Personal Finance Site Mint.com Acquired for $170mm
For avid readers of TechCrunch, Mint.com is practically a household name, a “Silicon Valley darling” says The Alarm Clock. We have long been a fan and were fortunate enough to have them present at the inaugural LeadsCon Las Vegas 2008. News of their acquisition broke on the evening of September 13 with a rumor that financial software giant Intuit had come to an agreement. In less than 24 hours, Aaron Patzer, CEO of Mint.com had authored a guest post on TechCrunch confirming the speculation while giving both a great overview of their story and a definite nod to TechCrunch50, an event where startups pay to present for exposure to the tech community. It was Mint’s official coming out party two years ago.
Mint.com epitomizes Web 2.0 in almost all ways – it has a slick interface, transformed once desktop software only functionality to the web, raised a bunch of money, and had a quick exit (three years from inception to sale). Best of all though, despite some of the sizzle that seems mandatory for any Silicon Valley startup of this era, they created a really great interface and exceptional user experience. And, they have managed what would have seemed an impossible feat years ago – getting hundreds of thousands of users to share their most personal information – credit card passwords, bank passwords, brokerage accounts, and more. Also important to their success is that Mint didn’t actually create the underlying technology they use to suck in the data from one’s financial institutions. They did make a better mousetrap with that data.
(Screen shot of unique visitor growth over the past year. Click for larger image.)
We see Mint as not just a Valley success story but a win for customer acquisition done the right way. Mint could have chosen many different revenue models, and with the amount of data they had access to, it would not have been hard for them to enter into some highly lucrative but potentially gray areas of monetization. Instead, they chose something quite unexpected – a pure pay for performance approach. Mint received payment when users converted on one of their recommended offers, e.g., by analyzing one’s savings account, they might suggest another with a higher APR. Mint deserves praise for avoiding the monetization temptation trap of suggesting offers that are better for them than the consumer. Were they a self-funded company, they might have.
It’s also a win for performance-based online customer acquisition as to date, the vast majority of stories have come from very different types of business. As we wrote recently, in the online lead generation / customer acquisition world, three models exist, Arbitrage/Direct Marketing, Platform, or Brand Building (owning the customer one’s self). Here is what we said on trying to build a brand:
The premise sounds easy enough – create a compelling consumer proposition such that users choose to visit your site. They either hear about you through PR / friends, or they find it through organic search results. While many companies own well ranked organic sites, Quinstreet chief among them, what differentiates that SEO approach from the brand approach is the investment in recall, in building a service that users don’t just use once but come back to time again. Among contenders, BillShrink has had the most high profile attention (hard to beat inclusion in a national T-Mobile commercial), but none can yet claim victory for the approach. If lead generation is in the second inning, then the brand approach is just getting drafted. Like the disclosure of earnings by Quinstreet, that companies like these exist is a boon to the long-term future of online customer acquisition, because it signals investor’s willingness to embrace the sector and a real focus on the user.
Saying “no one can claim victory” has just become, one can claim victory for the approach. In the Valley, $170mm might not be a big enough win for some investors, but it’s a great start for better business online.
