Outbox mail service: from tech darlings to out of business

By Bill McAllister, Washington Correspondent

Evan Baehr and Will Davis had become something of two darlings of the digital age.

In barely two years, their Austin-based Outbox company was threatening to replace the United States Postal Service’s mail delivery model.

For $4.99 a month, it was offering to scan the mail of San Francisco residents and let them view their letters on their home computers.

This could be the future of U.S. mail, they believed, and a way to slash the Postal Service’s huge labor costs.

Then Postmaster General Patrick Donahoe called the two former Capitol Hill aides to a meeting in Washington.

That session stunned the two entrepreneurs, according to an account of the meeting posted on Insidesources.com.

Donahoe told them the USPS would no longer cooperate with their venture.

“You disrupt my service and we will never work with you,” he supposedly said.

The reason, according to the article by Derek Khanna, a fellow at the Yale Law School Information Society Project, was that Outbox threatened to disrupt the Postal Service’s valuable advertising mail.

“You mention making the service better for our customers, but the American citizens aren’t our customers,” Donahoe supposedly said. “About 400 junk mailers are our customers. Your service hurts our ability to serve those customers.”

Without Postal Service cooperation, there was no way that mail could be forwarded to Outbox for scanning. Without that, there was no future for Outbox.

In mid-January, the company announced it was ending its pilot test in San Francisco. It would turn its attention elsewhere.

A Postal Service statement issued May 1 rejected the quotes attributed to Donahoe, saying: "Outbox's representations regarding the substance of the meeting, particularly the quotes attributed to the Postmaster General, are simply untrue."

“The Postal Service is focused on providing an essential service in our mission to serve the American public and does not view Outbox as supporting that mission,” David Partenheimer, manager of media relations for USPS told Khanna.

“We do have concerns regarding the destruction of mail — even if authorized by the receiver — and will continue to monitor market activities to ensure protection of our brand and the value and security of the mail.”

Two senior USPS officials contacted by Linn’s both voiced skepticism that Donahoe would use “the j-word” — junk mail — in a meeting with people he didn’t know.

A top leader of a major advertising mail coalition said the two Outbox creators were warned that their business plan was fatally flawed.

“I know about it all,” said Gene Del Polito, president of the Association for Postal Commerce.

“I was there from the beginning. I had told them their ‘business model’ sucked and ran counter to who uses the mail and who pays for it.

“They ignored the warning,” he said. “They paid the cost.”

A former senior postal administrator told Linn’s: “Frankly, I agree with Pat. You can’t encourage a private sector company that screens out third class [advertising mail].

“Look at the revenue line. Lose 20 percent of ad mail while FCM [first class mail] continues its inexorable decline … ”

Technology fans who liked the Outbox screening service were appalled by Donahoe’s action, seeing it as the reaction of a government bureaucrat determined to preserve his own turf.

They had championed the screening service as a way for the USPS to slash its huge labor payroll and to reemerge as a technology-based digital mail service.

But what they now see in Outbox’ death is an affirmation of how dedicated the USPS has become to its big mailing customers.

Citing a postal official’s comment that “digital is a fad,” Khanna ended his article saying, “it’s no wonder that the USPS is bankrupt.”