Lori Torres is the founder and CEO of Parcel Pending which provides innovative package management solutions. The company raised over $15 million from investors such as Tech Coast Angels. Parcel Pending was acquired in January 2019 by Neopost for a reported $100 million.
In this episode you will learn:
- How to thrive and learn with no college degree
- Loris top tip for new founders
- The gift of competing with Amazon
- How to handle an all-hands meeting when you have nearly 200 employees
- The workplace culture that won Parcel Pending the title of Best Workplace in Orange County, for the last three years
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About Lori Torres:
Southern California native, Lori A. Torres, is the founder and CEO of Irvine, Calif.-based Parcel Pending, the nation’s leading provider of innovative package management solutions.
Lori is a dynamic and successful entrepreneur with more than 25 years of real estate experience. She has been recognized on multiple occasions for her leadership, including being named 2017 Innovator of the Year by the Orange County Business Journal and chosen as one of 13 entrepreneurs admitted into the EY Entrepreneurial Winning Women 2017 North America class. Under her leadership, Parcel Pending has been voted one of the best places to work in Orange County by the Orange County Register for three consecutive years (2016-2018).
Loris first major career role was a 13-year tenure at The Irvine Company, a leading real-estate investment company and master planner. Throughout her tenure, Lori was responsible for the operational oversight of the companys entire multifamily portfolio, consisting of 1,200 property management associates operating over 44,000 apartment homes. This portfolio generated $1B in annual revenue.
While at The Irvine Company, Lori regularly walked-through many of their Multi-Family Communities. Initially, package delivery was not a major issue. However, as time went on and online shopping became increasingly popular, Lori noticed that property managers were struggling to devote enough space, time and money to properly manage the influx in resident deliveries. At the same time, residents were becoming overwhelmingly frustrated with having to pick-up their packages during office hours, disappearing packages, and tracking packages that never arrived. Lori knew there had to be a better way and she set out to find a solution.
She founded Parcel Pending in 2013 to provide seamless package management solutions to PMs, residents and couriers alike and has served as the companys CEO since its inception. Today, Parcel Pending is the global package management industry leader in the multi-family, commercial, retail and universities space with 140+ employees and customers across North America.
Prior to founding Parcel Pending, Lori served as senior regional manager at BRE Properties, Inc. from 1996 to 2000, and regional manager at McNeil Real Estate Management Company from 1986 to 1996.
She also served as president of the South Coast Apartment Association, Orange County in 2009, board member of California Apartment Association from 2010 to 2012 and board member of the CAA South Coast Apartment Association, Orange County from 2005 to 2011.
Lori cares deeply about solving the issue of homelessness in Southern California. She personally and professionally supports many local non-profits and organizations that fight homelessness. She currently sits on the board of Families Forward, an Irvine-based nonprofit that aims to provide affordable housing for homeless and at-risk families. She was also a board Chair of Grandmas House of Hope, a non-profit dedicated to ending homelessness, poverty and hunger, from 2010-2014.
Lori holds a Master of Business Administration from Pepperdine University. She also holds a California Real Estate Broker License and is a certified property manager.
She is married with two children and has enjoyed raising them in Orange County, Calif.
Connect with Lori Torres:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone and welcome to the DealMakers show. Today I think that we’re going to learn quite a bit from the guest that we have. I’m very, very excited because we have today a female founder. I’m so excited having three daughters myself. So, Lori Torres, without further ado here, welcome to the show today.
Lori Torres: Thank you so much, Alejandro. Nice to be on the show with you today. I appreciate it.
Alejandro: I’m actually interested, and perhaps we can do a walk through memory lane here, Lori, to really get to know you a little bit. So, how was life being born and raised in Southern California?
Lori Torres: It’s not about life growing up in Southern California. People joke about the cost of living in Southern California, but we pay the weather tax, and it’s beautiful there. So, I’m pretty fortunate. I’m born and raised and love it.
Alejandro: That’s fantastic. You did your college, and then you did your MBA in Pepperdine. Is that right?
Lori Torres: It’s not, Alejandro. I’m an interesting story because I actually don’t have an undergraduate degree. I’m one of those rare birds that I advanced my degree or advanced my career over the years. Everyone told me I would never make it; I’d never become a vice president, and I did. I’d never become a senior vice president, especially at the real estate company I worked at, and I did. So, I had no degree, and I then found that Pepperdine actually allows entrepreneurs to come and take an MBA program based on work experience. Because I ran a company that generated a billion dollars a year in revenue and 1200 employees, they said, “You can come get an MBA.” So, I actually went back and got my MBA without having an undergraduate. I’m an odd bird, but it’s perfect for me.
Alejandro: That’s amazing. Is there like a reason why you decided not to go to school, to college, or what was the reasoning there?
Lori Torres: You know, that’s a great question because people don’t ask me that very often, but I just started life. I was young and independent, right out of high school. I moved out and bought a little condo. I had saved some money and bought a condo, and was just a very independent person, and started my life. I got into a career pretty quickly. I didn’t even know I would get into real estate. You fall into it. I didn’t say, “When I grow up, I want to be in property management” by any means, and then I just had this great run for almost, I’ll say, 25+ years, so I don’t give away my age too much.
Alejandro: Okay, got it. So, you did a little bit of work here in real estate before doing the MBA. But just out of curiosity, what did you learn on the MBA? What were some of those breakthrough moments that you got from that?
Lori Torres: You know, I’ll tell you. There was always this crazy conversation, Alejandro, in the back of my head that I wasn’t as smart as everyone else at the table. While I was going through the program, I remember feeling that same way that I am not as smart as these people because they all have degrees. By the time when I got to the end, what I realized is, by the way, I am as smart. I can totally handle this. There were so many life lessons that I got through the program, and really, I came out with some very dear friends. I’m close to some of the professors. It was an amazing experience because I ended up with advisors and friends through the process. Then, of course, I learned some of the fundamentals that you learn when going through advanced education, so I would say it was a really great gift that I gave myself by going.
Alejandro: That’s amazing. It’s incredible how we are our biggest challenges. How we talk to ourselves, and sometimes, we don’t talk to ourselves in a very nice way. In fact, I think I read the other day that we talk to ourselves 50,000 times a day. Isn’t that crazy?
Lori Torres: That is crazy, and it feels exactly right. I think I might be 51,000.
Alejandro: I love it. So then, what got you into real estate, Lori?
Lori Torres: I started my career very young, and it was in property management. I started as a receptionist, and then quickly moved into a property manager position of high-rise office buildings. Then I managed retail and some industrial buildings, even lovely self-storage. Then I got into multi-family apartments. That’s where my career really stayed was in the apartment side. So, I grew. I’d only been with three different companies my entire career. The last, I ended up with the Irvine Company which is a very prestigious high-end developer in California. That’s where I advanced. I was there for about 13 years. That’s where I really advanced to the highest level where I was the senior vice president, but it was also where I saw the problem that made me start my company. So, it was such a gift there as well that I was able to make a complete shift after all those years in that business.
Alejandro: Really cool because Irvine has like over 3,000 employees or something like that. So, was it that big when you joined them?
Lori Torres: No. The apartment division had I think we had like 375 people. When I left, I had 1,200. So, we had some pretty good growth. Then today, they’re probably about 1,800. They’ve continued to grow significantly.
Alejandro: What were you doing there?
Lori Torres: I was the senior vice president of property management, so my job was to handle all the operations. I was responsible for the PnLs, for all of the real estate. At the time, I had about 125 properties up and down the coast of California. Then responsible for the operations and making sure that the properties were performing at all times. We had a big team, and it was great job. I loved being there. I learned a ton. The company is very structured and disciplined, and some people struggle with that. It actually gave me the gift to be able to go and be an entrepreneur because I learned a lot there to take that to my next step.
Alejandro: What were your biggest takeaways because 13 years working there was quite a bit. If you had to point down, let’s say some of your biggest takeaways, or breakthrough moments, what would those be working at Irvine?
Lori Torres: I’d say the biggest takeaways are the necessity to be in the detail, and to focus on the details which is very hard for some people including me because my brain is more of a visionary and a big picture strategist than it is a detail person. But knowing how important every detail is, and I say that because the owner of the Irvine Company was so meticulous about every building that was built, and every piece of plant material that was selected, and the color of the buildings. So, having this very high standardour bar set very high which is how I’ve really done it with my company is the bar has been high. The expectations have been very high. But when you set those high expectations, people raise up to that. I’ll tell you what I took away there is that always have higher expectations. It served me very well.
Alejandro: Really cool. Then would you say that perhaps doing the MBA because I see that the MBA you did in 2013, and that was right around the same time that you started your company, Parcel Pending? Was the combination of seeing those inefficiencies while working at Irvine, and then also being at the MBA, what really perhaps triggered the giving birth to Parcel Pending?
Lori Torres: Well, the beginning of Parcel Pending, yes, but I saw the problem while at the Irvine Company. The problem that I saw was that people were shopping online at home in their pajamas, and then off to work they would go. Our staff, our management offices were getting inundated with packages. So, I always said, “I’m a solution finder.” When you’re in property management, property operations all day long, your job is to just solve problems. So, I’m a solution finder. I’ll figure it out. When people started shopping online so heavily, and our staff kept saying, “Lori, we need more headcount. We need bigger package rooms.” I thought, “No, this doesn’t make sense. We can’t make revenue off of it. There’s got to be a solution using technology. So, when I realized I had something, I remember one day I had to go into the president of our division and said, “I think I have this idea.” First, I said I was going to solve the problem. Then I said, “I think I have solved the problem, but I think I’ve solved it for the industry, and now I have to quit my big fancy job and go after this.” I had full support from the company. I had been there for such a long time, and they really respected me. But it was a big decision. People thought I was crazy because no one leaves their executive position to go start something new with zero salary. When I left, there was just this burning need for me to get the MBA. I wanted to do it, and I had found, as I mentioned earlier, that Pepperdine would let people in without an undergraduate. So, I think the stars aligned. So, I wrote my papers throughout Pepperdine on Parcel Pending. I did all of the projects on Parcel Pending. My classmates, there were a few times where they helped so much with Parcel Pending. We were in a marketing class where they took Parcel Pending as a topic, and we used it for pricing discussions. I mean, the timing could not have been better to go get an MBA and to be starting a business. The only problem was, I also was the breadwinner of my house. So, I had to get a consulting job. I was working 15 to 20 hours for this company in the apartment space, but it was pretty intense the amount of work. So, trying to juggle those three giant balls at one time, let me tell you, I’m not really sure how I lived through it, but it’s like equal to having a baby. You forget the pain. It was a tough time, but it was good. I’m glad that I did it but pretty intense.
Alejandro: Was there a moment for you, Lori, where you were like completely sure that you wanted to dedicate your life to Parcel Pending? What was that moment like?
Lori Torres: You know, it was funny. When I left the Irvine Company, my family struggled with the thought that “Mom, who’s given us this really nice lifestyle is not going to have a job. So, there was some pressure. I actually went, and I interviewed for three different jobs. I got offered on all three, and every time I came home, I was so upset. I was like, “I don’t want this job. I don’t want to take this. I really believe I have something here with this idea.” It was such a deep belief that I had something. I couldn’t walk away from it. So, I had to fight through it, and fight through with my family so that I could make it happen. I just kept saying, “Trust me. You have to trust me.” It was scary. There’s no doubt. It was intense. It was like a Disney Land on the Indiana Jones ride when that giant boulder’s coming down, and the jeep is going up. It was like I was standing there trying to push that boulder up the hill because I had a lot of forces that thought I was crazy. “Who is going to do this afterwhy would you leave this great job and go start this? It’s so risky.”
Alejandro: Wow. For how many years were you in the corporate world before actually becoming an entrepreneur.
Lori Torres: Yeah. I was 30 years. Thirty years in corporate America. No risk. Very steady Eddie, consistent paycheck. So, to make the jump and become an entrepreneur, it was a big shift.
Alejandro: Quite a leap of faith there, Lori. So, what was the founding team there? Who did you rally to join you on this at the beginning?
Lori Torres: It’s an interesting conversation because I had met a gal, and we were going to start a company together. We got maybe six months in and realized we weren’t a good partnership, and we couldn’t move us forward. So, she went her way, and I went my way. Funny enough, we both came to market with our products. Both of us have had some good success. After that six months, I did it on my own. I sat down, wrote a business plan, got very focused to make sure that, “Does this make sense? Can the numbers work?” Then I was off to the races to build the technology and figure out manufacturing. So, I really did it on my own, but I didn’t. What I will tell you, Alejandro, there are amazing people that will help entrepreneurs. They don’t expect you to pay them. They don’t expect equity in the company. There are just people that are out there that want you to win and want to help you. People just kept telling me and pointing me in directions of other people. Like, “Oh, you need help on that? Talk to this guy.” Every time they would refer me to someone, I would go and talk to that person. Some of those people helped me, and some of them didn’t, and some of them are still in my life today.
Alejandro: That’s the Pay-It-Forward mentality, especially the founders that have been at it for a while. They always want to give back, so I fully agree with that, Lori. You know, it’s interesting that you mentioned this because I think it’s like over 65% of companies fail because of co-founder issues. So, it’s really amazing that you were able to really identify that things were not working very, very early on. So, was it like the skill sets that did not match, or it was like the agendas were not aligning, or what would you say didn’t work out for you guys?
Lori Torres: I would say probably stylistically, we just had completely different approaches. Candidly, probably too muchI’m an inquisitive person. I want to know all the answers. I can’t haphazardly do things. I have to know the details so that you can move it forward. I think we just had such different work styles and personalities that it wasn’t going to be a good fit. But I still talk to her today. We have stayed in touch over the years.
Alejandro: That’s great. Then as you went on, and you started to really work on technology and the product, what were some of the first critical hires that you made?
Lori Torres: Some of the critical hires. I’ll never forget the first one. You know, you never forget Alejandro, the first big checks you write. So, the very first big check I had to write was for $25,000, and it was a combination for the website development and the backend on our Cloud-based software. I will never forget saying in my head, “This is it. I’m now writing and making the first big investment out of my personal account that we’re moving this thing forward. Then I hired a gentleman who was a younger guy but had this great energy. I had taught a class in the apartment industry, and he happened to be there. He came up to me afterwards, and said, “I’d like to work for you someday.” I never forgot it, and here it is a couple of years later, I called him, and I said, “You mentioned you’d want to work with me. Let’s meet. Do you have any desire to join a startup?” So, he came and started. He actually became one of those people that was in almost every position in the early days. He’s not with me now. However, I just had dinner with him a couple of weeks ago, and he’s a lovely guy.
Alejandro: Really cool. What ended up being the business model for Parcel Pending?
Lori Torres: The business model: first off, Parcel Pending, we do electronic smart lockers to manage packages. The way that it works is just the drivers, the couriers come and put a package into our lockers through a touch screen. They find you. Once the package is in, it sends you a text or an email. Now, you can come pick it up at your convenience. So, the business model is that we can either sell you the lockers to own as landlords. We’re in retail. We’re in grocery. We’ve really innovated over the years. When we started, we started strictly in multi-family, but now we’re everywhere. We’re in corporate campuses. We’re in universities. We’re all over. You can buy the lockers and then pay a monthly software fee, or we have a finance model, a subscription model that you can also do. So, we have different models based on the need. So, for example, in retail, it provides pickup in-store. The pickup in-store experience is not very good, so now, if you buy online, you can pick up in the locker. So, you get this notification, you can go straight up to the Kiosk, put in a code, and now you get your package that you purchased. So, it’s just a better experience. Our whole purpose at Parcel Pending is just make life easier for everyone, and that means easier for everything whether it’s the contact stage, whether it’s getting your packages, whatever it is, just doing business with us, I want it to make your life easier.
Alejandro: Right. As you were building the business, how did you think because I’ve read a lot about some of the initiatives to really embrace culture for the company, so what is culture to you and how did you guys embrace culture in the business?
Lori Torres: There’s probably nothing more important to me than culture. I would tell you that one of the things I’m most proud of is that we have won in the last three years for Best Workplace in Orange County. I never, when I started the company, never even thought about that that could happen. For our associates to say it’s the best workplace, it just makes me so proud. The culture for me, was so critical because I’m just a believer that we all have to work. If we’re going to work, why not have it be the greatest experience of our work lives? Why not have it be a fun, rewarding, mentally-stimulating place to be. Before I had even one employee, I had written a mission vision and value statements. I knew that those would never be our missions, visions, or values because it took the team to write them. What was funny was when I had about 25 people at this point, we did an exercise, and we went through writing our mission, vision, and value. At the end, it was so in alignment with my original one that I had written by myself. Now, the words were different, but the meaning behind it was still the same. So, I think what had happened is over the years, we hired people that had the same passion for customer service, passion for other people, just being caring and considerate to other people, but also being relentless. Like, “We’re driven. We are such crazy solution-finders.” So, we were able to use all of those pieces to say, “This is who we are. We’re here because we want to make life easier for people.” We want to make life easier for the courier, the poor guy who has to go up and down the stairs delivering all those packages. Can you imagine how tough his life is when he gets home at the end of the day? So, we want to make life easier for him. So, the culture that we built has been something very special, and we do silly things that a lot of startups do like, “Of course, you can bring your dog to work.” Every day, there are always dogs in our office. We have beer Friday because you know what? You’re an adult, and if you want to have a beer at your desk, have a beer at your desk. Just come in. Do your job, and make it a fun place to work, and treat each other with care and compassion. It’s morphed every year. Now, we do a lot of charitable work. But none of that is dictated. I will never dictate it to our team. It’s based on what do they want to do? What do they want to achieve? So, I think that’s the difference.
Alejandro: I love it. Part of this culture and how you’re engaging with your team, how do you approach because I’ve seen that you guys do the monthly all-hands meeting. How do you approach those to make it really productive?
Lori Torres: Well, we do. So, the all-hands, we bring 170 of our associates together, and some either phone in or video in. Others are in the physical building at our main headquarters. We will talk very candidly about what’s going on in the organization. I’ve always said I will be completely transparent. If there’s any reason I can’t be, I’ll tell you I can’t answer it. We’ve made it an environment and a culture where people aren’t shy about asking the tough questions. I’m not shy about having the conversations. So, in that all-hands meeting, each department will give an update. Sometimes, we’ll go deep. When I talk about deep, we’ll talk about where things are a little broken, where things are not working well, where we get to be better, where we fell short, where we were awesome, and where we get to celebrate. I try to make sure it’s very well-rounded, and it comes from the executive team now that we’re all kind of beating to the same vision and the same mantra of who we are as an organization and as a team.
Alejandro: In terms of really financing and scaling your organization, how do you guys capitalize the business?
Lori Torres: When I started the company, I bootstrapped my way which like I said, that first check was really scary. After I was in a few $100,000, it was even scarier. Then I had to raise money. So, I went out and did first round of angel investors. This is a great story, Alejandro. It should hopefully help people see that there are always different options. So, I went out, and someone said to me, “Oh, you’ve got to go to Tech Coast Angels.” This is an Orange County group. They’re in California. I think they may be throughout the country, but definitely heavy in California. Some people said, “Oh, they will never fund you. It will take 18 months. You’ll mess around. You’ll never get funded.” When anyone tells me, “Lori, you’re not going to get this. You’ll never get that.” That just drives me to make it happen just like, “You’ll never become a vice president. You’ll never become a senior vice president because you don’t have a degree.” “No, that’s not me. You don’t understand. I’m going to overcome it.” So, when I met with the folks, and I got some help from some different folks along the way, I actually from my pre-screening to my money in the bank with my raise of 1.3 million was seven weeks. It was like the record deal that they’d ever done. I think I became the poster child. I actually did become the Entrepreneur of the Year from them because they needed that success story themselves. Tech Coast Angels. It was really a great story.
Alejandro: And with the exit that you guys did recently, which we’ll talk about in a little bit. That’s definitely a good badge of honor that they can put now on themselves. Did you do other financing rounds, or what was the strategy on the financing?
Lori Torres: Yeah. I did one other round. I did a strategic round with a real estate company that invest occasionally in startup companies to help in the apartment industry. These guys were such great partners to us. It was funny because I went in thinking I needed 2 million dollars. The CEO of the company said, “No, you’re not thinking big enough. I need you to go back and think bigger.” It was amazing, Alejandro, that that momentI’ll never forget leaving that meeting, going and sitting with my team at lunch. There were three of us: my CFO, and my VP of Sales. The three of us talked, “We’re not thinking big enough. We can grow this thing faster.” So, we went back, and we said, “We need 5 million.” He said, “You’re not asking for enough.” At the end of the day, I ended up with a deal that allowed us to have 15 million dollars. They were in different 5 million, in different tranches. We had a great deal with them. We renegotiated after a year and changed the format of the deal. What it did was it allowed meI lost a lot of sleep over the last five years, but not to lose sleep over not having money and not making payroll. So, it positioned me really well to grow. There was risk in it, and the more I borrowed, the more that came out of my personal ownership of the company. So, there were always risks there, but I knew what I had to do. So, it ended up being a great deal. They, too, were very happy on the exit by the way.
Alejandro: I can imagine. Let me ask you this because there’s something that I really dislike and that’s that the VC and the investment crowd have been like a boy’s club. Thank God things are changing which is really fantastic. But did you experience any type of being at a disadvantage or perhaps uncomfortable during the fundraising process being a female founder yourself?
Lori Torres: There’s a funny thing about me is that I’ve never really paid attention that I’m female. Like I never live in that conversation that I don’t get that because I’m female and they get that because they’re male. So, I’ve never let that block me or get in my way. But I will tell you what was really disappointing. There ended up being 28 angel investors that invested in Parcel Pending, and only one was female, and she was a friend of mine. She wasn’t even from the group, the Tech Coast Angel group. She came in on the term sheet. But it was disappointing to me because I remember when I went to the screening and the big dinner that you pitch the company, there were a few women there, not many. It was pretty much a sea of men at the dinner, but there were a few women, and some of the women came up to me, and they said, “Oh, we love what you’re doing, and we love what your background has been.” But they didn’t invest. It was interesting to me that that didn’t happen. I think that it’s evolving now. I talk to a lot of women that are in groups whether angel or private equity groups now that are participating more. I think that sea is changing, but five years ago, not so much.
Alejandro: I remember back in the day, let’s say ten years ago or so. My wife was my co-founder in one of my previous companies, and on the fundraising side, she just said, “Just do it yourself” because it was just a boy’s club. It was unbelievable.
Lori Torres: Yeah. I will be candid. I didn’t feel that, but then again, I just never pay attention to that. I don’t let that be a barrier for me. Of those 51,000 conversations in my head, that’s just not one of them that something doesn’t happen because I’m a woman. I don’t look at it that way.
Alejandro: Look, I love it. That’s the mentality, and that’s the way things need to be.
Lori Torres: Yeah. Exactly.
Alejandro: I’m really, really happy to hear that. So, Lori, now thinking about the company itself, and we were discussing this. The journey of an entrepreneur, the highs are very high, and the lows are also quite low. Looking back, was there a moment where you thought, “Oh boy, I don’t think we’re going to be able to make it here?” What was the breakthrough that helped you to overcome that?
Lori Torres: I think there were definitely some times over the last five years where one before I had done a 15 million dollar raise. It was like, “Okay. We are going to be out of money, and if we don’t have another dollar, you cannot run the business.” That put some serious pressure. Then what it does is it puts pressure on you that you want to negotiate, you want to move things faster, but you can’t. You have to let the natural flow happen. Otherwise, you come off as desperate. Those were tough days. Still, I didn’t take a salary for a long time. I felt like I couldn’t because the company wasn’t making money. Then, of course, I started to take a salary. But still, from a personal perspective, I had it all on the table. Honestly, I sold my home, and I was all in. It was tough. It was very tough going home every night and not saying, “We just made money. We’re doing this.” It’s like, “No, not yet. It’s coming. We’re working on it.” So, the time that it takes to move things along. We’ve had phenomenal growth. We’ve had 70% year-over-year growth every single year the last five years, which has been really amazing. I’m not saying that we weren’t making any money, but it still wasn’t real money like you’re not starting to throw cash off. So, I would say there were some very dark days. There was one point where we had a challenge with one of our manufacturers, and I was pretty sure that I had just lost a million dollars, and that we were not going to get any of the lockers that we had paid for. That was a pretty intense time. I will never forget coming in on a weekend sitting in the office with my president, and I think I was curled up in a ball thinking, “What are we going to do, and how are we going to solve it.” But you know what? The reality is there’s a solution to every problem. You just have to work through it. If you get your head clear enough, and you start thinking, “Okay, what are the steps? What do we need to do?” Put a plan in place. You can get through any of it. Try not to be dramatic, and just work through it. That’s what we’ve done.
Alejandro: For you guys, was there a turning point when walking back home it was different than what you were pointing to where you were like, “I think we’re onto something here?”
Lori Torres: Are you talking about pivoting, a pivot?
Alejandro: No, like a moment. Before you were talking about there were times where you were going back home that you didn’t know if there was going to be money coming in or that you guys were going to make a profit, but I’m sure there was a moment that you were able to tell yourself, “I think we’re onto something here.”
Lori Torres: Oh, yeah. It was funny because when I first started and I was sitting at a table with a bunch of executives from the apartment industry, we were talking about what problems we were having in the industry, and I said, “You know, we’re going to have a huge package problem.” They thought, “What are you talking about, Lori?” They just didn’t realize it yet. They hadn’t been out to their properties to really first hand to see what the problem was. I remember thinking, “This is going to happen. I see it. I go to enough properties. I know that there’s a need here. I know I’ve got something here.” So, as I started talking with people, and then once we started getting our first sale, it was like, “We really have something here. Wait a minute. This is real. We really can solve this.” But you don’t know. When you go to market, we went the minimum viable product approach because we didn’t know if anyone would buy it. So, you have to take that gamble, and here I’ve already invested a lot of money, and will anyone actually buy it? Will any courier even use our locker? We didn’t even have commitments from UPS, FedEx, USPS, Amazon, that they would drop into our lockers. It was a gamble big time. But we knew from a time perspective it would make sense. This all makes sense. Make it easy for them. They’re going to use it. So, I don’t know. We knew we had something. I knew I had something from the beginning.
Alejandro: It’s really interesting because the competing landscape, you had people like Amazon as well competing, and you were actually doing more business than them. What was it like to all of the sudden see yourself against this really huge giant on the rates?
Lori Torres: Yeah. That may have been one of those weekends where you wanted to melt down and sell the company. Funny enough, we actually had a conversation with Amazon about they were interested in understanding the company. Come to find out they were really just interested in gathering more information. It was a scary time of how are we going to compete with the prices they came to market with? They’re the gorilla, and they’re sexy, so anytime Amazon called a senior executive at a real estate company, they’d answer their phone call because “Amazon’s calling us?” In the real estate business, it’s not that sexy I have to say. So, when that call came in, everyone talked to Amazon. We had to really get aggressive. We had to really put a strategy in place to compete against them. But I’ll tell you this, Alejandro, they actually made us better. They made us stronger. They made us smarter, and I’m forever grateful that they became our competition. Also, what they did for the industry was they said, “There’s a need for these lockers, and you have to have them.” That helped us grow our business. So, it was a gift. I know some people shut their businesses because of Amazon. There’s no way I would let that shut us down.
Alejandro: Wow, Lori. Whenever I’m having a tough day, I’m going to give you a call. That’s for sure.
Lori Torres: Call me, Alejandro.
Alejandro: Lori, that’s a really interesting point what you were mentioning there, so you have this conversation with Amazon. It seems they’re more interested in the insides and outs of your business to perhaps replicate it, but when companies do M&As, or perhaps they have like a giant knocking on their door, especially for the people that are listening, how or what kind of tips, how could they differentiate between, “These guys are just inquiring to replicate our model,” or “These guys are inquiring to perhaps acquire our business?”
Lori Torres: I think it all depends on the integrity of the company. I want to believe in my heart of hearts that the M&A guys keep things confidential; that they know there’s confidentiality, that you’re under NDAs, and that they’re going to keep it confidential. So, in the end, I never felt like Amazon went and took my client list. We didn’t give them enough trade secrets that they could do anything. We didn’t give them our code by any means. So, I think you have to walk that road very cautiously though at all times and be very mindful of what you give up when you give it up, what’s the timing of the give up of your information, and if you think you really have something? I will say this was an interesting experience with all of my raises, the more I kind of said no to the deal points, to the terms, the more I got. So, I don’t want this to sound arrogant, but I mean, it was like dating. The more you kind of push back, “I’m not really interested” the more there’s interest. That seemed to happen in all of the deals, interestingly enough including the exit.
Alejandro: That’s fantastic. One of the things that I always advise founders when they’re looking at transactions is to always be completely unattached to the outcome.
Lori Torres: Yes. Yes. That is such a great gift to tell people, and people say it. They get wrapped into it. It’s just like a job interview. When you go on a job interview, and then all the sudden you get wrapped up, “Do I want to make a job change? Is this a good place?” You don’t even have the job offer yet. You don’t even get to be in that conversation yet. It’s not time. But as humans, we get so excited about things, and we want to try to move it forward, and if you cannot get emotional, that’s such a better place to be. With the sale of the company, I was totally 100% okay walking away. There were three different times where things got pretty hairy, and I was like, “Look. We can just wait. We’ll solve that. We’ll come back. We can talk in six months. It’s okay. We don’t have to go.” It was a great position to be in.
Alejandro: Let’s talk about that. Let’s talk about the acquisition of Neopost. How did this happen? Tell us. Was there a day that you decided, “We’re going to do an M&A process,” or how did this come around?
Lori Torres: No, not at all by the way. It was 18 months to 24 months way too soon. I did not plan for it to happen when it happened. I really thought we were 18 months out. We were just preparing to have our first audit. We were preparing. We’d really been preparing with the end in mind from the beginning, but I knew that we were still a couple of years out. I wanted to get us to 100 million in revenue. So, it was too soon. It’s so funny because every week I get emails from VCs and private equity. It was almost like an auto response. “Thanks for reaching out. We’re heads down, running with our hair on fire. Call me back in 12 months.” It was just my standard email to anyone who reached out. But when Neopost reached out, they sent an email and said, “We’d like to talk with you. We’re serious about a potential acquisition in the U.S. I wrote back. “Not interested. Heads down. Running fast with our hair on fire.” Call me back in 12 months.” Then they wrote back again, and they said, “No, we’re really interested. We’d like to just have a phone call with you.” Because they were strategic, because they had lockers, it made sense for me to have a conversation. So, I said to the president, “Brad, let’s go have this conversation.” So, we had a phone call with them, and we were like, “Well, we could see something happening here. It kind of makes sense.” Then we had a second call. This was in November of 2018. Then they wanted to come out. I travel every week because I’m trying to grow the company. I’m not around. We work very fast and motivated. They’re like, let’s get this NDA signed. Let’s get this appointment set. So, finally, by December 3rd, they came and met with us in Irvine, California. The poor guys in the first three minutes of the meeting when they sat down at the conference table, I said, “Look. I’m going to tell you right now it’s too early to sell this company. We’re 18 to 24 months out. You’re going to have to give us a ridiculous amount that’s not going to make any sense. I’m a businesswoman. There’s so much blue sky we’re about to explode. To make this transaction happen, it’s really going to have to happen in a way that’s not your norm.” But it was funny. We really liked them. We liked them so much, and two hours with them in the morning, and two hours with them at dinner. Brad and I walked away going, “We really like these guys.” By December 21st, we had a letter of intent, and we closed by January 22nd. It was like a crazy 32-day sale. There was going to be a light due diligence. It wasn’t so light. It was a pretty intense time, but it was perfect because it was going on through the holidays, so we just worked throughout the holidays while our team was mostly off. It worked out well. It was a good exit. It’s a good story.
Alejandro: Wow. I’m sure that when you had that first sit-down, they were a little bit in shock because they probably had to travel all the way from France.
Lori Torres: Yes, you’re right. They did travel from France, and here they were five minutes in and like, “Oh, this is not going to be an easy conversation.”
Alejandro: Lori, how long was that timeline from the minute that you got the email to the point where the transaction was closed?
Lori Torres: You know, I haven’t gone back to look at the date of that email, but I’m guessing it was mid-November, and we closed January 22nd. So, it was fast.
Alejandro: Walk us, and make us be insiders through that day where you finally got that pen and decided to sign the agreement.
Lori Torres: We took a picture. I do have this great picture that Brad, our president came and he’s like, “Wait. You’re signing the doc. We’re taking a picture of this.” It was a big deal. Going through that process, we had to provide a lot of information, obviously, and trying to explain why we saw such a big upside, and where the upside was coming from, and what it was in our pipeline. It was, certainly, not an easy process and not one without sleepless nights. I think during the entire deal process, there probably was not a night that had more than four hours of sleep. Every morning, we had a 5:00 am conference call. We were also interacting with France, so we would get up very early for calls with France. Yeah, it was a pretty intense time. I’ll not forget it, but you go through it, and it was fun. You become like a deal junky. It was really fun until the very last day when I remember saying something to Neopost. I said to the person I was dealing with, “Look. This is going to be the last item we negotiate. I’m completely negotiated out. I have nothing left in this take. We are done negotiating. Done. Either we’re doing this deal, or we’re not doing this deal. You get to that point. Personally, I couldn’t go through a six or nine-month sale. I’d have deal fatigue.
Alejandro: You mentioned that for you, there was no problem in signing and walking away. Normally, founders have a little bit of a tough time. They get depressed. It’s tough for them because it’s their baby. What was it for you?
Lori Torres: I kept a mindset the entire time that if it wasn’t the right deal, then it’s not the right deal. It was early to sell. I really had in my mindset we were selling in 18 to 24 months. To sell in the beginning of 2019, I thought it was going to be in 2021. So, to be able to not be emotional about it, it was business. It was a transaction, and so it was what is the best transaction for the shareholders and associates. That was my mindset the whole time. What’s best for the company. If I would have met these guys and they were jerks, let’s just say, I would never have sold the company. I would have been like, “You’re not a right fit for us.” But I really liked these guys. One of the things I really appreciated so much in the very first day they came out when we had the two-hour meetings, I said, “One of the things I would want to do is I would want to meet with your CEO. I need to make sure we’re in alignment. Then they sent me a schedule during the process. One of the items on there was they had heard me and said, “You’re going to meet. We’re going to fly him out and meet with our CEO.” It was like they really respected the request that we had. They really heard us, and they were just alignment-wise from a cultural perspective. They were a great fit.
Alejandro: So, the CEO of this 4,000+ employees company went to see you out of that request?
Lori Torres: Yeah. He came to Parcel Pending. Yes, and spent two days on a weekend and met with my team, met with me, spent time with me.
Alejandro: That’s amazing.
Lori Torres: Yes. It was pretty impressive. A billion-dollar company comes out and spends time with little Parcel Pending. Yeah, it was really impressive.
Alejandro: That’s amazing. So, Lori, what were the terms of the deal?
Lori Torres: Well, I can’t share all the terms of the deal, but as you know in the posting.
Alejandro: Whichever you can share.
Lori Torres: They are a public company, and it was announced that we sold for over 100 million dollars. I think that we’re all very excited about the future and very optimistic. We have some huge growth goals ahead. It was a great deal. There’s some upside for our team and for our shareholders. We’re working hard to achieve that upside for them, but it’s also for Neopost. I really feel like we’re part of the team now. We’re in an integration process with them. The thing is every time we meet a new person we walk away going, “We really like that guy. We really like that gal.” It’s really nice to have that experience because they’re obviously with a big company. I come from corporate America. I understand the structure and the hierarchy and the politics, and Im not feeling that with these guys. So, they were a good fit for us, definitely.
Alejandro: At the time, Lori, when you guys closed the deal, how big was Parcel Pending?
Lori Torres: How big we were? In 48 states and Canada. We had over 2,700 locations. We’d take about a million-and-a-half packages a month through our lockers. So, we were growing. I’d say 160 employees at the time. Like I mentioned before, we just had very good revenue growth each year and continuing to grow. I mentioned earlier, we started multi-family, and in the last two years, we spent a lot of time and energy in other verticals which include everything from putting a single-family home locker in new home developments to grocery stores with refrigerated and freezer lockers. I don’t want to sound like a pitch, but I’m just explaining that we evolved a lot. We’ve been able to come to market with new products. There’s a lot of upside. It’s a very exciting time. I will tell you, I think I’m working harder than I was before, and I don’t know how it could be because I always said every day’s a Monday, and I work like a dog. Now, I feel like it’s even more intense, and I’m running even faster than before. But I like it.
Alejandro: That’s amazing. What a run in five years. You’re going on your way, actually, to six years. Lori, one question that I always ask the guests that we have on the DealMakers show, knowing what you know now if you had the opportunity to talk with your younger self, Lori, what would be that one piece of business advice that you would give to yourself and why?
Lori Torres: The one business advice I would give. Oh, I hadn’t thought about that question. I guess it’s just, continue to be open or be open to different possibilities. I think of myself as a person who’s pretty open, and I take feedback well. I go out and solicit. When I have a problem, I don’t just do it myself. I go out and ask a lot of people like, “What do you think about this? What’s the best approach?” So, I try to solicit that, but I still don’t think people are open. Even myself, as I look back, there were things I was stuck on that I wentpeople would say, “Hey, you should try this,” and I was just not open to it. So, if you open yourself up to more possibilities, more things come in, I think.
Alejandro: That’s really cool. Lori, what is the best way for folks that are listening to reach out and say hi?
Lori Torres: They can reach me at firstname.lastname@example.org. Of course, at parcelpending.com you can find us on the web. You can find us on Facebook. I’m on all the social media, on LinkedIn. We’re everywhere. You can’t miss me. Google Lori Tores. You’ll find me.
Alejandro: Amazing. I love it. Well, Lori, thank you so much for being on the DealMakers show today.
Lori Torres: Alejandro, thank you so much for having me. I really appreciate it, and congratulations for all your success as well. Very impressive.