Remember Wesabe? It was a very promising startup that was well recognized in the personal finance space some years back. It provided financial software tools and a community on the web. Those following the financial technology industry will be aware of the fact that they’ve folded. But you may wonder what factors made them go under. We can certainly investigate some of the things that may have affected their progress. But let’s not forget that in general, many startups don’t last long and end up in the dumps after a few years. It’s a sobering thought but it’s something to keep in mind when you’re working in a startup or using the product or service of a fledgling company.
Here’s what we wrote about them before this company met its demise.
There’s a personal financial tool that the Get Rich Slowly blog has covered, called Wesabe: here’s their comprehensive write up on the company and their service. While I can appreciate personal finance software, I’m also a self-described security freak, so I’m still on the fence regarding Wesabe’s security policy, awaiting the time when I’ll feel warm and fuzzy about a site that allows so much information sharing. Hmmmm….maybe it’s time for me to get slicker about my financial tracking system, but part of me still feels that some of these tools may be overkill.
The tool itself delivers some good features (shared tips, tags, goals, targets) and looks quite promising — surely it will be “right” for those out there who will want to enjoy the financial community atmosphere it provides; for now though, I’m going to wait and watch for the green signal from the canaries in the coal mine. Hopefully the wait won’t be for long.
Well times have changed. In a big way.
Lessons From A Failed Financial Startup: The Story of Wesabe
So allow me to offer an update on what’s happened to Wesabe since I published that previous writeup. Wesabe has ceased to exist, sadly. According to Marc Hedlund, who was one of its founders and who was also the company’s Chief Product Officer, they were mainly a victim of circumstances, timing and unfortunate decisions. From my experience as someone who has worked at a lot of these small, underfunded companies, the stories and profiles are similar. These places are often amazing melting pots of talent with very smart people at the helm. While many companies find themselves in the same position, there’s really no guarantee here that these companies will make it alive in the next few years. Luck and serendipity can play a role here besides just the usual factors of having a great talent pool, connections, deep pockets, great products and a strong brand.
According to Marc Hedlund, there were lessons learned here (along with main issues that led to Wesabe’s end):
1. Being first to launch will not guarantee your success. I was actually surprised to hear this. But he claims that Mint.com, Wesabe’s main competitor, was able to overtake them as they were able to capitalize on Wesabe’s mistakes. This just means that even if you’ve got the headstart, it doesn’t mean you’ll win against your competitors. You can’t just rest on your laurels or feel complacent about how your business is positioned.
2. They ran out of money. Marc admits that they simply had no more money to sustain their organization. They just couldn’t keep going indefinitely.
3. Their main competitor had a better core feature. Mint.com fills up your data automatically for you and does a lot of that extra work that you’d have to do when using a money management tool. I guess we customers are a lazy bunch and have decided to reward sites that give us this kind of shortcut. Unfortunately, it was a huge feature that Wesabe did not have and was a big “differentiator” when comparing them against Mint.com. Here’s more on Mint vs Wesabe.
Bottom line was that Mint succeeded in providing the user the features that made their tool more useful — a quick way to track finances. Wesabe’s selling point was its community, but apparently, in the world of financial tools, this is not considered as important or special enough as other features to warrant the nod of venture capitalists, investors or potential shareholders.
This truly makes me wonder what the financial space will look like in 5 years. In some ways, we already know the answers when we compare how things are today vs just a few short years ago, eh?
By the way, the comments below reflect some history on Wesabe (as you can see from the dates they were made). I’ve simply updated this post to reflect developments on their story.
Created: December 2, 2006. Updated: May 24, 2011.
Copyright © 2011 The Digerati Life. All Rights Reserved.