Brad Smith (CEO, Intuit) at Startup Lessons Learned 2011
On May 23 I hosted a simulcast of the ‘Startup Lessons Learned’ conference on Microsoft campus.
Brad Smith of Intuit was the only real representative from a large company to speak at this year’s conference, so his interview was of particular interest to me working at Microsoft. I was really impressed. He was more transparent and straightforward than anything I’ve heard from management at Microsoft, speaking candidly about their company strategy, mistakes they’ve made and even executive compensation.
Some notes..
Culture of experimentation and entrepreneurship
Early on in the interview Brad said “the worst thing that can happen to a big company is to become big”. I rolled my eyes a bit, thinking that this would be a typical executive blowing a lot of hot air. When a few minutes later he said “we’re a company of thousands of entrepreneurs” I was ready to walk out. However, over the next few minutes, he convinced me that they really do have a concrete approach to driving innovation.
Intuit management divides the business into three horizons:
-
Existing businesses
- Metrics: growing category, share, net promoter, revenue
- 60% of operating expenses
- eg. Windows / Office at Microsoft
-
Adolescent businesses
- Metrics: growth, increasing efficiency (will lead to profitability)
- 30% of operating expenses
- eg. mobile / online services at Microsoft
-
Ideas
- Metrics: “love metrics” – how do people feel about these products
- 10% of operating expenses, projects funded quarterly if they show success
- eg. MSR, Fuse, Office Labs at Microsoft
As this was a startup conference, the conversation largely focused on their “3rd horizon”.
I was surprised to hear that executive bonuses are tied to the number of customers and percent of revenue from products that didn’t exist 3 years ago.
Some practical rules that they apply to these teams at Intuit: * teams have to be small enough to “be fed by two pizzas” (<6 people) * management not allowed to impose more than three rules on an idea team * ideas have to turn into working concepts in less than six weeks * teams report when they have news, not “just because” * corporate isn’t allowed to come help - “innovation is born of constraint”
People
Intuit has had a fairly interesting evolution in that most of its major products were acquisitions (TurboTax, payroll, Mint..). Further, unlike many silicon valley contemporaries they’ve managed to retain a lot of the people they’ve acquired. In the case of Mint, the acquired CEO went on to head up Intuit’s consumer finance business, in charge of both Mint and Quicken.
In addition to buying companies filled with entrepreneurial types, Brad explained that they make a conscious effort to hire for the ability to “innovate and improve” - people that aren’t content with the status quo. From an outsider’s perspective it’s clearly difficult to tell whether this is lip service or something that they genuinely value, but by this point I was willing to give him the benefit of the doubt.
Failures
It was really refreshing to hear the CEO of a large company speak frankly about company missteps. Brad went into some detail about a failed effort to rebuild Quickbooks piece by piece rather than from scratch and Intuit’s failed foray into international markets.
Snap tax
The conversation came back to this example several times. At a company event he asked the audience how Intuit was going to take advantage of smart phones. He got a range of responses including “what the hell do phones have to do with taxes”, but a three person team (that later grew to six) ended up producing an genuinely innovative tax product. SnapTax allows someone to take a picture of their W2 (american tax form) and file their taxes within about 10min. Awesome.
I was really impressed to hear that building SnapTax they really scoped the problem down. The first version only worked in California and only for those with the most basic of tax situations. A lot of big companies, and certainly Microsoft tend to start with big solutions that address the entire market. At Microsoft a business is said to have to be on a path to a billion dollars to be worthwhile. While that scale is pretty boggling, there isn’t anything wrong with that - but I think we make the mistake of creating broad and generic offerings that spend too much time in the oven before getting user feedback.
Watch the full interview here.
