February 28, 2007

Wesabe Gets Money From Tim O’Reilly’s OATV

Michael Arrington

27 comments »

Berkeley, California based Wesabe will announce a $700,000 round of financing tomorrow from O’Reilly AlphaTech Ventures (as well as a couple of individual investors), and Tim O’Reilly will join the company’s board of directors. A good overview video of the service, which launched in December, is below.

Wesabe is best described as a web version of Quicken, but with some fundamental differences that make all the difference in the world. Transactions can be tagged, for example. Also, as individual merchants are renamed by multiple users to make it more definitive (think about the crazy merchant names that appear on credit card statements), this better merchant data is automatically distributed to all other users as well.

One key difference between Wesabe and Quicken is a maniacal obsession with security and privacy. You can download data from up to twelve credit card, bank and other financial accounts. Your account credentials are never stored on Wesabe’s servers, though. You either download the data to your personal computer and then upload to Wesabe, or store your account credentials in an encrypted format on a small piece of Wesabe software on your computer. The result is that hackers can’t access your account credentials by breaking into Wesabe’s servers.

Wesabe has also spent a lot of time making it as easy as possible to leave the service. You can easily export your data and, more importantly, delete it directly from the Wesabe servers.

The service has been live for three months: $300 million in transactions have been recorded from 130,000 distinct merchants, and 1 million tags have been applied.

The company has eight employees.

This is OATV’s third investment (they also put money into Instructables and Chumby).

Sphere It

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Chris

February 28th, 2007 at 3:04 pm

The name is really hard to remember
matthew

February 28th, 2007 at 3:26 pm

good for them for making security and the abillity to export your data a priority…shows that they are respectful of their customers, which is rare in internet companies in this day and age.
Alaska Miller

February 28th, 2007 at 3:30 pm

I’ve been using it for 3 months now and I absolutely love it. The problem always with financial software is the ability to input in data. The more data you put in the more useful it is to someone. I have 15 credit cards, 6 bank accounts, 3 savings, petty cash, corporate expense, and billing for 10 different services. If I have one central place to organize and control all this, that’s the killer app. Of course the ability to input all the data, organize the data, and secure the data is what’s keeping from this being reality. Also trying to make money off a money manager is somewhat iffy as well.
Velioncho

February 28th, 2007 at 3:38 pm

Not much diff from Quicket/Money. They have been connecting to Credit Card/Banks for a while ,updating data.They do excellent job, you dont have to connect to internet all along, only when download/upload data.Doing it completely web-way is even more dangerous.All this encryption is not useful.
walter

February 28th, 2007 at 3:40 pm

“All this encryption is not useful.”

Are you serious?
Tester23

February 28th, 2007 at 3:52 pm

Privacy..? That still exists in this country? Even after the NSA plugged in a nice fat pipe into an AT&T west coast backbone traffic aggregator? Bleh.
Wes

February 28th, 2007 at 3:52 pm

Its good to see that Wesabe has given some good thought on the security arrangements but I also think that they have passed on the security burden to the user instead. So the user in this case has to make sure that their PC is as secure as it can be.
Alaska Miller

February 28th, 2007 at 3:55 pm

You people aren’t seeing the big picture. Security is one thing, what you’re able to do with the data is the real kicker. Stop harping on the security aspect, they’ve done a good job on it already, and see what the site is about.
Kevin W.

February 28th, 2007 at 4:07 pm

Alaska, why are you so defensive of Wesabe? I think some of the concerns raised here are legitimate. Having the user store his/her own data is no more safe than having it stored on a server. It might even be less safe!
beng

February 28th, 2007 at 4:11 pm

Alaska probably works for Wesabe, a lurker.
Velioncho

February 28th, 2007 at 4:30 pm

For #5 - what sort of encryption they use?
Jay Janarthanan

February 28th, 2007 at 4:58 pm

Is there a aggegation funciton, now I have to log on to every one of my bank account and download the OFX file or what ever - Jay
Jason

February 28th, 2007 at 5:30 pm

Ill be happy when a Quick Books like application that is NOT by Intuit goes live on the web. I’m looking forward to nameourapp.com whenever that gets a real name and is launched.
mountain

February 28th, 2007 at 5:51 pm

Wesabe has nothing like the rich functionality of Quicken. It is basically a community site where you can upload your financials to manage your budget. The information provided to help you make smart choices and to see how you are doing relative to others is based on the community members, which I have a hard time believing is made up of folks who are financially astute. Can we say the blind leading the blind!

What up Michael with the endorsement?
Jonathan

February 28th, 2007 at 5:56 pm

I think they are in a good space. If you read all the Amazon reviews on Quicken or Microsoft Money - most people gave very low rating. There is clearly a need for better product.

Would I use it? No, I am in security space and I don’t believe in just encryptions or storing user credentially locally is more secure. There are so many ways a website can be compromised and saying “we have encryption” is meaningless.
Marc Hedlund

February 28th, 2007 at 6:39 pm

Hey, I’m one of the founders of Wesabe. I’ll answer as many of the questions above as I can. Thanks, Michael, for the fantastic write-up.

I agree with the people who say we don’t match Quicken and Money’s features — we haven’t tried to. Those are both useful products, but we’re doing a different kind of application, a community of people helping each other organize and get the most out of our money. While we don’t do investment tracking (yet) as Quicken and Money do, we do provide community tips, aggregate data about merchants, goal discussions and tools, and “wisdom of crowds” editing and tagging. All of these features have the same idea: to make the work you have to do a lot lower, and the value you get out of participating a lot higher. Quicken is great at telling me that I’m in debt; Wesabe is great at helping me out of debt. (And I do mean me — I founded the company for a reason.)

On encryption, bank credentials are encrypted on your hard drive with AES, and all network traffic is encrypted with SSL. Jonathan is absolutely right that saying ‘we have encryption’ isn’t nearly enough to protect sensitive data. You can learn more about what we do *beyond* just encryption here:

http://radar.oreilly.com/archi.....iew_s.html

Wes makes a good point that storing credentials on your hard drive requires that your machine is secure. This is true of any application that stores passwords on your machine (including Quicken, Money, Firefox, IE, etc…), but it is no less true for us. The reason we made this choice was to allow people to get the benefit of our site without having to enter their bank passwords into a web form. Especially as an unknown company, we thought that was too much to ask, and based on the extremely high usage of our client app, we have good validation for that approach. Over time, we’ll add other options that allow you to use different security approaches if you would prefer those instead.

Jay, yes, we do have an account aggregation service, and mountain, our user population has plenty of high-income, low-debt, financially astute people as well as people in worse financial situations. We have users in nearly every U.S. ZIP code and every tax bracket, with lots of debt to no debt (in their Wesabe accounts) at all. So, there’s a good variety.

Finally, we were all in the office today, and we have no idea who Alaska is (though of course I would say that! :). Glad to hear from happy users, though — we get a lot of great feedback. Thanks, Alaska.

Thanks also to everyone for the feedback. Come by the site and check it out — accounts are free and you don’t have to upload your data to participate.
Jason Berberich

February 28th, 2007 at 7:51 pm

Jason (#13):

You might want to take a look at Mvelopes. It’s a web-based personal finance manager built on Adobe’s Flex platform.
I’ve used it for awhile, and it works pretty well if you’re willing to move to their envelope budgeting system. It will automatically pull transaction data from your accounts when you login, which is nice, but I do worry about the security implications of this vs. the Wesabe method of keeping the sensitive stuff separate.
Mvelopes supports downloading data from something like 12,000 different financial institutions, though I have a feeling much of that retrieval is done through a brute-force screen scrape after logging in with your info.
I’ve used both Wesabe and Mvelopes, and see them for two different crowds. Wesabe for keeping track of your spending, and Mvelopes if you really want to force yourself to spend less than you make. The aggregating and analyzing potential offered by Wesabe is really exciting to me - I’d like to see where that goes in the future.
BTW, I applaud the Wesabe crew for being as transparent as they have been. They even have set, daily hours when you can call up the CEO and talk on their dime. They’ve also removed the major excuses for not trying it: 1) security/privacy and 2) getting your stuff out if you want to go. I think they’re a great model for how to run a Web 2.0ish company.
Amy Wilsch

February 28th, 2007 at 8:01 pm

hi Marc, it looks interesting, but what’s up with the name? You know I’m thinking of that old Bud Light commerical “Wassssssssssaaaaaabiiiiiiiiiiiiiiiii”…….
http://www.ifilm.com/ifilmdetail/2423863
mountain

February 28th, 2007 at 8:09 pm

Marc,

You seem like a good guy and you certainly have an interesting product. However, more so than other communities, the effectiveness of Wesabe is very dependent on the actual skills of your members. No offense, but with all you have invested in Wesabe, you would proclaim a highly skilled and diverse community if you had 10 high school dropouts and a blind pig. What elements (I hate to use “controls”) of your community ensures the insights imparted are of real value? Seems to me you need to add seasoned subject matter experts in the mix somehow to impart more legitimacy to the community.

In any case, I wish you and your team the best.
Boolah

February 28th, 2007 at 9:54 pm

Yeah. I don’t like the name either.
Joel Mueller

March 1st, 2007 at 12:07 pm

If Wasabe could generate all of the basic business reports like Income Statements (monthly, yearly), general ledger of cash flow, category grouped income and expenses, then I’d stay a member — and even pay for the service.

I downloaded the Mac version of their plugin, and it was about as simple as it gets for grabbing your bank information and moving it to Wesabe’s interface. Editing the description categories, or tags, is helpful, but I noticed it gave issues when I named things like, “Personal: Food” on the right sidebar.

Overall, I understand they are trying to do something different than Intuit, but it sure would be nice to not have to manually enter my bank transactions into QuickBooks and re-edit the categories all over again.
Jesse

March 1st, 2007 at 2:48 pm

mountain: “Seems to me you need to add seasoned subject matter experts in the mix somehow to impart more legitimacy to the community. ”

The author of the book “The Wisdom of Crowds” would probably disagree with that.

I’m intrigued to see what comes of all of this, personally also personally invested in trying to convince people to manage their money responsibly, taken initiative, and make things happen.
Marc Hedlund

March 2nd, 2007 at 12:28 am

Amy & Boolah, we like the name! My experience has been that everyone hates the name for the first year and then declares it perfect after that. Let me know what you think next year.

mountain, you’re right, I’m a very biased source about Wesabe. We have some features coming up soon that may be more helpful in letting you decide for yourself whether the information we’re collecting is valuable.

Until then, I would agree with Jesse’s comment, that subject matter experts aren’t necessary to help you find areas where you can get more for your money. A lot of the tips that have helped me personally on Wesabe are pointers to local services, or very basic financial ideas backed up with personal stories from people who have used them successfully. In either case, even a person who is bad with money in some ways might be an expert with money in another way. You can buy subject matter experts’ opinions in books, but a collection of what works for people in your area and in your particular situation is a lot harder to come by. At worst, you’re getting more options; at best, you’re getting better visibility into the markets from which you buy. Transparency leads to efficiency — that’s basic economics, and our idea is to create transparency around consumer choices, prices, and satisfaction.

Joel, you’re right that we don’t provide small business features — we’re focused on personal finance at the moment. It’s hard enough for a startup to find success in one area, and spreading yourself too thin is certain death for a young company. There are several startups in this area, though — I’ve heard good things about Xero (www.xero.com), for instance.

Thanks to all of you for the great feedback. Let us know if there are specific things we can add to improve Wesabe for you.
franckyburton

March 2nd, 2007 at 4:54 am

Hi Marc,

Are you planning on adding PayPal to the list of financial services you support ?
I think it would be very useful.

thks
Basicity

March 2nd, 2007 at 10:02 am

You are driving a lot of traffic to wasabi.com and wasabe.com. Both domains are currently parked right now. I would make an offer to buy these two domain names to forward traffic to your wesabe.com, which I think isn’t a very good name.
mountain

March 2nd, 2007 at 1:01 pm

Marc,

You make some good points.

In the end, if Wasabe empowers folks to get more from their money it serves its purpose.

Best of luck. Be sure to create some discussion going in your community about how payday lenders are such a bad deal for everyone but payday lenders owners!

Best of luck.
Flate

March 6th, 2007 at 7:11 am

I felt compelled to write this when I noticed people saying they didn’t like the name. I couldn’t understand why. Great name I thought, easy to remember and catchy. I used the service and quite liked it but forgot to bookmark it. No problem, a quick google search will find it.

wasabi…..wesabi……wassabi…..wasabbi…..arghhhh!

In the end I returned to Techcrunch and clicked until I found the post and I finally got to the site wesabe.com. It took me 3 more times of returning to techcruch to find the url before I remembered to bookmark it and all 3 times I couldn’t remember the correct spelling.

Just wanted to share that with you.