With a headline that combined $25 million and technology that doesn’t work, I found myself drawn to an article from Darwin Online this week. The article was entitled, P.O.’d and it was sub-titled Mail Boxes Etc. spent $25 million to position itself as the real world's shipping partner to the virtual e-tail space. One problem: The technology doesn't work.
Written by Lauren Gibbons Paul, the article delves into the effort by Mail Boxes Etc. (MBE) to roll out a connectivity platform to link their brick and mortar presence to the Internet in a novel manner. The project found its seeds in the Internet-everywhere heyday of early 1999 and crashed into reality by year’s end. Today it continues to struggle along but seems destined for the trash heap in the very near future.
MBE (a San Diego based company) has 3,500 domestic franchises and they felt that they could turn this real world physical, real-estate asset into a cyber-play for themselves. They appear however to have fallen in love with what turned out to be a big problem spot; satellite technology. Using satellite technology to connect franchisees across the land probably seemed like a slam-dunk approach but I suspect that a narrow view of the opportunity drove this conclusion.
What MBE needed was to have their franchisees connected. How they connected doesn’t seem to be nearly as critical in hindsight and yet the fact that MBE forced connectivity over satellite pretty much guaranteed that the franchisees would be paying a premium cost for a service that could never be optimized to their need. Satellites work well for rural locations where the choices for connectivity are limited or in fixed and scheduled applications such as an upload of an inventory file nightly or mass distribution of data to all recipients at one time. They also work well for always on applications that can be set and forgotten. Using them for sporadic, as needed applications tends to be a bit tougher as MBE found out the hard way. (By the way, DirecTV is struggling with the same basic thing in trying to promote their satellite-based DSL type service.)
Perhaps one can forgive MBE a tiny bit for what today appears to be a true over-reach but in 1999 it probably was deemed a “sure thing.” However, a $25 million bet by a company with just $81 million in revenue and a perception that there would be “just one way” to connect to the Internet and that would be over a satellite sky-way, in retrospect combined to doom the project before it even got off the ground.
Perhaps the really creative thought would have recognized that merely getting the franchisees connected in any manner they could would have been the winning point to start from.
Darwin Online (May, 2001). P.O.’d. Mail Boxes Etc. spent $25 million to position itself as the real world's shipping partner to the virtual e-tail space. One problem: The technology doesn't work. [Online]. Available: http://www.virtualteams.com/company/press/world_time.htm.