Seven Startup Lessons from Intuit

Recently I was reading Inside Intuit, a book about the rise of the company that makes Quicken and Quickbooks.  Here are the take home points.  Not all of these lessons are universal, but hopefully you will find them useful.

1)    Business skills and technical skills are equally important.  
Techies and suits can remove their hands from each other's throats and work together.  Intuit founder Scott Cook had the stereotypical business pedigree:   Harvard MBA, Proctor and Gamble Product Manager, and Bain Consultant.  Partner Tom Proulx was a 22 year old Stanford programming whiz.   Cook used his business skills to do systematic market research and create a clearly defined product plan.  While Intuit's techie-run competitors crammed in every possible feature to their product, Cook designed Quicken to make it super easy for the home user to balance a check book.  Cook also formed distribution partnerships with banks and devised innovative advertising campaigns. 

Equally important to Intuit's success were Proulx's technical achievements.  When the team realized that most people had trouble printing checks on their dot matrix computers, Proulx spent all night hacking up a way for the program to automatically alert the user if the printer paper was not installed right.  This ultimately earned Intuit  a patent.    Proulx worked long hours and programmed the first two versions of Quicken almost entirely by himself. 


2)   Learn from non-technology businesses. 
Founder Scott Cook previously worked as a brand manager for Proctor and Gamble, a big cereal maker.  He decided to imitate breakfast cereal marketing and package Quicken in a bright orange box so that it would stand apart on the shelves.  This was very different than the boring, business-like packaging of the time, and it helped Quicken sell.


3)     Your competitor is not other companies, but the way that things are done now.   Forty-six companies sold accounting packages at the time Quicken entered the market.   But Scott Cook found that Intuit's real competitor was paper and pencil.  None of the other packages could balance a checkbook faster than could be done by hand.    That was the real challenge that Quicken faced - not competitors.

4)   Talk to as many potential customers as you can, from the very beginning. 
After Scoot Cook thought of the idea for Quicken, he picked up a phone book and called a hundred people at random.  These conversations not only told Cook that he was onto something, but they also taught him to deeply understand people's check balancing habits and difficulties.  It was these calls that told him what the the three most important features of the product should be.



5)   Focus your product on the absolute essential user needs. 
Intuit's competitors crammed their products with every imaginable feature.  The resulting monsters were so complex that their own engineers could not even print a check.  By calling and talking to hundreds of people, Cook learned that there were three tasks that people that people wanted to accomplish:  paying bills, maintaining a record of checks, and reviewing expenditures.  He focused everything on making these three tasks incredibly easy.  He routinely pulled pedestrians off the streets of Palo Alto into their office and would sit with a stop watch as they tried to use the software to print a check.  The average user took 7 minutes to find the enter key on the keyboard (remember, this was the early 1980's), but they still managed to print a check within 15 minutes.

6)  Even future billion dollar companies will teeter on the brink of defeat.  
"This isn't a layoff," Cook told his employees, "I 'd like everyone to keep working.... we just can't pay you right now."  Intuit's bank account was down to a mere $385.  Cook told his employees that he would like to talk to each of them individually, but that they would have to wait because, at the moment, he had to meet with his marriage counselor.  His wife was distraught because their entire savings was disappearing into Cook's startup. 

Fortunately for Intuit, the lead developer, Tom Proulx agreed to stay on board working only for stock.  The company juggled which bills they would pay and which they would delay.  They used packing boxes as desks.   They endured and the tide began to turn.   The Apple II version was far more popular than the IBM version.  Several banks finally came through on the partnership deals.  A magazine gave the software a great review.  The cash came in, and Intuit was breathing again.


7)  Do right by your customers
Disaster struck.  Customers from across the country were calling in complaining that the latest version of Quicken was freezing when they were trying to save their data to a floppy disk.   Intuit decided that all 20,000 customers needed a new version, and needed it as soon as humanly possible.  In the days before the Internet, that meant creating 20,000 disks in three days.  That was 8,000 more than their supplier could provide.  So the entire staff got to work, gerry-rigging computers into the positions where they could copy disks using both their fingers and their toes.   After that came a massive envelope stuffing operation.  Within a week, they mailed out 20,000 new disks to all their customers.  Their customers loved the rapid response.  Their customer satisfaction was actually higher than before the bug occurred.