Conversation with Financial Startup Wesabe Co-Founder Marc Hudlund

Yesterday I had a chance to sit down with Wesabe co-founder Marc Hedlund. Marc was in town for today's portfolio summit at Union Square Ventures. Let's dispense with the formalities first: Wesabe was not named after the Japanese root vegetable, that's Wasabi. Marc said the name comes from the spanish language as is a combination of "we" and "you". It's sexy.

I always look forward to meeting startups and developers for our conversations but this one I was really looking forward to. I have written several times about the other two big startups in the financial space: Mint and Geezeo and being a former accountant, the personal financial space has a tremendous amount of room for growth. My biggest issue with the other two is around security. Geezeo has more features than Mint but I have the same security concerns with both. Unfortunately Mint has some interesting corporate goals and has ignored most of my questions but I am still open to a discussion with them as well.

Now let's focus on Wesabe. We began by discussing marketing plans and Marc noted that the majority of traffic to Wesabe comes from Google which is stronger over time than a blog post on a top blog because Googlers actually need his product each time vs. a small handful from a blog post. Wesabe has a very strong community.

The founders spent two years interviewing over 1500 people about their spending habits and what they would be looking for in an online tool. Their goal was to build something robust because, "If it's the same as Quicken, why not just use Quicken?" Wesabe is an online financial management tool. It uses tagging to help organize your charges.

Most of our time together was discussing security. Where Wesabe differs from Mint/Geezeo is that Wesabe allows you to "decide how much to trust Wesabe". What this means is that you have a choice to either plug in your logins or you can upload the exported files from your bank Web site. I like this a lot. Their application for logins also works very differently than the others. It's a desktop app (or Firefox addon) in which you put your logins into it and after logging in, Wesabe exports the files and then it works the same as if you upload the files yourself. All login info is stored on your desktop pc and not on the remote servers. They have a data bill of rights for their customers.

We spoke about whether they use a middleman to get the data. Wesabe doesn't; they build their own from the ground up. Both mint and Geezeo use data middlemen. Yodelee is one of the middlemen and Marc noted that when they met with Yodelee, their policy is to retain the user's data even when the customer deletes the data off the Web site and there are very high data charges associated with Yodelee. I am sure there are benefits for using the data middleman as well.

Wesabe has an open API to allow others to build on what they have created. They are working on adding monetization currently and Marc believes that advertising won't be one of the options because he wants you to save your money, not spend it on whatever is being advertised. Their business model will never be at odds with their customer focus of helping customers reach their financial goals. You can even speak directly to the CEO every day.

Wesabe began development in December 2005 and launched in November 2006. I asked if it was in Beta and Marc slightly raised his voice and said, "No way we would be in beta, this is your financial data we are working with!" We then spoke about the new beta software on Virgin America and how scary it is to be on a beta airplane but I will save that for another post :)

Lastly we spoke about the community aspect of Wesabe. Wesabe aggregates data from it's customers anonymously to provide tips and recommendations for it's members. I wish I had pulled out my camera when Marc explained how this works but it's pretty interesting. Let's say that 10 Wesabe customers show charges for a new pizzeria and then the next month there are no charges from that pizzeria, it might be safe to say that the customers didn't enjoy the experience. Wesabe can help alert others in the same area to previous customer's reactions. And the same is true in reverse.

All in all, I am most impressed with Wesabe's ability to allow me to choose how much I want to trust them. All three services mentioned could be the big winner over time and there is plenty of room for all three to do very well. What's great is each of them is taking a different approach to their product which should provide a good option for each type of person.

Thanks for spending some time with me Marc!