So, how does that translate into potential success for personal finance? It means taking on small business and organization accounting. It’s quite possible you could drive paying prosumers and business to an accounting site by also having a good personal finance tool, but that’s not what Mint, Wesabe, or Budgetable were doing. Maybe it should be.

It’s the Flickr argument: they curate something different (or did at least) than the competitors. It’s not like Photobucket, MySpace, Twitpic, or Facebook. Even hack photographers are willing to pay for Flickr. Even people who wish they were hack photographers pay for it. Why? Smart limits, great inspiration (in interestingness), the “Pro” badge, and something that solves the problem pretty well.

It’s also the Basecamp argument, where they charge for a very basic version of things that existed before. Low free limits, good customer service, and a very functional thing. They really sell it, though, and have created a zealous following where I would have never imagined one existing.

I’m more surprised at the clever ways companies succeed, rather than how they fail. The failures are mostly in ignoring the obvious, like “why can’t we charge for this?”, or “wow, look at our burn rate.”

I don’t think that consumers insist on things being free, they just resist paying for things that don’t seem worth paying for.

It was easy for Wesabe to fail by not even trying, but I expect that they discovered that people weren’t willing to pay, especially given the existence of Mint, prompting their pivot to targeting banks. The opportunity to try charging people in this space probably won’t come again until Mint starts to rot on Intuit’s watch.

I think you have to be careful about what you learn from the paths of other businesses. There is inspiration to find and warnings to heed, but most often the real issues are in the brain-dead obvious things, like early profit, clever margin optimization, building something that people want to pay for, and working hard to make people pay (and continue) paying. Quality, service, and cost control.

Restaurants are a similar beast, and are a bit easier to understand. Why do most restaurants fail? It’s the simple things like failing to use real, fresh food, preparing it well, managing costs poorly, or failing to serve people well. Location, menu size, and even cost are far less of a problem when incredible food and great service are available. Most restaurants fail on quality and quality control, failing to turn enough tables or to control food and staff costs, which force the business into a corner where they’re even less able to deliver quality.

Wesabe was forced into a corner by failing their startup game. They waited too long to charge people, and then tried to scramble to find anyone to pay. Maybe they didn’t have something people would pay for, but that’s on them. I suspect that people would pay for something that solved the problem well, not charging people hints at either a product problem, or a confidence and planning problem. They also failed to control operational costs, which these days seems less forgivable.

This appears to be a common problem of funded software: not enough obsession over useful, profitable, and operationally-sane products.