You may remember that last year Mint.com, a service for managing personal finances online, was acquired by Quicken for $170m. You may also have seen that shortly afterwards Wesabe, their main competitor, gave up the fight (the site is still live but only as a discussion board).
So Mint won and Wesabe lost. And that happened despite the fact that Wesabe launched first.
Marc Hedland, a founder (and latterly CEO) of Wesabe, has written a long and thoughtful post which gives his views on what happened, why and what other people have been saying are the reasons for Mint’s victory. It is a very interesting post, as much for the myths it debunks and the way it highlights the BS that gets talked about topics like this as it is for what Marc sees as the two decisive differences between the two startups.
The purpose of this post is to highlight one of those differences. In Marc’s words one of the reasons Mint was successful was that:
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 [Wesabe] 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
In summary – the key to Mint’s success was instant gratification in return for minimum effort. Wesabe’s mistake was to focus on delivering longer term benefits.
Marc goes on to make an important clarification later in his post, saying that delivering real and lasting value to the user is also important and shouldn’t be forgotten, but you have to get her using the service first. And that takes instant gratification.
This lesson applies to pretty much every consumer internet service.