 Live from San Jose, California in the heart of Silicon Valley, it's theCUBE, covering QuickBooks Connect 2016. Now, here are your hosts, Jeff Frick and John Wall. Welcome back here in San Jose. We're live at the convention center for the second day of QuickBooks Connect 2016. Thriving community, 5,000 plus attendees here, enjoying what have been some fascinating keynotes and breakout sessions. And it's our pleasure to bring you some of the brightest and best minds in the QuickBooks community. And we have that with us today in the form of Jim McGinnis, who's the Vice President of Product Management. Hi, Pro Connect. Jim, thanks for being with us. Thanks for having me. I'm excited to be here. You know, I got to tell you, I wasn't aware of your stature until Jeff informed me of last year when the two of you met. He said I could barely have a conversation with it because the man's a rock star. People kept coming up, they wanted to take selfies with them, and it was nonstop. So apparently your cachet goes well beyond the cube. That's very kind, but the truth is, the rock stars are 150,000 plus pro-advisors from around the world. These guys are making a huge difference in the small business's lives. They come here, they connect with small businesses with each other, et cetera. So I'm, sometimes it feels a little silly, but I'm just honored to get to spend time with them. No, but they wanted the selfie. So good for you. They're not asking for Jeff and John. They're asking for Jeff. In the near future, I'm sure. Give me an idea. First off, your feelings about the vibe, and you heard us talking about it a little bit ago, but your thoughts about what you're seeing here and the growth of this show over the last three years. Oh, I was having a conversation. You know, this started on the back of a notebook three years ago where we said we're getting big enough that we believe we need to have a show to bring folks together, but we want to be different. We want to be about making connections. So the name QB Connect was born. We wanted to be the place where developers, small businesses and accountants come together and meet. The vibe is phenomenal. The vibe, you know, it starts early Monday morning when we do the accountant kickoff. They go into training. A lot of them get certified in QuickBooks Online and advanced certifications as well. It continues the next day yesterday with these fabulous keynote speakers. Last night with a great band, Third Eye Blind. And you know, sometimes these bands say, am I seriously playing for a bunch of accountants? But they always come away and say, that is one of the best shows we've ever done because the enthusiasm, the excitement. Everybody loves to be here. And then today continued, we had fabulous speakers from the stage again, people like Tony Hawk and Simone Biles. Yeah, so what do you want when people leave here and we're going to get into accounting and what's going on certainly in your world. But I'm just curious, the takeaway that you want people to have as they go back to all corners of the globe, frankly, what do you want them to do and how do you want them to feel about QuickBooks when they go back and do their 12 hour day jobs? Absolutely, you know, I want them to feel empowered to really make a difference in their clients' lives, which is super fun. They, there was a quote yesterday from America who said, you are modeling possibilities for someone else you may not even realize it. And boy, our pro-advisors from around the world really model possibilities. They save small businesses all the time. In fact, 89% of small businesses say they're more successful because they work with an accountant. How do I want them to feel about QuickBooks and into it? I really want them to feel like we're their partners. Scott Cook founded this company, believing that we're here to make a difference, to change our customers' financial lives so profoundly, they can't imagine going back. When I talked to accountants last night, today, that's what they tell me. They want to change their small businesses' financial lives so profoundly, they can't imagine not working with an accountant. We're perfect partners. That's what I'd like them to take back. It's so funny, right? The dirty little secret, everyone thinks it's an accounting show. It's not an accounting show. It's a small business show. It's really a building businesses and partnerships and really creating that foundation for other people to build from to be more successful in really pursuing their passions. I think that's why the energy is so strong. You said it well, it's all about possibilities and it's all about connections. Excellent, so let's talk about some big global trends that are not only impacting QuickBooks and Intuit and your customers and the accountants, but everyone all over the place. The two big ones that have recently just overtaken everything, mobile and cloud, huge impact on what you can build, how you can deliver it, how people consume it, how those really changed what you guys have built and delivered at QuickBooks. That's great, you know, I'll start with the cloud side because I think that's where it all starts. Those, all those desktops, they're coffins. The data is buried underneath your desk and it's unusable in so many ways. When the data moves up into the cloud, now you can make connections between industries. You can do industry benchmarking. Now the data can just flow seamlessly from one application like QuickBooks Online through trial balance to another application like our ProConnect tax online. We're able to connect up all these fabulous developers who are building solutions that we would never be able to build the creativity that we see and all plugging into this online ecosystem, it changes everything. On the mobile side, boy, you know, isn't it fun to see all the tweets going by? Our reputations are being built for us. The best we can do is curate them at this stage. The other is it's anytime, anywhere, isn't it? This idea that you could make an appointment with your accountant and he or you would drive across town to get some bit of information. It's just too slow in today's world. Mobile enables us to collaborate constantly with our accounting professionals and the accounting professionals to collaborate with their clients. And really in a different kind of form and function, because mobile, it's quick. I got two minutes standing in line at the grocery store at Safeway. I got a couple of minutes while I'm filling up my car full of gas. I'm waiting for the kids to come out of the coaches' meeting after the soccer game. So it's a lot more frequent little bits of connecting in the way that we use mobile apps to interact with our world. Absolutely. Think about all the productivity that's unlocked with mobile. So usually it's a simple question. I need something now. Make an appointment, drive across town. It's miserable. Instead, you can ask a question and all that's successful because the data's in the cloud. Right. So what do you do then in terms of, at least with a client base that has a reputation for being a bit slow to move and they're not, there's not an enormous number of early adopters. It's almost like show me. But yet when you have these new possibilities, like moving to the cloud, migration there, people are going to get left behind if they don't. How do you convey that sense of urgency and get them to convert and get them to adopt and take advantage of these great products and services that you're developing for people? You know, I'm going to answer that by saying, I say it ain't so. I think accountants and accounting professionals are some of the most forward people that I've known. Now, they have to be responsible. They have to look out for their clients and they're under a lot of time pressure. I think that if there's been some slowness in moving, it's because we haven't gone fast enough to create applications that really save them the time. Software is a tough business, folks, because before my previous life, I was in Procter & Gamble, you knew the benefit up front. Software comes with immediate pain and uncertainty about whether it's really going to deliver the promise, the benefit that's there. What we have to do is we have to help show accountants that the possibilities are there and give them immediate satisfaction that the time savings that they seek is there. When we do that, we've already seen it. They move quickly. Right. So you're kind of talking about in a way, I think, this firm of the future concept, right? That as far as where we're going in this 21st century. So talk a little bit more about that and what it means in brass tax terms. You know, when the rubber hits the road here and the terms of the products that you're providing people and the changes you think the customer's going to have to make in order to really fulfill this vision of the firm of the future. That's exactly right. You know, sometimes our accounting professionals or pro advisors come to us and say, can't you make it simpler? Can't you break it down into a few steps so I can follow a roadmap step by step and get there? And we've done that a little bit with our concept of firm of the future. The first step is the importance of getting online. You know, that first client, that's a little scary. Put your next client online, see what it's like, enjoy the benefits, learn the new operating systems, learn the new workflows. And then the benefits start to unlock. You can manage them all in QuickBooks online account. You can start tying in the different applications. You can see all of your clients there and as you get your second and your third you start to enjoy that. The second part of our pillar, I would say the firm of the future is we do believe that the billable hour, it's not scalable. With all the time savings is coming by moving to an online platform. Gosh, you'd have to have a lot more clients in order to make as much money as you're making today. We believe accounting professionals deserve to get paid for the value they create. And that means moving to fixed fee pricing. It means offering a range of services. It means going beyond just typing in data and compliance to actually creating more value through advisory services. And then that's the third pillar right there is once you're online and you're making money by creating value through advisory services you need to get your name out there. Become a specialist in a certain vertical. Help people around the country, even around the globe know the value that you can create and they'll flock to you. We've seen little companies start up with two people. There's one in Canada has gone up to I think more than 500 clients in less than three years because they followed the firm of the future approach. That's really interesting. It was part of the keynote too where a lot of the entrepreneurs said, you know they started with their family accountant or family friend who didn't really have a specialization in the industries that they decided to build and at some point they had to flip because the value added for the accountant is not data entry and it's this kind of old school that automation should help you get rid of the redundant and low value activity to free you up on the higher value activity which is asset planning and tax planning and future planning and inventory planning and the things where the accountant can bring much more value to the relationship that aren't tied to how many hours did it take to prepare your return? That's absolutely right. You know we say that the most important feature we can add into QuickBooks is an accountant and then you know sometimes there's some fear of technology I have to share what I read recently in the Wall Street Journal which is machines have been able to beat humans at chess but there's a concept called Centaur Chess which is half machine, half human. When a chess expert is combined with a computer can beat any computer and that's where we are in the accounting profession too. All this technology is fabulous but where it really starts to sing is when it's combined with an accounting professional who understands it and leverages to give advice only a human being can give. All right, so a couple more trends now that are coming, get your reaction. Machine learning, big one, big data obviously has been around for a while but you know kind of the machine learning and the augmented intelligence, AI. Some people say artificial intelligence other people say there's nothing artificial about. That's right. Should be augmented intelligence. Impacts of those on your software and your customers. Great question, let's be specific. Things like chart of accounts. We can do a pretty good job of estimating what a chart of account should be for a given vertical but they always get modified by the accountants because they know better than we do. When a few of them start to modify it and a few more pretty soon we can leverage the wisdom of the accounting profession crowd to get the very best chart of accounts for any given vertical. What a great opportunity. And then you think about benchmarks I was talking to somebody before about when all of the plumbing industry is on QBO and accountants can go in and say this is what accounts receivable should look like for a plumbing, for a plumber. Think of the power of that. But one thing we know is every small business says the same thing but I'm different. No problem. Tell me how you're different and in fact we'll find 10,000 others who are different just like you are. Just like you, right? That's it. Right, right. So let's just say, just going forward. You've got tax pros on one side, you've got accounts on the other. Never the twain shall meet. Now you're bringing them together and the importance of that, the value of that in terms of making sure there's an integration, there's a collaboration for small firms. You know, in my new role as product manager for the Pro Connect Group, that's the part I'm really, really excited about. Last year we launched QuickBooks Online trial balance so that the data flows into the trial balance and from the trial balance, mappings can be done and it flows directly into the tax software with a little modification and click of the button you can file right from the tax software. But our accountants told us, I don't understand, I don't want to run two different client lists when something's going on in the tax side of it. I want to know about it, where I do my work in QuickBooks Online Accountants. So this year we've integrated the tax software right into QuickBooks Online Accountant and now we're dreaming a little bit where as we talk about moving to advisory services, when it's a separate business, impacts in my books, impacts in the decisions I make here then get handed over to the tax side of the shop. Now when it's all one application, those insights come back from tax and say, you know, I wouldn't do it that way, I'd lease that, I wouldn't buy it because you're going to be in a much better position from the tax standpoint. And gosh, your business has really taken off, you need to think differently about your quarterly estimates because otherwise you're going to find yourself in a cash flow situation, you know, come October. So you're getting ahead, you're not looking after the fact and reacting. It's advisory services, it moves tax from being a once a year event to being an ongoing relationship. That's exciting. Well Jim, it's that kind of vision that I think makes you a rock star. And if you got time for a quick selfie with us, I'm just like, you know, we all just kind of, you know. I'm all in. Jim McGutis, glad you could join us here and look forward to seeing you down the road too. That's the one to you. Thank you very much. I've certainly enjoyed that, it's all a great show. I think it'd be a little blurry, we'll have to do another one here. Back with more here from San Jose, right after this, you're watching the Q.