When Steve Bennett joined Intuit in 2000 as president and CEO, Intuit had about 4,500 full-time employees and revenue of nearly $1.1 billion. When the company's fiscal year ended on July 31, it employed about 7,500 people and had revenue of just over $2.3 billion. Bennett wasn't supposed to stay this long, but in 2004 he announced he would continue for an additional five years. Along the way, the company has explored and abandoned vertical markets, while staying with newer endeavors such as payroll and payment processing. It has continued to increase market share with its QuickBooks Accounting line and it has a commanding presence in both consumer and professional tax preparation software. In this interview, Bennett addresses some of the issues that his company faces. With such a large market share with your QuickBooks software, where do you find future revenue growth in the accounting software market?
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The real question is how do we grow the category? Our biggest competition is non-consumption and higher-priced competitors. We expect to expand our share in both areas. We showed that we could expand the market with the introduction of QuickBooks Simple Start. Eighty to 90 percent of the users buying that product had not previously used any software.
Can you achieve this kind of market expansion with your consumer tax business?
Yes. The same is true of TurboTax. There are 29 million people who still use pen and paper. Meanwhile, every year 5 million first-time filers come into the market and 3.5 million leave. The new people are more comfortable using computers. We are not going to get all of this market, but perhaps we can get 5 million to 10 million more over the next five to 10 years.
How much improvement can you achieve in your professional tax business? You've predicted that segment's revenue growth will range between 0 percent and 5 percent this year.
We think that we can do better than that. But we will see. We see two markets in the professional tax preparation area. One is tax-only firms and the other is full-service firms. We think that these segments have radically different needs. We think that there is more opportunity with full-service firms and QuickBooks. I think we are going to be more focused on full-service firms. We have never been good at marketing a message for these firms. In Lacerte, we were a follower not a leader.
How will you reach them?
These firms are interested in automating workflow across multiple platforms. One of the tools will be our Lacerte tax program. Our engineers have been innovating with Lacerte in a way that they have never done before. There will be greater integration of QuickBooks with Lacerte. Previously, most of our integration work has been with ProSeries. For the future, you will see a lot more innovation with full-service firms. I'm not sure how much of the market is going to go with tax-only firms.
Your mid-market package, QuickBooks Enterprise Solutions, seems to have good reception. How far up market can that package go?
Nobody is doing a really good job in that market segment. We found that about 25 percent of the QBES users were customers who were moving down from more expensive products. I think we can serve companies with up to 500 employees. I don't think that we can go to those employing 1,000 people.
Some competitors say that businesses are almost genetically disposed in their preferences in how they do payroll, doing it themselves or hiring a service bureau. Do you agree with that view, and which groups do you plan to serve?
We believe there is a third tier, the self-directed company. We don't plan on being in the service bureau business. We tried to compete with Paychex and ADP and that was a big mistake. And while those two categories of users exist, we believe it is that third tier that is underserved. These include companies who want to prepare their own payroll, but want someone else to handle tax payments. We are just getting started in this area.
Intuit Company Snapshot
HQ: Mountain View, Calif.
Phone: (800) 446-8848
Annual Sales: $2.3 billion
Products: QuickBooks, Lacerte, ProSeries, TurboTax