Tag Archives: mint

Founding a startup – Wonder How To?

A Guide to a Web Startup: Mint.com

Recently, Mint.com was to be sold to Intuit in a $170m Cash Deal, CEO and Founder Aaron Patzer shared his step-by-step strategy for Mint’s growth at the Vator.tv Juice Pitcher event.  Aaron breaks down his 3-½ year journey with Mint into three phases of development, and each stage’s goal, expected expenses and runway until next round.

Watch the video at http://vator.tv/news/show/2009-10-07-aaron-patzer-lays-bare-mints-numbers. Insightful and very helpful to see behind-the-scene basics of a successful startup in the Valley.

PHASE I: Garage Stage (<$100k)

Goal = Build a Prototype

Pre-Revenue Valuation: How a company is valued prior to revenue.

  • “Rule of thumb around the Valley is to…”
    • Add + $500k / Engineer
    • Subtract – $250k / Business Guy
  • …Reason being, web startups need Engineers to build while there is little to do for the Business Guy at this stage.

Mints Expenses: Calculating Phase One expenses, Burn Rate, and Runway before next round of funding (based on $100k).

  • Founders at $30k Salary for living expenses. (Aaron’s Salary = $30k)
  • Engineer First Hires at $30-50k, + 1-3% of company.  (Mint’s 1st Hires at $36k + 1 ½ to 2% Equity)
  • Legal Fees deferred payment for 0.5 to .075% of company.
  • Example: 2 Founders + 1 Engineer = $150k / Yr Burn
    • Resulting Runway = Must raise Seed Money in 9 months.

PHASE II: Seed Money

Goal = Release Alpha Launch and get it in front of users.

  • Alpha should be usable but not polished.

Headcount should be around 5-6 ppl.

  • 3-4 Engineers
  • 1 Product/Front-End
  • 1 Biz Generalist

Mint had raised around $750k at this point.

Mint’s Expenses:  Calculating Phase Two expenses, Burn Rate, and Runway before next round of funding (based on $750k).

  • Salaries = at $50-90k
  • Overhead = + 20%
  • Legal = $25k General + $2k/mth
  • Total = $600k / Yr Burn
    • Resulting Runway = Must raise Series A within 12 months.
  • Note on Legal Fees: “One thing VC’s won’t tell you is how much the legal fees will be and that you’ll be paying theirs and yours…”
    • Paid around $60k in Legal Fees on $750k, leaving them with $690k.

Revenue Projections:

  • “…they’re going to be total bullshit.” And everyone knows it.
  • What Matters Most is…
    • A Huge Market Opportunity
    • Per use/client revenue
  • How much will you make per user, per year?
  • Calculating Opportunity:
    • #User Base x Rev/User/Yr = Opportunity


-        Goal = Launch a real product and grow a profitable business.

-        Be Aware of Hidden Expenses

  • Patents, Trademarks, Consultants, Legal, etc.

-        Mint’s Expenses:

  • Salaries + Overhead = $200k / Yr / Person
  • Legal = $10-50k / Mth
  • Total = $6m / Yr Burn
    • Resulting Runway = Must be profitable within 2 years.


-        Boost in Self-Confidence

-        Gratification of creating something from nothing.