From A TC40 Win To A $1...

With Disrupt NYC 2012 literally a day away ( tickets here ), it’s hard not to think about the past success of our former Battlefield startups. I’ve taken a close look at quite a few over the past couple weeks, and to be honest none have come as far as Mint.com. The company has rocketed to success since launching at TC40 in September, 2007, and subsequently winning the top prize at the Battlefield. The personal finance service has raised a total of $38.1 million over the course of the past five years, and has gone on to be acquired by Intuit for a whopping $170 million in September of 2009. When I spoke to VP and general manager of Mint, Aaron Forth, he said that two very specific things, the financial crisis of 2008/09 and a launch on the TechCrunch Disrupt stage, were the main factors of the company’s success, both in acquiring users and being acquired themselves. Here’s what else he had to say: TechCrunch: So tell me the story of Mint, from launch until now. Mint.com: It’s been such a great run. We won TC40 in 2007, and that was the first time our product saw the light of day. It was an intense moment, debuting something we had put so much work into. Winning gave us a great start. We hit 20,000 users within the first couple hours of the announcement. We’ve been on a crazy growth trajectory ever since, and we saw TechCrunch as a catalyst for getting out of the gate. It’s a special place to launch, particularly for a service like ours. We were trying to disrupt the personal finance world. We were asking for sensitive information, and credentials to financial accounts. What TechCrunch gave us was access to a young, tech-savvy, comfortable-on-the-web readership that was excited about exploring the service. They didn’t get aggravated by security concerns. It became a very viral growth process for us. We continue to spend very little money in marketing. Our growth is from word of mouth, and the TechCrunch crowd are great amplifiers. TechCrunch: I seem to get really emotional during the Battlefield. People are launching products they’ve been working on for years sometimes, and it’s a huge moment in their lives. How was the experience of launching on stage? Mint.com: We came out with a fairly immature product at TC40. So we realized that we had a ways to go. We were very focused on trying to demonstrate the value of the product and into pulling everything into one place. We wanted Mint to do all the work for you, which was our focus at TechCrunch. But at the time we could only aggregate checking, savings and credit. Over the next two years we worked on rounding out the financial picture, pulling in investments, loan functionality, and adding budgeting features. This type of full view built up quite a lot of data. We knew where consumers were shopping, and during the financial collapse in 2009, we became a huge resource to the media. Our data was anonymized and aggregated, and we could help the media tell a story with real data. It got our name out, and we continued to see really healthy growth during the economic downturn. Then we brought out mobile apps. It’s started to really drive us a lot of new users at a very affective acquisition cost. In fact, 60 percent of our new users come from app stores. By then, interest from Intuit and others started to come our way. As you already know, Intuit acquired us in September 2009 for $170 million, and we’ve continued to grow post-acquisition. TechCrunch: Do you think your TC40 win may have strengthened the argument for you guys, whether it be with investments of with the acquisition? Mint.com: Our win absolutely lent credibility. But then there’s the after effect. The amplifier that TechCrunch provides means that a lot of influential people end up following your service and getting buzz going. That, paired with attention from the media gave nothing but legitimacy to what we’re doing. The idea of aggregated finances has been done before, but it didn’t get traction. We did it substantially differently. Having that kind of platform to be born into the world got our name out there, gave us a lot of users fairly quickly, and made it easy to demonstrate growth. TechCrunch: So if you had to name a few things that led to your success, what would they be? Mint.com: I think TC40 made us. It was the launch at TechCrunch and the work we did to parlay that into making us a reputable service. Another thing that helped was the economic crisis. Being financially conscious was actually cool all of the sudden, and we could help people be cool and not be trapped in the desktop or a legacy personal finance tool. We modernized it and made it mobile. TechCrunch: There are hundreds of entrepreneurs headed to New York right now, if they aren’t already here. As a winner, and a super successful member of the Disrupt alumni clan, what advice would you give to them as they launch their products on stage? Mint.com: I think the demo has to impress, which rests on the strength of the product. the demo just makes it believable. But the thing that really resonates — and you have to realize that the panels are made up of guys who are used to investing and seeing lots of ideas come by — is the value proposition of how your product is going to change lives. If you have that hook, something that makes people believe in your company, then you have a chance. The next thing that you’re sure to be challenged with is how you’ll do it better than other people. Be prepared to speak about it in those terms. “Here’s how we’re different and that’s why we’re going to win.” If you can show the product and communicate a clear value proposition and how you’re going to win relative to competitors you’ll have a successful onstage launch. Disrupt NYC is set to be one of our biggest shows yet, with returns from Michael Arrington and MG Siegler , along with a variety of big names like Marissa Mayer , Sarah Tavel , Fred Wilson , and David Lee and more. It’s going to be huge. If you’re interested in checking out Disrupt and/or the Hackathon yourself, tickets are still on sale here and info on the Hackathon can be found here . Companies who want to join the Battleground can apply for the last remaining spots in Startup Alley . You can find the full agenda here .

Ask A VC: Spark’s Nabee...

Ask a VC is back this month (finally!) after a long hiatus. This week we have a freshly-minted VC, Nabeel Hyatt , of Spark Capital . Hyatt just joined Spark after 15 years of starting and building companies. His most recent company was social gaming outfit Conduit, which became Zynga Boston after it was acquired . We have a couple of questions from readers — one from Nicky, who asks whether the VC model is “broken”, and another from a reader Alex, who asks about how the landscape for user acquisition is changing. User acquisition is Hyatt’s home turf. As a general manager at Zynga, which is the most data-driven company on the Facebook platform, he had to know the arc and decline of social games like the back of his hand. This is super-useful in light of the explosive growth that apps like SocialCam and Viddy are seeing on Facebook and iOS. What’s happening right now is that Facebook is finally becoming a potent force in mobile app distribution, as Hyatt explains in the video. A year ago, if I talked to top free or grossing developers, hardly any of them said Facebook was an important channel for acquiring users. They were too addicted to paid channels like Free App A Day, offer walls or even download bots. Several of these channels are now banned by Apple, which is making more room for apps that are genuinely engaging or are getting users virally. Secondly, Facebook is realizing that if it wants to stay relevant in a mobile era, it has to step up its ability to push traffic to mobile apps, Hyatt says. A year ago, they were bent on bypassing the native app route and pushing the ecosystem toward building with HTML5 instead. But over the last few months, they’ve stepped away from that rhetoric and are now driving traffic to both native and HTML5-based apps. With the new mobile platform, Facebook is now able to single-handedly drive apps to the top of the free charts on iOS — something it didn’t do a year ago. That pushed apps like Viddy and Socialcam to the top of the charts over the past month. Now the question is what does this mean? How should these companies be valued? Are investors being sophisticated enough about how to value them? Hyatt says working at Zynga has given him many insights about what to look for. Namely, downloads and even daily active users aren’t sufficient enough metrics for judging apps. You have to ask for other numbers. For example, he’ll look at one-day retention: how many users come back the second day? And he’ll look at seven-day retention: how many users come back seven days later? He also looks at DAU/MAU, which is the ratio of daily active users to monthly active users. It’s a measure of stickiness: out of all the users that touch an app every month, how many come back every day? If you look at Viddy and Socialcam , this DAU/MAU metric is looking troubling on both of them, according to AppData. (Though, keep in mind, there have been some reporting errors over the past week.) He said that very few games can thrive if they fall below 12 percent on this metric. Even though Farmville is about three years old, it’s still hovering at around 19 percent . Viddy has been below 10 percent for more than a week and SocialCam just dipped below that key level. This is a negative sign. That said, when an app gets a slug of growth like this, the peak number of users is not actually that important. It’s the number of users that it keeps engaged for the following several months.

PayPal Gets Its Own Sha...

The reorganizing and downsizing at Yahoo — and possibly the executive scandal at the very top of the pyramid — are leading to a wave of talent departures at the company: the latest in that story is that Douglas Crockford, a trailblazing Java guru most recently at Yahoo, is joining eBay’s payment giant PayPal. The news was announced by Bill Scott , PayPal’s senior director of UI engineering, on his own blog, yesterday. Scott himself had also worked at Yahoo years ago and joined PayPal six months ago from Netflix. “Welcome aboard Doug! Stoked to be working with you again ,” Scott yesterday. (It was a note I first saw via  HackerNews .) The news signifies the Yahoo story coming full circle in way: Yahoo’s CEO Scott Thompson, currently the subject of so much scrutiny over his past experience, himself comes from PayPal and has hired other executives away from his former employer in his strategy to rebuild the struggling internet giant. ( Sam Schrauger  coming on board in April to lead its new consumer commerce unit is one of the latest.) The departure is also ironic, given how Yahoo’s recovery should rest on the talent that it has working there. Looking ahead, the hiring raises some questions of what new products and services we might expect next from PayPal — with a focus potentially in three key areas where Java is used: featurephones, Android and web interfaces. So far there is little information on what he will be doing. “Part of a lot of changes happening at PayPal. Working hard to get the inside changes out to our customers,” Scott wrote of Crockford’s hire on Twitter earlier. Crockford, according to Wikipedia (he doesn’t do LinkedIn , didn’t like total strangers using it to reach out to him), was most recently a senior JavaScript architect at Yahoo. He has played a significant role in the development in Java-based technologies. These have included the development of JavaScript and related tools and the JSON  data format, as well as Yahoo’s User Interface Library. In the past he also worked at Atari, LucasFilm and Paramount.

LegalZoom Files For $12...

Online legal services company LegalZoom filed an S-1 form this morning declaring its intention to raise up to $120 million in an IPO. LegalZoom offers documents and subscription services to make it easier for individuals and businesses to accomplish basic legal tasks. As evidence of the company’s traction and impact, the S-1 says LegalZoom has served about 2 million customers in the past 10 years. It also says that in 2011, those customers placed 490,000 orders on the site, and during that period, more than 20 percent of limited liability companies formed in California did so through LegalZoom. The company’s revenue has been growing steadily, if not dramatically, in the past couple of years — it was $156 million in 2011, up from $121 million in 2010 and $103 million in 2009. LegalZoom also became profitable for the first time last year, with $12.1 million in net income. LegalZoom says its future plans include adding more services, expanding its subscription legal plans, and growing internationally. Risk factors listed in the S-1 include: The company is switching from a transaction-based model to a mix of transactions and subscriptions, so it’s not clear how many customers will become subscribers. LegalZoom’s reputation could be harmed if it doesn’t protect its customers’ privacy. There’s increasing competition from online and offline legal services. The company is involved in several class action lawsuits. LegalZoom has raised more than $100 million in funding, including a $66 million round last year . The largest shareholders in the company are Polaris Venture Partners (with 35.1 percent of the company), Institutional Venture Partners (14.7 percent), Kleiner Perkins Caufield & Byers (6.4 percent), and co-founder and chairman Brian Liu (8.7 percent). The company is headquartered in Los Angeles suburb Glendale, so this is also nice validation for the LA tech community.

Pew Study: 18% Of U.S. ...

According to a new study by the Pew Internet & American Life Project , the popularity of check-in apps continues to grow, though it still isn’t quite mainstream yet. Pew’s latest survey found that in February 2012, 18% of U.S. smartphone owners over 18 used geosocial check-in apps like FourSquare. That’s up from 12% in May 2011. Even among adults who said they own a feature phone, 11% said they use check-in apps. This means that 10% of U.S. adults (including those who don’t own a cell phone), have now used check-in services at some point in the past. Sadly, the Pew survey did not ask users about how frequently they use these services. Given the hype around these apps in the past, it would be interesting to see how sticky these apps really are. It’s worth noting that the Pew survey’s question specifically mentions Foursquare (and Gowalla in the March 2011 survey), but doesn’t mention Facebook or other services that allow users to share their location in some form or another. I can’t help but wonder if the number wouldn’t be a bit higher if the question had focused less on Foursquare. Besides looking at geosocial and check-in services, the Pew study also looked at how often U.S. smartphone owners use their phones to get directions or to get general location-based information like restaurant recommendations. There, the numbers are obviously much higher than those for check-in apps. Almost three-quarters of U.S smartphone owners, says the Pew report, now access location-based information from their phones. In a way, it’s actually more surprising that almost 25% of smartphone owners don’t use their phones to get location-based information. Another recent Pew survey , by the way, found that 65% of smartphone owners have used their phones to get turn-by-turn driving directions and 15% do so on a typical day.