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Startup Secret 46: Beginner's mind at Personal Capital

Former CEO of Intuit and Paypal launches a financial management startup that takes on establishment money.

"Don't let your experience be your enemy."

--Bill Harris, founder, Personal Capital

Bill Harris is the CEO of Personal Capital, an online money management service. Anyone can get his company's tracking and stats on existing financial accounts for free. But to step up to the company's full financial management services, there's a $100,000 buy-in.

Personal Capital is a freemium play with cajones.

(My original review, if you're interested: Mint for rich people. The new iPad app is coming out today. I tried it. It's very good.)

Bill has been CEO of Intuit and of Paypal, so when it comes to the financial services industry, you could say he knows what he's talking about. Maybe too much, though, which is the devil he fights.

To be really successful and disruptive, Bill says you have to be close to the market you're working in to know the issues, "but far enough away that you're not steeped in how things are done today."

"You need mental adjacency," he says. But you have to "Fight the thinking that you know how things work." He puts it another way: "You don't want to be a babe in the space, but you don't want to be a prisoner either. Innovation doesn't come from people who have been doing the same thing for 20 years."

For Personal Capital, the traditional thinking that Bill stepped away from is that you need a personal connection to sell a high-net-worth individual a trading account. "Conventional wisdom is that these customers are sold, not bought. You need to look them in the eye, shake their hand, belong to the same Rotary Club." That's old thinking, and wrong, he says. "We can create relationships with direct marketing now."

Bill isn't giving out the number of customers Personal Capital has converted from free to paid, so he hasn't yet proved that this new thinking about selling financial management services works. And there are competitors with lower buy-ins: see WealthFront, for example (a very different product, but fighting for some of the same customers). He says Personal Capital has over 10,000 users of the free service.

Bill is not naive about his business, but neither is he stuck in an old model. I'd say he's thinking like a (potentially) effective young adult: Experienced enough to know what he's facing, but mentally young enough to still do something about it.

Startup Secrets is based on personal interviews with people building companies, and from their blog posts and news stories. Subscribe to Startup Secrets on Twitter or come back to Rafe's Radar every Monday, Wednesday, and Friday for a new one. See all the Startup Secrets.