When Adaptu’s co-founder Mark Brundage left in May 2012 to become Salesforce.com’s “Director Of Customer Success,” perhaps this was the first clue that Adaptu was losing steam. It’s hard to pass up a job at San Francisco-based Salesforce.com given its record revenues and multiple six figure salary packages. Adaptu is owned by StanCorp, a $1.7 billion market cap publicly listed company trading under the ticker SFG.
If one looks deeper into the financial account-aggregation space, there seems to be a general negative trend. According to ComScore, Adaptu received roughly 2,000 unique visitors the previous month compared to over 60,000 unique visitors this time last year. Meanwhile, Mint.com received 500,000 unique visitors down from 4.5 million in February, 2012. That’s a massive 90% decline.
As an entrepreneur, it makes me sad to see Adaptu shut down. After February 20, 2013 all user data will be deleted and users will no longer to access their accounts. I remember working with them when they first launched to help spread the word about their product. They sponsored a friend’s across the country RV tour and was also present at the Financial Blogger’s Conference. Overally, Adaptu has been a greater partner in the personal finance community.
On Adaptu’s homepage, they cited the key reason for shutting down was NOT wanting to transition away from a free model. In a world where so much is free, if one can’t get subscribers and traffic, it’s hard to survive indefinitely. Professional bloggers give away our content for free almost always. Look how many of us survive in the long run.
As many readers on Untemplater are entrepreneurs, I’d like to reflect on running a business.
LESSONS OF ENTREPRENEURSHIP
* It’s hard to make money with free. Nobody seems to pay for anything anymore. Once the first company starts offering their products and services for free, every competitor subsequently needs to follow suit. The problem with free is that there is no revenue. You’ve got to rely on massive volume to upsell a tiny percentage for paid services. If you don’t have a large customer base, there is no money to be had.
* Watch what the leaders do. Vice Presidents and C-level executives know more than you do about the state of your company. If you are an employee at a startup, it’s more important to watch what they do rather than listen to what they say. Did an exec sell her house recently? Are there more and more behind glass door meetings? Have any of your bosses or bosses in other departments jumped ship recently? Pay attention to those who have more to gain and lose than you.
* First to market is key. Mint.com dominated the financial aggregation space. At its height, the visitor traffic was 75X the peak traffic of Adaptu. Once you’ve got all your financial information uploaded to one service, it is extremely difficult to convince a user to move. The only way an upstart can win is if they provide even better tools. The problem is, there is a winner takes all affect in many cases.
* Sell your business when you can. On September 19, 2009, Intuit acquired Mint.com for $170 million. Not bad for being in business for only two years! Founder Aaron Patz was only 28 years old at the time. Perhaps Aaron could have received more if he sold a couple years after the financial recovery. But, at the end of the day, $170 million is $170 million. Sometimes you just have to take the money and run. You never know when your business might shut down.
* The market place is incredibly crowded in everything we do. There are supposedly over 500 million blogs online today. Good luck standing out, gaining traffic, and making a living online through advertisement. Take a look at the financial services industry. How many banks do we really need? Not that many, which is why banks are laying workers off by the hundreds of thousands. The same goes with the print media business. Whatever entrepreneurial endeavor we get ourselves into, we need to know the odds are strongly against us.
* Perhaps people don’t really care about their finances. Finance is boring compared to traveling the world and living a nomadic lifestyle. This is why businesses on selling you the dream of living the 4-hour work week succeed so much. Whether you succeed or fail, it doesn’t matter. Society wants instant gratification compared to years of saving in order to build a financial nut large enough to live financially free. We know we should keep track of our finances, just like we know we shouldn’t eat too much bacon, but we can’t help ourselves.
If you are one of the thousands of Adaptu clients being affected, you can take a look at Mint, LearnVest, HelloWallet, or Personal Capital. Personal Capital is a Silicon Valley start-up that launched in September, 2011 by former Intuit and PayPal CEO Bill Harris. His team’s goal is to give everyday people more control over their finances by using their technology for free while modernizing personal wealth management advice over the Internet.
Personal Capital is also a free online financial aggregator to help users growth their wealth. The company tracks your net worth, your expenses, and analyzes your investment portfolios for excessive fees and risk. The way they plan to make money is by getting a percentage of their users to sign up for financial advice based on the following fee structure below. It’s totally optional whether you choose to receive financial advice.
- First $250,000 in assets, 0.95%
- Next $250,000, 0.90%
- Next $500,000, 0.85%
- Next $4,000,000, 0.80%
- Above $5,000,000, 0.75%
Given the declining traffic figures of the financial aggregator space, I hope Personal Capital sticks around for the long term. They are based right here in the Bay Area, and I’ve been a happy user of theirs for the past several months. The biggest benefit is their free 401(k) Fee Analyzer which discovered $1,700 a year in fees I had no idea I was paying! With $28 million in VC funding and a business model that is scalable, I think they’ve got a good chance. You can sign up here. It only takes a minute.
Copyright. Original content authorized only to appear on Untemplater.com. Thank you for reading!