In Buying Mint, Intuit Looks to Revitalizeby
Last year, Intuit's legal department sent a threatening letter to Mint.com demanding that the upstart rival in personal finance software explain its breakneck pace of growth. The correspondence was leaked and Intuit was upbraided in the blogosphere for what looked like bullying behavior. Even Intuit CEO Brad Smith later professed dismay. "It looked like Goliath picking on David," Smith said in an April interview with BusinessWeek. At the same sitting, Smith praised Mint's "brilliant" approach to helping consumers manage their money on the Web.
Now, Goliath and David have more than made up. On Sept. 14, Intuit (INTU) said it will pay $170 million in cash for Mint.com in a move that eliminates one of its toughest competitors and may help Intuit attract a wider, more Web-savvy audience.
The acquisition fits with Smith's effort to rejuvenate Intuit's sometimes stodgy culture. During his 20 months as CEO, he's pushed the $3 billion-a-year software company, which traces its roots to the PC boom of the 1980s, to move more of its products to the Web. He has consulted with Hewlett-Packard (HPQ) about cost-cutting and with Google (GOOG) about engineering innovation.
The Mint deal is meant primarily to bolster Intuit's online operations. Quicken Online, launched last year, has been a slow starter and Intuit will now direct customers looking for financial management software on the Web to Mint.com. "That's where the new traffic and customer acquisitions will go," says Mint's CEO, Aaron Patzer, who will manage Intuit's personal finance products, including Quicken, once the deal closes in the fourth quarter. Meanwhile, Quicken Online will become an extension of Intuit's desktop Quicken products, which cost $40 to $50, and are used by an estimated 10 million to 12 million people. Intuit also plans to infuse other products in its line, such as TurboTax, with Mint's technology, which can automatically categorize household and business expenses with a high degree of accuracy.
Mint Thrived Against Intuit's Quicken Intuit's acquisition of Mint illustrates the line software companies need to walk as they extend their brands on the Web, where products are often free, while protecting revenue from desktop PC programs. It also underscores consumers' desire to find easier ways to manage their money at a time when many are trying to spend less and save more. Mint brings personal finance software "down a level" compared with Quicken, says Brad Strothkamp, a principal analyst at Forrester Research (FORR). "For things like online banking and managing finances, Quicken was a lot more than [many] people needed. Mint provides functions consumers want, but it isn't overkill."
Mint, which costs nothing to use, has attracted 1.5 million users since its launch two years ago. Mint has won plaudits for its attractive and simple-to-use design, which was created in reaction to Quicken's often tedious data-entry process.
The company, which had taken $31 million in venture capital, makes money by directing its customers to partners among credit-card issuers, insurance providers, and other financial-services companies. Mint analyzes users' finances, spending habits, and demographic information, then suggests money-saving accounts and financial products that may be suitable. A frequent traveler might get a pitch for an airline-rewards credit card, while someone who buys lots of groceries and gas would see offers for cards that help them save on those purchases.
That's the "savings engine" technology Intuit coveted. In addition to the Mint.com Web site, Intuit plans to rewrite its Quicken Online software to be powered by Mint's technology. "The desktop version of Quicken isn't going anywhere any time soon," says Patzer. But Intuit will position the Quicken Online site as a place to which desktop Quicken users can go to check on their investment portfolios or perform other straightforward tasks during the day while feeling secure that the bulk of their financial data is stored on a PC. "Not everything goes up into the cloud," says Patzer.
TurboTax Will Incorporate Mint's Tech A new version of Quicken for PCs is due in October or early November, around the time Microsoft (MSFT) launches its Windows 7 operating system. A long delayed new system for Apple's (AAPL) Mac is due out next year. Still, Dan Maurer, Intuit senior vice-president, acknowledges that it's getting tougher to keep consumers paying for desktop software. Last year, Microsoft discontinued its PC personal finance software, Money.
Shares of Intuit closed up 2¢ on Sept. 14, at 27.86. So far in 2009, Intuit's stock is up about 17%, compared with a 32% gain for the Nasdaq Composite Index. Sales fell slightly during Intuit's fourth quarter that ended July 31, to $475.8 million, and the company posted a net loss of $70.1 million.
Intuit says Mint's technology can pay dividends in other areas beside personal finance. Starting with its TurboTax products for the 2010 tax year, the company plans to fold in Mint technology that can examine taxpayers' earnings statements to automatically extract expenses. "Half your taxes could be done without asking a series of questions," Maurer says. The company also plans to export Mint technology to its QuickBooks products for small business customers and to software it sells small banks for online banking Web sites.
In the short term, Intuit will need to work hard to make sure consumers understand that both Mint.com and the free online Quicken services have value. "When you have two very powerful brands, you don't want to get rid of either of them immediately," says Patzer.