On this episode of Operations, Sean interviews Michelle Palleschi, the COO of Sendoso, the world’s first sending platform. Because, as Michelle puts it, sending stuff is hard. But that kind of complexity is what Michelle lives for – she previously worked in finance at Cisco and Apple. Ever wonder how Apple forecasts new product launches? Well, re-engineering that process was Michelle’s job. She shares a few stories from her time there – including how her team was able to predict the success of the rose gold iPhone in China.
Michelle and Sean dig into the level of planning required when you’re launching brand new products where the market demand is completely unknown, what the decay curve means for ops, and why it counts to take out the trash. Want to learn about the behind-the-scenes operations that enable Michelle and her team at Sendoso to send out 10,000 handwritten notes in any given shift? Listen to the full episode.
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Sean Lane: Hey there. Sean Lane here. Welcome back for another episode of Operations, the show where we look under the hood of companies in hypergrowth. Let’s do an exercise together. Think of your product that you’re offering, think of the industry you serve. Got it? Okay. For me, Drift is a B2B software company, and a good chunk of our customers are also B to B software companies. On paper it seems simple. But, just like I’m sure it is for all of you, the operations of our business is complex. There’s nuance, and new challenges come up every day.
Now, I want you to add a wrinkle. Keep your product that you’re offering in mind, and add in a physical product to the mix. How would the logistics of your company have to change? How many more complexities? How many more nuances would be added to your job, if that were the case? Hardware? Physical packages that need to be sent from one place to another?
In the words of today’s guest, Michelle Palleschi, sending stuff is hard, and she would know. Michelle is the COO of Sendoso, a sending platform that sources warehouses and manages the shipment of things like your company swag, or gifts you want to send your customers. And this isn’t the first time Michelle has found herself in a world made more complex by physical products. In fact, in our conversation, we found that across her entire career from companies like Cisco and Apple, yes, that Cisco and that Apple. The common thread that emerges is that she’s always worked at companies with physical products. So, on today’s episode, we’re going to explore that common thread.
Our conversation ranges from a warehouse of 10,000 handwritten notes, to Apple product launches, and who gets to decide whether or not people in China are going to like rose gold colored phones or not. And believe it or not, we’re also going to talk a little bit about taking out the trash. But first, I asked Michelle if this common thread we found was intentional. Did she consciously design her career around only working for companies with physical products?
Michelle Palleschi: It was not something I intended. I was fortunate enough to, pretty quickly out of college, get a job at Cisco Systems, and Cisco is the leader in building internet equipments. When I joined them they were the biggest company in the world, and that was almost 20 years ago now. And at that time, they were talking about becoming a trillion-dollar company.
So, started my career there. I was able to spend a little over 10 years there, and a lot of the leadership that was at Cisco was going to a place called Apple. And I was fortunate enough through my network, to be able to get a great position at Apple, and have a whole new set of experiences there.
Sean: Real big deal. Name brands.
Michelle: Yeah. I was obviously very attracted to the brands, and again I knew people that were there, and that’s really what took me in I would say all my jobs really, were led through my network. But I have to say I am attracted to companies and positions that have that elements of the business. I find it interesting that there’s a lot of areas of support, and so I do think I found the roles more interesting because of that. But certainly it was my network that took me to my jobs.
Sean: And once you got to Apple certainly like, if you meet anybody who’s been there, and people who have worked at Apple, and you were there from 2011 to 2016, people want to know what’s it like? What’s it like on the inside? And so, can you just give me an idea of what it was like during your five-plus years there? And you had a variety of different roles.
Michelle: Apple is an amazing company, an amazing brand, and I feel so fortunate to have worked there. They really obsess over the customer experience. And these very simple looking, eloquent phones and products, are the results of very smart and highly engineered products, and people that put their life into it.
And it was exciting to be part of a brand. When I told people that I worked for Apple, that was exciting. People wanted to talk to you about what you did. I’ve always been in finance. That is not an exciting world. When you’re doing a networking gear, and talking about infrastructure, and then you’re talking about finance on top of that, that can be pretty stale and uninteresting at a cocktail party.
Sean: Yeah, a little easier to talk about iPhones at Thanksgiving.
Michelle: Exactly. It’s very relatable, and it’s a consumer business as well. So you’re right, at thanksgiving conversation, everyone can participate in that. That was really amazing, and kind of a first for me as well. And at Apple, there’s a lot of genius that goes on in developing the product and bringing it to market, and supporting the ops. A lot of smart people and processes that support that.
It is however, also a tough place to work. It can be quite the pressure cooker in some roles. There’s a high level of expectation and, for as advanced as the company is, some of its infrastructure, as far as data and systems and mechanisms to support the business, are a little bit, I would even say archaic on some bits. And again, I’m talking from a finance perspective. So a lot was handled via Excel, very manual, a lot of data and information, just working through a lot of individuals. So it was a high pressure, high intensity, but really an amazing place to work.
Sean: And obviously, when we think of Apple, we think of the logo and the customer-facing stuff that we see in a splashy commercials and all that stuff, but you were really kind of like under the hood here, of the work that was going on. Can you tell me a little bit more about what your specific role was, and what type of stuff you worked on?
Michelle: Yes. So, I had a variety of roles when I was at Apple. When I started there, I started re-engineering the forecast process. Forecasting was very different at Apple than it was from Cisco. Cisco is a hardware company that would introduce the new products, then it would take some time to scale, and not really cannibalizing or replacing prior products, but most of it was additive and had a long ramp cycle.
Where Apple, it’s an interesting spot because every new product is essentially cannibalizing the last, or essentially, completely replacing it to some degree. Also, it has what we call a product decay curve, which means that you sell the most of the product in the first quarter it launches, and every quarter after that you sell less and less until the next rev or the latest addition. That forecast process essentially became almost a daily weekly forecast process to understand how you’re doing against the last product, what the trends were, where is the demand globally? And how you keep up with it.
Sean: Yeah, you mentioned globally. Are you for every single one of those, you mentioned some of these being a little bit archaic, and so I’m picturing you sitting there in Excel, trying to pull in data from all over the world, and update that forecast on a daily basis.
Michelle: Absolutely. Just imagine anywhere you can buy an iPhone. Someone is literally planning how much inventory and supply that exact store gets. So the Best Buy on the corner, the Apple Store in the middle of downtown, all those places need supply. And you need to have the right balance too. You don’t want too much supply sitting in one place, and not enough in another. That might just be in San Francisco right? How much is China getting? How much is Norway getting? And how much is going into every single location there? So there is a lot of people looking at a lot of data, to ensure that the demand and the supply are met.
Sean: How’s that for a little perspective? The next time you walk into your forecast meeting, think about the logistics that go into forecasting how many phones every single Apple Store in China, or Norway, or the store down the street from you, is going to sell, so you can perfectly match supply with demand.
Michelle had been inside that world, and that forecast for more than five years. And what I find really interesting is that concept she mentioned about product decay curve. Which she described as this decline in demand for a product over time, because what happens at Apple is, one product cannibalizes the one that came before it. Now, that makes sense when you’re talking about the iPhone 7 replacing the iPhone 6, but what about the brand new products that have never been launched before, and the market demand is completely unknown?
Sean: How do you forecast for the first Apple Watch? How do you make sure that the store down the street from me doesn’t run out of iPhones, or watches, on that first day? So, I wanted Michelle to take me inside one of those launches, and give me the lay of the land.
Michelle: The forecast process starts essentially years before the decision on the components, and that the ton its made. Pretty much three years out, and the component price are being made and respise are being made, and those builds are being assessed, how much is going to sell in the first weeks of launch and how much do we need post-launch. So, decisions are being made, like I said, years in advance, all the way to the very end, and on a daily basis, we were looking at sales ramp. That’s the measurement of how many phones actually land and actually are sold to an end customer. That is happening on a daily basis.
Sean: And can you take me through the days before a big launch? This thing starts three years in advance. By the time the thing is about to launch it’s like, “okay. We’ve got this whole thing figured out, now it’s just time to press the button and then everything goes out.” Or is it really up to that last moment a planning and forecasting still ongoing?
Michelle: Yeah. There’s so many great people that have seen this and done this so many times that they do know what to expect and there’s a lot of great processes in place. But just like anything, you have to be watching the data and the trends to ensure that you are making the most relevant decisions today. China was not always as big of a market for Apple, and it’s become less relevant over the last year again. So, knowing… Forecasting rose gold for instance, when iPhone launched its rose gold, predicting how much demand would be in China, for instance. And allocating supply based on geographic tastes and demands, was a huge debates. Just think about the black phone or the silver phone.
Rose gold that flew off the shelves in China and that was one of the biggest decisions that were made there. But designing how much needed to go, what would be the mix between silver, black, white, gold. Those are all become new decisions and can be big mistakes. You can miss a colour allocation pretty big, and not have enough of the right phone and not be able to sell through it.
Sean: Three years of planning. Three years, and then a huge measure of your whole launch can come down to whether or not people are going to like rose gold phones are not. Michelle taught me a bunch about the daily forecasting processes that go into product supply and demand at apple. Which made me curious about the logistics of what happens from there. So, I did some digging. A quick Google search surfaced a Bloomberg article from 2013 all about how apple moves phones from China to your local apple store. They compare the launch to a movie premiere, with the product arriving at the same time all over the world. It’s this perfectly choreographed dance of cargo planes, delivery trucks and storage warehouses. Here’s a fun fact for you? According to the Bloomberg article, each of the FedEx Boeing seven seven sevens that they use to fly phones can hold over 450,000 iphones each. And just because Michelle and her colleagues at apple have this down doesn’t mean everyone else does.
Just to illustrate that this thing doesn’t always go so smoothly. In 2013 that same year, the Bloomberg article about apple came out, Microsoft saw sluggish sales during the launch of its Surface RT product. And they were left sitting on an estimated inventory of six million unsold devices. Six million. This stuff isn’t easy. Anyways, back to Michelle. After five plus years at Apple and a stop along the way, she landed at Sendoso in early 2018. Where our theme of her career with physical products continues. But this time there is a twist because she’s working for a software company that specializes in the sending of physical products. So, let’s say I wanted to send a drift customer a thank you for participating in a Customer Webinar. Or I wanted to send a prospect some drift swag. I could send that along with a handwritten note through Sendoso. And that’s the part that I wanted to learn more about that shipping side. What goes into sending stuff?
Michelle: Yeah. So, I would say sending his heart, and you probably know this, maybe not as hard as landing 80 million iPhones and a quarter, but it’s a tough job. So, where does it start? There’s a lot of elements to it. There’s a lot of vendors, so sending one box out with, let’s say you’re sending it a YETI mug, and a notebook crinkled paper, handwritten note, and a custom box. You’re dealing with probably six different vendors there. They’re all meaning to land and have the right inventory in good quality at the same time. Then you want these to go out quickly, inequality fashion, and know when your potential customer or a customer is going to get it. And you need to know that so you can contact them, and follow up with them, and close that deal or tell them how much you care.
There’s a lot of steps in the process. I mean, just having someone box those up for you and get them in the right way. Get The handwritten notes written correctly, and looking good. It’s funny that people are very particular about what the handwritten notes look like and of course it’s our [inaudible 00:14:46] to make sure that the notes look great. But the reality is most people don’t have great handwriting, perfecting that and writing style. What people really want it to look like versus what it would actually look like as important. And doing that with a high degree of accuracy, of getting things to FedEX and getting them out the door. I mean, that’s one of the biggest struggles I hear on the phone with people.
It’s like the intense is there, but actually getting this done a super hard. And it takes a lot of people to do it. Let alone of tracking of it. It’s really FTE or human hour intensive to track, go into FedEX, see if it landed, let the rep know or the individual know that, “hey, reach out. You’re good to go.” That’s a long process to actually do that in a timely manner.
And we’ve pulled some customers say that the best response time is two hours after the product has landed well. Who’s going to be on top of making sure they know two hours afterwards that the product or the gift has landed.
Sean: When you say Gif is landed, does that mean it arrives at the end customer?
Michelle: That’s right. The individual that you’re targeting.
Sean: Got It. And I don’t want to sidetrack us too much, but I do want to go back to what you’re saying about the handwriting. Are you guys literally screening people for good handwriting when you’re interviewing people to work in the fulfillment center?
Michelle: Handwriting is probably one of the biggest processes we’ve had to really get right. There’s a lot of elements of it. You’re absolutely right. We screening people all the time. So, they come in, the first thing we do is have them write a note. And we highly critique it. We have a lot of examples, and we try to also understand who’s writing it. Is it female or male? So, we try to make sure it looks like it came from you. Also we are you [inaudible 00:16:38] our quality checking but note that is in front of them that they’re writing. So, making sure that the names are matching, is there misspellings? Was that intended? Does this note makes sense?
Sometimes it’s meant to be funny and difference, or there’s a rationale for the way that the note is written. Sometimes there’s the mistakes. So, making sure we catch all of that. So, you have a high degree of quality. So, a lot of time is spent and we can have a lot of projects at once. There can be literally thousands of handwritten notes that we need to be getting through at any one shift. Even up to tens of thousands. So, we’re pulling in a lot of handwriting as well. That’s one of the biggest quality areas for us.
Sean: What I find so fascinating about Sendoso’s business and your job every day, is the fact that like everything you just described to me is incredibly logistically complex. But it’s kind of like under the covers part of what Sendoso does, right? Like there’s a whole different part of you guys actually running your business, acquiring more customers, making those customers happy that the rest of, myself at drift, like that whole second half is all I have to worry about. And you kind of have both of these things under your purview at the same time. Is that really, really hard?
Michelle: It is hard. Sending is hard as I mentioned, and no one is doing it the way we’re doing it. It’s not like there’s a lot of warehouses that employ hand writers. There’s not a lot of platforms are any competitors that have a platform like ours. So, it’s not like we’re copying that. I mean we’re really trying to build a platform that automates the entire process of sending for you. So, it looks really easy. And I think sometimes that makes the engagement model a little bit hard with customers as well because I think some customers don’t know how hard it is, and how many points of consideration there are everywhere from customs to the handwritten notes to the size of the box and the impact that it has on the cost of shipping.
Anything, belly bands, the sizing of it, and how to create and articulate product to that integrates in your workflows and you don’t ever have to even touch or see it. And it just happens. And so, sometimes I think customers can forget that as well and that’s what we want at the end of the day. But they can forget how much goes on behind the scenes.
Sean: Tens of thousands of handwritten notes in a single shift. I know I said this already, but Sendoso is a fast growing software company and has to deal with all the challenges that come along with being in hypergrowth. And then on top of that, they are layering in all of this physical product delivery. I work with somebody here at Drift, her name is Kari Howe, and she leads our learning and development team. And prior to working at Drift, Kari worked at Amazon. And part of Carrie’s job was to go around the country and help open up new Amazon fulfillment centers. And she would tell me stories about going around the country and opening up these fulfillment centers, and basically the way it works is she would fly in a few days before the opening, and they would spend a few days before the opening choreographing what it was going to look like when the physical products start to come through the center.
But they would do this entire choreographed dance with no packages whatsoever. They would basically move people around the fulfillment center, and practice what it was going to look like when the package started to come in. And look, I get it, Amazon is in its own world when it comes to logistics and delivery, but I was curious after hearing Kari’s story to learn whether or not Michelle and her team at Sendoso, have their own version of these dress rehearsals, particularly for new hires.
Michelle: Absolutely. Amazon is obviously kind of the Apple category, and they’ve got it dialed in as far as our operations… Handwriters have to go through a test, but every warehouse worker goes through shadowing period. They’re not allowed to touch or pick pack or or send until they’ve completed their training, and they are also then shadowed by the supervisor on the floor to ensure that they’re asking the right questions and looking for the right quality. That process can be anywhere between two to four weeks to ensure that they know how the processes work, how to ask tough questions, and really understand what they’re doing.
Also in customer success, there’s a lot of support that goes on from our customer success team as well. They’re not able to onboard and manage customers for at least four weeks after hiring to ensure that they’ve gone through their boot camps. They understand the product and the processes. They also do warehouse visits to understand even our own processes to better support our customers so that our customers have a much better experience.
Sean: I don’t know about you, but I’m convinced that Michelle wouldn’t be as well equipped to deliver that better customer experience or create the magic of what Sendoso does, without her previous experiences at companies like Apple and Cisco, where her time working with physical products really began. And as we were looking back on everything that we had talked about and reflecting on our conversation, I’m always intrigued by people who make that successful jump from massive companies like Apple and Cisco, which really operate like well oiled machines to, in Michelle’s case, a 10 person startup.
Michelle: There’s definitely pros and cons for me being from big company this small. When I started working with Sendoso, it was less than 10 people. And I’ve been at a startup before Sendoso but 10 is really, it’s really quite small. You have to take out the trash. So, you do everything and everybody does everything, and there’s a lot of transactional items and support that needs to happen, let alone the scaling and the operationalizing. So, literally we’ve all here from the beginning have rolled up our sleeves, and taken out the trash and done everything, and you have to really want to do that. It’s super rewarding in the sense that, when you’re part of a big company, you can start to realize that you are totally replaceable. There’s very few people at a very big company that can’t be replaced and it’s not because there aren’t a ton of amazing people, but when a company is that big one person, a lot of times it doesn’t make or break a company.
Sean: I like the way you said they’ll take out the trash piece too, because I think depending on the mindset you have when you hear that, like that could either sound terrible to you? Or like you said, it can be incredibly rewarding. But if you don’t have that mindset, which I feel like a lot of times people coming from bigger companies might not have, then you’re going to hate that experience, right? Taking out the trash is going to feel like what taking out the trash really feels like the most people in life. It’s just a chore.
Michelle: Absolutely. I mean, no doubt about it. There’s pieces of my old, old room that were nice. I didn’t have to do things that there is organizations or other people, not that they’re taking out the trash. Let’s not take the analogy, but there’s pieces of my role as I became more tenured and gained more responsibilities, that I didn’t have to do. And sometimes that’s nice, and sometimes you aspire to that as you’re later in your career. And it can be tough going back and doing what I’ll call now in this part of the conversation, more transactional war. Right? And there’s some pieces of it that will be nice to not have to do anymore, but that will be the reward of scaling the company to a certain size.
Sean: Yeah. And getting it through to that other side.
Michelle: Exactly. But the difference of a startup is that every day you impact the outcome. Every day you move the needle. When I put a lease in place, when I open up a new location, it’s a tremendous growth for the company, and something very meaningful. Unlike opening up a new building for the Apple campus or the Cisco campus. It’s just the run of the mill day, right? So, it doesn’t really get any press that way. So, everything you do matters, and it can be very rewarding, and fulfilling on a daily basis. That can also be a little bit overwhelming. So, it just depends on the day.
Sean: Even on the most overwhelming days, I feel like if you can hold onto Michelle’s idea that every day you can impact the outcome. Every day you can move the needle taking out the trash or not. That’s a pretty cool feeling. Before we go at the end of each show, we’re going to ask each guest at the same lightning round of questions. Ready? Here we go.
Best Book you’ve read in the last six months.
Michelle: Okay. The best book I’ve re-read in the last six months is “The Big Shots.”
Sean: Oh. Interesting.
Michelle: I enjoy books that are vaguely entertaining, and have some financial components to it. I was particularly interested in the financial collapse. My husband works in the financial industry, and I went through it on the other side. And so reading about it, and kind of reading it from the author’s perspective, and kind of remembering it from my side. And I think there’s a lot of things we’re watching in this market as well. So, but it is a more entertaining rude for me. So.
Sean: Favorite part about working in APPS.
Michelle: The per view of the entire business. So, I get to touch every piece of the business, and I get to integrate finance and metrics with that. And for me that’s really my love. I have a finance background but I just love supporting the business, and I’m able to support every piece of it. And I think it keeps it exciting and fresh.
Sean: Least favorite part about working in APPS.
Michelle: It touches every piece of the business. A little bit spread thin, and sometimes I like to be working on my pet projects and sometimes I don’t have the time for that.
Sean: We will have to have you back to do a whole another episode on how to avoid that or you can just coach me personally on it. That’d be great. Someone who impacted you getting the job you have today?
Michelle: Well. It’s actually a funny story if you want to hear it.
Michelle: I was at a startup and my husband is friends with an advisor at Sendoso, and sendoso was super, super early at that stage, and they were looking to raise a little bit of an angel round, and we’ve done some investing in the past. So, our friend introduced my husband to Chris, our CEO. So, my husband comes home and says, “Hey Michelle, you need to look at this company. I think it’s really cool, they do corporate gifting.” And I’m like, corporate gifting, that sounds really dumb. I’m not interested in that.
And he said, “no, no, you really have to meet him. It’s really cool. He’s like, I can’t do it justice.” And I’m like, really? I’m not interested. And so, he was really pushing him and so I said, “well fine, Chris come over to the house.” So, Chris comes over. I drilled him for about two hours, and I would say I would call it drill. It wasn’t super friendly because I was not sure like yet Stan, I wanted him to understand that. And then-
Sean: Right. Corporate gifting who needs it?
Michelle: Yeah. This is Doug, right? I was at Apple. We don’t do corporate gifting. So, I drilled Chris, he leaves and I’m like, “I really like this, I really don’t want to like it. And I really like it.” And we ended up raising the first angel round for Sendoso. I started working with press as an advisor, and I feel more and more in love with the model, with the people, with the opportunity, and really the impact that this could have, and eventually came on full time. So, Chris not only recruited me as an investor, but as an employee. So, I can tell you I really didn’t want to like this company, and I love it from multiple perspectives. So, that’s how I got here.
Sean: That’s amazing. And certainly bodes well to having a clearly very persuasive CEO.
Michelle: Chris is amazing. I feel really fortunate.
Sean: That’s an awesome story. All right. Last one for you. One piece of advice for people who want to have your job someday.
Michelle: I’m connecting the dots. I think in a CEO role or broad role, having a lot of experiences is really important. In my early days, they didn’t all seem like they would add up together or be as powerful as they are now. I’ve had such an array of positions, and been able to support a lot of amazing business people in different ways. And every single one of those roles have come back in this role I have today. That has been really powerful, everything from being a budget analysts, to supporting engineering, to my experiences in mergers and acquisitions, and and so on. They’ve all come together in one role. So, a lot of times when I talk to individuals, I asked them not to worry too much about exactly where they think they want to be in the next two to three years. You really have to find roles that you’re passionate about, and that you will get something out of them. You really need to look for something you can learn in every role because ultimately that will all add up in future roles.
Sean: Thank you again to Michelle Palleschi, the CEO of Sendoso for joining us on today’s show, and thank you once again to all of you who continue to listen and send us amazing feedback about the show. I’m sure you’ve noticed by now if you’re listening to this, but operations inside its own feed now. So, send this to a friend of yours who you think can get some value out of the show. Help us spread the word and help us get this show out to more and more people. And if you’re feeling super generous, leave us one of those six start reviews on Apple podcast. Six Star reviews only. That’s going to do it for me. We will see you next time. Thanks.