This story appears in the May 7, 2012 issue of Forbes Magazine.
Someone is going to go postal on the Geico gecko. Every week it seems another unsolicited solicitation from the insurance company best known for its Aussie-accented pitch-lizard appears in my mailbox along with stacks of credit card offers, catalogs, nonprofits’ pleas for money, fly-by-nights wanting to refinance my mortgage and reams of garish advertising flyers.
But now, instead of hauling a pile of paper directly from the mailbox to the recycling bin, I pull out my iPhone and fire up a new app called MailStop. I snap a photo of the Geico envelope, tap the screen and beam it to Catalog Choice, a Berkeley, Calif. startup that then notifies the advertising-crazed insurer to take me off its mailing list. Within a few minutes I’ve performed a digital jujitsu on the junk mail in my mailbox. In other words, all the mail in my mailbox.
The $51 billion direct mail industry and the U.S. Postal Service are about to get disrupted, Silicon Valley-style.
The 22.5 million stop requests Catalog Choice has processed over the past five years are a mere scrap of the some 85 billion pieces of junk mail that landed in American mailboxes in 2011.
But that pace could dramatically pick up as junk mail- blocking apps from Catalog Choice and competitors like PaperKarma begin to seed smart phones. Meanwhile, cash strapped cities seeking to save landfill and recycling costs are launching their own junk mail sites, powered by Catalog Choice software.
“We have hit a point in your mailbox where the signal-to-noise ratio is out of whack,” says Chuck Teller, a former PeopleSoft executive who founded Catalog Choice in 2007. “It’s like watching an hour of TV, and there’s 58 minutes of commercials and 2 minutes of programming.”
A grassroots junk mail revolt would be more bad news for the beleaguered postal service, which has grown increasingly dependent on revenue from what it calls “standard class mail” as the volume of first-class mail falls 7% a year thanks to e-mail, social networking and online billing. First-class mail currently accounts for 51% of the postal service’s revenue; by 2020 it’s projected to fall to 35%. (The USPS would not comment.)
That a nine-person outfit like Catalog Choice poses any kind of threat to the 646,000-employee postal service or the direct mail industrial complex would seem ludicrous. Then again, a decade ago the nation’s press barons paid little heed to a nerdy guy named Craig who started a classifieds website out of his San Francisco apartment.
Opting out of junk mail has long been available as many corporate privacy policies allow consumers to put themselves on the company’s do-not mail list. Getting on that list is another matter. There is no national one-stop do-not-mail registry like the Do Not Call service, which allows people to halt telephone solicitations by simply entering their phone numbers on a government website. “There’s anti-innovation in this space,” says Teller, 50.
He started Catalog Choice after his employer, PeopleSoft, was taken over by Oracle in 2005. A friend at the Overbrook Foundation, a New York nonprofit that focuses on environmental issues, approached Teller about starting a company to attack the junk mail monster. Writing the code to automate opt-outs was easy; finding a business model was not. So Teller set up Catalog Choice as a nonprofit funded by Overbrook, the Merck Family Fund and other foundations.
Catalog Choice then created a searchable online database of 10,000 brands with direct links to opt out or links to the appropriate sites to do so.
Teller argues the free MailStop app is a “game changer” that puts into consumers’ pockets the instant ability to zap junk mail. As of mid-April MailStop has been downloaded more than 10,000 times since its launch in January, and Catalog Choice has processed about 105,750 stop requests. The company also offers a $6.75 snail-mail version of the app for the technology averse, in which prepaid envelopes send in up to 15 pages of junk mail to be scanned and stopped. Since November Catalog Choice has sent out 20,500 envelopes and has processed 12,000 that have been returned.
Teller, surrounded by boxes of envelopes containing “saturation mail” in Catalog Choice’s Berkeley office across from a Trader Joe’s, says, “The mail is the only communications channel in the U.S. where the consumer has almost no control.”
Not entirely true, says the Direct Marketing Association, an industry trade group. It operates its own consumer opt-out program called DMA Choice, which lets people sign up online or by phone to stop junk mail from companies prospecting for customers. “Because we represent the marketers, there’s nothing between the consumer and the marketer, and there’s no third party trying to act as an agent,” says Linda Woolley, a DMA executive.
She notes a million people have signed up for DMA Choice, but the association has no plans to roll out smartphone app. “Yes, there are people who opt out, but it’s never really a significant number,” says Woolley. “The thing I worry about,” she adds, “is that the consumer will have a false expectation from these services.”
Though Catalog Choice was set up as a nonprofit, its foundation backers promised only enough funding—$1.25 million in 2009, almost nothing in 2012—to get the service off the ground. Forced to diversify, Teller began setting up programs for cities, collecting annual fees for running their online programs. Catalog Choice now operates top-junk-mail programs for 70 cities.
In the first nine months of Seattle’s program, one-fifth of the city’s addresses signed up to stop delivery of phone books, according to Dick Lilly, a manager with Seattle Public Utilities.
“As a waste prevention strategy, it’s a huge success,” Lilly says, noting that from May to December last year the program eliminated 394,400 phone book deliveries, keeping 360 tons of paper out of the recycling bin. “We’re really pleased at the amount of paper saved and trees never cut down”
How fast the postal service can adapt to the networked age will determine whether the mailbox goes the way of the telephone booth as a 20th century artifact.
