 Live from San Jose, California, in the heart of Silicon Valley, it's theCUBE, covering QuickBooks Connect 2016, sponsored by Intuit QuickBooks. Now here are your hosts, Jeff Frick and John Walls. So we continue our coverage here at QuickBooks Connect 2016 here on theCUBE, the flagship broadcast of SiliconANGLE TV where we extract the signal from the noise that shows all over America and this week we are here live in San Jose along with Jeff Frick, I'm John Walls. We're now joined by Jeff Priest, who's the VP and Accountant Segment Leader at Intuit. And Rich, nice to have you with us here. Hi, thank you, appreciate you being here. We've had a great discussion about soccer, probably not what we're going to talk about for the next 15 minutes or so. What I'd like to do though, if we can't kick off, is on the firm of the future. And we've had that concept kind of bandied about a bit of her a little bit on the keynote stage today, but just what is that? And what is, what's going to, or what are you doing with it in terms of Intuit to facilitate its growth? Yeah, absolutely. So, you know, accountants are at the backbone of what we do at Intuit and QuickBooks. So, you know, we're very fortunate, we have 600,000 accountants who use our accountant offering for QuickBooks. So an enormous part of our ecosystem and, you know, what we've known for a long time is there's obviously a big move to the cloud. So these are accountants that historically have used desktop products. They have built by the hour. They haven't necessarily partnered with third-party apps. And of course the world has changed. Now, you know, the products like QuickBooks Online are in the cloud. That means that data can flow seamlessly from a client account, the bank account, back into the books. Much of the work the accountant did, frankly, has been automated. And so what we're trying to educate accountants with is you could get left behind. If you don't make that move to the cloud, you literally will go out of business at some point. Now, as we sit here today, there's about a third of accountants that have made that move to the cloud. About two-thirds still have not. So the firm of the future is all about how do I do that? You know, how do I get my clients to the cloud? How do I move my practice to the cloud? How do I work with third-party apps? And so it's a little bit foreign to some accountants. Some have adopted it, but that's the concept of the education. So what's the kicking and screaming all about then? I mean, you're talking about two-thirds of your accountant base has yet to pull the trigger on that. What's the reluctance? You know, and it's basically sometimes there isn't a burning platform for change or people don't feel the burning platform until it's too late. So if you think about a typical accounting practice who's been around for 20 or 30 years, it has maybe 200 clients, it's very profitable. If somebody tells you you need to change your practice fundamentally, there is arguably no platform for change. The average age of accountants is still in the early 50s. And so there is a groundswell of it won't happen to me when the reality of it is it will happen to everybody. And so as with anything, there are some early adopters and they see the future first and they make those changes. And I think the good news is it's starting to get to that critical mass now where more and more accountants are doing it. It will soon be at that sort of 50% place. And so when we talk to accountants, 76% of them say they plan to move to the cloud. So certainly I think the education has taken root. It's just about taking the steps and actually moving again from a desktop world to a cloud-based world. So one of the classic paradigms we see in enterprise software as more of the stuff becomes automated, moves to the cloud, especially on IT, the comeback is, but now you can do more value added stuff. Now you're not just keeping the lights on. Now you can get involved in the business. You can be a more significant person driving business value. Is that discussion happening? These guys would say, you know, you don't need to be entering receipts anymore. Now you can work with your clients to talk about cash flow, to talk about growth, to talk about, you know, succession planning, you know, higher value topics to recover some of that lost time that you're not doing data entry. Yeah, that's exactly the conversation that we have. And I'll give you a couple of examples. So, you know, you're right. The data entry used to be the backbone of what the accountant would charge for. And the reality of it is it's largely automated and the small business owner knows that it's largely automated. So the accountant can no longer charge for the core service. So they have to move to another place where they're adding value. Now, good example would be, you know, at Intuit we have a service called QuickBooks Financing. And so we essentially have a platform where we work with lenders, and at times actually we put our own money into this as well, to lend to small businesses. Now, some need a traditional APR loan, some need a line of credit. There's a whole variety of different lending tools. We try to educate the accountant so they can actually get in front of the needs of the small business to help them with managing their capital. That's something that an accountant historically would never have done before. So we try to give them those tools to have that conversation, and it's not just about data entry. I guess you do consider that your role as far as facilitating that dialogue or that relationship between the accountant on one side and the small business owner on the other. How have you learned to be the translator in that transaction? What have you learned from maybe the accountant side to help you talk to the small business folks and then vice versa over the years? Yeah, that's a great question. I'll answer the question by giving you a couple of stats and then sharing why they're important. So 89% of small businesses say they're more successful when they work with an accountant. So nine out of 10 basically say they're more successful when they work with an accountant. And then accountants say one of the hardest things they do is find new clients. Accountants will often say, they're not good marketing folks, they're accountants. And so you've sort of got this strange situation of small businesses knowing they're more successful when they find an accountant and accountants having a hard time finding small businesses. And so a good example of that is we have a platform which is like a matchmaking platform. It's called Find a Pro Advisor. So last year over a million small businesses just simply within QuickBooks went to this platform to find a Pro Advisor and several hundred thousand of them found a Pro Advisor. So we connected them to an accountant. Now, that's not good enough and we need to lift that number up but still it's making those connections. It's finding this small business is perfect for this accountant and putting the two together. You know, the other stat is half of all small businesses still go out of business in the first five years. Half of all restaurants go out of business in the first two years. And so again, early on finding the small business who can work with the accountant will actually reduce the odds of going out of business as well. And in that marketplace, obviously you're providing guidance in the restaurant example probably makes sense to work with somebody that's worked in the restaurant industry before because of the unique casual characteristics, the unique, you know, write-offs and another kind of tact treatment. So it's not just a blind yellow pages look or you know, I tap my buddy on the shoulder who maybe's in a completely different business. What's your guy do? I mean, you know, maybe your guy can help me. A lot more intelligence to the process. It is and that's exactly how it works. So for example, you know, we asked the accountant, what's the top five industries you support? Which third-party apps do you support? What social proof do you have? And then we'll actually look at their QuickBooks files and we'll say, you know, we know that you have 30 clients already who are restaurant owners. And then for a restaurant owner comes in and says I'm looking for an accountant, we can use that data to target the specific accountant in their area who supports the apps that they need, who has the experience that they need. You know, even within that one segment, for example, franchises is a big thing. Some restaurants are in a franchise. You know, you think of Subway, McDonald's, some obviously are not, they're one-off restaurants. Finding the accountant that supports the franchise, if you're in a franchise, is important. So we try to get to that level of granularity and then truly it's a client that fits the accountant and vice versa. Because there are so many people self-employed these days, right? That number is growing, I think. Correct me, but there's something like 34% of the workforce right is self-employed now and expected to grow. So if I'm an accountant and I'm looking at that, first off, great, great opportunity. So I'm thinking, oh gosh, great headaches because their accounting or their processes, their record keeping, their bookkeeping, their time tracking, it's just not up to snuff. So what kind of frustrations are there that are existing in that evolving paradigm now with the self-employed becoming the bigger part of our workforce and the accountant and then on the intuitive side, you're trying to corral them and get them organized. Yeah, and actually this is a really interesting one because as you mentioned, 34% of all tax returns today in the US are Schedule C, which means self-employed. So it's already a large number. By 2020, there will be 60 million, six zero, 60 million self-employed folks in the US alone. So this is a large and growing segment. Now, when we first spoke to accountants about this a couple of years ago, they largely said, I'm not interested in this group as my clients. They said self-employed folks typically are less organized and so these are folks that have receipts in the glove box of their car and so they come in with a shoebox and their willingness to pay me is relatively low. And so, apart from that, they're fantastic. They're ideal clients apart from that. And so that was sort of the leading perception when we spoke to accountants. Now, subsequently, we've launched a product. We have over 100,000 customers now using QuickBooks self-employed, which just goes to show the excitement in that space. We asked them, is this a DIY product or are you looking for help from a professional? And much to our surprise, 75% said, I'm actually looking for some help, particularly around taxes for a professional. So what we've recently done, and actually we announced it at the show in the last couple of days, we've built onto our QBOA, onto our accountant platform. We've built the ability for accountants to work with QuickBooks self-employed clients and essentially what we do for the accountant is package up the tax return and so much of the work is done for them and then they can help a self-employed client at a much lower cost point because it's much less of their time. So the average tax return takes an accountant five and a half hours and so we're hoping we can slash that down to a much, much smaller number and then that accountant can work with that self-employed client for a lower number. So our dream of putting the two together is still very much in place but sometimes it's about doing things differently so we can automate some of the work to drive the cost down. It's still a classic automation play, right? Automate so much of the record keeping on the client side, the access and the pumping of that data into the returns for the accountant side and hopefully they can do more customers so they get some more money. Exactly, versus miss out on a large and growing space which will soon be half of all tax returns in the US at some point here in the next 10 years will be self-employed and if you're the accountant that said I want no part of that then that's going to be a dangerous place to be at some point so we're trying to again lower that barrier to your point using automation. And then now we have the whole gig economy thing which is a whole different class of self-employed that's growing at an astronomical rate. It is and if you just think about Uber drivers, Lyft drivers, you know it's interesting I until recently was working for the last three years in the UK a fascinating stat there that's just a couple of weeks old is in London alone there are now 70,000 Uber drivers 70,000, 70,000 there are 20,000 black cabs so if you've ever been to London and you've seen how many black cabs there are there's now more than three times as many Uber drivers and then you think many of these folks are needing to file a tax return for the first time they're needing to separate their business and personal expenses for the first time and so a product like QuickBooks Self-Employed which costs less than $10 a month helps them do those two things and so that's where we've seen a tremendous amount of uptake. You've touched on this already but you just said something that maybe take another bite of the apple here you talked about we're going to do things differently we want accounts to do things differently and I start thinking well the accounts I know they don't do things differently that's just not how they're wired they've got gap and they stick to it and that's it so ultimately your mission is to make people go against their inherent nature and convince them that it's really good for them yes, yes and it does sound like a tall order when you put it like that and I'll give you, it was fun to be on stage yesterday recognizing what we call our firm of the future so we recently ran a contest, a global contest where we had thousands of entries, firms of accountants who were encouraging to make these steps to do exactly this, to get out of their comfort zone and sort of move into this new place and we recognize there's a lady called Karen who her company's called 24 Hour Bookkeeper and she was the overall winner and she sat on stage and we did a little Q&A like this and she talked about how she has literally fired clients in the last 12 months who wouldn't move to the cloud with her and she said I simply am unable to support you anymore if you want to be a desktop client and she said she's fired clients who essentially have been unwilling to accept what she calls value billing and so she's moved her entire practice from an hourly billing rate where she herself said there's every month she has clients where she feels bad because she's literally spent six or seven hours on a client but she doesn't want to build them that amount because she knows that the turnover of that business is relatively small and she's moved all of that to a value billing where she has three prices there's sort of a low, medium, high Different levels of service Exactly and someone can choose to pay whether it's $150 a month or maybe it's $600 a month at the top and they understand what they're getting and it's less time and it's more sort of a package of services and so she talked about how she was in a place three years ago where she didn't understand this and now she's in a place where she sort of sets these guidelines and some clients like it and some don't most do and her practice is now in a very different place and her clients are more successful than ever And she's much more efficient with her time the clients are getting their money's worth out of it but you've got to convince them to at the same time Exactly and it's a process and it's a process where we always have to educate obviously on the benefits and so it's less about what we do and more about the benefits to the accountant and the small business but we seem to be winning that battle over time Well, good things happening and into it no doubt about that, Rich we certainly do appreciate the time wish you all the best and congratulations on the show here by the way that's just good energy, upbeat, positive and blue skies ahead so good job on that front Well, thank you, really appreciate the time Thank you guys Thank you, Rich Priest from Intuit joining us here on theCUBE we continue our coverage from San Jose right after this