Berkeley, Calif. City Councilmember Gordon Wozniak has suggested an email tax to raise money for the failing United States Postal Service. This seems a little like taxing cars to resuscitate the horse-and-carriage industry, but Wozniak thinks that it could discourage spam mail as well as support vital post office operations.

“Since many billions of e-mails are sent every day, an e-mail tax could raise substantial sums,” he said in an e-mail to the local blog Berkeleyside. “Most of the revenue raised could be used to fund the managing and maintaining the Internet Superhighway and a portion to subsidize snail mail. Think of it as analogous to the gas tax used to maintain our physical highways.”

Wozniak brought up the idea in response to the Berkeley City Council’s efforts to halt the sale of its downtown post office, which is in a historic building. The Postal Service said in a statement that the building would be sold due to a 26 percent drop in total mail volume over the past three years, brought about “by the diversion to electronic communication and business transactions.” Not to mention its forced payment of $5.5 billion a year into future retiree health benefit programs, and private companies like FedEx and UPS that do a better job.

Locals are fighting to keep the post office open by looking at ways for it to increase its revenue stream, such as renting part of the building to local businesses. Considering the Internet is the real culprit here, as well as the American population’s treacherous defection to digital communication, Wozniak’s solution is to tax it. Like cigarettes, bad habits need to be taxed.

While it may seem crazy to most rational human beings, the United Nations Development Program actually entertained the nation back in 1999 as a way to fund “the global communications revolution” and finance the expansion of the web. However, Jonathan Zittrain, an expert in cyberlaw and Internet governance, told Berkeleyside why this will never, ever work.

“To the extent that the cheap flow of flat rate first class mail has positive effects for society at large, the insistence that the Post Office be revenue-neutral may not make sense,” Zittrain said. “Taxing email as an alternative, however, is a terrible idea: Bad in theory and truly unworkable in practice. There have been proposals to see fees imposed on email by service providers — or recipients themselves — as a way of minimizing spam, but to impose an external tax on it when there are ready substitutes –Facebook messaging, anyone? — and when collection would be a nightmare, seems a nonstarter. There is no reason to tax electronic mail users in particular to save the Post Office, any more than it would make sense to tax coffee drinkers to do it.”

Oh, and let’s not forget about the Internet Tax Freedom Act which President Bill Clinton signed in 1998 which banned an e-mail tax. So the e-mail tax isn’t only stupid but is  also illegal. Desperate times call for desperate measures, I guess. If the United States Postal Service goes under, there won’t be a nationalized way to send summer camp care packages or handwritten love letter. The Internet ruins lives again.

Photo credit: urbanwoodchuck/Flickr

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

The U.S. postal system has not typically been a breeding ground for innovative startup activity.

But the founders of Outbox, a startup launching in San Francisco today, have an alternative to the “old system” of mail delivery. Outbox will collect and manage your physical mail for $5 a month, so you won’t have to visit your postal mailbox again.

Once you sign up, you’ll be prompted via the website, iPhone or iPad app to discard, deliver, prioritize, or unsubscribe from any piece of mail. Outbox’s team of “Unpostmen” will empty your mailbox three times a week and bring any mail back to a secure warehouse so it can be digitized. If you want a piece of mail delivered to your home or office, make a request from a smartphone or tablet, and you’ll receive it in a day or two (in a Prius!) at no additional cost. Outbox claims to be more secure than USPS as its Unpostmen go through multiple background checks and interview rounds.

The company plans to slowly onboard customers based on zipcodes in the coming weeks.

Cofounders Evan Baehr and Will Davis met at Harvard Business School (HBS), formed the idea, and tested it for six months in Austin, Tx. After they made the decision to launch in San Francisco, they sent a package of coffee and other treats to influencers as a reminder of how delightful it can be to receive a gift in the mail. With all the buzz it has already generated, Outbox has the potential to be the next Lyft.

Baehr said in an interview that he worked on a civic project with investor Peter Thiel (who is now an investor in the company), which prompted him to think deeply about the lack of innovation in government. “I learned about how you could see a public problem and then build a private business,” he said. At HBS, he joined up with Davis to build out a “Dropbox for your mail” and improve a “really messed up market.”

“We brought some lean startup approaches into a dusty space,” he said. Lean startup, a movement popularized by Eric Ries and Steve Blank, motivates entrepreneurs to build innovative tech companies with a small budget and quick-and-dirty engineering skills.

In a digital age, is the U.S. postal service really ripe for disruption? According to Outbox’s founders, about 10 percent of the U.S. economy flows through this platform. And even with paper-based systems being replaced, there will always need to be a delivery mechanism for physical items. “Even the most dire predictions see letter volume drop from 150 billion to 120 billion in the next 10 years,” said Davis. “That’s a heck of a lot of mail.”

For this reason, they are not the only startup to take on traditional postal mail. PaperKarma, a recently-launched app, lets people block junk mail by snapping a photo. All the company really needs is information about the sender. Earth Class Mail has raised over $20 million in venture funding to turn your snail mail into email.

Likewise, a startup called Zumbox will digitize your postal mail and deliver it online. CEO John Payne said the major challenge for Outbox is security. ”When dealing with important financial documents, such as shareholder communications or bills, security is the number one concern for consumers,” he told me. “We are clearly and simply showing our constituents we’re serious about security,” he said.

Outbox’s founders speak boldly about “reinventing the U.S. postal service” and “disrupting volume mail delivery,” but they claim to have a lot of respect for USPS and Fedex. Davis said their “arms are open,” and Outbox is open to partnership opportunities as they gear up for launch in new markets.

The company has raised $2.2M to date with Floodgate Fund and five other angel investors including Peter Thiel.

Certainly the Internet has revolutionized communication, but despite the dominance of email, ecommerce, and online billing, people still cling to hard copies as a source of verification and recordkeeping. Zumbox provides customers with a cloud-based mailbox linked to a residential street address and delivers exact facsimiles of paper mail. With it, people can receive, view, archive, and search through their digital post in a single, secure online environment.

After signing up with your address, Zumbox matches your information with all the companies and organizations that have you on their mailing list and support digital mail. From that point on, it delivers all mail from those locations to your Zumbox account. You can access it from anywhere, set reminders, print, and organize to your heart’s content.

Gone are the days of piles of envelopes shoved under the door and rummaging frantically through trash cans for that water bill you accidentally threw out. It is cheaper for businesses, more convenient for you, and better for the environment.

Zumbox has multiple competitors, including digital delivery service Volly, which targets high-volume mailers, online bill organization system Manilla, and doxo, a digital file cabinet. Zumbox stands out by working with both the senders and the receivers to provide a simple, logical solution to the postal system’s model.

With the additional funding, the company plans to fund operations, sales, marketing, and development of its technology platform in the U.S. Zumbox CEO John Payne invested in this round, as did partner company Computershare. Former investors include Disney CEO Michael Eisner and former CEO of Priceline.com Rick Braddock. Zumbox was founded in 2007 and currently has 35 employees headquartered in Los Angeles. In 2011, the New Zealand postal system adopted Zumbox services.

Until teleportation devices are invented, snail mail will continue to be a necessary evil. If companies like Zumbox manage to quell the flood of unnecessary paper mail, the old-fashioned postal service can be reserved for pleasant activities, like sending love letters and receiving care packages.

The deal shows that Westlake Village, Calif.-based Zumbox is making progress on its dream of eliminating the paper mail service and replacing it with an online system that lets you send or receive scanned, physical representations of letters, bills or other things that you might normally send via paper. Such a system can be a lot more useful than plain email. Under the agreement with New Zealand, Zumbox’s service will complement the traditional postal mail service.

With Zumbox, you log into your mailbox at the Zumbox site and then receive digital delivery of your mail. There’s no need for stamps, since it’s free to everyone except marketers and advertisers. It is environmentally friendly because it saves trees. This transition to digital is inevitable, and it’s exciting to see it start to happen. The General Accounting Office reported last year that U.S. first-class mail has declined 19 percent since 2001 and will continue to decline 37 percent over the next decade.

The New Zealand Post has licensed this system exclusively so that it can create an all-digital option for mailers and consumers that will be cost-effective, convenient, and secure. The Zumbox Platform can be customized for any country as a white-label software service. The digital postal mail gives users a facsimile of paper mail, as if the paper were scanned into a computer. Consumers can access it from anywhere, and the data is stored in a centralized, secure online location.

“We have identified a clear interest – both among consumers and businesses – in a digital postal system here in New Zealand, and we are eager to test this service on the Zumbox Platform,” said Sohail Choudhry, general manager of integrated communications for the New Zealand Post.

In 2010, The Research Agency did a survey for Zumbox that showed 77 percent of consumers would use a digital post network if it were available. The average consumer using the service estimated they would opt out of receiving 59 percent of their current paper mail, while 42 percent estimated they would go paperless on more than 80 percent of their mail.

Zumbox chief executive John Payne said many postal operators have been evaluating digital initiatives in recent years. Those operators, such as the New Zealand Post, are starting to move from exploration to commercial deployment. The Swiss Post has begun to use Zumbox as well.

Zumbox creates a digital mailbox for every street address in a country. So companies can send bills via Zumbox. The consumer opens them and they look like scanned versions of the real paper bills. The Zumbox site will let the consumer look at a variety of media in the form of HTML, Flash, audio, and video. Nonprofits, businesses, government entities and consumers can use it for free.

Zumbox mailboxes are secure since the company uses a closed system with security measures that meet the toughest regulations. Users get a secure PIN number, which they receive from Zumbox via paper mail, just to make sure that scammers don’t hijack your mail. The user enters the code to verify that he or she receives mail at that address. As soon as the user verifies the account, mail from supporting companies goes to the Zumbox mail. The benefit of the closed system is there’s no junk mail. Consumers can still order and use a variety of electronic payment systems. They can also browse through the catalogs they want to see and order goods.

Zumbox is charging large transaction mailers, advertisers and marketers because it gives them real-time campaign measurement tools that are unavailable through traditional mail. Marketers and advertisers can also send mail to a single address, a mailing list, or a specific geographic region such as all of the homes in a specific zip code.

The company was founded in 2007. It has 25 employees and has raised $21.7 million from private investors. The company’s chairman and co-founder is Maury Friedman, a successful entrepreneur who has sold a number of companies. Investors include Art Bilger of Shelter Capital Partners, Rich Braddock of Fresh Direct, former Disney chief executive Michael Eisner, Bill Guthy of Guthy-Renker, and Zumbox’s Donn Rappaport.

Rivals include Manilla, Doxo and Volly, another provider of alternative mail services.