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Sabrina Parsons - Palo Alto Software

Sabrina Parsons

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Sabrina Parsons’ father, Tim Berry, was always dabbling in business planning and other entrepreneurial pursuits, so Sabrina grew up listening to her father evangelize about risk taking, passion and technology. Over the years, she and her husband made life decisions in the same way other couples did—but, well, somehow they were always in the right place at the right time. Several natural transitions—and gutsy decisions—resulted in Sabrina’s being named CEO of Palo Alto Software. Since taking the reins of the company in 2007, she has ridden the tech explosion, making more gutsy decisions and taking the company forward. She’s a great interview.

Video and Full Interview Text

Russ: This is the BusinessMakers Show, heard on the radio, and seen online at thebusinessmakers.com. It's guest time on the show and for those of you who saw last week's show, when we had Tim Berry, the founder and Chairman of Palo Alto Software, on the show is the 1,000th guest. You will remember at the very end, he was talking about succession planning and family businesses because his daughter, Sabrina Parsons who's with me now, has been the CEO of Palo Alto Software Company now for five years, right?

Sabrina: Yeah, it's crazy to think but yes.

Russ: Okay.

Sabrina: It was five years in April.

Russ: Well Sabrina, welcome to The BusinessMakers Show.

Sabrina: Thank you, Russ. It's really good to be here.

Russ: Okay, well I know quite a bit about how you got there but our audience doesn't so sort of paint your picture from school to being CEO of Palo Alto Software Company.

Sabrina: Well I'll start with the fact that when I was younger, my dad was always doing something related to business planning. He was a consultant and he started the company when I was in middle school, high school.

Russ: Okay.

Sabrina: So I feel like I've been part of the company for a very long time.

Russ: Oh, I bet.

Sabrina: But not an employee and when I graduated from Princeton University in 1996, Tim wanted me to come and work with him and at that point, you know, my response was always, "No way. What you do is boring. I'm gonna do my own thing."

Russ: Right.

Sabrina: And I went out to the Silicon Valley in the middle of the dot.com boom -

Russ: Okay.

Sabrina: - in '96; was involved in various start-ups. I think the most well-known and prominent one was Epinions.com.

Russ: Epinions. Share with our audience what Epinions does or did.

Sabrina: So - and still does.

Russ: Or both, okay. Yeah.

Sabrina: Yep, it still does. Epinions.com is a consumer review site.

Russ: Okay.

Sabrina: But the reviews are done by people like all of you.

Russ: Okay.

Sabrina: It's not any paid reviewers like Consumer Review -

Russ: Right.

Sabrina: - is and Epinions.com started in '99. We started in the benchmark in August Capital offices because they funded us.

Russ: Cool.

Sabrina: It actually managed to make it through the dot com bust.

Russ: Right.

Sabrina: It got bought by Deal Time that then became Shopping.com.

Russ: Okay.

Sabrina: And then Shopping.com got bought by EBay.

Russ: Okay.

Sabrina: So you can still go to Epinions.com but in doing all of this and being involved in the Silicon Valley and in all these start-ups, I started to understand business planning, why people did it -

Russ: Okay.

Sabrina: - and that what the business my dad was really in was helping people achieve that passion and that American dream.

Russ: Okay.

Sabrina: And that's when all of a sudden, it clicked and I started to find it more interesting.

Russ: And you thought, "Man, dad's really started a cool company here," right?

Sabrina: Yeah.

Russ: Okay. All right. Right.

Sabrina: It was. It was very interesting. In 2001, my husband and I moved to London. He's a dual citizen -

Russ: Okay.

Sabrina: - and we started a consulting company.

Russ: Okay.

Sabrina: At the same time, Palo Alto Software was looking to expand into the European market and they actually were beginning to negotiate a deal with a software distribution company in London.

Russ: Okay.

Sabrina: So my dad basically put the deal out to us -

Russ: Wow.

Sabrina: - and he said, you know, "We're not sure of this market. We're not sure if this is the right thing for us, so I'm not gonna pay you; I'm not gonna give you salaries. I'm gonna give you the opportunity -

Russ: Thank you, dad.

Sabrina: - exactly. But you know what, that's great.

Russ: Yeah.

Sabrina: I like the fact that, you know, he gave us the same opportunity that he gave somebody else.

Russ: Okay.

Sabrina: Because it was a good business decision.

Russ: Okay, cool.

Sabrina: And if, to me it allowed me to really prove that what I bring to the table is not just being his daughter.

Russ: Okay.

Sabrina: Because it's something to deal with.

Russ: Okay. So you and your husband - Noah is his name, right?

Sabrina: Yep.

Russ: Had a company that became a distributor for Palo Alto Software. Were you distributing other products as well?

Sabrina: So we were doing a lot of online marketing consulting.

Russ: Okay.

Sabrina: Palo Alto Software products were the only ones we were distributing.

Russ: Okay.

Sabrina: But in doing that, we started to realize what a huge market it was and we stopped doing as much consulting and really focused on distributing these products.

Russ: And did you achieve some success over there?

Sabrina: We did.

Russ: Yeah?

Sabrina: In less than a year, we had localized the product.

Russ: Okay.

Sabrina: We worked with local business consultants and accountants to make sure it was appropriate for the UK.

Russ: Okay.

Sabrina: So we built a UK edition. I basically went out and negotiated a bunch of deals, got us through the biggest distributor that then sold into all the retail shops -

Russ: Cool.

Sabrina: - so within nine months, we had UK localized product, newly-designed boxes and we were in all the retail outlets in the UK and Noah taught himself how to program in order to build us a shopping cart -

Russ: Okay.

Sabrina: - and build the whole online marketing vehicle for us to market the products in the UK.

Russ: When you say taught himself how to program, I mean he wasn't a programmer before?

Sabrina: He was not. Now he is a very engineer-minded person.

Russ: Okay.

Sabrina: He was an architecture major at Princeton.

Russ: Okay.

Sabrina: So he really has that form follows function; he's really an expert at user interface and user design.

Russ: Right.

Sabrina: And he was actually Employee 101 at Yahoo -

Russ: Oh my God.

Sabrina: - before Epinions.com.

Russ: Wow.

Sabrina: And what he really did at Yahoo was produce web properties for them.

Russ: Okay.

Sabrina: And really used a lot of his architecture skills in the user design of that.

Russ: Really cool.

Sabrina: So - yeah.

Russ: Yeah. So you had this company in London distributing product throughout the UK. You didn't go over to Europe did you, 'cause you'd have to localize. That would be a huge thing.

Sabrina: We dis- yeah, we distributed in Ireland as well.

Russ: Okay.

Sabrina: And then there were some countries in the UK where English is the business language.

Russ: Okay.

Sabrina: So we were distributed throughout Denmark -

Russ: Okay.

Sabrina: - and Norway and Sweden.

Russ: Okay.

Sabrina: A little bit in Germany and continue to be, today.

Russ: Okay, cool. So how did that evolve?

Sabrina: So at the end of probably a year and a half, Tim came to me and said -

Russ: Tim, your dad.

Sabrina: Tim, my dad, that's right. In the business world, I always call him Tim.

Russ: Okay, understand.

Sabrina: And I switch back and forth.

Russ: I'm just making sure our audience understands who Tim is, Tim Berry.

Sabrina: Yes. [Laughs]. So my dad came and said, "I need to hire some higher-level people here at Palo Alto Software in the US.

Russ: Okay.

Sabrina: If you guys are thinking of moving back, this is your opportunity. I need somebody to run all of our web properties and really develop our websites in a more strategic way and I need somebody on the online marketing business development side -

Russ: Okay.

Sabrina: - and I think you and Noah would be perfect for that. If you don't wanna do that and you wanna say in London, I totally understand but there may not be other opportunities in the US then, you know, I'm not sure when they might be there.

Russ: Okay.

Sabrina: So at that time, Noah and I had been married for about four years and had started to think about kids, didn't have kids yet.

Russ: Right.

Sabrina: And felt very far away from our families.

Russ: Okay.

Sabrina: And we decided, "You know what, this is the right time. We've had the opportunity to live in Europe, do some cool traveling, start a business here -

Russ: Right.

Sabrina: - understand what it's like to be an entrepreneur in another country -

Russ: Right.

Sabrina: And we were ready to come back. So we came back, moved to Eugene, Oregon and joined the company. Noah ran all the web properties and did all the development. I ran all the online marketing and business development.

Russ: Wow, pretty important positions as well, right? Yeah?

Sabrina: Yeah, it was. And it was fun.

Russ: Yeah.

Sabrina: It was fun to come back -

Russ: Yeah.

Sabrina: - I'd never lived in Eugene.

Russ: Okay.

Sabrina: My parents had moved there when I was in college.

Russ: Okay.

Sabrina: And it's a beautiful, wonderful town, especially when you're starting a family and have young kids.

Russ: Sure, sure.

Sabrina: So it was a great place to be.

Russ: Okay.

Sabrina: And then in 2007, I think last week everybody heard how -

Russ: Right.

Sabrina: - my dad just one day asked me a question and the next day I was CEO.

Russ: Wow. We were talking about succession planning and he said something like, "Well I didn't exactly do it by the book but all of a sudden, I wanted to spend more time doing what I wanna do and that meant somebody else had to do the operating of the company," and he thought you would be well-qualified and asked you one day and I think by the next day, you were CEO?

Sabrina: Yes. I mean Noah and I had always talked about maybe in the future, we might run the company, but -

Russ: Right.

Sabrina: - we thought, you know, a couple years down the road.

Russ: Right.

Sabrina: So it was. It was very surprising. It's not what succession planning taught me to do.

Russ: Right, right.

Sabrina: But it's worked. It's worked great and Tim, you know, basically said, "Well what are you guys gonna do and Sabrina, what are you gonna do," and I kinda laid out my plans and I guess I impressed him.

Russ: Well, you did.

Sabrina: And that's good.

Russ: I mean that's exactly the way that he said it. He said, "I asked what you would do," and he said that the first third of what you said was about business as usual and then this other stuff was kind of interesting but the last third, he said, "Man," you know, "she's really brought a new dimension to the company," so what was that last third?

Sabrina: The last third was really taking Palo Alto Software where you see us entrenched today.

Russ: Okay.

Sabrina: It was really saying the future of software isn't in Windows downloadable software.

Russ: Okay.

Sabrina: It's in online cloud applications.

Russ: Okay.

Sabrina: Salesforce.com was just beginning to start its, you know, big blowup -

Russ: Right, right, right, right.

Sabrina: - that today it's the standard in cloud and subscription success. And Noah and I, that's our background and we really felt passionate about this is gonna allow us to build better products and serve more entrepreneurs if we can keep up with the technology and really be bleeding edge in the technology and get Palo Alto Software online, in the cloud, in a SAS model.

Russ: Really cool. Well, I wanna talk more about that but we're gonna be back with more with Sabrina Parsons, CEO of Palo Alto Software after this. 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. Continuing on with Sabrina Parsons, CEO of Palo Alto Software, daughter of the founder, and you have just sorta told us about taking over and implementing more of a Web-based focus by the company. Did that go easily? Was it controversial? Was it too much of a change?

Sabrina: I think it could've been but we did what a lot of software developers call eat your own dog food.

Russ: Okay, okay.

Sabrina: We planned and I think that that's a critical step for any business that's growing, adding a new product line, a start-up - is to really think about where you wanna be, set your goals.

Russ: Okay.

Sabrina: You know where is it we wanna be I a year, in three years, and that's what we did first.

Russ: Okay.

Sabrina: And that helped us understand what we needed to change and what could remain the same.

Russ: Okay.

Sabrina: One of the first things we needed to do is hire the right developers to develop a SAS in-the-cloud product.

Russ: Right.

Sabrina: Our development team was a Windows team.

Russ: Right.

Sabrina: So we started to hire more developers and build a new team and slowly over the years, we've built a really good team with a start-up culture.

Russ: Okay.

Sabrina: So we did change it. Palo Alto Software had been in existence for a while and had great products and great web presence but it now has developers and marketers who understand online aps in a way that the employees that were there when I took over maybe didn't have that expertise.

Russ: Okay, so when you got there, how many people were there and how many people are there today?

Sabrina: So there was 'bout - I wanna say 26, 27 people when I took over.

Russ: Okay.

Sabrina: And we have over 40 today.

Russ: Okay.

Sabrina: And we've added two brand-new products -

Russ: Okay.

Sabrina: - in the five years.

Russ: Okay.

Sabrina: Both of them SAS.

Russ: Okay.

Sabrina: In the cloud subscription products and the most recent one, LivePlan, is really the future of our company.

Russ: Okay. You know, I don't know that some people who don't understand the software business understand how significant some of this stuff has shifted. I mean it's sort of a major paradigm shift. And to a degree, it could probably be a little bit scary, you know, like here was this model that was working and you deemed that wow, it needed to be modernized. What if you were wrong?

Sabrina: You know, I think that's the obstacle all start-ups and entrepreneurs and small business face and I think the best thing you can do in terms of, "what if it's wrong," is really have that plan, because the plan's gonna change, right?

Russ: Right.

Sabrina: Things are gonna be wrong and we hear this from people all the time. I don't understand why I should plan.

Russ: Right.

Sabrina: It's gonna be wrong and really, what it does is it sets you up to be able to make the right decisions. It sets you up to say, "Wow, I thought this was gonna happen, but it's not. Why?

Russ: Right.

Sabrina: And what can I learn from that?" And that's really what's carried us.

Russ: Right.

Sabrina: One of the hardest transitions for us - and we knew this but we learned along the way and planned for it - was a subscription-based model changes you from taking a certain amount of money up front, right away -

Russ: Right. Right, right.

Sabrina: - for a downloadable product to taking a little bit of money but you don't get it right away. So -

Russ: Which has major cash flow implications.

Sabrina: Exactly.

Russ: Which can really put some pressure on you.

Sabrina: Exactly.

Russ: So you experienced some of that, apparently successfully because you're still here and still growing.

Sabrina: Oh yeah. Absolutely.

Russ: You know, quite well. Now the company is unusual in that, you know, number one I could certainly feel the passion from your dad about the process of business planning. You've used the plan word about five times, so I sense -

Sabrina: Yes.

Russ: - that you feel that same way.

Sabrina: Yeah, no and for me, I think, that's one of the things that's most intriguing about the business that I didn't get when I was younger -

Russ: Right, right, right.

Sabrina: - and my dad was running it is that what we do is really help people achieve the American dream, right?

Russ: Right.

Sabrina: Everybody wants to start and run their own business.

Russ: Right.

Sabrina: The biggest hurdle there is that that's really hard.

Russ: Yeah, right. That's right.

Sabrina: Sixteen percent of businesses fail.

Russ: That's right.

Sabrina: But your chances to be around 5 years later -

Russ: Right.

Sabrina: - are 70 percent greater if you actually plan your business.

Russ: Right.

Sabrina: And really understanding that what we do is bring the tools to help a business succeed, that's where my passion lies.

Russ: Okay.

Sabrina: I love that. I love that we can truly tell someone, "We're gonna help you," and we are gonna help them.

Russ: Okay.

Sabrina: And that, to me, is what keeps me going every day.

Russ: And very honorable at the same time. Okay, so I know from reading some of the things that you've written before, too, that I gotta think that the company culture is enormously important to you. It's not necessarily part of a business plan but I sense that it is, nevertheless, at Palo Alto Software, a key characteristic of what the company's all about.

Sabrina: It is, it is. I think that I've experienced cultures where people feel like they have to be at the office all day long.

Russ: Right.

Sabrina: There's this pressure of face time.

Russ: Right.

Sabrina: I don't think people are working when they're at the office 18 hours.

Russ: Right.

Sabrina: I think they're working eight, nine, maybe ten hours.

Russ: Right.

Sabrina: They're not working for 18 hours.

Russ: Right.

Sabrina: And I wanted to bring that reality to Palo Alto Software. I want people who don't get burnt out. I want people to have a life outside of the company. I think when you're doing things that you love, your brain's still going. You're still thinking and if you're passionate about entrepreneurship, which we try to hire people who are all passionate -

Russ: Right.

Sabrina: - about innovating and helping entrepreneurs. I think that we are getting a lot of their brain time, even when they're off doing something else.

Russ: Okay.

Sabrina: I also think that happy people are more productive and if you don't have that life/work balance stress - if you can go home to dinner with your family; if you can work out if that's important to you; if you have hobbies that are important to you and you can do them, you're a happier person and that, to me, means you're a more productive employee.

Russ: Okay.

Sabrina: And that's been really important and from my perspective, too, as a woman running a technology company, I think that everything that I do can be done and I think I can do that and have that work/life balance, you know, if you provide the right environment at work -

Russ: Okay.

Sabrina: - and if the culture is there and I'm mom to three small boys and so -

Russ: Well I've heard -

Sabrina: - I can live that, every day.

Russ: Right, well I've heard and seen you referred to as the Mommy CEO in several ca- do you allow people to bring their children to work, to the office?

Sabrina: So I do, in fact. What we do is nursing moms can bring their babies -

Russ: Okay.

Sabrina: - for the first three months.

Russ: Okay.

Sabrina: They can take maternity leave if they like.

Russ: Okay.

Sabrina: But I can't take maternity leave, right -

Russ: Okay, right, right. You can't do that.

Sabrina: - as the CEO, I can't just be gone.

Russ: Right.

Sabrina: And that's one of the challenges that women face in leadership positions and why you mainly see women in leadership positions later in life.

Russ: Right.

Sabrina: Because we can't change biology. There's child-bearing years -

Russ: Right.

Sabrina: - and that can be difficult but I think that you can accommodate that. So all three of my boys - came into the office for the first four months of their lives.

Russ: Right.

Sabrina: I had a little Pack N' Play crib.

Russ: Right.

Sabrina: I had support from all of my team.

Russ: Right.

Sabrina: I nursed my babies in the office and then after four months, when they started to get a little more mobile and loud - harder to be in the office and that bonding time is done, then you know, they did go to daycare and now actually with three boys, it's more economic for us - we have a nanny who helps out.

Russ: Right. Sure.

Sabrina: But yeah, I think that's really important and when my kids are sick, I have a little camping mattress in the back of my office. I blow it up. I've got pillows and blankets.

Russ: Okay.

Sabrina: And if they're really sick, all they're doing is lying there anyway -

Russ: Right.

Sabrina: - and they want their mommy.

Russ: Right.

Sabrina: And so they come into the office with me and they lie there and I can give 'em hot soup at lunch and I can feel like I can do that and still run my company.

Russ: Sounds real cool and who knows, maybe one of 'em will be CEO someday, too, right?

Sabrina: Well, my oldest son is here today and -

Russ: Yeah, yeah.

Sabrina: - at the ________ competition and, you know, his plans after he becomes an Olympic swimmer and skier -

Russ: Okay.

Sabrina: - being eight, you can have lots of dreams.

Russ: Right, right.

Sabrina: Is to be the boss, as he calls it.

Russ: All right, all right. Really cool.

Sabrina: So and he practices every day with his little brothers.

Russ: Really cool. All right so share with us the vision that you would have - the ideal scenario, Palo Alto Software five years from today.

Sabrina: So Palo Alto Software, five years from now, is helping even more small businesses and start-ups plan and manage their business. Our LivePlan product today is not just a planning tool but it's also a management tool.

Russ: Okay.

Sabrina: It allows you to take your plan and then gives you a scoreboard that allows you to bring in your actual results and allows you to really see, "This is what I thought was gonna happen and this is what's actually happening." And it starts to give small businesses tools that larger companies have because they can pay a lot of money to get those tools, whether it's through a CFO or whether it's through large software enterprise solutions -

Russ: Okay.

Sabrina: A small business can't pay hundreds of thousands of dollars a year.

Russ: Right.

Sabrina: So our solution, you know, is one that is offered at $20.00 a month, so it's affordable and it gives all those tools that I use and allow me to sleep at night and not get ulcers about cash flow, about changing business models, about can I make payroll or not. I plan and I manage and I look at my financials on a daily, monthly, and quarterly basis and it allows me to make adjustments that keep us ahead of the game and no matter what happens - bad economy, changing product lines, we know what it takes to get there and we can plan for it and if that means a larger credit line; if that means changing payment terms; we know that ahead of time. So we may adjustments before you're in bad shape and that's what we wanna give small businesses. That's the future of Palo Alto Software is to really go beyond planning and give those management tools that all those entrepreneurs out there who are passionate about what they do but maybe not the MBA. And that's really what we're all about.

Russ: Really cool. I can't help but think that our audience is ideal for those services, so really cool. Before I let you go, one last question: let's imagine that a young, aspiring entrepreneur's tuned in right now. What general advice would you give her or him to kinda prepare them for the life ahead?

Sabrina: You know, I think the biggest piece of advice that I can give them is to acknowledge their weaknesses.

Russ: Okay.

Sabrina: Often times you see entrepreneurs who think that what they need to do is everything.

Russ: Right.

Sabrina: They need to be the salesperson, the marketer, the product person, everything -

Russ: Right.

Sabrina: - that's not being fair to your own business. What you need to do is figure out what it's gonna take to bring in enough money; whether it's through a loan, whether it's through bootstrapping, whether it's through angel or venture capital, so that you then can hire the right people around you and have the right team in place - because that's what it's gonna take. And an entrepreneur brings their expertise to the table but no one is good at everything and acknowledging, "This is what I bring to the table and here's my weaknesses or holes," is I think the first step into building a successful company.

Russ: Really cool. I now can see why the Chairman of Palo Alto Software wanted you for his CEO.

Sabrina: Thanks, Russ.

Russ: Sabrina, I really appreciate you sharing your story with us and being on The BusinessMakers Show.

Sabrina: Thank you. It's great to be here.

Russ: You bet. Thanks a lot. That's Sabrina Parsons, CEO of Palo Alto Software and this is the BusinessMakers Show heard on the radio and seen online at TheBusinessMakers.com.

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