We know the lifetime value of any customer that uses one or more third party apps increases by a very significant amount.
For our latest “What I’ve Learned…” interview here at OpenChannel, we spoke with Alex Barnett. With 17 years of developer platform leadership, Alex is Director of Developer and Partner Platforms at Intuit. He leads developer relations and partner integration solutions to grow Intuit’s 3rd party app ecosystem. He was Vice President of Developer Relations at Risk Management Solutions (RMS), the world’s leading catastrophe risk modeling company. There he built the app ecosystem around RMSOne, the industry’s first risk management and analytics open platform. He was Vice President of developer community at Bungee Labs, a pioneer in the Platform-as-a-Service (PaaS) space. He’s also held multiple positions at Microsoft Corporation including Community Program Manager. Before entering technology, Alex played professional cricket for eight years (Middlesex and Lancashire). He’s managed platforms at some of the world’s largest organizations, and spent some time with us to share what he’s learned along the way…
OpenChannel: What are the most effective tactics you’ve used to to grow your third party app ecosystem and increase developer success?
Alex Barnett: For context, QuickBooks Online is our product for both SMBs (small and medium businesses) and the self employed. We have 2.38 million customers and the platform is built in service of helping those customers succeed by helping them run and grow their business. We save them time and reduce their work by automating tasks, helping them keeping more of their money and providing confidence in the tools they need.
Third party apps are focused on expanding the capabilities of QuickBooks Online by enabling third party app developers to integrate into our platform. Those apps extend our functionality and fill in the gaps that we don’t provide through own own core product. Today we have over 500 apps that extend the value of the QuickBooks Online platform. That’s what we’re ultimately solving for.
When we think about what developer success looks like, there are a couple different aspects. One is how successful they are when doing integration work. How accessible is it for a developer to understand what’s required? What is the tooling and the end to end developer experience? How productive are they when integrating with our platform? We track metrics and have goals around how we can continue to make the progress.
On the other side for developer success is the ROI they experience when entering our app ecosystem. It goes beyond just publishing an app to the QuickBooks App Store and we want to make sure it can be discovered by customers. Their commercial success is important to us. Through product, marketing and customer care support teams, we drive awareness and encourage adoption of apps.
OC: You mentioned metrics and goals, what are the metrics or goals that you track?
Alex: Our platform is a three sided network effects platform. The first side is our small business customers. We track metrics that are delivering on the end customer benefit delivered by our platform and ecosystem of apps. On this side there are three key benefits that we track via a variety of metrics:
- How are we helping customers reduce their work, save time, increase automation or reduce double-data entry?
- Are we helping customers access and keep more of their money in their pockets, save money or get access to capital?
- How are we inspiring confidence in our customers, providing better insights or recommendations and helping them make better decisions?
The second side of the platform are the developers of 3rd party apps that integrate with QuickBooks Online. We track Net Promoter Score (NPS) and Product Recommendations Score (PRS) across our active developer base.
Overall NPS is the question “Would you promote this product to a colleague or customer of yours?”. In this case for developers it is “Would you promote this platform to another developer?”
The PRS is specific to the developer experience including the APIs themselves, documentation, the API Explorer, the SDKs and app publishing process. We track those and combine them into a single number and that gets reported at the business level. We also track how many new customers are adopting third party apps?
The third side of the platform for Intuit are accountants. They play an important role in the platform and are critical to success for QuickBooks Online and the success of our customers. Accountants are increasingly becoming trusted advisors to our small business customers. They can recommend right apps and even help our customers set up with those apps. We have a goals and metrics for this side as well.
OC: Developers have seen great commercial success with the QuickBooks App Store, how do you create the highest chance of a commercial success for developers and their apps?
Alex: As a starting point, we recognize our customers needs are more than we could possibly serve alone. We figure what “jobs” are underserved by our product and then recruit quality apps onto our App Store that solve for those jobs. Then the important questions is “how are we going to drive adoption of those third party apps?”
We have an embedded “apps tab” inside of our product which makes it easy to discover apps. We have secure single sign-on (SSO) implemented using OpenID and Oauth. A customer can actually try an app and see it working right away and understand how it works with QuickBooks Online. The easier we can make it for the customer to try an app and have confidence the better. That is a key part of how we drive commercial success for those 3rd party developers and app ecosystem.
We’re also investing in what we call “in-product discovery”. These are moments inside the product UI where a customer is trying to solve a particular problem or get something done. We can make recommendations for certain apps that could solve that problem at that moment. For this we’re investing in machine learning to make intelligent recommendations of truly helpful apps.
The other piece is a specific “app” tab for accountants within our QuickBooks Online for Accountants product. It makes it easy for these accountants to discover apps that will help both them and their clients. That’s another in-product experience that just removes a lot of the friction.
We also partner with the marketing and sales teams and care teams to help them make smart recommendations for apps to our customers. We essentially partner with every single part of the business that touches the customer to help drive the adoption of third-party apps and grow the app ecosystem.
We’ve also have a team of evangelists who work with our developers to help them improve their marketing. This helps them in communicating the benefits of their app in language that a small business would understand.
OC: You pay out 100% of app sale proceeds to app developers, was that a strategic decision and why?
Alex: It’s free for developers to publish an app to our App Store. When you’re connecting to a third party app is critical and all apps go through a technical and security review. We provide this for free to developers who want to publish.
Once the app is available on our app store, there is no revenue share and one hundred percent of the revenue is kept by our third party developers. They’re investing their own time and resources to do the integration work, get the marketing right and deliver and seamless experience for our customers.
We do have other programs in our app ecosystem that are revenue-share based that leverage the same platform. Examples Google, PayPal, Square, TSheets, Bill.com and others where we have formal shared business goals and outcomes.
There’s a recognition that having an app ecosystem of third party apps inherently adds more value to the product that we own and monetize directly. For every app that’s added and for every customer using apps, value is created. We have a concrete understanding of the positive financial impact that the platform provides to Intuit and the benefits we deliver to our customers.
We know the lifetime value of any customer that uses one or more third party apps increases by a very significant amount. The impact and contribution that the App Store makes to the bottom line of the business more than justifies the investment that we make around supporting the platform.
We also differentiate our product from others by having that thriving app ecosystem. Customers are spending more money and time with us, and have higher retention rates than customers that don’t use a third party app. The bottom line is customers using third party apps is good for Intuit. It’s also good for the third party developers and it’s great for small businesses and their accountants.
OC: What can other platforms do to instill trust in their third party developers?
Alex: We look at trust across three different dimensions. One is the technical stability of the platform. How many outages are you getting? If there’s an outage on our platform it can impact the apps. The end customer may blame it on the third party app and it doesn’t reflect well on them. A stable platform instills trust to our developers and end customers. And the converse is also true, if you start introducing instability, you’re going to hear from developers and it won’t be good.
Predictability of the platform is another dimension of trust in an app ecosystem. That means clear roadmaps, good API versioning and transparent deprecation policies. Developers may be waiting on API features and setting aside their resources and if you don’t deliver what you say that can cause a problem. I’m not going to rehash the Twitter example but most platform operators probably know what I mean here.
As a developer, the idea that an API may pulled from under your feet is scary but nobody would ever guarantee an API will be available forever. Being able to provide enough notice so developers can adjust and respond appropriately is critical to building trust.
The third dimension of trust in a platform is security. Nobody, not third party developers, our customers and certainly not us, want insecure connections. Our technical and security reviews of apps are very thorough. That helps build trust in our developers and instill trust in our customer’s to use third party apps.
OC: What software platform do you really admire and why?
Alex: I look at iPhone as the canonical platform success story. I think everybody that is in the platform business always studies the iPhone how to go about delighting developers. It provided a new channel, new business opportunity, and new form factor to expand the distribution of their apps.
What’s interesting is that when they came out with the first iPhone in 2007 there was no “platform play” and no intention of opening a third party app ecosystem. Steve Jobs was against the idea, concerns on the impact 3rd party apps would have to the end-to-end product experience. In the end, Job was persuaded that opening up as a platform was the right strategy. They knew it would deliver an even better product because of the app ecosystem.
Another is OpenTable. It’s fascinating because their journey was different, strategic and patient. They started their two-sided platform with restaurants first by delivering a solution to help them manage tables and orders. They got to critical mass and then opened up the consumer side for reservations when the time was right. That was a very deliberate and conscious strategy.
I’ve seen talks by the CEO/Founder about how this was a patient, long term strategy that they needed to play out in each market they entered. You’ve got competitors that have tried to squeeze OpenTable out of that game but what they haven’t been able to get the sequencing right.
OC: What are the biggest mistakes you see other platforms making today?
Alex: It’s that sequencing piece. Some platforms don’t understand what the value exchange is for the various sides of the platform, and how that’s self-reinforcing. For us as example, the three sides of our three-sided network means we have to deliver value and balance those dynamics. We need to create value every time a developer and app, accountant or small business customer is added to the network.
OpenTable is a great example of how to do it right. If you look at all their competitors they either didn’t have the patience or didn’t have the strategy. They couldn’t figure out which side of the platform they needed to get going first in order for the second side to succeed.
OC: What’s something you love to do or something you’re really good at that most people don’t know?
Alex: Oh, well, I’m great at drinking cocktails and eating steak. I’m also pretty good at making them both as well. I really enjoy cocktail making, playing around with recipes and then enjoying them of course. Argentinian style steaks are a passion of mine, I love making them and I love eating them.
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