Strong opinions, weakly held

Tag: startups

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!)

Links from February 25th

Flat is failure

Anand Rajaraman says that any startup that’s not growing is dying, and that if a startup isn’t going to succeed, it may as well die quickly. It’s outstanding tonic for the Sequoia RIP: Good Times presentation that seems to have been absorbed by everyone in the Internet business. I would guess that in five years, very few of the startups that decided to hunker down and wait for better times will be around.

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