Outbox is taking on the Post Office, and if it's not a total trainwreck, it will be awesome

By Carmel DeAmicis , written on August 29, 2013

From The News Desk

The last time Pando checked in with Outbox, the startup was merrily on its way to revolutionizing how people get their mail. It had partnered with a post office in Texas and was scanning beta users' mail in warehouses before the post office ever delivered them to people's doors. Those users would then receive electronic copies of their mail, and Outbox would shred the physical copy unless a user requested the startup send it on as usual. Users could also choose to "unsubscribe" from junk mail, and the startup would filter that mail out for them. Can you image -- never receiving an American Express credit card offer again?

It was a bold undertaking from Outbox's founders -- Evan Baehr and Jason Serriff -- to make postal mail digital. Unsurprisingly the attempt blew up in their faces.

All it took was one news segment from CNBC to get the attention of the Postmaster General Pat Donahoe, who had never signed off on the test project and asked Baehr and Serriff to come see him in DC. "It felt like being summoned to the principal's office," Baehr remembered."The Postal Service is the worst federal building in all of DC. The windowless, depressing conference rooms on the 6th floor, the drab gray suits and name badges dangling from waist belts. Everything about it is the epitome of government."

In that meeting, Baehr tried to pitch USPS on a partnership. If USPS allowed Outbox to set up scanning shops in warehouses to create electronic copies of mail, Outbox could give USPS data about its customers. Baehr says that the Postmaster General told him that individual Americans sending and receiving mail weren't USPS customers. The Postmaster General allegedly said that USPS customers were several hundred volume mailers (i.e. junk mailers). Those junk mailers wouldn't benefit from digitizing mail, particularly if there was an "unsubscribe" option for users.

It's a pretty inflammatory accusation for Outbox to make, but USPS didn't have much to say when PandoDaily reached out for a comment:

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. 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.
Baehr describes the USPS meeting as a turning point for Outbox, which had up until that point created its business model with a USPS partnership in mind. "The future of our company flashed before our eyes," Baehr says. "What would doing this in a different way look like?"

Outbox has spent the last year figuring that out in pilot tests in San Francisco and Austin, and today it launches its mail digitization service to the SF public market. People in San Francisco can sign up for $4.99/month to get all their mail sent to them as digital copies. Users can then choose whether they want the physical copy of individual items sent to them.

Talk about a monumental undertaking. Outbox has had to hire drivers, set up delivery routes, develop mail scanning software, put systems in place for picking up mail, and basically try to create an electronic USPS system in the SF market. It reminds me of what PayPal initially had to undertake to bring payments into the e-commerce space.

Outbox's founders will be grappling with regulatory bodies, operations, and the challenges of scaling hardware and software while dealing with the confidential, sensitive information of people's mail. There's a bunch of ways it could go terribly awry for them, but if they succeed they will be disrupting one of the few remaining consumer industries in America untouched by technology: snail mail.

The going will be incredibly rough though, and Outbox has already faced its fair share of obstacles to conquer.

Once the USPS shot down its partnership pitch, its first monumental wall presented itself: how to digitize people's mail if Outbox couldn't access the mail in the warehouse? The startup would have to pick up people's mail in their homes.

The founders tested a few options with pilot groups in Austin and San Francisco. "First we tried sending an envelope to users, and having them send us the envelope back with their mailbox keys in them," Baehr says. "But the very first time we did that there was a hole in one of the envelopes with the key hanging out." Oops.

So then Baehr and Serriff came up with a crazy idea: What if users took pictures of their keys and Outbox could have locksmiths create the keys using the photo? They gave that a shot, and it turned out that with 50 percent of the keys it actually worked. A locksmith could create a replica mailbox key using only a picture. But 50 percent wasn't good enough to run a business on, so Serriff -- the programming co-founder -- got to work creating in-house software that could replicate a working key based on an image. Now, Outbox says their software has 95 percent accuracy, and anyone who signs up for the program can just take a photo of his or her mailbox key (and frontdoor key if the mailbox is inside an apartment building), and send the image to Outbox.

Problem No. 2: how to scan mail in such a way that the image quality is crisp, readable, and just as good as if you were holding the mail in your hand? The scanned mail images in the original pilot test were terrible, so Serriff developed a system where a t3i could take a picture rigged to software that would crop it and digitize it.

The list of problems Outbox has already had to overcome goes on: Hiring drivers, developing a system where mail would be collected from users' mailbox three times a week (and returned to the users' mailbox after digitizing if that's what the person wanted), setting up cloud servers to hold the digitized mail, developing the Outbox mobile application.

With today's launch, the problems will only grow. Will they be able to get customers to trust them as a service? Will their systems reliably scale? Will building owners complain about security issues since Outbox will have keys to buildings? Will local governments find a regulatory issue with what Outbox is doing?

It's a juicy story, and should be a fun ride for anyone who follows along.

[Image Credit: mikecogh on Flickr]