Aaron Patzer of Mint.com – Idea to $170mil aquisition in 3 years @ FOWA

Aaron Patzer from Mint.com @ FOWAAaron Patzer – Mint.com – How to Take Your Startup to the Next Level @ FOWA 2010

Idea to $170 mil acquisition in 3 years.

3 Phases of a Startup

  1. Garage – <$100k in funding
    • Validate and idea
    • Create a prototype
  2. Seed < $1mil
    • Launch and alpha product
  3. Scale > $1mil

Garage – Rapidly Validate an Idea
Original Idea: Goal setting software

Talk to as many people as possible.  Don’t keep your business idea inside.  Don’t worry about stealing the idea.  Talked to 50-80 people.  He found that the money component really resonated.  People had issue with existing tools like Quicken & Microsoft Money.  Customer feedback before even building the app.
Solve a real problem that exists now and 5-10 years from now.  Don’t build a feature, build a business.  In 5 years, will this problem still exist.  Is it a transitional problem?

Garage: Goal = Prototype
Pre-revenue Valuation solver:

  • + $500k / engineer = prototype development
  • - $250k / business guy = idea, but not much to do

They built a real UI, and real prototype in July 2006. A prototype that is real and tangible will get you seed funding.

Garage to Seed: Raising Funding

  1. solve a real problem
  2. in a large market
  3. real revenue potential
  4. sustainable advantage – patents, people, user interface. need to be able to be leader

Seed: Proving revenue … before you have any

  • The hockey stick looking curve is total BS
  • Per transaction / per user revenue is much more important
  • And a huge market opportunity

Competition: Quicken & LowerMyBills

  • Lead-Gen & CPA Opportunity: $30+ /user / yr
  • Business Model: Referrals & Lead Generation
  • 7% of 16Bil online ad market

Seed Result – raised $750,000 and built prototype

Funded: Scaling People

  • Train yourself to hire
  • Hire better than you… then let them work
  • Recommended book – Topgrading – sequential interview process. In interview questions “the why is always more important than the what.” – looking for pattern recognition. You can spot gaps, you can see true colors.

Funded: Beta -> Big Launch

  • started blog ecosystem – find people to write guest posts
  • private beta builds demand
  • use exclusivity
  • user feedback is key

Mint had 20,000 email addresses 1 month before launch. If you put a badge on your site, we’ll give you priority access to Mint.  600 people did it. Also gave great pagerank.   The alpha users got velvet rope treatment.

Beta Product: Jul-Sept 2007
Saw scalability issues come across with the real users.  Focus on building architecture.  Hiring marketers properly. Scaling marketing by building the blog outreach.

Funded: The Big Launch

  • Venue: TechCrunch 40
  • Aggressive PR – hire an agency
  • Have a presence

Mint mojitos. Everyone in t-shirts. Rent adjacent space.  People’s choice award winner.  Result: Mint wins TC40 People’s Choice Award.  Off to the races.

  • Q – Validate your idea?
  • A – Talk to people.  Is it a real problem? Would you actually use it?  People will poke holes in it.  Find out other services that exist.  Don’t be super secretive.  Talk to parents friends, non early adopters.  Write down “concept statements” – go to train station, normal people.  What do you think of this concept?  Try different positioning statements & feature sets.  All on paper before you built anything?
  • Q – Story behind domain name?
  • A – Original domain – MyMint.com – he bought himself originally.  It must be easily spelled.  Have all its vowels.  Don’t chose your brand name based on availability.  Couldn’t afford Mint.com until series A round.  He bought it from a hedge fund investor.
  • Q – Where’d the Mint interface come from.  UI is critical.
  • A – The way that it was perfected was putting it in front of real users.  Take people off the street for a Starbucks $10 gift card. Mixture of ages, men, women, screaming babies.  Hire designers with very specific background Photoshop, CSS/HTML, and UI.  Designers make tradeoffs themselves.

Fred Wilson @ FOWA – 10 Golden Principles of Web Apps

Fred Wilson @ FOWAI’m at FOWA in Miami today w/ Peter and Alex from Flatsourcing.  The first presentation was from Fred Wilson who makes amazing investments in great companies:

Fred Wilson – 10 Golden Principles of Web Apps

  1. Speed – The most important feature, if its not fast, users will leave.  Early adopters are forgiving, the mainstream is not.
  2. Instant Utility – It has to give people something immediately.  If you have to spend an hour loading data into the app before you can actually do something, people will leave.
  3. Have a Voice – Stand for something, have a voice, don’t be bland.  The Twitter Fail Whale ending up on t-shirts, meant that something about their voice was connecting w/ society.  It sounded like a human being talking.
  4. Less is More – Start by being simplistic. Delicious was a great example. People used it every day.  You do one little thing but you do it all day, its quick, easy and fast.
  5. Programmable – Make your app programmable.  Make it possible for others to add to and build on top of your application.  If your API is not read/write its not an API, its RSS.  When people can add value to your application, they can add energy to your app, more data, and more richness.
  6. Personal – Infuse your application w/ your users energy.  People feel more ownership when your app is personal for everyone.  Backgrounds, avatars, user generated content.   Makes people care about your app.
  7. RESTful – In a REST architecture, your resources have a URL, and can be called by that URL.  Make the entire application have a clean URL.  Every component has its own URL that people can remember and type in.   Everyone can understand what a URL stands for, and it also is crawlable by search engines.  The web can get access to your app in deep ways.
  8. Discoverable – When you launch a web app, its a needle in a haystack.  How is anyone going to find yours.  You must understand SEO, and build your application from the ground up to be optimized for Google.  It also needs to be optimized for social media, meaning virality.  The product itself must push itself out into the web and social media.
  9. Clean – The application itself must be clean on the page.  Whitespace.  Big fonts.  Not too much functionality on each page.  Anyone landing on the page should know immediately what to do. (Tumblr login.) People underestimate how important it is to be efficient w/ the features on each page.
  10. Playful – The ability to play in an application is important.  The game dynamic is something you can use to get users to do what you want.  Weight Watchers is a good example.  Set goals, and get rewarded for meeting goals.  Create a game dynamic in all apps to make it “fun to play.” Foursquare uses game dynamic as a way to power the development of a local information service.  Users will have more fun, and you can incent the kind of behavior you want in the application.

The marketing for an app has to be in the product.  Don’t hire a marketing team.  Guerrilla, street, or stunt marketing.  It’s not a coincidence that two of Union Square Ventures  apps (Twitter and Foursquare) broke out at SXSW.   It’s authentic, and not expensive.

The Union Square Ventures, five of the six keywords they believe in: Mobile, Social, Global, Playful, Intelligent.

Here are his slides:

The 10 Golden Principles for Successful Web Apps

View more presentations from fredwilson.

Fred emphasized that these are his 10 principles, but there is a lively discussion going on over on his blog, where many other opinions are being expressed about what core tenants are important to an successful app.