Simplicity Won, Nice Guy Lost

By Harry Sit

Marc Hedlund was the CEO of online personal financial management software company Wesabe, which sadly shut down in July. Its competitor Mint has been successful in the same space. Wesabe and Mint let users see all their accounts in one place, sort of like an online version of Quicken. Marc wrote his take on why his company lost in the competition with Mint on his blog earlier this month.

Why Wesabe Lost to Mint

I met Marc Hedlund online, although never in person. Back when my blog barely had 100 readers, Marc recognized my blog as one of the three personal finance writers people should read, placing me among J.D. Roth at Get Rich Slowly (one of the most popular personal finance blogs on the Internet today) and Linda Stern at Reuters. I’m grateful of him seeing a gem in obscurity and telling others about it. Maybe some of you still reading my blog today were tipped off by Marc in 2008.

I followed Wesabe and kept abreast of its progress. I didn’t use Wesabe because I was already using (and still use) desktop money management software Microsoft Money. I saw Wesabe was trying to make it easier for people to get a full picture of their finance at any time from anywhere.

Because security is a concern when it comes to giving out login and password on one’s accounts to a website, Wesabe came up with a unique approach: if you are not comfortable giving out your online login and password, you can import the data anonymously. That way users are still in full control of their own security credentials.

However, that approach turned out to be one of the reasons Wesabe eventually lost to Mint. Being too nice didn’t pay. While Wesabe was distracted to developing data import tools, data export tools, Firefox plugins and what not, Mint jumped ahead with basically a beautiful skin over data from an established account aggregation vendor Yodlee.

In his post-mortem, Marc said not using Yodlee was probably a mistake. He didn’t use Yodlee because he didn’t want to rely on a single-source vendor. His users, however, didn’t appreciate the hard work he was doing behind the scenes to make Wesabe robust for the long-term. They only saw that Wesabe wasn’t able to cover as many financial institutions as Mint and that the user interface wasn’t as pretty.

Wanting engaged users was another mistake. Mint automatically categorized all transactions, however inaccurate it may be. Wesabe let the users tag the transactions on their own. Serious users want custom tags but most users just want something easy and no work on their part. Aiming too high cost Wesabe adoption while Mint could take their time adding advanced features after they beat Wesabe out of business.

In the end, nice guy Marc Hedlund lost to the ease of use and eye candies offered by Mint. Even on the way out, Marc was still nice enough to let the users export all their data out of Wesabe. Instead of selling the technology they developed, Wesabe open-sourced its software. Marc has been nice from start to finish. It’s really sad a nice guy couldn’t win in the marketplace.

Entrepreneurs usually will start another venture after one attempt fails. I will be watching what Marc will do next.

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Posted on October 14, 2010 under News.

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