Your Accountant Can Keep You on QuickBooks, and That Is a Big Part of Intuit's Edge
A founder chose a sleeker rival to QuickBooks, until his own accountant vetoed it, showing how exclusive distribution can beat a better product.
20VC with Harry Stebbings · Gokul Rajaram: How to Analyse for Durability and Defensibility in a World of AIAfter he started a company, Gokul Rajaram tried to pick his own accounting software.
Rajaram did not want QuickBooks, the Intuit program many small businesses use to track money in and out. He signed up instead for Xero, a rival accounting system that, as he remembers it, had just started and seemed to have a cooler interface.
Then he told his accountant, the outside professional hired to keep the books straight and handle taxes.
That is where the plan stopped. The accountant would not use Xero. "No, I'm sorry. I don't use [Xero]. You shut it down," the accountant told him, as Rajaram retells it. So Rajaram canceled Xero and went back to QuickBooks.
The story is about more than a stubborn accountant. It is about a kind of protection that a better screen cannot always beat. Rajaram calls it distribution mode, where a company has a proprietary and exclusive path to the customer. Anyone can try to build a better accounting system, he argues, but that may not matter if the person who actually runs the books will not accept it.
That, in his view, is a big part of Intuit's edge. Rajaram describes Intuit as having taught a network of accountants to use only QuickBooks, a channel he calls very hard to displace. In his telling, his accountant had the final say. Rajaram wanted change, but his accountant's two sentences were enough to stop him.
In Rajaram's case, the moment that counted was his accountant's no. The new tool died when his accountant refused it.
That is why Rajaram treats this kind of channel as a kind of lasting advantage. A product can look newer and nicer, and still lose before it is ever tried.
Questions people ask
What is QuickBooks and why do so many small businesses use it?
QuickBooks is Intuit's accounting software for invoicing, payroll, expenses, and taxes. It became standard partly because accountants know it well and can serve many clients on one system, which keeps new clients coming back to it.
What is Xero?
Xero is a New Zealand-based cloud accounting company founded in 2006 as a rival to QuickBooks. It is widely used by small businesses and accountants in Australia, New Zealand, and Britain, and has grown in the United States.
Why would an accountant refuse to use different software?
Accountants work on tight deadlines across many clients, so learning and supporting another system costs time and raises the risk of errors. Many also get training, support, and client referrals through Intuit's accountant network, which rewards staying with QuickBooks.