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Anyone here inside the company or somehow otherwise REALLY knows whether or not this is a sign of doom for their retail business? Can that business be profitable? Will someone buy it? Or might it get shuttered? If someone buys it, will prices have to be doubled to make it work?
This is smelling obviously suspicious and I do not want to end up downwind if it dies. Any reliable info out there?
I use Paytrust. They (formerly known as Paymybills) didn't have to roll out stores in order to prove this to Intuit who bought them. So, sounds like a little spin for Weiner to claim that they "had" to go through such a retail strategy in order to prove it to Swiss Post.
I use Paytrust. They (formerly known as Paymybills) didn't have to roll out stores in order to prove this to Intuit who bought them. So, sounds like a little spin for Weiner to claim that they "had" to go through such a retail strategy in order to prove it to Swiss Post.
http://stevemurch.typepad.com/blog/2008/07/eart...
Note that when you publish stories about Count Me In or Earth Class Mail, the comment string gets long.
Perhaps a story about those two companies? What makes them bring out the commenters?
Dave
Excellent analysis. Thanks for sharing the link. Looks like they are following some of the advice.
Dave, I am looking into the competition with Zumbox, so stay tuned.
John
Like many CEO's, he has the ideas, can start up the company, but we learn quickly, they cannot manage. This company ranks high on toxic environments to work in. No one should be put through what Ron has put his employees through.
"There's no sense in us continuing to run a brick and mortar business," said Wiener, adding that Earth Class Mail is transitioning to a "pure IP company."
Burning 1 million a month doesn't work for a start up. Taking on the big carriers takes years and lots MORE money.
On another note, the reason ECM receives so much feedback is because Ron is such a unlikable person. In my 10+ years investing in Seattle start ups, I have never met an entrepreneur with more arrogance and undeserved attention.
You have to wonder about a founder who people talk so poorly about rather than praise for their service to the area. I think the past quote was, "I hope Ron can manage a company better than his weight"
You have to be pretty disliked to have so many people jump at the chance to take a jab.
I bet investors are excited too. $20 million flushed down the toilet only to be told we need to build out the technology and infrastructure to support a new strategy with foreign governments.
When I first saw Ron's pitch two years ago he was already saying back then that their strategic plan was ultimately to sell off the retail business as soon as they had real traction with the much bigger opportunity of launching the service through national postal partners. Ron and Cameron and the other stellar folks at Earth Class Mail made that happen with Swiss Post well ahead of business plan. Years ahead of when they said it would liekly happen, if at all.
Only John Cook would take a story like this and twist it into a bad news angle as he does to so many other good Seattle companies. What happened to the old John Cook who used to write about the good AND the bad? I'm suprirsed the Business Journal puts up with it - it must offend some advertisers somewhere that Techflash is all about doom and gloom these days, and even good news stories like this one get maligned.
In any case, I hope the transition works for ECM -- innovation in the mail delivery/processing space is long overdue.
Dave
The fact that a major chunk of the business of ECM is being sold off deserves reporting.
To call it good news and/or positioning it as part of the plan all along is stretching the truth, don't you think? I think it's a pretty good assumption that those assets will be sold off at a significant loss, especially in the current economic environment.
No business should be faulted for changing gears and adjusting to new circumstances. There are very few, if any, successful businesses that end up being exactly what the version 1.0 business plan says they are going to be.
Strategic change is fine, and expected. But I also think criticism is warranted if a plan is so heavily funded, promises made and and bet-upon before the basic premise and profitability is borne out on a small scale. Call me old fashioned, but I just don't see why they didn't try to prove out the viability on a smaller scale before raising a ton of capital against an ultimately losing grand idea. Who knows, their IP play could still work, but a lot of capital was used up getting to that point.
Seems that others who felt that way probably thought they were too.
As I'm sure did folks who invested with Madoff, etc.
I appreciate your candor, but respectfully disagree as you have never worked with him. As an ex employee, his ability to manipulate and twist the "angelgrahms" to sound as if everything is peachy keen is staggering. The angelgrahms aren't what they seem.
Also, from my understanding via insiders, the Swiss Post is little more than a signed piece of paper at this point. When it becomes a large long term revenue stream, I will take off my cap to Ron and slimy Cameron and give them the kudo's.
As for the actual sale of this business unit, I will believe it when I see it.
I wanted to echo the comments of Steve Murch and Dave Schappell and explain my role as a journalist. I spent 40 minutes talking to Ron Wiener about the transition at Earth Class Mail. It was an in-depth discussion, which led to this post.I appreciate Ron taking the time to talk to me and openly discussing this transition, which I felt was newsworthy since it represented such a big switch in focus. I believe the story accurately reflects the conversation we had.
I also wanted to address your last comment that I am only focused on "doom and gloom" and that I somehow twisted this story to cause damage to Earth Class Mail. Nothing could be further from the truth. It is a pretty straightforward report -- largely based on the comments of the CEO. I am not here to serve as the PR arm of the companies I cover. Nor am I here to blindly attack them. If that were my mission, I don't think I would have lasted in this job for more than a decade.
Unfortunately, I don't need to tell you that times are tough, which is leading to stories of layoffs, closures, lawsuits, etc. There will be more to come. But through it all, I think you will find that TechFlash is committed to accurately telling the stories no matter whether they are "good" (see recent coverage of Startup Weekend) or "bad" (layoffs/closures, etc). In between, we have tried to provide readers with more than that, such as our guest posts from laid off tech worker Hallie Goertz as well as some fun items to keep things a little light amid these hard times.
Thanks for reading.
John Cook
http://bit.ly/eoUL
John Cook
Leave it to Earth Class Mail to cause a stir in the (usually) mundane world of postal mail. ;) I commend John for reporting what he sees and hears, and I don’t see anything in this post as being anything close to doom and gloom; quite to the contrary. While the implications to me personally are that I may have to find another job, that’s the risk that all “Start-up Junkies” should understand when taking a job with a start-up. I’d like to set the record straight from my personal perspective regarding a key element of John’s story that he does not get quite right… his statement regarding “…the original premise of Earth Class Mail”.
While it appears that Earth Class Mail is embarking on a “major focus shift”, the reported shift has been part of the plan all along. The elements of this story that *are* newsworthy revolve around the fact that it’s happening now as opposed to in the future, as was originally anticipated. Thanks to my early peripheral involvement, I have a business plan dated January 10th, 2004 that outlines this anticipated end-game quite clearly.
As a participant in, and observer of many events at Earth Class Mail and the postal industry as a whole, the simple truth is that the postal mail industry *is* changing, it needs to change and has historically been resistant to any real change. It is a fact that liberalization of posts around the world creates fertile ground for events like these to materialize and evolve.
Just my $.02, for what it’s worth.
-Nate
If the Post Office used this model then when the mailman came everyday he would give you a bill for the envelope, ink, and paper in the mail he brought. Then maybe the Post Office would make money again.
Great and well thought out business model. I pay to get bills and advertising!!!!!
I already have this it is called junk faxes.
I guess I just don't get how selling off such an expensive facility and retail establishment could have possibly been "part of the plan all along", since the Beaverton facility seemed so eye-poppingly overbuilt from the start.
I'd wager a fair chunk of money that it was not fully utilized and that it will be sold off at a significant loss. How can that be part of a plan that gets an kind of funding? Seems like a little truth-shading going on here. Sure, perhaps there was a vision for the company in some out-year to be an IP-only company, but it sure wasn't presented to viewers of Startup Junkies that way, nor was it funded or operated that way for the last couple of years.
Again, I do not fault any business for examining current circumstances and making changes in strategic direction. That, in and of itself, is fine. But surely some criticism is warranted when a major hit is taken by severely overbuilding on activities (be they tactical or strategic) that never worked out.
(Personal note -- Just to eliminate any ambiguity, I am not the same comment-poster as "Steve" above. I have never met Ron W., except very briefly at one Keiretsu Forum meeting. I have never been an investor in the company, nor have any associations with it other than watching the show.)
The many stories I've heard about his blatent unethical behavior would make your head spin. Many of them from ex-employees, ex VP's and C-level folks, and vendors he's screwed.
Todd Dean - you guys at Keiretsu have got to stop defending this guy and this corrupt company and realize they've really tarnished Keiretsu's reputation overall and you'd be best to cut all ties or references to them. This is a case study for another day on how a crook of a CEO swindled many well meaning investors.
2. I looked into ECM as an individual user. Looked very sloppily run. They could not answer basic privacy questions like what happens if they get a subpeona for my mail.
3. If Ron W. wants to do "petri dish" businesses, stay in the biotech field. People are buying your services because they think ECM is in it for the long haul, not to participate in some type of experiment.
4. Whoever started the comments regarding spinning the story is right on. Ron W. could give Bernie Madoff a run for his money.
5. Mark, the angel investor: if you want to protect your investment, do not do it by trashing this article nor John Cook. Go get a good attorney or possibly buy up all the assets Ron W. is selling.
MY ADVICE: stay with the USPS until this market shakes out -- may take 24 months. Even though I find the USPS repugnant.
Several months in, they didn't seem to have done even basic research on who their audience was and what the reasons were that customers were bailing so quickly. They weren't fixing things that they knew were barriers to acquiring customers - like figuring out their value proposition and making it clear on the website and fixing the overcomplicated signup process that included - hilariously - a requirement that customers submit a form that was notarized. No problem - we'll just get the government to change the law - by Tuesday! No split-testing on any creative - I could go on and on. It was a laugh-fest.
If they've stumbled - finally! - into a market where they can possibly make some money to repay their investors, all I can say is maybe there IS a merciful God after all.
Having been a satisfied customer for over two years, I have just received a notice that any similar service they continue to offer will be include a 250% price increase. From your article I am disheartened to learn that they hope to get out of this service business completely. It is too bad that Earth Class Mail has yet to mention this fact to it's customers.
Sadly I can not quite find an alternative. I actually agree that they shift from establishing mail fronts - they can never be that extensive. But find a buyer such as the many old fashioned UPS stores before closing out the service that helps them started.