Episode 2: Building and exiting an ecommerce fulfillment business in Africa
Welcome to the second episode of the Founder Series. We talked with Justin Drennan, co-founder and, until recently, the CEO of Parcelninja. Parcelninja is South Africa’s leading outsourced warehouse and ecommerce fulfillment company. In 2021, DP World (then Imperial Logistics) acquired Parcelninja to accelerate their digital capabilities and expand market access into e-commerce fulfillment in Africa.
Video script
Egla: Hello, everybody. We are here again for our founders series, a series where we talk to different logistics founders across the African continent to learn more about what they’re doing within their spaces. But before we get to that, Jill will just tell us a little bit more about Newtown Partners and remind us about the fund, and then we’ll get started.
Jill: Hi, everyone. Thanks for joining us. So, as you know, Newtown Partners, which manages DP World’s $50 million corporate venture capital fund, was started by two successful entrepreneurs, Vinny Lingham and Llew Claasen. We invest in Seed and Series A startups globally that are leveraging emerging technologies and disruptive business models in freight logistics and supply chains.
Happy to be here today.
Egla: Thank you, Jill. Okay, so. Very, very excited to have Justin Drennan from Parcelninja, or ex Parcelninja, but we’ll get into all that interesting stuff just now, but [00:01:00] Parcel Ninja is operating out of South Africa. So what they do is they’re a distribution and fulfillment platform, also operating a smart warehouse network.
So really, cool and interesting, and we really want to get into it, but Justin, welcome.
Justin: Thank you. Thank you, everyone. A pleasure to be here. As I said, I’m sitting in my car because I said entrepreneurship is about getting things done. And I don’t expect to have an office, and I’m on holiday, actually.
And still, this is how you do it. Out of the car. Are you really a founder if you don’t take calls in the car? I don’t know. Pretty normal, I think. Of course.
Jill: But Justin, if you could introduce Parcelninja and yeah, quick, how did it start? Where was the gap? Yeah, it would be great to hear from you in your words.
Justin: Thanks so much, Jill. So, I would preface this by saying that I’m not actually a supply chain logistics expert [00:02:00] by any stretch of the imagination. My background is actually software engineering back in the mid-nineties, so I’m quite old. I’m 44 years old. I hope it doesn’t show and you’ve edited, brushed appropriately, but my background is software engineering.
I did C programming back in the day, and I worked at a number of large corporates until I like early thirties and when I was around 30 years old, I worked at an online company that does online gaming. They were a bunch of software engineers who wanted to get some products from the U S that weren’t available.
So, being Africa or South Africa, it means that Amazon wouldn’t ship products out. So we had to make a plan or work out how to get products all the way from the U.S. to South Africa. Which I just spent a little bit of time found a reshipping facility in the U. S. in Tampa. And brought in the products that we needed, which was, I think, like a Darth Vader mask, Slinky [00:03:00] Spring, and some like, really arbitrary, techy, geeky sort of things for fun.
And after I brought that in, I showed some of the other guys that are working in offices and asked us to help. They asked if they could also get similar products, to which I said, yes. And we started a very simple business that brings products from the US into South Africa. Servicing the people in the way out, the people in the office, really.
From there got a little bit of scale. Learned how to do web development, my brother did. I was I was a back-end, like, SQL developer. Started the business out, got it going. And from there, just looked to solve problems at the end of the day. And, and if you could get products from the US to South Africa, the last thing you wanted to do was lose it locally.
It was the local networks and so being lazy, sort of engineers, we built systems and processes to help us automate the last mile or local logistics and through [00:04:00] building that up, decided to offer that to other people as a service. built out the parcel ninja business, which is a distribution business. It’s similar to fulfilled by Amazon.
You could say, you leave your products in our warehouse and we’ll pick, pack and fulfill. And we do all of that with a bit of a, a uniquely African flair, if I can call it that, which has its own risks and nuances and intricacies. And the business effectively does, does, has three components, which is that the warehouse that I spoke about, which is fulfilling products and shipping them to people’s homes.
The second one is we have a, have a SAS product that does real time courier optimization and comparison. So if you don’t want to leave your products in our warehouse, you can keep it in your warehouse and we’ll give you some tools to, to automate your warehouse. And then the third one is we built a last mile distribution business specializing in deliveries into the main market, which is a completely underserved market in South Africa, which [00:05:00] has the same challenges times 10 when it comes to delivery, cash collection, products, et cetera. We bought out those three components and that’s where the business stands. I mean, so many threads to pull out there, but maybe just to start from the beginning, what were some of those market dynamics that I mean, you obviously mentioned how it started, that you were really just trying to solve a problem for your immediate friend group and then you obviously realize that this is a bigger problem than I’m realizing here, but what are those market dynamics that are at play or were at play that, that made you realize that, Ooh, wait a minute, actually, you know what, there’s a market opportunity here.
You know, let me pursue this and actually start something. Well, I think it’s, I think it’s done out of a place of ignorance to start with, which is really great because the less you know about things or the issues that you’re going to come up against, the more you’re willing to probably go down that path.
I think that as I get older, you tend to focus more [00:06:00] on, you know, too much, which allows you to, to see all the negatives on all the challenges of being naive Thinking that, oh, well, you know, if this is something that’s that people want from us, there’s the product market fit was almost there for you.
And when you look at like product market fit, when you don’t even have to really try sell what you, what you’ve made, that’s what it looks like. And when we started the Want-it-all business, bringing the products from abroad that just happened, if I can say that. So it was done out of a place , of ignorance, luck, and, and Timing probably.
So I think it was just as this was around 2006, 2007. I think things were just getting going from an ecommerce perspective. And so it was just this conflation or this perfect sort of storm, of online happening. People want products from abroad. Amazon not shipping to South Africa. And there was also an opportunity from pricing between what the [00:07:00] cost in the U. S. versus South Africa. And also the inability to source the products locally. Yeah. And through all of those sorts of things, we ended up just building out a business learning tech and having access to a few people from the online gaming business we were in who were experts in, like, digital marketing, etc.
And getting them to help us do things. I mean, my, my partner who we have kids at house and business with, she ran Digital marketing in the game in the online gaming space and how I met her was I just looked up on the local intranet I said, well who the hell does marketing down the store ID?
I don’t know what SEO is or will pay per click or any of these sorts of things. So that was that that helped and then also having, I guess the, the two other co-founders, which is my brother, who’s very technical and Terrence, who’s phenomenal at process. And then you put the competency together the external factors of the market, the, the ability for us to do this [00:08:00] and, and by being naive in it.
And I think that’s kind of black worked almost. So I say these external and more internal factors.
Jill: I mean, it’s kind of an interesting question because, you know, you guys are starting out just when, Amazon was only doing kind of two-day delivery. And then in 2013, they started doing same day.
But we had like Takealot here in South Africa. id you ever service Takealot’s customers? And then how did you, you know? Was there ever kind of a competition similar to Amazon where they actually pushed out their own kind of performance, warehousing and logistic services to their ecommerce merchants?
And, you know, was there a bit of competition between yourself and Takealot? Kind of, how did those market dynamics kind of grow out?
Justin: So, that business that we started with, the premium products from the U. S. And what we did from that, is through those systems and processes and automation that we built.
Like I said, we thought about doing this for , another company or anybody else , as a service. We were lucky enough to be [00:09:00] around during , the Groupon heyday, where there were a number of businesses following the Groupon model, which was , the progression from vouchers and then products, etc.
I was introduced to the guys at a business called City Mob was the back of the day, which was a, Groupon competitor, which were getting into products. When I met them, I said, listen, delivering products is not as easy as it sounds because I do this every day, and we’ve automated everything.
You don’t have any technology to do this. Like, how are you going to do it? They said, don’t worry, they’ll work it out. And everything was fine. No problem at all. Bless them. I think around November, they phoned us to say they’ve got a giant disaster. They need help with supply chain logistics. Can we help them?
And we said, sure. And then we offered them this service. We actually ended up investing in the business and then they were like our first clients at the end of the day. So it was out of like friends and necessity or introductions and necessity. And that business morphed from, from city mob into a business called Superbalist, which is probably the largest fashion retail business in Africa.
And so [00:10:00] it just happened to meet amazing guys or people that run a phenomenal business, morphed it into something huge. And we want to do that together with them in that process and sell to Takealot. So while that was all happening, like I said, there’s the Takealot was launching in South Africa.
And there was this general ecommerce hype happening. And with Takealot launching, the expectation of like five days to deliver something. Change to two days and businesses needed a logistic solution. We’ve also found that a lot of people running businesses are great at sourcing products, marketing, surprising and delighting people, et cetera, et cetera.
And what they all hate is thinking about sending it to a customer. So we just sat there and said, listen, you focus on what you do marketing, product, etc. We’ll focus on what we do, which is supply chain. We’ll honor the promises you make. We’ll pick, pack the full on your behalf. And we’ll get it done. And that’s, and that’s how we sort of position things.
Egla: [00:11:00] That’s very cool. I think it’s really important, I mean, us being sort of that logistics investor, we’ve seen this, and being able to do just what you’ve described, being able to take that non core operation and say, you know what, we’ll pick and pack. We’ll do the not so fun, sexy stuff. You focus on what you do.
You focus on being a Superbalist or whatever, and we’ll do, you know, there’s the fulfillment and things like that, which is a really, really important part, but nobody really wants to get involved in that. But I wonder with like a take a lot, for example, which is one of the largest marketplaces here in South Africa.
So you’re helping fulfill businesses that are here, for example, selling on Takealot and I would think just to go back a little bit to that question that Jill asked in the beginning would say, for example, it Takealot, have they tried to sort of build their own sort of fulfillment and almost , this intermediate Parcelninja and say, you know what, since we’re the marketplace and we have kind of that relationship with the retailer, we can do the fulfillment, we [00:12:00] can take parcel ninja out.
This is easy.
Justin: I think that what you’ve seen with the proliferation of these large retailers and marketplaces is that a lot of people shop on the marketplace, which is correct. However, the brands that are listing on the marketplaces want to go direct to the consumer at the end of the day, and they want to own the experience and the customer themselves.
If you look back 10 years ago, you would not be able to buy off the Nike website or Adidas or almost any brand owner wouldn’t have had their own retail presence because it would have been seen as competitive to the “Takealots” or the retailers. What has subsequently happened is that these brands have worked out that, hold on a second, they would like to interact with the customer themselves, not be disintermediated, have these interactions in a way that they are able to differentiate the brand, offer a differentiated service, or product, or pricing, or whatever that needs to be.[00:13:00]
And in order for them to do that, Well, they have their own website and talk directly to the consumer, right? Once they’re talking directly to the consumer, it inevitably goes to that, well, how do we get the stuff to the customer? And that’s where they normally stop. Because they’ve got an internal marketing department, they’ve got people that understand the products, they know what they’re trying to do.
And when it gets to the supply chain, it almost like stops because they’re not geared at all for home deliveries. They are geared for delivering to large retailers and super link trucks. So what we did is we said, don’t worry, guys. If you want to go direct to consumers, just leave some products in our warehouse.
We’ll integrate it to ecommerce platforms. We’ve got fancy integrations. You just sell like you would normally. And once again, we’ll do all the heavy lifting behind the scenes. The “Takealots” don’t compete against us. They compete against the brand owners that we work with or the stores that we work with.
And we would be shipping products to take a lot for them [00:14:00] because they’re not used to this. And we’re chipped to take a lot and we’re chipped to all the other ecommerce platforms and marketplaces, et cetera. And so we are the guys that are experts in delivering small quantities of goods to smaller warehouses for you.
You stick to the super links, which are going to massive DCs. Everything else, you want to get it to pharmacies, you want to get it to restaurants, you want to get it to hotels, homes, we got you. And we’ll do all of that
Jill: that actually leads me very nicely into my next question. So, I mean, we’ve, we’ve obviously seen kind of the advent of traditional ecommerce.
It’s grown massively in the U. S. And China. You know, but what we’re seeing in Africa is this. Kind of new version of ecommerce coming out, which is more of that social commerce side, which is selling on Facebook marketplace and having an influencer or kind of even having one more in the informal market where you’ve got a person who buys internationally and will curate an inventory selection for their local community [00:15:00] and will then kind of sell to them.
We’re seeing kind of more of a more of a growth in kind of that social commerce. And I wanted to get your thoughts on that specifically, because you’re one of, you know, one of the only kind of supply chain. Guys that have able to get into the mass market as you call it in South Africa and dealing with kind of more informal piece.
So, yeah, I’d love to get your thoughts on social commerce versus ecommerce and yeah, how has it been moving into the informal market?
Justin: So, while I may not have my own TikTok store yet, maybe we have to do a dance or something, don’t we? You guys can show me. So I understand like, I think the Facebook, Instagram, TikTok, WhatsApp, ordering platforms are becoming prolific in the same way, I think that if you look at India, China, South America to degree Pinduoduo and some of those other businesses, I think, it’s social commerce is quite disruptive in that[00:16:00] it suits places in countries where there’s limited access to product. I think it’s the first one and where there’s an inherent limit on trust, sort of trust tax the people paying in the country. So in most African countries, there is Trust tax in that you can’t do transactions because people don’t trust one another However, this social commerce ends that in that you’re buying from somebody that you know, normally Informal promises and they’ll walk to you and bring you your products, etc, etc.
So I think that depending on the product categories of what you’re selling It’s hugely disruptive to traditional retail. However, these people, however, the resellers still need to get their products. Now, you brought up a few, interesting things there. The first one is let’s take a look at a Shein example.
And I mentioned this probably about four years ago, where I said that competition for local retailers is not going to [00:17:00] be bred within the local country, it’s going to be organizations external to your country or continent that aren’t necessarily operational there. They’re just going to ship from abroad into the country.
And if logistics is able to provide the solution for them, well then they’re not, why would you want to set up operations in each country to the same degree, marketing, et cetera. And we’ve seen that with Nike, for instance, where if you’re in South Africa and you order a pair of shoes that shipped out of, depending whether it’s Singapore or the Netherlands directly to you in South Africa, you wouldn’t even know any different, you’d get it in four or five days. so, we’ll take that apart, there’s one potential issue, which is cross border becomes a massive opportunity globally, and Ali Express, Shein, Wish are doing things around that, whether it’s setting up operations in Kenya, have representatives in South Africa, and make the entire process seamless.
I would, I think they talk to South Africa, they probably say that Shein is probably doing like 20 to 30, [00:18:00] 000 deliveries a day. If you go onto the South African Shein Facebook group, that’s created by random people that just started up themselves, you probably find 300, 400, 000 people there. All talking about what to buy, how to buy.
And that’s a component of the social commerce thing. So they might not be selling it to us, but they’re recommending products to each other, they’re telling each other how to do it, and they’re telling each other how to buy from international companies. Which is interesting. So I think that, this social commerce component, together with international shipping, is one part that we need to be aware of.
And as logistics providers, the question is how do you team up with some of these international companies to offer them some of these services? Yeah. An example would be at Parcelninja, we work with international companies that leave their stock in our warehouse. And if someone orders a product from, let’s say, an Australian or a U. S. company, we dispatch it for them within the local environment. So we are also enabling international players to have access to their local environment in a slightly different way, in that there’s a form of infrastructure for quicker delivery. [00:19:00] But I think the “Sheins” and “Wishes”, etc. are going direct.
That being said, doing that into Africa is tricky because there’s this moat that exists called terrible logistics, whereby you order from Shein or Wish, etc. And, , you know, get the products. So within South Africa, the South African Post Office has been negligent from a delivery perspective. And so we’ve been shielded from international distribution because of this incompetence.
Startups and other logistics businesses will solve that problem for these other multinationals or these, other retailers. So that’s the one part. The second part is, is that all these resellers that exist in whatever environments or places require product. Who’s going to get the products? I’d like to put up our hand and say that we will give you your product.
We’ll give you access to this product so it’s delivered to you. The last mile part and how you get that to your consumers or how you take that to your end users [00:20:00] is your thing. And maybe there’s, there’s ways to empower them with technology and systems and things to help with that. And I think there’s lots of different ways to improve the supply chain.
But our job is to, is to work together with them. And what we did in the informal or the main market in South Africa, is we worked with together with all of these, these little stores that sell FMCG goods. And we built on a way to deliver. They do all of these FMCG spaza shops or informal shops. Mm. And from there they then interact with their end consumers.
So it’s a B2B play in that way. Just micro B2B.
Egla: I want to dive a little bit deeper. Sorry Jill it just, Justin raised so many interesting points. I want to dive a little bit deeper on what you mentioned with regards to that competitive moat of Parcelninja having a warehouse, which is what we call an asset heavy model, quote, unquote, and then, of course, your “Sheins” and things like that, who have a more asset-light model, and I want to understand kind of your view [00:21:00] on, I mean, you already mentioned it, but I just want you to dive a little bit deeper that having those assets is kind of what helps parcel ninja to be able to be where you need to be. And be able to get closer to that customer as you need to be to guarantee that stock for like the social merchants or whatever And that gives you a competitive advantage over sort of international players and things like that But can you please dive deeper a lot of the time when investors hear sort of an asset heavy model?
Oh, we get a little bit uneasy Yeah, I think, I think, I think that the important part of it is to decide what assets you want to own and how do they give you differentiation. So in our parcel ninja business, what’s very interesting about it is that don’t own any of the vehicles, any of the trucks, bikes, et cetera.
So the last mile component is ours. Yeah. Okay. And, and that was a, a conscious decision that was made. Relatively early [00:22:00] on the business and we sat down and actually looked at whether or not we want to want to own the last mile because there’s potentially margin and differentiation, all these good things in the last mile.
And we sat down and Michael Porter and you look at, you know, and you look at all the differentiation and the competitors and where the price impressions are and all of those things that we said, there’s so many businesses that are trying to solve last mile. Yeah, that, that let’s not get into. All that’s going to happen there is going to be plastic oppression.
It’s going to be innovation. It’s going to be a big funding. It’s, it’s not necessarily core to what we do because we need to deliver it. And we saw the big issue was actually in the fulfillment, not the delivery. Because we saw lots of innovation. There’s Uber being delivered, there’s bike startups, there’s truck startups, there’s courier businesses.
And we didn’t want to fight with them in that space. And so we said, like, blue ocean, let’s leave the fight over there and move stream a little bit. And what we’ll do is we’ll [00:23:00] control these couriers or delivery guys. So we’ll have the power of pricing, scale technology and all of this. And we will develop some technology that allows our customers to interact with all of the last mile distribution players, optimize which one they want from a costing perspective.
We will aggregate all of that, use our pricing power to derive down prices for last mile distribution, , make a margin on that component there, and sell that onto our customers. So stay up the, the big fight area and we move to the, the less sexy other area. Where we’re we? I think , the last mile guys take for granted, the fact that things are picked and packed, which is completely incorrect.
So small scale picking and packing is easy. Move 700, 000 products to your warehouse a month and you need to know what you’re doing. And so, what we found is that when, when we saw businesses scale, [00:24:00] the problem was in South Africa, it was not the Last Mile. The problem was actually getting the stuff to the Last Mile players.
And, I look across Africa, it’s a similar sort of space that you see. If you’re fighting the Lost Mile, who’s going to give it to the Lost Mile guys? Who’s going to have the product available? Who’s going to track it? Who’s going to be able to, like, bring this all together in one way? And that’s what we did.
So our solution , is just tell us, give us the order, we’ll do everything. So we’ll have the relationship with the couriers, we’ll manage them, and we’ll make on delivery promise. We’ll organize best pricing and just make your life easier. And that’s really what it’s about.
Convenience. Do you want it done cheaper? That’s not our game. You can go somewhere else for cheaper. We are when you want to do things properly. And that’s how we were positioned.
Jill: Very interesting. Just in the interest of time, I would like to ask a few more questions along this vein, but but if other ones around geographic expansion and exit that I do want to cover.
So just to understand, I mean, I know now that Parcel Ninja has kind of been [00:25:00] sold off to Imperial slash DP World now. And now there’s kind of the movement of expanding into kind of the US and Europe. I just wanted to understand what are kind of the market dynamics that are happening in South Africa that are similar to the US and Europe that makes it kind of good expansion market.
And, from your perspective, obviously this wasn’t the thing that you were driving, but. Why is, why is U. S. and Europe kind of a better market than say, the rest of Sub Saharan Africa from your perspectives?
Justin: It’s interesting. When we started the Parcel Ninja business and we were offering our service to clients, this must have been about eight years ago, I still remember speaking to guys in the U. S. and telling them what we’re doing. To which everyone said, don’t worry, that’s already been done in the U. S., it’s working, you shouldn’t bother going there. I need to find out like last like two or three or four years that you, this Shapiro ShipBob, , all of these third party providers where our tech was ahead of where they are today, which is interesting and we [00:26:00] always took that for granted, thinking that, oh, we didn’t forget South Africa know we built this thing with tech guys.
We don’t know what , all the logistics people have, and we’ve looked at it. We thought we had something good, but everybody else wasn’t really sure, and so we didn’t really go into those markets. However, the maturation of the technology that we have, the cost base that’s already been spent on it, the integrations, the processes, more than the technology, are all better done in such a way that when people come see what we’ve built, and we’ve had Amazon executives, Walmart executives from around the world, DP world executives.
They’re always shocked to see what we have here on South Africa. And I think that that’s something that startups in African businesses and markets need to remember is that, Depending what you put is actually world class potentially and and what we and the problems that we solve your own problems that in other markets, but those markets are so well established to a [00:27:00] degree that those problems are pretty easy, but the tech that we have has already been paid for in local currency.
And so it’s exceptionally cost effective for us to go into other markets and we have the right processes and systems, which means that we can leverage everything we’ve done up until now.
So I think that, so I think that those markets, I think they underplay what we can do in those markets. Naturally, ourselves as, I did as an entrepreneur in that space there. So I think that, now’s the opportunity for us to do that better in those markets, and we’ve seen the technology that we have, and we get exposed to more what other guys are doing.
And what we do is on par, if not better, than what they do already. I think that’s the, that’s the story.
Jill: Yeah. Impressive. And then, I mean, just to understand why Saharan Africa maybe not the market that you’re looking into? Is it because maybe there’s less last mile providers to aggregate across and lower ecommerce penetration?
Egla: Yeah. I wouldn’t say we’re not doing it because we’ve actually just launched in some of the other markets in sub-Saharan Africa. I think it’s just more publicized [00:28:00] into Europe. And I think that if we were in our moves into other African countries, talks to the maturation of the actual local economy, the maturation of the, of ecommerce and let’s call it home deliveries rather than ecommerce.
The, the local knowledge understanding, I think is something that, that is, needs to be understood as well. And we’ve been to do work in Brazil and other countries and we’ve learned a lot about what it looks like to actually roll out in another country. So I think that’s something to consider. And it doesn’t mean that we’re not doing it in Africa.
It just means that we’re doing it in a in a way that’s controlled and that we feel is timed correctly. Yeah, you know, everyone’s everyone goes: Oh Justin. Well done. You built this business. It was perfectly positioned Everyone’s a genius when you’re running an ecommerce business and COVID strikes, If I can say that and so we just need to be aware of that as we go into other markets that we will be ahead of the curve, but if you want to be dominant and [00:29:00] if you want to have some of these like first move advantages. That’s what we’re willing to do.
Yeah, I want to switch gears a little bit because I do notice that we are running out of time but I do want to talk about exits. One of the biggest things that has been a topic to many conferences now that sort of the African ecosystem is maturing is exits. That’s a big, big one that everyone has on their minds.
And Parcel Ninja was fortunate enough to be acquired by one of the largest supply chain and logistics players on the continent, which, was Imperial, now DP World. But is it, I want to understand a little bit, what is that story there? Were you building from day one? With the thought that, okay, we need to get to, to get acquired, or we need an exit in a certain way or other, and then you sort of started that relationship from the beginning, or was it just right place, right time, because you had built this incredible, disruptive technology, or what happened?
How were you able to secure that exit, you know, on your [00:30:00] journey building Parcelninja?
Justin: I think that’s, that’s We always had the intention of exiting the business. So we knew that that was something we wanted to do. And that is because of the nature of the business being a supply chain, a logistics business requires the right individuals , to take that forward.
And while coming from a software engineering background is advantageous, it wasn’t necessarily, we didn’t always see ourselves as The guys to take that forward, let’s say, or there was maybe some nuances around supply chain, all the capital requirements and all of those sort of things we were aware of.
So there were few externalities that and internal sort of components in that thought process. But we always knew that we’re building something that actually It does have value for a larger organization in that ecommerce and home delivery is a global macro trend that will need to be solved for and somebody Needs to own that the fact that we happen to be there earning it and and [00:31:00] limited sort of competition meant that just a matter of time, before somebody woke up in one of the larger organizations, said we need to to have this as part of our solution because While we are doing work for some of these large multinationals, we’re doing a component of the logistics.
Someone else is doing the rest. And somebody else on that side must be going, well, who the hell are these other guys doing this work? Like, why are they in here doing stuff that we can’t do? Then saying, how do we do it? Realizing we can’t. And then saying, let’s go find the solution. Which was us. Okay.
So that was the thought process that was always sort of happening behind the business on a larger scale. That being said, the business was built and ran in a way that I think there’s one year of non-profitability in the business. Mm-Hmm. That’s how it was run. It was built to be a real legit business that gets down on its own two feet and do what it needs to do.
And was almost like self-funded in that way. Mm-Hmm. So there were investors that invested in the business very early on, like in 2007, [00:32:00] and then again, I think in 2014 around there. But we never required hardcore capital into the business to keep it going Actually, the business was almost self-funding in that way, which is just happened to be that we were quite lucky so we were able to make those step changes.
We didn’t have to buy assets. So why you say, oh, you know, Justin, you said heavy to the warehouse. Well, we’re not owning the warehouse, we rent the warehouse. So there’s no capital expenditure that way. We don’t own any of the vehicles. So what looks said heavy on the outside is not necessarily said heavy internally.
So we were able to scale the business at the right inflection points. You know, when you move from the, from a warehouse that’s 4, 000 squares to 8, 000 squares, you’re going to have a lot of empty space. So make sure when you’re at 4, 000 squares, you are bursting at the seams. Almost. And so we’re always making plans to like really get to that busbob, like the business is feeding the pressure from a capacity perspective before we moved up.
So we didn’t buy ahead of the curve. We were always almost like behind in that way. [00:33:00] And I think that that allowed us to maintain this profitability in the business. So when you take profitability, place to take growth and you weave into that the story of technology, which it was the profitability of the business, the larger macro trend that becomes an attractive acquisition.
Yeah. Sort of like, yeah. It becomes a tractor for acquisition, and how we ended up doing the sales, we just, we were introduced to, to the Imperial Group a few years prior. They asked us about our business, we did a bit of work and, and to know one another and didn’t end up doing a transaction. Just being on their radar meant that one day when they realized that they need to get into the space, we were the first people they phoned.
And in that way, we were able to execute on that, let’s say, three years later, three or four years later. So I think having conversations early, and also knowing in that first conversation that we had with [00:34:00] them, like what they’re looking for, what are the things that allow you to craft your business and story to align if that’s what you want strategically.
So I think it’s almost like if you do this, we will buy it from you, which makes life a bit easier.
Jill: Very good. Well, thank you so much, Justin, for spending some time with us today, speaking about your journey with Parcel Ninja. It’s great to kind of see how it started, how, you know, it’s ending and congratulations on, you know, an impressive exit for a business that was profitable from the get go.
I think that’s a very surprising thing most people will We’ll find in today’s session, you know, profitability is important from the very beginning. Yeah, so interesting one. But thank you so much. And I’ll quickly wrap us up. But thanks for joining us. We’ll be speaking to impressive founders like Justin in future sessions where we speak about how they’ve changed the basis of competition by utilizing these [00:35:00] emerging technologies.
If you have any questions, feedback or suggestions for future episodes, or if you’re a founder that would love to kind of tell your story, please get in touch with us at info@nullnewtownpartners.com. We’ll have many more of these to come and we’re looking forward to hosting you there.
Thank you guys.
