October 22, 2010

Wesabe vs. Mint: Lessons Learned

Marc Hedlund recently posted a great piece on why Wesabe lost to Mint in the battle of online personal finance apps. As many of you know, Mint was acquired by Intuit in 2009 for $170 million. Wesabe, on the other hand, closed its doors several months ago. Hedlund was the product designer (and later CEO) at Wasabe, so his point of view is especially relevant. He points out, for example, that Wesabe launched almost a year before Mint, contrary to what a lot of people assume. He also makes it clear that Wesabe's failure had nothing to do with design or brand identity.

Second, Mint focused on making the user do almost no work at all, by automatically editing and categorizing their data, reducing the number of fields in their signup form, and giving them immediate gratification as soon as they possibly could; we completely sucked at all of that. Instead, I prioritized trying to build tools that would eventually help people change their financial behavior for the better, which I believed required people to more closely work with and understand their data. My goals may have been (okay, were) noble, but in the end we didn't help the people I wanted to since the product failed. I was focused on trying to make the usability of editing data as easy and functional as it could be; Mint was focused on making it so you never had to do that at all.

For me, the above quote is extremely revealing about the main reason Wesabe failed: It wasn't focused on the problem people were trying to solve. Hedlund and his team assumed people wanted an online product to make better decisions about their personal finances. What's become clear in hindsight is that people were looking instead for convenience and ease of use. They were tired of logging into five different Web sites to check on their accounts with various banks and online brokers. Having that fragmented information brought together into a single dashboard made tracking finances a lot easier, and Mint did a much better job of making it as painless as possible.

So, the first lesson I got from this story is that it's absolutely vital to understand your customers' pain and design your product to address it. Don't assume you know what solution customers are looking for. Step back from the keyboard, get out of the building, and start talking to them.

Second, I believe Wesabe could have stuck to its knitting and targeted consumers who really did want help making better financial decisions. The people in that segment of the market presumably would not have objected to the additional work required on their part. However, Hedlund's essay doesn't provide any evidence that Wesabe tried to position itself in this way or that it actually improved its users' financial behavior.

Third, Wesabe's experience once again shows that the first mover advantage is grossly overrated. There are very few instances where being first to market creates an unassailable advantage and plenty of examples where a later entrant went on to dominate the early market leader (e.g., Dell vs. Compaq, Facebook vs. MySpace, Windows vs. Macintosh, etc.).

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