Speaking at TechCrunch Disrupt in San Francisco today, Scott Cook, the founder and chairman of Intuit, and Beth Comstock, the chief of marketing and vice president of General Electric (GE) traded notes on innovation, investing and acquisitions.
Intuit’s best-known products include Turbo Tax, Quickbooks and Quicken, software that helps consumers, the owners of small and medium sized businesses and large financial institutions save or manage their money. The company’s more recent releases include the Intuit GoPayment mobile app and Mophie credit card reader, the latter of which began sales at Apple stores about three weeks ago, and Turbo Tax SnapTax, a mobile app which allows users to “snap, prepare and file” their taxes with a smart mobile device.
GE’s business encompasses: power generation from traditional and renewable sources, hybrid and electric vehicle technology, financial services, health care solutions, and television programming among others. The company recently committed to spend $10 billion on clean tech research and development in the next five years via its Ecomagination initiative. Ecomagination includes a business competition for smart grid technology startups.
Comstock said more competitions focused on specific clean tech and health concepts would likely follow (and would help build GE’s portfolio). GE is also investing, over a six year period that commenced in 2009, $6 billion in healthcare ideas and businesses that decrease costs, improve quality and increase global access to healthcare.
For Intuit, Cook said, acquisitions are part of an approach to innovation and growth that starts with growth from internal talent and resources. Over the long term, Intuit expects double-digit organic revenue growth and revenue growth that exceeds expense growth. Whether Cook is reviewing a business idea that was hatched internally, or was pitched from an external source, he doesn’t apply a rigid hurdle rate, he said:
We look for…the deep and abiding problem that consumers and small businesses have that has not been solved. [We ask if] we can cobble together technologies that will solve that problem, and delight people in doing so to build competitive advantage. If we can do business there, it doesn’t matter what’s on a spreadsheet.
In the last few years Intuit acquired Homestead, Paycycle, Mint.com (which launched at the TechCrunch 40 in 2007) and more recently, MedFusion. Intuit spends its cash on high-yield opportunities, targeting risk-adjusted returns of 15-20 percent, generally.
Of its acquisition of Mint.com and others, Cook said:
You either disrupt or you get disrupted. If you’re not engineering, and somebody else is, you gotta get on the bandwagon. We bet on them, they also bet on us. [After we acquired Mint] we gave them our Quicken business, and now they manage both! They’re bringing invigorating new thoughts there.
Comstock said that GE has a “hole in its pocket” now, where great clean tech and health ideas are concerned. She emphasized that the company has been more open of late, investing in promising startups through competitions and more, and striking joint ventures with companies that complement GE’s existing lines of business:
We have great battery technology relating to electric vehicles. Our lab is great at sodium science! So we’d created this battery, and we had to make them. Our marketing team then asked: what other markets can I take this to? Auxillary power for planes? Cell phone towers? That is like a virtual startup. It could make $200 million in the first couple of years. At the same time, we invested a couple of rounds in A123. They have lithium capabiltiites. We brought them into our R&D lab, and its the first time we’ve co-created like this. So now, we’re backing the A123 battery, too.
Comstock advised founders wanting to attract GE as an investor, buyer or partner:
We have a whole combo of things we’ve grown and invested in, both…We are always asking ‘Does it scale?’ All the time… Technology is the thing that we do. But business model innovations are really important, especially when you lok at the data that’s coming out of everything! Jet Engines. Medical [devices]. You name it. Don’t just think: ‘I have to have a thing.’ It’s also software, algorithms and business models that we haven’t had experience with that interest us.
Cook advised founders more generally:
Select your team very carefully. Get the right people on the bus and pick the very best for each slot. Have a mission, a big dream, go out and change the world. The big dreams make a difference. But get there one successful experiment at a time. If there’s something I’ve learned in the last 4 years, it’s the power of iteration. Rapidly create, test, change… Run experiments with customers, let the customer vote, don’t rely on the boss to vote.