Why Intuit really wanted Demandforce

Intuit acquires Demandforce, targeting the front office of small and medium businesses. What's the strategy? We talk to GM Kiran Patel.
Written by Andrew Nusca, Contributor

Last week, TurboTax and QuickBooks parent company Intuit said it would acquire neighboring startup Demandforce, which aims to help small- and medium-sized businesses like dental offices and body shops automate communications with their customers.

The idea? Cut down on time wasted doing administrative duties and help business owners get back to doing what they do best.

To learn more about Intuit's approach to the SMB market, its company-wide transition to software-as-a-service-based platforms and just how legitimate this "local" trend really is, I called up the GM of its SMB group, Kiran Patel.

ZDNet: So, SMBs. Intuit's bread-and-butter customers.

KP: (Chuckles.) Intuit has a very strong presence in the SMB market. Historically we have been strongest in what we call the "back-office" applications, starting with QuickBooks with five million desktop users and rapidly going SaaS with 400,000 online customers. And we have an interesting payroll system, with a million customers.

But if you talk to a small business, these are all the things in the back office -- very necessary, very important, compliance-oriented, solving problems. One of the two big problems is getting and keeping customers. The other is financing. How do we help small businesses acquire and keep customers?

We bought a business called Homestead a few years ago that helps small businesses get an online presence. They see that marketing is rapidly moving to digital. The classic YellowPages books have gone away, and many small businesses have no idea how to do that. When we looked at Demandforce, it was right in that sweet spot.

The reason we're in the back office starts with our legacy, with Quicken. How do we help small businesses managing their money? There's still plenty of the opportunity left in the back office, particularly globally. We're working to take our successes global; we've traditionally focused on the U.S. market.

ZDNet: Intuit, too, has been increasingly moving online. I can't remember the last time I used the desktop version of one of your products.

KP: Just a few years ago, we were a desktop company. We are rapidly moving into the online space. This is something that small businesses struggle with. As they move online, we saw an opportunity for us to participate.

We are trying to grow some stuff internally through our partner platform, where third-parties can build, but we're always on the lookout for interesting startups that help us solve the problem and get us to market faster.

What's driving this, obviously, is customer preference. There are two types: those who are new to the world and who don't ever think of going to Staples and buying a CD of Quicken. They live their lives on the mobile phone and the Internet. That is where our customers of the future will be.

Now, if you go back to the five million desktop customers, here's their problem: I'm sitting at home, I've put the kids to bed, I'm thinking about my business and anything I want to know about my business is locked up 15 miles away in a C: drive in the office. Wouldn't you like to know which four customers are in the area you're going tomorrow, or what money you owe, or what you need to deliver to them? We've developed a customer services solution that links their C: drive to the cloud. It's not a SaaS offering.

We can push through updates as we like. We also like the business model of the cloud, because it's a subscription business. The desktop model is a license business. The customer may not update for two or three years, then reinstall, and that may pose challenges. Clearly the SaaS world benefits us, too.

ZDNet: What's your take on the "local" trend? Fad, or future?

KP: Lots of people are talking about it. Google has talked about it for along time. We think there's something there, but nobody's really cracked it yet. With Demandforce, one cool thing is, as they sign up customers in these verticals, they're gathering up reviews. My dentist has it, and I receive notifications when I need to go and can review my experience.

It's very, very early, and it's a dream we all have. What Demandforce has here is interesting.

A few weeks ago I missed my annual vision exam. I called my office to reschedule and they said, "We left you a voicemail." And I said where? And they said on my home phone. I don't know about you, but I don't check my voicemail on my home phone. Now [with Demandforce] I get a text message and an e-mail. It's the coolest thing, all on my iPhone. If a dentist's office loses $100,000 or $150,000 in revenue because of missed appointments...

Small businesses, their lives are crazy, right? I'm the owner, service provider, CFO, chief bottle washer and I pick up trash at night. They don't have any time to mess with any kind of technologies. They are all for anybody to provide simple solutions. They don't have consultants. It's got to be drop-dead easy so they can get back to fixing teeth or whatever their passion happens to be. I do see us continuing to expand in this space.

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