View Full Version : To Jane, Christian, Kim, Nick, Don and everyone

Ric Cisson
November 9th, 2007, 11:10 AM
First of all I hope I may indulge you. Many of you were so concerned as to why I would ask Christian the questions that I have. In a forum such as this, a place of public discussion, where questions may be raised, I raised some fundamental questions as they relate to what is happening, both in the present and in the future here with the forum and the "new home".

First, it seems general consensis that KW mishandled the announcement of shutting down the site. Agreed it might possibly have been handled better.

However, feelings ran high and tore at the very fiber that this community had been known for. A friendly enviroment where people can gather to learn and share and have a good time. Certainly for a better part of a week, this was far from the case.

The questions asked of Christian are not without merit. I hope if you have read this far you will allow me to qualify that. As some of you know, I just retired from the Digital Imaging industry. And as Christian might attest it is a very challenging and risky field at this time due in large part to the rapidly changing technology. Virtually everyweek, if not everyday, new technology makes obsolete the technology of just yesterday. Christian started Viovio in 2004, so Viovio has been around for 3 years +. That is good, establishing a track record. Businesses generally are looked at in 5 years as being successful or not. Christian operates out of North Carolina and Oregon and appears to be well founded on the Left Coast as well as the Right Coast.

Now, I cannot determine if Christian has his own printing equipment, in both locations, or just one. Regardless it is only important in the following sense. I don't know what system he is using, maybe an HP Indigo Press and let's just pick a figure out of the air for general discussion, let's say this one printer cost new $150K. Average service life expedency of the printer is say 4 to 7 years. Over the lifetime of the printer, say the first five years he has a maintenance service contract that is oh let us say $2 - 3K a year, and let's say he has a parts warranty contract for the same period that adds another $1K to that. On the average most equipment like the Indigo Press depreciates by 50% in the first 2 years, and most, if not all the depreciation can be deducted at tax time. By the time year 5 comes around his printer may have a trade in value of let us say $10 - 30K and now comes time to upgrade to stay in the business of printing. In the meantime the latest technology may have bumped up the price say by $50K So on one printer it is possible that it will cost $180 - 200K of working capital to replace. Not very often you come out ahead on equipment, but it is possible.

In the meantime in the course of doing business you have the cost of goods.
Two of the largest players in Christians operation I would presume are Paper and Ink, both indirectly and/or directly linked to transportation which is directly linked to fuel which is directly linked to the cost of a barrel of crude oil, which continues to rise. So his cost of goods has the potential of escalating, which directly impacts his cost of doing business, which impacts margin of profit. It is only fair for that business to pass those costs on to his customers in the form of a price increase. An example, just a year ago a roll of RA paper cost wholesale $60.00, and earlier this year that same roll went up to $75.00, a 12% increase, and chemistry jumped up 6%, and then at the same time frieght, which we had no control over, added a fuel surcharge equal to 5% increase in freight expenses. This hurt our margin of profit and we had no choice, again a very unpopular decision, raise select prices.

Another factor in the technology, Viovio is but one of many offering similar services. While true Viovio has some unique products, it is also true that Viovio is but a small part of many players trying to take cut out a piece of the pie. In other words there is a lot of competition out there. Factor into that now is the fact that consumers can now buy kits at Best Buy and Target and other places and make their own photobooks, and thus they too are reaching in for their piece of the pie. (And I have seen some of the books produced with these kits, and actually they are very good and thier impact could be quite significant) Additionally, becoming more and more fashionable, Digital Frames are becoming very much a favorite in lieu of photobooks.

These are just a few things that may or may not impact Christians ability to sustain a thriving business. Everything mentioned impacts the margin of profit Viovio can expect. It is not like 20 years ago when we were dealing with film and 35mm came in the door by the hundreds of rolls on a daily basis and very few labs to turn to for processing. Today competition is very, very strong in every venue of digital imaging.

Some businesses fail, because they cannot keep up with the cost of doing business, some succeed in this industry, an industry that I spent most of my life in, and an industry that I love, and I love the direction it is going, new, exciting and creative. It takes alot of financial resourses, either strong revenue or a deep bank account to keep an imaging business going today. Viovio, from what research I have done, has done well to date and I would hope that will be the case in the future.

So my questions to Christian have been asked to kind of give us an idea of what lies ahead, what is the future according to Viovio. And as you can see they are business oriented from the perspective as I know the industry. There are many more factors that I have not mentioned and I am sure Christian will agree. My interest is not in challenging Viovio integrity, nor attacking personally Christian, but rather understanding his vision and where he thinks Viovio will be say 12 months, 24 months, or even 60 months down the road. As Viovio goes so goes the "new home" I would suspect.

I have asked the questions of Christian, not of Jane, Kim, Nick, Don or anyone else. I feel I can address these questions because of my experience and therefore should be allowed a response from the person to whom they were directed. In no way should anyone feel threatened or feel defensive about the questions, they were not meant for you but for Christian. After posting originally I immediately considered PM Christian, but by then everyone made it their business, and that is where it got out of control. So, I hope that Christian, when things settle down, will now share with us his thoughts.

I congratulate Jane and Christian for thier tireless efforts to get the "new home" up and running and I look forward to making the move.

With all due respect to all concerned, I hope that you will understand now the "why" and why I care.