John Payne is a experienced entrepreneur, who has run two, public Internet companies -- Stamps.com and Day Software -- in addition to helping to run a number of startups. He's now head of Los Angeles-based Zumbox (www.zumbox.com). We caught up with John to learn about what Zumbox is up to nowadays in the digital postal delivery area, after Series C round announced by the company earlier this month.
John, thanks for the time today. Can you explain to us what your business looks like now, and what you offer to your customers?
John Payne: We've pioneered what's become known as the digital mailbox space. In the last couple of years, we've evolved the business to narrowly focus on what the consumer wants, which is they want all of their transactional mail in one place, available any time they need it, and stored forever for free. To do that, we've formed a bunch of partnerships, and now have the ability to aggregate mail content from over 9,000 sources. By that, I don't mean 9,000 mailers, but we have relationships with the people that print and create the mail for 9,000 sources. The way that mail works in this country, which you might not realize unless you were a mail geek, is that half of the United States Postal Service mail is actually created by a small number of mail, print service providers. What we've done, is formed partnerships with them, and provided deep technology integration, which gives us the ability to aggregate that mail content. Today, if you're a consumer, you can go to your digital mailbox, find a variety of mail there, from a variety of different people. Depending on the region of the country you are in, you might have more or less coverage. The key for us, as we have built our business, is those relationships allow us to acquire consumers at a rate and cost we're very happy with. We're now in the middle of scaling our business. We've become a digital mailbox with an archive at the back end, and are now a leader in the space. We've been so for some time, and it is a bit different from when Zumbox was originally founded.
What does Zumbox look like to a consumer?
John Payne: We're a white list system, where you know who your verified senders and recipients are. We have techniques that give us absolute knowledge of who they say they are, and that they live at the address they say they live at. It's based on your street address, which gives us a 100 percent, addressable market coverage in how we receive mail today. Once we've verified who they are, which takes a matter of seconds, they are then presented with the whole variety of mail which is available to them, and they'll start automatically receiving those bills and statements. We now have coverage for 100 million to 120 million mailboxes, and three to four pieces of key mail for consumer, and will soon have a lot more than that.
How are you acquiring customers, and why wouldn't they just have someone send them their bill by email?
John Payne: That's an interesting question. We acquire consumers in a variety of ways. Because of our relationships with the people who send the mail, we have a relationship with those consumers, and we can leverage people to bring them into the digital mailbox. We're also able to get a very high success rate with normal, cost-per-action media marketing, because consumers look at what we do, they get it, that the postal service is going out of business, and they have a very high propensity to try new things. Email lis oppose of what our system is. Our system is a verified system, where you are opening items from verified senders and recipients. Email lis the oppose, you have an open system, with unknown senders, spam, and unverified recipients. As a result, for practical purposes, although you might get an alert in your gmail account, you still have documents provided to you in twenty different places over the web, and in order to get those documents, and save those documents for tax purposes, it's a very long process that the consumer has got to go through. It's a lot of work to go find all those when you need two years of them when you're audited by the IRS, and need to turn in expense reports, you want your AT&T bill, and you need all those credit card bills to get the information you need. Email doesn't solve that problem.
The reason why is for a couple of reasons. First, everyone now is trained not to click on links, and not to open documents that arrive as attachments in email--a significant portion of malware actually comes from infected PDF files. And, as a matter of fact, no one sends documents attached to email. It just doesn't happen. Plus, there's no central place to archive documents and apply search services, so when you need it two years from now, you're rooting around in your garage, trying to pull up tax documents or your telephone bill. Instead, we can search automatically and produce the relevant documents in a digital way.
Mail is a push system, in that it just shows up on your doorstep--how do you compete with that aspect of the postal system?
John Payne: That's a great question. One of the basic elements of our scaling, is that we're a push system also. An example of how our system works: DST Output in Sacramento produces a million bills for some client of theirs. What we've done, is we've create an interface that diverts that mail before it goes into a giant mailing machine, the same mail that wants to be delivered to a digital mailbox. So what happens, is the print paper mail goes to the mail stream, and they also push a digital copy to us. It's not something that a consumer has to ask for. It automatically gets delivered. Over time, and the reason it's very important for our business, is that once they're receiving three or four pieces of mail through us, it's easy to get the fifth on board. The consumer doesn't have to do anything, it's pushed into their mailbox, and they're alerted it's there. There's no ongoing work a consumer has to do. We're a push system just like regular mail, with a fundamental difference, that we push it digitally before it's created as paper mail.
Finally, as someone with a number of successes under your belt, why did you decide to join Zumbox, and what attracted you to the company?
John Payne: The way I look at these things, and the criteria is always--can this be a giant business, that is going to be really important? In other words, I don't think you can talk to anyone in the world, and have them believe things will look the same in postal mail in five, six, or seven years from now. There's been a fundamental shift in the market space. The interesting thing for us, is we've gone through a rebranding, and our service is now known as Digital Postal Mail, Powered by Zumbox. Digital postal mail service is very likely going to be one of the significant beneficiaries of this market shift. As the postal service sees a five to ten percent decline in mail volume, documents are not going away, they are just arriving by different means.