[eDebate] One Solution to Tubs

Art Kyriazis akbiotech
Tue Jul 22 14:17:17 CDT 2008


Re: One Solution to Tubs

By Dr. Arthur Kyriazis, M.S.E. Molecular Biologist, Consultant, debate 
coach/judge for more than thirty years.

Looking to go Paperless? Try a little Schumpeterian Destructive 
Innovation...

Here's a startup by one of my Harvard schoolmates which will take all 
your paper and convert it into data automatically:

http://www.boston.com/business/technology/articles/2008/07/20/is_paper_piling_up_send_it_off_to_pixily/


  Is paper piling up? Send it off to Pixily


    Netflix-style start-up scans, digitizes, and, if needed, shreds your
    files

Email 
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Text size ? + By Scott Kirsner July 20, 2008

Before 1998, when Netflix Inc. 
<http://finance.boston.com/boston?Page=QUOTE&Ticker=NFLX> began 
operations, the idea that your mailbox might somehow compete with the 
neighborhood video store was inconceivable.

This week, a newly launched Waltham company will try to convince 
consumers and small-business owners that the mailbox can render the 
filing cabinet obsolete.

Like Netflix, Pixily has bright, durable envelopes. The difference is 
that instead of sending DVDs, you send Pixily a stack of documents you'd 
like digitized. Pixily scans the documents for you, makes the text 
searchable online, and then either returns the documents to you by mail 
or shreds them and recycles the paper.

A plan that allows you to send in one envelope a month (envelopes can 
contain up to 50 items) costs $14.95 per month.

Will it fly? Pixily, with its sprightly name, is onto something big. Who 
doesn't have a desk cluttered with papers that can't be thrown away, but 
might never be glanced at again?

Shipping them off for scanning and storage eliminates the job of 
figuring out where to file them, solves the problem of limited space in 
a file cabinet, and yet makes them more accessible than they'd ever be 
in a manila folder - just perform a Google-style search to locate that 
old credit card bill you're looking for.

But to make Pixily a household word, the company's founders will need to 
crack the riddle that faces every entrepreneurial venture: How do you 
generate awareness and acquire customers without spending yourself into 
oblivion?

Pixily's founders, led by its chief executive, Prasad Thammineni, have 
built complex Web systems for companies like Fidelity Investments, Sun 
Microsystems <http://finance.boston.com/boston?Page=QUOTE&Ticker=SUNW>, 
and IBM <http://finance.boston.com/boston?Page=QUOTE&Ticker=IBM>. They 
left their consulting lives behind last July to begin working on Pixily, 
forgoing salaries to try to get the idea off the ground.

Big companies, Thammineni says, spend about $5 billion annually on 
document storage and archiving, but there isn't a solution targeted to 
small businesses, home office workers, and individuals. In February, 
they started a test of the service with about 200 users.

Here's how it works. On Monday, I sent a package containing six sheets 
to Pixily, using a bright green Tyvek envelope the start-up had 
provided. I didn't need to add postage, and the envelope had already 
been coded with my customer ID, so Pixily knew who had sent it.

On Tuesday afternoon, e-mail from the company let me know my documents 
were available online. When I logged in, I saw images of the documents 
I'd sent in, which included a hotel receipt, a page of typed notes, and 
a printed-out PowerPoint slide. All the text had become searchable - 
except for the handwritten stuff - and I could give the documents labels 
(like "travel receipts") to organize and categorize them.Continued... 
<http://www.boston.com/business/technology/articles/2008/07/20/is_paper_piling_up_send_it_off_to_pixily?page=2>


Page 2 of 2 --

I could choose to share one of the documents via e-mail, download it in 
PDF form, or print it out again.

On Wednesday, the originals were back in my mailbox, along with a new 
envelope for future use. (Users can also upload already-digitized 
documents from their hard drives to Pixily for archiving.)

Thammineni says the company has lots of thoughts on what to do next. 
Pixily eventually plans to offer higher-end pricing plans that encourage 
users to send entire file cabinets of documents, so they can "go 
paperless." They'll set up direct relationships with your bank or 
wireless company, and pull e-statements automatically into your Pixily 
account each month.

The two big costs of the business are postage (between $2.50 and $3.00 
each time a full envelope travels to and from Pixily) and labor, since 
humans must feed the documents into a scanner and then package them for 
return.

But Pixily's founders say they've built a decent profit margin into the 
company's monthly fees, which range from $14.95 for one envelope and 
3,000 pages of online storage to $59.95 for four envelopes a month and 
12,000 pages of storage.

For now, scanning takes place at Pixily's Waltham office. But as it 
grows, the company, which has six employees, may have to add scanning 
centers around the country, similar to Netflix's DVD distribution depots.

Pixily has economized by building the entire website atop Amazon.com 
<http://Amazon.com/>'s Web services infrastructure, which allows a 
company to rent servers and storage space as needed. "That gives us the 
flexibility to add more servers based on our demand, as traffic 
increases, instead of paying for them at the outset," says chief 
technology officer Vikram Kumar.

Though Pixily has had a few conversations with venture capitalists over 
the past year, it hasn't raised any venture capital. One possible 
reason: A key challenge will be finding a marketing strategy that clicks 
with customers, and none of the founders have marketing backgrounds.

Rob Go, a principal at Boston-based Spark Capital, has met with the 
company and tried the service. "I really liked the consumer value 
proposition," Go says. But "there's an activation energy that you need, 
because there are such high hurdles to trusting a company to handle your 
documents."

How much is it going to cost to acquire these customers?

Netflix, for example, pays about $30 for every customer it acquires, and 
that figure is down from as high as $47. An interesting experiment would 
be for Pixily to distribute a first trial envelope free at Staples 
<http://finance.boston.com/boston?Page=QUOTE&Ticker=SPLS> or Office 
Depot <http://finance.boston.com/boston?Page=QUOTE&Ticker=ODP>, to see 
if that wins loyal, long-term subscribers.

With the investors Pixily has made pitches to choosing to stay on the 
sidelines, it's up to the company to figure out how to generate momentum 
on its own, without a multimillion-dollar marketing budget or a 
well-paid marketing exec. For now, they'll be spending frugally to pay 
for ads on Google and trying to get free press coverage.

"Our plan is to show traction in the market, and understand the cost of 
acquiring customers," Thammineni says. Then, they may make a second try 
at raising venture capital.

No one ever said it was easy to start a revolution in the mailbox.

/Scott Kirsner can be reached at kirsner at pobox.com 
<mailto:kirsner at pobox.com>./

? Copyright 2008 Globe Newspaper Company.


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