Why Xero? Xero Competition for Quicken and QuickBooks

Filed in Intuit QuickBooks, Xero by on April 23, 2012

The best answer for Why Xero does not relate to Xero’s obvious technical superiority or because it is the fastest and easiest alternative. The best answer for Why Xero is that we need more Xero competition for Quicken and QuickBooks. These Intuit programs now have about a 95% market share in the small home accounting and small business accounting program area. You simply cannot get effective competition and innovation when products are so dominant. In fact, as shown below, even when dominant companies can make better products quickly, easily and cheaply, it is often not in their interest do so.


I was a prominent early adopter of Quicken and QuickBooks, so Intuit often sought my advice. When Intuit’s former CEO hired Brad Smith, the current CEO, he told Brad to contact me before reporting to work. Brad personally told me this. My web page, Our QuickBooks Friends, has Brad’s initial email. It includes:

I recently joined Intuit, working with Rich Walker and other key impact players across Intuit, to strengthen our advocacy and commitment to the accounting profession and its many professionals. I am reaching out to you by way of this e-mail in hopes that we can schedule a 30-minute call to make introductions and briefly discuss ideas and key areas of focus. I understand that this is the busiest time of year, but have also been told by many Intuit executives such as Rich, Tom Allanson and others that you have been quite open to taking the time to assist Intuit, are a tremendous voice of reason and are one of our most impactful and innovative Professional Advisors.

As a result, Intuit had a three-day top management meeting to discuss my How Should Intuit Change web page. This produced an Accountant Inner Circle website. Both before and after it, I had many years of close contact with top Intuit execs. Brad and I occasionally exchanged as many as six emails a day, even on Sunday. Many emails dealt my wanting tech-support backed user-to-user forums, to avoid excessive phone support delays. Brad implemented this for TurboTax, after an unknown Intuit employee added the idea of linking TurboTax in-program help to the forums. Intuit soon found they produced better answers 43% of the time and faster answers almost 100% of the time, while cutting costs. Once Brad extended this to QuickBooks and Quicken, he was able to cut one-seventh of total Intuit staff.

When Brad heard he was going to be Intuit CEO, two years after I predicted, he called me for a long talk. Unfortunately, he then thought it would be best if I had a point of contact person, for my many contacts with top Intuit execs. I was the only one to get such a person, but it was a terrible idea. It ended my ability to interact with many top Intuit execs, limited my innovative contributions and soon made me stop getting help for many users that were unhappy with the help they got from normal QuickBooks channels. 

Competition and Innovation:

The key to my long-term close Intuit relationship was its long-term almost maniacal search for user input for innovation. Unfortunately, Intuit’s size, and its need for quality and legal compliance, now badly slows it down. Xero is obviously now technically superior, especially in its automatic daily downloads of all bank, credit card and financial institution data. Simple, yet powerful, Xero rules also automatically classify most of these entries, saving incredible amounts of user time, while increasing accuracy.

Intuit can add this quickly, easily and inexpensively, so why has it not done so? It has been 34 months since it paid $170 million for Mint, a specialist in such downloads. Mint only lacks the Xero rules, which any good programmer can implement quickly. However, it also has been more than eight years since the top Intuit exec in charge of QuickBooks downloads called me. I then suggested that he give us an option to automate QuickBooks downloads, on demand or at any scheduled time. He agreed that this would be much better, so why has Intuit not done this in eight years?

Why did not this exec also follow up on my related idea to further simplify downloads? We now must enter complete data for each bank, credit card and financial institution to get downloads. I wanted us to start with lists from credit reports. This might not give us everything, but it can give us a list of likely financial institutions quickly. Simply checking some or all boxes, on the related web list, would speed data entry, while increasing accuracy and completeness. It also might save us time if the program confirmed the accuracy of login information in the background, though that might increase some security concerns.

Credit report-based entries also, optionally, can give us regular free credit reports. They can come with instructions for increasing credit ratings, disputing mistakes and fraud prevention. Options also can include already mail-merged letters or emails to request changes or add vendors. They can even include mail-merged letters or emails to stop debt collectors, with appropriate copies to credit reporting agencies and/or the Federal Trade Commission. The exec also said that this would be much better, so why has Intuit not done this in eight years?

The reason Intuit has not done this is because we need more Xero competition for Quicken and QuickBooks. It would only cost a little money to make these changes to Quicken and QuickBooks. However, these programs already have about a 95% market share. If the change did not increase market share, Intuit would waste some development and advertising money. However, it would have a big monopoly problem if the change got many more users to switch to Quicken and QuickBooks. Intuit recently faced a monopoly attack over agreements with Google, Intel, Apple and others, to not solicit staff from each other (Employees Suing Intuit, Google for Antitrust, and Winning). It accepted a Justice Department decree on this and had the civil case judge say, “They still have an antitrust claim that’s going forward, so I don’t want to see any obstruction on discovery.” This makes Intuit actively try to avaoid monopoly problems.

Most important, this relates to Intuit stockpiling innovations based on wanting competitive responses. Intuit released many Quicken and QuickBooks innovations quickly when Microsoft mounted competitive attacks on these programs. My personal observations, the Inside Intuit book and a Forbes article all documented this, as part of planned Intuit responses to such attacks. The Forbes article even told of Brad coaching an Intuit team, in a game against a team of Intuit employees acting as Microsoft employees, to get Intuit execs ready for the expected deadly-serious contest. 

Accordingly, the best way for you to get better accounting programs is to get more Xero competition for Quicken and QuickBooks. Please contact us to join in this effort.


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