According to the Fiscal Times, two former Capitol Hill staffers and Harvard Business School graduates, Evan Baehr and Will Davis, assessed the current state of the USPS and formulated a plan to address the chronic problems plaguing the USPS, simplifying mail and making it more convenient for customers. Eventually, Baehr and Davis founded a mail digitizing service, Outbox," located in Austin, TX.
Here's the model. For $5/month, customers:
- will have their snail mail redirected to Outbox;
- the mail will be opened, scanned, and made available online or on a smartphone;
- letters can be identified that will not be opened and a hard copy of a particular letter can be delivered; and,
- just like email, a digital copy of all mail can be saved and mail can be accessed at any time and from anywhere.
Outbox was a hit with customers in Austin. So, Baehr and Davis expanded operations to San Francisco. There, local post offices allowed residents to sign forwarding contracts to have their mail sent directly to Outbox.
With USPS shipping letters directly to Outbox and mail not having to be shipped all over the nation, the Baehr and Davis thought the potential costs savings to USPS would make Outbox a hit with USPS brass.
At a meeting the USPS Postmaster General requested with Baehr and Davis, they were told the Outbox market model would never work, that digital was a fad, and that Outbox was disrupting USPS service. "We will never work with you," the Postmaster General reportedly said, adding that junk mailers--not the American public--were the Post Office's customers. Outbox "hurts our ability to serve those customers."
Undeterred, Baehr and Davis expanded Outbox by hiring drivers to "undeliver" mail from their customers' mailboxes. The numbers:
- Outbox helped customers unsubscribe from more than 1M senders of mail.
- Outbox scanned more than 1.5M pages and redelivered 250k mail packages.
- With only 2k customers in only two cities, Outbox had a nationwide brand awareness of 10%.
In addition, Baehr and Davis created new logistics software, built industrial-grade scanning machines (at 80% cheaper than the market rate), and developed new character recognition technology.
Once thrilled with the idea of partnering with USPS to revolutionize the nation's mail system, Baehr and Davis shut down Outlook in in February 2014. Undelivering mail proved to be too expensive because USPS would not participate.
Oh...and lest The Motley Monk forget...also in February 2014, USPS posted a net loss of $354M. for fiscal year 2013, USPS lost $5B.
The entrepreneurial spirit is strong, but the bureaucracy and special interests are stronger. And the nation's deficit grew by $5B due solely to the USPS.
Similar to most entrepreneurs who turn their loss into a success, The Motley Monk thinks Baehr and Davis will come out of this way ahead. Should they license or sell the logistics software, industrial-grade scanning machines, and new character recognition technology to FedEX or UPS, they'll be doing just fine. Plus, they'll be free to generate another venture.
Sadly, it's the nation's taxpayers who, yet once again, come up holding the short end of the stick.
Let the discussion begin...
To read the Fiscal Times article, click on the following link:
"How The U.S. Postal Service Crushed an Innovative Startup."