Scott Cook's preparation for life as a computer software founder and chairman was to work in product marketing at Procter & Gamble. Don't laugh -- both Cook and America Online founder Steven Case credit their P&G heritage for giving them the marketing savvy necessary to create leading consumer software products in a rapidly shifting market.

Cook's company, Intuit, is best known for its popular Quicken line of personal finance software. The company has expanded to provide tax preparation software (TurboTax) and has made a huge entry into the online banking business.

Cook's idea for a new software product came while sitting at his dining room table, and his subsequent success is the stuff entrepreneurial dreams are made of. One evening, while seeing his wife pay bills, Cook concluded that what the world could really use was a practical, "intuitive" software application that magically ordered the tangled rat's nest of one's checking and savings accounts. Inspired, he promptly drew up a business plan and wandered over to Stanford's engineering department in order to post a notice for students interested in doing some programming for a startup company. Tom Proulx, a computer science student lounging in a courtyard, asked to look at Cook's notice. A partnership was born.

Let's talk about the early days at Intuit. Legend has it that you approached and were turned down by over 30 venture capital firms for funding.
It was twenty-something.

Why was it so difficult? It seems that you had good credentials.
We thought it would be an easy, fun decision for venture capitalists to fund us because we had done a lot of market research and had really studied the customer. We understood the problems with the existing competing products on the market and had already built our own product. With a well-researched business plan and a working product, we thought it would be easy to get money.

Boy, were we wrong. One hundred and eighty degrees wrong. We couldn't even get second meetings with most of the VCs. One reason is that our management team had no industry experience. I was a former fat salesman [Cook marketed Crisco while at P&G] and my partner Tom was still a student. Another reason is that the investors fundamentally didn't believe in the business. In fact, there were occasional newspaper and magazine articles that recommended against buying computers for managing checkbooks and recipes. Another reason is that ours was a consumer product and most VC investing at the time was in industrial products. Investors were not comfortable with a business as different as consumer products, which is reasonable. You shouldn't invest in things you're not comfortable with. I also think there was a fundamental disbelief that a market existed for computers in the home. Those four reasons are probably enough to sink most good ideas.

Did you ever start to believe that what they were saying was right?
No. We had the data and had studied the customer. We knew we were building what customers wanted. We just couldn't figure out how to get them to buy it since we were supposedly going to use the venture capital money to solve that. It was a real problem.

The key to business success is knowing your customer cold. We had spent time understanding the customer. We clearly understood customer behavior and had data showing that our solution was vastly better according to customers' decision-making criteria. Our big fear was that, without money, our competitors would see what we were doing and recognize that ours was a superior product and copy it. Had any competitor lifted its pinky to compete with us, we would have been history. We were so weak for so long. The competition had retail presence, momentum, money, and brand names. We had none of that.

Wasn't it your father who lent you money from his retirement savings?
It's a real story of entrepreneurship. Very few entrepreneurs in this country are backed by venture capitalists, perhaps one percent. The other ninety-nine percent could never have gotten venture capital for their business. I used retirement savings from my job, my dad loaned me money, my mom loaned me money, and I used lines of credit. Also, banks invented a great thing called line of credit -- they don't ask what the money is for.

We often worked without money. We started paying salaries and then had to stop. At the suggestion of someone in the company, we tried getting a few people who knew us to invest smaller amounts of money. We got his father-in-law and a former boss to invest. We had asked for $2 million from VCs and we received $151,000 from these smaller investors -- much less than what we were looking for. It represented a total change to the business plan, but it kept the doors open for another six months. Without that investment we wouldn't be here today.

Reprinted from In the Company of Giants: Candid Conversations with the Visionaries of the Digital World
by Rama Dev Jager and Rafael Ortiz
Copyright 1997 by Rama Dev Jager and Rafael Ortiz
Reprinted by permission of The McGraw-Hill Cos. Inc.
All rights reserved.