Yes I would pay for email, but I think its a very hard industry for startups. The industry is consolidating around certain players and their economies of scale

Yes I would pay for email, but I think its a very hard industry for startups. The industry is consolidating around certain players and their economies of scale make it extremely difficult to compete. Owning and maintaining infrastructure and email systems is high consequence, technically difficult and expensive. Even well known email providers that you've heard of actually white label bigger, more sophisticated providers infrastructure/mail system. However, that shouldn't stop you from trying. It’s really easy and cheap to validate your idea. Sign up as a reseller at Rackspace, Intermedia, Apptix, etc. Now go get customers- direct customers are good, but channel is king in email hosting space. You want to build a partner channel of IT consultants that go into small businesses and do managed services. They’re already providing IT, selling your email is an easy upsell and extra revenue for them. If you can get a ton of resellers/consultants, spending money on your own infrastructure becomes slightly less risky.