(The Big Disrupt) IT: The Double Edged Sword That IS Being A CISO

In an age where IBM CEO Virginia Rometty well-worn phrase that data is the natural resource of the 21^st century is looking less and less presumptuous, companies across the aboard are investing an awful lot of money securing their data and their IT infrastructure from attacks which should be good news for CISO’s who are solely in charge securing both as the role has risen to prominence in light of large data breaches however, this puts a lot of pressure on CISO’s to get things right when the odds are firmly stacked against them.

Sure you might think CISO armed with growing budgets, years of experience dealing with cyber-attacks and threats, a rash of tools offered by security vendors, and a strong team behind them would put in a great position to stave off the threat of hackers but CISO’s, despite all these advantages are still at a disadvantage as they face an enemy that outnumber them and are often as good or better at breaching security systems as CISO’s are at protecting them. While attackers can get caught and prosecuted, the cost barrier to entry is almost insultingly low given how much companies have to spend to deal with a data breach. To give you an idea, TalkTalk’s data breach in October will likely cost the company 30- 35 million while the attackers would be breaking the bank if their efforts broke into the thousands[1].

A good chunk of that 30 million will likely go to their CISO’s budget as the company stated that they will give their CISO “carte blanche over security investments” which was likely to happen anyway given the company’s managing director Charles Bligh revealed that they were discussing spending more on security before the breach happened [2]. TalkTalk’s renewed commitment to security may reveal the company intention to avoid being breached again but this new focus in various organizations across many fields is leading to a strange occurrence of CISO’s budgets increasing despite companies experiencing breaches.

While security is obviously going to become a top priority for organizations after experiencing a breach, it’s highly unlikely a costly failure in any other role in the C-suite would be rewarded with an increased budget. You don’t have to be rocket scientist to find out what would happen if a CMO burned a 30 million hole in his budget on a marketing campaign that failed horribly or a CEO presided over sustained period of no or low growth as both would be out of a job before long. However, Unlike CEO’s or CMO’s, a CISO’s job is largely about planning for worst as opposed for the best working to stop multiple threats which means they negotiate a higher degree of risk of failure.

The high risk of failure seems to be growing by the month as CISO’s experience their responsibilities expand at a rapid rate with organizations embracing new technologies such as wearables, mobile, and the internet of things which CISO’s have to secure. This should prove good news for CISO’s as more responsibility means greater stature in the organization but they also have contend with a notable increase in cyber-attacks and  a much talked about lack of talent in the cybersecurity field which makes covering their growing remit that much harder.

In sum, like a number in the C-suite, CISO’s find themselves subject to a growing budget, greater responsibility and yet overwhelmed by their role but whatever happens, expect CISO’s to be prepared for it.

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[1] N. Wood, 2015, Talk Talk CISO given carte blanche over security investments, http://www.totaltele.com/view.aspx?ID=492027

[2] Ibid

(Sports) Boxing: Canelo v Cotto - Canelo Crowned Champ In Tight And Tense Affair

Tonight pretty much went the way described in our pre-fight prediction piece just without the Canelo knockout as we pretty much saw (as we predicted) Cotto out box Canelo for the first six rounds until Cotto started to slow and Canelo was finding his range landing the cleaner and most powerful shots of the fight.

Cotto was in the fight for whole bout but a notable slow down and Alvarez's punching power was clearly taking its toll as power differential between the two was clear from outset and played a bigger role as the fight went on. Though, impressively, Cotto was riding most of the clean right hands and left hooks to the body Canelo was landing for most of the second half of the fight. Canelo's footwork was slightly better than it has been in past fights but what was most impressive was his head movement as he slipped a number of Cotto's attacks particularly as the fight wore on.

What happens next for Canelo going forward is just as interesting as anything that happened in the ring as Canelo will likely be ordered by the WBC to fight easily the most avoided man in the sport (maybe save Main Events' light-heavyweight boxer/puncher Sergei Kovalev) Gennady Golovkin, a man Cotto has avoided like the plague since he snatched the middleweight crown from a legless Sergio Martinez two years ago.

Canelo has already proven that he's willing to take on anybody and is likely to invite the intimidating challenge Golovkin provides no matter how much Oscar De La Hoya will advise him against doing so. If Canelo ends up squaring up with Golovkin it would be his toughest fight yet and should he do the improbable and beat Golovkin who is both the bigger puncher and better boxer, it would confirm him as the biggest star of the sport and almost certainly its biggest draw given the already strong Mexican following he has.

In sum, tonight's main event was a good one as power and youth came up trumps against skill and experience but in truth the huge subplot that hung over this fight is what made it truly interesting regarding who's going to square up with the hard hitting Kazakh and now we have our answer (possibly the one everyone wanted),  the super-fight of 2016 is almost going to be made. 

(Sports) Boxing:Prediction – Cotto v Canelo

In an era where “low risk/ high reward” has become the prevailing mantra among fighters at the highest level of the sport, this Saturday evening presents us with a clash where the philosophy of “low risk/ high reward” is put aside for at least an evening as Miguel Cotto and Saul “Canelo” Alvarez go toe to toe in a bout that is truly a 50/50 match up.

Tonight’s fight between the Mexican and Puerto Rican natives promises to be a classic slugfest full of twists and turns as both are come forward fighters and can take punishment.

However, it’s hard to see a scenario where the Puerto Rican legend and future hall of famer Cotto ends the bout with his hands raised. While Cotto is more experienced ( he’s 10 years older than Canelo) and is the better boxer at least in terms of skill and ring IQ, it’s hard to see the stubborn 35 year old either knocking out or out boxing the younger, stronger and bigger fighter in Canelo.

I can see Cotto out boxing Canelo for at least the first three to four rounds owing his superior footwork but I also see Canelo coming on strong in the later rounds and ending the fight as Canelo will almost certainly push the pace of the fight which means Cotto may tire in the face of relentless pressure.

While Cotto’s trainer Freddie Roach has solid grounds to accuse Canelo of laziness and claim that this will allow Cotto to box clever all night due to Canelo’s notably poor ring cutting skills, Cotto will slow down in the third and final quarter of the fight as while chasing and missing an opponent can prove to be an exhausting enterprise, being hunted all night by an opponent who’s younger, bigger, hits harder, and can eat your best shot is just as tiring as it is discouraging.

Another advantage Canelo has is that he actually has a longer reach than Cotto which means he won’t have to work as hard to close the distance given he can throw punches from a longer range and still land punches that can hurt Cotto.

There are plenty of variables that could prove my prediction wrong as Cotto is the better boxer with one of the best trainers in the world in Freddie Roach in corner and both have enough experience to come up with a winning strategy to exploit Canelo’s weaknesses (ring cutting, low work rate) and nullify his strengths (power, youth) to great effect.

However, while Cotto will almost definitely expose weaknesses in Canelo’s game, I don’t see the him doing it for twelve without taking lot of punishment which I fear will force the referee to stop the fight if Canelo hasn’t already.    

In sum, whatever happens, this Saturday evening is going to  be a great night of boxing as two of the best in the sport of boxing go toe to toe but we believe  the power and youth of Canelo will overcome the skill and experience of Cotto.        

(The Big Disrupt) Music: why “will _______ save the music industry” stories need to die

With the release of Adele’s long awaited “25”, there’s been a rash of stories about whether both can save or revive the ailing music industry and while “25” is likely to sell millions of copies, be assured that the music industry will still be in need of saving.

Stories about what or who will save the music industry miss the crucial point that nothing and no one will save the music industry outside of the music industry itself. These stories can talk about the release of “25” supposedly “breaking the music industry” but all “25” looks set to do is break the bank account of Adele and her record label XL recordings.

To be sure, “25” selling millions of records will represent a win for the music industry in an age where a great deal of artists struggle to make it into six figures but that win stops where Adele and XL recordings ends and the rest of the music industry begins. Adele’s sales can’t heal or even mask the slow decline of the industry that has struggled in the digital era and that trend looks set to continue for the same reason windows 10 can’t and won’t save the PC.

There been plenty of words expended on stories that saw music streaming companies like Pandora and Spotify as the music industry’s savior but a closer look has revealed that Spotify and Pandora are anything but. This isn’t particularly because Spotify and Pandora aren’t honest brokers, it’s that Spotify and Pandora are neither large enough nor even inclined to pull it off. Music streaming companies have been great for the music industry as they’ve discouraged music piracy by providing a much better experience for music fans and consumers to find and explore music. They also provide data for artists and labels to get a read on their audience but if Spotify and Pandora plan to stay in business, that’s about as far as they can go regarding saving the music’s industry’s skin.

However, despite music streaming companies being a force for good in the music industry, they’re a key factor as to why the music industry needs saving in the first place. XL recordings still make millions from Adele’s last album “21” and looks like it’s about to earn another payday with “25” with Sony and retailers forecasting the album to sell more than a million copies in the first week. However, even XL aren’t safe from music streaming companies such as Spotify eating into cd sales and downloads with the label reporting a significant fall in turnover and profits with their turnover falling to £26m from £37.4m and their profits slipping to £7m from £12.3 million[1].

Very few majors never mind independent labels have artists selling millions of records which make the long term contraction of the music market more pronounced as far as their bottom line is concerned. This affects artists as the vast majority don’t make money from their music and are largely of the opinion that they’ve been shortchanged by music streaming companies (particularly Apple and Spotify) and their labels.

The reason why we even see the explosion of “will ______ save the music industry” stories is because the music industry has lost total control over how its core product is consumed and distributed well before Napster and a pushy Apple CEO came along. In sum, an album selling well is great for artist who created, the label that backed them, and the retailers and platform who’ll make a killing but for obvious reasons, a commercially successful is not enough to save an industry.

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[1] A. Lawson, 2015, XL Recordings profits hit by falling CD sales despite success of Jack White, http://www.independent.co.uk/news/business/news/xl-recordings-profits-hit-by-falling-cd-sales-despite-success-of-jack-white-a6728931.html

(Sports) UFC 193: Why Ronda Rousey Lost To Holly Holm

It was no secret before the fight that Holly Holm was easily the most technically gifted and accomplished striker that former UFC champion Ronda Rousey has ever faced and would possibly prove to be her toughest opponent yet but nobody ( maybe except  her coaches) was expecting Rousey to be severely outclassed in the first round and get put to sleep with a brutal head kick in the second. 

It was clear from the outset of the fight that it was going to be a long night for Rousey as she was chasing Holly Holm but failing to catch her as Holm was pretty much in control of the distance of the fight for as long as it lasted. Rousey had a few moments of control when she managed to close the distance from a missed counter and got Holm into a clinch and later on when she attempted arm bar but that short of that Holly Holm was busy showing the holes in Rousey striking ability.

And that's what was really shocking, not that Holly Holm was a better striker than Rousey but just how much better she was than Rousey. When facing someone as good as Holm at distance management, creating angles and landing counters, the last you want to do is get desperate and chase them as you’ll eat counters, hit air all night and possibility get knocked out which was basically happened last night.

A good deal of fighters in both boxing and MMA struggle at cutting off the ring but Rousey was particularly bad at it last night as there were several instances where she was following Holly Holm into a series of stiff straight rights and lefts which bloodied her nose. The amount of energy Rousey wasted for most of first round chasing Holm took its toll and as soon this happened the fight was lost as Rousey’s only chance from of winning the fight from that point on was Holm tiring, getting sloppy or complacent.

Rousay has eaten stiff punches before coming in but she basically harassed and closed the distance on fighters who were nowhere near as skilled as Holm is at circling or evading attacks particularly clinches and shots for take downs. To even get close to someone like Holm requires someone who can match her for creating angles and movement but Rousey wasn’t even close on both fronts.

It’s quite ironic that an MMA bout at the highest level turned out to a be a boxing clinic in using footwork and movement to keep an opponent out of position and punish them for their mistakes as Rousey most almost always out of position to throw a punch and paid for virtually every one she threw.

Rousey is almost definitely going to have get her chance to win her belt back but it’s hard to see how she’ll regain her crown given the night and day skill deferential between her and holm that’s damn near impossible to close in three to six months.

In sum, a near capacity Etihad stadium crowd was treated to technical clinic as the queen of MMA was deposed by, quite simply, the better fighter on the night.

(Note to the Reader) The Carnage Report #standswithfrance

On a chilly Friday evening in Paris, France suffered its worst attack since world war two in a clearly coordinated attack which claimed the lives of 153 innocent Parisians in a frantic 30 minute spell of carnage that will be etched firmly into the memories of those most affected and those like us who send our sympathy, condolences and support.

It's way too early to speculate who planned and executed this attack but many already have their suspicions that ISIS were behind yesterday events though there's very little evidence to support the theory. However, ISIS have made their position clear on the attack celebrating the carnage and offering a flimsy rationale as to why the attacks took place.

As to what happens next is unclear but we're likely to see France take an even more hawkish stance towards international terrorism than it has already and, unfortunately, more vitriol thrown in the direction of Islam and Muslims across the board  as the attacks will embolden voices from the right calling for tougher legislation on immigration and maybe even a tougher stance towards France's Arabic diaspora from law enforcement.

However, what happens from now into the near future, France will have to confront the human damage caused by the attacks but with the world by their side offering their support and by their side, they won't confront it alone.

Alex Clarke

Founder and Editor

The Carnage Report

(The Big Disrupt) Ad Blocking: Why The Fate Of The Online Ad Industry Is In The Hands Of Publishers And Advertisers, Not Ad Blockers

All markets and industries are in some way inefficient and that’s a good thing to some extent as if all markets were efficient, the world, at least in an economic sense, would be nowhere near as dynamic as we know it.  There are very few industries as inefficient as the online ad industry and the singular phenomenon that shows just how inefficient it is is the rise of ad blocking. 

It’s quite hard to argue against the position that ad blocking would never exist if the online ad industry wasn’t so inefficient as if it was efficient the industry would surely have paid close attention to the widespread hate for their ads and responded by building better ads that weren’t as creepy and annoying as they are now but now they’re paying for their negligence.

However, the continued success of ad blockers rest solely on what publishers and advertisers do in response and no one knows this better than ad blockers. Ad blockers know full well that they could be put out of business rather quickly if publishers and advertisers found a way to make better ads that weren’t a pain in the neck but ad blockers also know that this isn’t going to happen anytime soon as the inefficiencies that allowed ad blockers to rise in popularity are still in place.

Publishers and advertisers response to ad blocking so far has signaled that they’re not aware that the future of the online ad industry is their hands and are acting like an industry with a boot its neck even though to some extent they have the upper hand. Publishers have gone as far banning their readers and advertisers have threatened to lawyer up and take ad blockers to court but neither approach will work as market inefficiencies are almost always exacerbated rather than addressed by bans and courtroom dates.

The hundreds of lawsuits and various anti-piracy initiatives the music industry unleashed upon free music sites like Napster and potential customers didn’t make a dent in solving the issue of music piracy, a better user experience provided by Apple’s iTunes and music streaming companies like Spotify did. If anything, bans and court dates have the effect of alienating customers (especially those who represent their future customer base) and emboldening companies exploiting market inefficiencies industries have failed to address for years.

This is the reason why Uber can get under the skin of regulators, taxi drivers, journalists and insurance providers in every country it operates in and still remain a quite popular service among its customers as neither party mentioned above have been able to tackle market inefficiencies in the taxi industry as effectively as Uber has and never will.

In sum, publishers and advertisers to a certain extent have forgotten who decides whether they win or lose and ad blockers have served as an unhealthy reminder and if they don’t find a way to make consuming content on the web a more pleasurable one, Publishers (especially) and advertisers will pay the price.

(The Big Disrupt) Ad Blocking: Why advertisers ‘faster horses’ approach to ad blocking won’t work and publishers will pay the price

Henry Ford's famous “If I had asked people what they wanted, they would have said faster horses” quote is often used to deride the preoccupation in modern business with customer feedback and inspire young innovative entrepreneurs to follow the beat of their own drum but the central conceit of the quote is that Henry Ford didn’t ask his customers what they wanted and therefore had no idea what they would have said. Sure, he would have run into a couple of his customers who wanted the average carriage horse to rival seabiscuit in speed and power but there’s a good chance that he would have run into a large majority block of customers who wanted anything with less smell of horse’s ass.

Advertisers, publishers, and the online ad industry in general have a number of problems from the viewability of ads and ad fraud but arguably the industry’s biggest problem and existential threat is how they choose to deal with ad blockers and early signs look like advertisers are making same mistake Ford made as well as most people who use his quote.

From the Washington Post blocking their content from readers using ad blockers to advertisers promising to making better ads and even threatening to sue ad blockers, it’s clear quite clear that advertisers have missed the key message behind why ad blocking is popular: no one likes ads, online ads especially.

Banning readers (WTF), making better ads or suing ad blockers is not going to work and is likely to make things worse. The problem with online ads is that they’re a real pain in the neck and can ruin user experience. You might argue that this is where making better ads come in but no one reads the Guardian or the New York Times for a Land Rover ad and never will no matter how well it’s made. People (me included) have generally grown sick of ads hijacking their screens, popping out of nowhere in-between text, and following them around the internet and have turned to ad blockers to end the madness.

However, this madness only exists because people (me included) are less than willing to pay for content which gives publishers and content creators no choice but to reserve and sell ad space on their sites. I doubt you’ll ever see advertisers and publishers singing from the same hymn sheet on anything if consumers of content like you and me were willing to spare a dollar or two for great content but instead we find publishers having to side with advertisers.

As much as IAB (Interactive Advertising Bureau) CEO Randall Rothenburg would like admonish Ad blockers as thieves and extortionists (which they’re not but they may be something worse: industry killers), they are serving a need advertisers and publishers have ignored for years in eliminating forms of ads that makes consuming content online a more trying experience than it should be[1].

Advertisers create these annoying ads because to some degree it’s not their problem to make them compliment a site’s user experience and publishers run these ads because they pay the bills and consumers of their content don’t. But thanks to ad blockers, this scenario publishers find themselves in has to change fast or they may go out of business. Ad blockers aren’t exactly the good guys in this tale as they do charge publishers not to block their ads and to a much lesser degree threaten an industry that might not be liked but are pretty good at getting people buy things they don’t need or at the very least making you aware that they exist.

In sum, it looks like publishers are going to pay for advertiser’s sins as well as the price we weren’t prepared to subsidize in the first place.

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[1] R. Rothenburg, 2015, Ad Blocking: The Unecessary Internet Apocalypse,  http://adage.com/article/digitalnext/ad-blocking-unnecessary-internet-apocalypse/300470/

(The Big Disrupt) IT: CIO’s – Taking change on the chin?

We’ve written much about the role of CIO and the challenges they face but it seems like CIO’s are finally adjusting to the wild and radical change regarding the nature of their role as new technologies such as the internet of things take shape.

We’ve often said that CIO’s are arguably the most relevant members of C-suite yet the most in danger of becoming the most obsolete as the CIO’s find themselves in a position to innovate and add to the business but also undermined by the spread of IT usage under their nose which often leaves them having to pick up the pieces of IT failures largely not of their making or in the worst case scenario, pack their office into a box.

However, CIO’s are definitely in the ascendancy as they have tended to add business value and drive innovation for their organizations rather than fall victim to the winds of change which to some extent still threatens their position. With organizations becoming more data driven than ever and more willing to embrace technologies thanks to an ever changing consumer habits, smart CIO’s have seen this as a chance not only to add value to the business but as a way to position IT as key imperative to the business as getting IT wrong can cost a company millions in lawsuits and reputational damage at the hands of embarrassing news reports.

However, the main reason CIO’s have become increasingly important is that every company you can think of is conducting business in the digital space and are looking to become faster, more agile and responsive to customers and see technology as a number one way to get there which presents CIO’s with a great challenge and even greater responsibility as the failure to do so can leave them lagging behind competitors who are more or less trying to do the same thing but faster.

This has seen an explosion of new roles dedicated to fostering this digital transformation that compliment CIO’s but certainly overlap and in some cases compete with their role. If anything confirms this fact it would be that Mark Chillingworth, UK editor of CIO magazine took a somewhat philosophical position of welcoming CTO’s and CDO’s to their annual CIO summit but made it a point to clarify that “we (I presume CIOs with an applause line penciled in) should be looking at a future where the CIO and CTO are distinct”[1].

This should be no shock given he heads a magazine solely focused on CIO’s and him being a proponent of a well held position that the proliferation of  CTO’s, CDO’S and CSO’s exist because CIO’s dropped the ball on the digital transformation and organizations across the board have had to basically give responsibilities to CTO’s and CDO’s CIO’s should be managing. This argument is pretty convincing and is held a number of CIO’s even though even when they see CTO’s and CDO’s as lifesavers who have taken hefty responsibilities of their already jam packed plate.

Nontheless, CIO’s have embraced their perceived shortcomings and are definitely set to become unofficial COO’s in their organizations as technologies such as the internet of things will ensure that organizations become more IT dependent than they already are.

In sum, it wasn’t that long ago when every business or tech blog or site (including us) was convinced that CIO stood for “career is over” but increasingly CIO’s have seen their apparent death of their relevance to their as a way to prove their worth and seems to be better for the challenge.

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[1] M. Chillingworth, 2015, It’s time to be a customer centric CIO, http://www.cio.co.uk/blogs/editor-in-chief/its-time-be-customer-centric-cio-3625934/

(The Big Disrupt) Volkswagen: Volkswagen cheating is just the tip of the iceberg

Volkswagen cheating the EPA’s emission test might have sent shockwaves but it didn’t surprise or shock me that a billion dollar corporation cheated on a test for six years straight that would have cost them billions if they failed it. It should be common knowledge that a company as large as Volkswagen sole aim is to make returns on their significant investments and are liable to do whatever it takes to avoid or eliminate anything that impedes their simple if not narrow objective.

However, I grant you that if this was strictly true, Volkswagen executives and engineers it might have calculated that it would have been cheaper for them fail the emission test than cheat and deal with the mother of all nuclear fallouts if they got caught. Since they admitted they cheated, the company has lost a third of its value, drawn the ire of their customers, lost their CEO, opened themselves to a wrath of potential legal cases and fines, and suffered reputational damage that’s looking irreparable.

The thing that surprises me about the whole debacle is that Volkswagen knew that they would fail the diesel emissions tests without cheating, knew what would happen they got caught, were aware it might have been cheaper and whole lot less stressful to fail the test but decided to cheat anyway.

However, what also concerns me is not that they were prepared to roll the dice and pay the price to avoid failing the diesel emissions test, it’s the fact that they knew that their cars are more harmful to the environment (not to mention people) than they let on and were prepared to sell 11m polluting diesel cars around the world just to make their numbers.

Volkswagen could face billions in fines and a criminal investigation in the US alone, a wrath of lawsuits from VW customers across Europe (Europe represents diesel’s biggest market) who fell hook, line, and sinker for the “clean diesel” phenomenon, and even repercussions in Germany as according to Alexander Dobrindt, Germany’s Transport Minister, “ the carmaker had manipulated test results for about 2.8 million vehicles in the country”[1]. The company said that it will set aside $7.3 billion for fines and but with scale of the scandal expanding at every turn, it look like they’re going to need more than that to say the least.

In sum, Volkswagen will have hell to pay as VW’s emissions test scandal is only getting started as it’s quite clear that they aren’t the only carmakers trying to deceive regulators and customers.

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[1] A. Cremer, 2015, Volkswagen Picks company veteran to tackle emissions crisis, http://uk.reuters.com/article/2015/09/25/uk-usa-volkswagen-idUKKCN0RM08920150925

(The Big Disrupt) Ad Blocking: So Who's Afraid Of The Ad Blocking Wolf?

Ad blocking is not or revolutionary and have been around for a decade but the effect they could have publishers and advertisers could change the shape of the internet as we know it.

The rise of ad blocking has sent a silent shivers down the spine of both publishing and advertising executives backs as a lingering threat in the wings has now taken centre stage. However, neither party can be shocked with explosive rise in the popularity of ad blocking as nobody likes ads on any platform but everybody hates ads on the internet.

People don’t like ads on TV or radio because they get in the way of favorite shows but no one likes ads on the internet because, intrusive, creepy and annoying. They slow down sites, are a little too on the nose about our preferences and are getting harder to get rid of as almost all of them are built using flash, possibly the worst software known to man.

Being someone who reads a bunch of articles across a number of sites, I more than most people experience annoying ads that slow down my mobile never mind the site I’m on because advertisers, for some strange reason, like paying publishers to run ads they’re aware annoys their target audience so much that are flocking to providers of software that threatens their entire industry.

Apple opening the market for ad blockers on the iOS9 OS is a clear shot across the bow of Google but whether Apple would have opened up the market for ad blocking or not, I suspect the clamor to block ads would still be prevalent. As mentioned earlier, people generally don’t like advertising (particularly advertising that’s hard to get rid of) on any platform you can name but unlike other platform, they’re more willing put up with the excesses of a 30 second TV spot than they would a load time lag inducing banner ad when they visit a site.

This quite a strange fact given that we’re all aware that ads are all over the place because no one wants to pay for content (especially in written form) and without those screen eating, emanating out of nowhere, and super creepy ads, all our favorite sites would have to charge us for access to their content or go out of business. Whether we like it or not, ads serves as a necessary evil that ensures that the internet stays a largely wallet free zone as far as content is concerned and doesn’t become one big paywall after another. However, no matter how much publishers and advertisers repeat this line, ad blocking will continue in popularity and thanks to Apple’s none too subtle two fingers ups (not the peace sign, the other one) in the direction of Google and Facebook, the publishing and advertising industries are going to be even tougher industries to crack than ever before.

Online ad’s already suffer from the much talked about viewability issue where the majority of ads online aren’t seen and if ad blocking proliferates, they’re likely to stay that way.  The easy answer is that publishers and advertisers should get creative and produce better ads or at least abandon using ads people hate (pre-roll, pop ups) but these answers are often provided by people who aren’t affected by ad blocking or in some cases, directly benefit from ad blocking.

In sum, I’ve always been of the opinion that the only question that really matters when writing about a technology is “who get screwed?” With ad blocking, the answer to that question can be larger than first thought.

(The Big Disrupt) Interview: This Week In Startups Talks To Tim O'Reilly Of WTF Economy

Check out this great interview as This Week In Startups founder and host Jason Calacanis talks to Tim O'Reilly, Founder of O'Reilly Media talks about WTF Economy and the effect of tech on the economy.

(Sports) Nick Diaz v NSAC: Diaz Ban Shows How Arbitrary Sport Regulatory Bodies Really Are

There’s nothing more terrifying than a public body out for blood and when the Nevada State Athletic Commission basically did a hit job on Nick Diaz’s career for the heinous crime of smoking pot and showing little to no remorse about it, MMA fighters and fans got a whiff of how arbitrary sports law really is.

Nick Diaz losing his career for smoking pot is bad enough but Diaz getting five years for weed when his last opponent (Anderson Silva no less) popped positive for steroids and only got one year when he should got three really shows how bad NSAC suck at sticking to their own rules. Diaz’s ban is so egregious that he will be banned longer than first and second time PED users, those who submit fake tests, wife batterers and animal abusers.

Diaz has paid a hefty price not for smoking weed but getting under the skin of NSAC as he tested positive for weed use three times and the commission, taking Diaz’s customary lack of remorse for breaking their rules to heart, sought to effectively end his career which could have been even worse if the other commissioners members followed commissioner Pat Lundvall’s suggestion to ban him for life.

However one can’t really be surprised as the NSAC v Diaz debacle is another example of why sports fans across the board hate the organizations that regulate and/or run their sport and the people who run them from the NFL’s Roger Goddell to FIFA’s Sepp Blatter as their power and the rules they impose on sports appear to be arbitrary and grossly unjust. Nick Diaz will likely see his 5 year ban whittled down to maybe 2 or 3 years after a lengthy and costly legal battle or even overturned completely due to NSAC’s decision drawing the wrath of the entire MMA community.

The NSAC were clearly out to get Diaz as they ignored two clean tests carried out to WADA (World Anti-Doping Agency) certified procedures and chose to bury Diaz based on a positive test not carried out under WADA’s standards. It’s bad enough that the NSAC was banned for years but the reason is why Diaz being tested for and punished for using cannabis is the real concern at heart as there’s no advantage to be gained over a clean opponent when smoking marijuana at least in comparison to anabolic steroids which promotes faster recovery times, greater muscle mass and endurance.

With this in mind, it’s hard to fathom why fighters could spend up to five years or even the rest of their lives banned from the sport they chose because state athletic commissions and/or fight promotions have seriously prudish attitude to recreational drugs which puts them on the wrong side of the growing trend in the US of a more relaxed attitude toward drugs, cannabis especially.

Nothing hurt fans and brought the sport in disrepute than when Anderson Silva, arguably the greatest MMA fighter ever, tested positive for steroids leaving the whole of MMA in a state of depression but no one battled an eyelid when Nick Diaz, a real fan favorite, tested positive for marijuana not because Anderson Silva has a greater standing in the sport (although it was part of it) but nobody cared except the UFC and NSAC.

In sum, Nick Diaz may have paid the price for the NSAC taking his defiance personally but the real question is why it was possible he could get banned in the first place.

(The Big Disrupt) Zirtual: Why Zirtual Failed

Jason Calacanis: (in praise of Zirtual) “I think you’re sitting on a powder keg”

Maren Kate Donovan (founder and CEO of Zirtual) : “Thank you”

It was only a week ago that serial investor and This Week In Startups host Jason Calacanis (an investor in Zirtual) was singing Zirtual and its founder and CEO Maren Kate Donovan’s praises on his show but now it must be painful for Calacanis to watch that episode back as he gave a glowing appraisal to a company that stopped operations and was quickly acquired just days after the interview.

Calacanis, not exactly one to pull punches, was relatively Zen addressing the Zirtual implosion during his popular fan Q&A called “#askjason” (see the video below this article) choosing to look at the situation as something for him to learn from but it’s hard to imagine the man who put YouTube on blast while presenting at a YouTube conference not losing his shit on Zirtual’s founder and CEO via Go To Meeting.

Being a fan of the show, I found it painful to watch back myself as Calacanis went from one superlative to the next about the company, its CEO, and particularly it’s potential for growth as Calacanis tipped the company to reach “unicorn territory”.

While Zirtual’s implosion may have left Calacanis’s face red with anger and a little bit of embarrassment after investing in the company, the 400 employees of Zirtual were left pondering their futures after they were let go by the company via email. However, in truth, they’re jobs were in jeopardy the moment Zirtual made the wacky decision to take them on as full employees with benefits and add an incredible 30% to their costs. This has to be the strangest decision any company can make as there’s no company on the planet, never mind a 5 year startup planning to scale, that’s prepared to add 30% to their costs and risk their margin or, in Zirtual’s case, eliminate it.

Zirtual broke the cardinal rule that established companies and startups in their market live and die by: never make contractors employees. Very few companies who use contractors extensively can take all or even some of them on as full employees and Zirtual, unfortunately for them, weren’t an exception to the rule. Even Uber that’s currently worth $50 billion are scared to death of any court in the countries they operate in recognizing their drivers as employees as they simply can’t cover the costs as, according to a number of reports, they’re already losing a ton of money as it is.

While Zirtual may have got their numbers fatefully wrong, what they got right was building a service clients loved and their employees loved to provide which few companies can say about their business. Wil Schroter, CEO of Startup.co (the company that bought Zirtual) paid testimony to the commitment of the Zirtual staff as he revealed that some of the staff is working without pay to keep things going and commented on their passion for the business as he said ““They’re crazy passionate. ... They love what they built.””[1].

A company with this much good will from its employees towards it (despite letting them go via email) can never die without a fight and, hopefully, under the Startup.co, Zirtual thrives.

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[1] C. Ghose, 2015,  Failed S.F startup Zirtual’s  fired employees are working for free to revive services: they love what they built’,  http://www.bizjournals.com/sanfrancisco/blog/techflash/2015/08/zirtual-workers-shutdown-startups-co-maren-donovan.html

(The Big Disrupt) Interview: This Week In Startups Answers Fans Questions

Check out this great episode of This Week In Startups where founder and host Jason Calacanis talks about the Zirtual controversy, sage advice for entrepreneurs including raising money and dealing with investors.

(The Big Disrupt) Pay TV: Who'd Be A Pay TV Provider?

The last few years have not been good to be a pay TV provider with the whole industry losing subscribers and the goodwill of the one they have left because the industry’s notoriously bad customer service but the future looks even worse when you look closely.

The whole Pay TV industry is chasing two groups of TV consumers, cord cutters and cord nevers, who have chosen to either abandon or avoid entirely the cable bundle to sign up with over the top (OTT) services like Hulu and Netflix who offer a large library of content at cheaper prices than their Pay TV counterparts. This trend sends chills through Pay TV executive’s spines as cord cutters and cord nevers are their future customer base and find themselves having to compete with popular and well-established OTT services in the open marketplace to get them back.

This puts Pay TV providers in the unenviable position of having to negotiate a fine line where they have make sure their own OTT services don’t cannibalize their pay TV subscribers like other OTT services are.  However, this problem is nothing compared to the quagmire that Pay TV providers face: entering their industry’s number one growth market knowing that they’ll lose money or make significantly less than they make now. Pay TV providers, like any other company in any other industry, strive to make a return on dollars spent and thanks to low OTT APRU (Annual Revenue Per User), Pay TV providers over the next few years are going to find it really difficult to pull it off.

However, Pay TV providers will continue to make money from their large pay TV subscribers bases and Pay TV executives are well aware that they’ll see significantly lower subs and revenue in the OTT market and see it as a way to reach consumers they lost or never had. What Pay TV executives would be really be concerned about is the industry wide subscriber loss which saw Pay TV providers as a whole lose 550,000 subs in a quarter and the large retransmission fees they have to cough up to keep popular broadcast and cable networks in their cable bundles.

Pay TV providers hate paying these large transmission fees with every fiber of their being as it affects their ability to compete effectively and feel extorted to the point they’ve actively lobbied government officials to address the issue. It looks like their lobbying efforts paid off with FCC Chairman Tom Wheeler looking at removing exclusivity laws on the books that gives broadcast and cable networks an ungodly amount of leverage over Pay TV Providers, particularly at the local level. This will likely lead to an epic battle between the cable and broadcasting lobbies that will last months or most likely years as both sides are unlikely to back down even in defeat.

Retransmission fees makes up for a huge chunk of most broadcast and cable network’s revenue and would put a lot of downward pressure on their business for obvious reasons if they lose this battle as they won’t be able to command the same fees they do now by a long shot. Broadcasters may have ready themselves for the tough road ahead as pay TV providers have a winning argument and a FCC Chairman who would probably make the same argument if he was still head of NCTA (National Cable and Television Association).

However, looking at the numbers provided by SNL Kagan, it looks like Pay TV providers are targeting low hanging fruit as in 2015, premium and basic cable networks accounted for $37.9 billion of retransmission fees Pay TV providers had to cough up while broadcasters accounted for only $6.3 billion[1]. While retrans fees pay TV providers had to pay broadcasters saw more growth over the last decade than fees paid to cable networks, Pay TV providers are projected to pay just shy of $1o billion more in 2018 than they do now  to cable networks as opposed to the $2.3 billion they’ll pay Broadcasters in the same period[2].

The obvious answer to the problem would be for pay TV companies to keep the cable networks in check but that’s easier said than done when cable networks produce many of the commercial and critically acclaimed shows on television, period. This gives premium and basic cable channels such as HBO and AMC a lot of bargaining power as they produce commercially successful shows like The Walking Dead and Game of Thrones Pay TV providers can’t afford to lose out on.  Popular cable networks like HBO have buffered their already powerful bargaining position as they can explore other ways to distribute their in demand content to those who already subscribe to their cable channel (HBO Go) and those who don’t in partnership with other content distributors (HBO launching OTT service HBO Now in partnership with Apple).

However, in exploring new ways to distribute their content such as OTT and TV everywhere, cable networks are subject to same problem of low ARPU and thus lower revenues in general. However, network executives, much like their Pay TV counterparts, see these new distribution models as a way to reach cord cutters and cord nevers.

In sum, all this puts pay TV providers in an unenviable position which provokes the question who would be pay TV Provider indeed.

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[1] B. Fung, 2015, The FCC could soon give more power to cable companies. Here’s how, https://www.washingtonpost.com/news/the-switch/wp/2015/08/13/the-fcc-is-moving-to-end-tv-blackouts-once-and-for-all-heres-how/

[2][2] Ibid