NYSE Big StartUp Spotlight: Sabrina Parsons

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Sabrina Parsons
Sabrina Parsons

Starting, planning and growing businesses is in Sabrina Parsons’ blood. As the CEO of Palo Alto Software and a keynote speaker at the NYSE Big StartUp-supported EO Alchemy event—to be held 24-27 October in Seattle, Washington, USA—Sabrina has a vested interest in the growth of the entrepreneurs she supports through her products. In this interview, Octane talks to Sabrina about the “Lean Startup” movement, a methodology of learning based on lean manufacturing.

Recently, the Lean Startup movement has taken the entrepreneurial world by storm. Why do you think this is?

SP: It’s a fascinating trend that’s bringing some important principles to the forefront. I love the ideas behind the Lean Startup movement, especially the focus on implementation and getting something out to customers as quickly as possible. Lean Startup can help entrepreneurs get beyond the fear that their product or service isn’t “ready,” and instead help them understand that an iterative process with customer feedback is key.

What is Lean Startup missing in your opinion?

SP: Some of the models I see take for granted that the entrepreneur has done his homework. They ask for high-level summaries of things like sales forecasts and expenses, without requiring an entrepreneur to work through a full financial model. You can’t possibly understand your sales, expenses and how they affect both your cash flow and balance sheet if you don’t create a full financial model. When it comes to getting funded, this approach may help prepare entrepreneurs for the business pitch, but it can also present challenges once a successful pitch moves to due diligence, where full financial models are a must.

Why do you think it’s important to have full financial models?

SP: Convincing investors that your business is a good investment and that you can accomplish what you’ve pitched is difficult if you haven’t completed full financial models. Entrepreneurs often come in with these great “hockey stick” curves that show amazing profitability, but when the due diligence process starts, an investor will ask, “Can you really do this?” The entrepreneur has to be able to support the information pitched and give copious amounts of detail, research and evidence. In due diligence, every assumption, theory and forecast that you’ve pitched is going to be looked at under a microscope. If all you have is your presentation, your process will take longer, create more work and may even turn off investors.

Sabrina Parsons is one of many business experts who will be attending EO Alchemy, courtesy of the NYSE Big StartUp program. To learn more about this event or NYSE Big StartUp, please contact Shelly Nicholas, EO’s Strategic Alliances Project Manager, at [email protected].

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