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Wednesday, February 27, 2008

Review: Inside Intuit

I know it's hard to believe, but before the era of widespread internet use (which I peg at around 1995 or so, though 1993 first saw widespread web pages at university), there was the era of the desktop software revolution. Prior to that, most software was custom written for big corporations to fulfill their needs, and standard software was priced beyond the reach of a mere consumer.

The desktop revolution was amazing. First, you could buy Turbo Pascal for $50, an IDE that ran circles around the professional compilers. Spreadsheets became the killer app that businesses would buy PCs for. And then there was Intuit.

I ignored Quicken from the moment of its inception until 1992, when I first bounced a check. That one experience taught me that I couldn't just trust myself to manage my money just based on my memory alone --- I needed help. Quicken is a funny piece of software. Even at the time this book was written, it only has 15 million users. In a country with a population of 300 million people that's 5% market penetration. Then you realize that the top 10% of the population controls about 50% of the country's assets, and you realize that Quicken probably has a fairly sizable share of those.

This book covers most of the history of Quicken, from its origins as an idea, to a partnership between Stanford Engineer Tom Proulx and Scott Cook to found th company. The partnership between businessman and engineer is typical --- it didn't take too long for the businessman to try to screw the engineer. But of course, Proulx quit and retired from Intuit, so the authors only tell Cook's side of the story. And what a story it is. Quicken is not a very engineering intensive product --- while getting the UI and the user model right was correctly identified by Cook as the challenge, I bet that Quicken could be effectively assigned as an undergraduate homework assignment today, and modern tools would render most of its functionality easy to implement.

Cook and company forged the customer-orientation into a competitive weapon, working hard to make sure even the most non-technical of users could use every feature of the product. As the company grew, though, you could see the lack of engineering process or vision showing through --- the company did not successfully build a portability layer for its software. (Not a surprise, given that Quicken was UI heavy and there's not much you can do there for portability if you want the app to look native) Even today, Quicken for the Mac and Quicken for Windows aren't compatible, and Intuit is about to throw out the Mac version of Quicken and rewrite it. It's quite clear that engineering at Intuit was never taken as seriously as the marketing or customer service.

Yet the company thrived, and did something few other software companies did --- which was to beat Microsoft at the shrink-wrap software game. First, it priced the product correctly, so Microsoft couldn't immediately enter the market at a much lower price point. Secondly, it acquired TurboTax, which with its annual schedule of required updates, never fit in with Microsoft's culture of massive projects and massive integrations. But most impressively, by listening very closely to their customers, QuickBooks (the extremely profitable small business accounting application) ran circles around Microsoft's Great Plains acquisition. This relentless approach served Intuit well until the dawn of the age of the internet.

The authors write a lot about how Intuit survived the age of the internet through innovation, but I don't see it. Certainly, downloaded updates have made Intuit's job easier by allowing frequent patches to the software. But true migration of the tools of financial planning that Intuit's products manage requires serious engineering, and startups like or even Financial Engines. Intuit's lack of emphasis on engineering and computer science has hurt them here, and will continue to hurt them. Already, users have a hard time staying on the Quicken upgrade treadmill, for instance, and the lack of trust between banks and Intuit will not enable them to get at the data they really need to be able to provide their customers with real help.

Ultimately, the authors fall under Scott Cook's spell, and refrain from criticizing the company, even on such moves as their successful effort to lobby against the IRS for its proposed program to send out pre-filled 1040EZs to eligible taxpayers. For me, anyway, that was the moment Intuit lost my trust, but Taylor and Schroeder were so enamored of the company by that point they could not bring themselves to criticize the company whose leaders they had fallen in love with.

All in all, I don't think the time I spent reading this book was wasted, but it is important to read this book with a critical eye. Otherwise, you'll be hoodwinked into thinking that Intuit is some kind of technology company. It's not, and from the moment of its conception, it never was.

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