Going Ape for APIs (Breaking News with Hector Garcia)

There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.

Alicia Katz Pollock: In this episode of the unofficial QuickBooks accountants podcast, I have with me Hector Garcia of Right Tool and Reframe, and we are going to discuss Going Ape for the API. How are you doing, Hector?

Hector Garcia: I'm doing great. Uh, this is a really interesting piece of news we got from Intuit. It was a bit unexpected, but at the same time, [00:00:30] you know, a big company monetizing their APIs is not completely surprising. So some of the stuff is, um, partially shocking, but I think in a couple of days, the shock factor will die out. But it's really important to understand the repercussions.

Alicia Katz Pollock: Okay, so that makes a great opening. But people are going, what the heck is he talking about? So a couple days ago, I got an email myself from the Intuit Developer [00:01:00] program or the App Partner program, and at some point in history, I had made myself my own account to see what it was all about. But I never used it. But I'm kind of in the loop on some of the emails that came in, and this one email came in with like big updates about things that they're changing, but because it's not relevant to my day to day, I just kind of filed it away. And then when you reached out to me, I was really grateful because I really want to unpack what this is, what it means, and what are the repercussions [00:01:30] for our community. So can you briefly explain what Intuit's new API guidelines are?

Hector Garcia: Okay, so the announcement is that starting July 28th, Intuit is going to start to meter the activities that developers have between their app and QuickBooks. There's two types of activities generally when a third party app is connected to QuickBooks. One is a get and the other one is a post [00:02:00] I get is when you query data. So the app itself needs data from QuickBooks to show it on the screen or to generate a report. And a post is when you're pushing data into QuickBooks. So you're creating a bill in Bill.com or whatever, and then it's being pushed into QuickBooks. That would be a post. So interestingly enough, all the posts will remain free. So you're putting data in QuickBooks will be free. It won't even be measured or metered. But getting data out of QuickBooks will [00:02:30] start to be metered. And there's different tiers in which you get the first amount, and it depends on your tier. You get a half a million, a million, 3 million. We'll go we'll go into the exact numbers based on the tier that you're in. And then after that you will pay per call or per get every time you query the data. So this could mean for big companies like Bill.com Avalara Expensify that they'll probably [00:03:00] be the the chunk of the volume. Right. Or of this of these fees that will be paid into into it. But they're per transaction or per uh get fee might be so small.

Hector Garcia: Uh, you know, when you actually take a look at all the clients they have, when they split that across all the clients, that it won't affect them that much. You know, maybe there'll be a 5% price increase across the board of all the apps or something like that. But on the smaller apps, especially the apps that have, let's say, 500 customers or 1000 [00:03:30] customers, they're going to see a huge impact, right? Because, you know, all this time they based their cost structure on the fact that it doesn't cost anything to get data from the API. So the implications is some of the smaller APIs or some of the ones getting started could be affected, uh, the most. Now there's going to be tiers. So there's a builder program where it doesn't doesn't have any flat fees upfront. And so for apps getting started, you know, right when they get started [00:04:00] it won't be a cost. But as soon as they start getting some traction there, there will be a cost. Now there are some good news bundled into this announcement, so it's actually pretty cool. It was it was actually two parts. One is here are some huge great news for app developers and users. Right? Because if app developers get better and the API gets better, users get the benefit, which is the announce some new access, some new access points that the API previously didn't have. So let's go through those first.

Hector Garcia: So there's four new APIs [00:04:30] that they're that they're building or that they're, they're uh, or actually five that they're, that they're, uh, building or already built and they're already, um, active in the API, which previously you didn't see access to. One is called the Inventory Adjustment API. Basically prior to this update. And this one should be active now this recently launched or active live. Any third party app could access your inventory adjustments. So prior to this, [00:05:00] third party apps couldn't produce an inventory adjustment adjustment or look at an inventory adjustment. You could just create a journal entry or something like that. So for third party apps dealing with inventory, they're going to do they're going to be able to do inventory adjustments in QuickBooks online, which means that a third party app managing inventory could leverage QuickBooks inventory as well as the inventory they manage in the third party app. Traditionally, when you look at third party apps like fishbowl, katana SOS, they would [00:05:30] disable inventory in QuickBooks online and manage all the inventory 100% in the in the third party app. Now, they could essentially leverage inventory in Qbo as well. That could be a hot mess as well. Different challenge but but it's it opens up the door for that. The other door that it opens up is for apps like SaaStr or Transaction Pro Importer. Now you could also import inventory adjustments as well.

Alicia Katz Pollock: This is interesting because I've long I've [00:06:00] long held that if you're using a third party inventory app, the best practice is to turn inventory off inside your QuickBooks so that you don't have to maintain a different data in two different places. And now that they've been really leaning into commerce, I know that one of Intuit's goals was to have the Intuit Commerce section be the the one source of truth for all of your inventory so that you can push it out to multiple channels from inside [00:06:30] QuickBooks. So is this directly related to that?

Hector Garcia: I think I think it could be related to that. And in a future where maybe you have inventory in Amazon and you're using a third party logistics software that connects to Amazon, and you don't want to have another app to manage inventory because your third party logistic logistics service has some sort of inventory, and you want it to make the adjustment of inventory at the third party logistics app, and you can now push that into Qbo. Potentially, you know, if [00:07:00] the developers create that conduit, but now you have the API. To do that. So that was actually launched already. That's live.

Alicia Katz Pollock: And uh, what are. What's one of I know this announcement I'm really excited. I want you the honor of doing it. What's the next API that's now available or going to be available?

Hector Garcia: Yeah, it's going to be available. The article specifically says that it's launching the API soon. That's what it says. And there's actually four additional ones. We're going to have custom fields. We're going to have [00:07:30] projects. We're going to have sales tax and we're going to have payroll. So let's start with custom fields. So quick background in Qbo. Um, simple start. You can have one custom field in Qbo essentials. And plus you can have up to four custom fields in Qbo advanced, you can have up to 12 custom fields per type of custom field. The traditional API was limited and still limited to the first three custom fields. So it's a little bit awkward because. Qbo essentials or Qbo plus just got [00:08:00] a fourth custom field, so they haven't. It doesn't seem like they have solved for that specific issue. You know, where how do I access that? That that fourth custom field. So you can only get the first three. But particularly for QuickBooks Online advanced customers, the API is going to be available across all the custom fields. So if you're running using a third party app for running special reports, and you want to get data from all 12 of those custom fields per custom field category, or you have, um, data import, right, that where you want to include the custom fields, [00:08:30] you can right into any of those 12 custom fields. So that's huge because we've been asking for that for a very long time.

Alicia Katz Pollock: Yeah, this is a really big deal because when they rolled out the advanced ability to go to 12, which is essentially 48, depending on how you look at it, we all celebrated until we realized that it was only good for reporting inside Qbo, and that none of your custom field use was reportable outside of QuickBooks online or could be imported from other apps. [00:09:00] So this is enormous. We've been waiting on this announcement for four years, close to five years now.

Hector Garcia: Right? And keep in mind, it's still an announcement, right? We haven't seen it live yet. Right. The next one. And naturally, it's also worth mentioning nothing was mentioned about tags. And we're not going to expect tags to be ever open because tags almost died. But didn't you know they're on life support. Let's just call it that. Right. The next one is projects API. So interestingly enough, uh, traditionally you have been able to pull, uh, [00:09:30] the project name. You can get that from a third party app, you could get a project name, or you can right into, uh, a transaction using the project name. But you were not able to create a project. Okay. So that that particular part was not open in the API. So you would have to go into qbo, create the project, resync your third party app, and then the third party app can now look at the project. So some of the challenges that you were seeing is people using, for example, even Tsheets or QuickBooks time is [00:10:00] somebody in the QuickBooks time software creates the the project, so to speak. But it came in as a sub customer because you couldn't write into into projects. So that was creating all sorts of messes. And weirdly enough, Intuit acquired QuickBooks time or Tsheets, you know, to 2018. And they still hadn't, you know, thought about fixing that projects issue companies like notify that do construction accounting. Uh, they they weren't able to ever create the project inside Qbo. Again same [00:10:30] same example as the inventory example. It's once you're on the third party app, you should really don't need to use the built in tools. However, uh, QuickBooks online, Intuit with Qbo advanced and even enterprise suite, I think they want to continue to showcase projects as a unique value proposition, even if you're using a third party app. So by opening up by by opening up the project's API. Now we get you get more visibility between the third party and Qbo to manipulate and work with [00:11:00] projects.

Alicia Katz Pollock: Yeah, here's a specific use case and why I'm really happy to hear this. I work with a field services company where they have 20 people driving around all day doing repairs for Starbucks coffee machines. And they have an integration with Corrigo that handles all of their field service work. But in order to get the integration to work, they've had to create the project first in house in the office before sending the person out to the field. And then once they send them out in the field, the project is available. [00:11:30] But if the user in the field created the project before it, before it was done in the office, the work that they were doing would come into the main customer, not the location. And you know, if you're working with Starbucks, obviously that is not going to work. And so we have this very specific workflow that they've had to follow. And this blows that out of the water. They're going to be able to take an entire step out of their daily workflow that the reps out in the field will be able to just go ahead and create their project and [00:12:00] log their work on the fly.

Hector Garcia: Exactly. And the third API that they announced that's going to be released is the sales tax API. Now, this was a complicated one to discuss because traditionally, let's say companies like Avalara, for example, when they calculate your sales tax, they go back into QuickBooks and they update your invoice or your sales receipts to have a separate line item. Imagine like a service item or a non inventory item that tracks the sales tax [00:12:30] just for your balance sheet purposes. But you can't go into QuickBooks module to prepare a sales tax report because you're using the third party app to do that. So the interesting thing about this announcement and again this is where it starts getting, you know, interesting, right? When we talked about the inventory and the projects and the sales tax, the minute you add a third party app, generally you don't need to access those things inside Qbo, but third party apps are now going to be able to access into its automated sales tax. Now what could that mean? [00:13:00] And I'm just kind of thinking, what could that mean? So let's say, for example, I have a third party app where I do my invoicing. Let's just say that's how it works. I have to use my third party app to do my invoicing, but the third party app is not an expert in the sales tax portion, and I don't want to add Avalara to the third party app. So what essentially could happen is that third party app creates the invoice, sends it to QuickBooks, has QuickBooks, calculate the sales tax, brings it back, and then in the third party app you have the correct sales tax information Pre-calculated [00:13:30] by QuickBooks. So you can continue to prepare your sales tax report and your eventually at some point, Intuit should add electronic sales tax filing once the state is allowed to do such a thing. Um, built into QuickBooks online. So that's the purpose of opening the sales tax API.

Alicia Katz Pollock: This is great Because everybody, not everybody, but most of the clients that I know who have sales tax have multi-channel. They're not doing most of their invoicing through QuickBooks online. And so it's been a challenge. Sometimes it [00:14:00] works completely transparently. And other times we've had to make journal entries and adjustments and fake sales receipts and do other things in order to get the sales tax to line up. So I look forward to this. I'm a little skeptical about how long it's going to take them to be able to dial it in accurately, but if Avalara has been able to do it, hopefully they can actually build on what Avalara has put together and cut the development curve down.

Hector Garcia: True. But if you are using the quick the built in QuickBooks sales tax, [00:14:30] right, it's functionality to calculate sales tax and you wouldn't you wouldn't need Avalara, right. So Avalara doesn't need to talk to QuickBooks. It would be all the other apps that don't do the and the sales tax. And it's good. You mentioned the multi-channel sales tax with multi-channel is a nightmare because Amazon will calculate sales tax on its own and then Shopify would calculate sales tax on its own. And then some other system that you have will calculate sales tax on its own. And if you wholesale to or sell through QuickBooks online, that will calculate sales tax on its own. So you have four different systems reporting [00:15:00] potential sales tax. And you don't have one unified place to do that. So you have to bring all these spreadsheets together to be able to do manual preparation of the sales tax forms. And the idea, I assume, is that QuickBooks wants to push people, hey, you have a sales tax challenge. Make sure you do everything inside. Ultimately, the source of truth for sales tax should be QuickBooks. Okay. Good segue to talk about the last API that they announced, which is a payroll compensation API.

Hector Garcia: Now go back for a second. [00:15:30] Payroll has traditionally not been on the API, and the payroll compensation API doesn't mean that payroll all of a sudden is available through the API. The Payroll Compensation API limits the ability for the app to pull your Or pay types, your salary or your hourly, your overtime, your holiday, um, and be able to push it back in into the timesheets. So what ends up happening is when you use a third party app to track timesheets, you can track [00:16:00] how much time you're spending per customer, but you can't track the specific pay type, which means that when the timesheet data comes into QuickBooks online currently and you prepare a a paycheck, you would have to manually pick, okay, which of these are vacation hours or over overtime hours, or whether this is going to be through the salary pay type or the hourly pay type. So you can choose per line item of the time tracking that you're keeping, what pay type it is. So it flows through the payroll [00:16:30] without having to add one additional step.

Alicia Katz Pollock: All right. So I've got a couple questions for you about this one. So the first one is is it time focused or is it third party payroll focused. Meaning that if they're using different time trackers other than QuickBooks time like harvest, for example, or clockshark. Does that mean that these other time tracking entities will be able to import the timesheets in in a way that QuickBooks Time and Payroll can understand? [00:17:00]

Hector Garcia: That's correct. It's only time focused. It's not third party payroll focused. Right. Because it's not bringing in a paycheck. It's bringing in the time sheets with the pay types so it can flow through the paycheck. When you run the paycheck inside QuickBooks online, after the third party app brought the timesheets with or including the pay types.

Alicia Katz Pollock: Well, I'm going to put in a wish list here that it also opens up the APIs so that we can not have to make giant journal entries for payroll imports, [00:17:30] that if we can get ADP and gusto and all the third party payroll to be able to leverage these same salary hourly overtime, holiday pay, if we can actually get those mapped to the third party payroll apps, that would also be spectacular. So hopefully this is a first step to making that happen.

Hector Garcia: Yeah, that mapping would happen at the account level because it would be a journey. It would still be a journal entry because you can't write into paychecks in Qbo. And I don't think they're ever going to allow you to write paychecks into Qbo, because Qbo takes responsibility over tax [00:18:00] calculations. So they're not going to allow a third party app to create a paycheck and then into it somehow take responsibility over the accuracy of the paycheck being created and the taxes withheld. So I don't think that's ever going to happen. Where all right, special pay types into anywhere. But if the pay types are translated into an account and then when the journal entry comes in, it splits off over time and all that stuff and puts it in a different account in your chart of accounts, that could work, but that would still be a disconnected sort of feature request from the Payroll Compensation API. [00:18:30] This would be a different strategy. This would be hey Intuit, play nicer with a third party payroll processors who are also your competitors, who you also been after their business for a very long time, so I'm not sure how much well received this suggestion will be okay. So those are all the new APIs. And I would say in a nutshell it's a. Net. Good news that we're getting access to more stuff. Third party apps have access to more stuff. They also because they tied it to this article about Intuit monetizing [00:19:00] the API. They said that. At launch, specifically, these APIs are not going to be metered or charged. So anything that goes through these four APIs are coming the projects, the custom fields, the sales tax and the payroll. They won't count towards metering the the gets. And I think that's smart because in essence, we're going to be beta testing these things when it comes out. So it makes no sense to charge yet. But it says yet right. [00:19:30] Yeah. At launch it won't be monetized. Right.

Alicia Katz Pollock: Yeah. That was exactly what I was going to say, is that if if it's still in beta test and it's just getting launched, we know that it's going to take them some time to get this right. So it would absolutely be unfair to meter on the new APIs until they're dialed in.

Hector Garcia: So let's talk about some. If you're an app developer and you're you're reading this and you're trying to get our take on this, let's talk about some of the timelines. So on July 28th, I don't know why specifically that date. Right. We know that Intuit uh, fiscal [00:20:00] year starts August 1st. So I don't know why they didn't pick August 1st, but on July 28th, they will start, uh, metering. Uh, these, uh, the the APIs. They will also start charging the flat fees. So there is going to be a flat fee that you will pay as a third party developer based on the volume of API gets that you are getting. Now they didn't release exactly what the flat fees are going to be, [00:20:30] but they did release a sort of like per get uh, per unit cost, which is very similar to like how OpenAI charges per token to the third party developers. And I, I I'm going to venture to say that the success of OpenAI's coming seemingly out of nowhere and becoming one of the most powerful companies in the world and then monetizing their API being its principal business model, could be what inspired Intuit to do this? I have another theory which I want to go back to in terms of what could what's [00:21:00] driving into it, into doing this? We'll go back. We'll go back to that in a second. I don't want to give it away just yet. So July 28th, they'll start their start metering. However, they won't charge until after October 31st. So they're going to simulate the metering. So you get an idea. As a third party developer, how much volume you're producing and how much it will cost you, but they're going to automatically discount that invoice 100%. So so you have a couple of months. Basically you have August, September [00:21:30] and October to recalibrate your pricing, your infrastructure, your business model. Because essentially starting November 1st, that's when all us third party apps will start paying this additional metering fee.

Alicia Katz Pollock: That's an interesting way of doing it, because at least they're showing transparently what each of the developers can expect for a few months, so that they have an idea of what their additional cost is going to be. And then they can plan on whether it's something that they can absorb or something they're going to have to pass on. [00:22:00]

Hector Garcia: Yeah. I mean, remember when Intuit came out with Qbo and for a very long time and still now Qbo still doesn't have feature parity with QuickBooks desktop or even Qbo advanced or into enterprise suite, doesn't have feature parity with QuickBooks Desktop Enterprise. The narrative was, well, we moved to the cloud. You know, you're going to have to sacrifice some features, but we we have an incredible, uh, app ecosystem or third party developers who are innovators. And if you if you join forces with them and get your qbo [00:22:30] plus an app, it will make up for most of what you're missing in in QuickBooks desktop. And this API ecosystem has always been free, so to speak, like third party apps never had to pay really anything to do this. I think traditionally they didn't even have to pay to be listed in Ups.com. They just go through the process, you know, to get vetted and that sort of thing. So what they're essentially doing here is they're monetizing, getting people into using the API and also monetizing, getting into Ups.com. [00:23:00] Because, you know, I venture to say that a lot of apps get new business from being listed in Ups.com, and you have to be in that second level tier. So they mentioned four tiers the builder tier, the silver tier, the gold tier and the platinum tier. And these tiers, uh, will have a flat monthly fee and also a per transaction fee that if they go over the total amount of like prebuilt credits they have. So for example, the builder tier. [00:23:30] So let's talk to all the brand new app developers. The little the little companies. Companies like Rite tool like my own company. That's that's going to start doing things with API. We haven't started yet actually. This this is making us rethink our strategy. But the builder program would have no charge. And you will have half a million API credits for gets per month. Okay, but the minute your volume goes into a for a certain amount, they're going to force you to move into the silver. The next one the silver you [00:24:00] get 1 million credits.

Alicia Katz Pollock: Let me let me interrupt you for one second there. I have a question. When you're talking about the gets and you're talking about the the 1 million, um, what was the word that you used?

Hector Garcia: Well, it's called API credits. That's where the API credits.

Alicia Katz Pollock: Okay. So when you're talking about an API credit, is that just one ping of their software or is that each data point coming back over in the ping?

Hector Garcia: Great question. So if you pull a report the whole report is one credit okay. Right. So but it's [00:24:30] a prebuilt report right. It's one of the canned reports. If you pull a transaction right. That's a credit okay. So so let's let's just I'm going to put this in tangible terms. A lot of people that listen to this podcast are fans of keeper. Okay. Keep one of one of the awesome things that keeper does is it's not just a practice management software, but they pull transactions out of QuickBooks to figure out what's, you know, you know, where there's an opportunity for for fixing [00:25:00] or where there could be some redundancy. Or here are some transactions that you can that you can edit or add notes to or, or or enter in batch or reclassify a vendor name or a category. Every one of those transactions will be an API. Get.

Alicia Katz Pollock: So for keeper this is going to be a really heavy lift.

Hector Garcia: Yes. Heavy lift. Now unless unless in this process they create single credit queries. That includes [00:25:30] multiple transactions. You know I've we we are in our app in the right tool world. I asked my developers and I asked them, is there a possibility we could we could do a single. A query and get a bunch of transactions. It's like only if they are in a report. Right. So if they are part of a can report. Yes. But unfortunately what ends up happening is even. Though writing into Qbo is unlimited, it doesn't cost anything. You kind of have to pull [00:26:00] the data. First to know what you're going to work with and then push it back in. Now if you're creating new transactions. So if you're creating bills and Bill.com, or you're creating invoices and anchor or whatever, and that that invoice is coming into QuickBooks. In theory, you can write the whole transaction without having to pull any data. The problem is, if you want to validate that the customer name is correct or the account is correct, or the vendor is correct, you have to pull that first, right? So you got to pull a customer list, which is [00:26:30] the whole customer list is a single credit, and the whole vendor list is single credit because those are available in reports.

Hector Garcia: But if you want to pull specific attributes of a customer. So I want to pull the customers and the custom field that that customer, for example, which is not available in a, in a, in a, in a in a report call, every single customer I pull becomes a get. So this is going to get really convoluted, uh, because app developers are going to try to figure out they're going to re-engineer all their software to, to reduce the amount of gets [00:27:00] so they can reduce the amount, the cost of pulling it. So traditionally they didn't care how the data was pulled. As long as it's pulled, they're good to go. But now, you know, we you know, humans. We're going to try to I don't want to say scam the system. We're going to optimize the system to try to get the least amount of, uh, of API credits added to our account, because these costs are going to become pretty substantial.

Alicia Katz Pollock: Right? Well, hopefully you can do one call of the entire customer list and then work off of it from the during the session. Because if you had to do a separate call for every [00:27:30] customer task that you're doing, that's going to that can get enormous very quickly and unscalable.

Hector Garcia: All right. But I'm saying you put the customer list, right? And the customer list contains, let's say, ten fields. Okay. But one of the fields that it doesn't contain is a custom field, a customer level. Custom field. Right. Right. Even though the custom fields API is currently not going to cost anything, in theory, getting that information wouldn't wouldn't cost anything. But when it does, you know you would have to. You would have one query for [00:28:00] the entire customer list and one query for every single customer that you're pulling that custom field from. Until Intuit says, you know what, I got this report that contains all this data, so it only costs you one credit. So I'm telling you, it's going to get really interesting.

Alicia Katz Pollock: Yeah. Okay. Um, so you were in the middle of talking about builder and silver and gold. I think we left.

Hector Garcia: Yeah. Sorry. Yeah. So we were talking about the the the tiers. So the builder is one where the first 500,000 gets is free. And by the way, this is not per client or per company file. [00:28:30] This is across all the clients for that app. Right. So that's the way you have to think about it. Right. So like it's an aggregate amount of all the transactions that this app is acquiring through the API. So the builder is going to be free and it includes up to 500,000 queries if you want to go higher, like if you do more than half a million queries per month, you have to automatically go to the first tier of the paid program, which is published right now at $300 a month. Right. So this [00:29:00] would be the minimum cost for an app, depending on the, on the, on the, on the volume and the first million API queries is, is included. And then there is going to be a price per thousand and it tiers. Right. So the first you know for so the first for the first million to the 10 million is $3.50 per thousand. And it tiers down. The numbers don't matter because you have to use a spreadsheet really to simulate these things.

Hector Garcia: But um, but this goes all the way up to the, [00:29:30] the platinum. The platinum includes 75 million queries Paris and its $4,500 a month. So basically all the big apps that are doing probably more than 75 million queries, uh, per per month, they're going to be paying $4,500 a month just to be a developer that can connect to QuickBooks. So this is going to be huge for apps like Zapier or make. Right? Uh, because, you know, I don't know how many customers they [00:30:00] have, but, you know, every single little thing that they're doing, every single transaction that they're pushing in and out is going to be a query, especially when they're pulling the data out. So those guys are now going to be paying into it for querying data from QuickBooks. And it's possible that in the Zapier universe, they only have maybe like six companies that charge for that, and the rest are all free. So now when you log into Zapier or to make or one of those apps that query, you might have a segment where certain you have to pay a certain dollar amount higher, uh, [00:30:30] to be able to use the QuickBooks API because it's QuickBooks API now costs the apps money.

Alicia Katz Pollock: Right? Wow. Because the way that the app ecosystem works, I mean, there's a lot of apps that are free at the basic tier, and then you start paying at the intermediate and advanced levels or by volume or by feature. And are you saying that this might potentially eliminate the free tier on our app integrations?

Hector Garcia: Yes. Okay. So I got a couple of sort [00:31:00] of deep theories in terms of what what repercussions this could have. So number one, I think the freemium model for apps that talk to QuickBooks is essentially going to get killed. Like I just don't see how they can sustain not charging the customer anything, even if it's the first 50 transactions or whatever, because in aggregate, across all their customers, this is going to get pretty expensive. Right. So like, does it make sense to charge the customers nothing where you're actually paying QuickBooks something? Now it's possible that in their model, you know, because so many people from [00:31:30] premium eventually go to paid. You know, that the math kind of works, but I think this will start killing the freemium model or significantly changing that. The other thing that I think could happen is apps could, uh, probably increase their rates. This could happen. This is this is one of those theories that you can connect to, like sort of the current political landscape with the tariffs, you know, where where the, the US government is. Well, the current white House wants to establish tariffs for apparently [00:32:00] 1 or 2 reasons, and they're not clear which of the two reasons are. And depending on how things move.

Hector Garcia: It was recent A or recent B. So one of the reasons why we put tariffs on China or whatever is because we want to encourage us manufacturing okay. That's that's a theory. But then the other one is because they want to raise uh, a tax or income for the US government. It can't be both. So I, I connect this a little bit to what Intuit is doing because this is actually a tariff. If you think about it, this is a tariff on end users [00:32:30] that is paid by developers. So yes, it's paid by the developer to check. But the ultimate payer of this tariff is not. The developer is the end user, because the end user is going to get either a lower quality product because the app developer had to cut corners somewhere to make up for this, or they're going to get a higher price charged by the app developer to be able to cover this. So this is just like the tariff principle. I think the end user is the one that's going to end up paying for this. So even [00:33:00] though even though from an intuitive perspective they're quote monetizing their API, it's really the end customer that's going to pay the most.

Alicia Katz Pollock: Well, why do you think Intuit's making this change now?

Hector Garcia: Yes. So this is the second part of my theory. And this is like, I don't have any inside baseball on this. And this is one of those, like weird little Hector conspiracy theories. But if you have logged in into one of your clients QuickBooks online accounts lately, you've seen that they completely changed the look. And they have this new [00:33:30] thing called the fusion model. I think you did an episode a couple of episodes back to kind of talk about that. And the new fusion model kind of makes it look like every function inside QuickBooks is like an app, right? Like you kind of get that feeling that when you go to invoices, it's like it was an app in your phone and you went to the invoices app. But when you go to banking, it was like a separate app. And when you go to bills, it's like a separate app. So I think part of the narrative, and especially if you actually go back into a connect 2024 [00:34:00] and listen to people, uh, in the stage called QuickBooks, a platform instead of a software, and they use the platform. It's a platform, it's a platform. Get people into the platform. It's a platform. It's I believe that part of the narrative is that when people go into Intuit platform, right. So whereas QuickBooks or Intuit Ecosystem, that they feel that this is a gateway into all things for small business that can be solved within one screen in one place.

Hector Garcia: And if [00:34:30] Intuit Intel wants to win in the platform game, I think what they really want is to give the illusion that everything that you can do, or everything you need as a business owner into it, can do it for you within one of the apps that is available in there. So by Tariffing the developers and essentially two things are going to happen. Some developers are going to go out of business. So that's less competition for into IT or two. Some developers are no longer going to be profitable, and they would probably want to be encouraged [00:35:00] to sell their app or the technology to into it for much cheaper than they could before. Right. So, so in many ways, I think, again, another layer of conspiracy theory, like I'm sitting, I'm a fly in the wall in like the CEO's room and thinking, you know, how can we figure out how to how to win the entire market here? Like, we don't want we don't even care if third party apps are successful or not. How do we win the entire market? Well, we'll do it this way because it's not obvious, right? Like if you kill the ecosystem, that's a whole nother ball game. But this is not killing the ecosystem. [00:35:30] This is terrifying. The ecosystem to essentially feed or fuel the internal development or the internal internalizing of all the features inside qbo at some point.

Alicia Katz Pollock: Well, it's interesting because when you look at it from the development perspective, at least just in Qbo itself, each of the modules that we take for granted, like invoices versus bills, are actually treated on the back end as a separate app. Like if you look in your URL, it says Qbo, Intuit QuickBooks and [00:36:00] Intuit's development process programing, the QuickBooks programing has actually been. Each one is an independent app that all has the same look and feel so that you get this seamless experience. So what you're saying to me actually makes sense on the platform level, because the idea of being able to bring in additional functionality in a modular sense makes sense. But what you're saying also [00:36:30] about their consolidation. I mean, that means that QuickBooks really takes the risk of becoming a multifunction printer where it does this and it does this, and it does this, and it does this, but it doesn't do any of them excellently. They all have basic functionality, which is good for, you know, 50 to 75% of the users, but the other 25% need those third party apps to keep developing or to, you know, to, to suit their, their customized needs. Um, are there are there other [00:37:00] trends in the SaaS space or the fintech space that are influencing this? Is this coming externally or is this into its internal.

Hector Garcia: I so I don't want to yeah, I don't want to claim to know how Intuit came about this again, even though I'm I'm very well known in the QuickBooks world. I don't work for Intuit. I wasn't part of this thing. Everything that I said and everything that I mentioned is 100% speculation and opinion, etcetera, etcetera. And as I mentioned earlier, I think that the success of open OpenAI charging [00:37:30] by the token, and it being its principal business model could have been the impetus for this. But the other part of the theory that I mentioned is, you know, you know, is does this reduce the amount of third party apps that are in the ecosystem? Only keep like the big boys, you know, the big companies, the big reliable ones and all the little ones really, you know, won't have that much opportunity anymore, even though they have this build up program which which they have to have because you need you need the little apps to be able to ramp up. Um, you know, that could be [00:38:00] another, uh, the reason why. So I'm not sure if this is if if it's a trend from, you know, the other ecosystems, but I think the OpenAI model, uh, very much influenced it. The last thing I want to mention is they did announce that on June 12th, there's going to be a two hour webinar like in 2002. Two hour webinar is very often there'll be a two hour webinar on this, and I assume they're going to go much deeper. They're going to explain the fees, they're going to explain the variables. And it's open to anybody. You don't have [00:38:30] to be a developer, although they only announced it to the developers. Will give you all the links Alicia, so you can put them in the show notes. I think that whether you're a developer or not, I think you should listen to this webinar because they'll be I'm sure there'll be a lot of interesting things coming out of it.

Alicia Katz Pollock: Okay. Now here's another question. If they're now charging the developers, did the developers get anything else out of this other than access? Like are there any other benefits? Are there any other opportunities that Intuit is going to give them [00:39:00] for their money?

Hector Garcia: I don't I don't see it. It's not in the article, so to speak. But I would say that the more resilient developers that stay will have the benefit of having less competitors. So, so to speak. So I think again, the big ones, Bill.com and Expensify and Avalara, those are this is just going to be a little tiny item, a line item in their PNL. It's not a big deal. Those would probably enjoy, uh, all the little ones that no longer want to play with with with QuickBooks. But in those new APIs [00:39:30] are a benefit to the to the developers for sure. And and I'm going to also assume I speculate, you know, just kind of interpolate that if there is in fact less developers in the platform because of the fee, uh, the ones that stay are going to have much more access to the development team and just, like, better support. And if they're apps and there's less apps, you know, they have a vested interest to keep you there. So I would say that that could be the accidentally the benefit you get from that.

Alicia Katz Pollock: Okay. I did see [00:40:00] a section in their article about benefits and incentives, but I'm not clear where it falls, like if it's related specifically to the pricing or if you said it's just benefits of attrition. Um, where they, you know, it says engage outlines all the ways we'll partner more deeply with you, including account management, technical consultation and support and other ways to partner. Um, so it, you know, maybe hopefully that having to pay also means that they get more support from theory. [00:40:30]

Hector Garcia: Now they have the money to pay for more support, right? So if either one happens, if there's less apps to support or more cash from the apps that stay, they will have more resources to increase support. So that's what I that's what I mentioned by. That could be the sort of the benefit that you get from that.

Alicia Katz Pollock: Okay. Well I hope that's true for their sake as well as a as a developer, as a developer, if now you're paying for your access, I would demand more for my, my money as well. [00:41:00]

Hector Garcia: So that being said, Alicia, I was going on in your world.

Alicia Katz Pollock: Um, I am really excited that I am getting ready for my QuickBooks online hands on training class or what we call our hot class, and we've just begun enrollment for it. And it's going to be July 21st through October 8th. And it's a hands on training where the people taking the course is a 12 week course. 72 contact hours where you actually build QuickBooks files. Hands on [00:41:30] and in correlation with that. My 2025 book was just released at Consultants Comm, and the huge news around that is it's now available as an ebook. So instead of us having to ship you a 600 page book for you to hold on your desk, you actually can just pull it up as a PDF. So we're super excited about that and our relationship with consultants. So we'll have the link in the show notes. And how about you Hector. What's going on in your world.

Hector Garcia: Yeah that's that's amazing. By having [00:42:00] having that book available like that, more and more people will access that. Um, in my world, uh, we are getting ready to wrap up the last, uh, event in the US tour for reframe. So if you're listening to this prior to June 9th and you want to come hang out with me and my brother in a one day event called Exactly What to Say, How to Communicate your values so you can increase your prices without pushback. Go to Reframe Accounting Comm and sign up. If there's seats left. It's a small [00:42:30] group. It's going to be 20 people max in, uh, in midtown in New York City. So definitely, uh, come to that. And that would be the last reframe event we'll have until the big one in in November, the pricing with confidence event that we're going to have in Miami.

Alicia Katz Pollock: Excellent. And I can absolutely say that learning how to work with exactly what to say, the book and your your whole concept has absolutely transformed how I communicate with my clients. So I love the work that you're doing with Carlos at Reframe.

Hector Garcia: Thank you.

Alicia Katz Pollock: Yeah, [00:43:00] absolutely. All right. Thank you so much for coming on the show and letting us know what's happening in the development section with the APIs and all the third party apps. So, uh, Hector, thanks again and we will see you in the next one.

Hector Garcia: See you in the next one.