Last week, Outbox announced via a blog post that it would be shutting down, two years and $6.5 million into its creation. The startup had aimed to take on the US Postal Service, by providing a cheap monthly service for digitizing people’s mail. Instead of receiving paper mail, people would have an app for looking at their mail, with mail automatically sorted into junk and regular mail. You could then unsubscribe from junk mail, i.e. never see another Pottery Barn catalogue again.
It was an ambitious undertaking, and one that inspired a range of feelings in the media and beyond. Some believed it was a fool’s errand, others called it “bloated from start to finish” or a “a bad idea rewarded.” Then there were the believers, from CNN who said “the [nimble] startup can begin experimenting with new ways of handling mail that would take time, and possibly congressional action, for the Postal Service to do.” and Wired who described it as “determined to overturn the status quo in the world of mail delivery.” Or zagg who called it “one of the best ‘why-hasn’t-anyone-done-this-before’ ideas”
When I wrote about Outbox’s launch, I fell somewhere in the middle, saying “If it’s not a total trainwreck, it will be awesome.”
What struck me as amazing wasn’t necessarily being able to get your mail digitally. I didn’t particularly care about the product itself, although the idea of never getting a Capital One card application again was appealing. I suppose that should have been the tip off to me that Outbox would fail.
Instead, what I considered “awesome” was the sheer force of will and operations tactics required to get Outbox off the ground. It was the definition of a risky startup undertaking. It wasn’t some calendar app made to look pretty or yet another copycat Internet radio website. It wasn’t just sticking to lines of code and digital offerings.
Outbox was taking on every realm imaginable. The physical world, by picking up your mail. The digital world, by digitizing it for an app. Government bodies that regulate mail. Hardware, by needing to build machines that could quickly open and scan mail automatically. Learning machine systems, by needing to build an entirely new way to make copies of mail keys, which they figured out how to do through photography. Operations, by needing their own delivery system for picking up and returning said mail. And privacy issues, because of dealing with the sensitive nature of people’s mail.
The most surprising thing about Outbox shutting down is that it didn’t do so because it couldn’t tackle any of these problems. In fact, the company overcame each and every one. It invented and then built the machines for automated mail opening and digitization. It invented and built the machine for key creation off a photograph. It set up delivery systems and customer service branches and an app in San Francisco. It did it all.
For all of Outbox’s shortcomings, it didn’t fail because of the enormous challenges it faced getting things off the ground.
It failed because it was just not that good of an idea. And therein lies the big lesson for an entrepreneurs studying Outbox to see what went wrong. All the challenges in the world can be overcome, except starting off with a sucky idea that customers don’t care about.
The company failed to convert even 10 percent of its San Francisco wait list into paying customers. Junk mail, it turns out, was not such a problem that people cared to pony up the $4.99 monthly pittance Outbox required. Or perhaps customers inherently liked handling their mail, holding the rare vestiges of an analog world in their fingers. Perhaps their email was so frustratingly out of control that their physical mail was the place they could turn to for a little solace and peace, sorting through the five or ten pieces a day by hand. Or maybe people didn’t want to get their mail a day or two later (the time required for Outbox to digitize) than it would have been delivered in person.
For whatever reason, Outbox struggled to keep and retain customers. As a result, the customer acquisition costs came up to a whopping $50 per lead. Given the cost of all the extensive operations problems that Outbox had to solve for, they realized they wouldn’t be able to viably make money on the venture. Smartly, they threw in the towel. In the blog post they said they’re working on a new stealth company that they can’t release information about at this time.
Outbox may have been — as some vitriolic commenters in my first story said — a dumb idea, but it shouldn’t be written off as such. I thought the founders were inspiring because they didn’t shy away from taking on a giant system and trying to make it more efficient. Outbox wasn’t just another fun, but ultimately trivial app.
It was pursuing foundational startup ideals. Taking big risks. Trying to disrupt old entrenched systems. Overcoming seemingly impossible obstacles.
Although in the end Outbox’s founders picked the wrong problem to go after, their hearts were in the right place. I wish I saw more companies truly tackling the big issues and the big industries, and the big sectors. Taking on problems that can’t be solved with one or two engineers and admittance to the app store. Issues that require hardware and software and government regulation changes and operations and systems and innovation.
It’s much scarier and the risk is much higher. When you succeed, you succeed big time — as Elon Musk has proved. And when you fail? Well, better to shut it down quickly and pen a truly eloquent blog post detailing what you learned, than to drag the whole thing out.
Good effort Outbox. I’m excited to see what you take on next. I hope the founders haven’t been scared off and their next venture will be just as ambitious.
[Illustration by Hallie Bateman for Pandodaily]