Lori Torres – Going from Borrowing Money to Selling Parcel Pending for > $100MM

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lori torres selling company

Lori Torres left a high-paying job, had to sell her home, and borrow money from her mom to get her company, Parcel Pending, off the ground. Due to her personal frustration and knowledge of where online shopping was headed, Lori saw a tremendous gap in the market for making it easy and secure for apartment residents to receive and collect packages 24 hours a day. She took her idea and turned it into a $100+MM exit in record time. This is her story.

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Transcription

Dan Daugherty

Today, I have very special guest who I’ve known for about six years, all the way back to when she was trying to get her company off the ground, and since then she has built one of the largest companies within the package delivery space and last year in 2019 sold her company, Parcel Pending, for over one hundred million dollars. Lori Torres. Thank you so much for taking the time to speak with us today.

Lori Torres

Hey Dan, so happy to be with you. Thanks for having me.

Dan Daugherty

Well, I wanted to start this off with a two part question. The first is what is Parcel Pending? And I know you had a very lucrative job before you started Parcel Pending. What made you decide to leave that cushy job and take the leap into starting your own company?

Parcel Pending - Lori Torres

Lori Torres

Yeah. So, first off let me tell you what Parcel Pending is. We do electronic smart lockers and so envision a bank of lockers that have technology in them and we put them in apartment buildings at office buildings, in retail and so couriers can come deliver the package straight into the locker. They find the recipient and then it sends a text, an email to the recipient, and now they get this text for email with the code and they can go to the lockers and pick up their stuff. It’s a safe and secure way to get our packages and contact free in the world of COVID. It’s a great solution to a huge growing problem because everybody is shopping online and they want to get their stuff, but they don’t want it stolen off their front porch. So, that’s what Parcel Pending is. 

Let me tell you what happened was I was at a fancy corporate America job. I was in the apartment business running 44,000 apartment units with about 1,200 employees and my staff kept asking for more headcount and bigger package rooms because the residents were home in their pajamas shopping online and all of a sudden they were just inundated with packages and so I was like, we can’t add headcount, that’s an expense, it doesn’t make any sense. So I thought, you know we could solve this with technology. There has to be a way, and so, as I was trying to figure it out, I spent some time and then I realized, wait a minute, I can solve this for bigger than the Irvine Company. I can solve this for the industry, and so I left my fancy cushy job, as you said. Being a Senior VP at this large real estate firm in California, people just didn’t leave, they didn’t you know. It just didn’t happen, and so people thought I was nuts. But I left and launched Parcel Pending and it’s been such a ride. it’s been awesome

Dan Daugherty

So you just left, you had talked to other people. Did you have a cofounder? How did you even start? 

Lori Torres

You know, I talked to a million people and I did actually start with a Co-founder and she and I were going to try to become partners and we just couldn’t get anything really going. We had a prototype, but we just couldn’t get there and funny enough, she ended up leaving. I mean we broke up and very amicably. I always break up amicably and..so we broke up and she went her way and I went my way and we still talk. We still call each other on different issues or when she sold her company. She called me- and I sold my company I called her and so we’ve stayed friendly over the years but you know what, I found so many other entrepreneuers that were willing to help me because I knew nothing about it. I mean I came from Corporate America, thirty plus years in Corporate America, no clue how to start a business and certainly no clue how to go, raise money and I didn’t have a technology background. So it was all new to me, but I just knew there was a solution and that I could solve for it.

Dan Daugherty

And within four and a half years, you went from zero to an exit right?

Lori Torres

Yeah, which is crazy. I mean it is insane. You know it’s four and a half years from the time we incorporated the company. And yes, we actually did it in four and a half years, and probably I would say prior to that I was building the technology and building the early stage of the business planning. But from the time I got my first round of funding and incorporated it, was four and a half years.

Dan Daugherty

And did you raise money?

Lori Torres

We did. I did an angel round, so I bootstrapped my way in the beginning, and then I was out of cash and it was like. Oh my gosh. I can’t go any further. What am I going to do? Then I went and raised some friends and family money. I went to my mom and said, “Do you have any money?” It is a great story because my mom actually she’s, like I don’t- have money but you can use my HELOC.  My home improvement loan and you have to pay it back. I was like this is a risk for you but if you trust me, and she’s like, I trust you. I believe in what you’re doing you go for it. and tell you the end story afterwards on that because it was a great outcome for her and so I raised money. I did it through angel investors. I did a one point three ish round, $1.3MM and then I did a strategic round and I went to a REIT in the apartment industry and actually did a fifteen million dollar round, which was an interesting deal and it changed overtime. But It was a great deal. They were a great partner, are now.

Dan Daugherty

And the first Angel Round did you do that as an equity round, or was that a convertible note? 

Lori Torres

No, I had convertible on notes from the friends and family money and then the angel round was an equity round, and- and this was a crazy story too Dan because had folks that I went to and people would say you should talk to these guys, Tech Coast Angels, but just to know that it could take eighteen months and typically they don’t fund people. 

They kind of have this bad reputation of not moving quickly and not getting it done, and I went there pitched it to them prescreening and at the screening. I got a call afterwards from the president of the TechAngels, and he said, “you know this is the first time ever. 100% of the room raised their hand and would be interested in investing. It doesn’t mean they’re going to invest, but it means that there was a high level of interest. A 100% has never been seen before so um he’s like we’re going to take you to the dinner meeting so that I go to the next meeting and pitch it to you know all of the Angel Investors and we closed that round in seven weeks from prescreen to money in my bank.

It was great because it really helped them get the fire under them. Now, since my deal I mean they had done some great ones prior, but just they weren’t as active and as urgent and their reputation wasn’t as great and that it really changed the game for them. I think, and obviously, for us putting the money in our account very quickly. In seven weeks, and so it seems that everything I did in Parcel Pending was really fast from four and a half years to an exit.

My exit was a thirty two day exit. I’ll talk about that in a minute. Just fast which, by the way I talk fast, so sorry, Dan. I know I’m probably talking too fast, but that’s how I work Dan. That’s how everything happens so fast. 

Dan Daugherty

I love that .I love the story of your mom. I did the same thing by the way.

Do you remember what the valuation was at the Angel Round? 

Lori Torres

I think it was like a two point three million valuation. I think that was about right, yeah, almost O, quite okay. 

Dan Daugherty

Yeah, more than forty five times. I remember pre IPO, when Google was about to go public and they did a Dutch auction which allowed for retail investors to get in at the price that it went out at, and I told my mom, “you guys better get in here. You know it’s probably going to be around eighty five dollars and she got in at eighty five dollars. It was something like almost their entire life savings, which wasn’t much but you know she believed in her son and here we are. 

Lori Torres

Wasn’t that the best call ever that you made? She was shareholder number one. We gave her certificate number one and as she was up north at her sister’s house, I woke her up and said, I sold the company. That’s awesome she said. She did very well. She was very happy about it. You know she really wasn’t and She had never made a lot of money in her whole career. Like your mom, you know it wasn’t the entire life savings for my mom. It was a stretch for her to let me do that, but it changed her life, which was pretty cool. 

Dan Daugherty

Well, I thought of you.

I remember, I think it was in 2014 and I think it was at MTECH, which is a conference for real estate entrepreneurs specifically within multifamily and I remember I was speaking and I think you were in the first or second row. I said something to the effect, “You have to be willing to give up everything in order to gain anything of significance.” That was very true for me with the first company, it was less true for the second and the third company, because I had more experience. It was easier to raise money, but  I don’t know if you remember that, but at the time, if you did remember that, did that ring true to you?

Lori Torres

I put it all on the table. all of it.

Oh my God totally, and so I mean I put it all on the table. all of it. I mean from you know,l I was the breadwinner of my family. All the income that was coming in was from me, and so I put it all on the line and- and there were some tough dark days I have to say I mean I had to sell my house. I had a big fancy house on the golf course. I had to sell my house but I just believed in it so much. I knew I had something with Parcel Pending and I wasn’t going to give up and there was no way I could stop and you know each of those tough dark days, you just push through it, because when you believe in it- and I know other people believe in it, I could make it work. We worked our tails off to get there.

Dan Daugherty

Did you see a positive correlation with the amount of I quits to maybe the next week or the next day things improved dramatically? 

Lori Torres

I never had a day that I felt like I wanted to quit

You know what I have to say. I actually never had the, “I want to quit” moment. I had my family waving to quit and that my family was kind of like pushing. You know, at Disneyland, that big old boulder in Indiana Jones that if you were standing under that boulder, it was like pushing that boulder up to get them. But I kept saying it would be okay, that we were going to be ok. We’re going to get through this. It’s going to be a good outcome like that was probably the tougher part. I never had a day that I felt like I wanted to quit. I had days where I was like God, “This is so hard and I don’t know what that means. Like it’s just such a dumb statement, but it was so freaking hard, like where is the easy button. And there has never been an easy button, not a single day, even if today. It’s just not easy.  I don’t understand. When is it going to be easy Dan?