In this episode, we talked to Dennis Kelly, CEO of Postalytics, a direct mail marketing software. Find out more how Postalytics can help marketers leverage the power of direct and digital marketing today.
Connor: So Dennis, please walk me through your early life. You were just saying before we started that you grew up in a farm in upstate New York. I also know from listening to you on other podcast that you were quite entrepreneurial back then knocking on people's houses. And just, you know, doing the rounds, but I wanted to ask you, what are your formative experiences back then, or, you know, in an early timeline that have led you to who you are today?
Dennis Kelly: Well, thank you, Connor. And yeah, I think that there were many formative experiences. All of us have foundations that we build things upon. And I believe that the pieces of the, of my foundation were, were, were laid. At a young age, as you mentioned, I grew up on a farm. There was a lot of work, a lot of manual work that just needed to be done.
And my parents, my sister and I, there were only four of us. We had a significant amount of ongoing work to do every single day to both kind of up a broken down old farm that really needed a lot of work. And then to maintain a working farm. A lot of animals and property and things along those lines.
And so I was charged at a young age with doing a lot of things and my father taught me how to drive a tractor and take care of animals and men fences and cut wood and, you know, all, all sorts of things that were just necessary in order for the operation of the farm and really the improvement of the property to happen.
And so later in life, whenever I start to have doubts or to feel sorry for myself about working really long hours or being very tired, I think back to those years and say, hey I'm in the software business, I've got a pretty good my hands are tired from typing and you know, my eyes are a little bit tired, but that's about it.
You know, I think that that, that sort of work ethic. That you pick up in that type of home life is something that has been pervasive. My career and my approach to raising family and everything else. So that's that work ethic was, is there. And then I think, secondly my parents also encouraged me to just go out and try to make money and, and don't be afraid to ask people if they need help, if I can do work for them, I mowed lawns car washes just did a lot of small tasks.
For people that live nearby, that I could help them out and make a little bit of money. I always had jobs to do. And if I had a little bit of extra time, I'd try to find a way to make a buck. What was I think interesting about that is that later when I was working for a very, very large corporation, I think it struck me that I didn't really have a lot of control over my career.
Maybe more instinctually. I always felt like it. My effort. If it's my focus, I'll ultimately be able to control my own destiny. I think it kinda led me to wanna get out of a large corporate environment and, and into startups. Because of that instinctual drive to want to, you know, be in control of my own destiny and not just a, a cog in a very, very large machine. That was probably the other really formative experience that kind of drove my career.
Connor: Yeah. That's like a very logical through line because you would've just kind of molded yourself into that kind of person by doing all of those, you know, independent style jobs. That's not like most, I don't know what the Orthodox route is like you work for somebody usually.
My first job, I was a cleaner boy to butcher. That was just like a classic hierarchy where you're like, they pay me for doing the thing. But then I guess if you started out in life being like, I'm the guy going and getting the work, and then you eventually at work in the corporate space and you're like, this is so weird.
Dennis Kelly: Yeah. And I think the experience I had in the corporate world was, was wonderful from a lot of perspectives. I met great people and I got great training. And I guess when I was a young guy knocking on doors, trying to drum up work, it was a form of sales that first corporate job that I had they really invested in strong, formal training.
And in particular in sales, that was a great foundation piece as well, an entrepreneurial career, you, are always selling, you're always dating your case to somebody getting that formalized training and, and, and drilling and practice on presentation skills and organizing your thoughts. And leading customers through a sales process was also very, very important.
Connor: Let's tidy up the timeline. So what's this big corporate company. And where whereabouts is that in your life?
Dennis Kelly: I graduated from college in 1987 and that it was really, it was my first. Professional job outta college. A company called Prudential insurance who most people have heard of.
It was in a department or a division of Prudential that was focused on corporate benefits. You know, we were selling corporate benefit plans into businesses. You know, there was a lot to learn about. Insurance of course. And you know, how, and then how healthcare benefits work, what it was an interesting time in that industry because HMOs were first really just starting to become a prominent way to ensure corporate employees.
And so there was a lot of effort to reeducate the existing market around an innovation that Prudential and other insurance companies were pushing as a way to try to get a control over healthcare costs. There was a lot to learn about underwriting risk and of course marketing and sales.
And so that I was in an office in the New York Metro area after six months of training every day. Training on all these different topics and primarily on sales then placed out into a field office in Manhattan. You know, I worked with very large group of senior sales people and very strong manager who ran that office, the vice president who had been with the company for 35 years.
And I think it was the largest office sales office in the, in the country for Prudential. And so, you know, there was a lot of great mentoring guidance that was delivered and I was able to watch a very mature organization and how it works. But at the end of the day, I had to go and knock on doors and try to find business.
And, and so there was a lot cold calling both directly into businesses as well as what I figured out also is that there was a way to actually sell through independent. Insurance brokers. And so it's kind of a concept of a channel sales, right? Where you've got other people doing the selling for you, and you're getting a piece of the commission.
So that was also I think, a great experience. I did that for a couple of years in New York before I moved on into my first startup. Okay. And what was a college friend of mine and his brother were starting up. What was at the time computer company. It was focused on a particular vertical industry.
So it was in healthcare. And so what had happened was my friend food college was a software engineer, computer science major, and his brother was a nursing home administrator. And the two of 'em got together and were looking at the way they were doing all of their business in this nursing home and decided that they needed to computerize it because essentially everything was being done by hand.
Everything's done on paper, including the accounting, because at this time in the it's like early nineties. Early nineties, many, many businesses had still not computerized their basic accounting practices in the nursing home industry. And or I should say long term care because it encompasses assisted living in other segments.
The billing is very specialized. The accounting is very specialized because the, they all have to report to the government, everything that they're doing at both at state level and the federal level for a lot of regulatory reasons. And, and so there was need for very specific types of accounting.
You know, I knew I wanted to get into a startup. I was hearing all about how the people in tech were doing great and, you know, computers of the future. And I didn't know anything about computers. But I knew that that was directionally probably a good move. So I quit my job and moved to Boston and jumped into this little startup with my friend, his brother and his brother's wife.
We had literally no idea what we were doing. It was a very tough couple of years. You know, they had bought a piece of hardware from a company, a computer company called Quantel and, and back in those days, there were all computer companies that were building their own equipment, as well as their own operating systems and development environments.
And so, so you'd buy a computer for a hundred thousand dollars as a small business, which is kind of crazy. And then you'd get some basic software, but then people would have to write the software to actually do things in house as well. So they had bought this computer from a company called Quantel.
And my friend started programming the basic accounting principles in that, in this particular system. So in order for us to sell it, we had to sell this piece of equipment too. We couldn't just, you know, drop it in PCs cause PCs didn't exist. You know, there was no internet. There wasn't even networking. These were these computers that the size of a desk that had these green term green, black and green terminals hanging off.
Connor: So the workflow is just before you move on, you put it in that only like that only in that model every single time it comes in, you program it, you put it out.
Dennis Kelly: Yeah. So you could write the software once and then, so it would happen we'd if we'd sell a customer, which was not that often.
We would schedule this hardware install. You know, which would take six weeks to get set up and, and configured. And then we would come in and spend like two days loading up our custom software and, and then, and then begin training folks on, on how to change their accounting process from something that is handwritten to something that is now being done, you know, through some automation.
Connor: That's pretty cutting edge. That must have felt really cool.
Dennis Kelly: You know, it certainly did, but there was such, it was such a kind of mismatch in the, I guess you, we, today we call it product market fit. Right? So this is a generally an industry of small to mid-size businesses with professional staff of 25 to 30 people.
That are running these nursing homes. And while the goal of automate automation was certainly something that made sense. It was just a, a huge amount of friction. Yeah. Huge hardware purchase, huge amount of time, massive investment to change these processes. So it was slow and, you know, it was hard and we weren't making any money.
And we were so lucky because what ended up happening right at that time is PCs started to really become a viable computing option. And so all of a sudden we were able to start selling Dell PCs, right. To these smaller businesses and network them together through a local area network because ethernet happened.
Yeah. So those two things happen, right. Almost simultaneously in the computing industry. And then boom. All of these old line companies like that Quantel for a hundred thousand dollars, they just went away. And this whole new generation of hardware makers that were building, working on operating systems that would work across any type of computer happen.
So then all of a sudden, you know, you're not bound to a particular piece of hardware. And you can, you could build software once and have it run on virtually all the types of computers that are out there except for apple. Right. So all of a sudden we just decided, all right, we're gonna pull a plug on what we're doing.
And we basically laid off bunch of people put our heads down for a year and rebuilt the software in a PC operating system that could work on a network, a local area network, and it dropped our total cost of, of sale to a new customer by a factor of four X, you know, instead of $150,000, you know, we're talking $25,000, something along the lines.
So it was just a drastic change in the fundamental economics of what we're doing. These things happened completely out of our control and it was just a macro level change that we happened to be in the right place at the right time. When I said we knew literally nothing about what we were doing. That's kind of the example right there.
Connor: That is incredible. It was just listening to that thinking. I don't know why you did that. it's just like, that sounds like the space to be in. I can, I could, I should do that kind of thing. I should do that. And now you're just like buying these big PCs.
Dennis Kelly: Yeah. So you're 25 years old sometimes you don't make the best decisions, but it all ended up working out. The company ended up doing well. And I was kind of off to the races at that point. So we sold that business eventually to a larger healthcare it company.
I was VP of sales for them for a couple of years, starting a family, the VP of sales job required. A tremendous amount of travel. And you know I knew I wanted to get back out on my own again. And so, right along that time in the late 1990s, the internet kind of was becoming a thing. You know, I knew that this was a another huge platform shift and, and that it would spot a whole new generation of opportunity.
I had some ideas that I was. Cultivating and talking to a lot of people about here in the Boston area. And ended up connected with another guy. And we put together a business that was known as anyday.com. One of the very first online calendar systems. It rings a bell, essentially. If you're familiar with Google calendar, we pretty much built that almost identical in the way that it looks and user interface and the functionality was almost identical except it was early, right. 1998, 1999.
And yeah, I remember those computer. We're using dial up modems on the internet, but we knew that cable modems were coming and DSL and that it was the speed thing always gets worked out in computing. Right? Whenever there's a big platform shift, it's always slow and buggy and kind of hard in the beginning.
But if it's about speed, then that problem always gets solved by Moore's law or by something else by Moore's law by bandwidth. And there's a new type of network that happens. Like when internet first came out, there was just wasn't any bandwidth, but everybody could see that that problem would be solved.
When we hopped onto cell phones, there was very little bandwidth, right? You could only text message and you know, very, very little back and forth, but we knew that would be solved today in the, in blockchain. I think we're kind of at a similar point where it's just this huge resource hog and it's, you know, it's not efficient form of computer. But that will be solved.
Connor: The underlying principles of cryptography are like useful enough so that we'll break through and make it efficient.
Dennis Kelly: Exactly, exactly. So that time in the late nineties, early two thousands was crazy, kinda a startup perspective. And so we went and raised a bunch of venture capital and I ended up meeting one of the most brilliant people I've ever met in my life was a venture capitalist named Brad Feld, who was on our board.
He was on 17 boards all at the same time. And it was just a crazy time of life. Like a lot of venture back startups. The pressure was to grow and grow rapidly. And we did, as we saw the air being, let out of the dot com bubble. We were able to sell the business and have a good return for everybody to a company called Palm.
So Palm had really built the first commercially successful handheld computing device. You know, they saw the fact that these are all gonna be connected, just like everybody else. And, and so they said, well, you know, calendaring is a big part of what was being done in the Palm. But it was just being done locally and with local storage and they needed to find a way to kinda tie that together with the internet.
And so it was a strategic acquisition on their part to buy any, you know, stayed at Palm for a couple of years. It was another, you know, big, big corporation gone public, stayed there and ran the kind, the web operations for them for a couple of years before I ended up moving on again.
How Dennis started with direct mail
Dennis Kelly: Why don't we fast forward a little bit. So I did a couple more startups had my first failure in that gap. After, after the Palm experience jumped into in 2013, my one of the engineers.
That I worked with at, at any day in plum. He was a brilliant young software architect. Turns out he, he moved near me and, and we kinda reconnected got together. He had his own business doing consulting and had, had built some software as a side gig. And it was focused on the direct mail world.
You know, he said, Hey, I wanna show you this thing. And it's kind of cool. And I got some customers using it and you know, it was interesting because at that point in 2013, there's tremendous investment that had just. Really gotten going in the marketing tech world. And you know, there really hadn't been a lot of investment in technology to do corporate or business marketing, but marketing automation was becoming a thing.
Companies like hard out were blowing up and HubSpot was getting going and companies that had maybe been started in the late or, or say 2008, 2009 were really starting to get traction. And so then they were attracting more investment and we thought, you know what? There's a lot going on here in marketing tech.
And it's pretty much all email driven and, you know, direct mail is in a really old marketing channel that is still really big in terms of, you know, the, the total spend every year on the part of businesses. But nobody seemed to be thinking about ways to do.
This initial product that my partner had started we decided, okay, well, let's try to build software platform that we can sell into the direct mail industry and help them kind of catch up, able to offer a more automated solution to campaigns that they're running, because what happens when you go do a direct mail campaign, the traditional way you go to a print service provider or you go to an agency, there's a lot of manual steps that are involved.
What we thought was all right. Well, there's a clear pain point here. And we had sold some already and we thought, you know, there's a good market. That's being underserved. Venture capital. Isn't really looking at it. You know, they're off chasing digital and email and things. Let's go do this and we'll try to do it in a self funded way we spent a year or so built out this product started selling it hired some folks, you know, after a couple of years, it became very clear that we had built some really nice software.
We had some patents, but the sales cycle was taking longer than what we had forecast. The mix of revenues was far more tilted towards services than we had really forecast and really what we wanted. I mean, we didn't wanna build software tool that required a lot of professional services to help get configured and set up.
And it was frustrating because we thought the software was actually really easy to use. And then we, what we realized is that the market itself. The folks that the incumbent folks in the direct mail industry, there's a reason why they hadn't really invested much in technology. They weren't all that interested in change and they weren't all that interested in using technology to solve problems, had to make a, a tough decision to pivot from there.
And so what we ended up doing with the lay some yeah. Product market fit again, we had to lay off some great people. We took the underlying tech that was in underneath bonnet. And we came out in a different direction. And what we started hearing from some clients was, you know, that direct mail was just too hard to do. There's too many manual steps. It's not integrated. There's no analytics. And we were providing that, but we built a product for the service providers rather than the end users, like the, the companies themselves.
So Postalytics took a lot of the concepts that were in boy, net repackaged up and, and were in designed for marketers directly. So that if you're a market. You can sign up, build a campaign by drag and drop in software, press send, and it goes just like you can with an email campaign that realignment of kind of the underlying components we have built.
Packaged up marketed properly to a segment that is investing in tech and is trying to first think of technology as a way to solve problems that happened. We rolled out in late 2017, early 2018, and the company has been growing. You know, rapidly other things.
Connor: Just to paint the picture for people. When you said that the clients came to you and they like saying that there was too many steps, just walk us through what it took to get direct mail off the ground.
Dennis Kelly: As a maybe eCommerce company, the direct mail automation industry is still nascent in a fraction of the, of the overall picture here. So the majority of direct mail is still done this way where, right. Right. You will have a graphic designer. Who will work in a tool like an Adobe illustrator or InDesign to build out some creative.
I'll say it's a postcard. You'll hire a printer. So you'll send out bids about your bespoke campaign that you are planning. Send out bids, you'll pick a print partner. They will introduce a mail house, which will be an organization designed to help optimize the postage, save or lose a tremendous amount of money in postage.
When you send mail, then you need to find data, right? So if you're gonna mail to and so you end up typically exporting data out of your CRM names and addresses and, and other information into spreadsheets. You know, you're driving creative with a graphic designer. You've got people that are doing the data, work, the data, sitting in a spreadsheet.
All of that ends up being sent to a print partner where they then have a person go to a printer. And do a little mini run off, let's say five or 10 pieces of mail so that they can do the merge. Right. So that they can the alignment. Yeah. And because you can do personalization, right? So you can merge data like you do with email.
Except they have to do that and then actually print the pieces out, ship them through FedEx, back to the marketing team. And then the marketing team says, well, you know what, we're gonna change this. We're gonna change that. Oh, that's. And then the whole process starts all over again.
It's crazy, right? That, that should be a photo. That should be like a scan at that point. And then you can just zoom call adjust right there.
The problem is that you have to then go back to that graphic design file. Mm-hmm that is not integrated with anything. Yeah. You have to make changes. You have to go make changes in the data file, right?
Because it's not integrated with anything it's sitting in Excel. Nothing is connected. And it's this massive project management job. What we did was we said, all right, let's recreate email marketing and abstract away. The complexity we've essentially built software that enables that entire process to happen without any extra files you can design your postcard online.
The postcard is being stored in HTML. Then you can pull data in from Salesforce or HubSpot or whatever the case may be, and you can do the testing. Online, you can create PDFs and ship. The PDFs off to all of the people in are needed for approval. And, and then, you know, then you can send the campaign. All of our software optimizes the postage routes, mail to print partners around the country who are then responsible for the printing and the mailing of the software.
And then we capture data about what is happening to the mail. From the print partners and the postal service, believe it or not has data. And then we're able to sync the, all that back to dashboards. So you have a real time understanding of what's happening to the campaign and then sync it back into your CRM.
So that Salesforce knows when the piece of mail is being delivered to con so that you, it can then trigger another marketing event. Right. It can trigger an email to go out or text message. And then if there's a bad address that's captured and the data is connected and it's alive and it can actually do things. Saves you a lot of time. That's the idea of post, like essentially stitching together a set of technologies. To just eliminate all that friction from the manual process of direct mail.
Future of personalization
Dennis Kelly: You know, I think that more and more people are savvy as to basic personalization, like, Hey, Connor, everybody gets that, but now if you don't do that, it's almost like what I mean. Yeah, definitely. What kinda company is this? They can't even, they can use my name using highend or, you know, current resident or, you know, whatever.
What I think is more and more happening with personalization is that there are concepts around a segmentation and then B dynamic content. One of the innovations that we've helped to bring to direct mail is this concept of triggered.
It's very common in email. Right? And that's what marketing automation did HubSpot or part out one of these marketing automation tools and particular event happens. It triggers a, a single email to go out. You can do a lot of segmentation. So that email that is going out is specific to the, from a timing perspective, in a specific based on behavior.
Right? So. You haven't been online, you haven't, you haven't bought anything from us in six months. Well, you know I need to reach out instead of some blast of 10,000 messages going out it's one and it is geared toward a specific behavior. So that's segmentation really important. And what part of what we've done, we've enabled that to happen with print so that HubSpot can say, Hey, Connor, hasn't bought anything in six months.
And in fact, he's not opened five of our last emails in a row. Let's try another channel. So trigger a piece of mail to go out, to get, to try to get some re-engagement right. Even though it's a more expensive per piece per message, but clearly something's going wrong. Connor's not responding to my, our emails. He's not bought anything. We need to shake this up.
Connor: Send the sacred police, kick down the door.
Dennis Kelly: Exactly. Yes. So that that concept of sending a triggered piece of mail is very new. It's been around an email for a while, but a physical piece is kinda the innovation there. And part of it is because of the economics of printing.
As I mentioned, you gotta have a person go and set up a printing press for a run. Yeah. Well, you can't really do that for one piece of mail. So the economics are work against small numbers in printing what we do as actually in the back end, we bundle. All of the campaigns from different clients together, so that it's all ready to go.
We're creating high resolution PDFs in a queue from campaigns, from hundreds of clients every day. And so, so there's one print run of, let's say six by nine postcards and it might be 15,000 pieces. And that includes several hundred. One at a times we're aggregating volume to solve the printing problem and abstracting it from the customer.
They don't have to worry about it, so that, so that segmentation's important, then dynamic content, you can use data to then drive different messages to different audiences. And so if you know, Connor is a VIP customer, then the data coming over from. The underlying CRM or the marketing automation tool can then be used to say, all right, well, if the incoming content says VIP, then we're gonna display this offer and this message and this image, as opposed to, you know, a different segment of the audience where the data says something else.
So that more advanced type of personalization is becoming more prominent. And again, it's been available in email. We are making that available in print. Everything we're doing is an HTML. We're taking data from all these systems and we can just, we can apply this logic to present, to create unique printed PDFs that we ship off to printers.
How does Postalytics work
Dennis Kelly: So if you are a digital marketer, an email marketer, you're accustomed to gaining a lot of insights around the performance of your campaign.
And so direct mail is typically analyzed a process that requires a tremendous amount of manual work. So most organizations don't bother big companies do it, and they have analysts that will comb through different reports and do match backs across different data sets in order to come up with some analytics.
What we've done is we've taken advantage of service that the us postal service has called the intelligent mail. Barcode postal service developed this product for their own internal tracking mail is coming in and it's being done by a commercial print organization, as opposed to handwritten something with a stamp.
But if it's being done at a commercial level, they're incentivizing everybody to use this automation tool that prints a unique barcode on each piece of mail. And so that way a pallet of 50,000 postcards gets dropped off, you know, they have a way to track where everything is. And so they developed that internally.
Then they said, hey, public have at it. You know, you can apply for a permit from us. And, you know, you can get the barcodes, you can get the data and do whatever you want with it. We've created a system where when a contact comes into Postalytics and a piece of mail's generated, a barcode is attached to the contact.
And so if you're getting a piece of mail through one of our campaigns, then you know, Connor's piece of mail from this particular campaign that will have a unique barcode as it gets scanned by the postal service. We've already done that association. What we have to do then there are something like 2000 different scan events that they can come up with that obviously an overwhelming amount of information.
So we filter out a lot of the information that is not useful for marketers and then provide. The event data as steps of the timeline, right? So when the mail is being addressed, that's supply. Yeah, exactly. And as it moves through the distribution process, those steps are being recorded and captured in the dashboard and synced back into our CRM and market automation, tool partners through customized fields that we generate.
So then it's actionable and useful both visually to the marketer, as well as to the broader understanding of what's going on with messaging for this particular client in the CRM. And so that's a big part of it. And then the other thing we've done and this is part of what we took for from the original boy net product.
We have a patented method of generating unique. URLs and unique QR codes for each recipient of a mail campaign. And so if you get a postcard and it's got a QR code on it, you scan it. What ends up happening is we are capturing the fact that it is Connor from this particular piece of mail from this particular campaign.
And then sending you off to the landing page that you are supposed to go to and then we're able to track that in an analytics dashboard and then track your usage. Once you have responded. What else have you done?
Connor: Just before you expand on that, can you just flesh that up for me? I get a postcard, I see a QR code on the postcard, and then that takes me to the client's website.
Dennis Kelly: That's right. And this is all configurable on the campaign settings. Right. So here's where we're gonna send people and you have to load, we have a special tracking code that you have to have particularly with the pandemic.
QR code usage is exploded. It's an easy way to onboard people from a, a physical item to a digital experience. And, and so, you know, it just makes it kind of sense. And what's unique is that, you know, we're tracking the fact that it's Connor and Dennis and Jennifer responding to their individual mail pieces from specific campaigns that is in place from an analytics standpoint. And we actually we're working on some other mechanisms for response like text messaging or and other things utilize the same underlying framework of tracking.