The Web Startup Success Guide (Part 1):
Case Study of Mint.com

By Guest Author Bob Walsh

[Bob Walsh begins a series of excerpts from his new book, “The Web Startup Success Guide”, with a case study of personal finance startup Mint.com and an interview with the company’s founder and CEO, Aaron Patzer.]

Bob: Let’s start with how you decided that Mint.com was something you wanted to do.

Aaron: I had started a couple of businesses back in high school, building web sites and doing online marketing. When the Internet was quite new, I guess, it was back in sort of the 1996–97 era. And that’s how I put myself through college, went to Duke and then to Princeton.

So I was combining doing my personal and business finances, using Quicken and Microsoft Money to sort of separate out my personal and my business finances. I was really religious about getting in there and entering all my transactions and balancing all my accounts, categorizing everything. I did that probably every Sunday afternoon, for an hour every Sunday, every week for about eight years. Then I got really busy with another job. I was working as a software architect for another startup, and I didn’t log into Quicken for, like, five months. When I got in there it downloaded about 500 transactions from my banks that said, hey, your bank balance doesn’t match your Quicken balance. Will you please reconcile these 500 transactions. I thought, man, that’s going to take me all weekend to get back to square one. And it dawned on me that I been putting all this work and effort into a system that really wasn’t giving me anything back in return. Why did I have to balance my checkbook anyway? The electronic version of my checkbook can’t just figure it out for me? I was incredibly frustrated and I realized it was a huge waste of time and I didn’t want to do it anymore, and it turned out I wasn’t alone in my frustration. There were a lot of people who really didn’t like Quicken and Microsoft Money anymore; half didn’t even get through the installation process, because it was so cumbersome.

So the core idea started out in my frustration, and the core idea was to make personal finance effortless and simple. You know, get in and out in five minutes a week or less and get set up in five to ten minutes to get all of your accounts in there.

Bob: I know exactly the frustration you’re talking about. How does Mint.com solve the problem?

Aaron: It’s a free online application and links to 7,500 banks, credit cards, loans, and brokerages. So instead of the setup process you go through with, say, Microsoft Money, where you buy the software in the store, install it on your computer, which takes 20 minutes, and go through 30 different setup screens, search for your bank, enter your credentials and what you want to rename and these bank accounts, how you want to rename transactions.

Mint.com basically makes intelligent decisions for you. All you have to do is search for your bank and enter your username and password; after that point it will update your balances, your transactions, your bill-due dates. It will pull it in every single night, whether you logged in or not, sends you bill reminders, low-balance alerts, credit alerts. Things that the desktop program can’t do because it is only running when that application is open. So it’s always up to date and always watching your back, 24/7, making sure you don’t have any late fees, making sure the bank doesn’t charge you any fee, and it categorizes everything for you.

So I spent about three or four months alone in a room working on a patent pending categorization program so that it knows that when you go to Rose’s Café, that’s a coffee shop, or that the “Superior Court” entry, despite its name, is actually a racquetball court and not a traffic ticket. So there is a tremendous amount of technology behind it. We get five patents in what were doing.

Bob: Whoa! Let me ask you about something, from sort of the marketing point of view. Financial tracking desktop software has been around for, well, at least 15 years that I know of.

Aaron: Yup.

Bob: But nobody seemed to have the right mix of message and features to convince people to put their financial information on a web site, somewhere that we don’t even know where they exist. How do you deal with this issue of credibility?

Aaron: Every venture capitalist I talked to in the early days said that Mint.com would definitely fail because people would never trust a startup with their financial information, and certainly they were never going to enter their bank username and password. But we needed your bank username and bank password if were going to essentially get your information out. The banks need to know it’s you that’s authorized it. So there are a number of things we did with our messaging. Every reporter asks about security, so we spent a lot of time talking about what to do with security from an engineering standpoint and then how to brand that.

Mint.com has bank-level security. We have all the same encryption and backend protections that a bank would. We have outside security auditing, by hacker-safe outfits, and we verify signing outside, late-night hackers, they’re called, who try to break into the system, who haven’t so far.

We are a read-only system, so you can’t actually move money around. So even if somebody breaks in, that person can’t drain your accounts. And we’re anonymous, so we made a conscious decision not to request name, age, address, phone number, social security number, anything like that. We only ask for e-mail and a zip code. So even if somebody broke in, got into our database, he wouldn’t know who you are; he just knows happygirl17@yahoo drinks a lot of Starbucks coffee or something.

Bob: So like cutting off the head of the information, who you are actually are.

Aaron: Exactly, but no personal identifying information. The other thing is Mint.com helps actually protect you. We’ve turned the security issue 180º into a strength because Mint.com is monitoring your four or five different credit cards every single night. And 90% of all fraud occurs offline, not online. You’re much more likely to get your credit card stolen at a restaurant or a gas station or if somebody is physically handling your card. The alternative is you can log into four or five different web sites every day and check for fraud, or you link them into Mint.com, which will just tell you if there’s suspicious activity on your card.

Bob: Hence the alerts about these 25-cent charges that started popping up on various people’s accounts.

Aaron: Yes, and on our database; and we let those users know that their accounts may have been compromised, certainly not at Mint.com, but somewhere else. Well, I guess they lost 25 cents in it, but they should probably have those credit cards reissued by their provider.

This segment is part 1 in the series : The Web Startup Success Guide
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