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Why did Mint.com sell to Intuit?

Jason Fried’s rant about Mint.com selling to Intuit has really, really stuck in my craw for some reason. I have no special knowledge of Mint.com’s situation, and from my reading of Fried’s post, I don’t think he does either.

Fried constructs a fantasy world in which the noble founders of Mint didn’t really want $170 million and instead the mean old investors (who enabled Mint to exist in the first place) forced them into selling out and immediately becoming rich.

Anyone who reads Signal vs. Noise knows that despite their rejection of the label “lifestyle business,” 37 Signals is a company that brags a lot about the fact that its employees do not work a lot of hours. And I think that’s great, but something tells me that the 35 employees at Mint.com were not in the same situation.

The strength of Mint was that it was integrated with everything, banks, credit card sites, and so forth. What was obvious to me as a user was that they achieved this integration without the cooperation of those sites. Mint is at its core one of the world’s great screen scraping applications, and if you’ve ever worked on an application that does screen scraping, you know that it’s a ton of work to maintain. When Bank of America or Wells Fargo changed things up and broke Mint’s integration, people were at work until the integration was fixed. And Mint is integrated with hundreds of banks, all of whom can make changes to their Web interface at any time. In fact, I couldn’t use Mint because they never got their system to work with my bank, and yet they still tried. All that effort goes into the hidden plumbing that just makes the site work. Mint also has a shiny Web interface, a nice iPhone application, and the same uptime expectations as people have for their bank.

There were two very strong incentives to go through with the Intuit deal. The first was the opportunity to rake in a ton of cash as a reward for putting in the massive amount of effort that the company must have demanded of them. And the second was to change the relationship between the company and the banks with which it is tightly integrated.

Fried looks at Mint and sees Intuit as their main rival, but Mint faces a much greater threat from banks. Look at their revenue model — they use what they know about your accounts to present you with better offers for similar services. Mint offers checking accounts with less fees, credit cards with lower interest rates, and refi deals on mortgages that will save the customer money. In other words, Mint makes its money by cutting into bank profits. At some point Mint was going to get big enough for banks to go from ignoring them to actively trying to disrupt them, and they needed a strategy to counter that.

Sure it’s gratifying to look at an acquisition and say “greedy investors killed the dream,” but there are plenty of alternate explanations that make more sense and don’t require us to think in childish terms about heroes and villains.

Update: Mint.com uses Yodlee to integrate with banks, so they’re not doing the actual integration themselves. However, it does look like Yodlee uses screen scraping to get data from banks. My main point on the screen scraping was to point out that Mint probably demands its employees work long hours. After writing that, I noticed this on a Mint job listing:

We’re flexible when needs dictate you work from home (although you’ll miss out on free dinner!)

9 Comments

  1. I like your analysis, Rafe. Like your many other posts its thoughtful and very well written.

    Can I ask, about how long does it take for you, from start to finish, to put together a post like this?

  2. That one probably took 30 minutes to write but I thought about it for a couple of days in idle moments before I wrote anything down.

  3. You rock. From the quality and voice I would’ve guessed at least twice that.

  4. I think it’s unlikely that the banks would have tried to actively disrupt Mint’s operations for the simple fact that they wouldn’t be impacting Mint as much as impacting their own customers. Their customers have signed an agreement that lets Mint pull the customers’ account data, blocking such an agreement would likely run into legal problems, as it would if they didn’t honor a Power of Attorney agreement.

    Also note that many other banks and provide a similar service, often through Yodlee or another company.

  5. Oh, I forgot to add:

    If I had the chance to walk away with $170M (or even $10M!) after several years worth of hard work and guarantee my financial security for the rest of my (and my family’s) life, I would be very hard pressed to turn it down.

  6. Jason’s rant starts with one topic, the evils of VCs, then switches to the evils of selling to the ‘dinosaurs’ such as Intuit. His first topic is important. Mint.com’s founders took VC money, so they put themselves at the mercy of the VCs’ short-term ‘exit strategy.’ It’s a shame he didn’t stick with that topic.

    If 37 Signals has avoided VC funding or managed to take VC funding but not be at the VCs’ mercy for a short-term, short-sighted exit strategy, then more power to them. Instead of ranting, then Jason should be sharing with us how he’s managed it; most entrepeneurs don’t know how to go it alone.

  7. Rafe, Mint isn’t a screen scraping app at all, in fact they didn’t build any of the integration tech. They built Mint on top of an aggregation service called Yodlee (http://www.yodlee.com). Yodlee provides other services as well, many to banks, including online bill payment.

    I don’t think Fried knows anything about the deal (in fact, the VC comments on the post all disagree with him), but I sympathize with his despair over the deal.

    I have very little faith in Intuit to provide me with a good experience. The annual incremental upgrades for Quicken, and limited support for legacy versions are particularly annoying. They built Quickbooks on top of a deprecated API 4 years after it was deprecated, then cut off support for Quickbooks 2007 when (surprise!) the API was removed in Snow Leopard.

    Another loss for Mint users: TaxAct was set to introduce integration with Mint this year, but scrapped plans to do so immediately after the deal was announced. I can only imagine that future integration projects will be limited to Intuit products.

  8. The discussion about Mint, Yodlee and screen scraping is very interesting. We have been working for years to make a Windows and Browser screen scraping application that doesn’t require a rocket scientist to create the applications or fix them when they break. If anyone is interested in reviewing our end user screen scraping solutionl, please look at the FoxtrotOne demo at http://www.enablesoft.com.

  9. Has anyone here used an alternative to Mint called Thrive? I’ve been using it for the last 2 wks and it seems to have excellent results. It is very intuitive and provides great visual and analytical results for a free online webware program.

    Any thoughts?

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