Meet the Harvard MBA Who Turned Down Facebook to Found a Startup
Before turning 30, Evan Baehr had graduated magna cum laude from Princeton’s Woodrow Wilson School, Yale’s Divinity School, and Harvard’s Business School. He’d worked as a legislative aide for Congressman Frank Wolf, served as an advisor for PayPal co-founder Peter Thiel, and been offered a full-time job by Facebook COO Sheryl Sandberg two years before the social network went public. Had Baehr accepted that offer, his financial and professional future would have likely been secure.
But Baehr chose a different path.
In 2011, he called Sandberg to tell her he was turning down her offer to instead found Outbox, an ambitious startup aimed at disrupting the antiquated mail delivery model by building a new, digital version of it. Initially, the company received a lot of hype and attention (as well as investment capital from tech luminaries like Mike Maples and Peter Thiel), but Outbox folded in 2013 after it became obvious that the company’s business model — and its partnership with the government — was untenable.
Like many great entrepreneurs, however, Baehr and his co-founder Will Davis didn’t view that failure as a dead end.
In fact, within a few weeks, they’d taken the company’s team (and what was left of the $5 million it had received in outside funding) and spun it into an entirely new venture — a small business fundraising platform they called Able Lending. Watch the video below to hear Baehr explain when (and why) he realized Outbox needed to pivot, why he still believes turning down Facebook was the right decision, and what he learned from Peter Thiel about embracing irrationality and attacking narrow markets.
On turning down Facebook
- Big organizations typically aren’t the right apparatus for making big changes. Many of Baehr’s classmates from Princeton went on to become lawyers, work for investment banks, or take government jobs in Washington, D.C. Initially, Baehr thought going that route would be the best way for him to make a global impact. But what he found was that government (and even big businesses like Facebook preparing for an IPO) weren’t exactly the best petri dishes for exploring new, potentially game-changing (read: risky) ideas.
- Being a tech entrepreneur means creating things, not being an engineer. Oddly enough, a casual conversation with an investment banker friend changed Baehr’s entire view of entrepreneurship. “He said: ‘Being in business and being an entrepreneur just means you create things — and you love to create things,’” Baehr recalls. “That’s what turned me on initially to the prospect of what being an entrepreneur could be.”
- If you want to start a company in two years, what you should be doing now is starting a company. Even if you know that company will fail, the best way to prepare to for a successful business is to start one, Baehr says. If it fails, you’ll be almost more prepared to start a new, successful company than if the first one had succeeded. Ultimately, that’s why he turned down Facebook. He knew that, eventually, he wanted to start his own company and he worried spending several years at Facebook wouldn’t advance him toward that goal.
On knowing it was time to shut down Outbox
- Sometimes, things are out of your control. Initially, Outbox was built in partnership with the United States Postal Service — a fact that was fundamental to the company’s business model because it meant Baehr and his team wouldn’t need to build out a massive operations platform to deliver on the product. A year into building the company, however, the team got a call from the Postmaster General of the United States, who asked them to fly to Washington D.C. for a meeting. Baehr and Will Davis obliged, and within 30 minutes of that meeting they learned that the USPS was shutting down the partnership.
- Changing the business model — and being honest about the results. Soon after that meeting, Baehr and Davis grappled with how to adapt Outbox’s business model in the absence of the USPS partnership. The result: What Baehr calls a totally insane, Hail Mary pass. Initially, customer feedback on the new business model was positive, but its metrics weren’t: customer acquisition cost and the cost of delivering the actual service were 2-3x. “I believe the purpose of a startup is to marshal resources beyond your immediate control in order to uniquely collect data that can confirm or deny a hypothesis,” Baehr says. “We’d done all those things well. The data we got back did answer the hypotheses we had. It just negated them.”
- “We didn’t invest in the mail business. We invested in you.” The good news? Outbox had just raised $5M and already assembled an outstanding team, which led to the company’s investors telling Baehr and Davis: “We did not put money into the mail business, we put money into you guys. So, you have all this capital and you have a great team — you have a license to go build something awesome.”
On the importance of irrationality and narrow focus
- How an entrepreneur knows if they’re doing something truly unique. There’s a tension in trying to build a transformative company, and there are some common challenges those companies will face. But one easy way to tell if you’re building something that can change a market is by holding it to a line from a German literary critic: “Great work both invents and exhausts a discipline at the same time.” Baehr says a great example is Uber, which created an entirely new market and was so good at doing so it has totally dominated it.
- Avoiding the “One Percent of China” strategy. When trying to articulate the potential of a business, a lot of people will say, “This market size is X billion dollars, so if we only manage to get 1 percent of it we’d have a lot of money.” The problem with that way of thinking is you never succeed by getting 1 percent of a $100B business — you either get squashed by incumbents and get zero percent, or you succeed and become one of the market’s giants. Baehr says one of the most important learnings he’s taken from Thiel is the importance of finding and targeting a narrow market that gives you the best chance of growing into the dominant player.
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