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Stuck with snail mail
How the Post Office Killed an Innovation Everyone Wanted

There are few better examples of bureaucratic resistance to innovation than the demise of a company that promised to fix U.S. mail. As InsideSources explains (h/t Andy Quinn), Outbox arranged for its customers’ mail to be rerouted, digitized, and sent to their smartphones or email addresses. Users could then choose which pieces of mail they wanted physically delivered. Two former Hill staffers founded the company after seeing for themselves the waste and inefficiencies of the U.S. Postal Service. They believed the service could help save money for the perpetually broke USPS while sparing people the hassle of throwing out daily piles of unwanted mail.

Customers loved the service when it was tested in smaller markets, but for the company to grow, the USPS had to allow its users to sign forwarding contracts for Outbox. As the founders garnered more media attention and popularity, the Postmaster General called them into a meeting in Washington, DC to quash their service:

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” […]

Outbox was a disruptive innovation. Outbox offered utility for many consumers and offered new technology that the Post Office should have been offering for years. In a well-functioning market, we would expect a company like Outbox to disrupt the dominance of the incumbent and force them to either innovate or die. But of course, USPS is not a normal company; rather, it is an entity of the US government, and the market forces that lead to innovation and growth in the free market are completely missing in DC bureaucracy.

The postal system stopped cooperating with Outbox, and the company eventually died. This story is a sad chapter in the ongoing refusal to streamline and modernize the outdated USPS. What makes it especially notable is that in recent years the USPS leadership has welcomed changes, while Congress has resisted them. Here, it seems, Congress didn’t even need to step in, and the USPS killed the “disruption” all on its own—even though consumers are less and less willing to use the existing service. The information revolution has the potential to make government more efficient. But stakeholders in the current system will try to stop, slow down, or co-opt that process, as Outbox’s untimely death shows.

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  • Corlyss

    Their excuse was positively priceless for blowing up the Statples deal – they worried about inadequate training. As if postal clerking were brain surgery.

  • Luke Phillips

    Stakeholders in the current system. I wonder how many of those over the last half-century have squished new innovations in automobiles, airplanes, alternative energy sources including nuclear, and other sorts of technology integral to the Blue Model system. When you consider that the federal government’s policy towards those blue industries has ben subsidize-subsidize-subsidize, as opposed to the policies towards the vast, innovative proliferators that grew quickly like communication technology and information technology (invest-advance- let fail) it really makes you pause and consider what we’ve done to our own ingenuity over the years.

  • Bruce

    It is common knowledge that empires crumble when the bureaucracies stop working for the people and become completely self-serving. This postal service situation exemplifies this perfectly. You could find thousands more. Anyone who has observed government over any period of time knows that this had little to no chance of being adopted. It was good for the people but not the bureaucracy. We know who wins under those circumstances. It is becoming apparent that the power of the self-serving bureaucracies will be looked back on as contributing greatly to our decline.

    • Andrew Allison

      It is true that the USPS is a bloated, sclerotic bureaucracy interested only in self-preservation, but it is also true that junk mail represents most of the volume and pays the bills. When has a bureaucracy ever put itself out of business? USPS has to be killed.

  • mike

    Sounds like the episode of Seinfeld, when Kramer decides that he doesn’t actually need to receive mail anymore, and the postmaster general calls him into his office and explains to him otherwise.

  • Boritz

    Donahoe has to be credited for his market analysis. If most of his variable revenue comes from the junk mailers that issue has to be taken into account. This reminds me of the time Howard Cosell was interrupted in mid-sentence by the director cutting away for a commercial. When Cosell protested that he had been in the middle of his monologue the director explained that the sponsor was paying more for them to run the commercial than the network was paying Cosell to shut up on time.

  • Jim__L

    “You mentioned making the service better for our customers; but the
    American citizens aren’t our customers—about 400 junk mailers are our

    Has this gone viral?

  • billyjoerob

    This is the equivalent of a button for fastforwarding through all the commercials. It woudn’t save the postal service, it would kill it, that is so screamingly obvious. The USPS absolutely has the right to kill “innovations” that would destroy their business. What the USPS should do is rent out the retail space to venidng companies like Redbox and Coinstar and generate extra revenue.

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