Pigeonly's CEO helps prison inmates

Marco della Cava | USA TODAY

Show Caption Hide Caption From inmate to entrepreneur Frederick Hutson, is the founder of Pigeonly, a tech company which helps inmates make calls to and receive photos from relatives at prices that undercut what's currently available to the community. The idea for his company was conceived in prison.

LAS VEGAS – Not far from the slot machines and neon lights of the Strip, a few dozen tech companies hammer away at the future in a downtown area revitalized by Zappos founder Tony Hsieh.

But you can bet that no founder here has a stranger story than Pigeonly CEO Frederick Hutson.

In the fall of 2007, Hutson, now 30, was flush with success from a business that distributed marijuana when a dozen Drug Enforcement Administration officers pulled up to his A-OK Mail Center with guns drawn.

"They put me in handcuffs and arraigned me at the courthouse just down the street from where I sit now," says Hutson, offering an embarrassed smile. "I don't know that I've changed, because I still have a high tolerance for risk and a desire to solve problems creatively. But I have matured."

Hutson did 51 months in jail. He came out with a determination to make it big legitimately, and an innovative idea of how to do so.

Pigeonly helps inmates stay connected with family by providing them simple ways to receive hard-copy photographs and place inexpensive long-distance phone calls. Its secret sauce is a proprietary 50-state prisoner database that makes locating inmates as easy as typing their names in a search box.

Ultimately, Hutson envisions building a suite of Pigeonly services for inmates and their families that could include listings of employers and rental agencies that work with ex-cons and a financial services arm that would cater to the 30% of Pigeonly customers who do not have bank accounts.

"I know the population I'm building this business for, and that's my advantage," Hutson says of the 2.3 million men and women currently behind bars and their kin. "You put all those people together, and that's a large market. But more importantly, I saw firsthand that inmates who stayed in touch had a better chance of not going back to jail after they got out."

Connectivity with the outside world is crucial to the fight against prison recidivism, says David Fathi, director of the ACLU's National Prison Project.

"Nearly 95% of prisoners are coming home, so what kind of people do we want back in society?" he says. "A successful re-entry is always linked to how well an inmate kept in touch with the outside world. To the extent that a company (like Pigeonly) can mitigate the harsh and stressful world of prison and give people that sense of self through contact, that is very positive."

What sets Pigeonly apart from most start-ups is the $1 million in seed funding it has received from top Silicon Valley players such as Lotus creator Mitch Kapor.

"Frederick is a stellar example of entrepreneurs who pursue business opportunities that come out of their own experience," says Kapor, whose Kapor Capital is the investment arm of the Kapor Center for Social Impact in Oakland.

"You could hang out at Stanford University until the end of time and not find someone like Frederick, which is why it is so important to cast a wide net when it comes to funding," he says. "But simply put, his was one of the best founder presentations I'd seen in a long time."

Hutson has always been a hustler. Growing up in Brooklyn with a single mother and three siblings, he helped supplement the family income — which was anchored to a restaurant his mother ran out of their apartment — by doing fix-it jobs for neighbors.

After a move to St. Petersburg, Fla., where he attended high school, Hutson enlisted in the Air Force and worked on F-16 fighter jet engines out of Nellis Air Force Base outside of Las Vegas.

When the Air Force looked to downsize in 2006, Hutson received an early and honorable discharge. Ever the entrepreneur, he bought and sold a series of small local businesses — window tinting, cellphone accessories — when an old Florida friend told him about his marijuana-smuggling enterprise.

Hutson thought he could find a better way, and he agreed to help. "I thought I was smarter; I felt I was just fixing a business problem," Hutson says softly.

Soon, using FedEx, UPS and other shipping services as unwitting mules, the enterprise was netting him upwards of $500,000 a year. A fancy Las Vegas house, cars and jewelry followed. "At first, I just wanted to make enough to start a few new legitimate companies," he sighs. "Then it was just about having fun. I was 21. Dumb. One of the UPS drivers rolled on us. The DEA showed up."

The stigma associated with a prison term remains very real. Hutson experienced it last year when he tried to rent an apartment in the same Las Vegas building that houses Pigeonly's offices, succeeding only after he got a few co-signers on the lease.

But more broadly speaking, those coming out of jail today "don't face quite the same thing that people did 20 or 30 years ago, perhaps just because there are so many people cycling in and out of jail now," says Paul Wright, a former convict who is founder and editor of Prison Legal News in Lake Worth, Fla.

"A lot of former prisoners try and start companies, some of which are aimed at the prison population," he says. "But more than the most, the tech industry doesn't seem to care as much about your background. It's mainly, 'Do you have a business plan, and can you program?' If the answer's yes, many are happy to hear you out."

Another big Hutson investor, Erik Moore of Base Ventures, encouraged the entrepreneur to relocate Pigeonly from Hutson's post-prison stint home of Tampa back to the scene of his crime in order to be around like-minded tech founders. While Hutson says many wondered if he could be trusted, a few believed.

"I got a lot of, 'I can't get my mind around the fact that I'd be investing in a felon.' But in the end, others saw that I may be the best person to help this population," he says. "As is true in business, showing people numbers is what did the trick."

Specifically, Hutson showed how a direct mail campaign — letters are the only way to communicate with inmates — touting Pigeonly's Fotopigeon service (50 cents per print) got an unusually high response rate of 25%. Since launching in early 2013, he's grown that business from 1,000 to 10,000 photos a week.

Pigeonly's latest venture, the Telepigeon phone service, kicked off last December. It works by generating a phone number that is local to the incarcerated family member, who is then informed of the number by mail.

When it is dialed, the call is automatically transferred to the phone of a family member regardless of their location, reducing the cost of each call from 23 cents to the 6-cent local call rate.

With just 11 employees, Pigeonly has far from taken wing. But Hutson isn't likely to let this legitimate golden opportunity fly away. The way he sees it, millions are counting on him.

"I've helped kids talk to their dads and moms and saved real people real money in the past year, and that's humbling and motivating," says Hutson, flashing a disarming and ever-present smile.

Asked if he is a role model, Hutson shrugs.

"Not for what I did before, which was stupid and hurt my mom and my family. But I enjoy being an example now," he says.

"In the black and brown community, people don't knock on certain doors because they think they shouldn't. We usually don't have uncles who majored in computer science, so we start barbershops and mobile car washes, which are fine. But I'm here to say, you can knock on this door, too."