Doxo, Aspiring to Become Grand Central for Online Billing, Nabs $10M

2/16/11Follow @curtwoodward

Seattle-based “digital file cabinet” service doxo, which wants to torch that stack of paper bills you get every month, is out with a pretty nice one-two punch today. They’ve landed a significant partner in Puget Sound Energy, the largest electric and natural gas utility in the Puget Sound region, along with a $10 million venture financing.

The Series B cash infusion is being led by a new investor in Sigma Partners. The new round also included Mohr Davidow Ventures and Bezos Expeditions (yes, that Bezos)—two firms that led doxo’s Series A financing in late 2009.

The money will keep doxo growing for the foreseeable future. The company plans to add significantly to their 20-plus employees, particularly in development and marketing.

“We’re in great shape. We’re cranking now,” CEO Steve Shivers says.

Doxo came out of stealth last year with a vision that I’ll call the New Boring – they want to make paperless account management totally routine. The idea is to digitize old-fashioned paper mail from various creditors, service providers and the like, route it to doxo’s website instead of your post office box, and make it easy enough that lots more consumers will go paperless.

The doxo service is meant to be pretty seamless for businesses, without any need to spend money on big IT installations, for instance. It’s free on the consumer end. Doxo hopes to make some of its money by getting businesses to pay a fee for customer communications that pass through doxo’s hub. The more volume of transactions, the more money doxo ought to make. But even while that can add up fast, doxo says it can be a net savings for businesses by cutting bulk mailing costs.

Puget Sound Energy joins Sprint and Kansas City Power & Light as doxo clients.

Doxo also has a newish bill-paying feature—PSE is the first customer to use that side of the business—which isn’t surprising for a company started by veterans of the mobile-commerce firm Qpass. Perhaps more interesting is the idea that doxo’s initial focus hasn’t been just the payment stream, where there are plenty of players, but also the flow of account statements, claim-processing paperwork and other assorted mail.

Doxo sees a greatly underserved market there, with businesses that don’t have a regular consumer billing cycle being skipped by vendors who focus on digitizing payments. Meanwhile, many businesses are still spending tons of money sending out paper statements to customers, even though neither side may particularly want to do that anymore.

Which, Shivers argues, has led to a strange situation: More than half of consumers may be paying bills online, but far fewer are getting their statements electronically.

“Say you’re in health insurance and you’re mailing out tens of millions of explanations of benefits every month,” Shivers says. “You haven’t had any business come to you and say, ‘Hey—I can dramatically increase your paperless adoption.’”

That’s not to say the payment-processing service is necessarily playing second fiddle. It sounds like doxo expects that part of the business to be fully integrated and always available. But Shivers said the focus has been on digitizing the paper stream first and then worrying about whether there’s a billing function they can handle.

Quick side note: Doxo’s bill-paying service, doxoPAY, operates on a fee-for-service basis instead of taking a percentage of the action. Shivers has some choice words for the payment-processing industry.

“I’ll bet there is no more convoluted and unnecessarily complex system,” he says. “A lot of it has been set up specifically to allow a bunch of incumbent players get a piece of the action here, there and everywhere.”

Obviously, the big challenge for a service like doxo is ubiquity, or something close to it. A service like this needs to be hooked into all the major bill-collecting outlets—utilities, cable companies, Internet service providers, the list goes on—before an individual consumer can truly go paperless with a hub like doxo. Doxo argues that one major reason more consumers aren’t going paperless at a high rate now is the multitude of accounts, usernames, passwords and middlemen required to manage all those information streams.

What it also means is doxo won’t take off unless it becomes the center for nearly everything that you presently get in the mail on a regular basis.

Starting with a utility is an interesting step along that path. With a solid baseline that could get you into tons of homes—PSE claims about 1 million electric and 750,000 natural gas customers in the Puget Sound region—doxo says it can now head out to other national, regional, local and even hyper-local providers who have customer overlap.

In the next quarter, Shivers says, doxo plans to build on the PSE partnership to focus heavily on adding more service providers in the utility’s service area. The big idea there is to build a strong portfolio of Seattle-area service providers as partners, from the big cable or phone company down to your kid’s private school or even the landscaper, and replicate that model in other regions. (Doxo will still have a national focus too—Shivers says more companies may be announced soon.)

The desired end state for doxo would actually be sort of like a utility—always there, running basically in the background, not flashy or really all that noticeable (unless it breaks).

“Frankly, I’d say the more invisible we become, the better,” Shivers says. “It’s not often that you’re creating a service that I almost want you to go without thinking about.”

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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