Fabian Schonholz's Blog

April 20, 2008

Customer Service In The Era Of The Internet

Filed under: Business, Thoughts — fschonholz @ 9:53 pm

I despise talking to customer service. Most of the companies I have had to call either for information, to report a problem, ask for a refund, get an RMA, or anything related to service, have resulted in horrible experiences. The customer service reps have been rude, they have lacked product knowledge, they have been less than attentive and willing to listen and have made no efforts in trying to find a solution that worked; to make matters worse US based reps can barely speak intelligent English. To the above equation you need to add reps not based on the US. It is not the accent that bothers me – mine is so thick you can cut it with a knife – but the lack of a customer centric culture. The accent just gets further in the way and aggravates the situation.

There are two companies where the experience is 180 degrees in the other direction: USAA and LaCie.

To call USAA’s customer service exceptional is to not do them justice. They are superb. I am not sure how the reps are trained, but I am yet to talk to a rep on the phone and not gotten the help I needed. What impresses me is that when a rep does not know the information, they freely admit it and they are not exactly apologetic. However, they know where to go get the information and who to hand you over to. The hand over from one rep to another is also fantastic. The first rep introduces you to the second. The second greets you and the first one asks the second if he/she has you. If the answer is positive, the first bids you good bye and now you are talking to the second rep, who had been fully briefed before you started talking, thus, not having to repeat yourself. Of the few times I had to call USAA – they have a great track record – and in those few times the experience has been consistent: Great customer service every time I call.

The experience with LaCie was completely different. I called to complain about an order I had placed where one of the items was back-ordered. My complaint was that I had been charged for the back-ordered item even though it had not been delivered, or so it seemed. The customer service rep, although I was very short, was nice, cordial, composed and quickly turned the situation around by being understanding of how I viewed the situation. He very quickly changed the mood and tone of the call and resulted on a happy customer. I am not sure if that is the experience I will get next time. Regardless, it was a pleasant one. The most important part of this experience was that even though I was in “the wrong”, I was never made to feel that I was wrong.

Few other experiences rival LaCie’s. So few that I can count them with one hand and have change. By at large, my experiences are really crappy and frustrating. The worst experiences are the in-store experiences. Two companies are notorious in my book: CompUSA and Fry’s Electronics. I will not go into details of these experiences because there is nothing to learn from them and in all honesty, I would waste your time describing them. But let’s just say that the reps where less than intelligent; their knowledge of what the products they carry is near nil; their interest in taking care of you is non-existent; their personal hygiene and presentation also lacking. And their vocabulary … well … let’s just say that my children have a better vocabulary than the people I encountered have.

I completely understand that the opportunities for education these people have had are not, to any degree, comparable to mine or my children’s. And I do not blame them for their lacks. I will, on the other hand, make them responsible for it. Who I really blame is the store managers (who probably also do not know any better) or regional managers. I blame people all the way to the top. They are the ones that lack customer focused service and since they lack it, they can not expect their chain of subordinates to react any different than they currently do.

A while back I was recommended I read a book called “Raving Fans” by Blanchard and Bowles. This book is a good example of why USAA and the CS Rep at LaCie are so effective in providing exemplary customer service. I recommend you read it. To think of it, the person that recommended it should read it again. His organization’s customer service is beyond lacking to the point that Fry’s and CompUSA’s in comparison are not too bad.

The customer service landscape today is, based on my experiences, a minefield with a few safe havens. But it needs not to be such a disaster. Traditionally customer service had information issues. In other words, a customer service rep lacked complete and accurate information. And when the data was available, it was hardly ever integrated and presented in such a way that helped the rep. Once upon a time I used to work for Prudential Group Insurance, West Coast Operations. My main responsibilities were to provide technical assistance to customer service reps (CSRs) and help them navigate a series of disconnected mainframe based systems. This was in 1994, ages ago in internet times.

Fast forward to today. CSRs’ operations are no longer, for the most part, mainframe based, and most system have been integrated in such a way that the information is presented in a series of screens that make life much easier to find. To make matters better for CSRs, many of the system offer key-word search to assist finding information more efficiently. A clear example of some of these advances is banking. When you call your bank, in many cases (BofA Credit Card Services for example), you are connected to CSR in India, The Philippines, and other. The rep has access to a great deal more of information regarding your account and transaction history.

Putting the cultural and language elements aside, the first issue starts with security. Some person in some country half across the world has access to some of your most important financial information. But that would not change if the CSR was located here in the US, or for Europe in Europe or however local. What would change is the ability to do background checks. Secondly, what level of encryption in maintained for the connection between the outfit in India, for example, and the data repository in Colorado, again for example? If it was local, then there are regulations that need to be observed and regulatory bodies that conduct audits. Although these regulatory bodies extend their scrutiny to vendors and providers, I am not sure of the level of efficiency and transparency rendered in the above mentioned audits.

However, security, technolgy and data/information even though paramount, the problem remains with my chief complaint: Lack of customer focus on the part of the CSRs. And with the information they have at their disposal and the installed systems providing the information, I am utterly surprised service is still lacking.

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April 13, 2008

Ethics And Morality

Filed under: General, Thoughts — fschonholz @ 9:22 pm

For a while now, I have been concerned with Ethics and Morality. What they mean,  how they relate to each other, how humanity interprets and implements them, whether they extend beyond humanity and planet Earth, the history of Ethics and Morality and how they have evolved through time. Ethics and Morality did not start with Greece and the classic period, but for all accounts, at least as far as I know, the concepts were formalized then.

I have spent a few weeks now reading definitions. In the original version of this post, I had included a few of them. But then the post became too technical and about definitions rather than discussion and intellectual investigation. Moreover, I encountered contradicting definitions from different sources. I am enclosing a summary of the encountered definitions since they provides a frame of reference for the rest of the post:

  • In one set of definitions Ethics was defined as the study of Morality, while Morality as the study of Ethics.
  • A second set defined Ethics as the study of Morality and Morality as “the principles concerning the distinction between right and wrong or good and bad behavior”.
  • A third definition defines Ethics as the study of “what is good and what is bad and how it applies to behavior” and Morality as the study of Ethics.

Now you see the problem. The first definitions create a circular reference. It defines one in terms of the other and provides no scope as to what the true nature of these words really is. The second and the third are in direct conflict with each other. One defines Ethics in terms of what the other defines Morality.

My concern with these concepts goes beyond definitions, meanings and interpretations. I often argue that humans as a specie has yet to develop intellectually. We lack vision and imagination to truly incorporate time expanses of trillions of years and distances of billions of light years. And along those limitations, we lack the capacity to understand the true nature of the universe. Moreover, we have developed this limitation in the tongues we speak and write.

I try to think outside the box. I try, with some level of success, to think beyond the intellectual limitations inherent to humanity. Not because I am more intelligent, but because at least I recognize the limitations are there and I attempt to break through them. At the risk of sounding conceited and arrogant, if Einstein did it, so can I. In trying to break through the limitations I often try to organize concepts in hierarchies. Proof of my limitation is that I have started to think in trillions of years and billions of light years, while time and space are infinite; and no matter how I reconstruct my hierarchies, I can not visualize and internalize this infinity. But slowly, I am getting there.

Ethics and Morality are part of this thinking outside the box and organization. Just as Mathematics (I will argue the universality of Mathematics in a separate post) and mathematical concepts are true here on Earth, as in the Moon, Alpha-Centauri or 100’s light years away in any direction, other constructs and concepts must be as well. So, if the concept of  1 + 1 = 2 here on Earth or 10 Billion light years away holds, so does the concept of Good and Bad. However, before we can define this concept we need a framework.

Looking back at the summary of definitions above, I subscribe to the second one:

“… defined Ethics as the study of Morality and Morality as ‘the principles concerning the distinction between right and wrong or good and bad behavior’”

This definition provides a workable framework for the way I see Ethics and Morality. Ethics is an abstract concept while Morality deals with specifics. In other words, Ethics is a theory, a collection of ideas and concepts that describe esoterically a state of being, while Morality is the implementation of the theory. There is no weight in Ethics. There is no judgement in Ethics. There is no bias in Ethics, just the description of how to build a system of moral values, whatever these values may be. On the other hand, Morality is all about weight, judgement and bias. Morality is the implementation of an ethical system.

The table below is provided as an example of other conceptual and implementation associations in the hopes that it will clarify the argument above:

table_001.jpg

From the definition and table above I have established that Ethics is a theoretical construct while Morality is its individual implementations. Thus, what follows is that there is more than one morality, which indeed there are.
If we want to think of Morality as a complete concept, whether or not as an implementation of Ethics, we need to think of it as a collection of individual moralities. These moralities, in the majority of cases, are based on religious or cultural basis. We can consider a Christian Morality, which in itself could be considered a collection of individual moralities following the different Christian splinters (Roman Catholic, Baptist, Episcopalian, Church of England, etc.) Similarly, a Jewish Morality may follow an alike pattern and be a collection or moralities in the same form as Christian Morality. So on and so forth. (But, outside of religious based moralities, what other moralities can we find? We will come back to this later.)

These moralities all deal with specific behaviors. In the case of Judaism, in particular within the orthodox communities, there are 613 Mitzvoth (commandments) that must be followed and observed. A portion of these are regarding good: “You Shall”, and a portion regarding not good:”You Shall Not”. These commandments are the basis for a behavior and the compendium of moral codes. Yes, I am equating commandments to behaviors, but that is exactly what a commandment is: a discrete behavior. A commandment is a quantifiable action and the collection of quantifiable actions represents a behavior(s). I will assume that Christianity, Buddhism, Islam, etc., follow a similar pattern of commandments and behaviors. Furthermore, while I do equate commandments or compendiums of moral codes to behaviors, I am not equating religion and dogma with morality. This distinction is important.

Does Ethics deal with good and bad? Or Good and Evil? This is an important question. In my opinion no it does not. However, when discussing Ethics we normally fall into discussion of good and bad, Good or Evil. Why is that? Because our inability to maintain a level of abstraction. Based on the above definition: “ … Ethics as the study of Morality …” we can clearly see another reason why we fall into identifying Ethics with good and bad, Good and Evil, it seems implicit in the definition since Morality is defined as the study of good and bad “behaviors”. What seems implicit, it may not be.

Athenians and Spartans shared the same logical bases and by at large the same code of Ethics. But their moralities had points of difference. While Sparta condoned euthanasia, Athens repelled it. The moralities of the two city-states where based on the same set of religious beliefs, the same set of logics, same philosophical backgrounds and bases of governments. However, Spartans, based on their needs supported the systematic disposal of undesirable genetics traits by killing new-borns that did not measure up. Today, we would consider this practice evil. But that would be our morality speaking and not Ethics.

To summarize

  • Ethics is the theory of actions and behaviors that can lead to good and bad, Good and Evil. However, it does not label any of the identified actions and good or bad, Good or Evil. It also deals with the concept of good and bad, Good and Evil but does not create an association between actions and these concepts.
  • Morality creates associations between actions and behaviors and good and bad, Good and Evil. These associations are normally built in the context of religious dogma and culture.
  • Ethics is universal. Since it does not deal with associations, the concepts can be transposed to any part of the Universe without loosing validity.

The exceptions that prove the rule

There are two questions that I will not answer, but are pertinent to the topic in this post:

  1. When we talk about business and the concepts of good and bad, we discuss them in the context of Business Ethics. However, isn’t this the case of a mislabeled morality?
  2. Is “truth” (not THE TRUTH) part of Ethics or Morality?

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March 16, 2008

God

Filed under: Religion, Thoughts — fschonholz @ 8:18 pm

So … here comes Bob and tells me that he had a discussion with a Rabbi and the Rabbi suggested that God might have created the Universe several billion years old and earth with all the fossil evidence of an older system. However, the Universe and the planet is indeed only 6000 years old or just about. Well … it is a possibility. In our limited definition of God (or a God), an entity with the assigned “powers” could have done things in such a way. I fail to understand the logic of such creation – except as a joke – but then again, there are many things that have nothing to do with logic as we understand it and are beyond our limited understanding.

When I started to study Torah with Josale – he is a good guy, not only smart but VERY intelligent – he tried to explain Torah to me in terms I would understand … business terms. So, God creates and does a marketing study and runs a pilot. If he does not like it, he starts from scratch. And from the ashes and sparks of his “failures” he starts again. I guess God does not believe in reusability and building up from solid foundations. But that is OK; since we are made in his image, many of us do not believe in reusability either – but I do.

My questions is: Why doesn’t God reveal himself more clearly to us? What’s the mystery? Why such cryptic signs? Religious people would argue … indeed they would … that God reveals himself VERY clearly. There is no mystery. That mystery is created by people in order to deny God. What does denying really mean?

Let me state my position clearly:

1 – I have a hard time believing in God. At the same time, I have a hard time not believing in God.

2 – I do not have to believe or agree or even share other people’s view points, ideas and believes. But I do have to accept them for what they are, view points, ideas and believes. Moreover, I have to accept the peoples whose believes, ideas and view points I do not subscribe to.

Believing in God – or not – has many levels. Let’s assume, for the sake of this part of the post, that not only I believe there is a God, but I believe that the Torah, Gospels, Koran and other holy books represent the word of God as His own word. So, somebody transcribed for God. Moses, Mohammed, Buddha and many others were God’s prophets and they put down God’s words. Good for God, it had secretaries!! But … do I believe in those words as the truth? How about the ultimate truth? These books, to some extent or another, are full of laws and regulations that were pertinent 5000 years ago. Some of them are still VERY valid today, but many are not. Obviously some religious people will argue with me that those laws and regulations are valid today as they were valid 5000 years ago. It may be so, however, I just do not see it that way. God’s words would have a level of permanency and validity beyond time. And some of the laws and regulations are obsolete. On the other hand because they are obsolete, as long as they can be applied, I see no problem on people keeping with them.

The Torah describes in extreme details the different offerings for the different times of the years, situations, festivities, etc. Most of them are not kept anymore because they have become impractical. But those offerings are not written as optional. They are written as laws and regulations. Rules that people MUST follow no matter what or else, the wrath of God would descend upon the people. Those laws and rules have been adapted to coexist in today’s world. But if you really want to take the WORD of God seriously, then the adaptation is outside of the words themselves.

The word of God maybe is not really the word of God. Maybe it is the word of a few people that had the foresight to see the problems with society at the time and decided to help. Did they have contact with God? Maybe their foresight came from God. Maybe they were en-tuned with humanity because many of these rules’ validity lasted for a long time.

So … I am not so sure about the words!! And if they are the words of God, I am not sure I believe in those words. It leads then to question God’s existence itself. If God is omnipresent and omnipowerful, then the words should carry more weight. Clearly in my case they do not.

Does this mean that I do not believe in God? No, it does not. What it does mean, at least on a first approach, is two things:

A – I do not necessarily believe in God in the same way I may not believe in what somebody tells me. It has to do with authority. Just like I assign very little authority to a police officer I assign, potentially, very little authority to God since its authority comes, initially, from those written words.

B – In the assignment of some authority to God implies that God may exist after all. You can not assign authority to a non-existant entity.

As I wrote above, I have a hard time believing or not believing. But I do accept the possibilities, wether intellectually I agree with them or not. This leads to Acceptance and Tolerance ..

From the New Oxford American Dictionary (I finally figured out what dictionary I had in my computer):

acceptance |akˈseptəns|
noun
1 the action of consenting to receive or undertake something offered : charges involving the acceptance of bribes | [as adj. ] an acceptance speech | he had an acceptance from the magazine.
• agreement to meet a draft or bill of exchange, effected by signing it.
• a draft or bill so accepted.
2 the action or process of being received as adequate or suitable, typically to be admitted into a group : you must wait for acceptance into the club.
3 agreement with or belief in an idea, opinion, or explanation : acceptance of the teaching of the church.
• approval or favorable regard : the options proposed by the report gained acceptance.
willingness to tolerate a difficult or unpleasant situation : a mood of resigned acceptance.

ORIGIN mid 16th cent.: from Old French, from accepter (see accept ).

tolerance |ˈtäl(ə)rəns|
noun
1 the ability or willingness to tolerate something, in particular the existence of opinions or behavior that one does not necessarily agree with : the tolerance of corruption | an advocate of religious tolerance.
• the capacity to endure continued subjection to something, esp. a drug, transplant, antigen, or environmental conditions, without adverse reaction : the desert camel shows the greatest tolerance to dehydration | species were grouped according to pollution tolerance | various species of diatoms display different tolerances to acid.
• diminution in the body’s response to a drug after continued use.
2 an allowable amount of variation of a specified quantity, esp. in the dimensions of a machine or part : 250 parts in his cars were made to tolerances of one thousandth of an inch.
ORIGIN late Middle English (denoting the action of bearing hardship, or the ability to bear pain and hardship): via Old French from Latin tolerantia, from tolerare (see tolerate ).

These definitions not withstanding, I see Acceptance and Tolerance as natural antonyms. Acceptance is about openness and understanding. It is about transparency and education. While Tolerance is about closedness and separation; about being opaque and selfish.

Let’s expound on Tolerance first. Tolerance is about degrees. It is about the breaking point of not being tolerant. For example you can tolerate a baby crying for so long. If the crying persists, and your “tolerance” is low, then you will get annoyed and request to be remove from the annoyance. In the extreme, you will take matters into your own hands and make sure the baby stops crying. Tolerance is used often enough within the context of Religious Tolerance. The message is loud and clear, tolerate the baby while you can, and when you can not, take matters into your own hands. The Museum of Tolerance is adeptly named. It is all about the breaking point of tolerance and what happens when certain people take matters into their own hands.

Acceptance is not about degrees. It is about black and white. It is about realizing that we do not like something but learning to live with it. It is about coexisting in a community (neighborhood, city, country, world) where differences exist. It is about understanding (or not) those differences and making room for the differences to mature into a common language of understanding. I do not have to agree with the baby crying, but the baby will cry nonetheless. I have two viable choices: either I learn to live with the crying baby or I have to move on. Taking matters into my own hands is never a choice.

Back to God …

When I was much younger I engaged in the quest of answering whether there is a God or not. At some point I decided that the question did not make any sense and that nothing changed one way or the other however the question was answered. A few years ago, through my children and friends, I was brought back to the quest. This time around I benefit from experience and knowledge. I have lived not only longer, but in many places and have interacted with many more people. Those interactions have provided different perspectives on the subject and many inputs into my thinking.

One of the elements that I have been able to factor out is the difference between Tolerance and Acceptance and how it pertains to God. I have no idea still if there is a God or not. I am not a man of faith (read The Faithful And The Intelectual) and will never be. Faith is not my game so to speak. The only way I would get to God, for better or worse, is through the intellectual process. And in this pursuit I have learn that Acceptance is key and Tolerance is destructive. Acceptance has opened my mind to possibilities while tolerance does not. The world is full of possibilities. Whether coincidence or design, whether Nature or God, the truth is clear but our vision is clouded.

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March 11, 2008

A Hybrid Solution

Filed under: Business, Technology, Thoughts — fschonholz @ 10:14 pm

In an early blog posts, Building Scalable Web Systems, I discussed very high level some of the needed premises and basis to architecting scalable systems. What the post did not deal with is insurance and Downtime. What is the point of scalability if you have downtime and what is the business continuity plan that maximizes available resources. Also, the post does not deal with success. What happens and what tolerance does the business and market have in the case of massive and rapid adoption. How do you deal with it?

Enter cloud computing and Amazon’s EC2. For those not familiar, EC2 is a cloud environment that provides virtualized hosting services. They provide the hardware infrastructure, the pipes, storage and other services. You provide the application. The promise is that you can scale the hardware need horizontally without having to deal with the hardware itself and its management and upkeep.

The first question is whether I believe it is 100% ready for prime time. You can argue that loads of companies are using it successfully, thus, it is ready. I have talked to some of them to mixed reviews. You can argue that some of the unconfirmed rumors are to be believed because there are indications of truths, thus it is not ready.  Also, I have talked to some people that were not all that happy with EC2. So on and so forth.

The second question is whether it matters or not if it is 100% ready for prime time. And  on the hills of this question, can it be used as a business continuity tool. I will answer both below.

The obvious third is regarding cost. Through all my calculations (and other people’s), EC2 can be more expensive than running your own systems – of course at some external data center. But some of the advantages come around quick adaptability, separation of concerns, system automation and self healing procedures. I will go into more details on this later as well.

Let’s start with the first question: In my opinion EC2 is not 100% ready for prime time. It is a subjective opinion based on my findings and my level of comfort. Part of the decision is based on cost, but mostly on technical merit:

  • Full virtualization is not where it needs to be; although there are ways to set up virtualization in the right configuration to make it not only more stable but also better performing. Not knowing EXACTLY how EC2’s virtualization layer works (and I am assuming virtualization) creates a big question mark on how things will truly stand up to friction. For example, it is hard to optimize a virtual machine to run DB servers  that deals with millions of queries a day. Hardware optimization is important with relational DBs.
  • Virtual NICs have sort-comings. They collapse under high traffic. The way to overcome this “limitation” is by attaching each virtual NIC with a physical NIC. However, this defeats the purpose of virtualization and limits, the theoretical unlimited number of VMs you can have running on a single server (only as many as you have physical NICs minus 1; you need one NIC for the host Operating System.)
  • Let’s not forget performance.  Even though you can create a limitless amount of VMs, the performance of each VM degrades with the provisioning of each new VM on a single server. What I do not know, however, is if there is an optimal number of VMs. In other words, is there a hard limit where before reaching that limit each VM would not change its  performance characteristics regardless of number of active VMs? Not too long ago I ran a virtualized farm. Unfortunately the application I inherited was so horrible that it superseded all problems we had with the environment. So, I can not even begin to answer the last question. Needless to say that the application and environment were replaced.
  • But it is not just the DBs that need “specially” optimized hardware. Application servers as well. Maybe not as specialized but a slow processor creates drag. And adding many VMs to spread the load creates more management and more moving parts adding to the risk management factor and what can go wrong.

Continuing answering questions … YES!!! It does 100% matter that they are not ready for prime time. But really, what we need to ask is the degree of how much it matters. How far is EC2 from being 100% ready? I do not know, but they look darn close. By adding granularity to the question we come up with multiple degrees of “how much it matters”. 100%?, 90%?, etc. In the case of EC2, I think it matters less than 20%. They seem that close to being ready – by my definition.

We can define cloud computing in many ways, however, let define it by a behavior: it needs to work like the electric company. Using Bob’s analogy, we do not really know how many generators the electric company has. We just know that we want/need more juice, we plug to the wall and we get more juice. The more juice we use, the more we pay. In the case of EC2, it seems to work that if you need more capacity, you provision a new “machine” and off you go – well, sort of ;) This creates the idea that if you need more juice, plug to the wall and pay at the end what you consume. Not considering cost, it looks like an attractive proposition. But more importantly, think in terms of what it can do for you. Almost instant scalability when you need it and how you needed it.

A little digression …

I do not worry anymore about scalable systems. I know how to build them; I have come up with a methodology and an architecture philosophy and I have repeated the  implementation of the methodology and architecture philosophy with great success. However, while my architectures scale horizontally without much of a inconvenience, the problem of scalability has become an issue of “need” predictability and time for procurement. Now in English: How much traffic will I get and how long does it take to get the hardware and deploy it – I consider real estate and power procurement as part of deploying the hardware.

Over the course of my experience I found that I need 3 running months to predict needs 3 months ahead. I have reduce the problem of CAPEX planning to getting right the initial installation. This initial installation needs to have “enough” capacity to support 3 months of capacity needs. But … what will be the capacity needs on the first three months? On a web based system, it is somewhat unpredictable. Sure, we could plan marketing campaigns designed to “limit” traffic. However, why would you limit and control traffic – there are a great deal of arguments in this area – if you have the potential of being ultra successful.

There is also the argument of cash flow and spending the right amounts of cash on your infrastructure. Funding is a resource and needs to be maximized. Any hardware that is bought today that is not used and needed – Software as well, but to a lesser extent – depreciates and for less cash you can buy something better in the future when the resource is truly needed. Therefore, the initial deployment of hardware becomes not only critical from a capacity point of view but also from a “capital resource” point of view. This is not to suggest, however, that you should not deploy for capacity needs earlier. In other words, stay ahead of the curve. Deploy 3 to 2 months earlier than  needed. What I am suggesting is that you do not need to deploy hardware beyond 3 months or more.

Back to EC2 …

EC2 not being 100% ready creates a problem compounded by the fact that it seems to work and it seems a short ways away from being the real deal. I resolved the problem by thinking, with Bob’s help, of EC2 as an insurance policy and a business continuity plan: I will build my staging environment on EC2, even multiple staging environments.

Let’s define a staging environment as a facsimile of the production environment but scaled down. The facsimile, if at all possible, must contain ALL components.

How to set up an insurance policy and business continuity plan using “the cloud”.

First, let’s look at process and environments. I advocate and implement total separation of environments as part of my Software Development Methodologies. Developers work on their workstation and QA Engineering occurs in isolated environments that in some way represent as accurate as possible production. Staging is the environment where UAT (User Acceptance Testing) occurs and where the build is certified and readied to release. Once it is certified, it is released to production. Staging must be not as accurate as possible, but precisely a facsimile of production. By hosting the staging environment on EC2 – or any such cloud environment for that matter – you can have that precise facsimile at a small cost.

Let’s consider the case of wild success and the fact that it is hard to predict and the capacity needed to “potentiate” success. In this argument I will equate “success” to a “disaster” and how we not only recover from it but also ensure continuity:

If traffic spikes past available capacity, not only does the user experience degrades but  it disappears altogether. In this case, virtually a “disaster” happened since the service becomes unavailable. In this particular disaster, having the right amount of hardware would have prevented it; as we discussed above, however, this is not always easy to determine. Just like in any disaster, the speed of recovery is vital to the continuation and success of the company.  If staging is indeed 100% a scaled down facsimile of production, then on an environment like EC2 scaling up in order to provide “capacity” should be a matter of minutes to just hours and not days. Basically, enough tolerance for the business not to experience a catastrophic downtime. Temporarily moving the production environment from self managed to EC2 provides the company with the necessary time to build out, and potentially better plan, capacity on its facility. Once the “disaster” passes, production can then be moved back from EC2.

In order for this temporary migration to happen seamlessly and effectively a high degree of automation needs to be incorporated into the overall infrastructure from day one. While the last updated staging environment (there can be multiple) will have the latest code and basic configuration, its data will be not current or accurate. Data migration needs to happen on a regular basis, and all staging environments should have, based on the installed release, the latest data set. Not only the data updates must happen automatically, but the discipline of automation, from a “disaster” detection to recovery must be as automated as possible. Once an issue is detected, a single script needs to be run to get the new production environment ready for operations, including needed changes on DNS, load balancing and firewalls. Furthermore, provisioning and  de-provisioning new VMs should also happen as automaticly as possible based on capacity needs.

The last part of this EC2 consideration is cost. It is more expensive than it looks. Once you start racking up the VMs on a per hour basis, racking up traffic at a premium cost and racking up storage, the $0.10 to $0.40 price ranges start to add up. This is cost that you incur every month and that you can not “lease”. So, does it add up to more than what it would cost you to build it and manage it yourself? No, but the costs are comparable, at least in my calculations. Therefore, running on EC2 for 1 to 3 months, even though duplicates the expense for that timeframe, it does not, in theory, break the bank and provides insurance, albeit, at a premium cost.

I have some strong opinions on how technology should be implemented. I do not care to know the secret sauce, but I do want to know in more detail than just general terms how things work. Especially if I am going to bet my company on a platform. The unknowns, the uncertainties based on lack of SLAs and the assumption around virtualization make me a tensed CTO. The result: Not 100% ready and trustworthy to build an company on it. I admit, however, that it is very impressive what they have accomplished, it makes sense, and of the other commercially viable cloud environments (I am not including Google, Yahoo! and MS), EC2 is the only one that, again in my opinion, is worth considering and ultimately using; whether it is for production, or as in my case, as an insurance policy to support unpredicted growth and create a conscientious business continuity plan. With time and maturity, EC2 is a strong solution.

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February 17, 2008

Ducks, Rows, Lines And Business Processes

Filed under: Business, Technology, Thoughts — fschonholz @ 12:59 pm

ducks in a row

Image courtesy of rengawman.wordpress.com

I like my ducks in a row. Oh yes .. I do indeed. Every time my ducks get out of alignment I react, to some extent, poorly. This is particularly true as I help build companies through technology. Technology is just a business tool and even though it may take center stage as the enabler of a business, it is not the business itself. But that is no excuse to bypass technology best practices.

A word on best practices:

Most people take best practices as a recipe; as a cookbook; as a road to follow. To me best practices is a set of tools that I can use to accomplish particular tasks. There is no particular guide to the practices but the practices themselves as I adapt them to my needs. The same goes for development and project management methodologies. I only adhere to my own. Each problem is different and requires adaptations. It is ridiculous to think that one size can fit all; especially when each task is in the context of varied corporate cultures, projects and business needs.

Back to my ducks …

The whole thing starts with picking the first duck and placing it at the beginning. Then I pick another duck and I scurry to some supposed end and place the “last” duck there. This duck represents where the company may be in a distant future. Call it 5 to 10 years out. It is 100% my conjecture and based on my personal vision of where the business will be in “a period of time”. I based this vision on discussions I have with other stake holders. Will it go there? Who knows. I just like to think of the possibilities and have something to aim at. Does it matter if it does or not? Not at all. The company will experience changes based on the market. The business will go where the market takes it.

Third, I once again scurry around looking for another duck – the right one too – and I place it following the first duck. I turn around, look at the “last” duck and line the first with the second with the last.

It is time for another duck. I rush to find yet another duck, rush to the front and place it, all neatly lined up with the first, second and “last” duck. I go find another duck and I go back to the fourth position. I look back to the “last” duck, I look at the row in front; I look back just to make sure … and … the “last” duck is gone. I mean, nowhere to be found. This is not a real duck; it is my duck. How can it have flown away? Or walked?

I drop the duck in my hand somewhere in position and run back to find the last duck. I look around … I look around … I look around and I finally find it. There it is. But it is not where it is supposed to be. I pick it up and try to figure out where it really belongs. Undoubtably, since it moved, it does not go back to its original place. I figure out its new placement, most likely based on changed assumptions and market forces. And, I have to go to the front and quickly rearrange all the other ducks and align them with the “last” duck. This process happens again and again.

It does not bother me that the “last” duck moved – as a matter of fact I assumed from the beginning that it WILL move; what truly bothers me is that nobody told me before it got moved and then I am expected to auto-magically aligned the other ducks. If the duck had gone “quack quack”, then by just listening I could have quickly rearrange the other ducks on the fly. But these ducks are quiet. They do not make a peep, especially as they are being moved. Or maybe they are being forced to move pointed by a gun under the threat of death if they “quack” ? ;)

I see building companies very much as a process of putting ducks in a row. True, they do not need to be in a perfect line, but the row should have no gaps. The gaps are potential black holes that can drag the whole business into oblivion. Let’s be clear: gaps does not mean not having answers to all the questions. Many of the business or technology questions are answered as we lay down the ducks. Gaps means skipping the full understanding of basic elements in the business. In manufacturing it can mean skipping quality in the automation. In software development, not respecting a project plan. In business development, not having an out in a business relationship. In business in general, not having a solid strategy and not continually contesting it, revising it and analyzing potential risks factors.

Often I am asked “how can you know where the business will be?” As I stated above, I do not know. But I do imagine what the possibilities can be. It is not that hard to look up and try to take a leap of imagination and visualize where the business can be in 3, 5 or even 10 year. It is a dream. It is pure imagination. It is not real. It is a VISION. It is also a goal to aim for and a way to reverse engineer a road-map. Will the business end up there? Most likely not. Most likely it will take detours, it will change and morph, it will reinvent itself. It will struggle to survive (not necessarily in financial terms.) The market dictates where a business goes. And my ducks are witnesses to the detours and changes.

Regardless of the market, the vision needs to be there at the beginning. And the vision needs to adapt to the market. A business starts with imagining an idea. It continues with the fantasy of success. And follows the excitement of victory. In other words: THE VISION. Not vision as in a corporate statement – The Vision and Mission, those are important and necessary because they are internal call to arms and good external communications tools. But the vision as a quest to conquer some uncharted land or defeat some mortal enemy. Will the vision change? Absolutely. The change is what keeps things interesting.

I am a technologist and see technology as a business process, not as an esoteric pursuit of technicality. Indeed, the better the technical solution I come up with, the better I feel and I always strive to produce great technology including novel work when possible; however, as a function of creating value for the company and not for technology sake. I very strongly believe that in the end, if the technology does not answer the business need, for as good and revolutionary it may be, it is worthless.

My ducks, in the end, are just steps in a process to lead an important part of the business to success. Technology is an equal partner to all of the business units. It is normally considered a cost center, but it really is a revenue generator and through automation and operational efficiencies, a direct profit center.

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February 10, 2008

The End Of Progress

Filed under: Religion, Technology, Thoughts — fschonholz @ 9:34 pm

NOTE: In order to make the best read of this post – but you do not have to – you can read The Last Question, by Asimov (at https://filer.case.edu/dts8/thelastq.htm) and one of my previous posts called Downtime (at http://www.fabianschonholz.com/2008/01/06/downtime)

—

A few weeks ago surfing the web I discovered a short story by Asimov I really liked called The Last Question. I have read many of Asimov’s works, but not this one. More  or less at the same time I read the story, I was having a conversation with – let’s call him Bob – regarding God, science, technology, mathematics, physics, etc. The whole idea revolved around the fact that mathematics is the language of nature. Bob shared with me a NY Times article that touched on the subject. My reply to the article was The Last Question. And his reply to me was: Can humanity come together and decide to stop progress? My answer is a categorical NO.

Around the same time there was a TechCrunch blog post regarding services downtime events during 2007 and how certain business were affected. I placed a comment to the blog post and later wrote a blog post myself that took a consumer centric approach to the post. I focused on the dependency we have on technology as a society and how our daily lives are affected by technology and any downtime. In my opinion our lives are, to a large extent, the product of technological progress. From medicine, food preparation and the web, to cars, airplanes, cellular telephones, etc. Humanity as it stands today is very much the product of technological progress.

Why is it that humanity can not come together to stop progress?

Humanity has never and will never come together. Our history, starting with prehistory, is all about control and dominance. Hardly a “coming together” bunch. As tribes were developing and humanoid life evolved, confrontations have been the common theme. Most of these confrontations were about territory. Early humans were not hypocritical; If they wanted a piece of land they fought for it. There was no guise or pretext to why they conquered by the sword: land, power, wealth and procreation, the preservation and expansion of the tribe. When hordes of barbarians moved from one place to another they left behind most of what they had – they traveled light. And each new conquered place was an opportunity for expansion in more than just territory. For as crude as it sounds, the image of the sailor with a girl in every port comes to mind.

As early humans progress took place, “progress” being the operating word and concept, new dynamics developed. Battles and entire wars were fought in the name of a God, or a series of gods. Religion and the religious establishment became a controlling political influence and factor in such progress. Culture, just another form of “technology”, was regulated by the political, but mostly, by the religious establishment. The motivation for war remained the same, territorial and financial expansion, basic economics. The spinning of these motivations is what changed. Humans became hypocritical.

Fast forwarding to the last few hundred years, the spinning has gotten worse. New players joined the party and old players have grown more powerful or have created splinters, adding even more to the confusion and “not coming together”. There is no unifying banner for humanity to gather under. There is no common ground for people to come together because people have become cattle. And the different herds are guided in opposite directions. How can humanity come together when a few people are waiting for the Messiah, while others are waiting for the Messiah to come again. How can humanity come together when a few people deny the Messiah and rather believe in prophets. How can humanity come together when we will kill because of skin color. How can humanity come together when our differences, as minute as they can be, are used to drive a wedge between brothers. The world keeps getting smaller and we keep getting further apart. The political, religious and economic establishment profits from it. While this may sound as though I am placing the responsibility solely on religion, I am not. However, religion does have a great influence on people thus, bad religion or bad religious leaders rather share a good part of the responsibility in not coming together. Also, religion is a tool of control, and as such, it is often used to manipulate public opinion.

The fact that by nature we can not come together as a general people is not small, but only a part of my answer. It can be argued however, if you agree with my assessment above, that the question is already answered. Indeed, it is. If we can not come together  how can we agree on anything let alone something as monumentally big as “stopping progress”.

On the other hand, let’s assume that we could come together and agree on something. Stopping progress will probably be the last thing we would come to agree on. If anything I can only see us agreeing on “regulating” progress. Why then progress can not be stopped. For one, as I expressed earlier, we are the product of progress. Secondly progress is part of the philosophical system we natively subscribe to: Capitalism.

Capitalism as a philosophical system.

Humans are definitely capitalistic in nature. Capitalism as an economic system is just but a product of a larger system that encompasses who and what we are. The failure of socialists and communist systems is normally attributed to external and internal factors with the emphasis on the external ones. Isolation policies and economic blockades are more often than not cited as the driving factors on the collapse of the so called leftist  regimes. However, my personal opinion is that communism, in particular, failed purely for internal reasons – the external influences only solidified and to a minor extent fueled the internal struggle. What then are these internal reasons? People and power. We as individuals want power and the struggle to get power fuels capitalism. So, how can you drive a communal based system when your internal participants inadvertently desire power and control? You can not.

In history we look at individual events and try to find the causes for them. In big blocks we find the dependencies of past and present events. But there is no granularity. There is no visibility at the individual levels. For example, we know that the “Boston Tea Party” kicked off the American revolution. We know a great deal about the mood at the time not only in America but in Europe (the French Revolution). And we know about some of the political undercurrents supported primarily by the Free Masons. But we do not know how it all really started. We do not know about a couple of guys drinking wine one night and being dissatisfied with their situation; we do not know about the conversation that ensued and their complaints expressed in terms of taxation, but in reality, probably about the discrepancy between their economic prowess and the power of their voice.

A few years ago two friends of mine and I went Baja California, Mexico, on a fishing trip. One night we got very drunk. Not that the other nights we did not get drunk, but this night in particular was different. We started with Tequila. After we were two bottles into it we got hungry, so I prepare some sashimi. Of course, beer and sake became part of the meal. Once we finished dinner we moved back to Tequila and that is when our “brilliant” idea started. In our drunken imagination we concocted a plan to unify California and Baja California as an independent sovereign country – California (being the 5th largest economy in the world) has the economic might to pull it off.

The point of the anecdote is not about the particular ramblings of three drunks, but  … how many a revolutions started just this way? How many a movement? How many people died because of two, three, four drunks came up with an idea? Moreover, our  ramblings were neither idealist or romantic, but focused on economic gains. In other words, three guys somewhere in the middle of the totem pole and doing very well trying to get to the top of the pole. Basically, a typical middle class dissatisfaction.

I guarantee you, if we had visibility into all levels of history, we will find that most of the big historical events started as the discontented ramblings of three drunks. No matter how well we are doing, we want more. We want more of everything – in particular more power. We want our voices heard. We want our legacy to last. We want, and in this want communal based systems are defeated. Utopia, for as fantastic as it seems is unattainable because it is not in our nature. Our nature, as a species, is to move forward, to “progress”. With Capitalism comes efficiency and efficiency is one of the key drivers of progress.

Progress is always expressed in terms of technological advances. Even “thinking progress” indirectly is expressed and explained by advances in technology. With efficiencies not only comes more productivity but also more time. With more time, inclined and “illuminated” people could educate themselves and “study”. And with the pursuit of intellectuality “thinking progress” takes place.

We are the product of Progress.

When I think of progress and Homo-Sapiens-Sapiens I think of them as one. I can not separate from the other. The closest species to us humans are the Chimpanzees. We share 98% of our genetic makeup, yet we have surpassed them in every possible area. This is not to qualify our actions as good or bad, but factually, we have indeed surpassed them. And while Chimpanzees use tools just like we do, we have taken the same tools and have made machines with them that have taken us to the moon. So, apparently 2% difference in a genetic map is an important difference. And in that difference dwells our desire to progress.

I can imagine early humanoid life in this planet. This includes all the primates at the time. All competing for the same resources and the would be humans not always winning in the struggle. The power for abstract thought drove us to understand our limitations better and to find ways to overcome them. Technological progress became the differentiator, the edge that allowed us not only to survive but to flourish. While other species progressed much slower or disappeared altogether, our ability for abstract thought enabled is to adapt the same tools every body used into machines that conquered space.

—

I finally understood “The Time Machine”, by H.G. Wells. The story warns us of our desire for progress, while “The Last Question” gives us a possible answer to the beginning … and End Of Progress.

—

And to conclude, a follow up question should be: “How dependent is progress on not coming together?”

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January 13, 2008

The Cost Of A Startup

Filed under: Business, Technology, Thoughts — fschonholz @ 12:50 pm

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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January 6, 2008

Downtime

Filed under: Business, Technology, Thoughts — fschonholz @ 6:33 pm

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 

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In The Pursuit Of Art

Filed under: Personal, Technology, Thoughts — fschonholz @ 6:22 pm

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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December 9, 2007

The March To Profitability

Filed under: Business, Thoughts — fschonholz @ 5:02 pm

What makes a startup successful?

Getting to profitability and keeping it there.

At least that is my opinion. But why is it so important to get to profitability?

It gives you choices.

Basically, you can decide what to do and how to do it without having to worry about survivability. And if you have a Board of Directors, it lends credibility to your “choices” along the way, allowing more independence in how the company is lead. And if you are in the process of selling the company, then you are in control of the price and not the buyers (it is not a bail out M&A).

Many start-up companies do not worry about being profitable in their nascent stages, especially during times of economic abundance. They disguise the lack of concern for being in the black as “the time that we should invest in the future”, the “time for growth”. Actually, it is hard to disagree with that. Yes, you want to “grow” the company and you want to “invest” in the future but there should be a balance.  When a company is started, there is no revenue and none can be expected. The revenue needs to be grown. Indeed, in its first 12 months a company will not, most likely, be profitable or even have revenues, however, the drive should be there. The tendency should be created and in place from day one; in this way, the culture of the company will drive profitability and, in a way, make it more achievable.

Let’s not confuse revenue with profitability. Because revenues may be collected, it does not necessarily mean that you are driving to profitability. It is the first stage to it, and it does slow your burn rate giving you more time, but, in this deceptive thinking, you miss the point all together and you feel a renewed need to expand. This will drive your burn rate back up, offsetting even worse your revenues and making profitability that much more unattainable. Then, in order to sustain the company and its growth, new funding is sought, further diluting everybody that invested in the company. It makes the effort unworthy and a waste.

In one of my first blogs entries, “Purist, Opportunity and Growth”, I discussed different ways to build technology for a company. My prefered method is “growth”, since, in my opinion, generates the least amount of friction, thus resistance, the least amount of waste and it protects and safeguards the company assets. Yes, indeed, there is investment going on but not wasted. And growth is a result of answering two questions: (1) What does the company needs in the form of a strong foundation, and (2) What do the Marketing and Business Development groups need in order to make the company’s product strong in the targeted market. All else is a result of answering these two questions.

The last two questions, however basic to building a company, do not completely  answer the question of “time to market”. That answer is found in fast execution. But fast execution can not be done on the backs of your employees and by forced marching them. It can not be done by setting wrong expectation for your clients and partners. It can not be done by promising some date that is 100% driven by a sales need fiction. It is understood that in order to build a company to success we all have to work hard and there will be long days; even long weeks. It goes with the territory. But that effort can not be wasted by continuous desperate moves.

Fast execution is achieved by carefully reducing the scope of the projects to its basic elements and focusing on them. Then, by using and exercising these elements, you will discover what the next steps are. What you were lacking in your original planning, what elements need to be added, what needs to be changed. With these elements (additions and changes included) in place the business begins to develop and will further your vision and your understanding of what is needed next. At the end, the sooner you plant a flag and claim a territory, the sooner it will be yours.

This is what my “new” boss calls “smart speed”. I, on the other hand, call it “lack of desperation” and “focused execution”. Smart speed should not end after the initial product introduction. It should continue since it maximizes productivity and minimizes cost (not just in terms of funding). I normally equate this to baby steps and one step at a time. Before you know it, you are running and not much is left behind and progress is made at giants’ speed.

Once you get going on a project, a great many deal of ideas begin to surface and  are brought forward. Not all of these ideas are good, not all of them bad. They are just ideas. In some cases, these ideas become distractions. In other words, some ideas are brilliant, or deceptively brilliant, that derail the focus from “fast execution”. It is only natural, people have a hard time staying focused. It does not mean, however, that you do not think of new ideas and those ideas not shared. Ideas need to be managed so they can be maximized. And you maximize them  by sharing them with a small group of people with the understanding that they are “just” ideas that need to be challenged in the context of fast execution.

How long after starting should a company be profitable? As soon as it can. As stated above, a company is not successful unless it stays profitable. Staying profitable can take years and that is OK. Not ideal, but OK. What I mean by this is that as long as there is a balance and there is growth a company is not wasting resources, which is 50% of the battle. The other 50% is being self sufficient, to the extent that the company can chug along without further external investments. Once this is achieved, then an external investment is strategic and can be use to expand and extend the reach of the company. As such point the company is in a position to break through the rut and become a success.

The March To Profitability is hard, and if “smart” then is not forced and leads to success.

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