How An Ex-Inmate's Startup Is Improving Prisoners' Lives | Fast Company
Entrepreneurs often tap personal experience for startup ideas. In Frederick Hutson's case, that experience was incarceration. "I just saw...
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Saving families over $8MM in predatory phone fees
10,000+ active subscribers
$175k+ in monthly revenue
Backed by Y Combinator, 500 Startups, Social Capital, Kapor Capital, and others
Almost 10% of the American population (or 27 million people) have at least one friend or family member that is currently serving time in a US prison or jail. This group collectively spends over $4 billion per year financially supporting their inmate. Not only is the cost too expensive for most Americans to afford, it is also overcomplicated and inconvenient to maintain regular communication with their incarcerated loved one.
Pigeonly is the leader in providing families with easy to use, low-cost inmate communication services, disrupting the predatory billion dollar prison inmate services/communication industry.
We provide people with a simple to use consumer facing website that allows subscribers to search, find and send printed photos, letters, greeting cards, postcards and even online articles right from any cell phone, tablet or computer with a few clicks of a button. We also provide a low cost VoIP phone solution for expensive prison phone calls. Our proprietary technology, Haystac™, is the underlying technology that allows us to identify inmates across any Federal, State or County penal system.
The core of our business is an inmate API called Haystac™ which searches and organizes thousands of Federal, State, and County records per day; extracting the information needed to identify and determine the location of 1MM + inmates across 17K prison facilities in real time.
This makes it possible for our users to easily search, find and connect with their incarcerated loved one using one or all of our 6 consumer facing products.
We’re tackling a $4 billion market comprised of all related inmate services. Unlike our competitors, we are an independent service provider not reliant on having contracts with prison facilities. This allows us to stay mission focused while meeting the needs of our subscribers (the family and friends of prison inmates).
We have a subscription business model which allows customers to subscribe to one of three plans based on their unique needs and how often they communicate with their inmate. On average our subscription profit margins are 60-80%, and our goal is to reach 250k subscribers over the next 24 months, with a target of $40 Million in gross revenue.
“Choose 2” Plan
For $7.99/month subscribers can choose any 2 of our 6 services.
“Choose 4” Plan
For $14.99/month subscribers can choose any 4 of our 6 services.
All Access Plan
For $19.99/month subscribers get access to all 6 services.
With subscribers in over 88 countries we've built a reputation by helping families stay connected during the most difficult times in their lives, providing the support studies confirm aid prisoners post-release outcomes and lower recidivism rates.
Since launch, Pigeonly has maintained constant and steady revenue growth with subscribers in the US and internationally. Revenue growth has been an average of 20% year-over-year since 2013.
“The above projections for 2018 are based on the Company’s historical data and rely solely upon the management’s judgement. No third party has assisted with these projections and investors should not rely on them as they are merely a type of forward looking statement.”
Our future plans are focused on expanding our footprint beyond the Federal prison system to the 1.8 million inmates that are in State prisons and country jails. Our plan also include introducing a payments product that will allow families to to send their inmate money for little to no cost, a solution to the high money transfer fees.
We are expecting an 50% increase in our daily subscribers and revenue in 2018
It’s important that you know how passionate I am about providing families with an affordable, easy way to stay in touch with an incarcerated loved one.
It was my entrepreneurial spirit that often led me to new opportunities, I started and sold my first company when was 19 years old. However it was also my desire to attain the American dream on my terms that took me down the wrong path and at 23 I was sentenced to federal prison for the illegal distribution of 3,000 kg of marijuana.
It was this life changing experience that showed me first hand how difficult and expensive it was to stay connected with my family and friends on the outside and how inmates in isolation led to higher recidivism rates, negatively impacting communities. With no other options I decided to build a solution that would positively affect the lives of people no one else was paying attention to – inmates and their families. The idea of Pigeonly was born.
Today, (5 years later) we have customers in 88 countries and have grown Pigeonly into one of the country’s largest independent inmate services providers, saving families over $2 million a year in high phone fees. Needless to say, we’re excited about the new products we plan to introduce and the heights we’ll reach in the future. My team and I are always looking forward but are also extremely proud of what we have built and accomplished to date.
I’ll always be humbled by our beginnings and, more importantly, by people like you who make a choice to use and invest in Pigeonly and the impact we'll continue to make.
The maximum valuation at which your investment converts
into equity shares or cash.
If a trigger event for Pigeonly occurs, the discount provision
gives investors equity shares (or equal value in cash) at a reduced price.
The smallest investment amount that Pigeonly is accepting.
The largest investment amount that Pigeonly is accepting.
A SAFE is a Simple Agreement for Future Equity. An investor makes a cash investment in a company, but gets company stock at a later date, in connection with a specific event. The Crowd SAFE is a modified SAFE that is better suited for crowdfunding.
A SAFE is a Simple Agreement for Future Equity. An investor makes a cash investment in a company, but gets company stock at a later date, in connection with a specific event. The Crowd SAFE is a modified SAFE that is better suited for crowdfunding.
$50,000 – $250,000
needs to raise
before the deadline.
The maximum amount
is willing to raise is
Pigeonly needs to reach their minimum funding goal before the deadline
If they don’t, all investments will be refunded.
I am an x-felon and now mentor women in prison. I understand the power of this service.
I believe that it is very important for loved ones to stay in touch with incarcerated loved ones. People do screw up in life but life should go on.
I have met people who are currently struggling with this problem and this project needs to succeed. Poor people need communication too
Yes, Pigeonly's platform supports all County, State and Federal prisons.
No, in fact on September 26 2013 the FCC’s Wireline Bureau released a ruling stating the arbitrary blocking of VoIP phone providers is NOT AUTHORIZED regardless of whether or not the phone number is a local number or a non-local number to the correctional facility. Read in full [HERE].
Pigeonly is a FCC registered phone company (FRN No. 0023106578). We provide our subscribers with a secure telephone number that offers the lowest rate for the inmate callers facility. When an inmate calls a pigeonly number we automatically connect that call to our customer existing land line or cell phone allowing them to benefit from the lowest rates for your loved one's facility. By using a Pigoenly number, your inmate will be able to call you at the most affordable rates possible and can avoid paying inflated prison phone rates.
No, Pigeonly business model is unique as we do not seek or need to secure contracts with the prisons. All of our products and services work with and do not circumvent any of the prison existing infrastructure.
Frederick H.: This is my first technology business. I've started several small businesses in the past. This is my first time doing something in technology, so it's been a very interesting learning experience. Just learning, figuring out as we go. That's one thing to start something where it's just you and one other person, and then something completely different when you have live employees, when you have investors and you have a whole organization that's completely different.
So we're just learning how, the difference between building a business, of starting with a product and then scaling into an actual company. We do have supportive investors here in Silicon Valley as well as New York City, so this will not be our first pitch. We've had a lot of support from the Impact Investing community, and some of the traditional VCs as well.
I definitely feel prepared and ... For our business, it's really ... A lot of people don't understand the market. It's something that they haven't heard before, and they're not familiar with. SO it's really on us to really clearly help people understand the market and what the needs are, and then how, why a solution makes sense.
My name is Frederick. This is Alfonzo, and we're Pigeonly. I was inmate 42501048. I was sent to Federal Prison for distribution of marijuana. During those long, long, long five years, I noticed that there's this huge population of people that no one's paying attention to and we all had the same problem. It is incredibly difficult for people to stay in touch. Not only it is difficult to stay in touch, it's also extremely expensive.
Over 20 million people currently serving time ... Currently have a loved one that's currently serving time in prison, and they all share the same problem. This group collectively spends over $6 billion a year financially supporting their inmate. This includes everything from cellphones, regular telephone calls, commissary, postcards and more. We built a platform that makes it easy for people to search, find and communicate with their loved one in prison.
Our technology cuts the cost of expensive prison call, phone calls by 80 percent, and allows people to send photos, greeting cards, and more, from any cellphone, tablet or computer. Since our launch, we've grown Pigeonly be one of the largest independent inmate services providers in the country. We have 25 employees based in Las Vegas, and we're set to do over two million dollars in revenue this year. We would love for you guys to join us in this journey, to continue to disrupt this highly predatory business and make the world a better place. Thank you.
Jesse: We'll be right back after a quick break (silence). Welcome back to Meet the Drapers.
Rajeev Madhavan: But how does the facility or the inmate in the facility use your data? If I want to send something, how would I use that?
Jesse: Is it a closed system?
Frederick H.: Right. Yeah, so our customer is the family member. So our family member can go on our website, and they can for example send some photos. Those photos are then processed by us, fulfilled and shipped and the inmate would actually get those four by six prints in the mail. So goes through all the same existing channels that already exist.
For our telephone service it works somewhere like a Google Voice or Skype, where we give our customers, their family members-
Tim: So they get a physical picture?
Frederick H.: They get actual physical products, yes.
Tim: Picture and you could ship a box, too?
Frederick H.: Yeah, well, not really boxes but you could ...
Tim: So do you have a printer onsite or something?
Frederick H.: Yeah. No, we have a fulfillment operations ourselves, so in our office we have fulfillment.
Rajeev Madhavan: You're doing offsite all of this processing?
Frederick H.: Yes.
Rajeev Madhavan: And making it into actual physical objects and sending it out. But what do you do with Google Voice in that particular case?
Frederick H.: Our phone service works similar to Google Voice or Skype. Essentially what we do is we provide the customer with the telephone number, low-cost telephone number to be reached on, so that when inmate calls home, we route their call in the cheapest way possible. In most cases cutting the phone call from as high as a dollar to a few cents a minute.
Jesse: Are you going to ship boxes? I mean that's a huge opportunity for you if you're doing pictures right now, that's somewhere you could grow to. Could you do that?
Alfonzo: So that's what we ...
Frederick H.: Yeah. Go ahead.
Alfonzo: What we kind of specialize in, so each institution is different from local, state, federal. So what we specialize in is the data behind these institution to know what products are actually allowed to get into institutions safely, so that's one of the core things behind this is the data portion, with the facilities and the inmates and knowing what we can actually send to institutions.
Frederick H.: That's one of the four things that we built our company around as a database that we call hay stack, which basically aggregates all the public records of every inmate that's currently in the federal county or state prison. It allows us to know where a person is at a given time and whatever rules associated with that facility, so that a family member can just put in John Smith and our system will automatically find where John is.
Tim: When you send something into prison, how are you counting your revenue? You're up to two million in revenues. Are you profitable?
Frederick H.: No, we'll be ... Plan is we'll be profitable this year.
Jesse: Have you raised money today?
Frederick H.: Yes. We've raised five million so far.
Jesse: Great, and who is that from?
Frederick H.: So we have Kapor Capital. We have Social Entrepreneur Fund, MC Collective, several investors here and in New York City.
Tim: Have you worked with Defy?
Frederick H.: I mentored at Defy Ventures.
Tim: Good for you then.
Jesse: Me too. I was there last week.
Tim: She's been to prison twice.
Tim: But not for the reason.
Frederick H.: Right, I get it.
Tim: She volunteered.
Rajeev Madhavan: So there's two million revenue, how much packages are going back and forth? I'm just trying to collect what's the total time ...
Bill: What's the average package?
Rajeev Madhavan: What's average package price?
Frederick H.: So our average revenue for customer sounds like that's what you're asking is about $15. Average revenue for customer. What it costs us to acquire customers is about $3.50. We're doing everything from offline and online. Offline, because we have the data we know where everyone is in a population. We send direct mail to introduce our products and services. Online, we do all the traditional stuffs, Google Adwords, social media advertising.
Tim: So what are the things that are in the box?
Frederick H.: The six services that we offer is greeting cards, postcards, letters, photos, articles, where if you're reading an interesting article online, you can easily share that. Then we have phone calls. So those are the six products that we offer, and we're working on money transferring next for the commissary account.
Tim: How do they let you do phone calls? Because that thing was highly.
Frederick H.: Yeah, that's probably our most popular service. So basically how it works is if you sign up, and you'll ... We'll create-
Tim: I sign up not being in prison.
Frederick H.: Right, you're the family member. All our customers, all the family member's on the outside, right?
Frederick H.: So you would sign up and when you put your loved one's information in, our data will search ... Our database will search and find out where that person is, and then automatically create a special number for you to use, to give to them, so that they can call you on that number. We'll connect that number to existing landline or cellphone.
Jesse: And how many prisons are you in?
Frederick H.: We service ... Our system supports all 17,000 that's in the US.
Tim: Are you also a former prisoner?
Alfonzo: No, I'm not.
Tim: No. So how did you end up?
Alfonzo: Me and Frederick, I met Frederick back in ... This was about 13 years ago. I met him in the military actually in Air Force. We serve in Air Force together basically.
Tim: You got put in jail for selling marijuana?
Frederick H.: Yeah. Lots and lots of marijuana.
Tim: Lots of marijuana. So you had a big organization that you ran?
Frederick H.: Yeah. Yes.
Tim: It was illegal by the way.
Bill: That's a good sign for us.
Jesse: I know the illegal marijuana.
Tim: Now it's legal.
Frederick H.: It's actually illegal. Actually illegal.
Tim: I have a couple of questions. I have a couple of questions.
Frederick H.: He's being modest about the fulfillment. He's shipping out, our team's shipping out over 5,000 prints a day. We move a lot of product in a given day.
Bill: That's a good question. Could you share marijuana in?
Frederick H.: No.
Bill: Why not? It's legal.
Frederick H.: No.
Jesse: It's not. Not at all levels.
Frederick H.: So just go a little further. So even tobacco is not legal in institutions.
Rajeev Madhavan: What do you think is the sizeable of the 20 million incarcerated people.
Frederick H.: Not 20 million. There's 20 million people who have a loved one. That's currently across from us. So that's our market. It's not ... There's only 2.3 people who's currently across from.
Rajeev Madhavan: Okay. So how many of them really have people on the outside who want to communicate in your guess?
Frederick H.: From what we've seen, we see on average between five and seven people are connected with each image that we've had on our platform. So that's how we've done that number. So one of the cool things that we get to see and the cool things that we get that the institution companies that present data systems other companies that are in the space don't see is that we get the people that have a hard time finding their loved ones.
Those, that mix is the majority of our customers, so it's easy for institution to find the mum, and the girlfriend, and the wife, but we find the cousins, the brothers, the sisters, all the people on the outskirts, and the person that you went to school with say, "Hey, I heard so and so's got in trouble. I don't know where they are." They find us. They put their name in.
Now they're connected. So that's really where we built our business on is making really bringing those outer connections closer together.
Tim: Let's go to our audience. We'll have a couple of questions from the audience.
Female: Hi, I just have a question. How are you guys marketing your products? You mentioned people are trying to find their cousin or their aunt and their uncle. How do they know to use your service and where to look to know that it exists?
Frederick H.: So we two ways that we market. We have online and offline. So online we do our traditional Google Adwords, SEO, things like that, and social media advertising. Then we have offline where we'll send a direct correspondents to an inmate and say, "Hey, if you don't know. This is how you can stay in touch. Here is your options. Help your loved ones do this, and we'll give them a call to action."
Then we've done a really good job with SEO, so if you searched anything inmate or prison communication related, we're definitely going to pop-up.
Bill: Well, great.
Jesse: Great. Thank you guys so much. You're awesome.
Tim: Thank you so much for coming to Meet the Drapers and great meeting both of you.
Jesse: Good. Good talk.
Bill: I'm glad you're out and I'm glad you're doing something cool.
Frederick H.: Thank you.
Jesse: I love that you guys have matching shoes.
Tim: Thank you very much. Very good to see you.
Jesse: Yeah, nice shoes.
Frederick H.: Well, I think we surprised them a little bit with what we were building, but it was able to grab their attention, and they had some background. They had some background. They had met prior investments in other companies in the space, so the market there they understood. I knew that he would get what I was saying, and that's the biggest thing you want, investor. You just want them to get it. So I knew he got it at that point.
Our pitch kind of went fast, so we could have ... I could have slowed down and gave more information and background of the company, could have passed more information off. But other than that, the Q&A was really helpful and allowed us to go deeper than just the very surface level stuff to allow them to show how much of the business we've grown and built.
A lot of that didn't come across in the initial pitch. It was good group and it was definitely real comfortable and it was like a dinner meeting. More so than a gut wrenching, nut wikling pitch. You know what I mean?
Tim: What do you think?
Jesse: I mean I think this was so cool.
Rajeev Madhavan: Very impressive person.
Jesse: I was literally in prison last week, which is such an odd thing say, talking to many prisoners about how this is a major problem where they can't communicate with the outside world and a lot of the guys were trying to start businesses that connected prisoners to prisoners, but this is such a better business opportunity to connect to the families.
Rajeev Madhavan: He certainly, from his past itself, has shown the skills to do that in a very tough environment. He went inside and paid the penalty for that. But clearly some of that capability of managing people, he's certainly showing that.
Jesse: He was a real entrepreneur beforehand.
Rajeev Madhavan: He's a real entrepreneur beforehand, and he's just carried that through the five years of incarceration and he's back out and very big kudos to him.
Bill: I would back him in view of that story.
Rajeev Madhavan: Just that story.
Bill: Whether even if I knew I was going to lose all the money. I mean I really ... I would like to make a gift to the guy. He's really shown ...
Jesse: Yeah, he was great investors too before. He's such an incredible investor.
Tim: Your question for most entrepreneurs is have you ever managed anything? That guy has managed. He's like, "You know what? A lot of marijuana."
Jesse: He said it was a big business. Yeah, wow.
Rajeev Madhavan: In a very tough environment.
Jesse: He was in the military. In the air force.
Rajeev Madhavan: Yeah, the air force.
Tim: Yeah, they were both in the air force, so they served and then they served time.
Rajeev Madhavan: Then they made a super mistake.
Tim: They served and then they served time.
Jesse: Yeah, served and served. Served it all.
Tim: Yeah, so how are we going to serve Pigeonly?
Jesse: Okay. Thumbs up, thumbs down, thumbs all around.
Bill: Four ups. Hey, optimism is coming back to you.
Rajeev Madhavan: Optimism is coming back.
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