From Teacher to Tech Entrepreneur: Mommy CEO’s Story
At Palo Alto Software, we focus a lot on our customers. We listen to their stories; we turn to them for inspiration; and we learn from their experiences, using them to help educate other aspiring entrepreneurs.
What we don’t do nearly enough of is look to ourselves. So, today we’re giving you some rare insight into our company, and into how we operate. After all, we also began as a small business. We had to navigate the complexities of getting started and growing, and we also had to learn to do it more efficiently and effectively.
In this interview with Sabrina Parsons, CEO of Palo Alto Software (the makers of LivePlan), we learn more about how she transformed our business—doubling our revenue, more than doubling our employees, transitioning the company to an entirely new business model—all while keeping the customer first.
This is our story, and we hope it helps you!
Let’s get to know you. Tell me a little bit about yourself and your background.
I’m Sabrina Parsons, the CEO of Palo Alto Software.
I’ve been the CEO since April 2007, so it is approaching my nine year anniversary. To think that I’ve been CEO for nine years seems crazy. I feel like I took over the company only yesterday. Then again, when I really look back on it, I became CEO when I only had two kids. I now have three children and my youngest is six years old. I guess it has been a long time!
As the new CEO of Palo Alto Software, I was tasked with figuring out what was next, from both a technology perspective as well as a business model perspective. I was handed a very healthy company with a great reputation, a strong brand, and great products. But, the company was focused on selling Windows software, and in April of 2007, it was already apparent that customers wanted software-as-a-service (SaaS) and that Windows software was not the future for Palo Alto Software.
I knew that the company had to grow and innovate, and that we had to figure out the next great product, or we would die. We had a strong history and I wanted to honor that history.
Noah—my husband, and the newly appointed COO—and I started brainstorming about the future of Palo Alto Software; how could we build on the great company we had been handed? We looked at the market, we looked at our customers, and then we looked at our own company.
When we took over Palo Alto Software, we were still very small, only 29 employees; today we have grown close to 70 employees. When we first started managing the company, we used our own flagship product, Business Plan Pro, for budgeting and forecasting. But, for ongoing management of the business, we didn’t have a tool that worked. We ended up exporting our strategic forecast from Business Plan Pro into Excel. Preparing for management meetings every month was a huge hassle and required a lot of work in Excel just to get what we wanted.
We had identified a problem in our business management process, and as we talked to our Business Plan Pro customers and our Bplans.com users, we realized that there was a bigger opportunity to provide better tools for ongoing planning, strategic forecasting, and fiscal management.
We started to map out the new product we needed to build—a product that leveraged the history of business planning that Palo Alto Software had always excelled at, but that solved the ongoing “business management” problem for small businesses.
Voila! LivePlan was born.
You’re pretty deeply embedded in the technology industry now. Was it always this way? Did you have a computer science background?
No, I was a history major in college, with a minor in Latin American studies, and a minor in early childhood education. I graduated from Princeton University in 1996 and I moved back to the Silicon Valley where I grew up. After one year of teaching in a public school, I couldn’t help myself, and jumped right into the dot-com tech world which was exploding right before my eyes.
Originally my focus in tech was all about online content and how people interact with it. Then, through the years, my interest turned to creating actual products that were delivered online. I always loved how the internet made tools, processes, algorithms, and technology accessible to everyone—technology that had previously only been available to people in larger companies. I loved the internet as it was a great equalizer of information access.
To see how the internet has brought technology to everybody, and how it has made a huge difference to small businesses is really what gets me going.
You grew up with a family that clearly embraced entrepreneurship. Your father started Palo Alto Software in 1987. Do you think that growing up while he was starting a business affected your perspective on startups and business?
I know my dad’s passion for entrepreneurship was beneficial to me. Being entrepreneurial was never a scary prospect to me; it was normal. For some people, though, it is scary. If they have parents who have had more “regular” full-time jobs at companies, their parents might be scared of entrepreneurship. It feels risky. In my family, it was just the normal thing. That’s just what happened.
I also think it was a coincidence, maybe synchronicity of events, to graduate in 1996 and move to the Silicon Valley. My generation was the first internet generation. When the dot-com boom started, most of the valley was filled with people in their twenties; people starting companies. I think I was lucky to be in the right place at the right time. No one said, “Wait a minute, you don’t have a degree in business or computer science. How are you helping start a tech company?” Everyone said, “Oh, you’re 22 and in the Silicon Valley. You’re perfect for us!”
Did you do anything entrepreneurial as a child or a teen?
One of the things that my parents encouraged was independence. Growing up when my dad was starting a business, there wasn’t a lot of extra money, and my parents looked at independence and self sufficiency as a great thing.
I wanted my own money to go do things so at age 14 I started working. My parents were busy supporting a new business, and a family of seven (I have four siblings).
Learning the value of work and money early on in life was extremely beneficial. I understood that hard worked actually paid off, and that I could earn the money I needed to do the things I wanted to do.
I also learned how to manage my money. In college, my parents paid their portion of tuition as per my financial aid package, and I was lucky enough that they also paid for my books. But, that was it. From the time I was 18, if I wanted anything that wasn’t included in tuition, or room and board, I was on my own. I had to work, save, and learn how to juggle school and jobs. I learned how to budget, and how to forecast future spending to make sure I saved enough money for what I wanted to do.
Without really knowing it, I was learning personal finance, and budgeting and forecasting, which directly relates to business finances and budgeting and forecasting for a business. It’s a shame that in America we don’t teach personal finance in high school. We see so many small business owners that have so much fear when it comes to finance, fiscal management, cash flow, and forecasting. I think that part of that fear comes from not even understanding how to be a good personal finance manager in their personal lives. Then, throw that new business owner into the world of profit and loss statements, gross margins, COGS, and payroll, and they are just lost.
We always keep this lack of fiscal knowledge in mind as we develop LivePlan. We know that our customers are smart, risk-taking entrepreneurs. But we also know that finance can scare them, and that they tend to have very little formal knowledge of business finances when they start running their business. LivePlan is here to help them, teach them, guide them, and make the fiscal side of running a business a great experience.
What’s the scariest thing about being an entrepreneur, and how did you overcome your fears?
I think there are always some scary moments when building something new. When we built LivePlan, we were changing both the technology and the business model for Palo Alto Software.
There was fear around all those changes and the reality that we had to engage in a lot of really careful management. It was a very carefully orchestrated dance to launch LivePlan, and to move from a transactional business model to a subscription-based business model. The stark reality is that we used very careful strategic planning and forecasting, and used all the data we could to help us roll out LivePlan and manage the company finances while we did it.
We actually used the methodology in LivePlan to launch LivePlan:
- Build a strategic plan and forecast
- Come up with a way to test and launch the test
- Measure the results against the plan
- Re-tool, and re-launch
It sounds like you have had a lot of experience with startups and have learned a lot along the way. What about the entrepreneur struggling to start and run their own business? What should they do?
That’s exactly why we created LivePlan. Most small business owners are not business experts. They did not go into business because they have business degrees, or because they love finance and accounting. They went into business because they have a passion for what they do. Usually, numbers scare people. And if you are risking your career, your family—everything—on launching a business, the fear can be insurmountable.
We think that if you have a tool that clearly lays out what’s going on financially, that treats you with respect, and that teaches you along the way, you have a tool that stands to make a real difference. As a business owner, you will get addicted to the tool that gives you the right numbers in the right format. You have fear because you don’t understand these numbers and because finances are stressful. LivePlan really does solve this problem.
That’s what excites me about working on LivePlan. I really truly feel it can make such a huge difference to the wellbeing of a business owner. Their business finances become understandable. All of a sudden a business owner has the data they need to make better decisions and grow their business. Instead of worrying, biting their nails, and losing sleep, they can focus on innovating and growing their business.
What goals do you have for Palo Alto Software over the next three to five years?
I always dream big for Palo Alto Software. Primarily though, I would like LivePlan to become a tool that a small business owner hears about from everyone, as soon as they start running their business.
I want people to say, “Wow, you aren’t using LivePlan to run your business? How are you ever going be successful and stay cash-healthy?”
I truly believe we have built a tool that is good for entrepreneurs. Learning to monitor key business metrics is akin to diet and exercise. It’s not always the most fun, but when you get into good patterns and you eat well and exercise, you feel good. When you eat junk food and don’t exercise, you don’t feel great, though it is hard to break the habit.
Managing a business well is similar. The more you understand and use your numbers to make the tough decisions, the better you feel about your business, and the more you want to use data. But, if you don’t ever look at numbers, and you convince yourself it is “all in your head,” it’s hard to break that bad habit and do what takes some work and effort, but what is clearly good for your business.
I’d also like to continue to work on disproving the myth that planning is only for startups, and that financial strategy is is only for big businesses. I want to show people that planning and strategy can be easy and fun, and that when done correctly, using an easy tool like LivePlan does make a difference.
I’d love to see and build statistics that show that LivePlan absolutely makes you run a better business—definitively, because the data show it. Growth is better, cash flow health is better, and so on.
For the business, I think that’s my ultimate goal: To prove that LivePlan makes starting and running a business easier and more effective.