Intuit was founded in 1983 by Scott Cook. The idea came from his wife. She had complained about bookkeeping and how cumbersome it was to file taxes. He thought that if she was frustrated, others were as well. He started planning a product that would use a computer to make the process much easier.
Scott Cook explained, “I started designing the system by myself. Since the last time I did any programming was in school, however, I realized that I had to get help from someone who could do it a little better than I. I asked Tom Proulx, who studied with me at Stanford University, to join me, and we founded Intuit together.”
The two founders struggled to raise money and it took almost a year to get the first product to market. But when they did, Quicken was one of the first software programs developed and sold to consumers. In fact, most consumers still had no idea what software even was. In addition they had no money for marketing.
“After we closed several distribution deals, we managed to reach several banks. They offered the product to their customers, and we got several dozen customers through them. These customers told their friends. By word of mouth, the number of users grew.”
In 1983, there weren’t many software providers but there was still plenty of competition. In fact, there were at least 46 similar products launched before Quicken. Scott Cook jokes, “We had a 47thmover advantage”. In addition, Quicken had a half to a third of the features of many competing products. Quicken was also twice as expensive as the market leader DacEasy.
So why did customers choose Quicken over the competition?
The product was being used by a completely different market than the company envisioned. The first product was built for consumers, for people like Cook’s wife, not businesses. It was designed to be used by people that knew very little about accounting. It was the simple things like instead of designing the software to look like a spreadsheet it displayed familiar images like a check register and an individual check.
Intuit surveyed customers regularly, asking them among other things whether they used Quicken at home or in the office. Half said in the office. That made no sense, but Cook and his colleagues figured they were using office time to balance their checkbooks and manage their own money. Still, something seemed wrong. “Every time we asked that question, half said the same thing,” recalls Cook, 65, who now chairs the board’s executive committee and is still active at the company. “It just bugged me. Why were people answering that question wrong? So finally we dived in.”
Cook and company discovered they were way off base. Those customers weren’t balancing checkbooks: They were using Quicken to run small businesses. “But why were they using Quicken?” Cook wondered. It wasn’t designed for businesses, while dozens of other software products were. It turned out the other products replicated big-company accounting—and most small-business bookkeepers knew nothing about double-entry bookkeeping. “For most of them, ‘general ledger’ was a World War II hero,” Cook recalls. “So we built an accounting product that didn’t seem to have any accounting.”
The result was QuickBooks, which passed the market leader (called DacEasy) in just two months, even though QuickBooks cost twice as much ($99 vs. $49) and had fewer than half the features. “But we had solved the biggest unsolved problem,” Cook says. Today QuickBooks brings in half of Intuit’s revenue.
The key, which Intuit has never forgotten, was to focus on the finding that makes no sense. Most organizations do the opposite, as Cook and his colleagues did at first. They ignore the information that doesn’t fit, or convince themselves it isn’t important. Time and again, digging into the puzzling discovery —“savoring the surprise,” as Intuit’s leaders call it—has enabled the company to reinvent itself before competitors caught on.