USPS tells entrepreneurs that American citizens aren’t their customers; Update: USPS denies

posted at 9:21 am on April 29, 2014 by Ed Morrissey

It sounded like a great idea, but perhaps it was too good — at least from one perspective. Evan Baehr and Will Davis left their staff jobs on Capitol Hill and enrolled at Harvard Business School, hoping to find private-sector solutions to chronic inefficiencies in the public sector. They decided to rethink the US Postal Service model and came up with an innovative idea. Why not set up a scanning service to digitize mail and deliver it electronically, rather than continue to get mail hand delivered in an unsecured location?

Thus was born Outbox. They set up as commercial forwarders in a couple of local post offices (not a unique arrangement), advertised their service, and was amazed by the response. Customers loved being able to have their mail delivered electronically, and also found other services from Outbox invaluable, such as opt-out for junk mail. When Baehr and Davis got called to a meeting with the Postmaster General in Washington DC, they thought the USPS would jump at the chance to offer this to their hundreds of millions of customers.

As Derek Khanna informs us at Inside Sources, Outbox had miscounted what USPS considers its “customers,” and the two entrepreneurs ended up shocked — and out of business:

But once Outbox started to get successful and was covered on CNBC, Evan and Will got a call requesting them to come back to Washington to meet with the Postmaster General. Evan and Will thought about discussing how they could work with USPS nationally, perhaps even to provide some of their technology through a license for USPS to offer it directly to all their consumers.

They believed that their technology could actually save the Post Office money. If consumers started to opt-in to Outbox, or other services like Outbox, then the Post Office could receive the full benefits of the stamped envelope but never have to deliver those packages, which is one of the biggest costs for the Post Office. In fact, if properly implemented, when a customer sends a letter from Austin, TX to Alaska, if the Post Office knew that they weren’t going to receive the letter anyway, then the Post Office could forward the letter from Austin directly to Outbox, and never have to ship the letter across the continent. …

When Evan and Will got called in to meet with the Postmaster General they were joined by the USPS’s General Counsel and Chief of Digital Strategy. But instead, Evan recounts that US Postmaster General Patrick Donahoe “looked at us” and said “we have a misunderstanding. ‘You disrupt my service and we will never work with you.’” Further, “‘You mentioned making the service better for our customers; but the American citizens aren’t our customers—about 400 junk mailers are our customers.  Your service hurts our ability to serve those customers.”’

According to Evan, the Chief of Digital Strategy’s comments were even more stark, “[Your market model] will never work anyway. Digital is a fad. It will only work in Europe.”

Digital is a fad. That reminds me of a panel discussion a few years ago in which I took part, ostensibly to discuss the power and reach of social media on politics. One panel member scolded all of us (and me in particular on an unrelated topic) for wasting our time on e-mail. That was a fad, and politicians ignore e-mails, this person told us; faxes were what drove politics. He, of course, ran a fax-broadcasting service.

Faxes. When was the last time anyone in the private sector sent a mission-critical message by fax? Probably just before they sent one by first-class mail.

Now, let’s be clear that Outbox may well have not worked out to be the savior of the USPS, too. The cost savings may well have been outstripped by the revenue losses from junk mailers, a possibility that Khanna overlooks a little in his piece. However, his main point is solid, and perhaps understated. The reason the USPS doesn’t work well for end users is because the USPS doesn’t consider us its primary customers. It’s oriented to delivery service for junk mail, and works for those firms ahead of us. Maybe those companies should be footing the bill for the chronic deficits run by the USPS, instead of the American citizens the Postmaster deprioritized in dealing with Outbox.

Update (AP, May 1st): The Postal Service finally e-mailed with a reply:

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.


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RNC donation requests. Filling them with my daughter’s paper clippings and sending them back in a prepaid envelope is an endless source of my family’s entertainment.

Rix on April 29, 2014 at 10:50 AM

We do the same thing but tape a 99 penny donation inside the prepaid envelope with a note explaining the reasoning. We haven’t gotten a thank you, but haven’t been getting as many request either.

CTSherman on April 29, 2014 at 11:30 AM

I can honestly say that I haven’t used the USPS for anything for what must be 15 years, meaning they haven’t gotten a penny from me in that time.

BobMbx on April 29, 2014 at 11:44 AM

I call shenanigans. I work in the postal industry (not for USPS) and I’ve met Donahoe any number of times. It doesn’t sound like something he’d say, as he’s been an advocate for innovating and expanding digital tech in the mailing industry for years.

There’s so much wrong with this article I don’t know where to begin.

PetecminMd on April 29, 2014 at 10:18 AM

This. We have only the word of a disgruntled failed businessman about what the Postmaster General said. The very Postmaster General he blames for his business’s failure. Nope, no reason to be skeptical about the guy’s claims.

AngusMc on April 29, 2014 at 11:50 AM

I can honestly say that I haven’t used the USPS for anything for what must be 15 years, meaning they haven’t gotten a penny from me in that time.

BobMbx on April 29, 2014 at 11:44 AM

Does that mean you don’t pay Federal Income Tax, either? Otherwise, you pay for the USPS.

tomshup on April 29, 2014 at 11:53 AM

Maybe it is a union issue.

BTW…maybe they should approach Canada Post. It loses lots of money too…perhaps they would be receptive to sending digital mail rather than hand delivering it to Whitehorse.

Of course…there’s the union issue, again.

Blaise on April 29, 2014 at 11:56 AM

Y’all are forgetting the most important component of junk mail – RNC donation requests. Filling them with my daughter’s paper clippings and sending them back in a prepaid envelope is an endless source of my family’s entertainment.

Rix on April 29, 2014 at 10:50 AM

My Dad used to amuse himself by taking the flyers from one company, putting them in a return envelope for another company and mailing them back. He laughed like mad the first time I caught him doing that… said it was his revenge on junk mailers. I think I’ll start saving all of my odd offers for NRSC and RNC.

jffree1 on April 29, 2014 at 11:58 AM

As screwed up as the USPS is and has become, our paying customers still send us their checks through the mailbox.
MOST of our clientele will NEVER trust electronic payments.
To them, paper is still more trustworthy, even in the hands of the USPS.
Of our 70-80 customers, I think only two pay via electronic funds.

pambi on April 29, 2014 at 11:59 AM

There isn’t a week when I don’t receive one or more pieces of junk mail from Comcast Business.

bw222 on April 29, 2014 at 12:16 PM

The United States Postal Service, as distinguished from the previously existing Post Office Department, started in 1971.

J.S.K. on April 29, 2014 at 11:06 AM

Just kidding.

crankyoldlady on April 29, 2014 at 12:18 PM

There isn’t a week when I don’t receive one or more pieces of junk mail from Comcast Business.

bw222 on April 29, 2014 at 12:16 PM

I get companies wanting to sell me hearing aids and water. Which means they know I’m old and live in a trailer park.

crankyoldlady on April 29, 2014 at 12:19 PM

RNC donation requests. Filling them with my daughter’s paper clippings and sending them back in a prepaid envelope is an endless source of my family’s entertainment.

Rix on April 29, 2014 at 10:50 AM

We do the same thing but tape a 99 penny donation inside the prepaid envelope with a note explaining the reasoning. We haven’t gotten a thank you, but haven’t been getting as many request either.

CTSherman on April 29, 2014 at 11:30 AM

You guys are evil. I like it.

crankyoldlady on April 29, 2014 at 12:20 PM

There isn’t a week when I don’t receive one or more pieces of junk mail from Comcast Business.

bw222 on April 29, 2014 at 12:16 PM

I get companies wanting to sell me hearing aids and water. Which means they know I’m old and live in a trailer park.

crankyoldlady on April 29, 2014 at 12:19 PM

The worst is the ones that are like small newspapers, except in color. Pieces of actual mail get tucked inside and lost.

Fenris on April 29, 2014 at 12:28 PM

Until Google buys the idea, scans all your mail, then advertises the crap out it to you using your own mail against you and then pretends they have a product that the world needs and relies on and that they somehow have a right to the information. Just like they do with your own computer today.

Been there.

HopeHeFails on April 29, 2014 at 12:41 PM

I love junk mail, especially in the winter when I’m heating with my fireplace insert.

It isn’t just junk mail, it’s fuel, and it’s delivered free to my home every day!

Eventually the EPA will find out and ban burning junk mail, but for now it helps keep my utility bills low.

s1im on April 29, 2014 at 12:48 PM

Nothing in my mailbox is the best mail day possible! And do I have any recourse if I get a paper cut from the two sided color glossy bullsh these folks deliver?

DontBlameMe on April 29, 2014 at 12:52 PM

All that would happen is Postal employees would get fat. Even if they implemented electronic delivery, the union would require all postal employees to still be paid even if they are no longer doing anything and aren’t needed.

HopeHeFails on April 29, 2014 at 12:58 PM

* Comment sent via USPS *

justltl on April 29, 2014 at 1:02 PM

The reason the USPS doesn’t work well for end users is because the USPS doesn’t consider us its primary customers. It’s oriented to delivery service for junk mail, and works for those firms ahead of us.Maybe those companies should be footing the bill for the chronic deficits run by the USPS, instead of the American citizens the Postmaster deprioritized in dealing with Outbox.

What, you expected something different from the governemtn bureaucrats running a failing quasi-government company? Remember the Chevy Volt? In government “stupid” is a goal.

earlgrey on April 29, 2014 at 1:04 PM

Digital is a fad. It will only work in Europe.”

and so we see why the post office in general is a fail. Its quite possible that the initial implementation of outbox would see a drop in revenue as the junk mailers were bypassed, but its equally possible that with the new service average american citizens might also start using USPS again and more than make up for the loss.
But…. as this is the govt, we will never know and instead we can expect another stamp cost increase and more federal dollars going to help save the USPS.

Koa on April 29, 2014 at 1:17 PM

Guitar groups are on the way out. The Beatles have no future in show business. Said Decca to The Beatles.

birdwatcher on April 29, 2014 at 1:39 PM

…sending them back in a prepaid envelope is an endless source of my family’s entertainment.

Rix on April 29, 2014 at 10:50 AM

My suppertime hobby with snailmail ‘offers’: I get my 2.0 reading glasses and have a big laugh reading the fine print where it becomes very clear that ‘we care about you’ is not quite so true.

I then take a wide-tip sharpie and draw a note requesting larger print before I commit. I mail it back. No responses yet…

Opt out? Never! Everybody needs a hobby.

Tsar of Earth on April 29, 2014 at 2:34 PM

We have only the word of a disgruntled failed businessman about what the Postmaster General said. The very Postmaster General he blames for his business’s failure. Nope, no reason to be skeptical about the guy’s claims.

On the other hand, his alleged statement correlates extremely well with my personal experience with the US Postal “Service”.

Socratease on April 29, 2014 at 2:43 PM

It can’t really save the postal service money by reducing the letter load. Maybe at the margins, there would be fewer times they need to add an extra truck on a run, or boot something to the next plane out. But not much.

By law, the letter carrier must go by every box on the route every day. Even if there is no mail for them, there might be outgoing mail to be picked up.

The loss of junk mail would kill the service altogether, though. It’s been their life blood for the last 30 years or so.

Personally, I favor privatizing the whole system, allowing for subsidies only to those rural areas no private company would bid for straight-up. But the fact is this digitized mail isn’t something that would do anything but hasten the demise of the existing service.

Adjoran on April 29, 2014 at 5:00 PM

Ultimately, any information-transfer service is beholden to Whoever Pays The Most Money. This is why the USPS does indeed regard bulk mailers as its primary clientele’.

Similarly, anyone who has AT&T/Yahoo as their ISP quickly becomes aware that Yahoo doesn’t block spam from sources within its own system. Simply put, a $100/mo. basic commercial account at Yahoo allows a spammer to send everything from IN GOD’S HOLY NAME demands for donations to sExY tEEnaJ bLoNd wAnTs tO sHow yU hUr t**S pr0n to any other Yahoo account, or every other Yahoo account, from now until Hell freezes over.

Complaints are met with “buy a commercial account”, the latest iteration of their previous mega-annoying business-bumpup ploy, demands to “Join CHAT Now!” every time you tied to read your email.

I’d dearly love to see the FCC “have a talk” with the USPS and ISPs like Yahoo.

But considering how many of the miscreants they fawn over are big DNC contributors, I don’t see it happening any time soon.

clear ether

eon

eon on April 29, 2014 at 5:15 PM

Eighty percent of my mail is unwanted junk mail that is so cluttered in my mailbox that it makes me lose the small amount of mail I actually want. I asked one of the letter carriers (seems I get a new one every two weeks) if there was anyway he could stop stuffing my mailbox with newspaper ads and he said nope. USPS is a thing of the past. Now they are just delivering junk mail.

OxyCon on April 29, 2014 at 9:51 PM

Until Google buys the idea, scans all your mail, then advertises the crap out it to you using your own mail against you and then pretends they have a product that the world needs and relies on and that they somehow have a right to the information. Just like they do with your own computer today.
Been there.
HopeHeFails on April 29, 2014 at 12:41 PM

Or, y’know, just use email in the first place. Really don’t get the hate people have towards Google at this point… They release products that are paid for by ads, are better than any of their competitors, and subsequently force those competitors to evolve or die.

Really wish we could apply that to USPS.

Asurea on April 30, 2014 at 2:22 AM

We should abolish the USPS.

Let UPS and FedEx handle the packages.

E-mail for first class mail.

Set the highest privacy settings for Gmail or start a new service that does not read your e-mails.

slp on April 30, 2014 at 6:22 AM

Ultimately, any information-transfer service is beholden to Whoever Pays The Most Money. This is why the USPS does indeed regard bulk mailers as its primary clientele’.

eon on April 29, 2014 at 5:15 PM

Bulk mail has never been the money maker for the USPS. First class mail is where they make money, and the drop in first class over the last ten years is why the USPS has been losing money.

Bulk mailers get discounts on postage, but it’s because they do do a lot of the post office’s work for them. Bulk mail comes to the post office pre-sorted, it’s already been checked against NCOA lists, the addresses have been checked and corrected, and each piece is assigned a unique number with a barcode and correlated to the barcode on the tray, sack, or pallet it’s shipped in. In many cases the mailer does 90% of the shipping itself, carrying pallets of mail to induction centers close to the delivery point of the mail.

Charges for bulk mail are less, yes. But it’s because bulk mail shows up at the post office ready to be delivered. All the USPS is doing is putting it in your mailbox. Blaming junk mail for the issues with Outbox or the USPS is wrong, misguided, and silly.

PetecminMd on April 30, 2014 at 6:47 AM

Bulk mailers get discounts on postage, but it’s because they do do a lot of the post office’s work for them. In many cases the mailer does 90% of the shipping itself, carrying pallets of mail to induction centers close to the delivery point of the mail.
PetecminMd on April 30, 2014 at 6:47 AM

That’s true, as far as it goes. I’m a truck driver, and I’ve delivered many pallets of bulk mail to Post Offices for (local) delivery.

But there’s a difference between hauling 30 tons of bulk mail from a shipper’s dock to post office docks, and walking each piece of that to someone’s mailbox. I suspect that the Post Office’s finances would be well-served if they increased the Third-Class Rate to cover costs and perhaps a bit more; and used the profit to subsidize First Class mail.

ReggieA on April 30, 2014 at 4:03 PM

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