A lot of people at Adobe weren’t all that happy when YouTube was acquired by Google for $1.65 billion in 2006. After all, YouTube was just a pretty front end to the core Flash web video technology created by Adobe. YouTube got rich. Adobe got peanuts.
Mint, which sold to Intuit earlier this week for $170 million, is Yodlee’s YouTube. That’s because, like YouTube, the core technology behind Mint wasn’t developed in house. It was licensed from Yodlee, who got paid very little for what they provided.
Yodlee, which has raised at least $116 million over its 10-year lifespan (a lot of that was written off in a recapitalization), is the leading provider to account aggregation for banks. If you log into your bank’s website and they offer you the ability to aggregate accounts from other banks and financial institutions, it’s likely Yodlee is powering it.
Very early in Mint’s life they signed a sweet deal with Yodlee to provide all that back end technology. Mint focused on the front end user experience, and did a great job with marketing. People who have knowledge of the deal say total payments from Mint to Yodlee over the last couple of years are around $2 million/year. So Yodlee made $4ish million off of Mint.
And Yodlee never thought to ask for equity in Mint in the early days of the company, so they didn’t make anything from the acquisition.
To make things worse, Mint gave a “substantial” amount of Series A stock to Hite Capital in exchange for the Mint.com domain name. That stock was worth a “couple of million dollars,” says one source, after the acquisition.
The final insult: Yodlee won’t even be able to collect those small fees any longer from Mint. Intuit has it’s own back-end account aggregation service that it will use instead of Yodlee.
To be fair to Yodlee, the situation isn’t quite identical to Adobe/YouTube. The specifications, called OFX, for transferring account information between financial institutions was created in the 1990’s and any company is free to build on them. There are a few competitors to Yodlee, but for the most part they dominate the market.
But what Yodlee didn’t forsee is that sometimes having an enterprise approach isn’t the best. Mint focused on design and user experience and sold for $170 million two years after launching. Yodlee, after a ten-year fight and more $116 million or more in venture capital, is still looking for an exit.
And don’t just call this luck. Mint founder Aaron Patzer has nerves of steel and knows how to leverage risk. The rumor is he turned down an offer from Intuit earlier this year for $130 million. I’m not sure many entrepreneurs would have been able to do that. But the bet paid off, and he and his investors made another $40 million.