economy led people to do anyways.
6.
Changing people’s behavior is really hard.
No one in this market succeeded at doing so – there is no Google nor Amazon of personal finance.
Marc Hedlund
Credits:
Linkedin.com/in/precipice/
En.Wikipedia.org/wiki/Wesabe
Blog.Precipice.org/why-wesabe-lost-to-mint/
TheSmarterWallet.com/2009/wesabe-review-free-online-money-management-tool/
TheSmarterWallet.com/2009/wesabe-review-free-online-money-management-tool/
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