Mint's Fresh Take on Personal Finance

Gen Y is flocking to a free site for managing bank and credit accounts and household budgets. Mint.com aims for 1 million users by yearend

By Aaron Ricadela

In the market for personal finance software, bigger has usually meant better. For years, category leader Intuit (INTU) has been churning out new versions of its popular Quicken package, which lets users manage their bank accounts, investments, and small businesses with greater precision. Now, a free Web site called Mint.com has captured a slice of the market with a different formula.

Mint has drawn more than 200,000 users since the site went live last September, offering free and easy integration with personal bank accounts with an emphasis on managing a household budget. Where for $50 or more Quicken and Microsoft (MSFT) Money offer sophisticated tools to manage portfolios or plan for taxes and retirement, Mint aims for users in their 20s and 30s who merely want to keep their bank balances in the black. "Quicken and Money are for bookkeeping enthusiasts," says Mint's 27-year-old founder, Aaron Patzer.

Patzer says he built Mint for younger customers for whom "personal finance isn't their top hobby." The company claims its software automatically drops 85% of bank and credit-card transactions into categories, and can quickly show users where they're spending too much—too many Starbucks (SBUX) runs or shoe purchases, for example. "With Mint, you know you only have a couple of problem categories," says Patzer. Rivals, he says, "just don't do a great job of showing you, 'Where does it all go?'"

Young Idea

Mint's popularity—Patzer claims he's adding 10,000 users a week—threatens to upset the status quo in a market where Quicken dominates with about 15 million users and Money ranks second with 4 million. The site's arrival came just months before Intuit, which sells about $100 million of Quicken software each year, launched a Web version of the application in January. Intuit expects that Quicken Online can surpass sales of its desktop software within a few years. Intuit Senior Vice-President Rick Jensen points out that online versions of the company's TurboTax product eclipsed sales of desktop versions within five years.

Yet the competition between Mint.com and Quicken Online might not be as fierce as one might expect. Many of Quicken's users are baby boomers and seniors, says Cathy Graeber, an analyst at Forrester Research (FORR), whereas Mint.com and other Gen Y-oriented sites are attracting new users. However, Mint could lose its edge with the young crowd as banks make their Web sites easier to use, she says.

Patzer built Mint two years ago in a marathon coding session that lasted 14 hours a day for six months. He nabbed initial funding for the site from First Round Capital's Josh Kopelman after showing him a demo at a Silicon Valley networking event. On Mar. 5, Mint announced $12 million in new funding led by Benchmark Capital. All told, the company has raised $17.5 million from Benchmark, First Round, and Shasta Ventures, as well as angel investors Ram Shriram, Ron Conway, and Mark Goines, a former Intuit executive.