How the Pictures in Philippe Kahn's Head Become the Photos on Your Phone

It was Silicon Valley that lured young Philippe Kahn away from teaching mathematics in France in 1982, at the age of 29. And it is there he quickly made his name and his fortune, such as it is. But less than 30 miles as the condor flies to the southwest of the infamous valley is a hamlet, by comparison, called Santa Cruz. It's there where Kahn is making his future and, in a way, helping to make ours by enabling wireless operators to bring advanced wireless picture and video communications technology to the masses.

Santa Cruz was founded in the niche between Monterey Bay and the southern coastal range. It is a fitting home for an entrepreneur known for filling a niche as Kahn did by founding software language and developer toolkit company Borland in 1982 and mobile data synchronization company Starfish in 1994.

Once nearly destroyed by the earthquake of 1989, but unscathed by the bursting tech bubble that rocked its famous northeasterly neighbor, Santa Cruz has been rebuilt. It is home now to a mix of Seattle grunge leftovers and migratory old hippies from San Francisco. It's replete with surfer dudes and mountain bikers, snow-boarders and sailors — even a dance company or two. But one thing it has that its neighbors don't is the proper atmosphere for innovation, say the employees at LightSurf.

The area's anti-Valley, small-town charm is only partly responsible for the innovation coming out of LightSurf — and likely a small part at that. It is the culture Kahn has created since founding the company with wife Sonia in 1998, and the vision upon which his loyal followers have executed, that account for LightSurf's quick rise to profitability and almost inextricable position at the core of multimedia messaging across wireless networks.

The vision began in a maternity ward in 1997. Along with the usual items one packs for the delivery room, Kahn packed his digital camera, laptop and cell phone. During the down time shortly after the birth of his daughter Sophie, Kahn tinkered with his gadgets, hacked out some code and 48 hours later began sending streams of baby pictures to friends and family.

“That's when Sonia and I knew we were on to something,” Kahn said. “The overwhelming response we got from the pictures gave us the inspiration for LightSurf.”

He calls it synchronicity. He also calls it rare. “We were fortunate,” Kahn said. “When it comes to high-tech innovation, there isn't always such synchronicity.”

He said somewhat facetiously that he gets three ideas a day, but they don't all turn into businesses. “You have to have believe in an idea enough to carry it for three, four or even five years so that the technology is at maturity on one track and on the other track the market develops enough that I can actually use the technology.”

Kahn said there is a phased delay between when one gets an idea or expresses a plan and the transformation of that plan into a business that's appropriately timed to the market. “Heck, when we did the first wireless camera phone demo, there was no market for it.”

The formula was just about right for LightSurf. The market developed. The company landed Kodak as its first customer, and then quickly added mm02 in the U.K., Germany, Ireland and the Netherlands. Bell Mobility and Canada jumped on board, as did Sprint.

Sprint customers shared 66 million pictures in 2003 and the company launched the first video mail service late last year using LightSurf's Open Standards MMS Platform. In 2003, its fifth year, LightSurf became profitable. If the rest of his formula holds true, LightSurf won't be a small company for long.

“A high-growth, high-tech company grows 35% to 40% per year. Our goal is to be one of those high-growth, high-tech companies and continue being so for the foreseeable future,” Kahn said.

For now, Kahn and company are enjoying their unfamiliar role as builders of platforms for the masses rather than for the narrow, technology-focused markets they were used to at Borland and Starfish. (Kahn enjoys a certain loyalty among employees who have followed him from venture to venture. According to analyst Andrew Seybold, founder of research firm Outlook 4 Mobility, those who help make Kahn rich get rich themselves.)

Unlike the complex languages and toolkits Borland sold to programmers and the mobile data synchronization technology Starfish sold ultimately to Motorola for a handsome sum, LightSurf enables services that its wireless operator partners put in the hands of consumers and small businesses.

“Not only is this a great business from a pure numbers perspective, it's a business to capture your imagination when you think about the social and economic implications of what it can do,” Kahn said.

The implication is that LightSurf and its partners and competitors are helping the world get better connected through instant visual communications. “A world better connected is a world perfected,” Kahn said. “And when you have an impact on the daily lives of people as they create their memories, it's kind of fun.”

And there's plenty of fun to go around. While Sprint doesn't give complete revenue numbers for its PCS Vision services, the $10 average revenue per user added for Vision customers is better than being on the losing end of a dodge ball game.

“We are seeing the results we wanted to in order to continue to invest in this technology,” said Pierre Barbeau, general manager of mobile imaging for Sprint.

Four out of every 10 new Sprint customers choose PCS Vision along with their voice service. And half the phones in its lineup now have cameras built in. If a picture, indeed, is worth a thousand words, then there is a 66 billion-word message from Sprint that says visual communications is here to stay.

“It will become a new mode of communication over time,” Seybold said. “There are 140 million wireless phones in the U.S. alone, and they have become a personal communication device. People will communicate in more ways than just voice.”

As cool as visual communication is, taking pictures and sending them instantly through the ether to other phones or e-mail boxes may not be the long-term highlight of the LightSurf platform and operator offering. The wow-factor and the potential for even more operator revenue come from users' ability to store and manipulate their data ad infinitum.

“When we store a picture, we store it forever,” said Robin Nijor, vice president of sales and marketing at LightSurf. “Organizing them and sharing them is the whole idea. It's why people take pictures.”

These two features — generating real revenue (at last) for wireless operators and giving consumers the ability to organize their images, create albums or montages, manipulate images and put them on everything from coffee mugs to key chains — are what make LightSurf's offering, and by extension the multimedia offerings of its operator customers, a long-term proposition.

“That's where LightSurf shines,” Seybold said. “They have a great way of repixelizing and resizing images to fit whatever platform is appropriate, and it's all on the fly.”

For Sprint and other operators using the LightSurf platform, it also is nice to have all the storing, transcoding, formatting and manipulating managed by their vendor.

“We are not traditionally from the imaging business. So to bring that kind of expertise to the table and have them run it puts the expertise in the right place,” said Jeff Halleck, vice president of consumer product marketing at Sprint.

Nijor said the hosting model is like having skin in the game. “We are tied directly to the growth of our customers, and we are supporting their best source of new revenue. So we're pretty bullish on its potential,” he said.

To Kahn, properly placed expertise is only part of the equation. The rest is all about innovation. Sure, he said, carriers run complex systems, but the world of mobile media is so far more complex that having a company like LightSurf run it and be a partner makes much more sense than operators trying to acquire the know-how themselves. “And the innovation has to come from somewhere,” Kahn said.

Innovation is what Kahn does. It's who he is. It's why he likes to launch small companies — well, small companies that eventually grow at 40% per year to become big companies.

“You don't find the innovators at big companies,” Kahn said. “If I am a creator of technology getting out of Stanford, do I look for a job at Verizon or EDS? No. I look for a small company in Silicon Valley with guys who are doing interesting things.”

Large companies function through process, but Kahn said innovation is not done through process. It all comes down to people. “I can hire 2000 of the wrong people, put them in a room, pay them three times what they should be paid, feed them sushi, filet and lobster everyday and get nothing in the end,” he said. “Or I could hire one really smart, innovative person, have them work in their bedroom and get something extraordinary in the end. Innovation is not something you can get out of a recipe book.”

The role of big companies and carriers in particular is in marketing. “You can turn to them for their power and presence and muscle to push a good idea, but in general they need to partner with innovators that can help them create a differentiated, state-of-the-art service,” Kahn said.

However, innovation for the sake of innovation can be as much of a dead-end as a job following processes in the beige cubicles of a huge corporation. Visionaries sometimes see too far. Kahn knows this. And Seybold knows that Kahn knows this.

“He has been a visionary three or four times over,” Seybold said. “The difference is he understands problems and people's frustration, and he comes up with a visionary way of solving them.”

To help him solve these problems, Kahn relies on a couple hundred of “the right kind of people,” which the company has spread out across the globe in Santa Cruz, Calif., Ft. Lauderdale, Fla., and Bangalore, India (Bangalore being the only location from which Kahn cannot launch a boat).

Kahn has a loyal following among his management team. His chief technology officer, Eric Bodnar; vice president of engineering, Shekhar Kirani; chief financial officer and president of operations, Norman Cheung; and vice president of sales and marketing, Robin Nijor, all followed Kahn from Starfish.

“If you're going to work on something for four or five years, you should be excited about it,” Nijor said. “Philippe's vision is exciting, and it's usually dead-on.” He added that Kahn is an awesome coach but often comes in as a player and score a few goals of his own.

Kirani just points to Kahn's track record and smiles. Kirani is responsible for the supporting the LightSurf 5 Open Standards MMS Platform. He insists, “We're not an MMSC.” And that's true.

According to Kshitij Moghe, program leader for the mobile communications group at Frost & Sullivan, the MMSC, or multimedia messaging service center, which controls the management of voice, data and video messages, has become commoditized. “You can get it anywhere,” he said.

In fact, what LightSurf enables and Sprint offers is not technically MMS and wasn't included in projections by the firm suggesting phenomenal growth in the next 18 months. “It is intra-carrier. It goes from one Sprint handset to another,” Moghe said. He added that the standards work for the CDMA community being done in 3GPP2 have not been finalized.

“Sprint didn't want to wait for 3GPP2. They wanted customers to get acquainted with [this type of] messaging. They will eventually move to the standards when they are finalized,” Moghe said.

Seybold said what makes LightSurf different is the value-added services and compatibility and consistency it provides across different platforms such as mobile phones, PCs, printers and e-mail. “There are several companies that have been playing at this, but none I would consider a real competitor to LightSurf,” Seybold said.

Kirani said scale also makes the difference. “When you have millions of users and can't lose quality, scale becomes critical,” he said. “One glitch and the whole support infrastructure for this service goes down. That's not good when your job is to manage the memories of humanity.”

Kirani's plan is to focus next on working with standards bodies such as 3GPP and OMA, to work on issue such as interoperability, which most agree is essential for the widespread adoption of multimedia messaging, and to work on supporting new applications such as video blogging. “I don't think we have exhausted the unique applications that can run on this platform,” Kirani said.

Before turning to the next new service, Kahn wants to focus on simply making the current service better: more integrated, quicker, easier to use. For the man who never wanted to be more than an engineer, doing what the customer wants is his guiding light.

“Take Sprint,” Kahn said. “We are building big cabinets for them. They are going to do exactly what Sprint wants them to do. And when they want a new cabinet, we'll build them a new one.”