Bits of Cents

Scaling any consumer facing web property is a difficult task no matter what sector your startup is in. Getting 100 or even 1,000 people to sign up and use a product is one thing but getting 100,000 or 1,000,000 is another.  There are plenty of posts that talk about growing web properties and this is not one of them. This post is about growing a consumer facing property in the financial sector.

Along with all the challenges that come with customer acquisition in any online business, the challenges are magnified when consumer dollars are involved. It’s one thing to convince 100,000 people to sign up for a dating service and quite another to get the same number of people to trust you to directly touch their hard-earned money. This makes the already difficult task of even more onerous.

There is a tendency to think that innovative financial products lend themselves to “viral” acquisition. People often bring up ING when making this argument, pointing out that the company grew from 0 users when it launched in 2000 to 7.5M users today thanks to a radically new product offering. What they don’t mention is that ING, whose corporate parent is a €50B business, gave ING US a budget north of $50M for marketing in it’s first year alone and has spent hundreds of millions since. The goal - convince consumers that the ING brand is one you can trust your money with.  It worked but it wasn’t cheap.

Unfortunately, most startup financial services companies cannot support a marketing budget the cost of a small island which gets me to the purpose of this post.

The venture backed companies that will win in the financial services world are ones that can prove attractive customer acquisition math due to a unique view or take of the market – like Mint in its time where it focused on SEO and long-tail acquisition when no one else in the financial services world was. This is more or less true in any online business but is more so the case in the finance vertical due to the inherent trust and education component that comes with dealing with people’s money.