Russ: This is The BusinessMakers Show, heard on the radio and seen online at TheBusinessMakers.com. It's guest time on the show and it's very special guest time on the show, this is the one thousandth guest interview that we've done on The BusinessMakers Show and we had to make sure that it was a big name, a huge name in our space and that's what I've got here today because I'm with Tim Barry, the Founder and now Chairman of Palo Alto Software; Tim, welcome to The BusinessMakers Show.
Tim: Oh thank you so much Russ and congratulations to you, one thousandth that's - I'm so flattered to be here with you and just congratulations for that too.
Russ: Well thank - thank you, thank you very much. So let's kick off this interview. First of all we're in Austin, Texas, uh, where you're in town to be a judge at The University of Texas Business Plan contest, formerly known as Moot Corp, and today known as Venture Labs?
Tim: The Venture Labs Business Plan Competition, yeah, yeah
Russ: Okay. And you do make lots of business plan competitions, right?
Tim: I do four normally in April every year and I've been doing that since the late nineties; not always four but yes, I do. I get to read a lot business plans and I see a lot of business pitches; as in, like, more than a hundred every year.
Russ: Let's imagine somebody's been off of the planet now for a couple of decades and they don't know about Palo Alto Software Company, tell 'em about it.
Tim: I started the eighties discovering that I really like the business plan as kind of writing a story for your future and then making it come true. I was a words person in my education, I was a numbers person in my avocation, so I liked the way the business plan combines words and numbers. You can lie to people in words and you can lie to people with numbers, but it's harder to lie to people with words and numbers. So that - that was my interest in business plans from 1980 or so.
Tim: Palo Alto Software became over the years the publisher of business planning software, which respects the - the mode of the business plan as in we do tools to help people with all the financials and the formatting without doing shallow, cynical, fill-in-the-blanks, boiler plate write your plan stuff.
Russ: So you still have to be a good writer to use it effectively.
Tim: No, not necessarily because what's important in a business plan, in my opinion, isn't the writing, it's the content; it's the metrics, it's the accountability, it's the management. I've said before that a business plan is worth the decisions it causes. And I've also said good business plans are nine parts implementation for every one part strategy. So I like to play down the business plan as a writing contest and recognize that it's about managing a business.
Russ: Okay. So, I know today Palo Alto Software has quite a few products, but the basis in the beginning was giving a piece of software that gave you a real good framework for putting together your own plan.
Tim: Somewhere in the, er-well actually 1984 I decided that there was portions of a business plan that would be productizable; that started with the financials and financial templates with, for the old spreadsheet - and I know you are one too - with apologies for the adjective old for the spreadsheet people among us I used macros to help automate the financials a little bit but that was - during the eighties - me supported by my wife and I don't mean money, I mean moral support stubbornly insisting that I would one day sell boxes and not hours because I was supporting my family with business plan consulting.
But I had the templates and I was stubbornly insisting we would turn this into a product business instead. Which we finally did in the middle nineties when computing power and capabilities caught up with what we wanted to do so we were able to take the logic that was once financial templates and create an environment where it was a stand alone application that included the outline and modifying the outline and all of the financials and a lot more help that became Business Plan Pro; which still exists today in it's fifteenth version, but for the last year we're getting a lot more excitement over what we call Live Plan at liveplan.com. Which is an online application, browser based, doesn't care whether you're in Windows, Mac, or Linux okay, automating the business planning process for people on the web.
Russ: Now - now you referred to metrics and financials several times and i-in my opinion, business plans that I've seen that, you know, that just people say hey, check this out, what do you think, they always seem to be just real weak there which is, to me, the reason that, you know, a-an adviser, an investor would be interested. Because, my god, it makes sense, you know, you're making, you know, fifty points off of every widget, how many do you think you're gonna - and it's tough - but, does your product allow for a broad spectrum of performers ; some that are just real basic and some that are complex?
Tim: Absolutely because we've had to do that. So we give our users as much flexibility as possible so that every business plan can be unique. And they get to choose so in any of our business plan products, there's going to be a range from I just ant a simple one worksheet just let me focus on the big picture and just give me that, all the way to detailed financially correct, mathematically correct according to GAAP where if you change your estimated waiting time - we call that collection days - but how many days you wait to get paid, you change it by one day, you've changed your cash flow. So, we give these people - to answer your question - a range so they can be comfortable with - it has to be their business plan, it can't be ours, has to be theirs.
Russ: Cool, really cool. Well I know a lot about you, uh, from where you started and I want to talk about that after this. This is The BusniessMakers Show, heard on the radio and seen online at TheBusinessMakers.com. I'll be back with more with Tim Barry, the Founder of Palo Alto Software, after this.
Russ: This is The BusinessMakers Show, heard on the radio and seen online at TheBusinessMakers.com. Continuing on with Tim Barry, the Founder and now Chairman of Palo Alto Software. Give our audience a little bit of a picture of you, uh, when you first started becoming an adult and moving up to where you started telling us about your interest in business plans.
Tim: When I first started becoming an adult, Russ, I was already in my thirties, okay. Well but when the world would have thought me as an adult I made a crazy, impetuous decision to propose to Evangelina Rocha before we graduated from college and that worked. Forty-two years later we're still married. She's from Mexico City, we spent years in Mexico but we met in college; I was at Notre Dame and she was at St. Mary's in Indiana. I was initially going to be a literature geek. My degree at Notre Dame was literature.
We went together to the University of Oregon because I was enrolled in a PhD program in Comparative Literature, which was a horrible mistake for me. I lasted two weeks, came to my senses, oh my god this is so, I mean. I like a lot of things big picture and literature's great big picture, but when it becomes detailed it's like, oh no, I'm never going to survive five years of this. I switched, I got a Masters in Journalism quickly; I did the class work in nine months. And because my wife was Mexican and I was - I won't say lying but embellishing the truth - I said I was fluent in Spanish which was true three months later.
But, I got - my first real job was as night editor for Northern Latin America of United Press International; UPI as a wire service journalist and the thing about fluent Spanish was it became true because when I returned home to Eugene, Oregon with the job offer my wife said to me, and I think I'm quoting, "bueno de aqui ____ hablamos espanol y nada mas," which in English is "from now on, we speak Spanish." She was good for - she is good for me now but because my Spanish was fairly rudimentary when they hired me, they just guessed that I would speak fluent Spanish cause of my wife but boy she made it true, she didn't speak another word of English to me until our first kid was born a couple years later and then she - we decided maybe we should have. So I was fluent quickly; if you figure that's the way to learn a language.
I stayed in Mexico; I switched from regular journalism to business journalism in 1974, which is relevant to this story because after five years in business journalism I decided I want to do business more than write about it.
Russ: Wow, but now wait a minute, was this business journalism in Spanish in Mexico or was it?
Tim: Well I was always writing, well not always, almost always writing in English. I did have to write original Spanish copy for the bull fight reports and the soccer reports because our English reading, speaking, listeners, audience, users, readers didn't care. So that would be in Spanish but most of my writing was in English. For after United Press International, then I worked for McGraw-Hill World News, which was BusinessWeek.
And so I decided I wanted to do business instead of write about it and was kind of struggling with that when my father gave me some really good advice and Tim, why don't you apply for that Stanford MBA program? He still lives in Los Altos, I grew up in Los Altos, California ten years from Stanford. I said Dad, come on, I've got a wife and three kids, I can't afford that and he said, just do me a favor and just apply. Well, fast forward, uh, June of 1981 I graduated with a Stanford MBA degree and managed that you know.
Russ: You have two Master's Degrees, correct?
Tim: Yes, one in Journalism, one in business and that business school introduced me to numbers which I loved and computing which I loved. You'll remember the days - again, with apologies for references age - when you could buy an S100 Bus and build a computer that ran CPM; that was my first computer. I loved computing, I loved numbers. And that lead to business plan consulting, which lead to business plan products and the theme on this story is I was escaping boredom. I needed to make money so I couldn't escape boredom the normal way. I loved my family so that - well I - I needed to make money but I started pursuing the compromise between stuff that was interesting and stuff that I could make money on which became Palo Alto Software.
Russ: Really, really cool. Talking with Tim Berry, the Founder of Palo Alto Software and after this, I'm gonna see if I can get him to generalize a little bit about entrepreneurship. This is The BusinessMakers Show, heard on the radio and seen online at TheBusinessMakers.com.
Russ: This is The BusinessMakers Show, heard on the radio and seen online at TheBusinessMakers.com and continuing on with Tim Berry, Founder and Chairman of Palo Alto Software. Tim, let's say, you know, we've got an entrepreneur watching right now and they're right at the point where they go wow, I really do have to have a business plan. Is there some kind of general advice you can give him or her about what - how they ought to think about - other than go to Palo Alto Software and buy your product just the product itself. What should they be thinking about?
Tim: Definitely Russ, and - and I have a lot of strong opinion on this subject. They want to realize from the beginning that their business plan is not a sales document that they'll use once to land funding and then forget. They're gonna want a business plan that lean and practical, just big enough to run their company on. They're gonna want metrics, they're gonna want milestones, they're gonna want plan versus actual regularly and they're business plan is going to be management and steering the company in the future. And if they do that right, then that will end up with a business plan that will not get in the way of getting funding.
Russ: Really cool. I always know that plan versus actual part is sometimes painful too. Anyway, okay, let me take you to another generalization I want your perspective on; let's say this same start up entrepreneur is watching here right now, hadn't even maybe even thought yet about a business plan, but what kind of just general advice, if you can give it, would you give her or him to think about starting their own business?
Tim: I would actually Russ, because I, you know, the old entrepreneurs end up giving a lot of advice and what people forget is we're the ones who survived and all those people who didn't might have better advice than we do. So I would start out objecting to the myth of persistence. Persistence is what's left over when all the other causes of failure have been scraped off the business. So, if we tell people just be persistent, we're forgetting that persistence has to be based on something more important; you have to be giving value.
And if you're not giving value, if you're not creating something that changes the world, makes life better, that - basically that people want to spend money on, then don't persist, give up. And pivot they call it now - it's funny how that word is just, yeah. But the - the core - my advice is I don't think it's about the business plan, or the pitch presentation, or even growth potential, defense ability, scalability, it's about you have to have your business based on something that gives other people something they want. You stay with value and that's - there's no single factor, but if you could say this one is more likely to be important than any other I would say it's that; give people value and you should succeed.
Russ: Real cool. Okay, so I've been talking about the fact that you're Chairman; meaning you're no longer in day to day operations. I have, uh, I've met your CEO and you know her very well, since she is your daughter. So let's talk about kind of succession planning and family business all in one topical area.
Tim: Thank you. I mean, boy, combined assets - talk about your business and talk about your own kids and it's like you'll have to stop me at some point but I'll try to not go on and just keep it as advice. Advice number one is raising five children; my wife and I never thought of it as a family business. We thought of it as my, you know, nerdy, Stanford MBA business planner guy business and it was about survival; we were always broke. Our children did know where the money came because as teenagers they had to spend Saturday morning sometimes putting labels on plastic disks. Remember the plastic disks cause we had a special order or whatever.
So they were aware of that but there wasn't pressure. And as time went on they became grown up, educated; all five have college degrees, three of the five have Masters Degrees, and at various times for various reasons, participating in our business became interesting to them. Our son built the online downloadable portion of Palo Alto Software's web in 1998, went on to New York and has his own career; you can Google him as Paul Berry. Our daughter Sabrina and her husband Noah were in the Silicon Valley doing their thing for years and eventually started a company in London, which we bought, that brought them into Palo Alto Software and, fast forward to keep it compressed, um, I did not do or follow the literature on succession planning.
We let things run and in 2007 there was a moment where I wanted to get back to my writing - we talked about my journalism background and I've written six books that were published. I was tired - at that point I was fifty-nine years old - of the day to day management and I was confident that Sabrina would be able to do that better than me; fresh blood, new ideas. So rather than do the normal succession thing where I talk to all the stakeholders at length, I asked Sabrina one Tuesday afternoon in April of '07, what would you do if you were CEO? Cause we'd talked about it occasionally and she would say but Dad, you are gonna retire eventually, right? And she answered me in about twenty minutes with about a third of what she said was obvious, about another little bit was stuff that when she said it was obvious and the last third was stuff that sounded really smart to me that I hadn't quite conceptualized in my brain and it all sounded good so that Tuesday afternoon I said, good, let's announce it tomorrow.
Tim: And that's the way we did it, good or bad. Now if you go to the literature that's not the right way to do it but, in our case it had very good results because she was ready, her husband Noah was also in the company and she became CEO and she named Noah COO and the company has generated Live Plan since then and Live Plan is a great other shoe for Business Plan Pro and we've got growth going right now and it's a very healthy company and it, in retrospect, seems like it was the right thing to do and I meanwhile, talking about my personal interests, I love blogging. I'm on Huffington Post, I'm on Amex Open, I'm on my own blog five days a week.
Russ: For people who want to see your blog can find it aTim:
Tim: TimBerry.BPlans.com, although if you go to TimBerry.com, and that's Berry you'll find links to all these different places cause I blog a lot and I write a lot and I've done two books; one of them was co-authored with Sabrina since that transition. So it's called safe harbor for the older people among us; I would hate to retire and my wife has always said no, for better or for worse but not for lunch and all that stuff so I'm extremely active. I spend as much time on business now as I did on 2007 but, what's important is I do the part of it that I really like doing. I don't do refereeing which is what management is and the sort of detailed follow-up which is what management is, I do the writing and thinking and thought leadership about business planning and small business, which I love so it's a - it's a great succession story I think.
Russ: Tim, I really appreciate you sharing your story with us and as you well know I plan to also interview the present CEO of Palo Alto Software, your daughter Sabrina Parsons.
Tim: That will be fun, see if she says the same things.
Russ: We will see. But thank you so much for being our one thousandth interview.
Tim: And once again, congratulations on that, that's a great milestone.
Russ: You bet, thank you. That's Tim Berry, Founder and Chairman of Palo Alto Software and this is The BusinessMakers Show heard on the radio and seen online at TheBusinessMakers.com.