Glenn Paul’s Market Strategy

Competition from Kodak

What dotPhoto Does

Infrastructure Investment

InfoFirst

Joe Godcharles

Glenn Paul, Serial Entrepreneur

Clancy Paul’s New Owner: Radhey Gupta

Corrections or additions?

Published in U.S. 1 Newspaper on June 28, 2000. All rights

reserved.

E-mail: DougDixon@princetoninfo.com

DotPhoto: Smile & Click

For digital photos, the focus is on production

Last month Glenn Paul, Princeton entrepreneur and

co-founder of the Clancy-Paul computer stores, launched the website

for dotPhoto Inc., a new Ewing-based "dot com" company

providing

photo archiving, sharing, and printing services for users of digital

cameras (www.dotphoto.com).

Indicative of the Internet’s growing maturity, DotPhoto is actually

Paul’s second version of a website for digital photographers. The

original site, PhotosByNet, went live in June, 1999 (U.S. 1, August

18, 1999) and took a few hundred orders. However, it had insufficient

production facilities — an existing one-hour photo-processing

store for making prints — and inadequate infrastructure, and Paul

now calls it a "trial."

While new Internet virtual companies are called "clicks" to

distinguish them from more traditional "brick and mortar"

type businesses, the truth is that any click site that sells tangible

goods, even high-flyers like Amazon.com, needs to make major

investments

in real-world operations like warehouses, factories, and, of course,

shipping services.

The evolution of PhotosByNet into dotPhoto required the development

of a much more sophisticated "brick behind the click"

infrastructure.

To take this step, Paul teamed with co-founder Joe Godcharles, owner

of the MotoPhoto franchise in Plainsboro, to develop a new

photo-processing

factory in Ewing. He also hired Walter Krieg, of Research Park-based

InfoFirst Inc., to design and implement the Web hosting service

databases

and powerful on-line data servers behind the site. Eric Moser, a board

member who is a producer at CNET, the San Francisco-based new media

company, redesigned the look and feel of the site and the way it

interacts.

The company aims to create a piece of Internet infrastructure that

every other site can use to manage images and has a deal pending with

an 800,000-member group to do a co-branded site. "We raised about

$1 million through January," Paul says, "through angels, the

board of directors, and private sources. DotPhoto acquired PhotosByNet

and will take it to a whole new level."

Top Of Page
Glenn Paul’s Market Strategy

DotPhoto is the latest in a series of photo sites aimed at solving

the problems of digital photography: organizing and sharing images.

The advantage of digital cameras is their immediacy: the images can

be easily transferred to a computer to be edited and shared via the

Internet. Your kid’s birthday photos can be instantly E-mailed to

family and friends, or your company’s new product design can be posted

on your website for customers.

The online photofinishing market is supposed to reach $1.4 billion

in annual sales by 2003, according to InfoTrends Research Group.

DotPhoto’s

marketing focus will be affiliations with businesses and membership

organizations, and it is also trying to position itself as the

"eBay

of images," so that photographers can post images and charge fees

for their use. Funds have also been set aside for "weblicity,"

PR on the Internet.

"Digital opens up so many more possibilities to people using

photography,

as point-and-shoot cameras break and get old," says GodCharles.

"People like the immediate results. You can see your pictures

right away, and delete shots if you do not like them."

The disadvantages of digital photography are storing and sharing the

photos: you end up with lots of big images, with files strewn around

your computer and taking up lots of space. And sharing them with

others

gets clumsy as the images get larger; you can only fit a few at a

time on a floppy disk. Plus, you do end up missing those old-fashioned

photo prints. Prints are easy to share with others, look great framed

on a wall, and store away in a shoebox. Although you can print out

your digital photos on an ink-jet printer, the quality is not the

same, and premium computer photo paper can cost over $1 a sheet.

DotPhoto and similar sites address these problems by offering the

ability to upload your digital images, organize them into albums,

share them with others over the Web, and make photo prints. However,

these companies still are trying to figure out the right positioning

for the consumer market.

"We’re not in an unoccupied market," says Walter Krieg,

"and

the others have had the chance to iron out the kinks. Zing is the

best site, but they have changed their user interface five times in

six months and changed the color scheme three times."

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Competition from Kodak

Some competitors, like Intel (www.GatherRound.com) and

Zing (www.zing.com) are focusing on the shared Web experience. The

emphasis is on storing, organizing, and sharing your photos. These

sites aim to become an online photo community. "Invite your guests

to see, and then trade comments about your pictures," says Intel’s

site.

In contrast, such established developers as Kodak see online photos

as more of a byproduct of developing traditional 35mm film. When you

drop off your film with Konica (www.konicaonline.com), or mail in

your film to a processor like Seattle FilmWorks (www.filmworks.com),

you also can have your film digitized into digital images and returned

on floppy disk, CD-ROM, or posted on the Web. Since you always get

your prints back when they are developed, these sites tend to also

offer a wide range of novelty merchandise that can be printed with

your image, such as mugs, T-shirts, and mouse pads.

Kodak has been working diligently to expand its presence in digital

photography, with efforts like PhotoNet Online (www.photonet.com),

a partnership with America Online, and its Print@Kodak, announced

on June 26, which will offer traditional prints from digital photos

submitted online.

Other startup ventures are hedging their bets, including Ofoto

(www.ofoto.com)

and Shutterfly.com, the next big thing from Netscape Communications

co-founder Jim Clark. Some of these sites also offer traditional film

developing to attract a wider market of online users. Ofoto now does

free film processing in order to get your images onto its site,

although

it returns only the negatives and not prints. You can then share your

photos online and choose to pay only for the prints that you want.

"This is the future of photography," says Paul. "You get

exactly the sizes you want the first time, and the number of prints.

You don’t have to print the whole roll a first time. It’s like having

a Fotomat in every bedroom."

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What dotPhoto Does

The dotPhoto service is focused on three major components: free

uploading

and storage of images, inexpensive photo printing, and sharing of

photo albums as presentations, with the addition of audio clips.

"We

view the picture as a piece of a story," says Paul. "Kodak

is focused on the picture itself. It has huge overhead and investment

in old ideas. We have no interest in selling you a CD or a roll of

film."

Like other sites, dotPhoto will store your images for free, in the

hopes that you, and your friends and family, will purchase prints.

There is a limit to this generosity, though. After the first year

you must upload at least one photo per month or spend at least $5

on prints over a six-month period. Subscribers get "unlimited

perpetual storage" along with discount rates. In the future disk

space might be limited to 50 megabytes, equivalent to 100 to 200 color

photos. Images are stored for at least three years, or six for images

that have been printed.

With the digital approach to photo printing, these sites can print

your images for less than the cost of developing a roll of film.

"It

costs more at Wal-Mart," says Paul, "plus you have to go

there."

Sites like Ofoto, Shutterfly, and Zing charge around 50 cents, $1,

and $3 for 4 by 6, 5 by 7, and 8 by 10 prints, plus $1.50 postage.

DotPhoto matches these prices for large prints, and has significantly

lower prices for the smaller sizes.

DotPhoto has various introductory offers, but its "family

plan"

provides 26 4 by 6 prints a month for $4.99 a month (or $0.19 a print)

plus some extras. The 4 by 6 per-print price is $0.21 ($0.30

non-member),

and 3 by 5 prints are $0.17 ($0.24 non-member), plus $1.99 postage.

But the most visible difference with the dotPhoto site is the support

for audio clips. You can upload sound files from digital cameras,

add sound clips to your digital photos, and even communicate via

"instant

voice mail" with friends as they view your photo album. "The

picture is just the beginning of a presentation," says Paul.

"You

sit on a couch and view the photo album and tell a story."

This capability also makes dotPhoto more than just a consumer site.

"For business to business you can upload a PowerPoint presentation

as images," says Paul, "and annotate it with your voiceover.

When you post a new presentation, we can send the mail to notify

business

associates. It’s not faceless sharing, there’s a feedback loop. The

creator knows that you have been there to see it."

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Infrastructure Investment

Sites like dotPhoto require a significant investment in the back-end

server infrastructure as they go live and attract customers, including

"big iron" to store and process all of the customer data and

images, and fat pipes to transmit this data back and forth over the

Internet. "It’s all about speed: You need the right

infrastructure,"

says Paul.

For dotPhoto, this back end includes "the database cluster serving

the Web and a string of file servers for the photo images," says

Krieg. "We’re starting with over 850 gigabytes (billion bytes)

of storage, on fault tolerant disks. With this design, we can extend

the file servers infinitely, all over the world."

For the fastest and most direct connection to the Internet backbone,

dotPhoto uses dedicated servers located on site at DataPipe

(www.datapipe.com),

formerly HiSpeed Hosting. "They are located in Newark, a block

from Bell Atlantic, in the old Macy’s building," says Krieg.

"We

have a big enough pipe for a small city."

The dotPhoto pipe is an "OC48" connection that runs 1,600

times faster than a typical office complex "T-1" service,

and 44,000 times faster than the best dial-up connection that a

customer

might use to upload a file. (OC48 is measured in billions of bits

per second or 2.5 gigabits, T-1 in millions or 1.4 megabits, and

dial-up

service in thousands, 28.8 or 56 kilobits.)

In order to handle large image files efficiently, dotPhoto actually

keeps several versions of each photo on its servers. When you upload

each original photo, the server makes a small "thumbnail"

image for quickly browsing through a large collection of images, and

a larger "Internet" image that is used for viewing the photo

in a Web browser. The original image at the full resolution is used

only for creating a photo print.

While the original image might be 1 to 2 to even 3 megapixels with

the newer digital cameras (around 1000 x 1000 to 3000 x 3000

resolution),

the Internet image needs to be only 360 x 270 to view on a Web page,

and the thumbnail image can be 120 x 90. This is a major savings in

download time when browsing your images on the Web.

DotPhoto uses a dedicated T1 line to ship the photo images to be

printed

to the factory in Ewing. At that speed, even a big original photo

can be transferred in around three seconds, or 20 images a minute,

and 1,200 images an hour. This is about right for the initial

roll-out,

since the factory equipment is rated at around 1,000 8 by 10 prints

an hour.

Within the factory, one server is dedicated to pulling

images from the website, and a second for crunching the photos to

the right size. The dotPhoto software downloads the images, orients

each print correctly on the page, and resizes it for printing.

DotPhoto

uses custom software to "upsample" relatively low resolution

digital images to a larger size before printing them. The trick with

this software is to enlarge the image while keeping it sharp and not

blurry. "The upsampling looks terrific," says Paul, "I

guarantee you can’t tell the difference between this and a film

print."

DotPhoto does provide recommended guidelines for the maximum print

size for different image resolutions: no more or no less than 1024

by 768 pixels for 4 by 6 prints ("results will vary" for

lower-resolution

640 by 480 images), 1152 by 864 pixels for 5 by 7 prints, and 1600

by 1200 pixels for 8 by 10 prints.

Top Of Page
InfoFirst

Although the "look and feel" of the site has been redesigned

since InfoFirst’s original design, Krieg and a team from InfoFirst

were responsible for the infrastructure. Krieg has a PhD in organic

chemistry from Rutgers University and worked as a chemist in the

mid-’70s.

With his cousin, lawyer Frank Armenante (the barrister), he started

the Alchemist & Barrister restaurant on Witherspoon Street.

Krieg met Glenn Paul through the restaurant and the A&B was an early

Clancy-Paul corporate client for business systems. "They set up

an Apple II Plus to do payroll and our books," says Krieg. This

experience got Krieg hooked on computers, and he went back to school

at Trenton State to earn a degree in mathematics and computers in

1986. Since then, he has started three software ventures while also

working at AT&T until 1995. In 1996, Krieg and Simon Blackwell formed

InfoFirst, originally to sell a Web-based targeted ad delivery system

(www.infofirst.com).

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Joe Godcharles

Joe Godcharles, vice president of operations, is

responsible

for the photography end of this business. He was introduced to Paul

by a mutual friend who knew of his background in both computers and

photography. A native of Lawrence, Godcharles graduated from Rutgers

University in computers and went directly to Report Concepts in New

York City, where he eventually become vice president of operations.

Meanwhile, he was working as a freelance professional photographer

on a part-time basis "for events and weddings."

After 10 years Godcharles decided to "move in full-time" to

photography, and became owner of a MotoPhoto franchise in the

Princeton

Meadows Shopping Center in Plainsboro. Over the next nine years, he

became more involved with digital photography, doing digital

restoration,

photos to CD, prints from digital, digital scans, and large format

prints and posters.

The dotPhoto staff now includes seven full-time employees and six

people working on the Web interface. The office and factory is located

in the American Enterprise Park at Ewing, near the West Trenton train

station, and next door to Airborne. As Paul points out, it doesn’t

have the traffic of Route 1.

The processing factory uses standard chemical photo processing.

"We

bought the state-of-the-art in digital photography," says Paul.

"The equipment has a powerful LCD screen that needs to be tuned

to the magnetic field of the earth when it is installed."

Adds Godcharles, "Just the digital exposing part is over $100,000.

It’s designed for high capacity: We can print 1,000 8 by 10 prints

per hour."

To process a print order in the factory, first the digital unit

exposes

the prints, then the paper goes into the processor to be developed,

then through a dryer, and then to the high-speed cutter. Finally the

photos are inspected, packaged, and passed to the shipping department.

"We ship within 48 hours," says Godcharles, "and can also

send a Web notification."

The entire process works with 600-foot rolls of Fuji photo paper.

"It’s a premium grader," says Godcharles. "Fuji has the

longest fade life in the industry, 70 years, while the others are

around 15 to 20."

The trick to efficient processing is to lay out the

prints automatically on the photo paper roll, and to track which

prints

get shipped where. This is handled by printing marks on the paper

that the cutter can use to automatically cut the photos to the right

sizes. The customer’s mailing label is also printed on the roll, so

the order can be assembled and slipped into a glassine envelope ready

to mail.

Says Godcharles. "The focus has been on getting the back end

together

and production running smoothly. We are set up for rapid growth; we

can add up to four or five more production lines here in the six to

seven months."

The remaining issue with the whole online photo approach is that the

images from the megapixel digital cameras are big and can take a long

time to upload. Each image can take a minute or two to transfer over

a good dial-up connection (for 500 kilobytes), so a full

"roll"

of photos from a camera can take a half hour or so, even after

deleting

the bad shots. On the other hand, there are lots of people on the

Internet happily downloading much bigger MP3 audio files these days,

even when a song file of four megabytes can take around 20 minutes

to download.

And, with a DSL or cable connection, these numbers get much more

reasonable,

two to four times faster, or more. "In the next two years everyone

will have a fast connection," says Paul. Or at least many of the

people who will own digital cameras.

The next step is to sign up customers. As an introductory offer,

dotPhoto

is offering memberships for $4.99 per month, including 36 prints,

free shipping, member pricing for one year, plus a free personal

computer

microphone.

"We are creating a great visual experience, with sounds for

presentations,

the site for working, and inexpensive prints," says Krieg. "It’s

been a heck of an experience."

"Our focus is concentrating on the user experience," adds

Godcharles. "This is the most exciting space on the Internet."

"This is the killer app among ASPs (Application Service

Providers)",

says Paul. "This is a GRASP, a Graphic-Relational ASP. Text and

pictures and sound, creating a multimedia presentation on the fly,

out of the database in any order."

"This kind of opportunity doesn’t come along too often," says

Paul. "We can handle pictures better than anyone in the history

of the world."

Dotphoto.com, 800 Sylvia Street, Ewing 08628. Glenn

Paul, founder, president. 609-434-0340; fax, 609-434-0344. Home

page: www.dotphoto.com.

Does your business have technology that is transforming our

personal

and business lives? Send your suggestions for this column to U.S.

1 Newspaper, 12 Roszel Road, Princeton 08540, fax 609-452-0033, or

E-mail info@princetoninfo.com or ddixon@acm.org.

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Glenn Paul, Serial Entrepreneur

www.princetoninfo.com/200006/00628c02.html

Top Of Page
Clancy Paul’s New Owner: Radhey Gupta

www.princetoninfo.com/200006/00628c03.html


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