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TMF Interview With Intuit Inc. President and CEO Bill Harris

March 23, 1999

With Brian Graney (TMF Panic)

Based in Mountain View, California, Intuit Inc. (Nasdaq: INTU) is a provider of personal finance software and online services. Its well-known stable of brand names has expanded since its popular Quicken line of personal finance products were first introduced in 1984, and today includes TurboTax tax preparation products and QuickBooks small business accounting products. We talked with President and CEO Bill Harris about personal finance in the Internet age and what areas Intuit is headed into next.

TMF: I think what interests me most about Intuit is your Internet strategy. If you could maybe talk a little bit about the strategy and how your transition toward more of an online kind of business model over the past year is working out.

Harris: First let me say that we are not Internet company. We are a company that does interactive financial tools. Having said that, the Internet is hugely important -- an increasingly important platform for us to do our work. And [it is] one that is driving almost all of the new development efforts that are being undertaken in the company today, with the exception of those efforts that are related to maintaining and enhancing our existing desktop products.

We're in the process of migrating everything that we do on the desktop to the server. That's not instead of, or not to replace the desktop, but in addition to the desktop businesses. The desktop businesses remain healthy, profitable, and growing, but we're seeing most of our Internet-related services growing at substantially higher rates, often 50% or 100% annual growth rates.

TMF: How successful have you been in leveraging your already-installed software user base onto your online services?

Harris: Reasonably successful in a number of respects. Of course, our online services are offered and marketed to all users regardless of whether they are current Intuit desktop product customers or not. But a large number of users of various of our services are also desktop users, oftentimes coming directly from the desktop products. So, for instance, Quicken has integrated embedded links within the desktop product to a host of Internet-based services.

Quick Books is another example. [It] has an embedded linkage to an online payroll service, an Internet-based payroll service. That is tremendously valuable because it uses the data that's already sitting there in the Quick Books' accounting engine to make payroll service a breeze.

TMF: Down the road, do you prefer consumers to think of your brand names, such as Quicken, as more as Internet-related services or as software, like the shrink-wrapped software product that it is now, or as something completely different?

Harris: I'd say something completely different. The Quicken brand and our other brands in our view represent interactive financial functionality that play on many platforms. So, for instance if you go back in time, there was Quicken on DOS and then there was Quicken on Windows. Could it mean one or the other? No, Quicken meant satisfying a set of customer needs using the best and most appropriate technology.

TMF: How do you see Intuit fitting in the online competitive landscape about five years down the road? Do you think there are going to be more or less competitors than there are today?

Harris: I think perhaps about the same, but I will also say that I don't think there is much competition in our space today. And, of course, that depends upon how you define the marketplace. I define our marketplace as being the development of interactive financial tools across a broad range of financial activities for both consumers and small businesses.

And there are certainly no companies that operate as broadly and deeply across such a broad landscape of the financial toolsets that we do. There are certainly companies that compete in narrow slices of what we do. So, for instance, H&R Block is competitive in the tax preparation software market, InsWeb is competitive in online insurance origination, etc. But it's very hard to find a company -- in fact, I don't think there is a company -- that does so much across so many different categories.

And increasingly, one of the things that connectivity and the online provision of these functions can provide is the ability to seamlessly link one financial function with another, one data repository with another. And that, I think, will make it even more important that we be able to provide the full range of financial tools to our customers.

TMF: Do you think it will be a more profitable line of business providing linkages rather than just offering, as you call it, one toolset?

Harris: Yes. We have always seen that customers in their financial lives would like to have the complete picture. They're often stymied because the capabilities or the technologies do exist to make it easy, but that's certainly coming.

TMF: Financial services have been a big early winner on the Internet, thanks to the proliferation of online brokers and such. Are there still some financial services needs out there that you feel are not being fully served yet on the Net?

Harris: Absolutely. In fact, I would put it the other way. I think that we've seen a relatively quick adoption of discount broker online trading activities, but relatively slow adoption so far to Internet-based banking -- bill payment, bill presentment, insurance origination, mortgage origination, payroll, etc. Some of these have just started -- tax preparation online, for instance. This is our fist big year in online tax preparation. And even so, it's still on an order of magnitude smaller than what we continue to do on the desktop. So I think the most and largest opportunities for growth in the online delivery of financial activities are ahead of us.

TMF: You mentioned the electronic bill paying business where you provide the front-end services and Checkfree, your partner, provides the back-end services. Which of these partnerships, especially in financial services, do you see blossoming in the future?

Harris: Well, a whole host of them. I think the definition of connective financial activity assumes and requires an electronic connective partnership of multiple entities. So for instance, when we do tax preparation we are connecting with the IRS and most of the states electronically. And electronic filing volume is just soaring. This year's volume is more than double last year's volume, and last year's volume is more than double the prior year.

Just about everywhere you go in the financial space, whether it's insurance or mortgages or bill payment or presentment or banking or brokerage or online payroll or business services, effectively what the Internet allows us to do is connect the front end and the back end to the benefit of the customer and the provider. That's kind of the essential piece of what makes online financial activity so promising.

TMF: Which companies do you respect, personally, the most in the Internet area, either as partners or as competitors?

Harris: It certainly depends upon what the specific domain is. But there are a whole slew of people who are doing a great job. I would include Amazon, eBay, AOL, Yahoo, Excite, @Home and a whole series of others. I think the marvelous thing about the Internet today is that there are so many excellent companies doing so many revolutionary things simultaneously, but there are a lot of winners.

TMF: What do you think is Intuit's biggest near-term challenge, and how is management confronting that challenge?

Harris: I think the biggest challenge we have is attempting to simultaneously execute on so many opportunities. And that's a challenge both from the point of view of finances -- having the earning power to afford the investment -- and resources -- having the skill, the talent, the people and the management, and the bandwidth to do so much on so many fronts at the same time.

TMF: I'd be interested to know what resources you use personally to manage your own money and keep track of your personal finances.

Harris: Well, I'm sure it comes as no surprise, I use Quicken.com on the Web and Quicken on the desktop.

TMF: That's basically it?

Harris: Yep.

TMF: Do you think users will get to the point where they just have one service that they will continually use for all their finances? Is that the goal of the company?

Harris: No, I think there will always be multiple reasons to use multiple different products and services. But fundamentally, most customers -- or at least the affluent customers that we've worked with -- tell us that they are looking for an ability to deal with many financial institutions and financial service providers, but do so in a way that ultimately allows them to consolidate their data so that they can know where they stand and know what their financial picture looks like. And so for that particular purpose, yes, I think it's likely that consumers will want a single interface and data repository for that consolidation purpose.

TMF: Well, great. I've really learned a lot. I appreciate your sitting down and talking with us today.

Harris: You bet.

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