Enlarge This ImageHistory is not always written by the winners. After Wesabe Inc.'s crumble, those on the sidelines were keenly interested in hearing what the fallen PFM pioneer had learned in its short run.
Wesabe launched in 2005, before the market was flooded with personal financial management providers and before it was commonplace for consumers to almost blindly hand over their banking passwords on the promise of getting a better grip on their spending.
It allowed consumers to pull in transaction data from multiple financial institutions and compare their spending to that of their peers, through software and discussion groups it hosted.
The company quickly faced competition from household names like Intuit Inc. to upstarts such as Mint Software Inc., but Wesabe does not blame its failure on its competitors.
This story is "what Wesabe did to shoot itself in the foot," said Marc Hedlund, Wesabe's second and final chief executive, in an interview. "It was our market to lose and to whatever extent that we lost … we did it to ourselves."
BEGINNINGS
Wesabe approached its audience delicately — in hindsight, too delicately, Hedlund said.
Phishing was a common menace in headlines when Wesabe launched, and banks were extremely vocal about how important it was for consumers to never share their passwords and their transaction data with a third party.
"When I would go around and talk to people about the idea of Wesabe before we started the company, everyone — I mean 90%-plus of everybody — told me that they would never in a million years use a startup website that asked them for their bank passwords," Hedlund said. "That it was just a ridiculous, laughable idea."
Wesabe's first mistake was taking this advice.
Companies should avoid being "too attentive to what the audience says it wants," he said. "That's how you get bad movies."
The easiest thing Wesabe could have done from the beginning was to partner with Yodlee Inc., a company that already worked with banks to pull transaction data after receiving consumers' passwords.
Wesabe chose not to do things Yodlee's way. Instead, Wesabe devised its own system with a more cumbersome process for pulling in bank data.
Wesabe required users to download transaction data from their bank sites in a file and then upload that file to Wesabe's site. It attempted to make this process easier with browser add-ons that could automate the process, but it still required the consumer to do more work than Yodlee required.
In 2007, Mint launched a competing service using Yodlee's technology. Other rivals used a similar system from CashEdge Inc.
Hedlund said he does not believe that Wesabe needed technology from a Yodlee or a CashEdge to succeed, but his company should have better prepared for the prospect of competing with them.
"We should have known that somebody would go with Yodlee and we should have aimed to that as what we needed to achieve, either by going with Yodlee or by replacing them," Hedlund said.
Ultimately, in 2008, Wesabe caved to the demands of its audience and began accepting their passwords to simplify the process of pulling data into its system.
This was not enough by itself to even the playing field.
After Wesabe began accepting passwords, "we didn't significantly see rates of sign-up change," Hedlund said.
Instead of trying to balance the companies' technical approaches to security, Hedlund said he could have paid more attention to their rhetorical approaches.
