| By Jim Bruene on June 30, 2010 9:26 PM | Comments (5) |
I'm sorry to see that Wesabe has thrown in the towel and will shutter the financial management portion of its website, leaving just the online forums intact. Customers have until July 31 to export their financial data stored at the company.
I have been a long-time fan and have been inspired by founders Jason Knight and Marc Hedlund. The company was the first VC-funded player in the online PFM space, beating Mint to market by a good nine months back in 2006. We've written about them in Netbanker and Online Banking Report, and they presented on stage at our first FinovateStartup (2008 video).
Wesabe's been pretty quiet this year and traffic has been on the decline, but it's still a respectable 40,000 uniques per month (see below). I was hoping they would soon be announcing a new round of funding, but obviously that didn't come through. But I am somewhat surprised no other PFM player stepped in to purchase the assets, especially given Mint's $170 million exit nine months ago (note 1). I'm afraid it's a sign that the standalone OFM space is struggling.
Source: Compete, June 30, 2010
It also illustrates the point we've been making for a long time: The first hurdle for market acceptance is trust. And it's difficult for a non-bank financial management startup to earn enough trust from enough people fast enough to survive. Mint proved that it can happen, but most OFM players will need to partner with banks and credit unions to overcome the trust barrier.
Still, the Wesabe case is surprising. Well into its fourth year, with a solid track record, a core group of fans, some cool technology, and a straightforward white-labeling model, it seemed the company had made it far enough down the trust curve to be one of the survivors. But in a Wesabe groups discussion forum a few hours ago, CEO Hedlund gave a pessimistic assessment of the company's revenue outlook. In response to several posts from members saying they'd gladly pay a subscription fee to keep the company afloat, he said:
One interesting side note, Wesabe says it will open source some of the code base, so users can continue to operate the service on their own computers. That may create opportunities for scrappy entrepreneurs to build something from the ashes of Wesabe, a fitting tribute to the PFM pioneer.
Wesabe homepage (30 June 2010)
Notes:
1. Wesabe was philosophically opposed to taking outside advertising, figuring that it was not in their users' best interests, so the ad-sponsored biz model used by Mint was probably not on the table.
2. For more on the OFM/PFM market, see our latest Online Banking Report.
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So what does this mean for the rest of the market? Obviously there are a ton of other players in this space between Buxfer, Thrive etc. Do they all meet the same fate? Or can one of them grab any kind of market share away from Mint?
-B
I have a question for Blair MacGregor: In your last question, what do you mean by "market share"?
If you're referring to registered users, I'm afraid I'd argue that that wasn't a relevant measure of market share.
With no paying customers, even if Wesabe had Mint's 3 million customers -- oops, I mean users -- it wouldn't be in any better position.
Mint was generating revenue from ad dollars. It's "share" of the ad market was minuscule, probably not even calculable.
Market share usually refers to the percentage of an industry's total # of customers one firm has, or the percentage of total industry revenue that one has.
Mint's "customers" were advertisers, not consumers.
But Mint still has to generate eyeballs/page views to remain relevant TO advertisers. Despite the difference in revenue models, it doesn't mean they're not after the same potential userbase.
Perhaps "market share" in the true sense wasn't the right term to use there but to me that's picking at straws. The point is whether or not these competing services can play in the same sandbox as Mint and either stay competitive/profitable or whether they're unable to chip away at Mint's user base (or reach out to new customers) and end up having to fold their tent. Either way, it should be fun to watch play out. :)
The problem here is that we really don't know what "sandbox" Mint is playing in. As a business unit (is that even right?) of Intuit, is Mint.com going to become a white-label PFM platform and replace (and/or integrate with) the FinanceWorks platform or remain a direct to consumer play?
Those are two very different sandboxes.
Wesabe went the white-label approach a while back (six months, a year? not sure). In effect, it said "we're not playing in the same sandbox as Mint."
My point is simply that the key to Wesabe's potential for success since going white-label had nothing to do with grabbing share (or users) from Mint.
I read this yesterday on their site and was saddened. They were the first with the community forum and I really enjoyed all my dealings with Jason, the first CEO. It will be ingteresting to see how the PFM market shakes out over time. And like Ron, I am anxious to see what Intuit will do with their current mix of products.