Earth Class Mail CEO Sarah Carr on the Revamped Business Model and What Had to Change in Her First 10 Months
[Corrected: 1:15 pm, see below] Earth Class Mail was built on the notion that businesses which receive a lot of important documents through old fashioned snail mail may benefit from the services it has to offer. The Seattle-based company, founded in 2004 by former head and board chairman, Ron Wiener, develops software that digitizes incoming mail, allowing companies to manage their post electronically and avoid being inundated with envelopes and packages. For those of you out there who think this sounds a whole lot like e-mail, it’s a little more complicated than that. Postal items handled through Earth Class are imported into a digital database where customers can access it and choose to have items scanned and saved for company records. Once in the database, the documents can be forwarded to another address, securely shredded and recycled, stored in a digital lockbox, or opened and visually streamed on the spot. [An earlier version of this story said that Wiener is now chairman of the board. In fact this seat is currently held by Carr.]
New chief executive officer Sarah Carr, who joined Earth Class as COO in 2008 and took over the top job last September after Wiener had stepped down, says the software is essentially a “business process outsourcing” service. She describes it as both a convenient filing system and time-saving tool for companies looking to save time. And it hasn’t been without support. Earth Class Mail has been backed by well-known local investors, including Ignition Partners, Keiretsu Forum, and Alliance of Angels (which is no longer an investor in the company). There was only one problem, according to Carr: Earth Class Mail’s initial business model wasn’t profitable.
Earlier this week we checked in with Carr to see how she—and the company—are doing 10 months into this next phase with new leadership. Earth Class, she says, has undergone a “seismic shift” in that short period of time. We posed five questions to Carr, and she shared with us via e-mail a little bit about the effort to restructure the company’s revenue model, the future of Earth Class a few years down the line, and her merit-based approach to leadership.
Xconomy: You’ve done a lot since taking up your post as CEO less than a year ago. What is your new vision for the company? How are you going about implementing this new vision?
Sarah Carr: When I am figuring out how to make a business successful, I start with the customers that are most loyal to us. In examining the data about our customers it was clear to me that Earth Class Mail (in our retail business) is actually a business process outsourcing company. We have some really creative customers that are leveraging our solutions as part of their workflow in order to save time, money and scale their businesses without adding headcount. Given this, I reoriented the company to support this model. Our tag line has been changed to “making time for business” to reflect this new focus.
My vision for Earth Class Mail is to serve three markets: the small business customer through our retail channel; corporate enterprise mailrooms and mailroom service providers with our enterprise offering; and postal partners with our postal platform. All of these segments can be supported in a Software-as-a-Service (SaaS) model, or we can build a custom environment in the data center, as we did for our postal licensee, Swiss Post.
Evidence of how we are implementing this vision abounds—from our new product offerings, updated pricing plans, and revamped website, to our continued service improvements and product innovations.
X: What have been the biggest obstacles you’ve faced since coming on board (both as COO and CEO)?
SC: Unfortunately, the funds that were raised to support Earth Class Mail were spent before I took the helm. So we have had to re-build the company while at the same time cutting our burn rate by more than 80 percent. We were able to secure a small amount of additional funding from our very supportive and patient VC, as well as a few of our investors, but it has been a constant tradeoff around innovation and profitability. I have a really creative team. We have used this talent to build many things in-house such as the product demo on our website. We even built our own teleprompter for the filming of the demo!
X: Has there been a big shift in Earth Class Mail’s revenue model and/or customer strategy?
SC: There has been a seismic shift. The original vision for Earth Class Mail was that millions of would sign up for the service. The process would then be automated and the costs brought down leveraging scale. So the product was originally forward priced assuming scale.
Not only did the scale never come, but the model never made much sense. We would charge a flat price and then allow our customers to request actions on their mail—this required labor. We were actually afraid of our customers getting too much mail and wanting too many scans. We lost money on every customer, even the ones that never got any mail. And ultimately, it was not a sustainable business model.
We decided to switch our model to focus on business customers who want to divert a particular mail stream to us, not necessarily have us manage all of their inbound postal mail. We realized that if you don’t get much mail, or if you are just using our solution as a mail forwarding service, we don’t give as high a value as if you are using the solution as your business lockbox, or your in-house mail scanning service.
We now charge a monthly subscription fee, and provide a menu of services that our customers pay for separately such as mail and document scanning, check deposit, secure mail storage, recycle and shredding, etc. Our current customers appreciate the ability to choose their services and manage the costs—and they clearly see the value of our service. Earth Class Mail customers can avoid hiring a clerical staff person because all of their scanning, filing and check deposits are being done by us. Spending $2,400 a year to save $35,000 is a fantastic return on investment.
X: Where does the company stand now and where do you see it heading in the next year? Next five years?
SC: We are seeing the fruits of our change in vision and focus. Our customer base is shifting to small business high-volume customers, and more and more customers are signing up every day. Our postal licensee, Swiss Post, continues to improve its product, Swiss Post Box, and our relationship is very strong. I recently testified at a Congressional forum on postal innovation in the 21st century and hope that the U.S. Postal Service will explore some of the ideas that I put forward. It’s an exciting time for our company. Next year is all about growing the retail business, driving to profitability and continuing to innovate as a software platform provider. Five years from now? Who knows, but I hope that we are part of a bigger entity that can leverage what we have built and help us take it to the next level.
X: How would you describe your leadership and management style? Do you think the company culture has shifted since becoming CEO, and if so, how?
SC: I feel that I have created an environment where it is safe to voice your opinion and know your opinion will be heard. It may not be acted upon, but you will know why. We are a complete meritocracy. Our quality assurance manager was the person that suggested we add a test drive feature to our website in order to allow prospective customers to try Earth Class Mail’s service. Not only did we use his idea, but he got to design and produce the test drive! Lastly, we laugh a lot. If you can’t laugh during this level of intensity why bother?
Trending on Xconomy
By posting a comment, you agree to our terms and conditions.