Friday, December 18, 2009

Successful Innovative Companies: Volume 11

The Successful Innovative Company of the week is: ING Direct.
What they do right: give you interest on your checking and savings account. There was a time in life I paid bills with checks. Then I finally learned something and started using free bill paying on the internet. No more stamps, envelopes, not even bank statements mailed to me. I don't have to pay postage and nobody has to waste paper. ING masters the internet bank. They only have nine locations according to Wikipedia, but they have millions of users.

Now lots of banks give interest, but ING Direct consistently gives 2-3 times higher interest than other banks on their checking account and somewhat higher interest on their saving account. Most of the money saving is due to not have brick and mortar locations and using so little paper. As a corollary they also have less employees than a similar sized bank.

Their website is also set up very conveniently. Several of the banks I am part of have confusing websites but ING has done very well. There are not many buttons, the links are descriptive, and the pages show you everything you want to know without a bunch of advertising fluff and disclaimers.

I must also mention ShareBuilder. Apparently you can invest in the stock market and in very little amounts. I've never used it but Russ told me to mention it. I think that Russ recommends it too and he is a smart cookie with his money so I believe him. So there Russ, I mentioned it.

They also sponsor a bunch of marathons and other races. People that sponsor stuff for running are just cool. It's like a subversive way to get people exercising.

What they could improve: ATM access is always a little troublesome. It's fine when you find one of the free withdraw ATMs but when I am traveling it is a hassle because I'm looking for an Allpoint sign which is tiny. So I often get charged the two or three dollars to withdraw money.

Also, ING group recently announced that their business model was unsustainable. Their insurance branch received like 7.4 billion from the dutch government because of the recent economy so they announced they would separate the insurance and bank instead of being a banc-assurance company. Also, it is possible for other companies to copy the business model of offering a high interest rate and steal customers. So ING Directs looks poised to lose a bunch of customers because people have no loyalty. That being said they are the first and still the biggest online bank so they have experience which will probably help them survive a slew of new competitors.

As I set out to publish the 11th edition of this series I have to remind people that success as I define it can be short lived or long term. Also, innovative sometimes means just harder marketing so people forget about your competitors. I'm saying that in ten years perhaps none of these companies will be around because their business was not sustainable. That being said I think we have a lot to learn from failure and success. Even short term success if properly managed can turn into something great. Professional athletes compete for 5-15 years and many never have to work again. I will be interested to see in several years how my "successful" companies are doing.

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