Tim Berry is the founder and chairman of Palo Alto Software, and he is also the originator of plan-as-you-go business planning. He writes at Planning, Startups, Stories, one of the most popular small business blogs.
Sabrina Parsons has served as the CEO of Palo Alto Software since 2007. Prior to this role she co-founded a software company with her husband in 2001, a company that was purchased by Palo Alto Software in 2002. She is the president of the Princeton Entrepreneurs Network and a significant supporter of entrepreneurs. She blogs as MommyCEO.org.
Sramana: Tim, let’s start at the beginning of your story. Where are you from?
Tim Berry: I started adult life with a masters in journalism. My goal was to have a great journalism career. I started with United Press International, which was very well known back in the 1970s. It was wire service journalism, and I was in Mexico City covering hurricanes, volcanoes, earthquakes, kidnappings, and so on. I was young and it was a fun job. It did not pay anything, but I loved it.
Eventually I realized that I had to start making more money, so I changed course and started business writing. I wrote for McGraw-Hill and Businessweek for five years, still living in Mexico City. At that point I began to realize that it would be more interesting to do business rather than write about business. I applied, and was accepted to the MBA program at Stanford. My wife and I returned from Mexico City to the United States, and I got my MBA in 1981.
I then went to a fancy consulting company, where I discovered that they did not like me any more than I liked them. It was very hierarchical and and the antithesis of actual innovation and thinking outside of the box. In 1983, I went out on my own and started doing business planning and market research. In 1987, I started making templates to make a product out of a part of my business planning practice. That led to Palo Alto Software being incorporated in 1988.
The key there was that to do my business plan consulting practice correctly, I had to make sure that my clients understood that it was their plan and they needed to execute it. A business plan as a written document is worthless unless the person realizes that it will change every few weeks. Templates helped clients explore the nuances of running a business. Those templates led to an early product called Business Plan Toolkit. We moved to Eugene, Oregon, in 1992. We moved because we wanted to and we could. In 1995, the templates were published again, this time as the software Business Plan Pro. That is how Palo Alto Software got started.
Sramana: When you started the company with the thesis of providing financial model templates for business planning, this was all before the Internet. How did you acquire customers? How did they find you?
Tim Berry: It did not work very well. It was hard to sell templates. I was stubborn and I stuck with it until computing capabilities grew that allowed us to have the model we do today. The early template business was supported by my consulting. It did not break even for a long time.
To find customers, I had a classic paradox problem. I could pay what it cost to advertise in business magazines, where only 1% to 2% of readers were a target market, or I could pay what it cost to advertise in computer magazines where 1% to 2% of readers were in my target market. The private consulting is what I was able to do to support and provide for my family.
Sramana: What kind of consulting were you doing?
Tim Berry: Business planning and market research with a special focus on Spanish. I did a lot of consulting to high tech companies related to their presence in Latin America. That spread later to Apple Pacific and Apple Japan. I loved business planning and I was quite comfortable in Latin America, so it was just natural for me to fit in that line of work.