Fabian Schonholz’s Blog

For the nerds like me out there … classic newsgroup post. Very cool.

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A few years ago I started to get more serious about smoking cigars. I always liked cigars but was not too into them. Every so often I would be given one or would buy one. Boo was my once-a-year supplier. Every year at my mother-in-law’s Christmas party he would bring one for me. When my wife and I first started to date and got married, most times we went out we closed the night with a stop at a cigar shop and a walk while we puffed away on our stogies - those were the days!!! But I did not know what I was smoking, if it was good, if it was well preserved and all of the other apparently important elements that define “serious” cigar smoking.

About 5 years ago I was in Argentina for work and I decide to visit my sister at her farms for the weekend. We had dinner with Don Placido, her father-in-law - he passed on couple of years ago. He smoked cigars for 60 years. He smoked all sort of cigars, from most corners of the world that produced them. So … I go to Don Placido all proud of myself and tell him that I am getting into cigar smoking and I am a “great smoker”. He takes a look at me in a very condescending way and tells me I know absolutely nothing about cigar smoking; I was humbled. Instead of getting all personal about it I asked if he would point me to some good cigars. He suggests I visit a cigar shop in Buenos Aires , Hermes, where he gets his smokes. The sticks are cuban tobacco and leaf but hand wrapped in Argentina. When you go to the shop you can see the ladies wrapping them before your eyes. I go to the shop, of course, and tell them that Don Placido recommended the place and I want a few sticks “like Romeo and Julieta”. They immediately set me up.

Needless to say this cigars are great. According to Don Placido these are the best cigars he had ever smoked bar none. But … what did the old man know, he only smoked for 60 years. I brought a few back for friends and for me to have. I gave one of them to a friend of mine, that although not an expert, he knows a lot more than I about cigars. He thought these were AWESOME cigars. Maybe the old man knew something!! Finally, over a company dinner one night, I gave one of the other executives one of the cuban/argentinian sticks. Now … this guy smokes on a regular basis. He has a room in his house he converted to a smoking room/humidor. When I offered him the unassuming cigar he was a little skeptical. He looked upon my extended arm holding the cigar and was not so sure about it. If I remember correctly, I think he sort of growled at the cigar. He took a step back but finally took the cigar.

As he started to puff on the cigar his face changed, and it went from disgust to surprise in a matter of seconds. He could not stop puffing. He puffed and looked at the cigar in disbelief. After a few puffs he turned and looked at me. He paused … he was going to say something … his mouth moved but no sound came out … and he went back to puffing. A good 45 minutes later, when we finished the cigar he finally turned to me again and expressed how pleased he was with the cigar. Do you have more? He asked. I had couple more sticks on my pocket which I gave to him. And the next day, I brought from my cache a few more sticks for him to age. I remember with great pleasure the night and his expressions.

I continued to smoke the same cuban/argentinian cigars almost exclusively. I took over the supply of Christmas’ party smokes from Boo. And I made sure I had a supply of them at hand at every function I attended where smoking may occur. That is dedication my friends. There were only a few times were I smoked other sticks.

Last year I started expanding my horizons and started smoking other brands and trying other types beyond cuban seed and leaf. I discovered a new world of cigars from other parts of Central America beyond Cuba and I started to educate myself on what that meant. Honduras, Nicaragua, Costa Rica and Guatemala started to have new found meaning to me. Padron, Ashton, A. Fuentes, Rocky Patel and Gurka became new words in my vocabulary. As I normally do when I want to become well versed in something and decide that anonymous uneducated enjoyment will not do, I read and research as much as I can. Unfortunately I do not have all the time I want on a daily basis, but I have all the time I need over the course of my life. And part of enjoying these type of things for me is taking the time to learn and savor.

I drunk wine from an early age. I always enjoyed it. About 10 years ago I also started to get serious about it. I read and tried and researched and tasted as much as I could. And only after so many years I finally started to developed a palate worth mentioning. I am still not an expert. For example, my sister’s husband knows a great deal more than I. And a buddy of mine who owns a wine/cigar shop is 100 times more an expert than I will ever be. But I am proud of my developing wine connoisseur abilities and the road that took me here. I am taking the same road with cigar smoking. It will take me years before I can say I know even the slightest bit about cigars. And I will enjoy every single one of those years as I smoke one stick at a time one puff at a time.

Yesterday Sidney and I went to the Los Angeles County Museum Of Art and The La Brea Tar Pit on a photo shoot. Initially she was just going to help me by carrying my second camera but later she decided to get into the action. I am so proud of her. We traded cameras all through the day and we had a blast. We had a fantastic time.

These picturs are a collection of the best pictures we both took.

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Once a month, on the second Friday of most months, a CTO networking group that I belong to meets. Each meeting starts with a speaker - speaker in the loose term because it is not a fixed format - and then leads to questions and answers by the members and to discussions. This Friday the speaker was an individual that transitioned from being a CTO to being part of a VC. The attendance was not very abundant. However, since it is the path my career is taking and/or wants to take, I was not about to miss the meeting. The presenter brought up some good points and topics of arguments. And, of course, we all engaged readily. One in particular that developed into a full conversation once the speaker left was the initial cost of starting a company.

What Sangam Pant mentioned in terms of cost is that today it is VERY easy to start a company. It only takes $1M. Now … everybody jumped at that except another member and I. First of all, Sangam was using $1M as a figurate amount. Or at least I think he meant it does not take millions upon millions to start a company. Second of all, it is true, it does not take much money. You can use any of many OpenSource projects that are more than adequate for an initial buildout without compromising too much the quality of the architecture and application. You can successfully build on them. Or, you can use a small local team complemented with an outsource team at a fourth of the cost. I prefer the second option. It allows me to add more value to the company by providing a proprietary  code base and create opportunities for the future. Besides, I am more on the side of build than buy for core elements of the business.

The argument from the members was that if you are trying to build a $100M+ company , you need to start with adequate funding. $1M will just not do. My position is that you do not need to start with $10M or $20M. Or even $5M. What you need is to start. The initial problem of a start-up is two fold:

1. You need a product that works. Not juts technically - which is exceedingly important - but also from a business concept point of view. Is there a need in the market? Can a need be developed? Is the market ready for a product like “this”? Can the market mood help a product like “this”? There are a series of market factors that can be put into the conceptual analysis of a product. And many of those factors will help define the product, its marketing strategy and how the market is approached.
2. You need a business model. Now … this is the hard part. You need to devise a way to make money. It does not mean that you have revenues right away and it does not mean that you are profitable right away - although in a previous post I focused on the March To Profitability. Business models do not come by easily. Let’s restate this: An effective fully developed business model that matches the market mood and not only prevails, but gains traction, does not come by easily. A model like that takes time to develop and can only be developed by generating friction against the market.

How much does it take to start addressing these two questions? It changes from project to project, but does not need to be much. If the company is to get to $100M+ you will need growth investment; I absolutely agree that you will need more investment along the way. ALONG THE WAY. But first prove the “model”. Prove that there is a need in the market, or that the market will be somewhat receptive. And first begin to develop your business model and put it through some friction to see how it fairs. For the “first begin to” part of the project a “$1M” ought to be enough. Once you see a small light at the end of the tunnel and it is not an incoming train, the  you can go ask for $5M, $10 or more.

There is also a financial argument to not “taking” in big rounds at first: Valuation and dilution. The more the above questions are answered, and they do get answered over time, the higher the valuation. The higher the valuation the less the dilution. To the cost of a startup you need to add the cost of getting funding. Often enough there are situations where the founders of a company loose control of the helm because they get too diluted to retain a majority; in many of those cases you get there by either poorly negotiating or by asking too much too early and since there was no tangible value but value of an idea, the percentage sold is too large. Either case can be mitigated by having a more robust offering. Even if you negotiated poorly, the odds are in your favor if you have a more developed project well beyond an idea. Thus, the cost of funding is less. And the upside at the end is much larger for all involved.

Going back to the meeting … I have to say that I did not agree with everything the speaker said, his positions and the reasons for them. I have to say that I did not agree with the speaker in every idea or vision that he has on the market and how the market will develop. But the balance of what I got from him is positive. He was not only well spoken, but eloquent in the way he presented his ideas. And whether I agree with him or not, it does not matter. It is whether I could derive value from his experiences, concepts and intelligence.

Sangam, thank you for your time on Friday.

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A couple of weeks ago there was a blog post at TechCrunch (www.techcrunch.com) regarding web sites experiencing downtime as well as infrastructure companies experiencing failures in their operations. Obviously, the first take was on the revenue loss that each one of those companies experienced. In the case of the infrastructure company the concern and criticism comes from the websites they took down with them as they experience problems and their emergency systems failed. While I share on the critiques and concerns regarding revenue loss and customer experience, my take is more consumer centric.

Let’s take a few sentences to focus on defining some concepts: The Internet (internet) and the World Wide Web (web) are not the same. They are indeed related and one sits on top of the other. Internet is the infrastructure were the web sits. Internet is the infrastructure where also, email, Skype, Joost, Quicken and Quickbooks, amongst other applications, sit. But if you can access it on a “web” browser and is a website providing some form of a service, then it is the web. The web, in a sense, is a basic commerce platform. Basic not in terms of simple, but basic because it is a fundamental building block. While the Internet is the aggregated set of hardware and software implementing protocols that enable the web, email, etc. to exist.

The 20th century saw what seems today as accelerated development in technology. The second part of the century, initially driven by the Cold War, gave us a great many new technologies, the internet being one of them. As the infrastructure that is the internet expands into more places and high speed connectivity becomes a standard, more people benefit from access to the web. Indeed, the web of services available are of great benefit to us all; from the convenience of Online-Banking to entertainment to the access to more generic and educational content like Wikipedia. And we have just scratch the surface on the possibilities for services in the form of websites.

Both as the internet expands and service oriented websites become available, our dependency on those services grows as well. The problem must be viewed not in the form of a singleton, from a unique individual’s point of view. Of course, take away from me the online tools I use on a daily basis and my life will be extremely inconvenient. It is not just email, or the stock sites I visit and use, or Google. It is already ingrained in my way of life. So, imagine when a second person, who uses the same tools to interact with me, gets the same tools taken away? A small breakdown of the fabric of our society happens. Now, take it to a larger context, 100 people, all who interact with each other get their tools taken away. Disaster. Yet, we still do not have a complete break down on our society. It will take a few million around the world for that to happen. Nonetheless, it is a problem and a risk factor.

As individuals we are, more or less, dependent on technology as a whole. That dependency is based on personal preferences. But as a society we are infinitely dependent on technology. It is not just our cars, or the cellular telephone, or the internet and the web. It is the whole package. The difference, however, between the car or the telephone and the internet and the web, is that the internet and the web are more mission critical, but we do not realize the magnitude of how mission critical they truly are. The interesting part of the internet is that it was created as a fall-back and alternative communication channel in the case of a nuclear situation. Today, the internet is becoming THE COMMUNICATION channel. Again, our dependency on the internet and the web is becoming infinite.

A few years back there was a movie called Escape From Los Angeles (1996). It was a sequel to another movie premiered years before called Escape From New York (1981). Kurt Russell starred as Snake Plissken, a hard knocks ex military special forces and outlaw who did not mesh well with the new order of things. Both movies share the same basic plot. And both movies, although entertaining, had no permanent value - do not get me wrong, I loved both movies and to me they are cult classics. The second movie had an additional twist. The ultra religious conservative right had taken over the US’ presidency for a number of decades and had driven all form of freedom of expression to become illegal. Smoking had been banned, so was pornography, freedom of religion and speech. The media, all forms, was controlled by the government. In other words, all of the little freedoms to take for granted, in the movie, were gone.

Part of what drove the government and the citizenry was fear of being attacked by foreign forces; thus, a satellite was developed with the capability to neutralized all technologies in specific regions. The satellite was controlled by a remote controlled that had been siezed by a terrorist group which threatened the US if they US did not comply with some demand. Snake is sent in to retrieve the remote and if he succeeds all transgressions would be forgiven. He succeeds but suspecting the government about to double cross him, he decides to put the president to the test. As the plot against Snake is revealed, Snake activates the satellite using the global code. Thus, suppressing all technologies at a global level. Effectively, Snake sent planet earth to the 18th century.

Even though the movie uses technology as a gimmick to tell a tale, it is hard not to consider such a possibility. We have seen the effects on personal lives when online banking is not available or when Facebook goes offline. We have seen the effects on businesses when their sites crash and what it does to the bottom line. The instant something new comes up that sticks we immediately become dependent on it. And there is no end to it. It is as it should be.

Snake … press that button!!

UPDATE: A continuation of this post can be found here 

Recently I have gone bonkers with photography. What I mean by recently is the last couple of weeks. I have been bonkers about photography for a very long time. The last two week however, have been extra bonkers. I have a Nikon D80 that I bought about a year ago. This year I gave myself an early birthday present, a Nikon D300 - that happened couple of weeks ago - thus, most likely the reason for my going extra bananas is the new camera. What I have found by using the new camera is that I am forced to “work” it more, allowing me more freedom for artistic expression through photography.

When I was 11 years old my parents gave me my first camera, a Minolta 201 ST. It came with a 45 mm fixed focal length lens, a wide angle/fish eye screw on lens and a flash. I did not know much about cameras back then, neither did my parents. It was not the best camera for the money, or even the best set up for a beginner, but one way or another I made it work. I experimented and asked a lot of questions of the family photographer, Leo.  He suggested I took a class and in my normal “I will figure it out fashion” that remains one of my traits to this day, I never did. I do not regret it. I took some very interesting and good pictures.

Over the years I have been more or less into photography. It was a little inconvenient and the feedback was relatively disconnected. Since my photographic pursuits were 100% experimental, I was not technically aware of what I was doing. So when I got the pictured developed and back for review, it was hard to me for figure out the technical part of what I was looking at. I consulted a few books and Leo, but there was still no connection between what I was looking at and what had happen at the time of taking the picture. I was lacking that connection and it frustrated me. The higher the frustration, the less I was into photography until I would get a picture back of a subject I had snapped and the results where exactly what I had intended. Yes … there was a little “luck” involved in getting good pictures, however, I had developed some personal techniques to make shooting more predictable and less random. To this day my photography remains experimental.

I kept on shooting. Through my university years my photography declined. Along with photography I also liked to fish. Fishing also declined through the same years. I was too busy. At the beginning not exactly with studying, but in the end, I focused and mathematics took a primary role in my life. At the same time I rediscovered photography. There it was my old Minolta sitting there collecting dust. It had traveled to many places. From Miami where my parents bought it. To Argentina where I spent my formative years. To Santa Barbara where I went to school. And in between stopping in Punta Del Este, the East Sierras, Cordoba, Santa Fe, Mexico and many other places. It is 2008 and I still have it.

When I rediscovered photography in college, part of what I wanted to do was to take photos of naked women. OK … hold on for a minute. Yes, there was certain amount of being a young man with an exceedingly large amount of energy and libido, but you also have to admit that a woman’s body has an aesthetic quality that is hard to ignore. While men have square bodies, women have curves all over. I find the curves fascinating and with countless artistic possibilities. Women have been the muses for centuries for all forms of arts and wars. It was hard to find models. The best I ever did was photographing a friend of mine in a REALLY small bikini. She was a little shy and at the time of taking the bikini off, she felt a little self conscious. The photographs did not turn very well either which did not help with convincing her for a second photo-shoot. It was not the quality of the technique but the composition. I could not figure out how to frame people in a photograph, with our without cloths. I decided to experiment and give it time, but economics got in the way. As a starving student it was hard to afford the needed film, development and printing. I figure out ways to save on film by buying in bulk, but that was not enough. Shooting slowed down … considerably.

I kept on shooting but studying, getting married, getting divorced, moving to Los Angeles, getting a job and developing my career and the fact that cash was not so readily available kept on slowing things down. In 1996 I got married again and Elizabeth was very encouraging. The pace started to pick up again. In October 2000 I joined a company called Pictage; an online photo-lab for professional photographers. I was their VP of Technology for about 6 years. It was purely coincidental. As a matter of fact, I am not sure that I made it known during my interview that one of my hobbies was photography and during my tenure, not too many people knew. I architected, designed and managed the build of the technology that, to this day, runs Pictage.

In 2000 Digital photography was getting very popular. Sites like O’fotos and SnapFish made it possible for consumers to manage and print their digital photographs. But for professionals it was not that simple. Digital pro-cameras had become more accessible in price and a few early adopters had taken the plunge. Professional cameras with digital back ends were becoming more common in the market. But the workflow remained the same. Photographers had to cart their negatives - in this case the digital files - to their lab of choice to be printed. The labs themselves were not exactly ready to accommodate digital shooters. It was obvious that a lack of a digital workflow impeded massive adoption of digital photography at the professional level.

In January 2001 Pictage changed its business model to be more of a lab and provide not only hosting and photo-galleries, but also scanning and printing. Thus, the professional digital workflow was born. In 2001 Pictage was getting 95% film that needed to be scanned; the balance was digital. By 2006 when I left, film constituted less than 5%. The balance was digital. The interesting part of these numbers is that the proportion had been such since 2004. In a short 3 years Pictage enabled digital photography for professionals. Larger labs, like Miller’s for example, also figure out how to serve their customers. Nonetheless, Pictage, very quietly, changed professional photography.

When I first joint Pictage I had somewhat of a disdain for digital photography. I had spend many years figuring out the nuances of film and how to best expose it. I felt that digital could never provide the range and versatility film could. After a weekend in Mexico were I took a few pictures I had the film scanned and printed at work. I was blown away. I could see some of the difficulties that digital cameras were going to experience dealing with the range, but comparing a digital print to an optical print, I liked the digital version so much better. The color and matisse were deeper and even though they lacked in range, the image was more accurate with what I had intended. My conviction for film began to waiver.

At the same time this was going on I had been thinking about buying and experimenting with medium format. I had been eyeing the Mamiya 7. Sweet camera. One of the FujiFilm reps - our scanners and printers were Fuji - loaned me a FujiFilm 645 and gave me more film and development credits than I could ever use. I took the camera for a few weeks and shot to my harts content. First time ever where economics were not a factor. Well … what can I say about that??? As I would get the film developed I would have it scanned and printed. The results were just amazing.

My father-in-law had a Nikon CoolPix 990 and wanted to get the 995. He asked me if I wanted his old camera to which I readily accepted. Not only had I been in film bliss, now I could get into digital photography at no cost. One of the things I figure out immediately is “the more you shoot the more you recover your investment in a digital camera” - consider the cost of buying and developing film and the fact that you can readily choose what to keep and better select what to print. After the CoolPix 990 I upgraded to a CoolPix 5800, which I still have. My photography developed along and kept on getting better. But still, shooting good people pictures escaped me.

I became spoiled. I could shoot and print as much as I wanted. That flexibility allowed me to be very selective in what I printed. I went months without printing anything. I became more self-demanding. Shots needed to show exactly what I wanted. After I left Pictage my shooting went back into remission so-to-speak. I could see the pictures on my computer, but not being able to print them was a little demoralizing. Elizabeth encourage me to shoot again and to possibly buy a digital SRL. Or rather Elizabeth encourage me to shoot and I decided that if I was going to shoot, I was getting a new camera … and a printer. After some research I decided to get a Nikon D80 and an HP Photosmart Pro. I had been recommended the Canon Digital Rebel, which is a fine camera, but I had had such good results with Nikon in the past and the reviews were better than the Canon. My photography took a leap up and got dramatically better almost immediately. Better equipment does not make a better photographer, but it does open up possibilities. After experimenting I settled into using the vari-modes more than the manual modes. After a while I felt stagnated and my shooting decreased.

During the summer I had a chance to play with a Nikon D200. What I realized was that I needed to move off vari-mode and start using the manual and priority modes more. But on the D80 it was too easy to fall back into the vari-mode. In October 2007 I decided to buy a D200 and that is when I realized that the D300 was coming out in December and it was such a better camera. So … I waited for December and as mentioned, I got myself an early birthday present.

For somebody like me the cost-benefit equation of digital photography remains the same. The more I shoot the less expensive it becomes and the more I recover my investment. I am still in the mind-set of film photography. In reality, the cost-benefit equation does not exist anymore. The camera costs what it costs, and instead of film and development, now the cost goes into computers, software and hard drives. It is still less expensive overall with the added benefit of immediate feed-back (or gratification rather). But for my kids, there is no equation. My kids every so often go on photo-shoots with me. They use either one of the point-and-shoot cameras I have (or my wife’s) or the 5800. They do not know anything besides digital photography.

This summer the kids went to sleep-away camp for a month. We furnished them with point-and-shoot throw away film cameras. We showed them how to used and how to crank the roll. I explained to them that there was film inside and they needed to “advance” the film frame. I also explained how film works and the difference and similarities between emulsions and CMOS sensors. They got it, but it was funny to see how archaic they felt the mechanism was. They had the same expression when I told them when I was their age TV was black and white and not color. They did not understand that when my parents were their age, there was no TV. The same goes for other technological advances they take for granted; we on the other hand, have gotten so used to them that we have learnt to take them for granted.

A recent TechCrunch (www.techcrunch.com) blog post discussed not only website down times during 2007 but also infrastructure down time as well. My comment to the post reminded us all about our dependencies in technology and that not only revenue is affected during web site outages, but as consumers, we are also affected since many of us use the Web and the Internet to conduct our daily business. As my kids grow older and join the professional world, they will not be more dependent on the Web and Internet, they will be 100% dependent on them. Technology progress will not slow down, it will keep advancing. Sometimes at a gargantuan pace, other slower. Hardware, services and operating platforms are becoming more integrated. An example is digital cameras, as pictures are taken the camera can FTP them to a server and/or service (Flickr.com).

More and more technology and art blur together. In some cases technology renders a service to art, in others, technology is a part of art. There will be always be some die-hard purists that refuse or minimize the involvement of technology in art; thank goodness for them. Somebody needs to keep the old ways alive for us not to forget where all comes from. However, even they need to understand that technology and art have always been and will always be intertwined.

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