I was watching Start-up Junkies on Hulu. The video is at This url. I saw the logo of their company in the back and didn’t think like it woudl be that hot. I then saw what their model is. I was like wow this is a good idea. All your mail gets scanned and then sent to you via the web. I was very intrigued. I then went to their site to scope them out. It had a $25 dollar set-up fee. You then paid $19.95 a month. So whiel I think it is a great idea, the pricing is way out. Why would I pay that much to quit getting my mail? I still have to use stamps, which people still have to pay for. In the book, Reality Check: The Irreverent Guide to Outsmarting, Outmanaging, and Outmarketing Your Competition, Guy states over and over capacity is not your problem. That engineering for capacity you do not have is probably going to kill you. The best issue you can have is more customers than you can handle and you can add capacity when you need it. I think this may be an issue for them. If there service was $7.95 a month, with no setup fee they would have been exploding at the seems. It seems due to infrastructure they are building, that they did not need when the show was taped, is forcing them to focus on getting investors.
I was part of a great start-up years ago, that was profitable. We were growing well, and had a great management team. Once we decided to get outside investment, that ruined that idea. Your agenda will not always be served by those you partner with. Focus on delivering a quality product to your customers. Exceed their expectations in delivering to those customers on a daily basis. You will then have a great company. When you focus on just creating something to flip and get rich, You may flip, but rarely will you get rich. Building a world winning brand may happen, but it is an accident then, and probably won’t survive.
1) Capacity is great, too much extra capacity will hurt you more that too little capacity. One of the pros a start-up has is agility. Once you build a world class data-center, you lose that agility. You are posing like a large corporation. The only difference between them and you is they probably have reserves, you just have a slowly shrinking credit line.
2) Focus on your customers and wow them daily.
3) Deliver a quality product.
4) Keep an eye on your price point. We only have so many products we will pay $19.95 for. I get movies delivered every day for less than half what Earth Class mail is charging. I get a audio book I can download for less than they offer. If I have to pay someone else to still use your service, you better be inexpensive. This is especially true if I am a completely new service model and/or not a vanity product.
I wish Earthclass mail the best of luck, I would have loved to give them a shot. I think there are some great potential additional revenue streams and ways to market their service. I may share some of those in a future post.