Why Mint works

The online personal finance service Mint is getting a fresh coat of paint today. It's a good update, clean and attractive. I've been a fan and occasional user of this app since it launched a year ago, so I took this opportunity to talk with Mint CEO Aaron Patzer about what's happened to the product and the company in the last 12 months.

Mint, as you may recall, was the audience winner of the TechCrunch50 event in 2007. That honor carried with it a $50,000 prize, which Mint didn't really need; Mint was already well-funded when it showed up at TechCrunch. (Patzer says the money is sitting in a high-yield savings account, earning interest.) The award did generate press coverage for the company, though, which has helped it grow. Patzer says Mint now has about 400,000 users.

That's small number for a consumer service, but it makes Mint the largest online personal finance service so far. While traditional software giant Intuit has more users of its Quicken software, Mint has more users than the Web version of Quicken (review), or any of the other online personal finance tools like Wesabe and Buxfer, Patzer says.

Mint's getting a fresher look, but the company's real innovation is its clever ad model.

Patzer believes Mint's No. 1 position is an indicator that he's hit on the right formula for the category. "Mint delivers organized finances without a lot of work," he says. You can set it up in a few minutes and do what you need to do in it in five minutes a week, and "put your finances on autopilot." I concur: Mint provides useful insight and requires very little maintenance.

Mint's different design has made it popular with a different set of users than what Quicken has. Mint's users are younger than Quicken's, and 40 percent of its new users are women. Quicken and Microsoft Money are still "85 percent men," Patzer said.

But Mint's user base is, "1/100th its potential size," Patzer says. Patzer has the Quicken app in his sights. The old-school app is vulnerable, he says. "For many years, they viewed success in the wrong metric." He believes Intuit focused on getting users to spend time in the app, and thus layered in more and more features over the years. Mint, by contrast, is being built to get users out of it as quickly as possible. Plus, he says, Intuit abuses its customers with "sunset policies" on Quicken that force paid upgrades onto users.

Quicken, even the online version, never made "the transition to free," which appears to surprise Patzer. "They have all this information," he said. "They should have been able to help people."

As a Quicken user, I would take issue with the assertion that Quicken doesn't offer help. In fact, it does much more than Mint does. I use it because it has rich tracking for all kinds of financial products and situations, and because it lets you pay bills, not just view balances and trends, which is all Mint can do so far.

Quicken has never made "the transition to free," Patzer says. "They have all this information. They should have been able to help people."

But with Mint, Patzer has found a very clever way to help users while still offering the service for free. Mint's business model is to examine a user's finances and accounts, match it with offers from advertisers, and then pitch custom offers to users. For example, if there are credit cards or savings accounts with better rates than you are currently paying, Mint will show you what you would save with the new product. That clever model, Patzer says, "is two orders of magnitude more effective than banners." It's "personal, contextual, and quantifiable." It also means Mint is making money on its free service.

This model will be expanding into new financial vehicles as Mint gets new features. For example, as the product gets the capabilities to track investing and retirement accounts (in limited rollout so far), Mint will begin to evaluate the fees users are paying for their holdings. If it notices that you're holding a mutual fund with high expenses but that there are more efficient funds available with the same profile, Mint will make the recommendation, and, of course, pocket the referral fee. Patzer said he's looking at "fixing mortgages," too.

Challenges for the coming year include awareness of the app, and although Patzer won't admit it, security. While Mint has never suffered a breach and does not allow users to actually move money from the service, the over-30 crowd (the ones with the money) have a reasonable fear of putting their financial passwords in the hands of a start-up Web 2.0 outfit.

Mint's new design is not just a coat of paint. It's the realization of several rounds of A/B testing (testing individual design elements on subsets of users) that add up to 20 percent higher "conversion," or engagement with the site and its new features.

I like Mint's model, and I'm glad to see that it's doing well. I do not attribute Mint's success to the product itself, but rather the process the company takes in expanding its offerings and its user base. I think this is why it's worked out for Mint: management. "We take a systematic approach to understanding our users," Patzer says. "It's something every Internet start-up should do." It's obvious, but few Web 2.0 start-ups really do it.

Mint will officially exit its beta test period at the TechCrunch50 event next month.

Previous coverage:
Mint adds investment tracking, burger buying trends.
Mint: Solid but incomplete online personal finance.

[rgsunico]

As much as I really want to explore these online financial planning sites, being outside the US my options are limited. Do you Webware folks have any recommendations for good tools that work even for non-US users? Obviously we can't hope for complete integration into the accounts of our financial institutions, so what's the next best thing in terms of useful features?

[NewEnglander]

I use Mint daily. I have been doing so since March. I have no complaints. It really helps me keep an eye on my spending and savings. My overview screen updates in a couple of minutes, the transactions are easily categorized, graphs and drill-down to see detail is awesome.

I had a need to assign a category that was not in the list. I emailed customer service. An answer, and an acceptable one saying "Use a label for the moment until we update category requests", came back within 24 hours.

The only thing I have had to do manually is update a password change on my checking account.

I'm very pleased with Mint. Job well done ... and for FREE. Nice.