An Interview With Intuit CEO Sasan Goodarzi About Accounting and AI
Listen to this post: Good morning, This week’s Stratechery Interview is with Intuit CEO Sasan Goodarzi . Goodarzi took a very non-traditional path to Silicon Valley, joining Intuit in 2004 after working at Siemens and Honeywell. After managing business units across the company he became CEO in 2019, and is taking on the challenge of figuring out how one of tech’s oldest software companies manages the AI paradigm shift. In this interview we discuss Goodarzi’s background and the what it takes to be an effective generalist, and get his take on how Intuit has thrived for 44 years. We discuss the shift from Quicken to Quickbooks, the TurboTax business, and how Goodarzi thinks about the consumer space today. Then we talk about accountants, Intuit’s most important customer acquisition channel, and how the company wants to change the profession from partners to customers via AI. I present the case to Goodarzi that Intuit seems like its being disrupted, and he makes the case why they are well positioned to actual grow their market. We also touch on acquisitions like Credit Karma and Mailchimp, and how Intuit has managed business model changes in the past, and what needs to change in the future. As a reminder, all Stratechery content, including interviews, is available as a podcast; click the link at the top of this email to add Stratechery to your podcast player. On to the Interview: This interview is lightly edited for clarity. Sasan Goodarzi, welcome to Stratechery. Sasan Goodarzi: Thank you for having me, I’m a big fan of all the work that you do. It’s great to be a part of it. Well, we’ll get to my relationship with Intuit, which I’ve had for many years. Big fan? I’m going to have to think about that one. We are here to talk about Intuit, a company that you have been at, with a brief break, for over 20 years. Before we get to that, however, tell me about your background, which is a very interesting one. Let’s start with where you were born. SG: Yes, I was born in Tehran, in Iran, and I am the youngest of three — 13 years younger than the other two brothers. I was told I was special, I think I was an accident, so there you go. And back then, you’d ship your kids to the U.S. because everybody wanted to come to the U.S. to study and so my brothers were in the U.S. already studying, and my parents decided to do an experiment with me and shipped me to the U.S. at the age of nine and I was very fortunate, because the revolution actually happened. Got it. So you had already left before then, I wasn’t quite sure on that timing. SG: Yeah, yeah. I was very fortunate, I left before the revolution, about eight to nine months before the revolution, and have been in the U.S. ever since. Where did you end up in the U.S.? SG: I came to Orlando, Florida of all places, because my brothers were going to the University of Central Florida. And, by the way, back then we used to say, “U Can’t Finish”, that’s what we called it, but it’s a great university. But anyways, for that reason, I was in Orlando until my early 20s, until I started being moved by Honeywell. Every couple of years, I was going to a different state, which was a lot of fun, and eventually ended up in California. You studied electrical engineering, right? And then you were at Honeywell and Invensys. What were you doing there? I mean, it doesn’t seem quite the obvious path to being CEO of Intuit, to say the least. SG: Not at all. In fact, it’s advice I give, career advice I give to folks. I actually started at Siemens, I was a technical marketing person, which really — I don’t know why they called it marketing, it was all a technical role that supported our field sales folks. I was in the power generation business unit at Siemens so I used to go pitch why our power generation was better than anybody else’s. I don’t think they need much marketing these days in the Siemens Power Generation Unit. SG: (laughing) Yeah that’s right, they don’t. I did that for four years and frankly, I didn’t know what I wanted to do with my life, because in the meantime, I was doing startups on the side. In fact, before I even started at Siemens, I did a startup called Lazer Cables — with, at that time, a very good friend that was actually the genius behind the idea of fiber optics for the music industry, so I was dabbling in a lot of different stuff. When I was at Siemens, I love the company, but I was wondering, “Is the corporate world cut out for me?”, and I got recruited to Honeywell. And at Honeywell, they put me — it was like business development. In essence, they put me in charge of something they were experimenting with, which was just down my alley, because it was, in essence, a startup as part of Honeywell and I fell in love with the company because of that. I was there, I think like eight years. So is this — was this going to different states? Was that because Honeywell, being a defense contractor, they just have to source from everywhere? Is that the connection? SG: Yeah, but I was in the industrial home automation division. So if you look at my background, I’ve been in power generation, I’ve been in home and buildings automation, I’ve been in industrial, which means I was selling software and hardware at the time to oil companies that need to manage all of their oil and gas in the fields. I’ve been in all of those different industries and then, to your point, I got a call from Honeywell, so my whole background is enterprise and oil and gas and all those different industries. So my forte was getting into something and diagnosing quickly what was going on and what should we do about it, my expertise wasn’t in any one industry. And then, when at the time Intuit called me, I didn’t even know what the company was. Right. It’s a very non-obvious connection, so what did they see? How did they find you? SG: I think the reason they found me is, at the time, the CEO had come from GE Capital, Steve Bennett . And I think at the time, they were looking for folks that knew how to run businesses, not — these are their words, not mine — not a typical Silicon Valley grown-up leader, and that’s what attracted them to me. And I was trying to figure out what Intuit was, because, one, I had never served consumers, businesses — it was always enterprise. But I really fell in love with, at that time, the culture of the company and the leaders of the company. And when I joined, I’ve been here sort of ever since — 20-some-odd years. Well, you did leave briefly to be CEO of energy company Nexant. What advantages do you think you gained from not having at all a traditional Silicon Valley CEO background? And also, on the flip side, what challenges has that presented? SG: The biggest learning I had, which had to come innate because I was in a new job almost every three years, is curiosity — is going in and really diagnosing, really trying to get to the root cause of if something is going well, “Why?”, if it’s not going well, “Why?”. How do you assess the industry, the talent, the priorities? And so I became, only because I had to, a master of how to be curious and diagnose. Does this require a very systemic sort of thinking about the problem? What makes a good generalist? Because you, I mean, clearly you’re a generalist. So what makes that effective? SG: It is, in fact, what you just said. One, you have to be a systems thinker. You have to ask a lot of questions end-to-end, because, one, it’s not from one particular craft, and you don’t know the industry that well and so you have to ask a lot of questions. You have to understand what the customer problems are. Structurally, are you advantaged or disadvantaged? What kind of talent do you have? It requires a systems thinker. But I think the second is you learn how to hire great, great people. Why? Because you don’t know anything about the industry. Once you know what you got to go do, you need great people that know how to go do it, I think those are the advantages. The disadvantages can be that you don’t innately — like when I went from power generation business unit to serving oil and gas, they don’t have too many things in common, and so the disadvantage is intuitively, right off the bat, you wouldn’t know what to do. I think that’s the disadvantage. I would tell you, from what I have learned, I would take those disadvantages any day over a leader that’s curious, that can diagnose really, really well. Because it naturally — one of the things I love about Amazon is the Day 1 mentality. Every day is Day 1, and Day 1 truly is when you’re curious, and you’re trying to understand what’s going on, and what kind of impact can you have. Well, when you don’t know an industry, it is truly Day 1. If you know an industry very, very well, you actually have to work hard to ensure that you’re diagnosing versus, “I have the answers to everything”. I think people would generally think oil and gas, energy, tech, totally different. Is there, though, a commonality in terms of where the investment takes place and the marginal cost of serving customers over time? Is that similar, or are there still really important differences there? SG: There are a lot of similarities I have learned over time in terms of just how do you run a business. So it’s just general management is the commonality? SG: And, by the way, I actually think it applies in this environment more than ever, frankly, because structural advantages — are there any in this environment? What is your structural advantage? Making sure that you’re curious about how you really reinvent experiences because of what’s possible with AI. I think there’s a lot of commonalities, inclusive of — this is probably the biggest thing I would say when I came, and I have a lot of respect, by the way, for all the companies and all the leaders in the Valley because, frankly, we are the ecosystem that drives global innovation, period, end of story. With that said, I think one of the things I’ve learned over my career is we can end up being sloppy in the Valley in terms of how we think about expenses, how we think about cost, how we think about allocation of capital. Those are things you just — when you come from oil, gas, power generation, where margins are thin, room for error is zero because, trust me, you do one thing wrong in oil and gas, you can blow up oil tanks. And so those things carry forward in terms of how do you build quality software, where do you put your money. But then there are things that don’t carry over, which is oil and gas has nothing to do with how consumers consume stuff. Right. Can generalists — could it be a sort of weakness of generalists — you said sloppy. And I think about the generalist angle and systems thinking and it’s easy to skim over the details, “Not that important”. Is that a challenge that you sometimes think about? SG: First of all, I think every leader, no matter what industry, has to have helicopter skills. I think you have to — one, I don’t think you can set clear vision of where you need to go and then move fast to get there if you’re not grounded in details. What does that mean? I mean, for me, details are, are you meeting with customers? Are you in your KPIs? Are you using products? Are you looking around corners in terms of what has to happen in your experiences? I think you have to be detail-oriented, and not just in this environment, I think every senior leader at every level has to have detailed orientation. Systems thinking doesn’t mean you lack detail orientation, it just means that you’re thinking about a problem end-to-end and because one of the biggest things I learned at Honeywell is — think about building a plane, just as an illustrative example, end-to-end, from the moment you say, “Build the plane”, to the moment that plane is on a runway — and thinking about it wing-to-wing. So you can end up building the engine much, much faster, but if you don’t actually think about wing-to-wing — what it takes to build the plane and how to reduce the cycle time of building the plane — then you don’t ship better and faster planes in a shorter period of time. So this notion of wing-to-wing is similar to end-to-end systems thinking. You have to really figure out how to draw the box because when you redraw the box, you redraw your TAM, you redraw what’s possible and that doesn’t mean lacking detail, it just means both become very important. If AI is very good at details, is AI the biggest gift to generalists ever ? SG: I think — by the way, I was on the record, you can go back and look, eight years ago, we went in on data and AI. And the stuff that exists today, of course, did not exist eight years ago and I was on the record saying — and many laughed at me — on the record saying that, next to electricity and the Internet, it would spark the largest global innovation that we could have ever imagined. I think it’s, for many, while it has a lot of risks, it’s going to level the playing field in terms of what’s possible, what you can do, what I can do, what many can do. It’s commoditizing a lot of stuff — and not just information, but insights and helping you make decisions, what it can potentially do to healthcare, what it can do to robotics, what it can do to space. I just think it’s freaking fascinating what’s possible. Is AI a systems thinker or is it a details thinker? SG: Oh, I think, in my view, it’s all about how you design it, that’s the biggest thing we’ve learned in all the agentic work that we’re doing — is it’s only as good as the context you give it, it’s only as good as the data that you give it. The biggest mistake in learning we had in the last couple of years is we, to answer your question, we launched a bunch of AI agents , a payments AI agent, a payroll AI agent, an accounting AI agent, and while they did everything in slices very well, they didn’t actually deliver a great experience end-to-end for customers. That’s because of what the capabilities were about a year ago, but also just how we had designed it, we didn’t design it as a systems thinker. I think it can be both and of course the capabilities are just growing day by day. But it comes down to the context and how you design it, in my view. I did want to do a little bit of a historical tour. It’s interesting to talk to you about Intuit. You’ve been there for 20 years and yet only been there for half of Intuit’s history, this is one of the granddaddies of Silicon Valley. So your first product — Intuit’s, not yours personally, but Intuit’s first product — was Quicken , founded way back in 1983. The company started QuickBooks in 1992, which underpins your largest business today, of which I am a longtime customer. Was Intuit one of the first examples of productivity software companies realizing there’s a lot more money selling to businesses than selling to consumers? SG: First of all, none of us would be here but for Scott Cook , our founder, that was watching his wife, Signe, try to balance the checkbook. I’m old enough, I remember I was taught how to balance the checkbook, I remember doing it way back in the day. SG: We still have that table here, right outside of this building that I’m in, that signifies why Intuit was born. But to answer your question, it was first really the company was invented based on, there’s a better way just to manage your budget, your checkbook, and your financials, which gave birth to Quicken. But really the biggest next “aha” was that businesses were trying to use Quicken to actually manage their business and that’s really the “aha” that Scott Cook and the team had at the time, which is, “Wait a minute, rather than making Quicken better, there is this thing that we can actually invent that helps businesses, manage and be organized and manage their books”. That’s what gave birth to QuickBooks and the QuickBooks franchise, which over time became something incredibly special. Right. Your customers were misusing the product and sort of pulled the new one out of you. SG: That’s right. And Quicken, by the way, ended up only being like a $100 million business, but the brand was so much bigger than $100 million, but it really gave birth to QuickBooks. And then over time — this is a company, by the way, it’s made up of acquisitions. Many don’t know the TurboTax of today was an acquisition of Chipsoft . I have a question about that. On this point to the QuickBooks transition — well, I mean, QuickBooks Online launched in 2000. Again, very, very early to serve something online. The actual transition of your business to the cloud took a lot longer. I’m just curious — you joined, in retrospect, it was the beginning of that transition, but still four or five years after it was online. What do you remember about that transition? What was the challenge there? Was it technological? Was it consumer education? Was it internal, your business model — going from package software to a SaaS model? What was hard about that? SG: I love your question, because it actually starts with where you started, which is, this is a 40-year-old-plus company, and there aren’t too many that have survived. Because remember, we were a company that was born in the era of desktop, right? Yep, package software. SG: We were shipping CDs. No, because we use the word “package software” today, but no one realized — no, it actually used to be packaged. It was a box you went to the store to buy, with — not a CD — with discs inside of it. SG: Thank you! Yes. By the way, that’s actually why I use the words “we used to ship stuff”, we used to ship disks and CDs because many in today’s environment, when you say that, they’re not sure what you mean by “packaged.” I joined right at the beginning of that. And the challenge — I tell you, I give the company and all the leadership prior to me a lot of credit, because there aren’t too many companies that were born in the era of DOS and had to go to the cloud, to mobile, and then the transition to AI. And the hardest part is both cultural — you’ve got a bunch of talent that is building what ends up on a disk, and then you ship the disk. It’s cultural, it’s technology, all of your code is siloed, all of your code is in a bunch of different cans called disks, none of them talk to each other. Yep, and it has to be finished. There’s no updates. SG: And there’s no updates! That’s right. And so it’s cultural, it’s technological, it’s talent, and then there is the dilemma of, “Wait a minute, so you want me to, in TurboTax, build a cloud version, but we’re going to get disrupted, we’re going to disrupt our own desktop business that’s a great business and it’s highly profitable?, so then there is the Innovator’s Dilemma . SG: If you make this shift, how do you make it? So cultural, technological, talent, and then there’s the disruption of your revenue stream. Those are all massive challenges — which, by the way, that’s why we were late to the cloud, because we still have, I think, I’m going to go off of memory, several billion dollars of business that’s desktop. Now, we’re not shipping CDs and disks anymore, it’s sort of still in the cloud. But there are a lot of customers that love the desktop versions, and that’s the biggest challenge, the last one is the customer doesn’t want to change. Yep. Yeah. You mentioned TurboTax earlier, an acquisition, you’ve done a lot of acquisitions over time. I can’t remember — did you acquire TurboTax? I guess it was before you eventually sold Quicken. SG: That’s right, long before I joined. Right, eventually Quicken you sold off ages ago , TurboTax is your consumer play. To my question before — about generally it’s easier to sell productivity software to businesses than to consumers — should there be an asterisk that the way to sell to consumers is if you have the monopoly of violence on your side? Pay your taxes or else! SG: Compliance businesses are great, and that’s really what TurboTax is. That’s the ultimate compliance business. SG: It’s the ultimate compliance business, because it’s all based on the system of taxes in the U.S. and Canada, and you have to do your taxes or you pay a penalty. Now you have to keep inventing, and there’s a lot of competitors in this space, but there’s nothing like compliance businesses, they’re great businesses. Why shouldn’t the government just do the taxes for you? Especially for W-2 workers that are very basic. SG: You have to change the whole system. The government has tried. Right. Intuit has been consistently opposed to it, I think, for understandable reasons. SG: Well, we have been, because, by the way, it’s not free. When the government creates software, you’re paying for it as a taxpayer. Plus, a lot of these W-2 workers, they already have free available to them, whether it’s through us or H&R Block or many other tax prep companies. Unless we change the entire tax system, at the end of the day, free is already available to almost all Americans. By the way, including yourself — if you really want to go do your taxes for free, you could, it’s available to you today. Here’s the question about that — who is the constituency for not changing? Because you guys get cast as the bad guys, “The reason why this isn’t easy is because Intuit lobbies, blah, blah, blah”, which either one, you have the most effective lobbying operation in the history, I mean, you do lobby, I’m not going to deny that’s a fact — but at the end of the day, a lot of people complain about taxes every year and yet it’s still this way. So what are the constituencies that are standing shoulder-to-shoulder with you, as it were, in the system being as it is? SG: There’s two things we’re huge proponents of and, by the way, have been — in my 20 years in the company — when I joined, and wasn’t even running the tax business, these two things were true, and they’re still true today. One, we’re always advocating for simplifying the tax system, because the tax system is way too complicated and the more you simplify, the better it is for the consumer and the business. The other thing that we’ve advocated for is the government shouldn’t invest to build software for taxes, because it already exists and for the majority of Americans, if not all, free already exists. The government spending taxpayers’ money to create software that already exists doesn’t make any sense so those are the two big things that we have advocated for. And the reality is, every year, in some way, shape, or form, with additives of legislation, we unintentionally make the tax system a little bit more complicated. Right. That’s the constituent answer, isn’t it? Everyone is a constituency for their pet part of the tax code, and so it just never changes. SG: That’s right, that’s exactly right. From the consumer perspective, where does Credit Karma fit in this? Which, also by the way, has its own tax product. Is this just a realization, “TurboTax is a very high-margin business”, but at the end of the day, what’s the link? Are you cannibalizing yourself? To what end? SG: Let me maybe just step back and give you the strategic context very, very briefly. So I’ve run all parts of the company before I stepped into this role almost eight years ago in January. And when we declared our strategy, which was, in essence, an AI-driven expert platform with three big bets — which I can briefly get into in a moment — there was a couple of big from-tos. One, I wanted to shift the company from just being a tax and accounting platform to a company that was a platform company that helped businesses from lead to cash and helped consumers from credit building to wealth building, because I felt that, over time, one, just being tax and accounting was too small of an addressable market. And two, every business that I ran — both tax and our business group — the biggest thing I would hear from customers, our TurboTax customers would be, “Why can’t you help me grow my refund?”, “Why can’t you help me, with all the data that you have, connect me to financial products that are right for me?”, “How come you can’t give me immediate access to my refund?”, I would hear a lot of that, and nothing about, “Make your tax product better”. And when I went to the business group, all I would hear is, “I don’t really care about books and accounting, I have to do it”, and my accountant tells me, “I have to do it”, but, what about getting customers? What about managing my cash? What about helping me with whether or not I should buy inventory? So that’s the learning that I had that informed, we got to shift from just tax and accounting to an end-to-end platform company. We invested a lot in building out the platform, but I felt like there were a couple of acquisitions we needed to make and so now, to answer your question around Credit Karma — Credit Karma has like 45 million monthly active users that engage more than five times a month — taxes, once a year. So what I wanted to do is buy the platform and then integrate them to have one consumer platform where you can manage your money, do your taxes, and get access to financial products that are personalized based on your data that are right for you. That was the reason behind Credit Karma, to really create a consumer platform because the hope was, and we’re executing against that, that the more I can engage you throughout the year, the more you’re also compelled, based on everything that I know about you, to get you the biggest refund and for you to do your taxes with us and that was the reason behind the Credit Karma acquisition. Credit Karma’s ace in the hole is, it’s credit, right? People want to know what their credit score is, monitor their credit. Has that always been its biggest benefit, is customer acquisition ? SG: Yeah, that’s the biggest job that it solved, is, “What’s your credit score?”, but then really, when I bought Credit Karma, it was a data and AI platform. We have over 60,000 data points per consumer and based on all the data points, I can connect you — when you need a credit card, to a credit card that’s specifically right for you, versus just sell you a credit card. I’m agnostic, same thing with personal loans, insurance. So now it’s much more than credit score, it’s actually how we connect you to financial products that are right for you, that are personalized, how we help you with getting early access to your refund. It’s credit cards, personal loans, insurance, etc, so it’s now truly — we pretty much do everything for you, except we don’t help you trade stocks. What happens when people just start asking AI for this? Is there an aspect where you finally got to the right consumer business model — it needs to be free, you can get all these affiliate fees by connecting those different services — and then as soon as you finally get that cracked, people are like, “I’ll just ask ChatGPT”. SG: That’s right, this is where we started the conversation — where curiosity and always diagnosing matters so much, so we don’t fall in love with what we’re doing today. Let me answer your question with a perspective and a point of view about the very near future that, listen, may or may not change, but I think it’s important to start there before I answer your question. I believe that we will live in a world where, in some way, shape, or form, agents are doing a lot of the work with you and for you, with your approval and it will make life a lot easier for you. And so whether it’s booking your travel, whether it’s what is the right credit card for you, where you should do your taxes — I believe in a world where agents will do a lot of that work for you and that’s really why we have set out to build a platform where we want to be the financial intelligence layer for consumers, businesses, and accountants. What that means is I want to automate as much of the work for you, and give you intelligence, and carry out the action for you. Because if you think about what we do, we move people’s money, we help them with payroll, we help them with books, we help them with taxes and in the case of our consumer platform, it’s money, taxes, and financial products. That’s why we’ve integrated into a bunch of them — Muse , ChatGPT , Anthropic — because you can ask about, “What credit cards are right for me?”, but ultimately, when you go act on which one is the best one for me, that’s where AI agents, as we do our job right, will call on Credit Karma, will call on TurboTax, to not just give you information. But that’s a tougher spot to be, right? As opposed to most people starting with Credit Karma — where you’re actually the front door, you’re owning the customer relationship — now you’re downstream, you’ve been disintermediated. By the way, I think you’ve had executives say that channel maybe hasn’t been performing as well as you would like, is this a more aspirational goal than a reality? SG: It’s the reality we’re executing. First of all, out of the couple of acquisitions that I’ve done, Credit Karma has really worked out well. Right. I have questions about another one that is also close to me. But we can continue. SG: I am vocal about what works and what doesn’t work, so we can talk about it. But I start there because the whole essence of Credit Karma is really — we’ve executed on the platform strategy, which is create one consumer platform and really own the customer relationship and engagement. That’s the question — you build up this whole platform, and then the whole key component, the acquisition part, what happened? SG: But if you think about the brand that we have, and if you think about the capabilities that we have, we actually have better-intent customers that engage with us now through the LLMs than we did before. Right. So you get fewer customers maybe, but better customers. SG: Better quality and, by the way, not only do they still come to Credit Karma — because Credit Karma is not search-driven, it’s authenticated, it’s an app where we engage the customer. We help you with, “Hey, here’s what’s changing your credit score, here’s a card that’s right for you based on your situation”, so we’re proactively engaging the customer. And if a new customer also wants to ask, “Hey, what’s the best credit card for me”, and this is some of my information, one of the things that we’re getting LLMs to do, first and foremost, is, hey, connect to Credit Karma. Is this the new SEO? Like you need to be the service that the LLM recommends? SG: Yeah, and I think it will be even better. The reality is people now do search in LLMs versus just in Google, but I think one of the things that we’re doing is we’ve built out our experiences and continue to build out our experiences. And this is why, by the way, the OpenAI’s and the Anthropic’s come to us and we have a deep partnership — because we’re executing financial decisions, it’s not just information, it’s people’s money, it’s people’s taxes, and getting it right matters. And so for us, using the word “headless” — being within these LLMs where we get called on as the financial intelligence platform to do the work — is ultimately the way we’re building out our experiences and we think over time, it actually builds out the top of our funnel it actually expands the TAM that we have. Now, that’s yet to be proven over time, but that’s the way we built out our experiences. Presented by I spend a lot of time trying to figure out what is happening to businesses on the internet. What I often find I’m missing is a view across the economy itself. With more than 1.7% of global GDP running on Stripe, working with them means I can bring some of what they’re seeing to Stratechery. They are, in a sense, a barometer of the economy. Take the “SaaSpocalypse”. Earlier this year, nearly a trillion dollars in enterprise software value disappeared amid fears of AI eating its lunch. Stock prices only tell us what investors think will happen, and not necessarily what is happening. In this case, Stripe recently built a SaaS Index using payments data from 72,000 non-AI SaaS businesses. Looking at their actual performance, we can see that while SaaS stocks were selling off, revenue growth was actually accelerating. Year-over-year growth is now over 30%, with some of the fastest growth coming from the youngest SaaS companies. I suspect there are a lot more interesting things hiding in Stripe’s data, and I’m excited about having an excuse to go look for them. We’re going to circle back to a few of those points, but I want to get on the accountant angle. As I mentioned, I’m a longtime QuickBooks customer, the most obvious reason is that is what my accountant wanted me to use. You have a referral program, or you have had one, for accountants. How many of your customers are basically locked in via this channel? I’ve just never really considered anything else, because at the end of the day, I don’t really want to deal with it, and that’s what my accountant wants, is that just the reality for a lot of businesses? SG: By the way, I love where you started the question, because if I could — one minute on what we just rolled out at our Intuit Connect , which is a massive conference for just accountants. And then I’ll answer your question, if I may. Yep, I think it’s very interesting, I was leading to it, so please give me the pitch that you gave just a couple days ago. SG: For sure and we just rolled this out at Intuit Connect with our top accountants there. So, in essence, what we’ve been investing in is a unified financial intelligence platform that serves both sides of the network. One side of the network is accountants, the other side of the network is businesses, and the key is that it’s one unified platform. What does that mean? In shorthand, all the data, all the data models, data ingestion models, all the AI models are all one platform. But the way it shows up for an accountant suite is that the accountant suite helps the accountant manage their firm, manage their work, manage their clients, all in one place and it’s agnostic. If you have QuickBooks customers, other general ledger customers, you can plug it into Intuit Accountant Suite . That’s one side of the network. That’s a pretty significant change, isn’t it, that you’re going to support other ledgers? SG: Significant change, now we’re treating the accountant as a customer, not just as a partner, as a channel. Because in the era of AI, we — and I — had to change our approach to how we innovate for accountants. The other is the business, where not only do we serve the startups and the mid-sized businesses, which is with QuickBooks, but we now have Intuit Enterprise Suite , which is a mid-market suite that helps businesses of several hundred million in size. It’s an AI-native ERP solution that helps a mid-market construction company, wealth management company, architect company, whatever it may be, manage their business. And what we just rolled out at Intuit Connect — I’ll call out three big things. One is Intuit Intelligence , which is, in essence, think Claude or ChatGPT. You can just engage with a chat box if you wish, and you can ask it, if you’re an accountant, you can ask it, “Show me all of my customers and how they compare across profitability and margins for all of my construction businesses, and tell me which ones have their cost out of whack, and how does it compare to their peers”. That’s an example, an illustrative example of our engine doing all the work, but we’re automating the work so we can give you intelligence, which saves accountants. Right now, it’s shifting 30% of their work to advisory versus manual work, because we’re automating a lot of the work. That same capability is available to businesses, where they can just, rather than doing the work across the workflows, automate creating invoices, automate invoice reminders to get paid so a lot of our work around Intuit Intelligence has been around automation and for providing intelligence and insights. The second is we rolled out an enterprise-ready, industry-specific ERP for construction, manufacturing, not-for-profit, which is very disruptive for businesses that outgrow QuickBooks — but now they don’t have to outgrow us, because they’re on Enterprise Suite. Where did they use to go when they outgrew QuickBooks? SG: Typically, they would be either our highest-paying customers and the most pissed off, because they’d outgrow QuickBooks, but they didn’t want to go to the next solution. Right. What would they go to? Like Oracle, or what sort of level? SG: They would go to a NetSuite , as one illustrative example. And for most of these businesses NetSuite is just overkill. And that’s where Intuit Enterprise Suite now really serves an incredibly important sweet spot. And then the last thing we talked about is what I led with, which is Intuit Accountant Suite — now a platform where you can manage your firm, your work, your clients, all in one place and back to your original question of, “I’m using QuickBooks because of my accountant”, well, 65% plus of our customers are “attached” to an accountant, and based on what we’re rolling out, we want that to be 100%, because we see in our numbers the retention of a customer is much higher when they’re using an accountant, because accountants drive success and power their prosperity. Do accountants need you, or do you need accountants? And has that changed? SG: Both, both. I spend 40% of my time with firms — small, medium to large-size firms. And it’s a two-way relationship. And by firms, you mean accounting firms or business firms? SG: Accounting firms. They need us, they need someone — I don’t want to be overconfident — they need someone to help them reinvent themselves in the era of AI. That’s us, that’s what we just rolled out at Intuit Connect, because all of them, if they’re PE-backed, they’re getting a lot of pressure, if they’re not PE-backed, they’re having to compete with firms that are PE-backed. So automation, intelligence, advisory services matters. That’s what we just rolled out. And I need them because it creates a network effect and that really, in the era of AI, is a great place to be when you have a network effect. That’s an actual moat. So is it fair to say your pitch to accountants is basically, “Look, we’re all under the gun here — we’re better off banding together and figuring this out”? SG: Well, if you were to listen to my 25-minute keynote , where I revealed a lot of this product innovation, and you synthesized it and put it in Claude, it would probably tell you exactly what you just said — which is, “You need me, I need you, here’s what the innovation is we’ve done for you and here’s why it’s important”. But does that lead to innovation that actually — is just the reality someone like me is trapped, I’m going to go on with whatever happens and they’re going to figure it out? Or what is the actual threat here, that people just start using AI, the AI companies offer their own services? What are you banding together against? SG: It’s a great question. First of all, if you start with the jobs to be done, and jobs to be solved by businesses — they’re trying to get customers, they’re trying to grow with their customers, they’re trying to understand where their profitability is, they’re trying to get paid, they’re trying to manage their employees. And they’ve got to make sure their accounting and taxes are done right, because clean books. Right. Monopoly on violence — always good to have in your business model. SG: Yes, that’s exactly right. If you start with the jobs to be done, and what’s the role of an accountant? Oh good, that’s one of my questions — what is an accountant’s job? SG: The accountant’s job is to ensure that, one, advisory services — how should you grow your construction company? How should you grow your nonprofit? — making sure their books are clean. Wait, would you have ever said that was an accountant’s job five years ago? SG: No, it’s more important today. And why wouldn’t I have said that? Let’s talk about that. Because I used to run the accounting business at Intuit years ago, this is our pro-tax business, the reality is everything was manual, and all of the time, accountants were spending manually entering data to make sure your books are done right. Now, one of the things we rolled out at Intuit Connect is our agentic books close, where you can upload now your standard operating procedures and processes by firm, because every firm does books differently, and we automate a lot of that. That allows them to spend time on real value-added, “Hey, Sasan, here’s how you should think about growing your business”, “Here’s how many employees you should think about hiring”, “Here’s what inventory you can buy”. Is that a little bit like the mafia helping you? “We’re going to help you close your books”, your books are going to get closed, whether you want them to or not. SG: The reality is, businesses, we see this in our data, and remember, we have 100 million customers, 10 million of them are businesses. Businesses that are connected to accountants, our retention rates and profitability are generally higher. And so this is like real value that accountants provide, and back to your question of what’s different, I think what we’re now doing is making sure that they can run their firm far more effectively by automating and delivering intelligence, so they don’t have to do manual work, so that they can actually do a better job serving the business. And on the other side, we have a platform that the business uses to grow and run their business and it just creates this network effect in ways that I think is beyond, “I need to do manual work and I need to work in the workflow”, to an era of intelligence and insights and how can we grow faster with expected outcomes, where efficiency and profitability must improve because of what’s possible with AI. Are there more or fewer accountants in five years? SG: Fewer, many fewer. And are those accountants actually different people than the accountants today? SG: Well, I think by design, two things in life are true. You die, and you have to do taxes. Right. Is an accountant actually just selling a signature? Is that what they’re actually providing in the future? SG: No, they do a lot more than that, there’s only so much technology can do. Even tomorrow and the day after, as AI advances— SG: First of all, judgment. Closing books — that is really hard. Yeah. By the way, to my listeners, I love accounting. So you’re speaking to the choir here, but you still have to convince me. SG: I didn’t know that, but it’s good that at least this lands with someone that knows accounting. Categorization of all the financial data, making sure that you reconcile everything from a balance sheet to a GL [general ledger], making sure that all the revenues are recognized correctly and in the right categories. There’s a lot we’re doing to automate, but at the end, the judgment of, “Are the books right?”, “Are they clean?”, and then what choices and decisions can you make — that judgment and that intelligence will always, always be important. But I think if you think about a continuum where before it was 90% manual work and 10% judgment and intelligence to eventually, I don’t know when, a year from now, two years from now, it’ll be 90% intelligence and judgment and 10% manual work. I think about it just on a personal level. I had a longtime accountant, who unfortunately retired a couple years ago, and she loved me, she dealt with much larger companies and things. But at the time I was living abroad, I had this very high-cash-flow business. She’s like, “This is so interesting, you present so many weird edge cases and challenges that I’m not used to”, and I almost feel bad for her, because in a world of AI, she would crush it, because she’s exactly the accountant you’re talking about. The question I have, though, is this goes back to you being a generalist. I see someone like you — AI is incredible. I’d be curious to know what, if any, personal AI projects you might be working on because if you’re anything like me, it’s like, this is just so fun — you can do basically anything. That’s not your typical accountant, an accountant is like, there’s the beauty in the numbers, everything has to balance, credits versus debits, and also just a lot of drudgery, actually filling in the forms and making the files correctly, very conscientious, very careful, very high values — all of which seem pretty threatened. That’s why I’m wondering, not just how many accountants will there be, but what does an accountant look like? SG: First of all, there’ll be a lot fewer accountants because of what’s happening structurally, which is PE firms are gobbling them up . Was that happening before AI, or is that a post-AI phenomenon? SG: It was happening beforehand, because there’s just a lot of inefficiency, and PE firms look at that and say, “There’s a lot we can do”, and it’s just accelerating now with what’s possible with AI. I think that’s one reason. I think the other is I believe there will be accountants that are all-in on AI and accountants that are not and those that are not all-in on AI are the ones that are going to be disrupted and won’t be around two to three years from now. So that’s why, in general, I feel like there’s going to be fewer and fewer accountants. But here’s what I would tell you — and listen, you’re an accountant, I spend 40% of my time with them. I’m not an accountant, I just appreciate it. SG: The biggest thing I hear from them is they don’t really like doing debits and credits, they don’t like doing the manual work, and it’s the biggest cultural change they are focused on driving. And a big part of that, that we’re helping them with, is either training their folks, and/or for them to upgrade. I do think there’s going to be a massive change and upgrade of talent, either those that love the manual work are going to realize, “I have to love automation”, not doing manual work, or they’re just going to go get somebody else that will love that work — particularly these folks that are coming right out of college and want to be accountants and want to be CPAs, they’re much more tech-savvy, and they will want to drive automation. I think that’s the change you’re going to ultimately see, and we’re seeing it right now, because the top partners are driving it. If you look at your recent financial results, you’ve been growing revenue amongst your core customers, but barely growing total customers. Now you’re talking about going up-market, like into the accounting workstream, for example. You mentioned with businesses, your recent focus on ERP services. Again, going up-market, between that gap between NetSuite and yourself. All that makes sense. At the same time, you’ve brought up disruption, jobs to be done, you’re a student of this theory. A company going up-market, increasing average revenue per user, even as there’s a technological shift at the bottom that is gobbling up the business there — that sounds like a company that’s being disrupted ? SG: I love your question, I’m glad you’re asking it now versus four years ago. So we declared, in essence, these three bets that I’m talking about eight years ago. And what are those bets? If I were to simplify them, one is to disrupt assisted tax — out of the total tax TAM of $40 billion, $35 billion is assisted taxes — when you go have somebody else do your taxes for you, a human doing it. And it’s the signature that matters. Is the goal there that customers no longer need to hire accountants? SG: I’ll come back to that. So that’s one space. The second big space was shift from tax and accounting only to money, our money benefits and money portfolio being the core of our platform. What does that mean? It means bill pay, it means payments, it means instant deposit. And then the third is go to mid-market. When I declared this nearly seven-and-a-half, eight years ago, investors were very skeptical of me, because what they said was, “These are markets you don’t play in, you could screw up your margins, I’m very skeptical”. If you now fast-forward to where we are — to answer your question — it’s now 30% of the company, so it’s like $7 billion-plus, growing at 30%, we’ve already proven these. So is the answer to the old business is, we’re just going to outrun it with the new business? SG: That’s right. So AI is a huge tailwind for us, because we’ve been investing in it in these areas. The core business is — if you go back to Investor Day and what I just shared, I said, hey, we’re growing 30% of the company, my core business has slowed. I need to increase my market share, so I’m changing my lineup. Right, because isn’t the problem that your core business — maybe it’s not very sexy — but that’s the foundation of your new businesses? SG: That’s exactly right. And so that’s why we, in essence, what we’re doing is reinventing our product, but also being disruptive on price to take market share, while at the same time scaling my big bets because I want to make sure five years from now, we’re a healthy and growing company. Because here’s what I believe will happen with AI in our industry and in the spaces that I play in, AI is a tailwind for me with these big bets — disrupting mid-market, disrupting assisted [tax] — Just because you can develop software more quickly, or what? SG: My biggest differentiation in assisted tax is I have scaled the one thing that matters most, which is the human signature, virtually, at scale and I have a disruptive price. So I can do anybody’s taxes for them at a disruptive price with an amazing virtual experience, where you never have to leave your place of work or home and it’s an amazing experience. The differentiation is I have scaled the human signature because of AI. So that’s an example of — and my competitors are a lot of mom-and-pop shops and so scaling that for the next 10 years. You were saying “the signature”, are you talking about actual accountant signatures, or are you talking about, like, the TurboTax product where you’re actually— SG: We have about 18,000 experts that are CPAs, accountants, on our platform and those are the ones that are virtually doing people’s taxes for them. Got it, got it. So that’s a separate pool than your accountant business, I was conflating them in my head. SG: That’s right. I mean, the accountants that we’ve been talking about for the last 45 minutes are accountants that, they don’t even want to mess with somebody’s tax return unless it’s greater than $6,000, we don’t compete with them, we’re helping them grow their business. These are much more the normal Americans and the taxes that they pay. The reason I think we got on this topic is, for me, that’s a huge tailwind, AI is a tailwind to disrupt those industries. But I think for the lower end of the market, AI can help you reinvent experiences but if you’re not priced right, you’re going to get disrupted and that’s really what I’ve done. In the low end of the market, I’m reinventing experiences, but I’m adjusting my price-to-value ratio, so I can win these customers when they first come into the market, and then I can grow with them over time. I do have to ask you, because I hinted at it before — you acquired Mailchimp for $12 billion in 2021, a company that I originally worked with and left in part because I feel they send email people don’t want, and I send email people do want. The idea was extending QuickBooks from accounting into customer acquisition, that platform stopped growing, you’re segmenting it off , is that an acquisition that didn’t work out? SG: First of all, legendary brand, legendary product, legendary employees — full stop. I’ll come back to that in a moment. What we want to do hasn’t changed, the customer problem of helping customers grow has not changed, and so now we’ve built that AI natively within QuickBooks. Right, but you said before you’re building a money platform. Is the issue that Mailchimp doesn’t have anything to do with money, at least directly? It’s a secondary input. SG: Growing customers has everything to do with money, because eventually, they have to pay. So when I say “money”, it is, in fact, owning the right to the workflows that lead to money — which is why solving the problem of getting customers, which is what Mailchimp does, is something we’ve built out AI-natively within QuickBooks. But to your point, we have carved out — I don’t think we’ve executed well on Mailchimp, so we’ve carved it out separately to really focus on getting the business right and making sure it’s transparent how we’re performing externally and as I’ve said to investors and our employees, all options are on the table to make sure that it has the right future. All right, I want to get back to the more interesting question, because we’re almost at time here. To go back, to put this together historically — you went through one big business model change, from package software to subscriptions. What does the business model look like in 10 years? People talk about usage-based, outcome-based pricing — you’re not necessarily seat-based , so that’s a big advantage for you, you also have the affiliate marketing angle on your consumer side. What’s the core way that Intuit makes money in the long run, and is that going to be fundamentally different? SG: Three things I will say. One, first of all, you’re absolutely right — we’re not seat-based, so let’s get that foundation confirmed by me, that we’re not seat-based. I’ll say three things. The way we’re set up today is, we’re beyond user-paid, so the entire Credit Karma platform — everything for the user is free, but we get paid based on all of our partners on our platform, so that’s one business model. The other business model is subscription-based, which is our business platform is subscription-based — about 80%, 90% of it. The third is we’re transaction-based. Right. You file your taxes, you pay a certain amount of money. SG: That’s right. Or you invoice, and we get paid, a customer gets paid, that’s transactional. So those are the three models in which we operate today. If I were to answer your question five years from now, three years from now, not just 10 years from now, I think what will get added to that is consumption-based. SG: For instance, a lot of what we just rolled out at Intuit Connect is, if an accountant uses certain agentic capabilities, like creating specific tailored experiences for a construction company, and that construction company pays the accountant more for those services, which they will — we have the opportunity to monetize that consumption. Is that monetization — is that usage-based, or do you envision outcome-based pricing ? I mean, you are dealing with money. SG: No, no, it’ll be usage-based. Is there room for an outcome-based pricing model in any of this? SG: You know, there could be — I don’t want to fixate on “yes or no”, we test a lot of this with customers. What I would tell you — customers today, doesn’t mean tomorrow won’t change — generally, customers aren’t that interested in outcome-based pricing. They’re generally not interested in token-based pricing, because then they can’t control what they’re going to end up paying, so they still want an element of fixation of what I’m going to pay. Predictability, yeah. SG: That’s right. I think three years from now, the value of what they’re willing to pay for in certain markets will go up. In certain markets, it could go down. But I believe in three years, we’ll still have beyond user-paid, we’ll still have transactional, we’ll still have subscription, and I think there’s going to be a smaller element — and growing — that will be consumption-based. Do you feel like you’re on offense or defense? SG: Every day, we’re focused on playing offense and every day, I open my email to see what was launched yesterday, to figure out where we need to play defense. Very good. Sasan Goodarzi, thanks for coming on to Stratechery. SG: All right. Thank you for having me. This Daily Update Interview is also available as a podcast. To receive it in your podcast player, visit Stratechery . The Daily Update is intended for a single recipient, but occasional forwarding is totally fine! If you would like to order multiple subscriptions for your team with a group discount (minimum 5), please contact me directly. Thanks for being a supporter, and have a great day!
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