Dan’s Chocolate Adventure

As states in the South begin to reach temperatures in the high 80’s, we have to slightly adjust our products to compensate. These adjustments are subtle, and not noticeable to our average customer, but to understand chocolate, one must have a deep appreciation of temperature. If one doesn’t, one will be in the soup business, not the chocolate business.

One of the changes we make in our Chief Chokolada product is we increase the amount of powder coating by about 50%. We do this because the heat breaks down the sugar molecules, and when combined with the increased humidity that condenses on the product in shipping, it can melt away the sugar coating. This is all a visual effect, but it makes the product look old and nasty. By increasing the sugar powder we can keep the truffle looking fresh and tasty in the summer months.

I am so glad I am not in Switzerland while writing this post. To the Swiss lover of chocolate, the shell of a truffle must be extremely thin. The thinner, the better. This happens to be a cultural preference, and speaking from a lot of experience with American consumers, not one that is shared on universally on this side of the pond.

One of the problems with making a truffle in a direct ship business such as dans.com is, well, the shipping part. When I first started Dan’s we had a very thin shell, and over time I have had to increase the thickness about 50% due to damages in shipping. Chocolates can get bounced around with a high degree of enthusiasm by the folks at Fedex, and the shell needs to be able to withstand the stress.

You will notice in our Chief Chokolada and Razz Matazz truffles, which have the thinnest shells, that the breakage is the highest (though still very low percentage-wise).

Many Americans also like a little more solid chocolate in their truffles than the Swiss. Currently our truffles are 30-40% chocolate, and the rest soft interior filling, or ganache. I use the Swiss as a benchmark because the Dan’s Chocolates recipes all have a Swiss heritage.

Easter is next Sunday, and we are getting the bunnies ready. Here they are in their pen, but they are ready to hop and roll:

We have eight funky flavors of bars, and all of those wrappers have to be printed somehow. I’ll take you behind the scenes here so you can see how it is done. This press is printing our infamous Caffeinator bar, home of high caffeine and coffee! It is a 6-color flexographic press.

Note that most printing presses look like they time warped out of the neolithic age. They just tend to look beaten up, as they are used constantly, and ink is an essential ingredient, and inks stain. But the results are pure beauty.

In this photo the paper enters the first set of cylinders, and we print what is the inside of our bar wrapper with just black ink:

Then, we need to turn the paper over so we can print what is the exterior. This is accomplished with this clever device, which inverts the paper at high speed without tearing it:

Then each color is printed separately, on a reel like this. The amazing thing is that this is purely a mechancial alignment, and press operators can align these reels within tenths of millimeters:

Here is a view of all of the color reels lined up. Note that the more you use, the more expensive the wrapper is. So in some cases, such as the text ALL NATURAL on the back of our bars, we made some modifications to reuse one of the colors that is used on the front of the bar:

At the end of the machine, the paper is sliced in two, and each thread is wound individually onto its own reel. These reels will eventually be loaded into our wrapping machine:

For those of you using digital cameras in your small businesses, or just on your own, this is a great post from Don MacAskill at Smugmug.com about the marketing of megapixels:

The one thing that most amateur photographers should look at carefully, which will affect their photographic happiness far more than megapixels or other features, is the response time from the point at which you press the shutter button to the time when the camera actually fires.

Windows Vista really nailed two things of importance for laptop users - the sleep function and plug and play. As most XP laptop users know, when you shut the lid of your laptop, the machine didn’t always sleep (may have been a manufacturer’s issue). That was pretty annoying. In addition, if you changed the state of any peripheral devices after the machine went to sleep, it would generally hang when its call to wake up arrived.

Vista is beautiful on both of these fronts, and the machine will enter and exit sleep mode very quickly. Better yet, from what I’ve seen so far you can change the peripheral setup ten ways to Sunday with the machine in sleep (even dock or undock it) and it’s fine when it wakes.

Unfortunately, based on a little testing I did, it looks like when you forward an attachment, Gmail duplicates the attachment file and it detracts again from your quota. They don’t create a hardlink like Unix would.

This is sort of silly, and pertinent to those of us who are at 88% of our Gmail quotas.

A friend of mine was thinking about leaving finance and entering the venture capital world. I was telling him that I though venture capital was difficult because it was more about media than money.

When you look at the returns in VC, if they don’t have the big 1 or 2 hits in a portfolio, the return collapses. Entrepreneurs who own a “big hit” company know what they are sitting on, and seek out the best known firms. Hence, as a small or startup VC, you have to get very lucky to get a big hit. The small firms often get the scraps.

Why do the entrepreneurs seek out the well known firms? It’s not about money - there is a lot of that floating around for good, growing businesses. It’s to secure the media buzz and the press exposure that prominent VC firms increasingly bring. That is worth much more than the money, and the established firms know how to work those channels.

A co-worker of mine, dubbed J here, told me a theory about Internet networks, which is that the Internet is essentially just a conglomeration of many small networks, and people tend to aggregate in these small networks of sites, and they never really move from one small sub-network to another.

From my own behavior, and from observing others, I believe this. I stay within a network of at most 20 sites, and really don’t change it often.

I bet it is the rare individual that is constantly surfing all over the Internet. In a way, one’s common sites act just like consumer brands, where the familiarity gives you comfort, so you continue to use the same set.

Especially among young people, employee turnover continues to increase, as average tenure at jobs falls. This is harmful to both employees and employers. For employees, they never achieve the specialization and depth of knowledge that the modern economy demands. By studying a field and having an area of expertise, salary tends to rise, and the personal feeling of accomplishment increases at an even faster rate.

This is also bad for employers, because beyond the short term costs of replacing people, employees do not have the incentive to avoid long term costs in their business actions and decisions. That is, if they feel like they are only going to be with an organization for a year or two, why really consider costs and complexities that may arise in year three or year four?

Because the employee tenure and the decision implication timeframe don’t match, decisions will result that are non-optimal.

I began using Windows Vista for the first time today. It’s a big improvement over XP, as long as you are running it on new and fast hardware with 2GB of RAM, which I am. I don’t find the security popups annoying at all, in fact I kind of like them. If you do find them annoying they are easy to dial back.

At this point in the OS wars, I would say Microsoft and Apple have essentially reached a point where their products don’t have a material difference (and I have both). Sure, there are different features, etc. But I think in terms of productivity, they have nailed the big issues and they are both stable. For given niches one or the other may be better but for the general user it’s a toss up.

I was sitting in a parking lot on 93 North in Boston recently, and was late for a meeting. In addition to rescheduling the meeting twice, I had to cancel the one hour of the day I had reserved for my daughter. My sister was baby-sitting for her and told me she would keep her up late just so I could see her that day.

And I started thinking, I wonder how many marriages break up, and kids don’t know their parents, just because people are investing a huge portion of their time into traffic, staring at the car in front of them, instead of into personal relationships?

I left Boston and moved back to Vermont primarily for this reason - I couldn’t run a chocolate business having to commute on the freeways, and still know my wife and kids.

The sad thing is that, with the exception of one exceptionally weird dude I knew a few years ago, no one really wants this situation. Everyone wants to get out of it, it is just very tough to do.

Over time I’ll expand this section with a bunch of my own ideas on how to break the traffic handcuffs.

The Long Tail by Chris Anderson has stirred up a lot of business press recently. I have not read the book, because I’ve been hearing about the long tail for years, and essentially it is just a pareto distribution. The idea in one sentence is that if the pareto distribution is your sales curve, you you took the integral, or all of the area underneath, the front of the curve, it would be a smaller number than the integral of the long tail.

Most businesspeople call this selling to niches or small customers. It is very difficult, as transactional costs can get high quickly. There is a reason companies like to sell to Wal-Mart - for one transaction they get huge volume, even if it is at lower margin. The long tail works online because transaction costs can be so low.

I think this concept is going to generate a lot of buzz but ultimately not going to yield much for the vast majority of businesses, as they find that their transactional costs are much higher than they may have predicted.

When I was driving home from the factory the other day, I heard a radio ad saying “Don’t have time to shop for a prefab house? Call 1-800-XYZ.” And it struck me, what kind of person doesn’t have time to shop for their own house? I mean, this is not a spare chocolate ball we are thinking of going to the store and picking up here.

“Hunny, you’re going to have to sleep in the van again tonight, because work’s been kind of busy, and the house thing just has to wait.”

Doesn’t everyone? Well, these days it certainly is trendy. But in the year 2000, when I began, it wasn’t trendy at all. He was being called a crusty old fool by the media, and his company’s stock, Berkshire Hathaway (my kind of web site), hit a multi-year low on the same day the Nasdaq peaked. Just 20 years ago his annual meetings consisted of a small number of people whose names he all knew.

In the dot-com frenzy of 1999 and 2000, of which I was an active participant, I began to realize that the emperor had no clothes, and began to search for someone who was saying so publicly. This was not easy to find, but Buffett caught my attention as he was shouting this loud and clear from his somewhat diminished soapbox.

And that was how it started. I wasn’t looking for a great company to invest in, or a financial strategy. I was just looking for someone willing to say “These guys on CNBC are smoking a very, very large weed.” And Warren was saying this (though in slightly different terms).

I have always feared what majorities, and especially super-majorities, do to minority views and positions. While it is both innate and comforting to be a member of a majority, it’s in the minority positions that great ideas emerge. A new idea by definition has to begin as a minority view. The founders of our country realized this, and the fundamental premise of the U.S. Constitution is that majority rules, but minority is protected.

This is sort of morbid, but I’ll post it anyway. One of the reasons business leaders often seem so out of touch with trends is that many of them are, well, old. It is a well known fact among activists, or entrepreneurs for that matter, that it is much easier to influence a young person than that of an old person.

Sometimes great shifts in products or services or social movements require the innovation or movement fester for years, and only as an older generation dies away does the downward pressure dissipate and the new emerges to become the norm.

The problem for business leaders, as well as politicans and other leaders, is that have lived their whole lives in the old norm, and cannot adjust to the new.

When evaluating people in an organization, I always look at what I call their “Exothermic” vs “Endothermic” qualities. A simplification of these terms might be optimism vs pessimism. But its more than that. In my personal Webster’s Dictionary, an Exothermic individual is not only optimistic, but actively contributes to others in need to help projects move forward, often when they are not even asked. Hence the contribute energy to the general pool. Endothermic individuals, by contrast, drain energy from the pool by being isolated, pessimistic, political, etc.

This is not to say that people who are Endothermic don’t have good or great qualities - they often do. But I am willing to overlook chunks of mediocrity or other weaknesses if someone displays strong Exothermic characteristics. What they add to other people is very valuable and emotionally supportive.

Every now and then, you run across someone who just seems to be naturally Exothermic. The rest of us have to work at it.

I did a bunch of testing today on our Internet connection speed using a Netgear XE102 wireless ethernet bridge vs a Netgear XE102 wired ethernet bridge. We have cable Internet access, at 6Mbps download speed, so I wanted to see if the wireless vs wired “last five feet of connection” made a difference. By using similar devices from the same manufacturer I assume I introduced some control, though this is not verified. The wireless bridge was only five feet from my laptop in these connections.

I used Speakeasy.net, which I highly recommend. Very functional and a great interface. I tested on three different servers.

The difference was huge. The wired ethernet came in at 5.1Mbps, while the wireless averaged 2.9Mbps, and remember that the wireless was only 5 feet from the test computer. The wired ethernet bridge was 76% faster.

The lesson is that wireless is convenient, but you pay a big price in speed.

Norman Hollenberg, a Harvard Medical school professor is pointing to Epicatechin, one of the compounds in cocoa, as beneficial to health when taken in high quantities. In fact, he says it may “rival penicillin and anaesthesia” in terms of its importance to public health, significantly reducing stroke, heart failure, cancer, and diabetes (4 of the big 5 adverse medical conditions). I am not endorsing nor negating the science, as I haven’t looked into this, but here is the link:

Science Daily - Norman Hollenberg Epicatechin Article

Here is another post:
Cocoa Epicatechin and the Heart

And a quote from Dr. Hollenberg, showing some interest in the capitalist side of this:
“There are opportunities to develop high-flavanol cocoa varieties or supplements. Cocoa is already really popular, but no doubt some people would prefer to get their epicatechin in capsule form,” said Hollenburg. “We could see a massive expansion in the market and a lot of money changing hands.”

Important Update: Mars Corporation is one of the sponsors of Dr. Hollenberg’s research. He should be disclosing this more publicly than he is.

This is totally smart. I have wondered for a long time why more big companies don’t realize this.

From Don Dodge’s blog at Microsoft:

“I have heard Steve Ballmer say that he would rather acquire 40 companies for $25M than acquire one company for $1 Billion. The first reason is that it is easier to find synergies and leverage in a small company than in a large billion dollar company. The second reason is that you spread your risk with 40 small companies versus putting all your chips on one big company. In the interview I talk about some of the companies we have acquired and why we did it.”

By doing this, the big company can bring in it distribution channels and blow out a small idea, or a technology, or a consumer product. But it doesn’t end up paying a jaw breaking price, and hence can spread its bets far and wide.