What is QuickBooks' central role in bookkeeping, how has it won the segment, and what is needed to dislodge it?
Co-founder & CEO at Truewind
I was catching up with the guy I met recently at Intuit, and I was asking him “How'd you guys win? How did QuickBooks win?”
His view internally was they had a very robust product that did all the things that it needed to do. I think that's fair to say. It's not a fantastic design, but it has all the features you need it to have.
They also have this army of boots-on-the-ground salespeople that gets this into the hands of small business owners. I think that's where it started. I think it started off with small business owners and then went to accountants. It's always a little bit harder, in my opinion, selling to accounting firms and legal firms is a little bit more challenging. You get into the hands of the company, and then the bookkeepers will learn to adopt it as well.
One thing that Intuit has done really well in terms of QuickBooks continuing to grow, is they capture the audience with bookkeeping, and that's a small ACV to start, but one of their biggest selling points is their net dollar retention, even despite the fact that so many businesses die, is very, very high, I think it might be over 100%.
Because you started with bookkeeping, and then you're going to go into invoicing, expense management, payroll, hourly, and so on. There's a ton of features that they've built on top of it, and while many in tech startup land like to use the best in class of each category, small businesses don't. They just want to use one.
Bookkeeping is a starting point, and bookkeeping and QuickBooks might provide their banking, then they're going to use it for everything. I think that's how they've done well and won.
In terms of how you might be able to dislodge a QuickBooks, in SMBs, I'm not sure. I haven't thought too much about that because my focus is on venture backed startups specifically. And so as far as VC-backed startups, it's about creating the 10X better user experience. Let QuickBooks sit in the background, our users don't interact with it, they interact with something far more delightful and nicer, which is our interface.