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InPost & Self-Service Locker Logistics

Former Chief Information Officer at InPost

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Executive Bio

Former Chief Information Officer at InPost

The executive has over 10 years experience at InPost and was the first person to join and build the IT department. He has led the technology infrastructure buildout from day 1 and understands the integration of locker hardware and software and how it compares to competitors.Read more

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Interview Transcript

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

Thanks for your time. We've been researching the business for a while, and we thought we'd wait to hear your thoughts on the business since the beginning. When you were listed and then Advent took it private, what happened with the business? What were the main drivers?

We need to be on the same page in terms of my role. At the moment when Advent International came on board, my cooperation with InPost ended. I can speak about many interesting things in terms of what happened before that moment, but in terms of what happened after that moment, except maybe a one-year history when I was helping to wind down InPost Canada, I was just observing the happenings from the outside. I no longer had a part of this organization.

There are some claims that minority shareholders were frustrated that they were bought out well below the IPO and at a price now well below where it's being listed again. Overall, do you think the whole operation was "clean," or are there some issues there?

You're asking me about a very controversial topic. Many people didn't take what happened lightly in terms of the buyout, and a lot of people counted wrongly in terms of mathematics and the possibility of the buyout. I'm a technical person. I'm not able to answer the question of whether or not this was clean.

Understood, no worries. Generally, what do you think of the founder Rafal Brzoska and very senior management from your time there? How would you rate them from a corporate governance perspective and a strategy and execution perspective?

I met Rafal and the team, some of whom are still there, very early. Rafal was young in 2008; very dynamic, very visionary. Rafal is a person with tremendous charisma, and this charm is still there where he can put his magic on almost anybody and that is very helpful in his endeavors. In the beginning, we took a lot of risks. You need to understand that at the beginning, this was a very startup approach, we had a very young team, quite a crazy idea in front of us, and we were sacrificing a lot of time, effort, and involvement to make it happen. Rafal was a great driver of that in motivating the team, selling the vision, and pulling us behind him; he was a magician here.

Makes sense.

Nobody will tell you differently. After a while, the craziness came when we were doing a lot of global expansion, and many mistakes happened. However, I would say that Rafal, even in those very dark days when the vision started to crumble, never lost his faith, and he never stepped down.

You said many things went wrong, and InPost had to be bought out by Advent. Could you give us a chronology of events in what went wrong so we can appreciate it? What expansion, or did some things happen on the regulatory perspective that changed? Can you give us some insight?

I may not be very precise in terms of dates and chronology of events, but the biggest problem or the biggest issue that caused the ship to start to sink was unrelated to InPost Locker expansion. InPost Locker expansions were bold, and we were starting a lot of fires, and we were bleeding money, but most of this was calculated. The business was diverse, and Parcel Locker was not the only service we were offering. Most of the business was letters, and InPost functioned as a private post, not a parcel locker operator. Rafal was heavily pushing for InPost's growth, and one of the biggest changes for us was with the government contract to perform mail delivery for government institutions. We are speaking here about courts and other government institutions sending priority letters with signature requirements, and so on. That was a huge business. We participated in a tender, and we won. After we won the tender, we wanted to do our job correctly, so we started to invest in the technology to execute this contract; we made a lot of investments. I connected with new technology related to making a validated signature of government-related letters without certified devices that would reduce the cost and timelines of the whole service and make the contract lucrative for us.

We invested a lot of time and money, and then the government took the contract. They simply said no, no, no, InPost will not do that. They won the tender, but we don't care; InPost will not do that. This is for us, the government. This is the reality of business in Poland. We hired many people, invested a lot of money, and could not execute the contract, so we were at a loss. We had to fire people and summarize the loss in investment, development, technology, and equipment, which was the last nail in the coffin. Of course, our situation, when we had opened markets in 24 countries in terms of having InPost locker networks starting up over there, didn't help. It made the ship sink faster. But this was not what triggered it.

Just another one related to the strategy and expansion. At that time, it seemed the contract you lost was a drag on the overall business, so that was a hit to the expansion. But once Advent took it private, with the money and without that drag on the business, they didn't decide to go ahead and keep expanding the business, but they just centered all their focus and attention on Poland?

Yes.

So maybe there's something that you guys learned in the past by going to several countries, which Advent may have realized?

When you enter this many countries, you realize that each of these countries is different. You need to approach how you want to build the solution, this business model, totally separately country by country. I think this was the biggest realization, and I don't think it's any kind of secret sauce right now, but the biggest realization is if you want to be successful in these types of networks, you need to own logistics. We failed everywhere where we had to be dependent on third-party logistics, and we were thriving and being successful where we were in control of our logistics. There must be a symbiosis between the last mile process, the customer relationships, the first mile, and interactions with the machines in how this works. What's the driver's engagement in front of the machine, and does he care or not? Those might sound like small elements, but apparently, they are very important. As you may see from the market, this is not only a realization that came to InPost. Drivers like Amazon are doing the same. They want to control the whole logistic chain.

That’s very interesting and brings us to the discussion on the business model. When you say it's important to have the logistics, do you mean all the distribution centers and all the depots, as well?

As much logistics as you control, you can better orchestrate the whole thing. If you are buying us as a service or depending on a third-party courier doing his own business, you are creating very conflicting situations. First of all, you are kind of asking the courier to work with a service that is competing with the courier. You are also trying to transform customers or encourage customers using the courier services to use your locker service, and other conflicts are happening there? On the other side, this is a technology solution that requires service, maintenance. It requires care. If a driver comes to a locker and he cares, because that's his company, because that's his network, then you will see significantly fewer issues with the machines.

Yes.

You will have far fewer problems with the annual maintenance of the network. Can you imagine 14,000 machines that require cleaning, and each of them has a couple of hundred compartments, and each compartment has to be cleaned? If you have your own logistics, your drivers are doing this differently. They will clean each compartment that they open; the machine doesn't need to be cleaned because it's cleaned all the time. You can achieve many symbioses in terms of going a little bit upstream in the process, and you’re looking at the distribution centers, the DCs, and so on, where we are sorting material.

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