A computer nerd from age six, Aaron Patzer is the founder and CEO of Mint.com and vice president and general manager of Intuit’s personal finance group. “I’ve had E-mail since the 1980s, and I was born in 1980,” he says.
Patzer expanded into entrepreneurship in high school when he created PWeb, a web development company. “It’s how I put myself through college and how I taught myself how to program,” says the Indiana native.
In 1998 Patzer started his second company, an online marketing firm that optimized the ranking of websites for search engines. The company was called Internetional, so named because he started it with a Dutch friend.
While at Duke University, earning a triple degree in computer science, computer engineering, and electrical engineering, Patzer also started a bio-informatics company, Genomic Acceleration, that won third prize in a Princeton business plan competition in 2003. Its mission was to identify diseases by accelerated matching against known gene sequences.
After graduating from Duke in 2002, Patzer became a Gordon Wu fellow at Princeton University to study electrical engineering; he also took several computer science and algorithm courses. But he dropped out of the Princeton program with a master’s degree as he saw the value of his inventions outstripping that of the academic path he was on. “I didn’t think the Ph.D. was practical enough, that it was making me a better inventor,” he says. Patzer currently has 11 patents to his credit.
Patzer moved to the Silicon Valley, where he worked with IBM and Sony for six months on the Playstation 3 chip and on tools for computer-aided design, earning three patents in the process. He then worked for a year and seven months the San Jose start-up Nascentric, but left to start Mint.com in 2006 — which he sold for a bundle three short years later.
Patzer will present “The $170 Million Idea: From Idea to Exit in Three Years,” on Tuesday, November 30, at 4:30 p.m. at the Carl A. Fields Center at Princeton University. Call 609-258-3979 or E-mail slanders@princeton.edu.
Mint.com, located in Mountain View, California, is a fast-growing, free personal finance web application that happened almost by chance. “I started Mint out of frustration with existing personal financial tools,” says Patzer. As early as 1997, when he started PWeb, he was trying to separate his personal and business finances using Quicken and Microsoft. “It seemed like it took an hour to set up the first time I used them, and then an hour a week to enter transactions and categories or clean up the data.
“I wanted something that was much simpler to use and could be accessed at work, at home, and on the go,” he says. “It had to be online as opposed to a desktop where it is trapped on a hard drive.” So using his problem-solving and computer skills, he worked out his frustration by creating the core algorithms that power his business.
About a year and a half after Patzer left Nascentric, he presented his model for Mint.com at the Techcrunch40 entrepreneurial conference, where Mint.com was named the top company in a field of 700 start-up ideas. By the end of that first year Mint had more than 100,000 online users and had begun raising the $17 million in venture capital that would fuel its growth.
One of Mint.com’s most powerful algorithms is for categorizing transactions. The software is able to classify most debit and credit card transactions as, for example, books, groceries, restaurant, or bar. To gather its users’ financial information, Mint.com links to 12,000 banks, credit card companies, brokerages, student loans, and mortgages firms.
“Mint gives you visibility into your spending;” says Patzer. If, for example, you are spending more on restaurants than on groceries, that may be a problem. Or if you’re spending too much in bars, you may want to go out less with your friends, he suggests.
Not only does the site show you how much money you have and where you spend it, but also how much you owe. It will send you bill reminders and alerts as well as low balance alerts.
Data security is huge for Mint.com. “We have bank-level data security,” says Patzer. “We hire ‘white knight hackers’ to try to penetrate the system, and no one has ever penetrated the core.” He explains that Mint.com is a read-only system. “You couldn’t move money around; and you wouldn’t find names and account numbers,” says Patzer. “We don’t keep that information.”
Mint.com earns its income through successful referrals on the site, and the site takes great pains to remind you that it is free. How it works is similar to PayPal — sign up with a valid E-mail address, link up the accounts you want to keep track of, and check out offers that Mint forwards to you, based on your information and usage. If you accept and use the offer, Mint makes money on the referral.
For example, if a user needs to roll over an IRA and follows Mint.com’s recommendation for a new investment vehicle, then that investment company will pay Mint.com a commission. Or if Mint.com recommends that a frequent traveler switch to a travel rewards credit card and the user switches credit cards, then the new credit card company will pay Mint.com between $70 and $100.
Last year Mint.com was purchased by Intuit for $170 million, and Patzer is now responsible for both Mint.com and Quicken.
Examine the trends in your spending and make changes where necessary. Mint.com tracks spending by category and can display a pie chart of spending, across all credit card accounts, over any desired period of time. If Patzer was concerned that his spending at Whole Foods might be out of line, for example, he could compare it to what other people in California spend at the store.
Mint.com can also graph income versus spending to reveal net income over a particular time period. It can also graph assets, debts, and net worth or spending with a particular merchant. One current limitation is that Mint.com is not yet familiar with overseas categories, but users can remedy this by typing in the correct categories.
Evaluate all your investments. Mint.com provides its users with the assessed values of their homes as well as the Kelly Blue Book’s estimate of the values of vehicles. It provides details on all cash accounts, credit cards, loans, and other investment vehicles.
You can graphically compare investments to Dow Jones, S&P 500, and NASDAQ and visually see where they are out-performing or under-performing. For each investment, Mint.com displays price, number of shares, cost basis, market value, and change in value. You can also compare investments by asset type.
Mint.com also provides investment advice. For example, it might note that an old 401k that has been dormant is collecting fees and suggest a rollover to an IRA that will offer higher returns. Or it might recommend the highest-yielding savings account where you can stash unused cash.
Save for future goals. Mint.com allows users to specify financial goals, including buying a home, paying for children’s college educations, remodeling a kitchen, and saving for retirement and trace their progress.
Over its first three years Mint.com has accumulated about 4.2 million users, with another 60,000 joining weekly. It currently has 50 employees. Mint.com also has popular apps for mobile phones, including one for Android and one of the top five financial apps on iTunes.
In an interview on the SmallBusiness online community website, Patzer described the three strengths that contributed to Mint.com’s success. First, although it had very high fixed costs during development, it scales easily, with variable costs close to zero. Patzer told the interviewer, “Quite frankly, to service one person or a million people on Mint, it takes the same amount of effort.”
Second, Mint.com solves a real problem, one that Patzer found in his daily life. “Anything that takes too much time, irritates you, or ticks you off, if you can solve that problem, that’s a business. So long as you have a big market or a lot of other people have that same issue,” he says.
Finally, Mint.com had an initial competitive advantage — the algorithm he had written to correctly categorize transactions.”
Patzer’s mother was a teacher of home economics, where she trained her students in cooking and sewing, but also in household budgeting. His father does market research for Bristol-Myers Squibb in Indiana. Right before Mint.com launched, his father came in for a short period to teach his son about creating the brand and marketing the product. He helped with consumer studies and positioning tests, including what language to describe the product — for example, was Mint “your automated financial advisor” or “your money champion.”
Patzer learned quickly, applying his knowledge to the naming of the product. They chose Mint.com because its spelling was indisputably straightforward, even for potential international customers, and for its symbolic power.
As Patzer told the SmallBusiness online community interviewer, “Mint is a place where money is made. Mint is also a term for top quality and condition, and mint is cool and refreshing.”
