Intuit asked us to delete part of this Decoder episode
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I mean.

I petal, edit and chief the verge on and decoder is my show, but big ideas and other problems today's episode, it's a bright i'm talking into its CEO the song guadarama built into IT into a jug or ot business software company through a series of major acquisitions. You're pride familiar with quick in and quick books, which are incredibly well known as personal finance and small business accounting software.

But nearly everything else, turbo tax, male cham credit, carma loads more, more acquisitions of some kind along the way. That leads to a lot of chAllenging structure questions at Susan. I really got into integrating all of those companies and their different approaches to software requires big decisions and into IT made a big decision of handling IT, all by betting on interOperability that I found fascinating so far.

That sounds like Normal decoder stuff, right? Here's where I got weird. I couldn't have the CEO into IT on the show without asking about tax reform.

In the united states, individual income taxes are more complicated in the U. S. And in almost any other developed economy.

Into IT has been lobbying hard since the ninety eighties to keep IT that way. In order to protect turbotax, the company spent nearly three point million dollars lobbying in twenty three alone. There is extensive reporting that office went to IT in the showers.

That lobbying has had mixed results. Truly free online direct filing with the irs began as a pilot program this year, and it's expanding to be available for more than half of the U. S. Population in five. But it's not just lobbying.

In twenty twenty two, a coalition of all fifty states got into IT to agree to a one hundred and forty one million dollars settlement that required the company to refund low income americans who are eligible for free filing. But we're redirected to into its paid products. And in two thousand and three, the ftc found that turbo taxes, quote, free marketing, was willfully deceptive and after the agency won an appeal earlier this year into IT, was ordered to stop doing that.

So I asked about taxes and Susan disagree with me. And we went back and fourth for a few minutes on it's decoder. We have exchanges like this on the show all the time. And in the moment I didn't think anything of IT. But then I got a note from rick khyam in the chief communications officer into IT, who called that line of questioning and my tone inappropriate, agreeable and disappointing, and demanded that we delete the entire section of the recording. I mean, literally, he wrote a long email that ended with quote, at the very least, the end portion of your interview should be deleted.

We don't do that here at the verge, as many of our listeners and readers now we have a very explicit and very strict ethics policy will link to IT in the shown as the most important thing here is that we never allow anyone to preview or approve our interview questions, and we certainly do not allow anyone to review or alter the work that we publish. I told this to rick, and he came back and asked that we quote, delete that which takes away from the conversation, which he defined as rather voices, or are speaking over each other. So, quote, listeners can understand your question.

And the answer Susan gave, I got to be out with you. That is one of the weird request i've ever got ten. So here's we're going to do. In the spirit of fairness, we're going to run that whole part of the interview first, unedited.

So you all can tell me it's about five minutes long and you can decide for yourself then will come out of IT and we'll run the rest of the interview, which like I said, is an other fascinating episode of decoder. okay. So here I am talking about taxes with the sung dari, the C E O.

Into IT. Into IT is legendary for our turbo tax, also legendary for lobby against free direct federal e filing. How much of your budget is allocated to lobby as .

fundamentally that's uh a wrong premise uh and it's not accurate. Uh we in our in our a lobby we spent a couple of million dollars fighting for simplified taxes ah and we don't lobby against free and by the way, freeze available to all americans sell ah, which is if you choose to do your taxes for free, uh if every american choose to taxes for me it's available today. Through private industry, we have heavily been focused on making taxes simpler. Just the tens of millions of lines of tax code makes IT very difficult for for a customer to understand taxes, much less companies like us that are trying .

to the simplest version of taxes as the government sends you return. It's done now and into IT has loved. And to would you support the government just do in the taxes for people and sending the refund .

because that many countries .

in the world do that.

Yeah, but you have to change. The tax system is about software. Uh, so if we changed the tax system.

are you going to want me to change the tax system to what the government.

to the family and people change?

But i'm asking you, you spend the dollar .

would you lobby for IT would lobby for the.

uh the government getting the tax is m the simplest version of the tax .

system would be to just want ant but you have .

loved IT against that. That's i'm saying that that reporting is clear. You've loit into IT is not you into IT is .

love IT against that very much? Well, I am into IT, right? And so it's it's okay to put me into IT in the same um in the same first, we very much focused on simplifying taxes. That's what we've loved for, simplified the tax code. That's simply what we've love .

you for when you see free direct federal you filing a arrive. I think today, literally today, just before we started speaking, the government to be available in half the states, which is about sixty per population, decide a revenue impact on you. You get an email saying we project turbo tax revenue will go down.

but x we do not uh free is available to um all consumers today. And so IT really is not a relevant to our business. And in fact, proof points uh, are always important.

You know, in the last five years too, pretty formidable, a companies got into providing free tax. Often are one was credit arma before we acquired them hundred million members. Uh, they provided free tax software, no no impact in the tax industry.

And then we sold that to another formidable company and has really been no formidable a impact uh, to the structure of the tax industry because freeze already available. And so my our view, by the way, very strongly, and we've been on the record, this is a solution looking for a problem. A free already exists.

And by the way, what the government is providing is not free. You're paying your tax dollars are going towards building a software that already exist for america. So that's something that we've been on the record that from our perspective and private industries has been on the record, IT doesn't make sense. Priority exists. So why build another one?

I'm and asked you this question. I can already tell you that you're going to tell me you disagree with my premise when I ask IT anyway uh brought this speaking I would say the criticism of into its free products when IT comes to taxes is that IT says it's free and then somewhere along the line, they slide you into paying. The government has complained about this.

That is a reputation damage for the company. Again, I get the mails from the koto and is asking me what questions to ask you yeah and it's that it's that sort of dark pattern feeling inside of in particularly the free tax product. Is that something you want to fix? You worry about .

that damage to the reputation? Yeah, I love you. Your question, let me leave and answer IT in two ways. You know one is uh, there are over one hundred million uh customers that we've served for completely free. Uh, it's more than the entire combines.

So we're very, very sort of intentional about making sure that are we are a big player when IT comes to free tax, often are. On the other hand, any time we see something that needs to be improved, we take that very seriously. We take our reputation very seriously.

So I can tell you, you know, in the last several years, we've been very, very intentional about going through, uh, are advertising all the way through the product top to bottom up to really improve where we need to improve to ensure that customers really understand what they're eligible for and what they're not eligible for. In fact, last year, we one of our advertisements that we ran on T V, we said eight, thirty seven percent of the population are is eligible for free. And these these are the qualifications just so we could be very clear and transparent.

And that's from what we've learned where we can improve. So although i'm proud of, uh, the number of customers that we've served for free, to me, there's always something you can learn and always something you can get Better at. And this has been an area where we've improved our end and experience from advertising all the way to check out to make sure customers are very, very clear what they are eligible for. That's very important to me, very important to the company, is our reputation matters.

All right. So what do you think was that contentious? Should we have deleted IT you let me know.

I'm open to the feedback right now. I'm mostly just amused and a little befuddled. Here's the rest. That episode, which as I keep saying, was a good episode of decoder with some very interesting ideas about how to integrate big acquisitions into a single tech platform inside of IT. Also, I asked why Susan shot admit, which honest is a thing I should have been the most outraged ed about. Okay, Susan got the CEO into IT.

This song is easy. You are the sea of into IT. Welcome to decoder.

Thank you for having me.

I am very excited talking to you. Just not a bunch of AI products that are interesting. You've been changing the company around.

Let's start at the very beginning. Into IT is forty years old. A lot of people are familiar with the various products of turbo tax or male trip. What is into IT now? What do you think .

of the company is? Well, first of all, you know, with our forty years Young, i've been with the company for a half that time. And when I stepped into this role, the decision we made was to play a far more meaningful role in the lives of consumers and businesses.

So we really started on a path to shift the company from attacks and accounting platform to apply form company that businesses and essence can rely on us to be able to grow and run their business and consumers can power their financial prosperity. So that's the path that we started down about five plus years ago. But most importantly, I would say that we said, hey, we have to create experiences that, in essence, are done for customers rather than creating workflows where people have to do the work to run their business and manager cash flow or manage your personal financial life.

Wanted to create done for you experiences is where we deliver benefits and insights like marketing is done for you. We manage your cash flow quote to cash for you books, accounting taxes are done for you. And and really, in order to do that, we bet very early, almost six years ago on data on AI.

And Frankly, we did IT for very practical reasons because in order to do what I just articulated, which is we focus on your bottom line, your revenue profitability as a business or your financial household savings as a consumer, we have to actually leverage data, your data and leverage A I to deliver these insights and experience. So so, so today, to answer your question, we have become a platform company. And what that means from the lens of a consumer and a business is consumers can use our platform all in one place to be able to build their credit, be able to manage their money, get financial products that they need, like credit cards, loans, insurance, a mortgage for for their homes and all.

So be able to get their taxes done. And then we help them with, what did you do with your refund? So we now do all of that gaming because we wanted to play a meaningful role in live of consumers and for businesses.

Now in one place, you can, in essence, manage your customers market to your customers, be able to really manage your quote to cash your cash flow and make sure you you books are right for tax time. So now we have all those capabilities. And really the future for us is now how do we create everything in a way that it's done for you versus you have to do the work?

That's very interesting. The emotion he started with six years ago. Obviously, transformers only really burst on the scene couple years ago in the way that they are now, and that's really expLoring stuff.

So I want to spend some time talk about the differences between the AI technologies are betting on before and what's happening now. But before you to that, I just want to know how the company is structured in built. This is a company that is kind of built through acquisitions, might be entirely built through acquisitions, starting with buying turbo tacks in one thousand nine hundred ninety three.

And then it's a combined, I think, one thousand nine million dollars on male trip in create karma just in the last four years. How do you think about integrating all those describe parts with? The example of turbo tax for me is particularly interesting. That became the company you require the company that would became the company. Are you thinking in that way with male champion credit harm as well?

I love actually where you start because most people don't know what you just articulate, which is this whole company has has been in essence, has started with Scott cook, our founder, creating quicken, and realized the way people are using IT, their small businesses trying to manage their money. And that's what gave birth to what today's our cookbook platform, but turbo tax, even our payroll offering male im credit at the all acquisitions.

But answer your your a question, particularly in the last five years, a lot of our platform play and where we are today has been based on a lot of organic innovation and investment. But also, we bought these two sort of big brands, two number ones in their space credit karma ml champ. Because when they come with a lot of data and a lot of sort of AI capabilities, particularly credit as a lot of machine learning and really AI capabilities that we've coin as light box, which I can get into at some point down the road if you're interested.

And really, the intent of all of this is to create one platform is to really integrate the products customers back so that customers in one place can, where are their business run their business and as a consumer, be able to manage, uh, your personal life. So I think five years from now, we're going to look back and go wow, the addition of all the things you had plus what you did with credit car mi and melching or just, uh, really the key take kite, the next chapter of the company. But the answering your question is, yes, we're stitching at all together to create .

one seamless platform. So we ask about that for a little bit. Everyone says they can do that.

Most companies, they succeed and they failed rather that that's an inconsistent process. Mill champagne, particularly, was a big company. IT had its own culture.

That immigration was a little messy. We had the new CEO of male chain peroni a on a while back. We talked about that integration has going how she's changing the culture because she's into its C E O.

She's not the founder, C E. O, that they had before. You're the CEO, the umbrella corporation. Have you think about having all these companies and all .

of their CEO under you? Yeah well, first of all, we the way we run the company were very intentional about goal setting. The sort of there are three four things that really are key artifacts that create who we are today. It's our true north goals and which is how we set goals for the company to its our mission and third, its our values. And then last, but not at least, the sort of our strategy and the five bets of the company.

Those four things are the way we run the company and and the reason I started there is we have very specific leaders that h the lead parts of uh the company, but the expectation, the goals are about uh, how we are creating a platform. And so incense, in the case of male jump, the charter of male chap is not to be run stand alone. That has two charters are just like payments, payroll are accounting team.

The charter is one. It's about how we integrate across the platform because we win as a platform. That's a lot of what's ignited our growth over the years.

But then two, on a stand alone basis, whether it's smell chant, where there it's payments, where there is player al, whether serb attacks, they have to be good products and they have to perform on a stand alone basis. So the expectations are such that we win as a platform and ah how we integrate our our products to be able to win. And that's how I measure every leader.

And so if you are, you know spend a week in the company, what you'd really get a sense for is like what we're trying to do to win with our business platform, what we're trying to do with our win with our consumer platform verses, there's a bunch of pieces and parts and everybody is a working towards. There are only true north. There's really one true north that we really work towards, and that's how we run the company, is our leadership expectations, is the mechanisms of the company and how we measure success.

So one, anything really interest there is this component platforms are still divisions, right? Male champ has a CEO credit. Carma was a big company that required usually when companies like into a required and a credit or you promise the people who work there are measure of independence. But you're talking about stitching IT together into a platform.

There's some technical stuff there that I want to definitely talk about, but there is just the Operational side of saying, okay, now you're part of a bigger thing while still keeping the walls up and still saying, okay, we have different ceos that's very different than most of their time companies. How have you made that choice? And is that durable over IT a long term?

Let me be clear. Roney is no longer the city of male SHE is the the segment leader senior vice for president that runs our gross segment. Male champ is is as a part of and we did that very intentionally at the beginning just from a cultural integration.

But we don't have seals within the company, even joe coffin, that runs our credit carma business. He is reporting now to mark nota, oni, that owns our consumer business, and he is the head of credit karma senior vice president that runs create carma. The first thing I want of the sort of start with is that CEO element was a just a cultural transition.

We have leaders that at the end of the day, when they look at their paycheck, it's into IT and their expectation is to serve you know, our customers. And IT goes back to the the way, answered the question earlier. If you were within the company, what you'd yet a sense for is really two things.

One, we have mission based teams. Because in order for teams to have a cause to fight for, they have to know they are fighting for creating the best sort of payments capabilities, bill pay capability, accounting capability. And that's what we turn mission based teams as they have a mission.

And there are focuses that mission payments, meltin, turbo tax, whatever, or may be. But the other element is the leader's job is the mission, is the platform and to win as a platform. And so it's really our discipline and our rigor and how we run the company is actually our strength. And from the outside looking in IT may seem like there are sort of parts and pieces, but within that, we're all solving for the same thing, which is how do you win as as a platform running.

Hinted that that change was coming when he was on the show that I wanted .

to ask you about and tell me .

about that one of things I was asked everybody is how to make decisions. Tell me about that decision, right? Obviously, shit knew was coming when he was on the show of make that call.

What does that look like to walk up to someone and say, hey, you were the CEO. We're changing IT we're not doing anymore. How do that unfold for you?

Well, when we are make an acquisition, whether it's credit karma and or male chan before we make the acquisition, we create jointly uh with uh the founder of the company but really are broad leadership team that uh informed of the potential acquisition, we create a six and this six pager really lays out what are we gonna do together. Why are we buying, in this case, a mill cham.

What's the vision of what we're trying to create? And the vision is integrate to create one platform. What are the key priorities? And particularly, we focus on acceleration, not integration, although everything we do in the product is integration in a company of our scale, in size, clarity matters a lot.

And so even basic things like what we will do in the first ninety days, what we will do in the first six months and clearly is important. What we're not going to do is all part, not only the six pager, but sort of the playbook. So they answer your your question, part of the playbook all along was we're going to create one platform.

And when I spoke rona years ago to take on this role, IT was very clear. At the end of the day, he would take on the CEO role, and that would be the title of a really an interview period from my cultural transformation. But her charter is the same.

And at one point, that title is more about the svp of the category. And so it's important to have those conversations, you know up front, uh, very big on we're not interested in leaders that are pursuing titles even when we recruit from the outside. We're interested in folks that one really fight for the same cause.

They are in love with our our mission. And of course, everybody has to be thoughtful about what's right for me as an individual. So we take all those things in the consideration, but we have these conversations, you know, up front. And I was just sort .

of part of the transition. Yeah, tell me how into the structure now and how was the .

company rather organza. So we're really structured as a platform that means is a we have a leader that runs our consumer platform, we have a leader that runs our business platform. We actually have a leader that looks at the network perfect and the ecosystem effect between consumer and ah businesses.

Um and then we have A C T O that is really responsible for all of our technology in the company, all of the spending technology and the segment leaders, the consumer segment leader, the business segment leader, they decide what's most important to drive growth and deliver for customers is our CTO that owns all the technology that then decides how do I need to ensure that I allocate the dollars, the people, to achieve what we want to achieve across the platform. And then we have a customer success platform leader that owns all of customer success across uh, the the company. And of course, then a really very important roles around amna people in places, uh, legal and finance.

But we run the company as a platform and the leaders. In the case of the consumer and the business leader, the business segment leader, they're responsible for the outcomes of the segment. But I also hold them accountable for how the company performs because I want to make sure we're making trade off to win as a company for customers and not just have a blinders on in our segment, but where a license organized around being a platform.

If you ve got the two platform leaders and seeming the report to and then you ve got A C T, O is making technology decisions. I'm assuming you type break a lot there, right? If you if you're responsible for the successive the consumer platform, for example, and you really think you need some technology built or built in a different way than the company currently has, and the answer is no. Guessing that comes to you.

I don't type break enough and sometimes I talked at the team about is enough stuff getting up to me. So I don't play a huge type breaker role. It's actually even Better today than that was three to four years ago.

And the reason is mariana and mark marana runs our business segment. A mark runs our consumer segment. Maranta used to be our CTO.

SHE was heading up all of technology for the company before this role, and mark was actually leading all of our customer success before stepping into running the the consumer platform. We, an essence, promoted both of their protegees. And so my point is, uh, there is a very, I would say, thoughtful collaboration between the team.

And because we're very clear about our strategy, we're very clear about a the deliverables for both the year and the next three years out and a lot of the discussions and tie breaking happens between the team. Of course, I I get involved particularly very deeply in our one and three year mechanism. That's a mechanism where not only do we review priorities, but we actually review very specific what are the deliverables for this year? What are the deliverables for the next three years and what's resource, what's not and why? And some deep and I R CFO.

And I will get involved if we feel like there are certain of areas where the team has made all of the resource location tradeoffs, but we're still we have an opportunity to fund, you know, even more opportunities and will get involved in those types of decisions. But I have a lot of gratitude for my team because of the mobility that we've had. We've seen all parts of the company. There's a lot of just natural debate and and sort of trade off decisions that made within the team without an escalation to me. But once in a while, maybe once every couple of months, there's something up to get involved with just a break, a tie or make a resource decision.

We need to post here for a quick break, will be your epic.

Think scaling AI is hard. Think again with watts and x, you can deploy A I across any environment above the clouds, helping pilots navigate flights and on lots of clouds, helping employees automate tasks on prem, so designers can access proprietary data and on the edge, so remote bank tellers can assist customers. What's the next works anywhere? So you can scale AI everywhere, learn more IBM dot com flash. What's the next I B M? What's create.

Looking back, i'm talking to into its CS the song dari about the big decoder question, how he makes decisions. When we left off, you was talkin about building a company through acquisitions. The other chAllenge of building company through acquisitions that you don't have to integrate is the technical foundations of all those companies are different.

The data storage requirements of these companies are different. The databases, the customer database, all that stuff has to be integrated a technical level. However, you managing that, I mean, that seems like the biggest problem. You have to buy a company the size of male champion, say, okay, you're we're bugged you into quick books. Those are very different products.

How does that work? We do A A lot of diligence before we make an acquisition. And and let me be clear, no matter how good you are due diligence, there are things you going to get surprised with on the upside once it's done, and there are things you're going to get surprised with at the downside.

But the three areas where we spend a lot of time on due diligence is one cultural fit because I have a very strong belief that no matter how great of a strategic fit something is, if you got two cultures that may clash is just not going to work. So we do a culture, deep culture assessment. And I personally get involved, depending on the size of a deal, to really assess the culture, uh, for myself as well.

We, of course, have a very deep strategic assessment. Then we do a very deep capability assessment. So this goes to your question, will assess what's their compensation schemes, what are the systems they have. But most importantly, we really thorough assess both their data and technology capabilities, and we have come a long way.

And so as technology in terms of integration, to specifically answer your your question, one of the wonderful things about credit camera and melt in n and i'll just use credit camera in this cases. An example is the amount of consumer data that they have and the amount of consumer data that we have with turo attack. And the reason is very attractive acquisition is than what we can do with customers consent to use their data to deliver benefits to them that otherwise nobody else can cause.

We know a three sixty view of their information, but rather than having to take their data lake and our data lake and the cloud that they sit on, which is google cloud, the rest of the company is on AWS. Rather than integrating h, we actually innovated uh, across the technologies where we build a data pipe where data is shared uh, without all the data having to be all integrated. For instance, we've actually built bridges in terms of a how google cloud in AWS work together.

So a lot of our technology innovation because where API oriented services based is actually about connection versus integration, and that's really what has propelled you what's possible because credit ARM as great platform, data platform, AI platform, we didn't have to replace IT or create, you know, sort of one integration of a platform. But we built an essence pipes where we can achieve the product innovation for our customers. So that's the approach that we've been taken, and that's what we do in the do diligence just to make sure that we can, in fact, to do that because of a platform of this scale. If you have to rewrite the entire code or integrate the stacks, IT just becomes too much work and not worthy.

Yeah, that is a strategy, right? That is an acquisition strategy. We're going to depend on technical international ability and we can build data pipes between different club providers.

IT seems like that strategy is weren't working. There have to be downsides of that strategy. What are the downsides?

The big downsides is what I mentioned earlier, which is any time you do, do diligence, there are things you're going to be surprised to the upside. There's going to be things that you are you surprised on the downside and you know the devil is in in the details know, for instance.

And in one of the acquisitions, IT wasn't on any cloud, and we've been working on getting all of IT on, on AWS, and that's taken about six months longer than what we thought. And so that's that's an element of an example of where you get surprise, where you assume it's going to take six months s period to do something, but IT takes a year. And you know what, we sort of baked that into our thinking that we're going to be wrong in certain instances.

There are things that okay to be wrong in and there are things that not okay to be wrong in. So the the areas where it's not okay to be wrong is the assumption that you can actually build a data bridge and a data pipe and between platforms. And if you're wrong about that, that sort of blows up the whole premise of the what you thought you could do and what timeframe I am.

Now the great news is not on what we've proved that out across our our acquisitions. The things that is okay to get wrong, and most of the time you're not going to get perfectly right, is how long is going to take to do something. And the example I just articulated earlier in, in the case of, you know, transforming one of the acquisitions to be entirely cloud based, it's taking six months about six months longer than what we thought those are. That's okay because it's just an element of time verses, an element of the ability do ever .

have broader questions about the strategy over all you ever have? I'm guessing the person who goes and negotiates with A W S. Would love a little bit more demand from whatever some google cloud does. I look, we've got more scale, lower the rate, right? I mean, those are the kinds of trade are there are those conversations were actually increasing scale are concentrated further, will be the benefit verses interOperability.

We do have those conversations in first of all, I had the pleasure of being our cio for a couple of years, and I was deeply involved in shifting the company from all of our own data setters to shifting the company at that time to A W. S. So I worked very closely with the amazon team and an andy to really drive the road back, but would get us prepared to go to to the cloud.

And one of the the reasons I started there is one of the decisions that we made very, very early on is to build our capabilities, our s and the way we built a sort of cloud ready apps was so we would never get married to or stock only with one platform we wanted in a Operability. And we actually like the fact that we're on multiple clouds because and with the age of AI, we've built our own large language models. But we also experiment using about nine, ten other large language models externally and I actually think it's very healthy to understand what works and what situation uh what doesn't work.

And uh, I multiple clouds, in this case multiple elms, is actually quite healthy because you learn faster, you pivot faster. But we have these conversations all the time, we believe. And I would just tell you that probably the most heated debate that we had five years ago when I stepped into this role with my staff was whether or not we would bet on AI because A I wasn't popular than wasn't the buzz d that IT is today.

And I bring that up as an example of wee debate technology bets, uh, wee debate interOperability verses. You go all in with a partner all the time because it's actually critical. They're critical force in the road and critical decisions for the future. So I definitely involved in those key discussions.

International abilities. I is really interesting ah as much of our company built through acquisition regulators are on the world right now, not so hot and acquisition and assuming of some thoughts about that, but the other thing they really into is international ability, right? They are saying to various companies, you have to make your products and services in are Operable each either so you can lower switching costs for consumers and businesses can go have a viBrant market to to pick and choose our vendors from. If you've built the company through acquisition and interaction ability, do you think some regulators are going to come to you and say, okay, all of the intercept that you built for credit karma in quick books got to open that up to another financial kind of winter?

All of our decisions are based on delivering for our customers and winning in the marketplace and driving growth for the future. We we don't make decisions that really are in the in the context of what will what will a regulator think about something. Um we have very solid governance in the company.

We have a data privacy and security principles, which which we are by by all focus on on our customers and such. Your question, I don't spend and we don't spend a lot of time worrying about. Well, now that we've built the company in this way to win and deliver for customers, what could a regulator do? Because the end that a day, a regulator generally, they want to do the right thing.

Generally, it's not politically driven sometimes that is. But at a our view, uh, is that they always want to do the right thing and we always want to do the right thing. And now we would always have a conversation in the construct of if there's any areas that have questions on. But our focuses, our compass, is very clear.

Would you let your competitors use the interactive hooks you ve built for your own company to interface with theirs?

We live in a world a of quartet tion only because when we think about our specially our businesses that we serve, what we really care about is our businesses are transacting on our platform. You but sometimes they will use square payments, sometimes they will use uh, paypal, sometimes they will use a other payroll per riders. And we provide the capabilities to immigrate those capabilities on our platform because we want the customer to be able to serve their customer they way they want. And so that sort of when you look at our AI driven expert platform strategy, yeah, a very important element of IT is that it's open and it's open because that helps us deliver for our customers and win.

Let me ask you the key decoder question, which we have been circling around this all time. Uh, how do you make decisions? You have you've been there a long time.

You have grown with the company. You ve made a bit of big decisions. What's your ramework?

Probably one of our largest advantages, the company is what we uh term our into an Operating system is the mechanisms in which we run the company. And this is important context. To answer your question, if you look at our mechanisms, we have a set of mechanisms around how we set expectations and set strategy.

We have a set of mechanisms in terms of execution, and then we have a set of mechanisms in terms of how we gavan ize the leaders at all levels and all of our employees. And so therefore, we have mechanisms like six year plan. And it's not a financial plan.

It's actually just looking away into the future and looking back to consider what has to change. We have three in one year planned mechanisms. I won't bore you with all the mechanisms, but that's important context to answer your question. You know our six year mechanism is is really structure to touch that. We question everything that we do. One of the things that you we believe in strongly, I believe in strongly is never to fall in love with what you declared and always found in love with the customer and and sort of the trends and how the world is moving. So our mechanisms are set up for certain outcomes and decisions are six year mechanism decision.

Is does anything change in our strategy and bets? And if so, what is IT? So the output of IT the decision is what changed and why are three in one year planned mechanism is all structured around not only the key priorities but the actual deliverables um what we call input goals, which is the best practice we borrows from amazon where you know every input goal has a leader sign to IT a has success measures and we ensure that it's resource and we also know what's below the light.

Those are all decisions that our teams make, but the decisions that I make our capital allocation because not everything is created equal. And where do we put our dollars and capital? And then the last one is we spend a lot of time on culture and people, and those are decisions are involved with.

Like just last week, we had an all day, which we have at four times year all day session, focused on people on succession planning. Those are decisions, right, whose potential successor for key roles in a principle that we have is teams can propose who the successors are. But if it's a direct report to the C E O, one day I decided if their actual casual, so those are decision. So every mechanism is set up for an output and a set of decisions and were generally pretty clear, are those decisions I get to make are their decisions the team gets to make, but not that we try to push as many decisions as we can into the work, uh, because most decisions are two weight hours, you can always reverse them. But that's the structure and framework that we use is our into adapt ating system.

There's one key decision I have to ask you about since we're here and you mention things fitting into the into IT Operating system. I was a very loyal mint user. You decided to shut that whole service down. What was your thinking there?

There was a very small cohort of customers that we're using mint. Uh, we decided that in order to truly to have a platform that we can serve millions of customers that we would port most, not all of the capabilities in the credit arma. And so we I can't remember the exact percentage, but I think thirty to forty percent of the immense customers are now on a credit arma, by the way, happier than before.

And I think there's twenty percent of customers that we can't serve today with credit karma. But we're okay with that because there is a very small world to customers that we could serve on mint. And we had the we ultimately made the decision to be one platform. So by the way, if there's anything we can do to help you send me email, my email address is available on our website. Anything I can do to help you, we but we can't replacement exactly the way I was.

We need to stop another quick break. Will will be back in just a minute.

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Welcome back and talking with into its CEO to song the dari. Before the break, we started to get into one of the harder decisions that CEO have to make laus when into a fire ten percent of its workforce. Earlier this year, son sent a memo saying the majority of the folks let go.

We're under performing. So I really want to know, how did he measure that? How many people work IT into IT today.

where about seventeen thousand strong and growing and growing?

So the interesting thing about growing is you just let off at ten percent of your folks this year, eighteen hundred people, you said you're going to hire another eighteen hundred people to focus on AI inside of that decision. And this is the one I really want to to press on, uh, inside of that decision, I think the company announce a thousand plus of those eight hundred people were low performers. How did you decide which one of eighteen people was a little performer?

First of all? Um when I look back at the last five years, there are big decisions that i've made and then there are really, really tough decisions that we've made that i've made and this is one of them because at the end of the day, everyone we have in the company, we believe, is very talented. And when you make a decision like this, you're impacting you know people's lives.

And so one ah these decisions never come a easy. The second is we were very clear across five areas, particularly are five beats. We've seen so much progress that as we thought about this is part of our six year and three year mechanism as we thought about the next two years, three years and five years, we felt that IT was important to accelerate investments in five key areas.

Majority of them are around our big beats. And we also felt that in order to do that, there was an opportunity to relocate dollars from within a while, we buy the way, continue to add to our overall investment portfolio. So this was all driven by acceleration, momentum and growth.

To answer your question in terms of, uh, how we picked to those folks that was all bottle up. H, we have a performance management system where h, in essence, of managers will go in and they will rate their employees. Generally, ten percent of the company is what we call trajectory changing.

About twenty percent is exceeds expectations. So about thirty percent of the company is exceeded or trajectory changing. And generally about you sixty to sixty five percent or achieved expectations, which is, by the way, we have very bold goals to achieve expectations is actually really strong performance and generally five to ten percent that or does not meet expectations. And that's A, A process that we go through once a year where managers will put into the system the ratings. And so this was done bottoms up at every layer of the organization. IT was not a top down decision, but the decision that we are made this year was that in order to move with the velocity that we need to move to reallocate the resources and the dollars, is that we would, in essence, lay off the ten percent that fell into IT was actually more like eight percent that fell into the bucket of does not meet expectation. So that the very bottle of very disciplined and rivers, although very tough in terms of how we made the decision.

I feel like a lot, a lot of people, uh, spend some time every year using enterprise software to raise their employees. I certainly do IT my boss to do IT to me. Do you feel like that data is good? Do you feel like that data was actually telling you something? Because a various companies that i've work with, I can tell you that data at nothing and at some companies that means a lot.

Yeah for us is everything um and what I mean by everything is for us it's about first of all, goal setting because goal setting is is about what does great look like. And performance management for us is performance management at all levels. We need the performance manage our trajectory changing so that they can become a Better version of themselves.

And we needs a performance management that does not meet expectation. So performance management for us is about coaching a baseball team, right? You're focused on making every person know on the team great.

There's somebody that never comes off the bench. There's somebody that you know the star of the team. That's what we try to become great out.

So sort of goal setting for us, uh, discussions on a monthly basis and then they're rating at the end of the year. It's about the system. And I would say the system for us is very, very important.

And I will also tell you that is a conversation I had with the whole company this year. We need to up our game in this area. When I look at the last several years, we have not been as great as we need to be in terms of really being great at setting goals for every individual. That's meaningful goal with very clear success measures and then having conversations because it's a two way street in terms of how you become a Better version of yourself. And so we actually take the end end approach, the goal setting to performance management very, very seriously.

Do you think that shows up in the products? I will tell you a lot of decoder westerners have asked to have you on the show basically for feature requests in bugger reports. And then there's other stuff that a lot of people ask us to task you about. But in particular, right, the software is and as good as IT should be, you you're moving me from my desktop client to a web client because that's where the platform is and the web client is not nearly feature complete for things like keyboard commands. Do you think that this process is going to make the products Better?

Everything that we do around goal setting, performance management is about delivering for customers. I mean, that's all sole purpose of why I exist. Why our team exists is all about the product.

So the short answer is yes. I would also separate what I just said from the sort of promise of your question, which is desktop to the cloud. I think that the reality is we were born forty years ago.

We were born in the era of dos and we were born as a desktop company. And Frankly, uh, that stop customers, both on the consumer side and on the business side, built you know who we are today. At the same time, the workflows, the features, the functionality of desktop is not intended to be translated to the cloud.

If we did that, we would not be able to continue to grow with most of our customers or acquire new customers, particularly as we're trying to create done for your experiences versus feature. So I would say a lot of our focuses how do we make the transition for our desktop customers as easy as possible to the cloud. With that said, if you look at any company that had to go from server to cloud or desktop to cloud or on premise to cloud, there's always a lot of growing pains because cloud, uh, platforms are not a replication of desktop platforms.

And so we're really solving for as much as possible the ease of migration far does stop customers, but we're truly building a cloud platform that's built for new customers and customers that i've embraced the cloud platform from ten years ago. And and I saw that just to say, we aim to make our to stop customers as happy as possible. But really, it's impossible to replicate what they want in the cloud because then our cloud offering, uh, would be very old, aged and a workflow base, which is not what customers of today want.

Do you anticipate supporting the death of clients are forever?

I mean, we have for many, many years and many of our desktop services are actually now on the cloud, and we built IT in such a way where there will be a seamless transition to the cloud one day. At this point, we've not clear your goal .

was to move everybody to the cloud.

The goal has eventually move everybody to the cloud. We're not going to force customers that like for instance, the workflow is not going to be the same in the cloud. But if you have a need for a particular module that we absolutely don't have in the cloud, we're not going to force you to move to the cloud eventually. That could be two years from now, five years from now. I think everybody's going to end up being in the cod.

Let's like what A I and then i'm not going what you get out here unless we talk about tax filing. You know it's common are the AI features is going to be in the cloud only are they going to come .

to the dust up platform. The primarily only in the cloud, only in the cloud. In fact, everything that we're building in the cloud and have building in the cloud is just powered by our data AI platform. Cape.

you just announced, uh, bunch of A I features that your investor day is on the order of when people logged in the quick books, you're going to see a feed with new insights on cash flow and other opportunities to use AI. Let me just asked you a threshold. The question that i'm asking.

Every CEO about their AI products, can the A I technology you have now do all the things you want IT to do does? I'm not a hundred percent sure that the L M. Technology can do all the things that everybody wants you to do.

Let me say two things in in context of your question. The first one is we're not launching A I features, but our entire platform is fuelled by data and a and in fact, our goal is not to ship a bunch of plugin features that do so for you, but but to create a platform where marketing is done for you, quote to cash is done for you, books, taxes are all done for you.

And please think about IT from what we're trying to achieve as the whole platform is fuelled by a data on a that's the first thing. The second thing is when we declared A I cord, our strategy, our investments were in machine learning and knowledge engineering. Knowledge engineer is very particular to us.

We have patterns around IT. IT takes rules and the relationship of rules and code turns out into code and the power of IT is accuracy. And a lot of what we do has to be accurate.

That's really been the promise of all of our AI investments has been machine learning, knowledge engineering. About three to four years ago, we started investing in genii and specifically in our own into a financial large language. Models are models are the only thing, models that are trained by the customer data.

I set that context to say we're to answer your question. We are in a very, very early days of what else can do. And I would tell you that we work a lot with the majority of the companies that are out there, and the progress that's been made month to month is incredible.

So in terms of. Will I do most of what we need sometime in the near future, medium future? absolutely. And I believe A I will one day be as smart, uh, humans, if not smarter.

But I think humans are always going to be a critical part of the picture us in in our industry, but is still very early days. I don't want to also suggest that everything can be achieved with A I today. We're the beginning of a very long journey. It's one thousand and ninety nine internet part of the newt. Now LLM are .

someone notoriously bad at math. You you run a financial platform for lot of people. Do you trust IT?

Uh, not on a zone. That's why I mentioned, you know, when you look at our AI platform that sits on our data layer in our data platform, it's the combination of machine learning knowledge and gering, which is very good at math and are alams that work in concert to deliver experiences to ensure your taxes are done right, to make sure accounting is done right. So on its own, no. But in the combination of our um other elements of our AI platform, absolutely.

Are you getting economies of scale from other A I companies investing in this space? I think you pretty about met as doing a lot of open source models right? And they're pushing far ahead on generate vi a knowledge engineering. Are you getting the same kind of economies of scale from the industry or as everyone focused on alms?

You know, we're getting a lot of economies of scale because of our own investments because we were so early and we did this for very, very practical reasons. But we actually test and experiment, whether, you know, across the board with entropic A W S, geri lama, open source. And part of the experimental is a, how could IT potentially be a leverage to our limbs? Because our limbs have the agency in the authority.

There are the brains of delivering the experiences that I are articulated. And so we're not getting economies of scale from other allies. In fact, I would say it's the reverse right now. I think two years from now, three years from now, we're going to get economies of scale. But today, the economies of scale, and it's why we've been able to deliver platform leverages and margin leverages from all of our own investments over time.

I think it'll help you get a lot of owners using your products. They're looking for insight. They are pretty not financial experts.

The L M. Or whatever system is you build tells them something in a loose nation, it's wrong. Have you have you worry about the liability of that of giving bad financial advice? Just one business center.

So I love, by the way, the promise of your question, which is this is why we're focused on done for your experiences because a small business.

once that's a lot of responsibility to accept.

we going to do this for you. That's right. And that's, by the way, why the essence of our investments that started six plus years ago is one based on the customer data at ours.

Everything that we provide is very specific and relevant to you. And then to it's the combination of our machine learning capabilities, our knowledge engineering and our alams that really deliver the performance, accuracy and costs that we would want. And we have governance.

We have technology governance and human governance eternally just to make sure what we are doing is accurate. And i'll just end by saying there's a range of accuracy, right? We can generally be right when IT comes to accounting and taxes, right?

We have to be hundred percent accurate. But then there are elements of, hey, you can run this marketing campaigns. I've to put IT together for you.

We think you could deliver a range of fifty, one hundred thousand dollars in revenue. The region was what matters, not the exact number for customers. So I think accuracy has a limit based on what IT is you're talking about.

You got to get a taxes is exactly right. A range of revenue. What's possible from a marketing campaign, you can have a range and customers are totally okay with.

do you think over time is integrate AI and to more and more of the platform, and that becomes something more customers are paying for the free into a turbo tax. Products will remain as big of a mix as you have today.

It's really you have to think about the coherence of customers. There will always be customers that um have a simple tax situation where free may be the right thing for them. There's also a lot of customers that no matter what their tax situation is, actually want somebody else to do their taxes for them because of confidence.

They fear getting IT wrong. They want to make sure they're getting the largest refund if the IOS comes after them. They want to make sure somebody is there to protect them.

And so they always want to have an expert do their taxes for them. So we believe that over time, we'll still have a mix of free will, have a mix of paying customers. And I think over time, our largest growth will come from disrupting what today is the assisted category.

Well, sun, I can keep talking to you forever. I think as you can tell, we got wrap this up. Thank you.

Shopping the coder. Yeah, absolutely my pleasure. Great to see you talk soon.

That's the episode. D like, thanks the song of darzi for taking the time to join me on the coder, and thank you for listening. I hope you enjoy that.

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