How Intuit went from a failing venture to a multibillion dollar success story

Scott Cook, the founder and CEO of Intuit, shared the success story of his company at Harvard Business School (HBS). Below are some salient points that founders and budding entrepreneurs can apply to their own journeys.

Where did the Idea come from:

With all the digitalization today, it may seem archaic, though if we go back in a time, managing personal finance was not a trivial matter. All of the accounting had to be done manually and most of the options available required extensive accounting knowledge. 

Scott Cook saw this complexity as an opportunity to streamline the process. When he founded the company in 1983, with a product called Quicken, it was based on the premise that if the product looked like a check register rather than a spreadsheet, it would have high adoptability rate. 

The Team and Funding at early stages:

Scott had a consulting background, so he needed a partner who could write the software. If we travel back in time, software (or coding) was not the norm, neither were personal computers a commodity. Apple and Microsoft we just becoming mainstream, albeit more in a business setting vs consumers. 

To tackle this, Scott went to college campuses and handed out flyers to students who may be interested in joining his venture. Whilst several seems interested, Tom Proulx was candidate of choice. 

Why Tom? As Scott shared; other candidates understood the engineering required, Tom understood that this was a consumer driven and centric product, as such, had to be built from ground up, with the customer in mind.

Initial product testing with customers were very promising, indicating they had developed something that had a product-market fit. Simplified product that mimicked that experience of a checkbook, and the software managing the complexity, was far superior than any other competitive offering.

Between Scott and Tom, there was not much available in terms of funding. Tom was still studying at Stanford, so Scott initially bootstrapped the company, even taking a loan from his dad.

At the early stages, no investors were interested in Quicken, as they thought of the idea lacking market competitiveness in terms of features and it being consumer driven. Scott's initial target was $2 Million, albeit he could only raise $151K, even that was not from big investment firms.

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Go to Market Strategy (GTM) and Channels:

The primary GTM strategy at the time was TV adds (remember the internet was not around in 80's) and software was sold in retail stores. With limited funding, Scott 'n co, could not afford TV ads, so Scott leveraged his consulting contacts in the banking industry to see if they would be willing to buy and sell the software. 

Wells Fargo was the first major bank, who saw the potential of Quicken and bought the software, to then resell it to their customers. This provided much needed capital for Intuit, but not enough to keep developing the product. As a result, half of Intuit team left the firm. Over a period of time, a handful of banks, had bought the software and were selling to their customers. Even though Quicken was being sold to banks only 1 out of 10 banks was successful in selling it to the consumers.

Network Effects & New growth segment:

Things were so dire, that Scott and Tom after going at it for almost 3 years, had to make a tough decision - make one last push and if did not work, shut down. The last of the money left over from sales to banks was put towards TV advertising. Interesting things started to happen during this time.

The handful of consumers who had brought the product liked it so much that they referred it to their friends. Since, the product was not available in stores, consumers started contacting Intuit to buy Quicken. Network effects, led to sales tripling every couple of months. 

During this time, Scott noticed another unique trend. When customers were surveyed about the product, many were using them in offices. Scott initially thought it was for personal use. It was only when he started digging into it found out that in small, medium business, the software was being used to manage office accounting. The reason being that small firms did not have any accountants on staff and the Quicken software with its customer driven design, allowed small medium businesses to use it for business book keeping. 

QuickBooks was then developed and launched to address this new segment. Even at double the market price, the product was a huge success. Main reason for its success - product was designed for non-accountants to manage the business. Customer centric approach, coupled with simplification made Quicken and QuickBooks the market leader.

Today, Intuit has a market cap of more than $180B dollars. Not bad for a company that could only raise $150K and was on the brink of collapse just a few decades ago.

Key Takeaway for founders:

  • Solve a problem through product market fit
  • Experiment to align with customer expectations
  • Find the right team to complement each others capabilities
  • Raise funds as needed, albeit find investors who believe in the idea
  • Listen to your customers to find new growth segments
  • Never give up

You can also watch the story on YouTube here:

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