Intuit's CFO explains how to build cloud-based software customers actually want to use
If you file your taxes electronically, operate a small business, or track your personal expenses through a web-based application, there is a good chance you have come into contact with at least one of Intuit's products.
The $27 billion software giant is responsible for some of the best-known finance tools in the world. Among its core products are QuickBooks, TurboTax, and Mint.
Over the past decade, Intuit has transformed from a desktop-based software company to a cloud-based software-as-a-service (SaaS) platform focused on small business and personal-finance users.
Business Insider spoke with Intuit's CFO, Neil Williams, about the company's move to the cloud, its hyper-focus on mobile accessibility, why it decided in August to sell its former flagship product Quicken, and its plans going forward.
Business Insider: Why did Intuit decide to sell Quicken to a third party?
Neil Williams: It started back in the spring of last year, when we do our financial planning. During that time we were looking at areas to invest more and discussing areas we would expand. We were already in the midst of taking QuickBooks online outside the US. We had a great tax season last year with TurboTax, and we saw the ability to extend the category of do-it-yourself software. So lots of great ideas. Lots of great investment opportunities there.
As we began our resource-allocation discussion, there were three parts of the business - Quicken being one and Demandforce and QuickBase being the others. Those opportunities were not as rich. The resource allocation was really skinny. So we started having a conversation to think if it was fair to these businesses and their customers to under-invest and not really be promoting the entire business framework.
That led to a discussion where we ultimately decided that if we are not going to invest in them and we are not going to nurture them or grow them, then it would probably be better under new ownership where people are going to focus on them and be able to deliver for those customers.
Quicken, as you know, was the founding application at Intuit. It really was the birthplace for QuickBooks. As our cofounder Scott Cook observed, a lot of people are keeping their business records in Quicken. So it was a tough decision. But as Scott himself said in a video to employees, it is our past, but it really isn't our future. And we hadn't really invested in moving that software to a SaaS-based solution.
BI: Why wasn't Quicken moved to a SaaS-based solution?
NW: It's older code, and we bought a company called Mint a few years ago that is a SaaS-based solution. The idea initially was to port the Quicken customers over to Mint. We learned over time that those Quicken customers really didn't like the new user experience in Mint. That newer cloud-based software doesn't have some of the capabilities around investments and things that Quicken does. So it really was a mix of the customer base, so that migration never really worked.
We have retained Mint for those customers who prefer an online application, and we are going to find a new home for Quicken that respects the brand, respects the customer base, and really focuses on it and builds it out.
BI: Is there a younger or different demographic with Mint?
NW: People who come to Mint are typically looking to make sure they don't have a late fee, making sure they don't overdraft their account. They are more concerned about where their money is going. Do I have the money to pay the rent at the end of the month?
They are typically younger and don't really have investment-portfolio needs as much. Mint is focused on helping you find a better deal on credit cards and mortgage loans and stuff like that.
The typical Quicken user is more mature, has more assets to manage, and is more focused on being organized, having a good handle on where their money is going, and what they have invested. They loved the account aggregation of it, so they typically have multiple accounts so they can see them all in one place. The two products definitely have different demographics and very different needs.
BI: How do you see your core products working together in the future within a cloud-based platform?
NW: There are a few examples that are out now that we are excited about.
We launched a new version of QuickBooks about this time last year called QuickBooks Self-Employed. It is ideally situated for someone like an Uber Driver or an Airbnb host who gets a 1099 and probably doesn't know what to do with it. They may not have kept a record of their expenses all year long, so preparing their tax return and handling a Schedule C is a big hassle for them. QuickBooks Self-Employed is designed to really help you track money in and money out. It downloads your bank transactions directly, just like Mint does. It helps you split transactions if part are business and part are personal.
The coolest part to me is that QuickBooks can be uploaded directly into TurboTax. As a customer you can buy QuickBooks Self-Employed for about $10 per month or you can buy a bundle with TurboTax for about $15 per month. About a third of customers are now buying the bundle, and closer to tax time that should improve and increase.
You get a sense of your tax return being well started and well underway just from the start of the software, and it's simple - and a beautiful thing for us.
We have similar functionality in QuickBooks for larger companies. There is a tab in the upper right corner, an income-tax tab, that exports all your data to our professional tax software. It is really for the accountant who does your tax return. It eliminates about an hour of work the accountant would normally have to do without that.
Those are two early examples of trying to reinforce the link and build a network effect, if you will, between our small-business software and our consumer-tax software. All that is enabled by our SaaS solution.
BI: You've achieved nine straight quarters of accelerated user growth. What do you attribute that to?
NW: We are on the third iteration of QuickBooks online. Two years ago we introduced a version we called "Harmony" inside the company. It was a new user interface that was heavily influenced by Mint. It was much easier to set up and get going. It used the data we had from other customers and clients to configure your QuickBooks for you.
Before Harmony, if you wanted to setup QuickBooks you had to set a charter of accounts, say, if you wanted to do cash or accrual accounting - things many small-business owners didn't really want to do and didn't feel competent to do. If you go into QuickBooks today and launch it, it will ask you what business you are in and where you are located. If you are a florist in San Francisco, it will tell you we have 600 other florists in San Francisco, and this is how they set it up. Do you want to mirror their accounting?
You can go in and change elections if you choose to. It's a much less daunting task. That has led to a much better and easier user experience. It's easier to attach your banking information and get your transactions downloaded. It has pie-chart-type features people are familiar with from Mint. It gives users the ability to see their business and feel like they are accomplishing something very easily.
We saw a marked increased and adoption of QuickBooks online as we launched that version. The catalyst to really accelerating growth and acceptance was the new user interface we rolled out a few years ago.
BI: Are Intuit users tech-savvy, or is there a lot of hand-holding?
NW: It's a mixed bag. First, people these days are much more comfortable with technology. They are willing to try a solution. And they are much more familiar with capabilities on mobile devices and on their laptops. I think the acceptance and awareness is much greater. People these days tend to search for software that can do a very specific job for them.
People's expectations are really high in terms of how software performs. With a phone, it is easy to download and start to use something, but I think the users frustration level is low. So if something doesn't work right away, or if it's confusing, it's easy to press it, wait until it wiggles, and then delete it. We see that, and the implication for us is that the software applications we build have to be really drop-dead simple. They have to be usable without a lot of software support or instructions.
I'm really impressed with all of Apple's products, because you don't get an instruction booklet or an 800 number to call. That's the way it should be. That is the bar we should hold ourselves to at all times. The age of expecting people to read a lot of instructions or go through a big tutorial, I think, is in the past. People who make software and applications have to grab the user really fast, and the user needs a quick benefit, or they just delete it.
I spoke with a programmer in Europe who built an app that could be played by children with no verbal instructions. It was a pitch to make something international with no language barriers. Here is a Santa Claus showing up on the screen and you can draw a beard on him and interact in other intuitive ways. It would chuckle and things like that.
One game was based around fishing, and it was incredibly simple to pick up and play. I was amazed at children - at 3, 4, and 5 years old - who were engrossed with the game but with no instructions at all. Just open it up and hand them the game and they could immediately start playing. That's how our software needs to work.
BI: How are you using mobile to enrich the customer experience?
NW: We think you have to be able to use all of our software, and do virtually all of the important jobs on your mobile device. In QuickBooks you can send an invoice electronically from your mobile devices, you can do a bid, you can complete and send a proposal, you can approve and run a payroll. You can even accept a payment. If you have a relatively simple return, you can do your tax return on a mobile device.
The short story is, we think you have to be able to do all the essential work on a mobile device. Most of our customer base is made up of service workers. They are working in a van or a truck or something like that. So the ability to send a bill from a job site after you finish means your time after dinner is freed up. You can do something else.
The ability to send a proposal or complete a bid on a job site is hugely beneficial. That is what attracts a lot of people to software that they were maybe not using it before. Probably the most frequent way someone adopts our payment solution - they see a competitor swipe a card transaction locally and think, "How can I do that?" So the premise is, we think you have to be able to do all your work on a mobile device. Instead of taking a desktop solution and eliminating features, we start with a mobile device. The screen limitations and other mobile considerations make you think, "What are the essential things a customer needs to do?"
If you go back a few years, our software was probably like your VCR or DVR. It had a lot of features and tabs people probably didn't know how to use. They were less frequently used, and if you didn't use them all the time you forgot how to use them. Mobile devices have taught us and other developers to focus on the crucial things a customer really needs to do often. Build those in, and make them really crisp and clean in the application.
BI: Intuit moves at a steady pace. How do you approach technology shifts during such a disruptive time in tech?
NW: At Intuit, we have this thing called "Follow Me Home," which sounds kind of creepy, but essentially we observe customers doing work in their own native habitat. So whether we are watching someone in their house at their kitchen table doing their tax return or watching someone do payroll or send invoices in their office, that is a critical part of the way we learn or think about features and design.
What you will find if you do that is that people will do things and you will observe things they would never tell you in an interview or you would see in a lab. For example, how often they get interrupted if they are trying to do something, like work on their taxes or do a payroll or something like that.
They are probably not even mindful of how many interruptions they are faced with when using our software. Or how many thing distract them. It may be important that they don't have to do a lot of data entry at certain parts of a specific process, or that it is easy to come back to later and see where they left off.
We can also learn if it is important for our users to start on one device and pick up on another. That process of observing a customer and deep customer immersion has helped us focus on the things customers really like and appreciate and not burden them with some things you can do but that nobody really cares about.
There are a lot of things in technology that amaze me that you can do really well and really neatly. But then it gets to the question of, "Does anyone really want to do that or do it that often?" Discerning the things people really want to do and will do frequently versus what you can do just because the technology can enable it, is what we do really well at Intuit.
We don't get it right every time, but we do run things by customers and get responses and reactions before we just put it out. We let them figure out what gives them value. I am always amazed to learn from customers what they think is cool and what they will use a lot. Other things we think they will love, customers come back and say those things don't matter.
BI: What challenges and victories has Intuit faced in moving to the cloud?
JW: The number one thing to me is the inertia of people who use desktop software today or who use a spreadsheet or use bank bill pay. If people have a solution that works for them, especially the older generation, there is less reluctance to disrupt or to try something new than I had anticipated.
I am a curious person myself, and I like to try new things, and some of them I stick with and some of them I don't. But I think the thing that has been the biggest surprise to me about the transition is that people have a lot of reluctance to change. A fourth of the TurboTax units we sell every year are still desktop units, and they are not unsophisticated people who are not technological savvy. But they are people who have a reason or a rationale for why they choose desktop.
Eight out of 10 people who adopt QuickBooks for the first time use the online version. That is logical. What about the other 20% who are choosing desktop for the first time? My first reaction is, "What's up with that?" But when you talk to the customers, they have privacy issues, they feel like their data is more secured on their own desktop and not in the cloud. It can be that whoever recommended it to them uses the desktop version. A number of reasons that are logical to that customer. There will be a long-tail number of people who will be slow to adapt to a cloud model. That's just the way it is.
Security and privacy is an increasing issue with many consumers. They think about security more so in the last couple of years with all the public data that has been breached. Thankfully, many users are also becoming more tolerant of multifactor authentication and security that you need to enable in order to protect your identity online.
Far and away, people love the flexibility and our ability to see what customers are doing and to learn from that and to make the product better all the time.
If you think back to the desktop model of shipping a version every year, there was a big push for us to get it out every fall, and then we had a short sigh of relief where we thought, "Oh good, we don't have to do that again until next year." But now it is so liberating to be able to think of a new idea and to see a problem and fix it in a really quick-release cycle.
BI: What is Intuit doing to retain customers in a cloud-based economy?
JW: That is one of the big advantages of online software: You can see what people do, you can see where they are with the software, and you can see where they get stuck.
A couple things you might find interesting: During tax season, there are 150 million people in this country who file a personal tax return. About 90 million out of 150 million will log in to TurboTax online. They will log in, they will look around, and we can see where they go. About 20 million will actually get through the entire funnel and file.
It is interesting to see where users get stuck and where they abandon our product. For example, a high percentage drop off if they have to enter their W2 information manually. So we have been working on an initiative over the last couple of years to get as many W2s as possibly in the electronic file so we can upload those for the customer electronically. You conversion goes up tremendously if the customer can download and populate their W2 electronically. Then you see people move through the questions.
One nuance we learned last season: Even if you don't have 100% of their info, if you can download even a portion of a customer's personal data, it gives them the sense of, "Hey, you're doing some of the work for me." And the conversion improvement is almost as good as having 100% of the data.
Another thing we are doing in the consumer tax and online space is using some artificial intelligence based on what we know about you. If we know you are a writer living in New York, we can tailor the interview process based on other people like you who have used TurboTax so we can eliminate a bunch of unneeded questions.
Our goal at the end of the day with TurboTax is to have an interview that is not the same for any individual, so you only see the questions that are relevant to you and you are not distracted by questions that are not relevant. A lot of questions that seem relevant to me will throw off someone who is concerned or worried about the process, and they will abandon the funnel and never complete a filing.
But again, with an online solution, you can see where people are in the process, where they get stuck, and where they bail out.
BI: Are there examples you can give about how you determine a customer's likelihood to stick around?
JW: In our small-business solution, we have learned that there are certain things customers will do early in the cycle. So if you think about the initiation process of setting up QuickBooks online, we know that if you put in your bank credentials and you download transactions electronically early on in the process, that is an indicator you will stick with it.
If you connect your accountant to QuickBooks online you get a gold star. If you send an invoice electronically, if you pay an employee, those are both good indicators that you will keep using our product past the trial period. There are a handful of things that we know if you do them early on in the process you will likely get through the trial period and become a paid subscriber.
BI: How can you help a customer become a loyal user through cloud-based observation?
JW: During that introductory period, we are watching you really closely, and you will get a lot of emails and messages, and maybe a phone call. If you haven't sent an invoice, we might ask if you understand the process and ask if you need any help. We will even walk you through the steps. There are a lot of white-glove services that are enabled to observe what you are doing and find out where you are in the process. We try to get you to do those things that give value or the perception of benefit to the customer early on.
All that is enabled by the technology. In the old desktop world, we knew through surveys and work after the fact that 20% of the people who bought shrink-wrapped software never installed it - we called it shelfware. But you didn't know that until after the fact, you never knew who bought it at retail and then never used it. It's like going to the gym. Everyone thinks they need to be organized and have financial software, so they buy it on impulse but never use it.
If something is not curated, if you are not offered some assistance or help along the way, it is kind of a cold experience. The cloud is a more delightful experience for someone to observe what you are doing and offer some help along the way, both in tax and small business.
If you just hover over an item for a long time in TurboTax, we show you a popup window that asks if you want a live online chat or a phone number to call us and go through your issues. It is always intriguing to me to see some common language we use that throws some people off. We will even tune our language to make it easier for the biggest number of Intuit users.
BI: How is the sharing economy affecting your focus on small business?
NW: We had about 25,000 new customers in six months in our self-employed application that rolled out midyear 2014. That product is focused on people who get 1099s.
We have talked for years at Intuit about how there are 29 million small businesses in the US, and that is our addressable market. But about half of those small businesses are really just individuals, and they don't really consider themselves small businesses, but they are - they file a Schedule C.
I think the self-employed application gives us the first opportunity we have had to get penetration into that market, because they would have said in the past that QuickBooks is too heavy for me, I don't really need that, it's too complicated. And so I think we will continue to build out and make applications that are appealing, and that enable that economy to do well.
BI: You have strong partnerships with Uber and Lyft, where you provide drivers with self-employed business software. Tell me about how it works.
NW: If you go on their websites, we pitch our services to their drivers. A driver typically doesn't know what to do with a 1099. Uber and Lyft have tens of thousands of drivers who receive a 1099 and then call those companies and say, "What do I do with this?"
It worked really well this year to have Uber simply direct those customers to us. And to say, "Here is a tool you should use." That is a huge distribution channel for this product, and it's very beneficial to both new customers and the companies we work with.
BI: You're in global-expansion mode. How do you determine where to expand?
NW: We have the product out today in a nice localized version in the UK, Australia, Canada, and Singapore. We are going to roll out this year in France and Brazil. We are excited about that. It is interesting going back to the online discussion. We have a version of QuickBooks online that you can discover anywhere in the world, and you can use Google Translate and other translation software to translate the software, and currency-conversion tools and things like that.
In basic terms, we look at which regions have the most activity and use. Some countries that you would not have expected to maybe be as aggressive or an early adopter have come in quickly. Other developed parts of the world have been more difficult to penetrate. For example, in Germany there is already a big install base, and they have an alternative they like and use regularly.
It has been interesting to see how many users we get around the world who will adopt and use our software with no marketing. They just discovered and started using it online. That has informed how we prioritize which countries to expand.
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