Monthly Archives: June 2010

Why Online Advertising Should Be Regulated

In a recent article,
wrote about the need for
regulating online advertising and how doing so will help promote growth
of the industry overall. Below is the full excerpt:

The online advertising industry is going through rapid and exciting
changes. In the past two years, we’ve moved from a publisher-centric
model to a network-centric model and now to a data-centric model. Top
advertisers can now buy specific audiences in addition to specific

All of these innovations provide consumers with a better experience
with more relevant ads, customized content, and less spam while giving
advertisers more confidence in the performance of online ads.

While this technological transformation is enabling a richer and more
personalized web, it also raises new privacy concerns for consumers as
their data is being analyzed and shared. The increasing lack of clarity
about data practices for technology providers and consumers alike will
likely impede further growth in online advertising.

While conventional wisdom might hold that regulation is harmful to an
industry, we believe closer regulation of online advertising will
promote continued innovation by allowing companies to better understand
the rules while giving consumers and brands more confidence to engage
with online media.

Regulation provides guidelines, promotes growth

Already, our industry is working hard to establish its own rules. The
Network Advertising Initiative (NAI) has been very forward looking and
has done a great job establishing standard guidelines (such as how to opt-out).
The Internet Advertising Bureau (IAB) has also done a tremendous job by
establishing a set of principles
that govern what is reasonable for online privacy. And together, the
NAI and IAB have released the CLEAR
Ad specification
advocating notices in online ads to tell consumers
what information was used to deliver the ad to them, and how that
information was collected.

These are important steps to protect privacy. Unfortunately, these
institutions are still not well recognized by consumers, and because
they are opt-in for advertisers, there remains a profusion of bad
practices including use of flash-based cookies, IP targeting, deceptive
offers that auto-bill credit cards, and many others.

Absent legislation, some advertisers may try to out-compete others by
using practices that work against the long term interests of the
ecosystem. Over time, these practices erode the foundation for exciting
industry changes, increased use of online services by consumers, and
brands’ adoption of advertising technology.

That’s why formal regulation is needed – not only to clarify what the
right guidelines are, but also to make sure everyone follows them so
that the advertising industry will continue to move forward.

The current state of regulation

Today the federal rules are vague on what is permissible and what is
not. If you ask ten experts you are likely to get ten different answers.
And we are entering a world where most innovative advertising practices
are poorly understood by consumers or unknown altogether. It will take
some time and debate before the dust settles and the guidelines are set.

What is clear, however, is that we are in an era where consumers are
only slowly awakening to what data is readily available in the 50
milliseconds it takes to serve them an ad. And if consumers cannot fully
grasp the implications of behavioral advertising, they will shy away
from participation – and brands will be reluctant to drive spending to
mistrusted technology.

Specific industry guidelines from Washington would be the clearest
signal to consumers and brands that it is safe to participate, enabling
innovation to move forward by providing much needed clarity.

Right now there is a healthy debate over the draft
put together by Congressman Boucher. Both industry
advocates and privacy advocates raise legitimate concerns, and it’s
clear that there is work left to do to strike the right balance between
the benefits of better advertising and consumer expectations of privacy.

While some pieces of the draft legislation need to be changed, the
spirit of the bill is a good one: clarify the rules and make online
advertising safer for consumers, content, and brands. Clear federal
guidelines are what we need to realize the full potential of our

The ultimate startup: Creating a New Country

The ultimate startup wouldn’t have a stock ticker, corporate headquarters, or even sell goods and services. It would, however, be held responsible for the welfare of its “customers.”

Creating a new country is one of the most difficult, complicated and riskiest things you can do. But it can also be one of the most rewarding since you’ll have a direct impact over the lives of your citizens.

There are 195 countries in the world today, and most of the newest countries have formed out of conflict. Around two dozen countries were formed in the 1990s alone stemming from the dissolution of the U.S.S.R., Yugoslavia, and others.

Region-capital_country-001 Why haven’t countries been created using the startup mindset – out of careful thought, experimentation, and the desire to make something better? Isn’t it worth trying to make a better government and to make people happier?   Shouldn’t countries try to recruit the best talent from all over the world?

Countries are a lot like Businesses
Countries and businesses share many similarities. In order to survive, countries need to keep their customers (citizens) happy, and they need to generate revenue (from taxes, selling resources and exporting goods, or investing in other countries or corporate entities). Countries also need to form partnerships, abide by certain rules, invest in research and development, and should also have a roadmap for the future.

Unfortunately, most countries today are too similar to large corporations and not enough like startups. They are large, slow-moving, and bureaucratic when in fact they need to be more nimble and responsive to their citizens.

No Easy Task
Like forming your own startup, there is a long list of things that need to be thought through before you can create a new country: Where will you be based? Who are your first citizens and how will you encourage them to join you? What type of government will you establish? How will you raise money and how much do you need?

Countries could even be landless (though you should be able to negotiate with a country to buy their land).  Getting land for your country would be difficult, but startups always have serious disadvantages when competing with entrenched players.

Once you get a certain number of people (so we know there is demand) and backing of a certain number of dollars (so we know the country is viable), you should be able to have a charter country in the United Nations. 

There are many more complex issues that would need to be thought-through first, and even if you were able to address all of them, there would still be a lot of risks and on-site learning. But daunting tasks have never kept entrepreneurs away from trying to accomplish their goals.

People should be encouraged to start countries.  Not only is there is a monopoly on starting your own country but there is also a lot of upside for your citizens.  Breaking down the barrier to create and develop countries will require much trial and error, but innovation and progress only happen through experimentation.

Darwinism also applies to the nation-state just like it applies to companies and besides, a little creative destruction is a good thing. 

Special thanks to Michael Hsu for his thoughts and edits and Shervin Pishevar for his inspiration.