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Scott Cook saw his wife's frustration as she was paying bills. It was then -- in the early '80s -- that he had the idea of creating an electronic checkbook known as Quicken. Now more than 10 million people use the program, and it is one of the few applications that has beat the mighty Microsoft. But it was not a smooth path to the top. First of all, Cook had no computer experience. Rather, he was a marketing guru for Procter & Gamble, and was in charge of the Crisco line of products. He posted a notice at the engineering department at Stanford, and a computer-science student, Tom Proulx, responded. Both Cook and Proulx created a partnership. Intuit was born.

They did market research, developed a business plan, and visited about 30 venture capitalists. Every one of them rejected the plan. Not giving up, the duo borrowed money from friends and family. They also obtained a line of credit from a bank. They raised a total of $151,000. It was a great investment indeed, as the current market capitalization of Intuit stands at about $2.4 billion.

Focus on the Customer

What has been a key to the success of Intuit has been its obsession with determining the needs of the customer. A great example is 1992, when Intuit decided to launch its accounting software called QuickBooks. At that time, the market was glutted with nearly 30 competitors, and the average price per package was $50. Going against the grain, Intuit decided to sell QuickBooks at $99. Within the first month of the launch, the product was the No. 1 best-seller.

How did this happen? Well, because of its customer surveys, Intuit discovered business owners did not know how to do double-entry accounting. So, QuickBooks let users enter the numbers only once. However, during the past few years, Intuit seemed to be meandering. It was losing its connection to the customer. Its Quicken product line was beginning to mature. Fortunately, Intuit is once again at the cutting edge, and just reported strong earnings. The stock price has doubled this year. The main reason: Again, Intuit is looking to the customer. And the customer wants to use the Net to do financial planning.

Here's what Intuit has been doing on the Net:

1. TurboTax Online: Yes, Intuit owns the most popular tax-preparation product, which has been No. 1 for the past 10 years. It took 200 tax experts to create the 1997 version. This year, Intuit integrated the system on the Net. The site uses the award-winning EasyStep Interview approach -- which asks taxpayers easy questions (such as, "How much did you receive in dividends?"). The cost is $9.95, which includes electronic filing. Interestingly enough, if there is an error in the return (because of faulty programming), Intuit will pay the penalty, plus interest.

2. Online Auto Insurance: Intuit provides comprehensive auto-insurance services through its InsureMarket website to consumers in Alabama, and will soon launch throughout the nation. To accomplish this, Intuit signed an agreement with Travelers. The auto-insurance service will provide individualized rate quotes, verify driving records, process the premium payment, and provide real-time approval.

3. QuickenMortgage: With the plunge in interest rates, there has been a rush to refinance mortgages. The QuickenMortgage website has capitalized on this trend. The customer will go through an interview process and the site will determine if it makes sense to refinance the mortgage, as well as show how much money will be saved. The customer can then prequalify for a loan within minutes, then initiate the application process online. The site is hosting more than 25,000 customers per day.

Having great technology is only part of the solution. There also must be a way to market it. Here, too, Intuit has been very successful:

1. American Online and Intuit: Intuit agreed to pay AOL $30 million ($16 million due on the signing) for exclusivity on the Personal Web Channel on AOL.com, as well as on the AOL proprietray service. The term of the agreement is three years. Thus, Intuit will be able to provide its content to the 11 million eyeballs of AOL.

2. CNNfn.com and Intuit: Both CNNfn.com and Intuit have created a co-branded website for financial planning. The five-year agreement makes Intuit the exclusive provider of personal financial tools (for example, mortgage and retirement calculators). The CNNfn site generates about 50 million impressions per month.

3. Excite and Intuit: Intuit invested $40 million into Excite (a 19 percent stake), a major search engine, and also agreed to a seven-year agreement to provide an online financial channel on Excite. The equity stake is now worth about $100 million.

The Internet and finance makes a lot of sense. A customer can save time and money. And, as for Intuit, it should make lots and lots of money.

Commercial: Readers interested in IPOs may want to check out The Investor's Guide To New Issues: How To Profit From Initial Public Offerings, available in our bookstore.