Murray Martin: Thinking outside the mailbox

The Business Interview: Pitney Bowes has the US mail franking market licked, but its CEO tells Stephen Foley the firm's future is digital

Apparently, there is a photo. "But, no, you can't have it," Murray Martin says with a grin. There is a Simon Cowell mask in the corner of the Pitney Bowes chief executive's office, but it is not the time he wore that he is being coy about. It is the time he dressed up as Steven Tyler, the Aerosmith frontman-turned-American Idol judge, for the company's "Innovation Idol" competition, when Pitney Bowes employees are feted for suggesting promising technological ideas. (The winner this year, since you ask, was an idea for embedding more interactive information into QR codes, those barcode-type squares on ads that you can snap with your phone.) "You should have seen me in the Steven Tyler wig," he says. "But, no, you still can't have the photo."

Behind the razzmatazz of Innovation Idol is a serious purpose for Mr Martin, who is racing to remake Pitney Bowes and pushing the company in all sorts of new directions.

Messrs Arthur Pitney and Walter Bowes created the first franking machines in the US almost a century ago, eliminating a lot of stamp licking at the nation's businesses, and the company is now a $4bn (£2.5bn) goliath which dominates mail franking and whose machines can now do much more than just stamping the envelope. It also prints and sends millions of bills and junk mail on behalf of big customers. But...

"Nothing wrong with postal machines at all," Mr Martin says, "however the volume of mail is not increasing." Although email and the internet haven't quickly killed Pitney Bowes, they are the grim reapers on the horizon, so the company has been inventing ways it can muscle in on the digital communications between companies and their customers. Inventing, and acquiring companies, too. Last year it paid £44m for a UK-listed company called Portrait Software, one of 80 takeovers in the past decade. In the UK, home to 2,400 of its 30,000 employees, it helps retailers including Marks & Spencer choose the location for new stores, based on its databases of demographic information.

Mr Martin has also taken a leaf out of Apple's playbook. The latest franking machine for small business – it's called the Pitney Bowes Connect+ – is a "platform", not just a machine. As with the iPhone, app developers are being encouraged to design extra features for the machine. Soon, it won't just print the postage but may also be able to check the accuracy of addresses or target direct mail to the right type of household.

It is all a far cry from the first hulking postage meters on display at Pitney Bowes's Connecticut headquarters, complete with Dickensian-looking pots where operators had to put the ink – but let's not forget those machines were on the cutting edge in their day. "Pitney Bowes has always been an innovative company," its chief executive says, "and it continues to reinvent itself. That's why it has been here for 90 years".

One interesting thing about our interview: at no point does Mr Martin utter the word "paper". Not once. When he means paper, he says "physical", as in, not digital.

He has been scanning and saving his mail in digital form for about five years, he says, an experiment that, through some twists and turns, led to Pitney Bowes's latest big idea – a web service called Volly where consumers can collate all their bills in one place, from credit and store cards to utility bills. It is going live in the US around the turn of the year, and ought to be available in the UK by the end of 2012.

"It went back to a vision of this, and asking what is it like to deal in a digital environment in your home. I digitised the mail and I gave the physical to my wife. She took care of the physical files and I took care of the digital, and we looked at what were the problems with finding things if it's digital versus physical.

"My wife gets roped into all of it. If we build a new product I give it to her. She says, 'I hate it because you talk about it afterwards.' You want somebody who is not familiar with it, hasn't thought about it, someone who is not a technology person. It's too easy to make things that work for somebody who is well-versed, instead of somebody who isn't. She doesn't like being the tester, but..." He grins again.

Volly enters a competitive and fast-changing arena, where start-ups and multi-national companies alike are fighting to persuade consumers to bring all their log-ins and online activity into a single place. Some analysts are sceptical that Pitney Bowes is spending its money in the right place. Maybe it would be better if it just took all that cash from its lucrative franking and printing business and gave it back to shareholders.

Mr Martin points out the dividend is already generous, and he is sure Volly has a decisive advantage over rivals. "In America, our equipment creates or processes 74 per cent of

all the bills; globally it's well over 50 per cent. It's going to take years for adoption to occur, but where does it start? It starts with the biller, and if you don't have relationships with those billers, you are going to have to try to find them and create them. We provide an integrated digital and physical solution that can migrate as the consumer allows it to migrate."

How fast will consumer adoption be? We will have to see. In the meanwhile, Mr Martin will have to indulge his speed-freakery outside the office. Just before our interview, he had received a DVD of footage from a recent day out at Silverstone in the UK, where he drove the new McLaren MP4-12C and was taken for a high-speed spin by Lewis Hamilton. "I love fast cars," he says, again with the grin. "I like to use somebody else's car, though. I would love to race, but I don't. I don't think the board would be thrilled with the idea."

Murray Martin CV

Born 11 December, 1947, to a Mennonite minister in the farming community of Hawkesville, Canada.

College Maths and computer science at the University of Waterloo but dropped out – like Mike Lazaridis, the founder of Research in Motion. Since made Distinguished Fellow in cryptographic research.

Career Joined Litton Industries as a salesman, aged 19, and 10 years later was company president. Has been at Pitney Bowes since 1987, chief executive since 2007 and chairman since 2009.

Passions Business (he raised German Shepherd dogs for money aged 5, and ran a country store aged 10), fast cars and ice hockey. He has had a gold front tooth since a hockey injury 48 years ago.

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