Insider Chatter by Donna Bogatin

Fred Wilson to Jason Calacanis: Web 3.0 is nonsense, and so is Web 2.0!

Nevertheless, Mint CEO Aaron Patzer IS thrilled that his online personal finance brainchild, Mint.com, took first place honors at the first ever foray into DEMO conferencing land by Web 2.0 champion TechCrunch. However, please DO NOT consider Mint merely a Web 2.0 play, Patzer underscored to me in New York City, the financial capital of the world!

Mint may have played up its refreshing, Ajaxy goodness in Silicon Valley demo territory, but in the Silicon Alley and Walll Street demo world, it was all about the money, serious money, at the serious FINOVATE on Tuesday.

I chatted with Patzer at the conference about his business model, life after TechCrunch40 fame and the chiding from competitor Wesabe’s Union Square Ventures backers that Mint ought to step up to the online finance plate for a bigger and better financial data “Bill of Rights.”

Why did Mint demo at Finnovate on the heels of TechCrunch40? Patzer told me he does not want Mint to be perceived as merely a consumer friendly cool Web 2.0 money app; He proudly notes Mint’s high-end, patent-pending Web-based financial application. By going head-to-head against the likes of Intuit’s Digital Insight, also demoing at Finovate, Mint helps establish itself as a big league finacial services player, Patzer indicated.

What does Mint aim to do with the $50,000 it pocketed from the coffers of Michael Arrington and Jason Calacanis? “Something yielding maximum PR value,” Patzer teased.

Did Mint recover from the server overload consequences of the TechCrunch phenomenon? Mint’s servers never actually went down, Patzer assured. While the sudden influx of registrants–three to five people per second–caused a backlog in pulling user data from third-party financial institutions, causing Mint user accounts to “time out,” the integrity of all user account information remained intact, Patzer indicated. To prevent a reoccurence, Mint has since procured greater server capacity and further optimized the database query process.

What is the Mint revenue model? Lead referral fees, in the $20 to $50 range, from financial services providers such as ING and HSBC. Patzer is most proud that indivdual Mint users are only presented offers if they really represent cost savings opportunities for the particular person. For example, if Patzer has already optimized his own financial transactions, he would not be presented a third-party promotion.

Why did Wasabe investor Fred Wilson, Union Square Ventures partner, greet the Mint TechCrunch40 win by headling at his A VC blog “Who (really) owns your financial data”? Competitive sour grapes, perhaps? Patzer told me Union Square Ventures expressed interest in investing in Mint, but Patzer decided to go with other funding opportunities. Following the decline by Mint, Union Square Ventures invested in Wesabe, Patzer said.

Is Mint lacking from a financial “data bill of rights” perspective as was implied by the A VC post about Wesabe? “I don’t know what he was talking about,” Patzer mused. After all, Mint does have a publicly available four prong “How Mint Keeps You Safe” data policy.

What about Mint vs. Wesabe? NO CONTEST! Patzer conveyed.

“Put your finances on auto pilot” is the Mint slogan, and a reality for the Patzer vision. “Automatic and effortless” is how Patzer described the Mint registration process to me: “It takes two minutes to setup an account and automatic synchronization is done on a daily basis.”

Wesabe, on the other hand, requires multiple, manual, time consuming steps that must be repeated at each visit to the platform, Patzer indicated.

Who needs Wesabe then? “Unusable” was how another CEO presenter characterized such an individually labor intensive online financial services platform.

Who needs Mint? Patzer told me the site has been retaining new registrants over the last few weeks at a rate of about 75%.

PS: Is Web 2.0-3.0 really nonsense as Fred Wilson laments, today. His prognosis may actually be short lived. After all, last month he didn’t like the term “social graph.” Now, he does.

ALSO: Y Combinator to Hackers: Dream SMALL and Code for Google on the Cheap and Social Fireworks Alert: LinkedIn vs. ‘Loud Mouth McClure’?

CONTACT DONNA BOGATIN

If Ameritrade can not be counted on for financial data intgegrity, how can consumers be expected to put their faith in the likes of Mint.com, I underscored yesterday, countering Union Square Venture’s assertions of a financial “data bill of rights” in its Mint.com competitor, portfolio company Wesabe.

USV’ Fred Wilson rode the TechCrunch40 winning Mint.com wave on behalf of Wesabe, and conference producer Jason Calacanis continues to do so, while pitching TechCrunch40 2008 to boot!

You thought it was safe to come out of the TechCrunch40 water? NO!? The Michael Arrington and Jason Calacanis show rolls on; Calacanis is now delcaring TechCrunch40 has set Web 2.0 trends, starting, not surprisingly, with its controversial winning pick: Mint.com.

If TechCrunch40 is declaring its own self-made trends, it is only fitting that Calacanis should name them as well: First up, Data Normalization Services, thanks to Mint.com:

Big trend coming out of TechCrunch40: data normalization services like Mint, Cake, TripIt, and Clickable.

DMS is a new category (I think I just named it) in which companies pull in data from 3rd parties, normalize (clean) it, and then leverage it. In Cake’s case they suck in people’s trading activity to share investment wisdom. TripIt normalizes desparite travel prodiders to provide clean trip itenearies. Mint, which one the TechCrunch40 event’s $50,000 prize ($25,000 of which was technically my money!!!), sucks down your credit card and banking information to create a dashboard of your spending AND to save you money.

These services are creating a layer on top of existing services in order to do something that those services typically don’t want done. In the case of Mint they might show you how your bank is ripping you off and get you better rates for your credit card or savings account.

All is good then, once our data becomes “normal,” thanks to TechCrunch40 hyped Web services? NO!

If Mint.com can’t even handle normal Web traffic, who will trust it with their confidential financial data, as I discuss in Mint.com: TechCrunch 50,000 Winner or Loser?

Calacanis extols Mint.com “creating a layer on top of existing services.” Such layering, however, risks the integrity of consumers’ financial data, as I analyze in-depth in Wesabe USV: YOUR Financial Data Belongs on the Web!

Arrington and Calacanis may have ruled Web 2.0 for two glorious and highly profitable TechCrunch40 days, but can they really parlay that into a must-follow TechCrunch roadmap for Web 2.0?

How much lasting confidence will there really be in any of the TechCrunch40 picks? After all, if their winning, power VC-backed Mint.com can’t hack the real Web 2.0 heat, what should we expect of the 139 TechCrunch40 runner-ups?

Mint.com “refreshing money management”? It hopes to be able to refresh its servers! 

THE REAL TECHCRUNCH TREND: TechCrunch40 Fuels Hacker Dreams While DeadPool LOOMS 

ALSO: Web 3.0: From AOL to TechCrunch, NYC Takes Center Stage and Got Ethics? Google Rats Lured by TechCrunch Trap

CONTACT DONNA BOGATIN

Layered Technologies has been targeted by malicious hackers who may have stolen passwords and other personal details on as many as 6000 of its clients, the Web host warns. NOT very reassuring the day that a Web-based personal financial services startup got all the Web 2.0 attention! 

BUT, who says Mint.com SHOULD get all the attention, just because the First Round Capital backed Web-based personal finance play was annointed the Web 2.0 startup of the season by Michael Arrington, Jason Calacanis and TechCrunch40 and company? NOT VC competitor Union Square Ventures’ Fred Wilson, on behalf of portfolio company, competitor Wesabe.

Seizing the opportunity to turn the spotlight from a Mint only one, to a Wesabe “category” issue, Wilson hails at his A VC blog, “Who owns your financial data? THAT’S the question we should all be asking now’!

REALLY? Because Mint.com won $50,000 and got its servers overloaded?

Wilson’s answer to his purportedly urgent call to financial arms is apparently a philosophical one:

It is time to discuss what it means to take your personal financial data out of the hands of your bank and credit card company (who thinks they own it but do not), and put it on the Web.

How comforting? Wilson’s seeming indignation against the financial services companies that process our transactions sounds like a Wesabe slogan. Moreover, it makes no sense.

Wesabe actually hopes people put their bank and credit card account information in ITS hands–i.e,. “upload accounts”–but that would do nothing to change the presence or status of the accounts at their true host location, the bank and credit card companies which actually transact on behalf of account holders. In other words, even by using Wesabe, one’s financial data will still be “in the hands of the banks and credit card companies.” 

What’s more, allowing one’s financial data to be accessed by an additional third-party Web site, such as Wesabe or Mint, will undeniably dilute an indivdual’s absolute proprietary interest in and control of the data, no matter what hi-falutin data “bill of rights” or tech security strategies are waived.

Additionally, Wesabe and Mint are dependent on the very bank and credit card companies Wilson maligns, if they are to have the transactional data they need for their super-duper meta-data aggregation!

Adding a Wesabe or Mint layer to one’s financial services mix, in and of itself, will do nothing to change an individual’s relationship with his or her banks and credit card companies. Implying that the use of a Wesabe or a Mint will reduce bank and credit card company absolute power is not acurate and the suggestion that one’s financial data becomes more secure once it is also put ”on the Web” is non-sensical.

While Wesabe hopes to one-up Mint with its “data bill of rights,” discerning consumers will remember one basic point: If ETrade and Ameritrade can fall victim to tens of millions of dollars of online financial fraud and massive identity theft, putting ones financial records in the hands of the likes of a Wesabe or a Mint IS most definately risky personal business.

And, while Wesabe may have a data “bill of rights,” its public FAQ for prospective users is woefully inadequate and NOT reassuring; It is not clear what actually transpires between Wesabe and an individual’s bank and credit card companies.

In other words, a Web 2.0 crowd-pleasing “your financial data belongs on the Web” just won’t hack it!

ALSO: Wesabe: MySpace For Your Checkbook and Mint.com: TechCrunch 50,000 Winner or Loser?

PLUS: Web 3.0: Madison Avenue Money Trumps TechCrunch40 Cool Apps and Mint.com: Can Arrington and Calacanis Really Set Web 2.0 Trends?

CONTACT DONNA BOGATIN

The transformational power of Web 2.0 never ceases to amaze.

YouTube King Hurley’s recent DC stop at Capitol Hill saw him being feted for “helping children in Africa,” thanks to YouTube’s clip-culture. Today, Union Square Ventures advises that its new financial services portfolio company–Wesabe–can help solve the world’s loneliness, really.

What is Wesabe? Who are the entrepreneurs behind it?

First off, the team behind the Web-based financial planning tool assures:

We are not a team of financial planners or number crunchers.

How refreshing? For a site that wants to help people plan their finances? No fear, the service claims that by pooling everyone’s (non) knowledge, all will be more financially savvy.

Union Square Ventures buys it, literally, as the lead in a $4 million Series A funding round. In justifying its investment, partner Brad Burnham waxes poetic on why Wesabe is “more than a personal financial service”:

Balancing your checkbook using desktop software is a lonely pursuit. You may feel better knowing where your money went, and even have some idea about how you did against your budget, but you haven’t learned much more than that. Your relationship with your software is defined. It is a utility. Its value is limited. The best it can do is save you a little time each month when you plow through an unhappy chore.

On the web it can be a whole different story. If you manage your expenses on a web based service you have the opportunity to contribute to community and to take advantage of its collective wisdom. Allowing your service provider to aggregate transaction data anonymously makes it possible for that provider to deliver a service that is better than desktop software.

Share and share alike? With W2s?

“Using a web based financial services provider makes the notion of personal financial services less personal and more communal,” hails Burnham. The Wesabe Website touts “managing your money in public view” and the wistfull “When does money buy happiness?”

Not all is so touch feely at Wesabe, though. After all, money is at the heart of the “community”. Burnham is on the “Peer produced data categorization and cleansing” bandwagon:

I have given up using my annual gold card statement from American Express, because half of the vendors are listed as an unrecognizable string of characters, and even when they get the vendor right, they often do not put that vendor in the right category. Once I contribute my data to a co-op, a lot of these things are fixed much more easily. If anyone participating in the community recognizes an incomprehensible string of characters as “Whole Foods” and makes the change in their account, everyone in the community benefits from their contribution. After three or four people do it, the service provider can begin making the change. If most people categorize expenses in certain ways, the service provider can usefully suggest categories, and auto-fill entries to speed you on your way.

So let the peer produced data categorization and cleansing begin? Social personal finance sounds a lot more appealing.

Wesabe has all star Web names behind it: Cory Doctorow, Clay Shirky. The power advisiory board has undoubtedly helped garner the accolades Wesabe has already received, even though the Wesabe Website gives the appearance of not even being open for “business.”

Online Banking Report gushes: “Wesabe is a company you want to love. They are on a mission to bring clarity to the mess most people make of their personal finances.”

Financial blind leading the financial blind?

Moreover, the notion of consumers falling in love with one’s checkbook, and a Web services company to boot, does not appear to be grounded in hard, metrics driven research, or even soft focus group targeting.

The story of Wesabe and Union Square Ventures may be a love story though, love for Web 2.0 hype.

ALSO: Who Needs Google? Ning, ShopWiki, Wetpaint

CONTACT DONNA BOGATIN