Intuit is buying Mint.com for a whopping $170 million. That’s a lot of money for a company which has yet to make a dollar in profit — indeed, it found itself in need of an extra $14 million in equity capital only last month.
So what makes Mint worth so much? The website basically has two main possible revenue sources. The first is the way it’s making money right now (or getting revenues, anyway): armed with its users’ financial information, it can act as a broker, introducing them to offers from financial-services companies which might be a good deal. And like any broker, it gets to keep a commission.
There’s also what Mike Arrington calls “a goldmine of user data” — incredibly granular information on the saving, spending and borrowing habits of 1.4 million registered users who between them account for $175 billion in transactions, and $47 billion in assets. If that information is added to the information which Intuit already holds, it could provide unprecedented insight into how Americans deal with money.
The problem is that while Mint is generally much-loved, Intuit is generally much-hated. Mint is free; Intuit is constantly trying to squeeze every marginal dollar out of its customers. Mint’s user experience is a joy; Intuit’s is gruesomely bad. (And is possibly responsible for the whole nightmare that was Tim Geithner’s tax situation.) Mint is trusted; Intuit isn’t.
The fear is that Intuit will stop showing Mint’s customers the offers which are best for them, and will start showing Mint’s customers the offers that are best for Intuit, even if those offers are predatory or otherwise unsuitable. And as for the money which Intuit might squeeze out of those users’ personal financial data — again, while I trusted Mint not to do anything evil, I don’t have the same feelings about Intuit.
I do have a Mint account, but I don’t use it very much, and it’s a bit glitchy. I think I’ll probably deactivate it now. Better safe than sorry.
In the wake of Justin’s book and Cadbury’s rejection of Kraft’s takeover offer, it’s probably worth noting that the one place the efficient markets hypothesis never took hold was in corporate boardrooms. It’s commonplace for boards to say that offers significantly above the stock-market valuation “significantly undervalue the company”, or somesuch — with the clear implication that the market is not rational at all. At least when it’s your own company on the line.
Joe Nocera this week looks at eBay’s sale of Skype, and wonders who would pay $2 billion for a company with a massive lawsuit hanging over its head. With apologies for quoting at some length, here’s the nub of Nocera’s thesis:
The Skype founders’ essential complaint is that eBay tampered with their software, and in doing so, violated the terms of the licensing agreement. They were demanding that Skype be forced to stop using the technology, which, for all intents and purposes, would mean shutting down Skype itself…
The founders would have been willing to come up with a price that suited eBay — if they had been able to enter into negotiations. What is clear is that the bad blood that had developed between eBay and the founders was infecting the potential negotiations over a buyback of the company…
Not long before Index Ventures became interested in Skype, it brought on board a man named Michelangelo A. Volpi, a highly respected former Cisco executive who — hmmm — once sat on the Skype board. In fact, he was so well liked by the Skype founders that they hired him to run Joost…
Mr. Volpi told me that not long after he arrived at Index Ventures, he discussed the possibility of making a run at Skype — and he and another Index Ventures partner, Danny Rimer, in turn rounded up Silver Lake and Mr. Andreessen, who — hmmm — sits on the eBay board.
So another theory: because of his friendship with the Skype founders, Mr. Volpi believes he’ll be able to settle the lawsuit…
It is, alas, unsatisfying to delve into a mystery like this and not be able to solve it. But over time, it will become clear. Either the case will linger, and we’ll know that Silver Lake, Andreessen et al. do indeed have nerves of steel.
Or it will quickly go away, which will provide an answer of a less seemly sort.
The problem I have here is with the “hmmm”s and the “less seemly”. Nocera is clearly of the opinion that if Skype’s buyers have a tacit agreement to settle with JoltID, that would be pretty scandalous. But why?
From the point of view of eBay’s shareholders, the existence of any such agreement would clearly be a good thing: they managed to sell Skype for $2 billion as a result. More generally, it’s clearly Pareto-optimal that Skype and JoltID are on good, non-litigious terms with each other. And it’s obvious that they were never going to be on such terms so long as eBay owned Skype. If Adam Smith’s invisible hand were doing its job, then, eBay would sell Skype to someone who had much friendlier relations with JoltID. What’s unseemly about that?
Jimmy Lee on Rupert Murdoch, after the successful acquisition of Dow Jones:
James B. Lee of JPMorgan Chase & Company, who has represented clients in some of the biggest deals in history, said of Mr. Murdoch, “nobody else I have ever banked could have pulled it off.”
News Corp.’s Murdoch says he consults regularly with Lee, and gives him a great deal of credit for helping him buy Dow Jones in 2007 — a deal many believed was impossible, because the Bancroft family that had owned the company for 105 years was thought to be totally opposed to the idea.
“He knew it was something I’d given a thought but he actually made the contacts and got things together,” Murdoch told TheStreet.com. “Without him it wouldn’t have happened or would have happened much later.”
All eyes are on Ken Lewis today: he’ll be testifying to Congress, and, according to the Reuters news planning email this morning, “Lewis is a fiery character and we will be looking for any departure from his script.”
Yet again we’ll be revisiting the history of the last four months of 2008, and specifically two decisions made by Lewis: the September decision to buy Merrill, and the December decision, in the face of pressure from regulators, not to pull out of the deal.
There’s no doubt that the September deal was done hastily. Matt Goldstein reckons that redounds badly on Lewis:
There’s still no evidence that anyone from the federal government was holding a gun to Lewis’ head when he and John Thain shook hands on the merger just as Lehman was spinning towards bankruptcy.
Lewis bears full responsibilty for that deal–along with his newly annointed chief risk officer Greg Curl. It didn’t take a rocket scientist or a mathematician to know that Lehman’s uncontrolled bankruptcy filing would have grave consequences for the financial system. Yet that didn’t stop Lewis and Curl from agreeing to buy Merrill. And at a price that was then a substantial premium to Merrill’s then share price.
If Congressional investigators want to do more than simple grandstanding they should begin by asking Lewis what kind of due diligence his team did in September when he inked the deal. They can start by asking whether he did any due diligence or was it just wishful thinking that everything would out.
But two facts are worth bearing in mind here. Firstly, the deal was of necessity rushed: Lewis and Curl simply didn’t have the time to do due diligence on a bank the size of Merrill over the course of one frantic weekend. But if the Merrill deal hadn’t been announced, there was an extremely high chance that Merrill would have collapsed in short order — and that at that point the shock waves from the Lehman-Merrill 1-2 punch would have been so systemically damaging that Bank of America itself would probably have gone under as well. Given that Lehman’s bankruptcy was obviously going to be harmful, it made some sense for Lewis to essentially draw a line under Lehman and show the market that at least Merrill was safe. If he didn’t, the entire financial system was in jeopardy.
Secondly, essentially all deals done during the financial crisis could reasonably be considered contingent until they actually closed. I noted when Lewis announced the purchase of Countrywide that it wasn’t an acquisition so much as a call option, and after that a whole spate of announced deals ended up being unwound, including Chris Flowers’s acquisition of Sallie Mae and Citigroup’s purchase of Wachovia. Given the rushed nature of the Merrill deal, it was probably reasonable for Lewis to think that if his due diligence turned up some particularly monster black hole in Merrill’s accounts (as it did), he would be able to find a way to wiggle out of the deal somehow.
The problem was that Lewis didn’t wiggle hard enough. Faced with stern disapproval from Ben Bernanke, Lewis quietly stopped wiggling and went ahead with the acquisition, even though he knew it would be extremely bad for his own shareholders. What he should have done is simply told Bernanke in no uncertain terms that his fiduciary duty to his shareholders forced him to back out of the Merrill deal, even if doing so was going to cost him his job. It was when he buckled in December that Lewis made his biggest mistake — not when he agreed to buy Merrill in September.