Interview with David Pinkus of RuleBase

BizPlanIt recently spoke with David Pinkus, Founder & CTO of RuleBase, a unique provider of customer communication and commerce tools for e-CRM and e-businesses. After successfully raising a first round of funding from Koch Ventures, BizPlanIt interviewed Mr. Pinkus to gain his thoughts on the business planning experience and difficulties encountered during the process.

BizPlanIt: How long did it take your company to complete the business plan and subsequently raise capital?

Pinkus: It took us roughly two and a half years from the time we started writing the plan until funding.

BizPlanIt: How many people were involved in the process?

Pinkus: In terms of composing the actual business plan, it was just me. However, I did solicit advice from others. My employees were asked to contribute parts of it, but eventually all the writing, editing and content came from me.

BizPlanIt: Had you written a business plan before?

Pinkus: Never, and I hope to never write another one again. It is one of the hardest things I have ever done in my life.

BizPlanIt: What made it so difficult?

Pinkus: Two things. First, I was not sure what they (venture capitalists) wanted. I thought a lot of it was speculative in the sense that there was information we needed to include that we could only figure out as our business moved along. But, we needed the money to figure these things out. The feedback I was getting was that they need to know the answers to these questions – ones that we would have no idea how to answer honestly until we had the money to figure them out. I found myself in a little a bit of a quandary as to guess, make-up, try to do some half-baked research or just continue to push along to provide the information they say they needed, although in reality I knew I could not really provide accurate information without getting the money first. I found this to be a horrible chicken and egg thing as far as putting the content of the plan together.

The second thing was, I had never written a business plan before and I did not know the scope of how much or how little information I had to put in there.

However, the plus side of is that it forces you to ask some very tough questions about your business and to really think through things. My failing initially was that I did not simplify things enough. I really needed to simplify things -- not just for my business plan -- but also in my business. Our undertaking was too ambitious for what we wanted initially, and we needed to reign it in – at least for the business plan.

BizPlanIt: Specifically, what did you scale down?

Pinkus: The business plan should have really focused on what our initial steps were going to be - how we were going to spend the investors’ money then and there. As opposed to writing the business plan for the business’ next five years, the business plan should have been the operating plan for the next year with an eye on the next five years. The amount of energy I spent on the five years picture was disproportionate to what people told me they wanted to see -- a snapshot of the year ahead.

BizPlanIt: Did you pull in outside experts to deal with functional issues?

Pinkus: Again, that is a chicken and egg thing, we did not have the money to do that. The next time I go through this, I will certainly do that – hire outside marketing people to help with the market research, outside financial people to help in that area. I won’t write the business plan, I would have someone else do that. I would contribute the technical part and the vision part of it, which is what my skill sets are.

BizPlanIt: Did you get any feedback from VC’s on your document?

Pinkus: I was so proud of myself when I was done with this 120-page document, and I don’t think anyone read it. Even the people who invested in us did not read it. I know when we went back and asked what they thought of the plan, they said quite frankly they we were not going to read a 120 page plan. They read the exec sum and if the plan was 20 pages they might have read it, but they were not going to read the whole thing.

BizPlanIt: What advice would give someone in your position who is starting out, with no money and needing to get a plan put together?

Pinkus: Knowing what I know now cost me so much more than having had someone else write it for a fee. Also, I would tell someone to simplify, simplify, simplify. What I mean is, imagine the person reading your business plan is a third grader, and I don’t mean use little words, but make sure you can articulate your business very, very clearly. Make sure it is a very specific market and make sure there is an upside to it. If you have a technology that is broad that can go across many vertical markets, but you will start off with one vertical market, make sure you spend your time talking about how you will allocate your time in that vertical market and how you will dominate in that market. Then talk about how you will move into others. Don’t talk about how you will dominate in all the markets because that never works in real life. You always have to get a success in one market and then move into one market.

All we really needed to do was pick one of the things we were going to do. We did not need to be perfectly right. We were so worried about not being exactly wrong, that we forgot to be generally right. If we had just picked one market we could of moved a lot more quickly and then in the back of our minds we could have known we were going after these other markets.

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