Nineteen-year-old Frederick Hutson had a thriving business in 2003. The young entrepreneur took delivery of kilos of marijuana from a drug cartel in Nogales, Mexico, at a mailbox store he owned in Las Vegas and then repackaged and shipped it to contacts in Florida. There, his accomplices distributed the pot and sent cash back to Hutson at the mailbox store. The business was all about the Benjamins; Hutson says he’s never smoked weed or even a legal cigarette.
And business was good: Hutson brought in $500,000 to $600,000 a year tax-free as he and his South Florida associates moved thousands of kilos of marijuana to 200 customers throughout the Sunshine State.
All of that crumbled in 2007 when federal agents arrived at his downtown Las Vegas storefront with guns drawn. During the next 10 months of courtroom dealings involving Hutson and his 10 South Florida co-defendants, the federal government confiscated much of his personal wealth, including a $500,000 house in Florida, a nice set of wheels and his mailbox store.
But prison set Hutson on a new, legitimate path of entrepreneurship. “I saw that there was this huge population of confined people that no one was paying attention to,” the soft-spoken ex-con recalls. Every inmate had difficulty receiving photos and phone calls from friends and family because prison communication “really hasn’t changed a lot with the advances in technology everywhere else.” Prisoners can’t receive email, for instance.
“In my own experience [while incarcerated], it was difficult to get a loved one to get the photos off their smartphone, take them to CVS or Walgreens, and get them printed—then the person had to go to the post office to mail them. I remembered there were a lot of steps, and I didn’t understand why no one built [a technology-based solution] to ease the process for everyone involved.”
Some of the problems arise from prison rules, differing from facility to facility, that govern how many photos an inmate is allowed to receive via snail mail each month, what size the images can be and their content. As a further complication, friends and relatives face the challenge of finding up-to-date addresses for inmates, who are often transferred several times during their incarceration. Hutson, for example, was housed at eight facilities during his 51-month sentence.
Meeting That Need
After being released from prison in September 2011 and entering a halfway house, Hutson began working on a simple way to navigate the logistical and legal obstacles so people could send cellphone photos to incarcerated loved ones. The result was Pigeonly, a Las Vegas-based Internet startup that builds technology products for overlooked and underserved populations such as inmates. The company’s first product, launched in late 2012, was Fotopigeon, which makes it easy to send printed photos to inmates from any smartphone. Senders upload pictures to Fotopigeon along with the recipient’s name and inmate number. Fotopigeon prints the photos, inserts them into envelopes and mails them to prisoners through the U.S. Postal Service.
For Fotopigeon to work, Hutson first had to build a database containing the names, inmate numbers and exact addresses for everyone incarcerated in the United States. “You have all these states’ departments of corrections databases that didn’t talk to each other. The one in Florida doesn’t talk to the one in California, and the California one doesn’t talk to the one in Florida… and so on and so forth.” With Fotopigeon’s unique database, which is updated daily by web scrapers that automatically extract data from departments of correction websites, the company can keep tabs on prisoners at any given time.
“I named the company Pigeonly because the pigeon is something that is inconspicuous. No matter what continent you go to, what state or country, there are pigeons. They’re all around, but you just don’t notice them.
“And that’s kind of what our demographic is: those people all around us who typically are overlooked and underserved. We created Pigeonly not to focus solely on products for inmates or inmates’ families…. [Our demographic] also includes low-income people, migrant workers—nontraditional demographics.”
Marketed through direct mail and newsletters, Fotopigeon immediately attracted interest from 2,500 customers; it currently processes between 6,000 and 8,000 photographs daily.
Hutson followed up that service with Telepigeon in early 2014, which lowers the cost of prison phone calls by providing the person on the outside with an easy-to-secure phone number local to the prison, thus eliminating pricey long-distance and collect calls. “It was super-expensive to use the phone in prison,” Hutson recalls. “I would spend roughly $70 a month for the 300 minutes that they allowed you to talk on the phone. Had I had a local number to call, those same 300 minutes would have cost me $18.
“So that planted a seed in my mind, and, once again, the technology exists. You have Vonage, Google Voice and Skype, but nobody was paying a lot of attention to making an easy user experience that’s designed for people who may not have the best Internet connection or where their computer might be their smartphone.”
Hutson also plans to roll out Haystac, Fotopigeon’s inmate database, as a separate business-to-business-only product. With a cost that will vary by customer, Haystac—as it already does for Pigeonly—can provide access to more than 35 million pieces of inmate information (names and addresses, for instance) across county, state and federal correctional facilities.
Although the fees for Pigeonly’s core communication products are modest—ranging from 50 cents per photo for Fotopigeon users to a nominal fee and local phone charges for long-distance callers using Telepigeon—Hutson says investors see potential. Mitch Kapor of Kapor Capital, one investor, says Hutson had clearly thought through his market and strategy for tapping it. Pigeonly’s revenues are growing steadily, Kapor says, and the company is “doing very well… marching forward and raising more capital.” Hutson says Pigeonly has already received $3.2 million in seed money and venture capital.
Despite that solid financial backing, Pigeonly has modest downtown Vegas digs for its 20 full-time employees. Hutson put his creativity to work in the décor, though: The walls are painted in prison stripes, and the concrete floor has yellow lines reminiscent of the ones that indicate where prisoners must stand in corrections facilities. (Six Pigeonly employees, including Hutson, are ex-convicts, and he has reserved jobs for two co-defendants once they’re released.)
When asked to give advice helpful for budding entrepreneurs, Hutson replies, “Pick something that you are passionate about, because that passion will help you stay motivated when the going gets rough.” And if you’ve found that passion, he suggests spending time to create a “high-level plan.”
“Then do all the research you need to become an expert,” Hutson says. “I stress ‘high-level’ because sometimes entrepreneurs get stuck in putting together highly detailed business plans too soon and actually forget to execute. You need to plan enough so that you are not going in blind, but not plan too much—where you get stuck in that process.”
Hutson also shares what he considers his three biggest mistakes in business and what he could have done to avoid them.
The first was keeping his cards too close to his chest. “Sharing your idea with people who can add value to your company is very important…. The more people you talk to, the more resources you’ll acquire.”
He also wishes he hadn’t concentrated so much on the technology and instead had focused more on the problem to solve and on the business model. “People get too caught up in the technology by which you provide or deliver your product or service. Technology is only a means to the end, a way to provide value to your user in an efficient way. If you keep that in mind, you’re not crippled if you don’t have a technical background.”
The third mistake Hutson identifies was working from a sense of urgency without being thoughtful. “To survive as a startup, you must move fast, and oftentimes it is your ability to remain nimble that is your advantage. But make sure you remain thoughtful as you move quickly in order to avoid making unnecessary mistakes.…
“I always focus on a problem. When people say they have an idea for a new business or business line extension, I’m always asking, ‘Are you solving a problem?’ You’re always going to be in trouble if you’re not identifying a very clear need for what it is you’re creating.”