Wheaties for Your Wallet

A couple of months ago Wesabe moved from a free office in Berkeley (above my wife’s clothing store) to a much nicer office in San Francisco. We did it because we were busting out of the seams of the free space, and still hiring like crazy. I was especially happy because I hadn’t been able to spend much time working in the tiny Berkeley office with our engineering team. Understandably, they didn’t want to listen to me talk on the phone most of the day, so I usually worked from home.

After the first week at the new office, I started thinking about the fact that I had purchased my lunch every day. I also noticed a surge in my transportation spending:

$6.00 a day for lunch ($1500/year)
$6.30 a day for BART ($1575/year)
$84 a month for a parking pass, since some days I need my car for meetings ($1008/year)

Total: $4083 a year

Wow! That is a big swing in the budget. There isn’t a lot I can do about transportation costs, but I do have control over how much I spend on lunch (we have an espresso machine at work…so fortunately I’m not also dealing with the latte factor). Over the weekend I bought some meal storage containers at Target, and last night packed up leftovers for my wife and I to take to work.
I just created a new group on Wesabe called “Pack a lunch”…you are welcome to join. My goal is to spend an average of $2 a day on a packed lunch – that should save me about $1000 a year. If I can make the lunches tasty enough that my wife will also eat them, I can double our savings.

The thing I’ve noticed about making money stretch is that it involves choices. When our circumstances change…the way we live often changes as well. It was easy enough to adjust my habit of eating a sandwich at home to eating out, but it sure cost a lot more money.

Our member-owned financial database has grown past more than a billion dollars (U.S.) of transaction data. This milestone comes two months after we announced hitting the half-billion mark.

This data belongs to our users, who can export or delete it at any time. By anonymously aggregating their data with the Wesabe community, members are helping to shift the balance of information from businesses to consumers. Our job is to use this data to help guide members to the best merchants and the greatest value for their money, and we’re looking forward to sharing our progress soon.

This morning, we announced that Wesabe raised $4 million in Series A funding in a round led by Union Square Ventures (USV). This is good news not only for our team (yes, we will be moving out of the “office space” above my wife’s clothing store), but also for our members – this means we’re going to speed up the roll-out of new features and make Wesabe even easier to use.

When Marc and I set out to raise our Series A, we expected a long, drawn-out process. It wasn’t, because one of our very first meetings was with USV and things just clicked. There were many reasons we decided to partner with USV, perhaps most importantly: 1) they have a fundamental respect for our members and place a high value on customer service; 2) they challenge us and make us smarter…sometimes the hard way, and 3) we simply like spending time with them.

USV partner Brad Burnham joined our board of directors, and we’re looking forward to his insight and guidance.

One day back when I was in school, I was walking to the library and saw a couple of students sitting behind a portable desk. They smiled and asked nicely if I would like a cookie.  I said no without even thinking.  I’m not accustomed to eating food given to me by strangers, so I didn’t even consider the offer.  They looked a bit disappointed for a second and then asked someone behind me if he wanted a cookie and that person said yes.  Walked up to them and got a free homemade cookie and walked on.

A moment later something happened – my brain processed that the sign in front of their folding desk said “Random Acts of Kindness Club.”  “Damn!” I thought. “I could have had a free cookie.”  I like to think now, looking back on it, I didn’t go back for the cookie because I was late for an important meeting (although I can’t remember any meetings that were all that important back then) or I had to an urgent need to study (also highly unlikely).  One thing I do know is that event has stuck with me for years and I’ve thought a lot about free cookies and the people who give them away.

Here’s the thing – I bet the best cookies you ever had you were given for free, and I’m not talking about the ones that someone bought and gave to you – I mean the ones your friend baked and shared with you.  I can’t think of one store-bought cookie that calls to me, but I remember ginger cookies that were baked by a neighbor when I was young that I still wish I could taste again.  My co-founder, Marc, by the way makes great cookies.

I mention this because a couple of days ago a woman called into “Talk to Jason” to find out some information about Wesabe.  And then she did something unusual – she conferenced in her husband.  Couples sharing the responsibility of personal finance is in my experience (five months of phone calls) a very rare, and in my estimation, a very good thing.  We talked about the benefits of the service, and our security and privacy model (things were going well) and then I mentioned that you could get tips from other users…and they very quickly lost interest – they clearly didn’t want to get tips from other people.  They didn’t know or trust the source of the tips and were afraid they might be misled.  While I respect their caution and desire to make good financial decisions, I also felt a bit like the person with a box full of free cookies…and someone walks past without even looking.  “Hey,” I wanted to yell into the phone, “Our cookies are good…you should try them!”

Tips on Wesabe are peer-reviewed.  Our top 10 tips have an average of 10 comments each.  Much like a cookie, I can just look at a tip and tell whether it is good or not…or at least good for me.  And thanks to our members, there are a whole lot of good, free cookies on our site.

A big part of Wesabe is people helping each other make better financial decisions. Today one of our members, “someoneelse,” posted a link to a Boston Globe article about Bank of America adding a $1.50 finance charge for former MNBA credit card holders (B of A acquired MNBA in 2005) on any balance carried forward. So, if your finance charge would have been $.30, they round up to $1.50…just because…just because they can. Or in B of A’s words in its letter to customers, the company added the minimum finance charge “due to a change in our business practices.” Like I said, because they can.

This will probably generate millions of dollars in incremental fee revenue (benefit of scale) by leeching just enough money from their customers without causing so much pain that they actually react. If you’re affected, “someoneelse” also linked to a Consumerist article explaining how to opt out of this charge.

A few thoughts:

1) thanks to “someoneelse,” the Consumerist, and Bruce Mohl (the Boston Globe reporter) for bringing this to light. A buck here or there might not sound like much, but recognizing the cumulative effect this action will have on consumers’ bottom line is critical

2) Comments on these stories have shown that consumers overwhelmingly see this change as a “gotcha fee.” Will outrage translate into action? How convenient is the local branch if every piece of mail from the bank requires action or they’ll jack up your fees?

If a company changes your terms or engages in a business practice that you don’t agree with, call them out. And if that doesn’t work, YOU can make a change… by moving your business somewhere else. Of course that only happens when push comes to shove. But it does feel like B of A is giving these customers a not-so-friendly nudge, doesn’t it?

Last week was a big one for Wesabe. We closed a $700,000 round of funding from O’Reilly Alpha Tech Ventures, (OATV) Mark Fletcher, Freeman Murray and some very supportive angels. One of the things that made this funding so cool is that everyone involved in the deal knows each other quite well (Marc was an entrepreneur-in-residence at OATV and they were the first firm we spoke to when we formed Wesabe). They have watched Wesabe grow from the seed of an idea to a company of nine people, and the team has appreciated their support along the way.

We’re also excited to announce that Tim O’Reilly (of O’Reilly Media) has joined our Board. Anyone who knows Tim can tell you – he’s the real deal. We greatly look forward to his input as Wesabe evolves and see his deep understanding of the social and collective aspects of the web as a real asset.

The money we’ve raised is going to be spent on product development, so please keep sending your suggestions for how we can make Wesabe better.

In England a Royal Bank of Scotland (RBS) customer sends debt collectors to force bank to repay unlawfully collected fees (Story).  So there are a few elements of this that are interesting: 1) fees = an adversarial relationship between bank and customers, 2) at some point consumers (voters) will reach a boiling point, and 3) my bet is that in the search for profits banks will push to that boiling point.

The real question is when consumers stop feeling guilty for what is often an administrative error and start getting angry at being exploited.  Ramit Sethi has a post on the topic that is illustrative of common sense – read the first comment in response to Ramit’s ideas.

I first read about Genarlow Wilson on Mark Cuban’s blog.  If you haven’t heard of Genarlow, he is a 20-year-old former honor student who is two years into a 10-year prison sentence in Georgia for a consensual sex act with another teen.   You can read the specifics here NY Times & ESPN, but suffice it to say, this is clearly a miscarriage of justice.

I signed the petition and thought of the Tito Puente song “El Pico” better known as “Never go back to Georgia.”   A couple of days later, Jason Calacanis mentioned the story in his blog and encouraged other bloggers to speak up – which I thought was a damn good idea.  I’d like to encourage anyone else with a blog who reads this (and feels inclined) to do the same thing.

When I was a kid we used to play dogpile, where we would all jump on top of some poor kid at the bottom – good times.  I like it when bloggers all blogpile on corrupt, unjust and unacceptable behavior.  Shining a light on people in power and making them accountable for their decisions embodies everything I love about being a part of the Internet community.

I’m a fan of the guys at Trabian (OpenSourceCU). I like their sites, ethos, goals…everything. On January 31^st they launched “Give With Us,” and completely knocked my socks off. Jim Bruene posted an excellent review here.

Trey posted a response to Jim’s review today – particularly responding to some of the challenges of making “Give With Us” a success, but I would have liked him to emphasize a little bit more on the opportunities for credit unions. Challenge: it only works if people at the credit union commit to it – deep down inside commit and make it part of how they understand their job and success at their job. I think that is asking a lot, but I also believe it offers a game changing shift: “Give With Us” is a way for credit unions to put themselves in the center of their member’s emotional and financial life. Seriously.

I’ll use myself as an example – I have wanted to volunteer for years. I’m really interested in the process of transitioning out of university and into professional life – especially for low income students who don’t have white collar family members to help. People’s desire to give back, engage or contribute to the community is persistent. The ability for credit unions to help realize those powerful emotions is a real opportunity. It connects the dots between the person, credit union and the community.

One of the features that I especially like about the product is the ability to create badges that you can put on other sites (for donations or information). I think it is very cool that they are using Web 2.0 tools for credit unions, and frankly, it is this process that will move Web 2.0 towards the mainstream.

Congratulations to the guys at Trabian for building such a cool product!

Mortgages remind me a bit of dentistry – really important but not a lot of fun to talk about. My good friend Kerry is the chief marketing officer at a Japanese lending company. He’s done a whole series of advertisements on what it feels like to take out a mortgage.

http://video.jjloan.jp/index_en.asp

My favorites are “climb” and “kitchen” but they are all pretty funny. I’m impressed with these ads because Kerry has been able to do two truly rare things in the series: 1) make home mortgages funny, and 2) star in his ads (he is the voiceover and distinguished- looking gentleman at the end of each commercial). If I know Kerry, he did the work himself so he could save money.

Disclosure: I’m in no way endorsing JJLoan. I only know for sure that they make good commercials.