Tech Startup's Demise Shows It's Tough Going It Alone

Good reviews don't guarantee a software product will survive.

Manilla, an online service that let consumers store bills and other financial data and documents in one place, announced Monday that it is closing up shop July 1. Though it has been a hit with technology critics — it even won a Webby Award in the bill-pay category — and had its share of devoted fans, Manilla never found what it truly needed to gain widespread acceptance and, ultimately, make money: a bank partner.

"This was a hard decision given that, over the past three years, Manilla has won many awards and has been well supported by its valued user base but was unable to achieve the scale necessary to make the economics of the business viable," Manilla said on its website Monday.

The Hearst-owned company was founded in 2010 to help consumers keep better tabs on their monthly bills. The free service allows users to store financial information in one place, alerts them when bills are due and lets them easily manage expenses, like rent or utilities, that are often shared with family members or housemates. Last year, Manilla partnered with AOL to provide its service to AOL account holders.

The service received positive reviews from the likes of CNBC and Money magazine, and appeared to have some loyal supporters. In Facebook posts Monday, commenters expressed sadness over news of the firm's demise, with several saying that they would have paid fees to keep using its service.

A big reason Manilla never really took off was because it was unable to achieve Chief Executive Jim Schinella's stated goal of finding a bank partner, or partners, to market the service. Similar personal financial management services offered by the likes of Geezeo or MoneyDesktop have survived largely because they have the endorsement of mainstream financial institutions.

Manilla's demise "demonstrates how hard it is for an independent company to get traction going direct to consumers with a product that requires users to turn over their username and passwords to billing and/or financial accounts," says Jim Bruene, founder of The Finovate Group. "The trust issue is huge."

Others say that Manilla needed to be more than just an organizational tool to be useful to consumers. Mark Schwanhausser, the director of omnichannel financial services for Javelin Strategy & Research, says he is "not shocked" by news of Manilla's demise and suggests that the firm might have survived if it had allowed users to, say, pay bills through its website or mobile app.  

Another startup that sent users reminders when bills were due has suffered a fate similar to Manilla's. Zumbox said in April that it was closing its digital archiving service due to lack of investor appetite to keep it running.

Still, there is evidence that consumers appreciate being reminded when bills are due, and that could present an opportunity for banks, says Bryan Clagett, a Manilla user and chief marketing officer and investor at personal financial management provider Geezeo.

"It's something I wish my bank could do for me," says Clagett, whose company white labels its technology to banks.