Building a Successful Business –The Mint.com Story (Interview with Aaron Patzer)
At the age of 25, Aaron Patzer started Mint (in 2006) and after three years, sold to Intuit for $170mn.
Mint is special for couple of reasons – first and foremost, they manage to shake up the personal finance space and took the much bigger competition head on (Microsoft Money and Quicken). Secondly, the product was way too well thought out – right from domain name (rumored that Aaron paid quite a big chunk of money for the domain) to the unconventional way it was marketed.
Here is a detailed conversation with Aaron Patzer, Founder of Mint (the conversation occurred over the phone and will be shared later as a podcast).
How did you come up with the idea?
I started a web development company at the age of 16 and Mint was born of a personal frustration of using personal finance tools which entailed way too much work. Maybe there was a problem when you have to go through 50 screens of setup.
Mint took away a lot of work out of the system. We took yellow pages data, categorized and eventually, we were able to categorize 90% of expense data.
If the user knows where their money is going, we know where their money is going – and that led to our business model. Later we realized that possibly we can’t keep up with Microsoft Money and Intuit just on categorization features – so we gave away the free product and made money out of the insights from it (i.e lead-gen model for this industry).
Early Days >> How did you manage to gain traction? Apart from SEO, what other channels did you use? Tell us more about the customer acquisition strategy of Mint.
About 9 months before we launched the product, we started a personal finance blog. We didn’t have any money to hire writers, so we started writing ourselves and did simple series like ‘What’s in your wallet’, ‘Why am I using this credit card’ etc. We also brought in some of the prominent bloggers as well. We also did series on personal finance disasters and then we got other bloggers from personal finance websites who would contribute blog articles for a link from us.
At the bottom of every article, we had ‘Hey! Mint is cool thing and is launching. Give us your email and we will notify you of the next revolution in personal finance”. We collected 20,000 email addresses even before the launch and 20,000 email is what our system could handle all at once. After that, we sent out email to everybody that if you put up a badge on your website (“I want Mint”), we will give you three alpha access. It was like a red carpet – 600 people put up the badges (also means 600 banner ads for free!).
The other big fact is that we launched at TC40 – you are on stage for 7 minutes and doing a live demo. That’s all the time you get and beside that, you don’t have much presence (hard to get mindshare). So what we did is we made sure that the entire company was there – all wearing same t-shirts, our PR agency and couple of friends wearing same t-shirts (brand consistency, i.e.) ensuring a much bigger presence.
The conference had rented all but two rooms – they were too small to be used. We rented them and in one room, the team was programming (i.e. staying productive) and in the other room we served free alcohol to everybody and had demo stations. We demoed the products, we put out little fliers.
So while everybody just had 7 minutes (of demo), we had a lot more. We got lot of positive responses and was a little way to hack the conference.
How did you manage to win trust in such a space without a known brand? Was trust built a function of design?
Most investors told me not to bother to start a personal finance business. We had all the site securities and product features, but the biggest thing we did for trust was to have a highly secured website. Trust is an emotional thing – you know if you are walking down a street in the night – the person coming from the opposite direction is a threat or not. Same thing with websites. We have a pixel perfect website that added to the trust.
Secondly, Mint.com being a four lettered domain was easy to remember, easy to spell (as opposed to our competitors who had unpronounceable names).
Product Metrics – How has it changed over a period of time for Mint?
The key product metrics that we track every month is how many registered users we get, how many active users did we have and of course, metrics across different departments (like marketing takes care of driving people to websites, while product team takes care of user metrics etc).
The other metric we measure is our aggregation success rate and then our Net Promoter Score (which I think is the best way to measure customer satisfaction).
How did you hire your team?
When I founded Mint, I had saved upto $50,000. With that money, I couldn’t pay a seasoned professional. The first employee I had was Matthew Snider, whom I met at hiking.
I worked alone in a room for 7 months (7 days a week, 14 hours a day for 7 months), went hiking with Matt a few times. He was working on 3 startups at that time, making around $1,000 a month. I convinced him that three startups he was working on were terrible ideas (even though he owned 40-50% of each.) Instead of $1000, I’d pay him $3,000!
I had an extra car, gave that to him (even introduced him to his now-girlfriend). And then I had a friend from college – she became engineer number 2. We knew each other pretty well. And then I raised proper venture capital so that I can hire more professional.
What did investors say initially when they heard about the concept?
The first 50 people I pitched the idea to (i.e. the so called elevator pitch), they declined (cannot trust a startup in personal finance). I didn’t make much headway.
I was in a networking dinner, I met Josh Kopelman (First Round Capital). I pitched him the idea – he liked it. I said I have a laptop in my car and instantly gave him the demo. What made the difference was not the idea, or the presentation – but the fact that I had a real software, a running system (hacked interface with XML files that pretended like real).
Not polished, but it worked.
After a week and a half, I got the term sheet valuing the company at $3mn and raised $750,000.
Did you doubt yourself or the product at any point while building it? How many iterations did you go through?
Of course I had doubts. One day you’d think that this idea can change the world (help change the national savings of entire US) and next day, you think that I am a 25 year old guy taking on Microsoft/Intuit. You just push through it. Just go with it!
What are your tips for any startup to be successful?
First and foremost, you want to solve a real problem and create real value. This might sound generic, but not too many people get it.
Real problem and real business are things that occur even 5/10/20 years from now. Problem that Mint solves is that you have credit cards, mortgages, retirement savings, understanding interest rates,where your money is going etc. These problems have been around for a long time and will be around for long time.
If you can make it easier and faster and save people money – that’s value. There are 100 different people who are starting Twitter tools/features like lists, etc – that might be a decent feature and maybe work for a year or two- but isn’t solving a fundamental enough problem.
Think about how many URL shorteners are there (20?). What happens to them when Twitter comes with a default system?
Also, you should have a large market – problem that is not completely obscured. The next thing to ask is ‘What advantage do I have’, a sustainable advantage – and that could be a personal factor as well. In case of Mint, I wasn’t the personal finance expert but we filed 5 patents for categorization systems (I had the algorithm expertise).
Recommended Read : Why Wesabe Lost to Mint? Product Lessons[Image credit: wikipedia] http://www.nextbigwhat.com/mint-story-aaron-patzer-interview-297/Startup Resources