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

While running Intuit’s TurboTax and QuickBooks business, Sasan Goodarzi had a startling realization: No matter how much effort the company put into helping people do their own taxes or keep their own books, then they don’t really want to do those things at all. .

“I realized that building a platform for customers to do real work was not the future,” he recalls. “That’s the future, it’s already done for you.”

The lightbulb moment prompted Goodarzi, who became CEO in 2019, to lead the company on a major strategic reset, placing AI at the heart of the business. The shakeup includes two major acquisitions worth a combined $20 billion, layoffs of hundreds of employees, and heavy investment in AI, years before the technology’s blockbuster public debut.

The company has been incorporating elements of AI into its business for years, but its first major standalone AI product for consumers, called Intuit Assist, launched today. It’s embedded into products including TurboTax, Credit Karma, QuickBooks and Mailchimp, and the company says it can do everything from predicting a small business’s impending cash crunch to creating and Implement email marketing campaigns. Goodarzi believes that the early gamble on AI, coupled with its vast trove of data, was a winning strategy for expanding the company’s dominance in accounting and tax software for individuals and small businesses. And he literally bet his entire company on the idea that millions of people would trust an AI service to recommend specific, personalized business decisions.

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

Intuit has a long history of change over time.

The company launched in 1983 with personal finance software called Quicken. Dedicated PC software was hot back then, but Intuit’s peer software from that year (Flexidraw, VisiCalc) is no longer available. It has outlasted them all by constantly changing itself in response to the advent of Microsoft Windows, the internet, mobile devices, and other revolutionary innovations that its competitors couldn’t handle. Okay.

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Today, the company is best known for creating TurboTax, the best-selling tax preparation software, and QuickBooks, the #1 accounting software for small and medium-sized businesses. Since the company went public in 1993, the S&P index has increased 902% and the Nasdaq has increased 1,940%. Intuit shares rose 23,190%. Most Wall Street analysts rate the stock a Buy. No one rated it Underweight or Sell.

Despite Intuit’s history of continuous transformation, when Goodarzi decided to put AI at the heart of his business model in 2019, not all of his top subordinates agreed. “It was a big debate,” he recalls. “Five years ago, putting AI at the core was hard to see. You have to have faith.”

The deciding factor in that decision is the company’s incredible trove of data — what the AI ​​needs to train on and what allows the company to make detailed financial recommendations tailored to each customer. “AI is really useless if you don’t have big data and clean data,” Goodarzi said. Luck three years ago. Speaking more recently, he said that when it came to a new strategy, “my decision was that we would bet on the company on data and AI.”

Intuit already has data from its 57 million customers, which gives it a significant advantage when it comes to finance-focused AI. Then in 2020, Goodarzi bought Credit Karma, a personal money management platform, for $8.1 billion. That brings in 110 million consumers and their financial data. And in 2021, he bought Mailchimp, a marketing platform, for $12 billion. That brings in another 10 million customers and their data.

“Everyone wants to talk about how great their data is,” said Jackson Ader, the MoffettNathanson analyst who covers the company. “But Intuit’s data set, on the consumer or small business side—is second to none.”

Amid these acquisitions and a shift in strategy, Goodarzi made an unprecedented move in 2020—laying off 715 employees, the first mass layoff in the company’s history. Goodarzi feels moving AI into the core is happening too slowly, and that Intuit’s ambitious reskilling program can’t work fast enough. He replaced the departing workers with more than 700 new people, most of whom had AI skills. “We were starting to see momentum betting on data and AI,” he said, “but we knew we didn’t have the talent at the level needed to accelerate what was possible. We took that money and reinvested it in the craft skills we needed.”

Goodarzi’s big goals

Intuit says the AI-powered general assistant it introduced today will provide personalized analytics and recommendations for anyone running a small business, filing taxes, managing finances or marketing products and services.

For example, in addition to alerting a small business to an impending cash crunch, Intuit says it can now create an email marketing campaign—the strategy, images, words that customers targeting—analyzing results and recommending next steps. The company says it can also offer personalized recommendations to a consumer living paycheck to paycheck and facing an unexpected expense or help an entrepreneur get started, importing data from its website. business people and perform daily tasks like sending invoice reminders. to customers.

Intuit has a long AI head start over competitors including H&R Block, Cash App, TaxSlayer, Xero, FreshBooks and others. The company is hoping its initial investment will create a network effect, in which good AI-generated recommendations will attract more customers, yielding more data, improving the company’s products. company, thereby attracting more customers.

But the release of OpenAI’s ChatGPT last November raised concerns, at least among investors, that the company had been ambushed. Who would need Intuit’s AI products if someone could order free or low-cost AI to do almost anything? Fears deepened when OpenAI introduced GPT-4 three months later and demonstrated its tax capabilities — calling the system TaxGPT and asking it to answer the tax problems of a fictional couple, to show how it arrives at the answer and, as a powerful development, to write a rhyming poem that sums it all up (“For their taxes, it’s true/A deduction except for the standards we must understand…”).

These fears are unfounded – for now. GPT-4 can read tax codes but can’t make personalized recommendations because it doesn’t have Intuit’s massive proprietary data set. GPT-4 is “a friend rather than a potential threat” to Intuit, Ader said, because Intuit “has the data—which is what they have a lot of.”

So far, investors seem to like Intuit’s AI-powered strategy. The stock has outperformed the S&P and Nasdaq since Goodarzi took the helm. But he feels certain that his controversial call from five years ago still has a long way to go to be effective. His goals are broad: double the savings rate of customers on the Intuit platform by 2025 (the US personal savings rate was 3.5% in July) and increase the success rate of small and medium-sized businesses on this platform by 20 percentage points by 2030 (about 50% of new businesses fail in the first 5 years). As for the company itself, Intuit expects its revenue to grow 11% to 12% in the fiscal year ending July 31, 2024, and expects earnings per share to rise 11% to 15%.

Goodarzi sees AI as a general-purpose technology that is as transformative as electricity and the internet. “We are at the beginning of our journey with AI,” he said. “Over the next five to 10 years, it will create new economies and destroy some, will create new experiences, spur the growth of new companies and make some The company must definitely go bankrupt.”

This story was originally published on Fortune.com

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