Apple Product Launches and 10,000 Handwritten Notes with Michelle Palleschi (COO of Sendoso)

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 or your 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 B2B 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 or your 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 has 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 equipment. When I joined them, they were the biggest company in the world, and that was gosh, almost 20 years ago now, and at that time, they were talking about becoming a trillion dollar company. So I started my career there, 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 kind of have a whole new set of experiences there.

Sean Lane: No big deal, name brand.

Michelle Palleschi: Yeah. I was obviously very attracted to the brand, and again, I knew people that were there, and that's really what took me, and 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 element of the business. I find it interesting, 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 Lane: And once you got to Apple, certainly 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 kind of an idea of what it was like during your five plus years there? And you had a variety of different roles.

Michelle Palleschi: Apple is an amazing company and 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 role. When you're doing a networking inaudible 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 Lane: Yeah, a little easier to talk about iPhones at Thanksgiving.

Michelle Palleschi: Exactly. It's very relatable, and it's a consumer business as well. So you're right, that Thanksgiving conversation, everyone can participate in that. That was really amazing and kind of a first for me as well. And at Apple, I mean, 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 kind of 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 it's 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 amazing place to work.

Sean Lane: And obviously when we think of Apple, we think of the logo, and the kind of customer- facing stuff that we see in the splashy commercials all of that stuff, but you were really kind of under the hood here of the work that was going on there. Can you tell me a little bit more about what your specific role was and what type of stuff you worked on?

Michelle Palleschi: Yeah, 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 new products, and it would take some time to scale, and not really cannibalizing or replacing prior products. But most of it was additive and kind of 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, right? That forecast process essentially became almost a daily, weekly, forecast process to understand how you're doing against the last product, and what the trends were, where's the demand globally, and how you keep up with it.

Sean Lane: Yeah, you mentioned globally. Are you, for every single one of those... You mentioned some of this 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 Palleschi: Absolutely. I mean, 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 of 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. And that might just be in San Francisco, right? How much is China getting? How much is Norway getting, and how much is going to every single location there? So there's a lot of people looking at a lot of data to ensure that the demand and the supply are met.

Sean Lane: 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? How the hell 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 Palleschi: The forecast process starts essentially years before the decision on the components inaudible is made pretty much three years out, and the component inaudible are being made, and risk buys 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? And 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 sell- through, 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 Lane: And can you take me through the days before a big launch, right? So this thing starts three years in advance. By the time that 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 everything goes out," or is it really up to that last moment, the planning and forecasting's still ongoing?

Michelle Palleschi: 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 forecasting rose gold, for instance. So when iPhone launched it's rose gold, predicting how much demand would be in China for instance, and allocating supply based on geographic tastes and demand was a huge debate. Just think about the black phone or the silver phone. Rose gold flew off the shelves in China, and that was one of the biggest decisions that were made there, but deciding how much needed to go, what would be the mix between silver, black, white, rose gold, those become new decisions and can be big mistakes. You could miss a color allocation pretty big and not have enough of the right phone, and not be able to sell through it.

Sean Lane: 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 or 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 777s 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's 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 Palleschi: Yeah. So I would say sending is hard, and you probably know this. Maybe not as hard as landing 80 million iPhones in 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 a YETI Mug and a notebook, crinkle paper, a handwritten note, and a custom box, you're dealing with probably six different vendors there. They're all needing to land and have the right inventory and good quality at the same time. Then you want these to go out quickly in a quality fashion, and know when your potential customer or 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 to 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 to make sure that the notes look great. But the reality is, most people don't have great handwriting. Perfecting that handwriting style, what people really want it to look like versus what it would actually look like, is important, and doing that with a high degree of accuracy. 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, is the intent is there, but actually getting this done is super hard, and it takes a lot of people to do it, let alone the 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 had 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 Lane: Huh. And when you say gift has landed, does that mean it arrives at the end customer?

Michelle Palleschi: That's right, the individual that you're targeting.

Sean Lane: 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 Palleschi: 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're 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, and 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 QCing or quality checking the note that is in front of them that they're writing. So making sure that the names are matching. If there are misspellings, was that intended? Does this note make sense? Sometimes it's meant to be funny and different, or there's a rationale for the way that the note is written. Sometimes there's 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 Lane: What I find so fascinating about Sendoso's business and your job every day, is the fact that everything you just described to me is incredibly logistically complex, but it's kind of like the under the covers part of what Sendoso does, right? 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, 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 Palleschi: 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 or 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 an articulate product too, 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 Lane: 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 Kari'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 product started 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 packages 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 Palleschi: Absolutely. Amazon is obviously kind of in the Apple category, and they've got it dialed in. And as far as our operations, hand writers have to go through a test, but every warehouse worker goes through a shadowing period. They're not allowed to touch, or pick pack, or receive, 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 Lane: 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 Palleschi: There's definitely pros and cons for moving from a big company to 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 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, doesn't make or break a company.

Sean Lane: I like the way you said the take out the trash piece too, because I think depending on the mindset you have, when you hear that, 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 to most people in life, it's just a chore.

Michelle Palleschi: Absolutely. I mean, no doubt about it. There's pieces of my old, old world that were nice. I didn't have to do things. There was organizations or other people, not that they're taking out the trash, let's not take the analogy inaudible, 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 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 work, 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 Lane: Yeah, getting it through to that other side.

Michelle Palleschi: 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 to 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, it can also be a little bit overwhelming, so it just depends on the day.

Sean Lane: 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 the same lightning round of questions. Ready? Here we go. Best book you've read in the last six months?

Michelle Palleschi: Okay. The best book I've reread in the last six months is The Big Short.

Sean Lane: Oh, interesting.

Michelle Palleschi: So 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 read for me, so.

Sean Lane: Perfect. Favorite part about working in ops?

Michelle Palleschi: The purview of the entire business. So I get to touch every piece of the business, and I get to integrate finance and metrics with it, 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 Lane: Least favorite part about working in ops?

Michelle Palleschi: It touches every piece of the business, so I can get 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 Lane: We will have to have you back to do a whole'nother episode on how to avoid that, or you can just coach me personally on it, that would be great. Someone who impacted you getting the job you have today?

Michelle Palleschi: Well, it's actually a funny story, if you want to hear it.

Sean Lane: Please.

Michelle Palleschi: 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 Kris, 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, Kris can come over to the house." So Kris comes over, I drill him for about two hours, and I would say I would call it drill, it wasn't super friendly because I was inaudible, and I wanted him to understand that, and-

Sean Lane: Right, corporate gifting, who needs it?

Michelle Palleschi: Yeah, this is dumb, right? I was at Apple, we don't do corporate gifting. So I drilled Kris, he leaves and I'm like," Pat, 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 Kris as an advisor, and I fell 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 Kris 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 Lane: That's amazing, and it certainly bodes well having a clearly very persuasive CEO.

Michelle Palleschi: Kris is amazing, I feel really fortunate.

Sean Lane: 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 Palleschi: Connecting the dots. I think in a COO role or a broad role, having a lot of experiences is really important, and 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 businesspeople 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 analyst, to supporting engineering, to my experiences in mergers and acquisitions and so on, they've all come together in one role. So a lot of times when I talk to individuals, I ask 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 Lane: Thank you again to Michelle Palleschi, the COO 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 is 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 star reviews on Apple Podcasts. Six star reviews only. That's going to do it for me, we will see you next time. Thanks.