Intuit cut hundreds of jobs and spent at least $20 billion to make a big bet on AI. Today the company is unveiling its new virtual assistant

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When he was running Intuit’s TurboTax and QuickBooks business, Sasan Goodarzi came to a shocking realization: No matter how much the company did to help people do their own taxes or keep their own books, they didn’t want to do those things at all. .

“I realized that building a platform for our customers to work on was not really the future,” he recalls. “The future was, it was done for you.”

The light bulb moment inspired Goodarzi, who became CEO in 2019, to lead the company into a major strategy reset, putting AI at the heart of the business. The overhaul included two major acquisitions totaling $20 billion, laying off hundreds of employees and investing heavily in AI, years before the technology made its blockbuster debut in the public consciousness.

The company has been incorporating elements of AI into its business for years, but its first major stand-alone AI product for consumers, called Intuit Assist, debuts today. It’s embedded in products TurboTax, Credit Karma, QuickBooks and Mailchimp, and the company says it can do everything from predicting a small business’s cash crunch to creating and executing an email marketing campaign. Gudarzi believes the early gamble on AI, combined with massive amounts of data, is a winning strategy to expand the company’s dominance of tax and accounting software for individuals and small businesses. And he has literally bet his entire company on the idea that millions of people will trust an AI service to recommend specific, personalized business decisions.

“At the end of the day, you have to make some decisions,” Gudarzi says. “And the decision I made was, as a team, we were going to bet the company on data and AI.”

Intuit has a long history of changing with the times.

The company launched a personal finance software called Quicken in 1983. Specialized PC software was hot then, but Intuit’s peers from that year (Flexidraw, VisiCalc) are long gone. Microsoft outpaced them all by constantly disrupting itself to meet the advent of Windows, the Internet, mobile devices, and other revolutionary innovations that competitors couldn’t handle.

Today the company is best known for creating TurboTax, the best-selling tax prep software, and QuickBooks, the No. 1 accounting software for small and medium-sized businesses. Since the company went public in 1993, the S&P index has risen 902% and the Nasdaq has risen 1,940%. Intuit stock is up 23,190%. Most Wall Street analysts rate the stock a buy cover. Do not rate or sell it underweight.

Despite Intuit’s history of continuous transformation, when Gudarzi decided in 2019 to put AI at the center of his business model, not all of his top lieutenants agreed. “It was a big debate,” he recalls. “Five years ago, putting AI at the center was difficult. You should have faith.”

A decisive factor in that decision was the company’s incredible wealth of data—something it needed to train AI and enable the company to provide detailed financial recommendations tailored to each customer. “AI is really useless if you don’t have massive data and clean data,” Goodarzi said fortune Three years ago. Speaking recently, he said that when it came to the new strategy, “the decision I made was, we’re going to bet the company on data and AI.”

Intuit already had data on 57 million of its customers, which gave it a significant advantage when it came to financially focused AI. Then in 2020, Goodarzi acquired Credit Karma, a personal money management platform, for $8.1 billion. This led to 110 million customers and their financial data. And in 2021, it bought the marketing platform Mailchimp for $12 billion. This led to another 10 million customers and their data.

“Everybody wants to talk about how good their data is,” says Jackson Eder, a Moffett Nathanson analyst who covers the company. “But Intuit’s dataset, whether on the consumer side or the small-business side — it’s second to none.”

Between these acquisitions and the shift in strategy, Gudarzzi took an unprecedented step in 2020 — laying off 715 employees, the first mass layoffs in the company’s history. Moving AI into the core has been too slow, Gudarzi felt, and Intuit’s ambitious reskilling program can’t move fast enough. It brought in more than 700 new workers to replace those who left, largely with people with AI skills. “We were starting to see momentum in our bets around data and AI,” he says, “but we knew we didn’t have the level of talent needed to accelerate what was possible. We took those dollars and reinvested them in the craft skills we needed.

Goodarzi’s magnificent goal

Intuit says the generative AI-powered assistant introduced today will provide personalized analytics and recommendations for anyone who runs a small business, files their taxes, manages finances or markets products and services.

For example, in addition to warning a small business of a cash crunch, Intuit says it can now create an email marketing campaign — strategy, image, wording, that customers want to target — analyze the results and recommend next steps. The company says it can also offer personalized recommendations to consumers living paycheck to paycheck and facing unexpected expenses, or help an entrepreneur get started, performing everyday tasks like importing data from an entrepreneur’s website and sending payment reminders. to customers.

Intuit has a long AI head start against its rivals, including H&R Block, Cash App, TaxSlayer, Xero, FreshBooks and others. The company hopes its early investment will create a network effect, in which better AI-generated recommendations will attract more customers, bringing in more data, improving the company’s products, thereby attracting more customers.

But the release of OpenAI’s ChatGPT last November raised fears, at least among investors, that the company was under attack. Who would need Intuit’s AI products if one could ask free or low-cost generative AI to do almost anything? Three months later, the fear grew when OpenAI introduced GPT-4 and demonstrated its ability to calculate taxes – calling the system TaxGPT and asking it to answer a hypothetical couple’s tax problem, showing how it arrived at its answer and, as a fool, summing it all up. To write a rhyming poem that gives (“To calculate their taxes, it’s true/A standard deduction we must understand…”).

The fear is unfounded – for now. GPT-4 can read tax codes, but it can’t provide personalized recommendations because it doesn’t have Intuit’s large proprietary dataset. GPT-4 is “more of a friend than a potential threat” to Intuit, Eder says, because Intuit “has the data—that’s what they command.”

Investors seem to like Intuit’s AI-driven strategy so far. The stock has outperformed the S&P and Nasdaq since Goodarzi took the helm. But he feels his controversial call from five years ago has yet to come to fruition. Its goals are broadscale: double the savings rate of customers on Intuit’s platform by 2025 (the US personal savings rate was 3.5% in July) and increase the success rate of small and medium businesses on the platform by 20 percentage points by 2030 (about 50% of new businesses fail in the first five years). ). In the case of the company itself, Intuit expects earnings per share to grow 11% to 12% and earnings per share to grow 11% to 15% in the fiscal year ending July 31, 2024.

Goodarzi sees AI as a general-purpose technology as transformative as electricity and the Internet. “We’re at the beginning of the journey with AI,” he says. “Over the next five to 10 years it will create new economies and destroy some economies, create new experiences, spur new company growth and put some companies out of business.”

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