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Inside Intuit: learning from other companies

Tuesday, May 10, 2005 at 08:12AM
Posted by Registered CommenterPolitical Mammal in Entrepreneurship

Last week I read Inside Intuit: How the Makers of Quicken Beat Microsoft and Revolutionized an Entire Industry. I used to read a lot of biographies—progressive politicians, baseball players, composers, Native American chiefs, kings and queens, diplomats, muckrakers, but I do not remember reading about a single businessperson. Now, almost a decade of trying to figure out how to run a company, I have started to take more interest in capitalists.

Intuit seemed like a good company for me to learn about because they produce something similar to what my company sells, but for a very different and very much larger market. Intuit produces software (Quicken and Quickbooks, and they later acquired the tax preparation software TurboTax) to help households and small businesses with accounting. NGP designs software to manage money in political campaigns, and to file federal and state election commission reports.

While Intuit competes in a market many orders of magnitude larger than we do, I still noted many parallels. They started small, were initially self-funded, and maintained a feeling of being “missionaries, not mercenaries.” They build a culture of tenacity, frugality, and obsession with the customer experience. In their early days Intuit managed with and very small amount of cash. In their formative years, “everyone answered support calls.” They thought of technology not as an end, but as a means to the end goal of improving customers’ lives.

I related to many of the struggles that Intuit went through as they built their company. For instance, when Intuit sought to move from DOS to Windows, they outsourced that job to another firm, just as we did initially when we tried to move from Windows to a web application. Both outsourcing attempts failed and both companies were forced to pull the projects in house. And when Intuit had a bug that actually damaged data (something we have not yet experienced, whew)—they found that because they handled it well, satisfaction had actually increased. We have also found that our extremely dedicated technical support helped to build a loyalty among our customers. Intuit also struggled to adopt better internal processes as they grew, because they were initially very dependent on the brilliance of a few individuals.

Once Intuit really started to take off, the parallels become less apparent, but their experience was still very interesting. Along the way, the founder brought in a professional CEO, contemplated and then executed a merger with Microsoft (their biggest enemy) that was disallowed by the Justice Department to the great satisfaction of many of the Intuit employees. They also added a charge for technical support, experimented with growth by acquisition, and learned how to be a big company. Despite their size and talents, they still had trouble figuring out how to ride the Internet wave.

Two anecdotes amused me. One revealed problems in Intuit’s ordering system. In one instance, a customer ordered a copy of TurboTax and received by accident a sealed pallet full of product instead. When he called to customer service to report the problem, a second pallet was delivered to his home. As the authors note: “such operational crises underscored the difficulties in achieving scale for future growth.” In another instance, an irate customer shipped a smashed Macintosh PowerBook to Intuit, along with some Quicken installation disks. The customer claimed that nothing worked with the software and that “in a fit of frustration” he “tossed the computer and it broke in half.” The Quicken Product manager sent the angry customer a new PowerBook.

It is enjoyable to see how a company that focused on providing easy-to-use software and great customer service bested larger rivals. Not a bad model for us. I encourage NGP employees to read the book.

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