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.
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