Diego Torres-Palma is the co-host of the successful podcast Startup to Storefront with Natalya Cappellini and Nick Conrad. The podcast is centered around the success stories of business founders, while focusing on the often untold challenges of launching a business.
Torres-Palma was born in Lima, Peru, and grew up in Massachusetts, where he went on to begin his professional career as a civil engineer. He received a B.S. in Civil Engineering from UMass Amherst and an MBA from Questrom School of Business at Boston University.
In 2017, he launched Ventana Ventures, a real estate development company that is “committed to finding windows of opportunity that lead to meaningful investor returns while providing much needed revitalization to communities across the United States.”
Wealth of Geeks had the opportunity to talk with Torres-Palma about real estate investment, the importance of finding the right people to work with, and the realities of launching a business.
Diego Torres-Palma Delves into the Realities of Starting a Successful Business on Startup to Storefront
Maggie Lovitt (ML): So what is your backstory?
Diego Torres-Palma (DTP): My backstory is interesting. I went to school for civil engineering and then I did a little bit of engineering after college. I very quickly realized that I just wanted to be the owner of a company and do my own thing. I think that realization for me, and because while I had a great manager and a great mentor, I just realized my success was going to be a function of him. So that got me right into entrepreneurship.
I remember meeting with the CEO of the company I was working for and I asked him how he got started and how he became the owner of the company. So not too long after that, I decided to start a bow tie company, oddly enough. It was interesting, this is when iPhone apps were just coming out. So this is 2008. To give you a reference in 2008: if you recall, most people had Blackberries. That was like 50-60% of the market. The iPhone was new, but what was new to the iPhone was this app store. People didn't know what the app store was going to be, we knew it would be like games and all that fun stuff.
We really had no idea how brands and companies would be part of the platform, in an effort to either inspire you to buy their products without being too salesy. There was a lot of confusion around this. So what we did was we looked at the iPhone screen, which isn't too different from the size of the iPhone today, but a little bit smaller. And we said, well, this is about the size of a bowtie.
I remember I was at Barney’s one day and I had seen a gentleman there who was taking pictures of ties with his Blackberry. Just to give you more of a reference, this is 3.2 megapixels of glory. So yeah, a very bad image. He was taking pictures of ties and he said he was doing it because he doesn't buy shirts very often because shirts are more expensive than ties. So basically, if he buys ties, it gives him a way to have a new outfit without spending too much money on the shirt. And I was like, “Oh, that's really interesting.”
I went back and I said, “Can we make an iPhone app that you could put up to your neck and you can swipe and sort of try on a bow tie before you buy, but with high-resolution images?” And that was it. We were basically an app company, or at least that's the problem we are trying to solve that had developed into a bow tie company.
We got a ton of press just because it was cool. It was really cool, unique fashion tech thing with a product that everyone thought was their grandfather's essential gear or their professors. Interestingly enough, we wanted to take the app to market and we wanted to become an app company. We realized brands were already thinking about this and we were late to the party. So we just became a bow tie company. We went on to run that for six or seven years, and I was fortunate enough to sell my portion of the company.
After that, I dabbled with a bunch of other projects in between. We tried to start a jet fuel refinery at one time, but that didn't work. Then, I guess, the next project was data analytics in the parking industry. [It was] just like how people buy hotel and airline tickets using data. Basically, if I wanted to travel on Thanksgiving, everyone knows that it's more expensive because the demand is higher. But parking doesn't work like this. So we wanted to make an attempt to do this in the parking industry to where parking should work the same way. It’s November, it's Thanksgiving, which should be more expensive than if it's May. So we tried to do that. The reality is it was just really difficult because the parking data is hard to get. I think in 10 years’ time, they'll have solved the problem. But I left that company [to start] doing real estate development.
ML: So then you started Ventana Ventures. What should we know about that company?
DTP: Ventana Ventures is effectively a real estate development company that I think operates a little bit differently. Traditional real estate, commercial real estate, is where you buy a building, you make it pretty and put some money into it, and then you put up a for lease sign on that building. Then you hope that a tenant comes in. When they do, it's usually a three to six-month process and then once they're in, they're going to spend more money to make it appealing, usually because it's not their brand, or it's just not them.
I looked at this like, this is really flawed and silly and there’s room for improvement. There's an opportunity here to change the model. We took that and deconstructed the equation. I said, “What sort of things do I like? What things do I think society needs today?” Some of those things are like breweries, which I think are the new church. I think breweries you can go on a first date, you can bring your dog, you can bring your family. It’s a lot of fun. You can be outside in some cities around the country [have outdoor breweries]. Then there are coffee shops, the same thing, right? It can be a first date, quick meetings, quick meet-ups. I mean, everybody loves coffee and beer.
I wanted to basically do something where instead of in the traditional real estate model, where you put a for lease sign up and hope something happens. I wanted to start first with the company. I was on the hunt for basically breweries and coffee shops. We work with a coffee shop, Farm Cup Coffee, where the owners literally spend three to six weeks with the farmers where the coffee beans are grown. Then if all goes well, they are sourced directly from the farmer. There's a lot of marketing out there that suggests that everybody does this, but it's actually not true. There's a ton of middlemen in between. So the ethos of the company to me was really nice. We're working with them [because of that].
And then [we’re working with] another brewery that we're working on now. A lot of this sounds obvious, right? But there's only one cidery in Los Angeles. So we'll be bringing the second cidery to LA. Because the market here is obviously very gluten-free and conscious around health.
ML: That's shocking to me.
DTP: Yeah, no, for sure. It tastes amazing. The other thing is their beers are all naturally processed, naturally fermented. And, again, these are words that sound crazy, but basically, all the beer that most people drink specifically like if you go buy [and] it at a store, most of the beer you're buying is actually heavily processed. Anheuser-Busch, anything [like those] are usually heavily processed. A lot of people don't know what that means, per se, but I guess COVID has accelerated what we put into our body, or at least the consciousness of that.
So this is all naturally processed, naturally fermented beer and cider. We're also having an outdoor component. You can basically drink around a fire pit. This is another crazy thing to think that in Los Angeles, there's no brewery where you can drink outside, around the fire pit just doesn't exist. We're bringing things to market that I think are interesting.
Once we meet the tenant that we like and the business operators that we think are bringing something new and something that's a no brainer and that should exist, we go ahead and move forward on buying the property. Then we do the design together. In traditional real estate, the way it works is the owner does their own set of designs and the tenant does their own design. Basically what happens is both groups spend the same amount of money, where if you do it together, you can actually essentially save half. If you're willing to commit, it seems obvious to me to collaborate. If you're willing to collaborate both parties end up saving a lot of money.
ML: Yeah, that definitely creates more synergy.
DTP: The last thing we do is document the entire development. When I was in tech, we would send a PDF update to all of our investors. I would get really upset when they wouldn't read the PDF and the investor update because it takes so much time. I mean, you're taking a lot of resources to create this document that, for the most part, goes unreviewed. When I left tech, I realized, maybe it was the [fact that] investors are looking at hundreds of these. Maybe it was more of the medium.
When I got into real estate, I said, let's just make it digital. I started an Instagram account just to showcase videos of our projects and use those as investor updates. I would have my investors follow me on Instagram because it gives them a window into what's happening. Those videos took on a life of their own, where cities would repost the videos. Basically, by episode three, you're wondering when the grand opening is. At the last grand opening, we had 3000 people show up during the day.
ML: Oh my God, that's amazing!
DTP: Yeah. A lot of things that if you're under 40 make perfect sense, for some reason nobody does them. I just feel like a tech guy and commercial real estate guy [who is] just blending all of those skill sets.
ML: And it seems to be working for you.
DTP: So far, so good. I mean, it's certainly not easy. I must say that there's a lot of politics in a lot of cities. A lot of city dynamics that you have to work through. I try to keep at a high-level and so far, so good. It's certainly a lot of fun.
I think it's important in entrepreneurship to know what you're solving for. I learned a long time ago, if you're solving for money, you're never going to really do much of anything. So with commercial real estate, some people even ask me, like why don't I do houses or multi-family buildings. For me, it's all about just solving for impact. If I can put a really cool coffee truck or an amazing brewery, I mean, you're impacting tens of thousands of people.
ML: So how have tenants and your business been managing during COVID? Have you been able to kind of shift gears over the last couple of months?
DTP: They [shutdown the] brewery and then they were allowed to reopen in June. We were all very excited. We thought all right, we got this. Then they were told to shut down again, I think on July 1, right before the Fourth of July.
I'll just say, what really bothered me, or hurt me was, [that] restaurants were allowed to open. I understood that, but if you were a brewery you couldn't open unless you had your own kitchen. What some breweries tried to do was to partner with a taco truck or somebody like that. A lot of breweries don't build a kitchen usually so most of the breweries here in LA were shut down. Because the rule was [that] you have to have your own kitchen, you couldn't partner [with someone else]. This kind of rule didn't make any sense.
They were effectively shut down from July 1st until October 9th. In terms of what it did for us, we renegotiated all of our leases with our tenants. In March, when COVID hit, we put everybody on a staggered rent. we dropped the rent from $14,000 a month to $1,000 in March, $2000 in April, $4000 in May, and then $8000 in June. We thought we were being really fair with this model. That is of course until July and then they were effectively told to shut down again.
We went from thinking we’re being great landlords and we’re working with them and everything’s amazing, to having to do all of it all over again in July and give them another few months with no rent. It's been interesting. We're all in this together. It's a big mess. But you know, our philosophy is you have to do right by the tenant at the end of the day.
The simple answer is we reworked all of the numbers on the leases, gave them massive discounts, and have continued to do so and just monitor the situation. Now they're able to open again on the weekends, so we're trying to help them wherever we can, whether it's through social media, whether it's through some ads. We'll see how it goes.
It’s bigger than just like COVID. There are people that really depend on this paycheck.
ML: So you also have a podcast. What inspired you to launch Startup to Storefront?
DTP: I've been in the driver's seat a lot as it relates to my own companies. I had never been in the passenger seat. I got to watch our tenant essentially go through hiring an architect for the first time, dealing with the city during construction, all of these things that they had just never done. Putting together investor decks, raising capital on social media platforms, and crowdsourcing platforms. I was really in shock to seeing this from the outside, in terms of the real pain that goes into this effort.
Personally, I do a great job of forgetting all the bad stuff. I'm just like, very goldish. Like, if it's bad, I just tend to forget. Watching this happen made me want to start the podcasts to inspire entrepreneurship through sharing truth. Because at some point, when I was watching them go through the pain, my brain didn't say this is inherently hard. This is hard because they didn't think it was going to be hard.
So the ethos of the podcast is really to inspire entrepreneurship through truth through the realities of what it actually is. Because it's not glamorous and most of the time it's really difficult. The whole goal of the podcast is to get amazing people who can share their truth around how they got to where they are.
If you're an entrepreneur the takeaway is that you're going to get a lot of tidbits and probably some tips on how to navigate certain things. But at the same time, you're going to be inspired, hopefully, and say “Look, this person, despite all the hardships, is still doing it.” And so the podcast is pretty cool and it's grown into something much bigger.
ML: Yeah, I listened to a couple of episodes and it was a great podcast. Natalya is also on HGTV. Is your podcast something that you would like to see turned into like a TV show that talks about the realities of opening up your own business?
DTP: When I think about television, we have two things I think have swept the nation, right? We have Shark Tank and then we have Flip or Flop right Or Rehab Addict on HGTV.
I have to credit the Lionsgate development executive that we were talking to while pitching this idea. He said, “What if we took the podcast and the people that come on the podcast and we show the beginning of the show is where you’re talking business and you go, ‘Alright, we’re going to invest’. That’s the first ten minutes of the show. Then the next ten minutes are us finding a location for that business. The last ten minutes of the show is basically the grand opening of the business.”
It’s always in the back of my head. Natalya is obviously interested. She’s a general contractor who owns her own construction company.
Every time we talk to a producer, the hard part that they always pick out is, “Can you do this for a season? Can you get eight businesses to do this? My answer is always, “Are there eight businesses in all of LA that are opening right now?” The answer is always 100%. There’s always way more than eight. It’s just a function of finding them and putting it all together. We were in discussions around this concept, but obviously, all of the productions are shut down. We’ll see what happens.
ML: I would definitely watch it. Whenever I watch HGTV shows, I always wonder why they don't talk about more of the realities and the hardships that come along with starting your own business. So it's such a great concept.
DTP: That's actually why we film everything ourselves. We have a video producer and it feels like you're watching an HGTV show. There's a little bit of drama, there's music, there's all the good stuff. But we tried to show more of the realities. I think the younger demographic really wants that trait.
It's one of the things that I've learned recently, HGTV’s average viewer is actually 60 years old. So they struggle with appealing to people under 40. It's an interesting time for these networks, where they have to redefine who they are. The concept I just told you about for the TV, they don't get it. They're like, “Oh, it's too young. It's too hip.” That's when I just realized I'm talking to the wrong group of people. Maybe it’s not on cable television? Maybe it's on Netflix, or some streaming service, or YouTube.
ML: I think you definitely have something there for it. So when you're looking for a business venture to invest in what kind of business are you looking for, aside from coffee shops and breweries?
DTP: Honestly, for me, it's totally not even the business. 90% of it is the person running it and why they do it. Is it personal to them? Are they intelligent? Are they equipped? Are they ready for the long road? That's all of it, frankly, and then I would say 10% is the market they're going after. If I met an amazing founder just trying to build the next Facebook, I probably wouldn't [invest] just because of the sheer odds of them creating a successful business.
I'll give you a story. We invested in a company called Goodmylk. They make natural almond milk that makes amazing froth. Better than any almond milk I’ve ever had. The way I found it was, I was going to a local coffee shop here in LA and I was getting an almond milk latte. For people who know me, I'm like an almond milk latte addict. It was the best one I've ever had.
So I went to Trader Joe's and Whole Foods the next day, and I bought every single almond milk from every brand. I have a really cool coffee set up here in the house and I tried to replicate it. I couldn't find the milk they were using. I probably would have saved me a lot of money to do this first, but I went back and I said: “Hey guys, what are you using?” [It was] a local company in Venice called Goodmylk.
I immediately got in touch with Brooke, the Founder. We had her on the podcast and I just loved her ethos. She was getting really sick and she couldn't figure out why. Turns out her body is susceptible to a lot of processed foods and she realized [almond milk] was making her sick. She started making her own almond milk and sure enough that really inspired her to create a company that would go on [to be in] basically every coffee shop. I just loved this, she was solving her own problem so it was deeply personal. For her, she felt like she got duped because she would buy these almond milks that claimed to be healthy and she took a look at the back [of the ingredients list] and there are only eight ingredients on it, but for some reason, her body was rejecting it and thus she made her own. I'm telling you, it's honestly an amazing product. They just released an oat milk too.
In that setting, if I were to dissect that: she’s a first-time founder, in a space I know nothing about. I don't know anything about almond milk. I know a little bit about grocery stores and consumer packaged goods, but not that much. I just thought that she could break any barrier that was confronting her. For me, as an investor, it's an honor to be a part of it. I get a front-row seat, right? We help her however we can.
I would say it's just the people. We're always looking for people with an amazing product.
ML: Very nice. So what advice would you give to someone who is looking into getting involved with real estate investment?
DTP: While you're getting into it, I obviously have some investors who are passive investors. For them, they're either doctors or lawyers who are just trying to diversify or invest in things that are a little bit more fun, right? Because I can buy a stock or I can invest in a brewery and then go to that grand opening and literally support them by going and getting some beer or coffee or something like that.
I would just say, if you're looking to get into real estate as an investor, just choose wisely. Make sure you know the developer, the me in this case. Make sure that they're doing things that align with what you want and it's not just money. Then I would say if you want to get into real estate, for me, it's been a long game. Obviously, my background is mostly in startup and tech, and not really real estate at all. But I had my own house when I was in Boston. I had two properties in Boston and came from nothing, just an amazing single-parent home.
ML: So looking forward to 2021, do you have any goals looking into the new year?
DTP: The brewery. We're trying to close on this building and submit drawings to the city and break ground in December.
In 2021 I'm just so excited about the podcast. We recently hired a social media person and a YouTube pro that's been able to help a different YouTube channel grow into millions of subscribers. I'm just seeing our viewership double and excited to see what happens in the future.
I'm just excited for what's to come. I'm also looking forward to a grand reopening sometime in June of 2021 or whenever everything's back to whatever the new normal is. Entrepreneurship is on the rise. I was reading yesterday that there have never been so many business small business filings ever in the United States.
DTP: I have so many philosophies in life as it relates to jobs. I think COVID has been an interesting time where a lot of people have left their job or have gotten laid off, and it's forced them to scratch that itch of pursuing the passion that they may have always had in the back of their head. I think that's exciting. I think even if those businesses fail, just scratch that itch. I think it's really important for people.
I'm excited for 2021.
ML: Is there anything else that you would like our readers to know?
DTP: Oh, boy. Let's see. Just pursue it, do it. Do whatever you want to do. Make sure you're doing it for the right reasons. Listen to the podcast, that's probably the thing I should say.
Maggie Lovitt is a writer at Wealth of Geeks where she covers her favorite topics: Star Wars and pop culture nerdery.
In her free time, she is also a novelist, screenwriter, actor, and member of the Screen Actors Guild.