When Jason Knight went looking for solutions TO get out of debt, he instead uncovered a business opportunity.
The CEO of the San Francisco-based startup Wesabe (www.wesabe.com) created an online community where people could manage their money and talk to others about their financial challenges and strategies.
The free Web-based software lets members access, upload, and view their banking and financial transactions, and tag or identify their spending, and it helps them make that “a-ha” connection to where all the money is going.
“It’s very hard to talk about money,” says the New York City native. “When I started talking to people about personal-finance tools, I felt like a priest. People were confessing their financial sins to me with this incredible level of emotion.”
Knight, 36, and Marc Hedlund founded Wesabe believing the tools that existed in the marketplace failed to provide consumers with clarity regarding their money and spending habits.
Initially, investors balked at the company. “One unfortunate thing about Silicon Valley is that everyone knows what you’re doing,” Knight says. “A number of venture capital firms said, ‘The consumer will never trust you.'”
With so much of the work involving sensitive financial information, trust was indeed an issue for the founders. To address that, they developed a “Data Bill of Rights,” which is being viewed as an industry standard as users turn more toward open data applications for their personal and business solutions.
Knight and Hedlund launched Wesabe in November 2006 with $200,000 of their own funds. Customers soon followed. One of the top draws of the site is that users can remain anonymous–not to mention the Wesabe.com space remains ad free. “[With] Internet companies in the past,” Knight says, “once you check in your data [it used] to be like a roach motel–your data checks in but it never checks out. It becomes the company’s data. From an implementation perspective, we built a privacy wall to protect users. And from a data ownership perspective, we make it explicit that this is your data. It’s stored locally on a user’s computer; it’s not sitting on a control server somewhere.”
Within the first month of launching, the site drew roughly 10,000 visitors. In March 2007, the company received $700,000 from a combination of angel and seed investors. And in June 2007, Wesabe successfully secured an additional $4 million funding from Union Square Ventures. The company now has more than 50,000 members who have uploaded more than $1 billion worth of transaction data to the site.
Part of the attraction to the site is the user feedback: users can take part in a variety of member-created discussions about saving money.
The founders believed that to have a successful product, they needed input from the users. “We didn’t want to build what we thought of as a perfect product,” Knight says. “In Spanish, ‘Tu sabe’ means ‘you know.’ The name Wesabe is Spanglish. It means that we know that our collective intelligence can allow us to make good decisions together.”