Mint.com recently had a successful exit to Intuit for $170 million. While some, such as Jason Fried, have argued over whether the exit was a good decision or a premature one, I don’t think we can pass judgment without knowing a significant amount of confidential details (i.e., profitability, user growth, revenue growth, VC pressure, etc.).
So, this post is operating under the (perhaps naïve) assumption that any exit where the founders make a ton of money and keep their product intact is a successful one.
In just a few short years, Mint grew from just an idea in Aaron Patzer’s head to a product being used by 850,000 people. This dramatic growth and subsequent acquisition didn’t just happen by luck, and there are several lessons to be gleaned from the success of Mint:
1. Don’t be scared to challenge an established player. Mint launched as a boot strapped venture by Aaron Patzer. He saw an opportunity in that all other personal financial software was cumbersome and not necessarily targeted at younger users. Rather than just complain to friends and be afraid to challenge multi-billion dollar competitors like Intuit and Microsoft, he sacked it up and decided he could do it better than them. We always hear of the fabled garage startup putting an established player out of business, but most entrepreneurs still remain frightened of challenging these big companies. Mint proved you with the right idea, you can out swagger even the most mighty of competition.
2. Elegance in an app matters. One of the first comments made about Mint by new users is almost always the beauty and intuitiveness of the app. The company understood that their product, no matter how many cool features were packed in, would be rather useless to customers if it wasn’t extremely usable. They when went the extra mile and added a shine of elegance on top of the intuitiveness. In addition to this strategy making the app fun to use, it also helped capture college-aged users (a prized demographic) who are used to working on the web and appreciate extra attention to detail in their software (see: Apple).
3. Think of ways to break the “usual” business model. Mint is a free service. So, it must be supported with revenue from banner/text ads, right? I mean, that’s the way free things work: Google, Facebook, Myspace, NYTimes.com, etc. Is there another option? Mint didn’t fall into the trap of just mindlessly following its predecessors (albeit very, very successful predecessors), but came up with a model unique to its offering. Mint made its money by analyzing a user’s financial situation and habits, and then recommending relevant products or offers. This is different than a freemium model (see Evernote or DropBox) and the typical advertising relationship, but that didn’t prevent Mint from giving it a shot and ultimately succeeding with it.
4. Free can work. While my company certainly believes in charging for our products and services, I fully understand that many start-ups haven’t been charging lately. While I, like many others, have an issue with this general approach, I can’t deny that it can work in certain situations. If your product or service can gain users at a such an accelerated rate that you can make money because of them rather than from them, then go for it. However, don’t hold on for too long, thinking that the big jump in users is just around the corner while you spend all of your cash. It’s better to start charging early than too late.
5. It’s ok to exit. I think I’ve made it clear in this article that I think it’s more than ok to make an exit, if the terms make sense. Much of an exit decision goes far beyond just compensation and places a lot of emphasis on other aspects of the deal, such as product future, ongoing commitment to purchaser, and more. Mint was able to keep its product and free subscription model in place, while also doubling its user-base with Quickbooks’ 1.4 million users moving over to Mint. I’m sure CEO Aaron Patzer would not have exited without assurances that the product and business he built would remain intact and that he was also excited about the idea of growing his product in such a large way.
6. Take your time. Mint was launched in 2006 and took several rounds of funding. It was originally bootstrapped by Patzer and he hired slowly before getting his first round of funding. Not every successful exit is some blowup success over night. These things take time and taking time is the way to build the best company possible. I remember when we first launched NMC, we thought we’d have an easy exit that would make us filthy rich within the first five months of the company – while we did have an opportunity to sell that quickly, it wasn’t the right deal and by understanding the importance of taking our time and not rushing, we’ve been able to build a much more valuable and enjoyable company.
7. Word of mouth can get it done. Mint outgrew its large, public competitor at such a staggering pace that it would seem that they were investing all of their money in marketing. However, the company had a rather miniscule marketing budget, spending only around $50,000 on search engine ads. Everything else was done through inbound marketing, word of mouth, and hard work. The company kept an updated and very helpful blog (this very cool graphic is actually how I first found the company: Visualizing Uncle Sam’s Debt), attracted fans on Facebook, and provided useful information on Twitter. I know I helped in this effort, as after I started using Mint, I instantly added it to my Facebook favorite links and emailed it out to about two dozen of my friends.
As you can probably tell from this post, I think presents a pretty inspirational story as a startup and marketing machine. However, unlike people like Fried, I don’t think their acquisition means that the story has ended, but that its simply entering a new chapter.
Are there other lessons to be learned from Mint? What other startups are putting these lessons to use? Have you?