As confirmed by San Jose Mercury News and the WSJ, Mint.com has been sold for $170 million dollars in cash. This is excellent news for Aaron Patzer, the CEO and founder, who only launched the service 2 years ago (it was in development for a year). If you’re interested in reading the CEO’s acquisition message, here it is.
This is a great story about an entrepreneur working hard to achieve his dreams in Silicon Valley and getting the ultimate recognition: a huge payout. This story is even funnier when you consider that not too long ago, Intuit demanded Mint.com show proof of how they came up with their – apparently unbelievable – user base figures. It’s also important, economically, to point out this acquisition arose while we’re in a recession. It’s uncommon for companies to go shopping when they are hording cash to survive. Let’s take a look at how the Street digested the news:
INTU share price few days before and after Mint news
It looks like on Monday, when the acquisition was announced, Intuit’s (INTU) share price spiked a little bit but the next day it dipped moderately. Since INTU is nearly a $9 billion dollar company, I doubt Mint had little to do with the minor price changes (e.g. Wall Street doesn’t expect any significant top or bottom line impact to INTU’s business).
Analyzing this acquisition strategically, the real winners from this deal are Mint’s stakeholders and INTU. The ultimate losers will be the users. First, I believe Mint cashed out too early and INTU killed it while it was in its infancy (this was a smart move). Mint’s business has lots of potential for growth by analyzing spending trends of consumers (ever wonder why Safeway encourages you to use their “Club Cards” aka grocery tracker) and ultimately re-selling that information to other businesses (credit card companies, investment banks, educational institution, economists, etc.). Information is power, hence Google’s mission to organize the world’s information. I doubt INTU will be focusing much attention building Mint’s business as they’ll be dedicating resources to more profitable (read: cash inflow) businesses.
Secondly, Silicon Valley is well known for nurturing start-ups and watching them rise and compete against “old” businesses. Google refused Yahoo’s buyout offer and look at where they are now. Facebook rejected offers from Yahoo and NewsCorp (both offers worth ~$1 billion each) and their most recent valuation places them at $10 billion. However, for every success story, there are also the ones that didn’t turn out so well – notably, Friendster rejecting Google’s $30 milion buyout offer and now they’re virtually unknown in North America.
Are you a user of Mint? What do you think of this deal: will it hurt or help Mint? Did Aaron sellout too early?
{ 3 comments… read them below or add one }
Hmm, interesting analysis. How about Mint being sold for cash vs. equity in INTU? Does it mean Aaron is looking for a quick cashout instead of working long-term with INTU to build value?
Interesting observation. I think you can also take a step back and ask, how really had the advantage here? If INTU wanted Mint more, they could bend to Mint’s demands for cash/equity and vice versa.
*who really had