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College Bootstrapping Buddies: Grasshopper Cofounders Siamak Taghaddos And David Hauser (Part 6)

Posted on Monday, Apr 12th 2010

SM: Intuit does well because accountants and bookkeepers all know and use its product. They are all trained on QuickBooks, and they are not entrepreneurs. Even Microsoft could not penetrate that relationship.

ST: It all depends on the services they’re going to provide to entrepreneurs. Intuit has done a great job and has been very successful because its distribution has been directly into the accountants. However, for the same reason we would never start accounting software, we doubt that they will go into some of the product areas we intend to go into. For us to wonder if Intuit or HP would get into entrepreneur’s services is just speculation, and I would put our money on ourselves rather than anybody else.

SM: Intuit just bought PayCycle, which does small business payroll software for companies that have 1 to 20 employees. What they are doing is rolling up a bunch of software as a service companies and small startups. There are very solid companies out there, and Intuit has the currency to roll them up. My question to you is, what is your strategy to compete against Intuit if they really go heavily into that space? I’ve had conversations with their CEO to that effect.

DH: First, just look at the market perception of Intuit and what entrepreneurs think about their brands. For the most part entrepreneurs dislike QuickBooks, yet it is the only option they can use.

SM: I’m an entrepreneur and I have no problems with QuickBooks. I haven’t met any other entrepreneurs who do. QuickBooks has millions of users.

DH: We’ll just have to disagree on that point. The more important fact that you pointed out is that Intuit is not creating those products on its own. It is going out and buying companies. It bought Mint and other companies that it could not build on their own.

SM: It’s possible that you could be an acquisition target for Intuit.

DH: We don’t want to go in that direction. The Intuit plan shows that it is not able to create products or services and that it has to acquire them in very large multiples.

SM: So your game plan is to build a company that is independently large and over which you have control?

ST: That’s correct. Acquisition opportunities are hard to speculate about, and we would never rule that out because it depends on who it is and when it comes along. We are going to continue on our path, and if the right investor comes along and wants to acquire our company we will look at that situation. If Intuit came right now, we would say no.

SM: Who are your direct competitors? Do you view RingCentral as a direct competitor?

ST: RingCentral and VirtualPBX are both direct competitors.

This segment is part 6 in the series : College Bootstrapping Buddies: Grasshopper Cofounders Siamak Taghaddos And David Hauser
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