September 2, 2014

U.S. Postal Service Killed Startup Outbox, Report Says

outbox

Entrepreneurs Evan Baehr and Will Davis initially set out to change the way millions of Americans got their postal mail. For now, at least, the startup has buckled under the pressure of a skeptical and likely threatened U.S. Postal Service and federal government.

Their startup, Outbox, was a service that offered to digitize your snail mail. The $5 per month service included forwarding your mail to Outbox. From there, it was scanned and could be delivered to an Outbox mail app rather than your traditional mailbox. The aim of Outbox was to reduce the clutter created by paper mail, anything from letters to so-called junk mail.

So Why Was the U.S. Postal Service so Threatened?

In a recent report by expose site Inside Sources, Baher and Davis tell their story. It’s the story of how the U.S. Postal Service helped bring down a startup that could have given better options to consumers. It raises the question of how a government that claims it supports entrepreneurialism could allow one of its own agencies to snuff it out.

First, it should be noted it was not a healthy system Outbox intended to disrupt. Baher and Davis insist their system would have ultimately saved delivery costs. It’s those costs, among others, that have seen the Postal Service treading water financially for years. Last year, the U.S. Postal Service posted a $5 billion loss. In February of this year alone, the Postal Service recorded losses of more than $350 million.

But the agency still clearly viewed Outbox mail as a threat to the way it had done business for more than a century. It was this view that led to a confrontational meeting spelling the beginning of the end for the tech startup.

Baehr says that during the meeting in D.C., Postmaster General Patrick Donahoe told the Outbox duo that the company was disrupting the Postal Service’s relationship with its customers: Those that send the mail, not those that receive it!

Specifically, this included literally hundreds of junk mailers the Postal Service relies upon for revenue. And, not coincidentally, these would be the very mailers most likely to be screened out by Outbox’s new service. Donahoe told Baehr and Davis that the U.S. Postal Service would no longer cooperate with Outbox in its efforts to expand.

The decision very nearly spelled the end for the startup which relied on the forwarding services of the U.S.Postal Service as a critical part of its business model.

To be clear, Outbox was not breaking any laws by opening customers’ mail. Outbox customers signed-up to grant this permission in exchange for the convenience of not having to deal with paper mail. Exceptions to this were even made in the case of bills with sensitive information or packages that obviously couldn’t be scanned and delivered digitally.

Not wanting to give up, Outbox changed the way it conducted its business. Rather than essentially interrupting mail deliveries by having mail forwarded, the company sent out “un-postmen” to collect their customers’ mail. From there, the mail was scanned and delivered digitally.

But ultimately, the overhead made the business model unworkable. In a post on the official Outbox blog, Baehr and Davis explained:

“For startups, it’s difficult to know when to throw in the towel. Indeed, the main strategy for most of the life of a startup is overcoming impossible odds, and we built a team that did that over and over again.”

The Outbox team has since moved on to a new product, but the question remains. How can government officials proclaim their support for entrepreneurship and at the same time let their agencies attack business models that offer a better alternative to consumers?

It’s a question entrepreneurs and small business owners should be asking, too.

Image: Outbox

3 Comments ▼
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Joshua Sophy - Staff Writer


Joshua Sophy Joshua Sophy is a staff writer for Small Business Trends, covering technology and business news. He is a journalist and editor with 15 years experience in media. A former newspaper reporter and editor, Joshua also serves as President of the Board of Directors of a curling club and is editor of a regional newsletter focused on the sport of curling in the Eastern U.S.

3 Reactions

  1. Contrary to recent assertions made by Outbox representatives that they were summoned to the Postal Service for a meeting with the Postmaster General, the fact is that the meeting was held at the request of Outbox. It is because the Postal Service values innovation and new ideas that Outbox was given an opportunity to meet with postal executives. The principals of Outbox were allowed to present their ideas to postal management. In the end, postal management was concerned that Outbox’s approach might compromise both the security and value of the mail. Ultimately, management concluded that Outbox’s business model was flawed – a conclusion that the market appears to have affirmed. Outbox’s representations regarding the substance of the meeting, particularly the quotes attributed to the Postmaster General, are simply untrue.
    David Partenheimer
    Corporate Communications
    U.S. Postal Service

  2. I think this is cool. There is something so drudging about managing snail mail. I guess they really manage to come up with a service that is actually needed by everybody. I guess it is a pretty okay service given that it is only for $5.

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