Marc Hedlund, co-founder and former CEO of personal finance company Wesabe, has penned a refreshingly honest and open take on why he thinks the startup lost to rival Mint.

The latter launched later than Wesabe (and won the top prize at the TechCrunch40 conference back in 2007) and was later acquired by Intuit for $170 million, while Wesabe had a less stellar exit and hit the deadpool last June.

Hedlund takes the blame, but also counters some of the things that have been cited as reasons for Wesabe’s demise for being myths, such as the fact that Mint was first to market, that the company wasn’t making any money and that it boasted an inferior name and design.

An excerpt:

I am, of course, enormously sad that Wesabe lost and the company closed. I don’t agree with those who say you should learn from your successes and mostly ignore your failures; nor do I agree with those who obsess over failures for years after (as I have done in the past). I’m hoping that by writing this all out I can offload it from my head and hopefully help inform other people who try to start companies in the future.

You’ll hear a lot about why company A won and company B lost in any market, and in my experience, a lot of the theories thrown about — even or especially by the participants — are utter crap. A domain name doesn’t win you a market; launching second or fifth or tenth doesn’t lose you a market. You can’t blame your competitors or your board or the lack of or excess of investment.

Focus on what really matters: making users happy with your product as quickly as you can, and helping them as much as you can after that. If you do those better than anyone else out there you’ll win.

What we’ve got here, ladies and gentlemen, is a must-read.

Good discussion about the post over at Hacker News.

In the letter, Wesabe CEO Marc Hedlund writes that the site has been operating on a shoestring budget lately, which has led to both some poor customer experiences and the potential for security issues, which is why they’re pulling the plug:

In recent months Wesabe has been operating on a shoestring budget, with support from some of the developers and operations people who made up our core team. While the site has remained online and we continue to hear from people who find it helpful, we have not been able to provide the support people need to use it for something so central as financial management. I’ve felt especially terrible that some members have a good initial experience but then hit a problem, often after investing many hours, and aren’t able to get help with it. That’s obviously a bad experience, and not what we want to offer. Also, because Wesabe stores such highly sensitive data, continuing to operate the service with shoestring operations and security staff is not acceptable, and we do not want to continue accepting new accounts if we cannot guarantee the security level we believe our service requires.

Wesabe was showing some growth in April 2009 when it launched its iPhone app, but traffic has dropped steadily since then. The site has largely been overshadowed by competitor Mint, which launched at (and won) TechCrunch50 and later went to on be acquired for $170 million by Intuit.

We’ve been covering the site since 2006. In Feburary 2007 it raised $700,000 from O’Reilly AlphaTech Ventures, and later that year raised $4 million in a round led by Union Square Ventures.

Wesabe has been added to the Deadpool.

So how do the apps stack up? Well, there are two key differences: Mint’s looks nicer, but Wesabe’s is more dynamic. What I mean by that is, with Mint’s iPhone app you can only see an overview of your finances, and look at things like the budget you set up online. With Wesabe’s iPhone app, everything is editable. And that’s a nice feature because more than a few times with Mint, I have seen a transaction categorized wrong, but had to login on my computer to edit it.

One cool feature that comes out of this ability to edit and add transactions from the app is that you can use your phone’s GPS to geo-locate wherever you made a purchase. This means you won’t have to type out the name of every merchant if you really want to take a hands-on approach and enter every purchase you make manually. The app also allows you to tag items on the fly, which is core to Wesabe’s offering.

If you’re really worried about security, you’re probably not going to use either of these apps. But one nice thing Wesabe’s features is a separate security layer that allows you to set a password for accessing the app. This is great if you don’t have a password set on your iPhone and worry about losing your phone and someone seeing your finances.

Wesabe’s iPhone app gives you access to all the accounts you set up online through the service. Unfortunately, while you can sign up for a Wesabe account through the app, you cannot import any bank accounts or credit card accounts through it — you’ll have to go to a computer to do that. Wesabe CEO Marc Hedlund tells me that functionality will be available in an upcoming release of the iPhone app.

Ultimately, the choice of which app you’re going to use on the iPhone will come down to which service you use. But if you’re deciding which to sign up for and being able to edit your finances easily on a mobile device is important to you, than Wesabe may be a good choice.

Find the Wesabe app available for free in the iTunes App Store.

Tree.com Chairman and CEO Doug Lebda commented that the acquisition of Thrive is a perfect fit with the strategic vision of Tree.com, and you don’t have to be a genius to see that he has a point there. Tree.com operates a number of strong brands in the financial and real estate space, and its customer base can clearly benefit from free tools like Thrive which enable users to better monitor, manage and improve their personal financial health, particularly in the tough economic times we’re in.

According to its website (which also includes funny bios for their team members), $225,209,097 is currently managed with the help of Thrive at the time of this writing. For the sake of comparison, Mint says it’s tracking $50 billion in transactions, $15 billion in assets and has identified more than $100 million in potential savings for its users.

The terms of the acquisition were not disclosed and are said not to have had a material impact on the operations of Tree.com. According to the about-page, Thrive’s investors included current and former executives from Paypal, Citigroup Investment Banking and Limewire.

Strands has made a second recruitment in its effort to develop a Mint competitor called moneyStrands that leverages the same recommendation engine behind its video and music products.

Just over two weeks ago Strands acquired Expensr, and now the company is announcing its acquisition of NetworthIQ. Both are personal finance applications that Strands wanted mostly for their human capital, but also for some of their technology assets. The terms of both deals were not disclosed.

While the media has yet to get its hands on moneyStrands and give it a spin, the product has been in development since December and it marks Strands’ attempt to aggressively apply its recommendation technology to new fields.

Just how that technology will be applied to personal finance is not altogether clear. The core Strands technology digests and analyzes behavioral information to make its recommendations. This is fairly straightforward when it comes to music: frequently play two or more songs with one another and Strands will learn something about how you prefer to experience music.

Apparently this technique will transfer over into personal finance by analyzing the sets of purchases that consumers make and then recommending how they can make better purchases. This analysis will not only consider the various purchases that one consumer makes; it will also compare these purchases to those made by others.

Aside from detailed personalized recommendations, Strands hopes to differentiate itself from competitors like Mint and Wesabe by providing superior mobile support and widget integration.

Strands is mum on the fate of NetworthIQ as a stand alone service, but I think we can safely assume it will shut down eventually as its team focuses on the development of moneyStrands.

There have been a lot of startups focused on enhancing your online personal finance, mostly around analyzing your investments (Cake, Zecco, Covestor) or expenditures (Mint, Wesabe). By contrast, Billeo functions as a straight forward tool for automating or remembering to pay your bills online.

You tell Billeo what bills you want to pay automatically or be reminded to pay and their service sends reminders and tracks you payment history online. Although a lot of banks offer online bill payment to third parties, Billeo also tracks your payment stats and compares them to the crowd. If you download the toolbar we previously covered, Billeo will also automatically fill out a lot of financial forms for you online. However, while other financial management tools haven’t incorporated online bill payment, it seems a clear feature addition that will compete with Billeo in the future.

Wesabe is differentiating itself from Quicken in three ways. First, it’s only online. Second, they’ve added tagging to transactions that are shared among users – when enough users tag a specific merchant, that tag is automatically added as a suggestion to your transaction. Finally, Wesabe is security-focused. Your third party bank and credit card account credentials are not stored on Wesabe’s servers – instead they are downloaded to your personal computer. Hackers can’t access your account credentials by breaking into Wesabe’s servers.

There are other startups generally in this space, but the real heavyweight (we hear) is Mint, which has guarded the specifics of its service closely. Those who’ve seen the demo, though, say it’s a winner.

Buxfer is deeper than Billmonk, letting you track and tag out your expenses with friends and groups over time. The groups option makes it great for managing debts between roommates or within a club. Billmonk is more geared to managing splitting debts between friends and lending out your stuff. Buxfer goes further, letting you analyze you expenses over time through a Google finance-style pie chart with adjustable time frame. Buxfer has gone to great lengths to make importing transactions as easy as possible. They currently support adding transactions to your account via SMS and the ability to import your credit card statements (.csv,.qfx,.ofx). From there you can tag and divide up your expenses as you see fit.

What’s great is that these sites start with a simple day-to-day problem that can frustrates us all and present a solution. However, without intimate integration with payment services, it’s still a chore. I’m not so OCD that I will tag and text myself about every payment I make. Wesabe has payment integration, but is also going after the quicken market. Billmonk really benefited from integration with Obopay deal and perhaps Buxfer will find a similar partner.

Wesabe is best described as a web version of Quicken, but with some fundamental differences that make all the difference in the world. Transactions can be tagged, for example. Also, as individual merchants are renamed by multiple users to make it more definitive (think about the crazy merchant names that appear on credit card statements), this better merchant data is automatically distributed to all other users as well.

One key difference between Wesabe and Quicken is a maniacal obsession with security and privacy. You can download data from up to twelve credit card, bank and other financial accounts. Your account credentials are never stored on Wesabe’s servers, though. You either download the data to your personal computer and then upload to Wesabe, or store your account credentials in an encrypted format on a small piece of Wesabe software on your computer. The result is that hackers can’t access your account credentials by breaking into Wesabe’s servers.

Wesabe has also spent a lot of time making it as easy as possible to leave the service. You can easily export your data and, more importantly, delete it directly from the Wesabe servers.

The service has been live for three months: $300 million in transactions have been recorded from 130,000 distinct merchants, and 1 million tags have been applied.

The company has eight employees.

This is OATV’s third investment (they also put money into Instructables and Chumby).