The Hub Cool News

Handmade Vodka

titoVictorino Matus offers a spirited defense of Tito’s claim to being ‘handmade’ vodka in a Wall Street Journal essay (10/20/14). In the beginning, Bert "Tito" Beveridge used Elmer’s glue to affix labels to bottles of Tito’s Handmade Vodka, and attached "every cap to the point of getting carpal-tunnel syndrome. Alone, he could crank out 65 cases a day. This was back in the 1990s, when he was sleeping on the floor, next to his still, doing every little thing, well, by hand." Today, however, Tito’s "a 26-acre operation" producing some 850,000 cases.

Can vodka manufactured on such a scale still call itself "handmade"? A pair of class-action lawsuits — one in Florida and the other in California — charge Tito’s with "false representation," that consumers are misled because the vodka is not "made by human hands" but rather in "large industrial vats in mass quantities." It’s also true that Tito’s, like "at least 65% of all vodkas made in the US, originates at contract manufacturing sites." Given this, the plaintiffs say, Tito’s is not the "high-quality product" they thought they were buying.

"Both lawsuits rely on the Oxford definition" of ‘handmade’ as "made by hand, not by machine and typically therefore of superior quality." However, Victorino, author of Vodka: How a Colorless, Odorless, Flavorless Spirit Conquered America, says he has "sampled more than a few ‘handmade’ vodkas that weren’t ‘of higher quality’ than their industrial counterparts," adding: "Relative to other vodkas, Tito’s isn’t that expensive, either." The courts have yet to rule, however Victorino predicts few would notice if Tito’s dropped ‘handmade’ from its label.

Animalistic Vanilla

vanilla-beanRaw vanilla beans smell of "castoreum, a secretion from a beaver," reports Ellen Byron in The Wall Street Journal (10/22/14). Vanilla’s "animalistic" note became apparent to Ann Gottlieb, a fragrance developer, while touring "the tiny, rudimentary farms where vanilla is usually grown," after "handling beans before and after processing … The discovery is influencing fragrance projects now under way, including a number of men’s fragrances that will combine animalistic vanilla notes with its warm and creamy ones."

This is but one example of vanilla’s many possibilities now under development — testament to the aroma’s enduring popularity. "Vanilla will never die," says Ann. "It’s probably the most acceptable note of anything there is in a fragrance … Everyone has a vanilla memory whether you realize it or not." Experts say such memory begins "before birth, helped by mothers using and eating so many things that contain it … Vanilla can be found in amniotic fluid and in breast milk … Babies often recognize, or orient their faces toward, a vanilla flavor or scent."

No question but that vanilla is big business: "Since its opening in 1990, Bath & Body Works has sold $1.1 billion worth of vanilla-scented products, including body lotion, shower gel and perfume." The retailer’s latest vanilla fragrance "comes from a bean in Madagascar that takes three years to grow and must be pollinated by hand within 24 hours of a blossom appearing." It is being marketed as "vanilla like you’ve never experienced." Camille McDonald of Bath & Body Works says the claim even intrigues "vanilla skeptics who think they’ve smelled it all."

Kiranas Convenience

fruits-veggiesModern supermarkets have a tough time competing with India’s vegetable stalls, reports The Economist (10/18/14). The supermarkets are cheaper than India’s "curbside stalls and kiranas." They are air-conditioned and have "wide aisles and broad ranges." However, so far India’s supermarkets "account for only two percent of food and grocery sales and are struggling to make a profit … In large part it is because supermarkets are not a compelling draw in terms of price and service." They are also inconvenient, typically far from residential areas.

The supermarkets are further handicapped in that they lack "enough muscle to push around Unilever or Procter & Gamble in negotiations. India also has a law that mandates a maximum retail price for packaged goods." "Merchandising is lackluster in terms not only of aesthetics but also of thinking," says consumer guru Rama Bijapurkar. They fail to stock "flowers during Hindu festivals," for example. Traditional merchants meanwhile lay claim to higher quality goods, longer store hours, credit and free delivery.

Kishore Biyani thinks he may have a solution with Fairprice, a chain of convenience stores with a relatively small footprint, narrow aisles and a large selection of "own-label products" tailored to local tastes. So far he has opened "around 180 of these stores and would like to have 5,000 by 2018, in part by selling franchises to kirana-owners." "Supermarkets won’t kill the kirana," says Rama, predicting, however, that social forces eventually will, as children in India "aspire to more than taking over the family store."

Pencil Power

pencil"People are rediscovering the feel of a freshly sharpened pencil," says Lori Booker in a Wall Street Journal piece by Natalia Drozdiak (10/17/14). Not surprisingly, Lori is a spokesperson for Dixon Ticonderoga, "known for its yellow ‘Number-Two’ pencils." However, Euromonitor confirms that, overall, "North American and European pen and pencil sales are steady or growing slightly … after a dip in 2010." "We have smartphones, but there are also times when we look for a break from that," says Felix Stockle of Prophet, a consulting firm.

Growth of old-fashioned pencil — and pen — sales is also evident in Latin American and Asian developing countries, "thanks to rising wealth and literacy rates." All told, sales of pencils "are set to increase four percent this year to about $2.7 billion, while pen sales will rise 4.9 percent to $8.5 billion," according to Euromonitor, and "growth is expected to continue for at least five years." Count Anton-Wolfgang von Faber-Castell, of Faber-Castell says the digital revolution vision of a paperless world is just "wishful thinking."

To that end, Faber-Castell has introduced what it calls the "perfect pencil," which comes with "its own built-in sharpener and eraser" and sells for about $250. A "diamond-encrusted version has sold for as much as $13,000." Meanwhile Crayola has introduced Digitools, "a range of plastic, rubber-tipped tools" that "let children ‘stamp,’ ‘brush,’ and ‘paint’ designs on a tablet through a free accompanying Crayola app." Staedtler’s Digital Pen 990 "works as a regular ballpoint pen while simultaneously converting everything written into electronic files."

Hendo Hoverboard

hendo-hoverboardMarty McFly inspired a generation of tinkerers to create a real hoverboard, reports Conor Dougherty in The New York Times (10/21/14). Marty and his hoverboard were fiction, of course — a memorable scene from Back To The Future Part II in which the Michael J. Fox character used "a floating skateboard to flee a gang of bullies." (video) The future back then was 2015, and the film "had other futuristic items, like flying cars and self-tying shoes, but none touched the imagination like the hoverboard."

Greg and Jill Henderson are among the inspired, although their aspiration actually is buildings — not skateboards — that float. Their hope is to arrive at a new kind of foundation, using the magnetic technologies that might give rise to the hoverboard, to "build cities to better withstand earthquakes." The Hendo Hoverboard, "a noisy magnetic skateboard that can float above a copper surface … about an inch above the ground," is as far as they’ve gotten. They just launched a Kickstarter campaign (link) to raise $250,000 to keep their dream alive.

The essential challenge is "that repelling magnets are tough to balance." Other hoverboard hopefuls include Rich DeVaul and Dan Piponi of Google X, who "got as far as a fingernail-size piece of carbon that could hover above a lattice of small magnets." Rich and Dan still think they can build a hoverboard, but admit it may be pointless. "I was racking my brain because I so wanted to build this damn thing," says Rich, adding: "We weren’t sure exactly what big problem we were solving except for this global lack of skateboard parks."

Dirigible Dreams

dirigible-dreamsHad it not been for Hitler, "the airship would yet have had a place in global transportation," writes C. Michael Hiam, author of Dirigible Dreams, in a Wall Street Journal book review by Sara Wheeler (10/18/14). Ferdinand Zeppelin "pioneered the ‘rigid dirigible,’ an airship with an aluminum frame that could support gondolas below," and some "fully expected that zeppelins would bring the war to a swift and satisfactory conclusion." The zepps did indeed scatter bombs, but "the unreliable airship’s wartime record was poor."

Unreliability was the recurring theme of the dirigible, which is defined by its "ability to navigate through the air by engine power, unlike balloon flight." Margaret G. Mather, an American who journeyed aboard the Hindenburg, reported "an indescribable feeling of lightness and buoyancy, a lift pulling upward, quite unlike an airplane." The Hindenburg also featured a "well-stocked wine cellar and cocktail bar," and a "tiny but complete" cabin where passengers could sleep "soundly between linen sheets."

The craft’s history is one of heroic attempts — such as Salomon August Andree’s "mission to reach the North Pole in a non-rigid airship," that ended in a crash. America’s "most powerful airship cheerleader," Adm. William A. Moffett, also went down with his ship. The dirigible’s "incredible potential" and the promised "future of human flight" was not to be. "One by one, nations gave up their dirigible dreams, especially after 35 souls burned to death on the Hindenburg in Lakehurst, NJ, one of the first transport disasters recorded on film." (video).

Sweet Spot

david-aakerTapping into a customer’s values and passions is the key to strategic digital success. A Hub white paper by David Aaker of Prophet. How do you create a digital strategy with involved customers in an energized social community? How do you generate an engaged, active ‘go-to’ website? One answer involves changing the orientation of marketing from ‘selling’ the brand to becoming an active partner with a shared-interest program around a customer’s ‘sweet spot.’

A sweet spot reflects customers’ ‘thinking and doing’ time, beliefs and values, activities and passions, possessions, or places they treasure. Ideally, it is a part of, if not central to, their self-identity and lifestyle, and reflects a higher-order value proposition. It could be New York City adventures, healthy living, rock climbing, sustainability, a college football team, or whatever. The driving logic is that customers will seek out, discuss, and be engaged in their interests. Read The Rest of the White Paper.

The Diaspora Four

diaspora"Code can organize many things, but human nature isn’t one of them," writes Christine Rosen in a Wall Street Journal review of More Awesome Than Money by Jim Dwyer (10/16/14). The book is about the attempt by four New York University students to disrupt Facebook with an alternative social network that allowed "people to swap and share without paying a toll in data." The founders had been inspired by Eben Moglen, a technologist and law professor who had termed Facebook "a structure for degenerating the integrity of the human personality."

The attempt to provide a Facebook alternative received "adulation from the press" and interest from venture capitalists. The idealism was quickly met with a decision about whether this social network — Diaspora — "would be a typical startup corporation that accepted venture capital or a crowd-funded, open-source nonprofit foundation." While this debate dragged on, the founders were "working brutal hours for no salary and pursuing the active social lives of young single men in their 20s."

"Their job," Jim writes, "was to demonetize the soul." The essential conflict was evident in that "even as Diaspora caught on among privacy-minded tech geeks, some of its founders continued to use Facebook," presumably "because all of their friends were still on Facebook." Despite the altruism, the Diaspora Four "embodied the hubris that permeates the Valley." Could taking on Facebook require anything less? Moreover, despite the cause of privacy, the essential nature of social networks is premised on just the opposite.

Mellow Ello

elloThe hottest new social network appeals to the highest common denominator, reports Lois Parshley in Bloomberg Businessweek (10/16/14). Ello, as the network is known, is an invitation-only network launched August 7th that by late September "was receiving 50,000 requests per hour to join." Ello describes itself as a "simple, beautiful, and ad-free social network created by a small group of artists and designers." Ello, as co-founder Todd Berger explains, involves "absolutely no advertisements, no data mining."

Positioned as the "anti-Facebook," Ello is also deliberately exclusive. "We don’t want every person in the world to be on it, so we don’t have to design for the lowest common denominator," says co-founder Lucian Fohr. To participate, "you have to be asked to join by one of its existing members or send in a request." If all else fails you can buy an invitation "on eBay for $100." Also unlike Facebook, you need not use your real name, and the site’s "content is divided into Friends (the people you follow) and Noise (everyone else)."

Ello originated at Budnitz Bicycles in Burlington, Vermont, as "a space where creative people could collaborate and share ideas without worrying about privacy," or becoming a "product that’s bought and sold" to advertisers. The network does hope to attract brands, though. "It’s an opportunity to find a new way to advertise," says Todd. Social media expert Gary Vaynerchuk remains skeptical, saying that "people don’t care that you’re selling their data. We want ads that are targeted, more than you think." Ello so far has raised $435,000 in venture capital.

The Connection Stack

steamboat-springsThe entire Colorado town of Steamboat Springs is improving its customer service, reports Ian Mount in The New York Times (10/16/14). The idea of teaching a town how to treat its inhabitants occurred to Tom Kern after noting a drop in its Net Promoter Score to a tepid 68 out of 100. Net Promoter indicates how likely a customer would be to recommend an experience to someone else and Tom, the CEO of the town’s Chamber Resort Association, was concerned. He contacted a consultant, Ed Eppley, for help.

Ed’s approach, typically with telephone agents, is to connect "through personal conversation and to use the information learned" to tailor sales pitches. He had also applied this concept to "cranky ski lift operators" at "the town’s dominant resort" with positive results. At the heart of his method is a series of "pictogram cards that ask five questions: Where are you from? What do you do? Where did you go to school? Where do you travel? What are your hobbies?" "We teach people how to have that proper conversation with a guest or client," says Ed.

Ed calls these cards "the connection stack" and Bethany Clendennen, a local bartender, says it works. "It’s fun. It’s more like socializing," she says. "We find that people are a lot happier in this atmosphere." She says it’s good for tips, too. Ed says sincerity is essential, and Joseph Weintraub of Babson College notes "it’s hard to keep that smiling face and be genuine if that’s not who you are." Also, some people just don’t like chit-chat. So far, the connection stack hasn’t stacked up, however, as the town’s Net Promoter Score has dropped a point, to 67.

Counter Intelligence

google-glassCosmetics counters are getting a Google-inspired facelift in the e-commerce age, reports Bee Shapiro in The New York Times (10/9/14). At Bloomingdale’s, the "latest counter program" employs Google Glass to help customers learn how to use the products they buy. "A YSL makeup artist wears the gadget while applying the client’s makeup. The video, which also includes shots of the products used, is emailed to the customer." This appeals to shoppers like Carol Koehli, who says she’s "hopeless with makeup."

Carol says she might even post her makeup session on social media. "I’m on Twitter and I have Instagram," she says. "My friends are on Facebook. We send each other pictures already. I might well do this video, too." YSL’s Google Glass initiative underscores how "the lines between department store beauty shopping and e-commerce are blurring." "A customer might notice something on a website first and then go to a store," says YSL’s Alexandra Papazian. "Or they’ll go to counter and then go home and do more research online."

Other department stores are banking on more in the way of high-touch. At Bergdorf Goodman, for instance Clif de Raita, is a star attraction at the Tom Ford counter, where he "has developed something of a cultish following. Clients report that his gentle guidance (more instructive than old-fashioned hard sell) is worth the trip to the store." Arriana Marion says Clif gives her advice on things she’s too busy to research herself. According to Tom Ford Beauty, "the company sells double the items per transaction at the beauty counter as it does online."

Global Warning

chris-hoytThe rest of the world lags behind American shopper marketing. A Hub research report by Chris Hoyt and Nancy Swift of Hoyt & Company. This is part two of the 2014 HUB Shopper Marketing Update survey analysis. Where part one looked at global best-practices, part two examines the geographic differences in shopper-marketing practices around the world with emphasis on US versus non-US.

While there are legitimate reasons to think of non-US shopper marketing as simply a less mature version of US shopper marketing, a deeper analysis indicates one particular practice, in fact, puts the two on very different trajectories. To ground this, let us reprise key findings from part one of the global results of the survey. Read the Rest of The Research Report.

SheTaxis

shetaxiDemand is so great for women-only taxis that SheTaxis "has had to decelerate its launch," reports The Economist (9/27/14). SheTaxis is "an app that lets female passengers insist on female drivers, and vice versa. It will be available in New York City (where it will be called ‘SheRides’), Westchester and Long Island, and the firm plans to expand into other cities." Founder Stella Mateo says it is for women who "are nervous and weary of getting into cars driven by men" or "those whose religious beliefs forbid them to travel with unrelated men."

The SheTaxi concept has proved so popular that the company is currently recruiting some 500 drivers, who wear pink pashminas. Such service is nothing new "in India, South Africa and several Middle Eastern cities. Some Brazilian and Mexican cities offer women-only public-transport programs known as ‘pink transport.’ Japan has had women-only railway carriages on and off since 1912, Known as hana densha (flower trains), they offer a haven from the gropers who make rush hour in Tokyo so disagreeable."

Other than too much demand, the other obstacles for SheTaxi include other cabbies, who already "are furious at the growth of online taxi firms such as Uber." There is a legal question of discrimination, as SheTaxis will only hire women and will not do business with men. That "its drivers are all independent contractors" is one possible defense. Another defense is that the service is in the public interest, and not unlike all-women colleges. However, men may also feel safer with female drivers: A 2010 study found that women get into fewer car accidents.

Bland Sedans

impalaYou can rent any car you like, so long as it is a Chevy Impala, reports Josh Barro in The New York Times (10/14/14). "National tries to address the issue of rental car roulette by just letting you pick your own car," says Chris Ladd, a frequent renter. "Unfortunately, what that means is you can pick absolutely any vehicle out of their vast collection of Chevy Impalas — even one of the fancier shades of gray." Chris may be exaggerating, but "57 percent of all new Impalas sold in the United States last year became rental cars," according to Polk Automotive.

It’s true that National and others also rent plenty of Chevy Malibus and other cars, but "blandness is one of three themes that emerge in defining the vehicles that depend so heavily on the rental market." The other two are "large SUVs and full-size vans, which users are disproportionately likely to want on a temporary basis," and "subcompact cars, like the Toyota Yaris, that don’t sell well in the American market," and are offered at deep discounts. The Malibu and its like are simply "bland sedans nearing the end of their product cycle."

The Chevy Captiva, a "compact SUV" and "the last vestige of the shuttered Saturn brand … has 96 percent of its sales go to the rental market." "Some cars, such as the Nissan Altima and the Toyota Camry are big sellers into the rental market because they are big sellers, period." The missed opportunity may be that people reportedly tend to buy cars that they’ve rented. To that end, Chevrolet has redesigned the Impala so it has more consumer appeal, and is teaming up with National for a free "test-drive" rental with every paid rental.

Uncontained Compensation

container-storeKip Tindell thinks paying store staffers "nearly $50,000 annually" is a key to success, reports Rachel Feintzeig in The Wall Street Journal (10/15/14). Kip is CEO of The Container Store and says the higher pay produces better productivity. "One of our foundational principles is one equals three: one great person can easily do the business productivity of three good people," he says. "If you really believe that they can do three times the productivity, then you can pay them 50% to 100% above industry average."

By the way, Kip’s college roommate was none other than Whole Foods CEO John Mackey. He also believes in keeping the most productive workers "tickled" by giving them sizeable annual pay increases commensurate with their contribution. The goal, for example, is to ensure that the "17th greatest contributor gets the 17th largest piece of the pie." This requires "a highly evolved review structure," says Kip — "a formal written review" that takes employees and their supervisors up to eight hours to complete.

The two parties "then take another four or five hours to go over it with each other," Kip says. "It’s really now getting to where you and the person who reports to you actually agree on their compensation." Meanwhile, Kip doesn’t believe in having a Human Resources department, and instead relies on employees to recruit new hires. This can include hiring family members. "People know which of their cousins are great and which aren’t," says Kip, adding: "It can be as simple as recruiting a waiter at a restaurant that you think is just the best you ever had."

Operations Innovations

jcpMore CEOs discover that strong operations trump flashy merchandising, as reported in The Wall Street Journal (10/14/14). Target CEO Brian Cornell, for example, and incoming Gap CEO Art Peck, "are valued more for their ability to run large organizations than for their gut instinct about the next hot trend." The same could be said of Marvin Ellison, who is slated to take over as CEO of JC Penney, in the aftermath of the Ron Johnson debacle, in which efforts to "make the chain more hip … ended up blowing a $4 billion hole in company sales."

This trend toward "detail-oriented operators over executives mainly lauded for brilliance in merchandising" comes "as the industry faces giant new challenges in managing its supply chains and keeping customers from defecting to the web." Penney is particularly vulnerable in "the discount-driven apparel business, the traffic-challenged world of shopping malls and the beleaguered middle-class consumer." Marvin sees beauty in stability: "The last 18 months have proven that turning the company upside down and shaking it … was not necessary."

Marvin joined Home Depot 12 years ago, running "areas including loss prevention and global logistics." As executive vice-president of stores, he "helped lead Home Depot’s transformation from a cluttered big-box store with antiquated operations and employees who spent the majority of their time unpacking boxes and restocking shelves, to a retailer that devoted nearly two-thirds of its labor hours to serving customers on the sales floor." He also "made sure items stayed in stock" and the stores were "easier to navigate."

Infra Eco Logi

Infra-Eco-LogiThe future of urbanism may include buildings the size of cities, reports Julie V. Iovine in The Wall Street Journal (10/14/14). At least that’s the view of a group of architects — Geoffrey Thun, Kathy Velikov and Colin Ripley of RVTR — who see the world "as composed of networks and systems … rather than being studded with something so limited and finite as individual buildings." They see "vast megalopolises blooming across the landscape," in some cases stretching across multiple cities, states, and even countries.

For example, the Great Lakes Megaregion would encompass "two countries, eight states, two provinces, 12 major metropolitan areas and the five watersheds of the Great Lakes," involving the cities of Detroit, Chicago and Toronto. Infra Eco Logi Urbanism, as this concept is known, considers this region in terms of "natural resources, overlapping transportation and distribution systems, shifting employment demands and environmental threats, among other issues." The goal is "to uncover design possibilities within the system."

"Orphaned parcels" in and around highway interchanges would "be used for the footings of supersize buildings straddling the highway." Toronto would become a "modern acropolis," with "a great arrivals hall surrounded by Olympic-size sporting venues as well as megachurches and research facilities." Chicago would repurpose "underused parking garages, air rights and barren lots" to weave together new transportation systems, and Toronto would be home to assembly halls, where megaregion citizens could discuss their shared concerns.

Southdale Center

one-southdaleA Minnesota city hopes to attract Millennials by "asking them to live at the shopping mall," reports Robbie Whelan in The Wall Street Journal (10/14/14). Edina, Minnesota "has long been considered the quintessential American suburb," but is seeking to refresh its aging population. "Edina is a first-rate suburb, but right now we’ve got as many people over 65 as under 18," says Jim Hovland, the town’s mayor. "We like it, but you want to make sure your town is regenerating itself so that it remains vibrant and healthy."

The answer is One Southdale Place, "a 232-unit luxury apartment complex built on the site of a former parking lot at the corner of" the Southdale Center mall. This is just the beginning, as "One Southdale is part of a broader effort to develop ‘a village unto itself’ around the mall. The city is in the midst of expanding a mile-long promenade project that will eventually connect the mall to a nearby park with footpaths and biking trails lined with sculpture gardens. Three more apartment buildings are planned for locations along the promenade."

The concept actually echoes the original vision for Southdale Center, as imagined by architect Victor Gruen in 1956. "Gruen’s original vision was to foster community," says architect D. Jamie Rusin. "He originally saw the mall as a place you could go to shop, eat, see a doctor, have an office — a community center for people who didn’t have one." That idea resonates with Southdale resident Tom Bymark, 25, who sees it as an attractive alternative to city life, "where it’s claustrophobic and you’re shoulder to shoulder with all these people."

Data Vapor

green-eyeshadeBig Data is a big deal, but "no one really knows what all that information is worth," reports Vipal Monga in The Wall Street Journal (10/13/14). "It’s flummoxing that companies have better accounting for their office furniture than their information assets," says Douglas Laney of Gartner Inc. The "lack of standards for valuing data leaves a widening gap in our understanding of the modern business world." Kroger, for example, sells $100 million worth of data on what its shopper buy, but places no value on the data as an asset.

That’s because doing so would violate "generally accepted accounting principles, which prohibit companies from treating … the data as investments instead of costs. The Financial Accounting Standards Board … has struggled to update its rules," including issues such as "how to account for time employees spent gathering data — as an expense or a capital investment? Companies would also have to estimate the shelf-life of their data, figure out its future worth, and track and report any changes in its value."

Such questions are prickly for Facebook, eBay and Google, "which rely on the data they collect for the bulk of their revenue." For now, they rely "on the collective wisdom of the market" and the stock price, to place a value on "prize assets" like data. So, little has changed since the "dot-com bust of 2000 … fueled by the widespread belief that traditional metrics for value and risk didn’t matter in the ‘new economy’." Alex Poltorak of General Patent Corp. says "the accounting profession … has completely failed modern business."

Advertising Neutrality

shineAn Israeli tech startup is poised to disrupt the way ads are served online, reports Christopher Mims in The Wall Street Journal (10/13/14). Shine Technologies has developed software that can "determine how much ad providers are making on advertising using carriers’ delivery systems." Called AdSight, it allows "wireless carriers to monitor what ads are being delivered through their networks, and from whom, all the way down to the level of individual ad impressions." They can also use the information to block ads.

This is highly interesting to the carriers. "You should see the faces of the CEOs seeing these reports on how much of their traffic is used by ad tech," says Shine CEO Ron Porat. Some carriers "in Europe, South America, Asia and the US … plan to use the technology to block certain ads as a way to bring the ad providers to the negotiating table to win a cut of the fees." "The ad blackouts will come without warning," says Roi Carthy, also of Shine, who also says at least one unidentified US carrier is on board with the idea.

This has also gotten the attention of net-neutrality advocates, who argue that "blocking content, even ads, is a direct violation of the principle of net-neutrality." They suggest that the telcos "would end up battling regulators in both the US and Europe." While the rules are under review in the US, in Europe they clearly prohibit discriminating between types of online traffic. Ron Porat denies that Shine is about taking hostages. "Everyone is taken hostage already," he says. "You as the user are taken hostage, because some of your data is taken for ad tech."