Intuit and the Dangers of Hubris

Posted by: Steve Hamm on October 08

When finance software maker Intuit announced a deal on Sept. 14 to pay $170 million for Web 2.0 phenom Mint.com, a lot of people asked the obvious question: Why did Intuit have to buy Mint? Why didn’t it think of doing what Mint does before Mint did it? After all, Intuit is known for its dedication to finding out what consumers want to do and making it easy for them. How could such a customer-obsessed company have let another outfit leapfrog it?

I put this question today to Brad Smith, Intuit’s CEO, when he dropped in for a visit. His answer: It’s generational. Intuit understands and caters to an older group of people. In the 1980s and 90s it helped them make the leap from balancing paper checkbooks and visiting the neighborhood bank to using Quicken on their PC and banking online. But Intuit failed to decipher the wishes of the Web 2.0 generation.

It took 27-year-old Mint.com founder Aaron Patzer to see that other young people wanted to keep track of all of the threads of their financial lives simply, in one place, and figure out smart ways to save money. They also wanted the service for free. So it was he, not Intuit, that put together the hottest new spot for personal finance management. Mint.com analyzes consumers’ finances and suggests ways that they could do better, then channels them them to financial services providers who can help them out. Those companies pay for leads and new customers steered to them by Mint.com.

Smith says Patzer and Mint.com served as a wake-up call to Intuit. The message: “I tell our employees that hubris is the worst thing of all. Over-confidence blinds us into believing we have all the answers. We got caught.” Now, as part of Intuit’s quarterly reviews, its executives study all of the start ups in the finance space and see if somebody’s doing something they should do. Then they perform a simple calculus. They ask themselves what’s the best way to get a 15% to 20% return on their investment over a three- to five-year period, build new software internally or buy a company that already has it?

In spite of coming late to the Web 2.0 party, Intuit is performing relatively well during the Great Recession, and it’s poised to do even better when economic activity increases. It’s busy creating dozens of new cloud-computing-type services—many of them for mobile phones. One thing’s for sure: It won’t likely be bushwacked by another Mint.com any time soon.

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