When software giant Intuit agreed to buy plucky start-up Mint.com for $170 million this September, the business press lapped up the acquisition as a David and Goliath story, with the speedy, simple, youth-oriented Mint running energetic circles around its staid competitor. But hidden behind the usual headlines is another tale of giant-slaying that shows how the some of the youngest members of the workforce are using their drive, tech savvy, and unique perspective to shake up how the old guard does business (and making a bundle of money for themselves in the process).
This is the story of Mint founder Aaron Patzer who was all of 25 when he founded the company and decided to take on the big guys. Today he shares his views on the different perspective of Gen Y entrepreneurs, the challenges of pitching to older decision makers and how to overcome them, and his secret weapon for success -- Frank Sinatra.
There were lots of financial-planning products out there when you started Mint, but you must have spotted something that was missing from the existing offerings. What was it and how did you go about filling the gap?
Before Mint.com, I was a long-time user of MS Money and Intuit's Quicken. Both were powerful and loaded with features and functionality around taxes, investment, budgeting -- too feature-laden, in fact. They took hours to setup, forever to learn, and an hour a week to maintain. I wanted a personal-finance tool for people who didn't want to be accountants, something you could setup in ten minutes and spend less than five minutes a week on. Mint is now that tool.
The other issue I saw with desktop products is that they only update when the program is open -- meaning if you get busy and forget to open them for months, you can miss your bill due dates, exceed your budget, and not know where your money is going. Mint is designed to put your finances on auto-pilot. Whether you log in or not, it will send you a weekly summary of your balances and biggest purchases, and how your investments and budgets are doing, along with sending you alerts on unusual spending and low balances.
You were just 25 when you started the company. Do you think your relative youth gave you a different perspective on the market?
Definitely. Most of the financial industry, and many financial tools, are geared towards men age 40 to 60 with a high net worth. I wanted to build a tool for my generation, people 20 to 40 who recognize that you don't need to spend time balancing a checkbook or checking your banks' math -- you need quick visibility to your finances from home, from work, and from your mobile phone. Mint's average user is 30, and 40 percent of our new users are women, a demographic our banking partners are shocked by. They simply can't believe we got young people interested in managing their money.
Was it hard to get people to take your idea seriously and, if so, how did you convince people to put their faith in what you were building?
It was. Since I was a 25 year old with an engineering background and no MBA, potential investors would always suggest that perhaps I shouldn't be CEO. I would always reply, "If it's best for the company, I can always be CTO." Eventually I proved myself as CEO, and within three months of our seed investment it was never questioned again. After another year, the compliment went from "You're doing a great job for a young CEO" to simply "You're doing a great job as a CEO" with no qualifier.
Simply executing and having a reason for every decision you make goes a long way. The other thing that convinced my board was that I hired well. All of my executives were in their mid-30s or older, with at least a decade of relevant experience more than me.
Do you have any advice for young people pitching new ideas to older decision makers?
I pitch Mint to everyone from investors to engineers, young and old, and I do it pretty much the same way: Here's the problem in the market place, here's how we solve it, and here's how we make money.
Perhaps the only difference when speaking to older decision makers is that I use a few more customer testimonials from people in the target demographic. This helps them understand the importance of Mint's iPhone application, for example, even though they themselves may not be heavy mobile users.
There is a bit of a generational divide about whether people feel comfortable doing financial tasks online, and I have to admit that even I, a blogger who's pretty comfortable with the Internet, paused a second before I entered all my bank details into Mint. Did you face any resistance due to these sort of security concerns and how did you combat it?
Initially, every single investor I went to said, "No one will ever trust a start-up with their finances." I went through about 50 of these rejections before my first 'yes.' Part of it was simply showing that with the right security mechanisms -- not requiring a name or address to sign up for Mint, making the system read-only with no account numbers, and implementing bank-level data security and audit procedures -- consumers would trust Mint.com.
The second part of the solution was to turn a perceived risk into an asset. Because Mint has access to all of your bank accounts and credit cards, we can detect fraud or unusual spending patterns faster than your bank, then send an email or text message alert to users.
For those who are contemplating starting their own company, what do you think are the most important qualities for a young entrepreneur to have?
At the Silicon Valley 40 under 40 awards event, we were asked to answer what factor most contributed to our business success. Many people cited their teams, others a divine entity. My answer as a little different: "Stone cold, iron-willed determination."
When I started Mint.com, I worked seven months alone in a room, 14 hours a day, seven days a week. It's natural to doubt yourself: "Who am I to do this?" "If it was a good idea, someone would have already done it." "How can I possible compete with Microsoft and Intuit, two of the largest software companies in the world?" Whenever I felt that doubt, I listened to "That's Life" by Frank Sinatra, or read my favorite Shakespeare quote: "Our doubts are traitors, and make us lose the good we might oft win, by fearing to attempt." It's okay to doubt yourself, it's okay to feel down; just never give up.