The Venture Capital Community Could Benefit from Better Judgment Re: The Enormous Demographic of Eco-Conscious Young People

Is it just me, or has the quality of judgment of the venture capital community experienced major slippage lately? Obviously there are the extremely visible failures like Fisker Automotive and Solyndra (yes, both were also backed with public dollars). But here’s a little beauty you may have missed: “Outbox.”

The premise: It’s easier for people to process email than snail mail, so this new business will employ people to drive around in cars to customers’ physical mail-boxes, open all the mail, scan it, and email it to the customer.

The result: Bankruptcy.

The reason: Lack of demand.

The loss: $5 million.

I wish I could have interviewed the people who thought this could work, and who believed that the target market (I suppose: young, email-centric people) would embrace this service. I can think of a dozen reasons why this would fail miserably, only one of which is the eco-sensibilities of young people. The company is going to support the idea of a huge new fleet of gasoline-consuming vehicles on the road? To do what?

Even if the near-zero level of demand wasn’t obvious in advance, which apparently it wasn’t, isn’t there a cheaper and faster way to answer that all-important question: “Will the dogs eat the dog food?” Having been in the market research business for 25 years, I could have done it in about two days, for a few thousand dollars, a few bucks shy of $5 million.