Jason Putorti, Mint.com’s lead designer and an early employee of Mint.com, recently expounded on the reasons he believes caused Wesabe’s demise (and Mint’s “victory”). Below are some of his points with my rebuttal.
According to Mr. Putorti (JP), Wesabe failed because of:
Revenue. JP: “Wesabe never made any. You can’t overlook this in a startup. They literally ran out of money.”
My take: Partially correct. Yes, Wesabe ran out of money. But “running out of money” is very different from “never making any.” Plenty of startups stay alive for long periods of time without generating revenue. Tweet tweet.
Product/Market Fit. JP: ” If they set a price up front, and people didn’t pay, they would have worked on customer development until people started to pay.”
My take: Huh? Geezeo never set a price, and its users didn’t pay, and yet Geezeo is not only far from dead, it’s thriving. Customer development has nothing to do with Wesabe’s demise — if we’re talking about consumers as customers that is.
Wesabe changed its business model from consumer-direct to white label — which Mint, as part of Intuit, is now doing as well. So why didn’t Mint “work on customer development until people started to pay”? Better question: What does “work on customer development until start to pay” even mean?
Savings. JP: “Mint saved people money right out of the box without changing their behaviors. These were in the form of offers, which we then monetized.”
My take: An overstated claim. Mint never made public how many people actually accepted the offers to switch that were made. I’m just guessing of course, but if it was that many, every other FI (besides E*Trade) would have jumped in. And the claim just doesn’t hold water since for someone to have saved money s/he would have had to switch providers, which — by definition — is a change in behavior. It’s also an unsubstantiated implication that Wesabe never saved its users money. The forums that Wesabe managed contained lots of advice on how to manage one’s finances. I’m just guessing again, but I bet plenty of Wesabe users saved money as a result of the tool. And, “changing behavior” is a good thing — not a bad thing.
Team/Founder. JP: “I don’t know the Wesabe folks, but the Mint executive staff and team were world class. I think we just had more firepower. Our board members and investors similarly were world class.”
My take: No argument about the opinions regarding the Mint folks, but to infer that the Wesabe management team, board members, and investors were any less “world class” is uncalled-for arrogance.
Audience. JP: “Mint always focused from day one on people who didn’t want to ‘manage’ their money or do a lot of work. It’s a fire and forget product. We auto-categorized transactions, (Wesabe required tagging which takes time), we synced to bank accounts (Wesabe required uploading data), we emailed you every week, there really wasn’t a lot of work to do.”
My take: Partially correct. Mint did (and does) auto-categorization and syncing, and Wesabe didn’t. But the consumers that Wesabe tried to appeal to were those it believed didn’t place a high value on those capabilities.
The perspective that Mint was (is) focused on people who didn’t want to “manage their money or do a lot of work” is misguided. The percentage of people in this country who want to “do a lot of work” to manage their money is minuscule. Trust me on this one.
The whole reason that online PFM has begun to gain traction is that it makes money management easier to do. I have argued in the past, and will continue to argue, that “auto-categorization” and “syncing” capabilities appeal most to people who have an already established inclination to use PFM tools. Which is only about 25% of the population. Reaching the rest requires something else. To its credit, I think it’s things like peer comparisons and user forums, which Mint is now pursuing. But Wesabe kind of led the pack here.
The ultimate downside to Wesabe of not providing auto-categorization and syncing has nothing to do with the consumer audience. What Wesabe found was that when it went white label, the paying audience — banks and credit unions — wanted these capabilities.
Name. JP: “It’s a cheap shot, but Wesabe fails a lot of tests for what makes a good brand name.”
My take: Agreed (that it was a cheap shot, that is). The name was not a factor in Wesabe’s demise. Once it went white label, it didn’t matter what its name is or was.
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So why did Wesabe fail? Three reasons. It didn’t sufficiently execute on:
1. Marketing. By not adequately positioning itself as an “alternative” to the traditional approach to PFM (i.e, aggregation, categorization, budgeting, forecasting), it missed an opportunity to attract millions of users. Had it done that, success would have been far from guaranteed, but with a larger base of users, it might have been seen by investors as worth putting more money into.
2. Sales. From a sales perspective, Geezeo was (and continues to be) far more aggressive about making inroads into the credit union community and with vendor partnerships. Yodlee had a base of large FI relationships to leverage. Wesabe simply didn’t have the sales presence of its competitors (including Jwalla and SimpliFi).
3. Technology. I’m speculating here, but my hunch is that Wesabe didn’t integrate very easily with FI’s online banking platforms.
As a result, Wesabe ran out of time and money.
But there’s something else about Mr. Putorti’s assertions that I don’t agree with: The inference that not only did Wesabe fail, but that Mint succeeded.
With all due respect to the folks at Intuit, let me be clear in my opinion: Mint did not succeed. I have believed all along that the reason Mint sold out to Intuit was that it recognized its business model was untenable. It could not survive for long on an ad-supported business model.
Yes, Mint “succeeded” at attracting 3 million users. And to Mr. Purtorti’s credit, Mint’s design played a huge role in that. The design is definitely better than any other PFM platform (sorry fellas), and it leveraged that superior design to become the cool PFM tool.
But those are 3 million ”users” — not “customers.” You might not agree, but I’d rather have 100 paying customers than 1 million users I can’t monetize any day. Despite Mr. Putorti’s claims, Mint did not successfully monetize its user base.
If it had been successful, I doubt Mint would have sold out at $185 million, and instead waited a few years to become a half billion dollar firm. Tweet tweet.
Last point: Not only did Mint not win (past tense), it’s too soon in the development of the PFM market to say that anybody has won. We haven’t seen the last of new entrants into the PFM market.
Technorati Tags: Mint.com, Wesabe
[...] a comment » Ron did up a great post here reflecting on the reason for Wesabe’s failure and the arrogance of someone at Mint as to why they [...]
Ron, nice job. You said “With all due respect to the folks at Intuit, let me be clear in my opinion: Mint did not succeed.” Finally somebody speaks the truth. Actually you should not say with all due respect to the folks at Intuit. You should have said, “with all do respect to the folks from the former Mint.com”. They did a great job but did they have numbers like Yodlees (25 Million consumers worldwide through more than 150 leading financial institutions – Source: http://www.yodlee.com/2010_6_22.shtml ). Also, their numbers were nothing like Intuit’s Quicken software installed base of 12 million households (Source: http://blog.quicken.intuit.com/announcement/2009/10/13/introducing-quicken-2010-personal-finance-software/ ). Are these numbers big? Yes, but here is a bigger number – 114.8 million. That is the 2010 estimated number of households in the USA (Source: http://www.census.gov/population/projections/nation/hh-fam/table1n.txt ).
I think the modern day PFM is almost 6 – 7 years old. Yodlee has been around for more than a decade and I heard they are “profitable” (right Anil? Note: Anil Arora is the CEO of Yodlee). Ron is right, this iteration of PFM is very young.
Speaking of Intuit, they may turn into the winner. They launched their first salvo in 2006 when they bought Digital Insight, an online banking vendor. DI’s product was FinanceWorks and Small Business FinanceWorks (nobody else has a viable alternative yet). Intuit moved their software base personal and business products online and could not succeed the way Mint did. So they bought them and now the team is integrating the three very strong family of products. All these companies had a vision and the technology. Wesabe, remember them, well they had buzz. I tried their product and it manually integrated with my banks – I had to download then upload data files…FAIL! Personally, I liked Mint’s, Intuit’s and Thrive’s (justthrive.com was bought out) online personal financial management software better. Now I am playing with the latest Yodlee Money Center beta. They are out their innovating like crazy. Intuit and Yodlee are huge and have tons of money and frankly they can not be stopped. Ron mentioned some other company…Geezeo and something about selling prowess . I met those guys. They really can sell. They also play guitar, smoke cigars and play vinyl records but I also know their secret. They did not tell me their secret but my name is David and I intuitively know their secret. Here is their secret:
“David and Goliath confront each other, Goliath with his armor and shield, David with his staff and sling. “The Philistine cursed David by his gods,” but David replies: “This day the LORD will deliver you into my hand, and I will strike you down, and cut off your head; and I will give the dead bodies of the host of the Philistines this day to the birds of the air and to the wild beasts of the earth; that all the earth may know that there is a God in Israel, and that all this assembly may know that God saves not with sword and spear; for the battle is God’s, and he will give you into our hand.”
David hurls his sling with all his might,and hits Goliath in the center of his forehead. The Philistine falls on his face to the ground, David takes Goliath’s sword and cuts off his head. The Philistines flee and are pursued by the Israelites “as far as Gath and the gates of Ekron.” David puts the armor of Goliath in his own tent and takes the head to Jerusalem, and Saul sends Abner to bring David to him. The king asks whose son he is, and David answers, ‘I am the son of your servant Jesse the Bethlehemite.’ ” [Souce Link: http://en.wikipedia.org/wiki/David_and_Goliath ]
The secret, Geezeo is nothing more than a bunch of Davids and they partner with, you guessed it, more Davids. When that is not enough, they partner with Brett (really David) King. They hustle, they innovate, have fun and engage with their client base. Every other vendor in this space should watch out. To be fair, I must point out that I met a bunch of very smart and scrappy individuals from Yodlee. These guys know how to innovate too.
The PFM/OFM game is really not over. It is just getting started. Intuit/Digital Insight/Mint watch your back. For those of you who have short memories, Intuit is known for beating Microsoft to a bloody pulp over personal finance software. Banking Innovation Technology is alive and well in the United States of America and every corner of planet Earth. Enjoy.
So, who will really win? Consumers and small businesses who use these tools.
My flippy floppy story is now over.
@dmgerbino
DG,
Do we all have to change our name to David now?
David (Brett) King
BANK 2.0
Brett: In your last comment, does DG = David Goliath? I don’t remember seeing a comment from him.
Great points. The only thing I would challenge you on is that only 25% of the population is inclined to use PFM tools. I think that 25% is too high.
Ron,
Great job. I had read JP’s take and, like you, found it poorly written, not very thought out, and quite naive and arrogant. I am not saying I could have done a better job but thats exactly why I don’t (currently) blog and put my thoughts out there for the Ron’s of the world to slice and dice.
As for my two cents on the future of PFM – I am excited! PFM is what Online Banking always needed to be. Finally, we will have a way for clients to be engaged and have a relationship with their bank through the Online and Mobile channel in much the same way they always have through the branch.
I am curious to see who the “winners” will be. Intuit seems to be taking Mint and selling it to FIs. I, too, think they have the best design, but I haven’t seen the same level of marketing and innovation (in terms of current offerings, road maps, and pure thought leadership) as I have seen from Yodlee and Geezeo.
It has been mentioned in Ron’s post and your comment that Intuit is moving to/selling Mint to FIs. I haven’t seen mentions of this move toward BtoB business. Any link or readings to recommend?
Tekfin,
It isn’t that Mint is bring shopped to FI’s exactly, but the FinanceWorks product has been incorporating features made popular with Mint, including the interface/experience. It is becoming increasingly difficult to tell the two products apart, although FinanceWorks is more robust and has more features.
Paul
Paul,
Ok I understand now. For me one of the selling point of Mint (as a separate product)was that they were independent of your existing bank relationships. This positioning makes it very different from Geezeo or FinanceWorks. Will the extension of PFM in online banking attack their userbase? Probably unless they position themselves differently. I think their move toward more content on investment / savings etc.. is a way for them to try create a user community on their platform and keep people there.
Well said Ron. Think you nailed this one.
Did anyone mention that Mint used (still uses?) Wesabe as their servers and route to all the bank info? Could it be that Mint just sucked all of Wesabe’s resources? You know, Mint is going on and on here about how great Mint is “world class” and there are still so many feature problems and bugs in Mint that Mint has known about for yearS (plural) and still haven’t fixed but they continue to put efforts into these fancy half ass features so they can advertise and make money. Mint is also highly focused on adding as many banks as possible, but when a bank fails to login, or transactions get lost, weeks even a month can go by with no solution.
correction. darn, someone said Mint uses Yodlee’s servers. I always thought it was Wesabe. Anyway, my opinion still stands. I’ve been using Mint for two years, and it still not very good. Lots of bugs and design problems. I would never pay one penny for it.