Great update on Earth Class Mail
For those of you who follow the TV series Start-up Junkies, the Seattle Times had this great update on Earth Class Mail.
Tips for Startup Junkies
By Natalee Roan, from the TV show "Startup Junkies"
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Natalee Roan: Great update on Earth Class Mail
The Federal Government resisting adopting less expensive, faster-moving technology? Who'da thunk it?
Ultimately, the Earth Class Mail model could destroy traditional postal delivery as we know it. If the Feds were on the ball, they'd be actively looking for ways to either outsource directly to ECM, or simply stealing/adopting the business model for government use.
I'm not a rapid "small government" guy, but this is another example of how private enterprise drives innovation, and the Federal government hinders it...
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Having watched the Startup Junkies first season, some episodes multiple times, I guess I'm still an Earth Class Mail skeptic, at least at the market cap it must currently be at. (Due to the high raise.)
First, I don't understand the argument that Earth Class Mail is somehow competitive to postal services, that postal services are about to be extinct if they don't look out. ECM *requires* a postal service. It is a mail processing facility, albeit a digital one. Sure, it helps digitize the "last mile", so to speak, but it doesn't really do anything to get the originator's message to the recipient digitally, end-to-end. That's where email, FTP, twitter, facebook, SMS, and other technologies/services fill a void and are truly competitive. Are we to believe that ECM has tremendous value-add over email in a truly end-to-end-digital world? No. It's merely a way of digitizing the final product.
Which leads me to my second point. It *could* be a big service, if it really capitalized correctly versus the opportunity. The military, large corporations, and ex-pats, and perhaps RV'ers/snowbirds are all segments that could use mobile-email. But rather than invest multi-million-dollar sums to build out a processing facility in Oregon, and who knows how much to build dubious street-level facilities in major cities, why not scale operations with customers? If the data shared in Startup Junkies is correct, it's somewhere around 3,000-4,000 paying customers as of last year, adding maybe 300-400 every month. That's terrific, but really, that level of volume only supports maybe 10 employees, adding 3-4 every year. Overcapitalizing is equivalent to accepting $1,000 to mount a dagger to your steering wheel in your car -- it's all fine and dandy if the road is smooth, but if you're at all going to miss plan, it's a very bad thing.
I understand the need to satisfy large corporate accounts and postal services and answer the "scaling" question. But with virtually zero directly-competitive pressure, there is no need to way, way overbuild infrastructure ahead of demand. Have we learned nothing from Webvan?
I have very much enjoyed the show, but I remain a skeptic of ECM, at least at this level of investment/market-cap/infrastructure. It could have been a very interesting, breakeven 20 person company growing larger every year, but I worry that a "get big fast" attitude will doom the company, much as it did Webvan, taking a very good kernel of an idea (e.g., HomeGrocer.com) with it.
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Thanks for the link to the article. It was a good read. If the numbers (Sprint may spend $2-3 million to save $10 million) are correct, seems there's some room to raise prices (and profit) later.
I agree with many of the comments I've read here that ECM has a small niche for individuals, but should be mission critical for many businesses. Which is just as well, since their website doesn't seem to even come close to what it should be to target individuals. Corporate sales (which means one on one, face time, palm pressing) will be ECM's money maker, no matter how many individuals with special circumstances sign up. (motor home travelers? living overseas? fine, but small percentages)
As far as the people who run other country's mail system being more interested than those who oversee USPS, it's so common in so many industries, I'm beginning to wonder if that's just "how it's supposed to work." The city on the hill gets most of the rocks and most of the wonder.
I also believe that ECM version 1 (so to speak) that focuses on the receiver is not as interesting as version 2 will be.
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