What's the Secret Success of Mint.com? The Real Numbers...(christine.net)
christine.net
What's the Secret Success of Mint.com? The Real Numbers...
http://www.christine.net/2009/10/whats-the-secret-success-of-mintcom-the-real-numbers-behind-aaron-patzers-growth-strategy.html
6 comments
We're starting a new company, hiring 2 developers and paying ~$50k, ~2-4% equity (4yr vesting), and providing health/dental via AdminiStaff. However, we're based in Austin so that's closer to ~$70-80k along west coast. As founder, I'll be taking a salary around ~$30k unless we receive our full ask.
I suppose it's also worth clarifying that this is an angel round to build the prototype, 9-12 month runway. Salaries will go up if all goes well of course.
I suppose it's also worth clarifying that this is an angel round to build the prototype, 9-12 month runway. Salaries will go up if all goes well of course.
AminiStaff -- thumbs up or thumbs down? Can you share what you're paying on health/dental per employee? Thanks for the info.
I can not share because I don't exactly know, at least not yet because we're still finalizing the last details. I want to say it's about $12k +/- 2k per year per employee. We're getting grandfathered in because our investor currently has a startup using their services. It's my understanding AdminiStaff doesn't support companies under 10 employees.
At the previous startup I was involved with as a normal employee, we used AdminiStaff and I thought it was pretty nice. It saves a ton of headache/time, and they keep you in check with all the employment laws, etc. I thought the health/dental coverage was really good too; I picked United but you get a few options to select from. I've been told AdminiStaff can get great coverage for a lot cheaper because of their size, but I'm sure you'll pay a premium overall vs. doing all the HR work yourself.
One thing I did like is after the startup failed, I was able to access all of my employment records for the IRS without having to jump through the invisible hoop of locating our former office manager (who we fired many months before the company closed).
So thumbs up from my experience thus far, I'm sure you can google around and find complaints though. Hope that helps.
At the previous startup I was involved with as a normal employee, we used AdminiStaff and I thought it was pretty nice. It saves a ton of headache/time, and they keep you in check with all the employment laws, etc. I thought the health/dental coverage was really good too; I picked United but you get a few options to select from. I've been told AdminiStaff can get great coverage for a lot cheaper because of their size, but I'm sure you'll pay a premium overall vs. doing all the HR work yourself.
One thing I did like is after the startup failed, I was able to access all of my employment records for the IRS without having to jump through the invisible hoop of locating our former office manager (who we fired many months before the company closed).
So thumbs up from my experience thus far, I'm sure you can google around and find complaints though. Hope that helps.
Thanks!
Personal experience, I've been in this range & been offered 1-5% (declined because I felt neither was worth it).
It sounds like they gave everyone significant raises after 6-9 months (seed round) and again after another 12 months (series A). I'd be more willing to take equity in place of salary if I knew it was only temporary.
> "$100K from friends and family"
shoot and dang.
shoot and dang.
He went to Princeton, so I'm thinking he had some cash among his friends and family.
Would anyone have a problem raising 100k from friends and family, knowing that in 12 months if you were unable to raise a series A, you would be forced to tell them that they had little chance of seeing their money again?
I guess it depends on the friends and family. If they can afford to lose $100k and they understand the risks, which for me would mean they've been there before and not just that they're telling you they understand the risks, then no I wouldn't have a problem.
If I get 10k from one friend who has a million, 50k from another who has 5 million and maybe several 1k investments from others, it would be less painful if things fell through. One would have to be rather up-front about the incredible risk involved and have a huge amount of trust with many parties beforehand.
Can I meet your friends? My friends and family couldn't loan me $1000.
All friends listed were hypothetical. I might be able to get 10k from my closest friends and family. :-)
Around here we would call that house money, not "garage money".
That's one hell of a supportive "friends and family"!
This is a great article, but keep in mind that the numbers are illustrative of one type of company. Mint was dealing with financial information, so they had to get "serious" fast and that means spending on things that, say, a Facebook or Twitter would not have had to spend. They project $30/per user for user acquisition (if I read that right), which again is very different for different kinds of companies, and different business models. Extremely high value niche companies would pay hundreds of dollars per user. On the other side Twitter being a mass player, would spend far, far less. Financial sites are valuable, so $30 seems like a good deal.
Typically you don't refer to acquisition cost in terms of $/user/year. The $30 was referring to revenue/user/year. That doesn't preclude your point that they had to approach user acquisition much differently than Twitter or Facebook.
I believe Aaron is on the record saying that Mint never purchased traditional advertising, instead they relied on pr/word of mouth.
The legal fees are kind of astounding. $10-50K/month in legal fees for a 30 person company? We spend maybe $2.5-5k/year on legal fees for our three person company after the initial $20k operating agreement/TOS/PP/copyright. The $10-50k/m figure seems a bit outrageous to me. Can someone with more experience than me explain that in more detail?
I suspect it has to do with the financial nature of the startup.
Yeah, you're probably right. I'm guessing the legal nature of having access to everyone's bank account is a tricky situation. But usually once you've outlined (legally) how you're going to approach something there isn't a monthly cost associated to that legal work.
"But usually once you've outlined (legally) how you're going to approach something there isn't a monthly cost associated to that legal work."
Oh how I wish that were true for everything :(
Ph0rque is right, though. Unfortunately, if you're dealing with money (payment processing, financial services/PFMs, large-scale real estate, investment management, etc.) then you basically must have a law firm on retainer to deal with all of the changing legislation, certification guidelines, compliance programs, patents, general disputes, etc. etc. Stuff is constantly in flux and the lawyer work is almost never-ending. Especially right now while the US market is in the economic scramble, blame-game mode. This stuff isn't like writing a basic TOS and being done. I'd actually be very surprised that Mint's legal fees were that low, except for the fact that Yodlee handled all the backend work for them. I would absolutely love to get off that cheap...we pay a multiple of what is quoted here. For each of several financial service companies.
I've heard several entrepreneurs say they intend to fill the vacuum created by Mint (by building another anti-Quicken PFM.) My firm has gotten pitches from half a dozen teams already, and we're not even actively seeking investments right now. The relatively small Mint exit seems to have chummed the waters and everyone is probably going to blow out a bunch of money and drown each other like usually happens in these little entrepreneurial frenzy pockets. I'm normally all for the little guy, but if people think this is an easy market to enter now without buckets of cash and industry experience, then they're idiots. For some (most?) industries, being an outsider gives you a new perspective because you don't know what can't be done. Financial industries, however, you need both the cash and the experience or else you may end up in jail.
Oh how I wish that were true for everything :(
Ph0rque is right, though. Unfortunately, if you're dealing with money (payment processing, financial services/PFMs, large-scale real estate, investment management, etc.) then you basically must have a law firm on retainer to deal with all of the changing legislation, certification guidelines, compliance programs, patents, general disputes, etc. etc. Stuff is constantly in flux and the lawyer work is almost never-ending. Especially right now while the US market is in the economic scramble, blame-game mode. This stuff isn't like writing a basic TOS and being done. I'd actually be very surprised that Mint's legal fees were that low, except for the fact that Yodlee handled all the backend work for them. I would absolutely love to get off that cheap...we pay a multiple of what is quoted here. For each of several financial service companies.
I've heard several entrepreneurs say they intend to fill the vacuum created by Mint (by building another anti-Quicken PFM.) My firm has gotten pitches from half a dozen teams already, and we're not even actively seeking investments right now. The relatively small Mint exit seems to have chummed the waters and everyone is probably going to blow out a bunch of money and drown each other like usually happens in these little entrepreneurial frenzy pockets. I'm normally all for the little guy, but if people think this is an easy market to enter now without buckets of cash and industry experience, then they're idiots. For some (most?) industries, being an outsider gives you a new perspective because you don't know what can't be done. Financial industries, however, you need both the cash and the experience or else you may end up in jail.
Based on my limited and tangential experience with this sort of stuff in a different country those numbers seem quite reasonable. First of all finance related regulations change quite often and you really have someone who continuously monitors those changes to see what applies to you. Secondly every time you add a new feature or change anything in the way you do things that can quite easily lead to a new avalanche of paperwork.
Probably repeated compliance filings, expanding to new countries, partnering with new banks, etc plus they probably hit several milestones for legal needs as they grew.
This is also for all the fundraising. You just start accounting a % of it as your legal costs.
I wonder if they use mint.com to track their startup expenses :o
Eating what you cook -- a great way to know what's wrong with the food.
That woman is so freaking beautiful I can't concentrate on the article. I had to firebug/edit html her picture out so I could get it done.
After reading it: It was a nice look into the strategy/numbers but I am not sure I can take anything away from it. Like (pretty much) everyone else here being a programmer/developer - I do not see raising $100k for my prototype as feasible for me.
After reading it: It was a nice look into the strategy/numbers but I am not sure I can take anything away from it. Like (pretty much) everyone else here being a programmer/developer - I do not see raising $100k for my prototype as feasible for me.
[deleted]
A) getting LOTS of equity B) really naive about equity
Are any of the startups here paying their first hires in this range? If so, what kind of equity package are they getting?