166-ish million dollar fund. >> we don't really talk about it. >> okay. filed a form with the s.e.c. suggesting as much and you had in 2012 so a fund you're sort of sticking to your traditional trajectory it sounds like. josh, what are you. you raised your last fund in 2014, $175 million. you in the market this year? >> we typically raise -- target raising every two and-a-half years. that would put us on pace to raise at the end of this year. okay, great. do you feel s, like -- you can say no. you obviously would never say no good reason. when i spoke to bill he made this point that it's very hard say no.because you you can lose your seat at the table possibly for the duration career as an lp. do you feel that's true? >> that's absolutely true and we wereeresting because talking about this back stage.

office, which s is kind of the exemplar invented y basically the game in a sense from the institutional investment perspective. one of their secrets to success getting off the bus one stop too early rather that ne stop too late but takes a lot of courage. and you know, most investors lack courage because they focus career risk and there's a whole principal agent problem there. furthermore, once you say no to fund, you're forever in that gp's bad graces. >> right. and we all have examples, i'll say i wrote a blog a long epistemologyed the of investing. why do we believe what we believe. what justifies our beliefs? what made me think of that when to the xl i said no facebook fund twice when i was as rinceton and once again they were raising. everything in that moment said that was an easy no and boom greatest p one of the personaer and i've been

nongrata, not explicitly but speedsay i'm not on their dial. >> andy, us v has famously returns.l but speaking more broadly, this is a very funky market. how do vcs turn their paper into cash on cash returns? it's not really up to us. we don't have control over it. the companies have control over it. partner fred has been outspoken that the company should be going public as a way to get liquidity. companies should be going public. that's one way to do it and that's the number of issues is decreased of ipos has so therefore companies don't get liquid, we don't get liquid, chris doesn't get liquid. i'm sorry, i'm having a bit of trouble hearing you. but josh, what do you think? i tend to agree with andy of iposre seeing a lack in the market. i think part of that is caused y the fact that there's a massive dislocation between how

are valuing ts companies and how public markets are valuing companies. we're at this rare moment in time -- you know, it used to be hat private companies would aspire to go public so that they could achieve the public market valuation. we're in the rare moment in time where it's almost the opposite. minor league ball players are getting paid far the professional all-star m.v.p. major league ball players. out ntil that works itself in the market, it's going to create a really challenge iing e these companies that are being valued in the private markets to realize anything near price in the public market. >> if mashlts are efficient, occur atlibrium should some point, correct? >> and it looks like we might be seeing some of that correction in the market. >> it's interesting because here's a real echo chamber

dynamic, and one thing that lways strikes me as an lp is when you do get these disconnects, it's very difficult glide back to kind of this rational ordering. you get these , funky kind of risk-adjusted inflections where you've got, you know, kind of private companies more value than public companies. if i were -- if i could wave a magic wand i'd invent a way to private companies because the would kind of create equilibrium. the steal prices associated with private companies makes it impossible to do. right. public companies trade every day. good news, they trade. news, they trade. private companies typically of two reasons. when there's good news and the to fundraise or when the companies needs cash so badically that they're willing news and n bad capitulate on price.

and what that means is that need to see to companies -- some of these work ies will have to through their cash before these private companies trade to sort of where the market should be. know and i also think that we're at this interesting point where the n't know industry is trying to figure ut, are we using the right comps? in tech ng companies innovation marketplace and should be valued as such or hould they be valued as lenders? should e-commerce -- disruptive be labeled ompanies as real technology innovators or mattress company, and valued differently based on that. >> and even companies that are very clearly creating markets, like uber, nobody knows what to price it at. i thought it was interesting, ventures talked to business siders friday or this weekend and he thought eber if

publicly would go out at about $25 million, which is far than some of these values. do you think there's maybe a moment? d sometimes when i talk to ipo experts, oh, i think it went thought maybe that would be it. i believe we may be seeing the first tech company go public this week. i don't know -- i think it's a acacia ng company, communications. are you thinking once bloomberg goes. certain company everybody is kind of waiting on to open up this market? not necessarily? [laughing] investor so stage for me, i typically funda the earliest end of the cycle and sort of e the prognosticating on what is that public ed moment, the market investors. >> what are you guys seeing in m & a. investors also like to point out the fact that these companies,

google, microsoft, apple, facebook have these enormous balance sheets but they seem reluctant buyers. i mean, are your companies these companies? high think there's a level of activity. i don't know if there's a high prices desire to pay that may be divorced a little bit from fundamentals. and maybe there was more of that seems like and it there's less of that right now. >> i guess probably also sort of a catching a falling knife sort f a thing, you know, why not wait another six months and see where prices are. >> yeah, i mean, there are bviously some companies where they buy them for far more strategic reasons in terms of technology, access to talent, filling a critical strategic hole. you know, or access to customers whatsapp look at the acquisition by facebook in that

regard. it's financially driven it's obviously going to be subject to the same market forces that the are going to be subject to. >> and what are you seeing in terms of valuations? at least it oast seems like valuations are down a little bit. zachary of crv who i interviewed maybe last week was aying the one exception is celebrity investor, meaning serial entrepreneurs who created in a space where they already have some expertise. is that true on the east coast as well? seen it on both coasts. we've seen valuations have taken a slight dip. four member in the last ears, the average seed stage valuation has almost tripled. 20%, en if it's down 10 or it's still a very attractive entrepreneur. >> what do you think, andy? don't , you know, we really track valuations that much. every deal, there's a moment in there's a company

that desires to have an investor price and a invest at a ires to certain price. i don't see any generalations lower than gher or before but i suggest there's uncertainty in the market so flebl eneurs may be more than they have in the past but i don't really track valuations. vcs, you don't think are more price sensitive than in the past? investa firm that doesn't that often, you know, 8 to 10 times a year, 8 to 10 data really expandsn't out to generalizations. >> you do see many companies? sure.h, and we're focused on it obviously but for us we need to think is the we right amount of money and get an ownership position that allows like chris r people their returns. entrepreneurs are being more flebl. can you get more for your dollar?

maybe a couple of years ago they oh, we'll give you 15%. now, they're like take 20%, 25%. i don't know how you think about it. we don't attempt to try to get more for our dollar. a commodity. is the right amount relative to the risk relative to our just to deliver our lps some money. we don't want it to be that much because it comes out of the entrepreneur side. point. t >> it's interesting too because i talk to a lot of portfolio companies because they see me as a be an honest broker in sense. nd not one of these from shark tank. just kidding. but it's interesting because alto at least where i live, valuations xpectations have been kind of cranking ever upwards and i think we're seeing this first kind of chill where, you know, to see some tech layoffs and, you know, from my feed, i invest in a

funds.of dozen from my feed, i'm a second derivative guy. terribly smart but i remember from math change, the rate of change is the rate of change i guess. market is still going up, the rate is slowing in terms of mark up. we saw in q4s what and q1 and i think as we see the arket plateau in terms of expectations, i am seeing some investors, you know, the market is not clearing for some right, for the transactions to start getting done and hopefully we'll see a expectations tor and entrepreneur expectations, i should say, you know, to kind of interesting o an kind of return potential opportunity. as the market has gotten choppy over the last couple of it's also important to ealize you have a whole generation of found ers and to some degree of fund ers and investors who have never been turn.gh a down if you've been in the industry the last seven years, you've up. straight

so it's also important. i don't think it's ever as bad it is and it k probably wasn't as good for the last seven years. where the marks are, most venture firms probably have inflated marks right now that topic ay on josh you have identified seven years. kind of and i'll even say that i think '08 was kind of a gag. -- and i nies shouldn't say that necessarily but most companies have cash for 18 months at any given time and that was a very short down turn. deck as more of a slide than a down turn. with a es, and i meet lot of folks raising funds and 08, i did xyz. i remember in '01 and '02. i was at princeton. i remember speaking in math what asymptote meant. there was a grinding and every

value and we a were asymptoting towards that line. grinding down turn. that's where you had financing risk and operations risk. that's where you had all kiepdz syndicate risks. nobody has seen for 15 years. >> and you don't necessarily -- you don't think into that? >> i don't think we're heading into that but i think people who kind of puff their chest and say i've lived through a down turn have no clue. generations removed in terms of companies from the last . al down turn >> but on some level it is different this time. >> yes. is nd part of the challenge figuring out how and in what ways it's different. i agree it's a challenge when an environment of 10 years of rising asset prices, that's the rhythm or the cadence know, rising asset prices. when they're not rising, you to learn new rhythms and cadences. at the same time in that 10-year period we all got computers in our pockets. so the dynamic does feel like .t's different

obviously our jobs are to figure out what ways it's different and prices.earing at the same time, it doesn't feel like the world is falling apart here. >> it doesn't feel like the falling apart but the question really is, how different is it? me it's different but then again you hear investors say, you know, there's fundamental misunderstanding even though the opportunity is global and even though everyone a smartphone in their pocket, there's going to be this very small number of breakout winners. you guys agree, disagree? -- is the ortunity size of the winner's circle changing? getting e winners just bigger? i think that's sort of always -- yes.ou know, yes and at some level, the leading today who are the incumbents that really didn't exist 10 years ago are positions.powerful they have an incredible advantage to them.

t the same time, the opportunity set seems broader too as well. and that's a tough balance to strike. found in my first company, cofounded it in '92. -- the year before the web browser was invented and saw the internet sort of rise remember everyone talking about how the internet is going o disrupt every portion of daily life and it really has and yes, while you now can go global nd yes you now are mobile, i don't believe that we're done creating amazing companies. believe that 't this time is fundamentally is 3x nt and this time larger than the last time and, you know, the market is going to said o figure out as andy how to price that. everyone was talking about a amazing ve bubble when went public and they went public at a value of $500 million. you now have jet.com which is the amazon 2.0 which is raising

markets at a $1.5 billion price. still opportunities are there. believer that you're going to see a massive increase in the number of epic companies that are created. from my seat, one thing i'm always cognizant of is the asset is largely a function of the price you pay and also the capital you consume. we've seen, you know, pricing go up and up and up in terms of startups, you know, jet an example or literally you can point at any startup. raising -- one thing that always strikes me as a quick aside is if i look at my and josh is in my portfolio first round and first companies bunch of that would be in the s & p mid00, which is amazing, right. entrepreneurs raise money in the private markets of these valuations and at the end of the day you've got to think do i put the moolah in

the coolah. valuations we're investing in now to the exit exit e open up that sphincter and the capital stream comes back to me, are we getting expect s of returns we or are the returns becoming more pedestrian? so what do you need to believe? and i believe this time it is different, you know, that you will see larger outcomes, that's great, but all portend bigger holes. that's what i worry about. >> the paradox is that -- and josh. i disagree with i think the opportunity set is much greater than 3x than it was first started your company. could be 10 or 20 or 100x. so i don't think that to me is a reality. the question is where do investment returns come from that? that's uncertain and if the investment returns don't come to feed what we need to return to you, what are the implications of that? what are the implications of to the next generation of funds or entrepreneurs? i don't have an answer to that.

i find that to be a key question. me, the question is less or greater than the opportunities? they are. fundamentally bigger. >> in the meantime, are you ipo market is the kind of shot right now and i slow, are you seeing that your follow-on investors are changing at all? keep hearing about hedge funds, mutual funds sort of recharging, these parent opportunities to do deals, a menlo of funds recently, ventures raised opportunity funds to tackle this particular gap.rceived real is it real? hard to take one quarter or two quarters and try to extrapolate. e're still seeing that good companies can get funded in the follow-on market by good investors. are, you know, as the markets have grown -- as the

moretions have gone up, as companies have sort of achieved nicorn status, we've seen more investors, nontraditional investors come into the space, seen the n't yet surrender of the existing traditional venture investors. >> and i want to go back to something i said. is never either open -- is neither open nor shut. it is what it is. company's choice to go public. they might not like the process, they might not like the it is always open and the challenge some of us are is the disconnect between the private valuation and what companies think they can get in market. the ipo market is always open. time.ost out of any last thoughts? >> put the moolah in the coolah, guys. >> thank you so much for being here. >> thank you. thanks, guys. applause] cons of internet

advertising. >> so let me get just a little bit more audience participation the interview. how many have downloaded and used an ad blocker? of the room.0% most of the front part. the back people aren't even listening so that's fine. like, you know, there's people at least that are exposed to the technology. on a good at least day, i'm a journalist. i actually get paid mostly advertising and through wonderful events like this. off ear ck plus takes or obviously has taken off, as it continues to grow, am i going a job? of > no, i think why this potentially hurting is the business model that doesn't work apps that clearly don't provide any value to the consumer is to me a failed which i think is

the reason this needs to evolve and the interesting thing is all the people that install an ad blocker, they ads.t hate they're just annoyed by the really intrusive ones so that's a program called acceptable ads, which basically publishers helping show alternative less intrusive targeted at lly people who have opted out of traditional online ads and what found out is that fewer but better ads provide more value. we're creating this win-win situation in which the user gets better experience at the same time publishers can make ore money while still honoring user choice. >> so let's talk about the acceptab ads program. just to make sure i understood you. there are publishers now who make more money with acceptable of than they were with sort the traditional banner ads before? till: yeah, i think it's just realize

they're a different segment of users. may re regular users that be completely fine with the flash banner ads but then there tech-savvy lly the people that install an ad blocker and just need to be in a different way and what we're establishing is a way on arget users not only their profile but just under ad references and i think this really creates a lot of value for publishers which is why now out of the top 100 web sites in u.s., 40 of them have acceptable ads on their page and shows that this works for publishers but also on board. moderator: tell me a little bit more about what makes an ad acceptable. the distinction there? till: i think the most important every user can decide that for himself. every ad blocker, every user can figure out what preferences they have. but for us, it is important to

good default settings that find exactly the perfect balance experience on er the one hand and enough opportunities for publishers on the other hand. we put a lot of research into but we're t balance now in the process of opening that up so we're currently stablishing an independent committee which will have members from all the relevant that have a roups stake in online advertising and handing control over what constitutes an acceptable ad we theeve we can really evolve problem so we will have journalists there. e will have publishers, advertisers and also ad companies and if we bring table e together at one we think we can really evolve this program. oderator: so it will be what you call a council essentially, like a board or something like that? ill: yeah we call it the acceptable ads committee. moderator: so they'll kind of set what the broad guidelines user can e individual

still decide what their settings are even if they want to see at all. e ads till: absolutely. moderator: i think there are some people who see this idea but hey we're an ad blocker we make money from advertising down right cal or extortionist. how do you respond to that? it's of course nonsense because the only reason why we are as successful as we are is we have millions and millions of users that support our vision and because we incremental of revenue for our partners. now, of course ad blocking is controversial. i think disruptive technology has to be controversial. o coming up next, it's randal, and i'm very sure he's going to and nue his rants about me about my team. really is t just

an attempt to distract people of the real reason why we're in this mess has failed to create an advertising ecosystem healthy.ustainable and moderator: so when you say it's disruptive technology and that's it's controversial, but certainly there are probably going to be as ad blocking to grow, there are goes that are going to be hurt by really concrete way this. do you think they'll say this is really bad for us? i think we are all about empowering our users to have control over their browsing experience. at the same time, we're working with publishers on user friendly methods and i think this is really what is needed because you cannot have a relies on pissing off your user base. this is : and i think one of the things interesting is that you guys have this control it, the vastrstand majority of them are willing to see acceptable ads. they don't opt out of

advertising entirely. why do you think that is? i think because so far we've managed to find that perfect balance between the user monetization the needs of publishers. enerally if you ask people who have an ad blocker installed, rarely do they say they're against all advertising. the really just intrusive experience that just installing an ad blocker. moderator: one of the things i found out back stage is that you this ly come from background of online marketing yourself so this is actually a orld that you know even though you've now come into this very kind of controversial position within it. yeah, i mean, many people from our team have a background in advertising and i think also important because we really want to bring both sides together and i think this is lacking in has been the past, that there was real nnovation in online advertising, especially user friendly innovation and i think good position to

facilitate that. moderator: so let's talk a more about the form. you talk about giving users choice and i think at the ads meant acceptable like tech space ads, ads without images. talk a little bit more about what you think good ads looks like? most importanthe aspect is it cannot be disruptive. if you're reading an article and next to it there is an animation that is screaming for just something's that bothers most people, so the forms out there just blend better into the content of overall are just much less disruptive of an experience. you guys have been things ublish ers and called flatter plus. what is that? till: flatter plus is going to first payment system that is going to work for web without any

friction for the user. so it's going to work every web siteor and users can just decide how compensate. so if they decide they don't want to pay with their eyeballs content, they can decide how much content on the web is worth them and by signing up with flatter plus, their funds will be automatically distributed to web sites they have engaged with. moderator: and they don't have to hit a button or do anything. it's automatically tracking sort .f the sites they're looking at till: exactly. this has been what's missing so far is the payment system on the web that works everywhere and completely frictionless for the user. moderator: do you feel confident going to be a significant number of users actually willing to pay for content? yeah, definitely. right kind ave the of audience of people that are looking for alternatives. he majority of people will always be fine with seeing

obnoxious ads. that en there are people want to have more control and hey want to decide how they concentrate it and i think we're in a very unique position to facilitate that. to be clear, a publisher has to actually partner with you in order to the money from flatter plus. till: they just have to tell us the money to. moderator: just accept the checks basically. exactly. moderator: it is interesting. you're working with flatter on this, as the name implies, one founders of pirate bay. i imagine some of these we'resations are like hey ad block plus. we're here with the company of pirate bay guy, do you want to work with us. are anyone like screw you, we to work with that. till: i think most understand that we have to evolve business on the web and we have to put the user in the center of that and if we make it really contribute to to

the content they consume then i think we can establish something we've never had before. moderator: so, i mean, let's talk a little bit more about how publishers are going to make. the terms are that you guys will rest goes fee and the publishers right? till: right. by the end of how much going to the users? till: we will estimate about 10 users and they will spend about $5 a month we estimate. hat's interesting if you look at monetization, it's shocking create.tle value ads so my opinion, as little as what you spend on a cup of coffee, by spending that much per month, you can create the same value publisher without having to see any intrusive advertising. moderator: when you say ads for e little value

publishers, is that basically on eyeball basis, if you get enough eyeballs they can add up to a big number but individually it's really tiny. till: absolutely. look at the revenues generated through advertising on an individual basis it's very tiny. so you as the user, if you spend bucks a month, you can create the same kind of value for the publishers but you don't have to advertising.ive you don't have to accept malware risks and all the things wrong today. vertising moderator: you guys announced flatter plus last week but the product t used yet right. till: no, we're going to open it p by the end of the month hopefully. right now people can go to the leave atterplus.com and e-mail address and we will notify them once the program is open.

moderator: right now flatter plus is a completely separate from ad blocker plus but overtime do you see integration. till: absolutely. feel we're in a really unique position to make this work many people ve so using ad block plus so that it fits really perfectly into what always been all about. nd that is user friendly monetization and with your ad fewer but ve proven better ads provide more value and now we're providing more and how they users want to concentrate it. so as a user you can really just ecide how you want to be monetized and i think this is reply important because the is all about user choice. moderator: let's talk about ad plus more broadly. how many downloads have you guys seen at this point? till: i think we're getting close to a billion downloads now. it's a huge milestone for us

that we very recently achieved ad block plus is being used n over 100 million active devices. so i think that just shows that ore and more people are just ompletely curre lly frustratede current ad on the screens and reach out to us. the ator: last fall was first you could launch on ios. what have you seen there. we've launchod ios and android and seen over 10 million downloads. compared to our overall user ase that is not super huge yet but we see more and more people complaining about the mobile ad experience. they're complaining about issues like band width consumption or age load time so we anticipate a lot of opportunities for us to . ow on mobile as well moderator: can you say anything in terms of how much money the acceptable ads program is making now?

till: we're not releasing any of ur financial data but i think we are in from a business perspective in a very healthy grow and i e can think that also validates our we have created ipmendous amount of value of krement aa aal -- incremental and our partners are on board that. moderator: going back a second, he way publishers have responded to ad blockers, ad, it'll say hey, we saw you have an ad blocker turned on, maybe turn it off or cases, we won't show you the story or content until you turn it off. what do you think of that? i think the kind of dialogue is good and ntentionally we made it a very prominent feature with the ad off on a to turn it given site so we encourage users ad block responsibly, but

i don't think it goes far enough users to turn off ad blocker, but you also have to to do so because otherwise they will turn it back on immediately and that is what achieve with o acceptable answers as well as making sure that the ad is rience for those users just a lot better than the regular ad experience because if don't provide them with the experience they want, they will move elsewhere and the traffic those sites that are blocking ad blocker users, i think they're telling the whole back that users don't come if they don't like the experience. moderator: do you feel the conversation around advertising good at constitutes advertising has changed as a blockers? ad till: yeah, i think when we started a couple of years ago, we had to create awareness that t is a problem with online advertising. i think nowadays there's no disagreement around that anymore on ow we just have to work the right solutions, but at least all the people in charge that along the way

they have lost the consumer, and we can bring them back. we've also nd adsously been seen enormous with ad block plus and the that it's not an ad blocker per se like a browser as a as ad blocking component. as that happens how do you think ad block needs to evolve so it's still competitive? till: well, i think thanks to success of ad block plus, it's no surprise everybody wants the ad blocking feature in their product and many companies are with us around that. for us it's important that we always provide the best user experience because people can easily move on to a different ad blocker. since we make a point out of not blocking all he ads, we have to make sure that the experience for the users with ad block plus is . ways the best

moderator: we're almost out of time so my last question and randal on stage and others in the industry will be watching this video, is there that you would change about the ad tech industry that you think would make the better? as a whole till: i think it is really time friendly user innovations and for that, we need to bring everybody together. need the agencies, the publishers, the ad tech we anies, the consumers, need all of them to agree on certain standards. iab should have done that years ago. they have completely failed in now which is why we are establishing this committee and i think we are going to be much more successful because we are takenly ones that actually the consumer seriously. moderator: great. thanks so much for joining us. you.: thank [applause] > hey, phil, you want to stay

with me for a sec? come here. up. know what's we have obviously ad block and coming on stage. they didn't want to hang out for second, which is understandable but we thought hands.ould shake randal rothenburg from iab. why don't you come on out here. come on. he doesn't want to. i'll shake your hand. good job. rothenberg from iab going to do we're the other side of that conversation. have fun out there, man. on out. >> sorry. slightly awkward transition. > thank you for joining us, randal. and so we're going to talk about a bunch of things in the advertising and publishing industry, not just ad blocking but we might as well start with blocking. you've said in the past and i don't think it's to any surprise not a fan of ad

blockers. ou think they're a threat to creativity. can you explain it to the 40% of blockers? use ad randal: sure, and i have no argument against anybody using d blockers because i think there is a very strong kernel of truth when it comes to the impedence of user experience that absolutely is a true issue. that's fine. i said before, and i directly heard it very in your conversation is that this is an extortion-based business and it hurts publishers, primarily small publishers. majority earned by publishers all around the world from all sizes comes from advertising. companies -- the like ad t companies block plus, these are companies whose business is trying to take revenue and t

divert it into their own pockets. it's very straightforward. one of the is biggest sufferers, one of the victims for years because it's been primarily tech sites and gamer sites that have this.hurt by i often notice -- i was listening to the interview, he didn't answer any of your questions. say what is an acceptable ad. didn't answer that. refuses to talk about what the are.nues they're very high. he's a rich man from blocking advertising. oderator: so one of the things he did say though was he thinks that the iab hasn't done -- he the iab has failed to create a sustainable ecosystem audiencewhy there's an for something like ad block that's fair? hink randall: i wish it was fair. i wish i could be that powerful something.d fail at the fact of the matter is that any trade association in the can create s standards that by definition have to be voluntary. allowed to enforce

them according to u.s. antitrust regulations, so that's true for any kind of standard, even the three-pronged plus that the ieee recommends. t's fair to the extent that this is an industry that is very fragmented, very diverse and early days of iab, he founders were very successful at coming together and create iing different kinds say for standards on the format of advertising. the past say 7-10 years, it's been more difficult because incentives in the industry itself led by short term venture capital favor differentiation and customization and lack of tandards, rather than standardization. i wish it were different. as much as e strive

we can to try and coalesce this fragmented industry around chain ds for the supply but the pushing a boulder up hill, absolutely. a erator: let's step back second. most people don't know what the iab is. it's the interactive advertising bureau. iab and specifically who do you represent? was founded 20 ears ago by about 50 top publishers. these were companies that primarily created first-party of them in those early days began in the magazine or television or newspaper business. some were digital natives, and hey sold advertising as their primary source of revenue that creative content. over the 20 years, it's grown to about 650, 700 members. most of them are first-party publishers.

our board of directors, for example, 70% of our board of are publishers. ew york times, meredith, abc, disney, nbc, companies like that. do, we do what most rade associations do, which is in no particular order, we're involved in training and development. iab digital ad certification program for ad sellers. it's basically a qualifying test that 12,000 people have taken in years we've had it. vice schiller, executive president of nbc is here. he was the founder of this program. market research and consumer research on content attitudes about and advertising and user on rience, market research what buyers are thinking of and not thinking of. run marketplaces.

we're right in the middle right now of the annual digital new fronts where about 0 creators and distributors of original digital video content re presenting their offerings to about 10,000 ad buyers in presentations over this two-week very exciting's a event because you get to see ots and lots of original content. we represent our industry in washington. team of three or four obbyists in washington to work on everything from malware and to ware related issues privacy, to internet security. do lots and lot in between. oderator: i wanted to get into a couple of those different things. the first one, in the middle of excitingnt which is an time to come in. this year is interesting because there's a lot of companies that before.done new fronts

they're doing them -- this is maybe the obvious ones are like is having their first new front on friday. i will be there. depends on what you mean by sellacious, because i ead playboy is no longer publishing pictures of naked people because there are too many free naked. so i hear. moderator: yeah, i've never looked at internet pornography so i have no idea. so how many viewpoints do you to? o go randall: i went to pretty much all of them last week. went to about 25 or so and week i don't get to go to anybody because i have to go to lis ben to the iab europe conference. to nate t say no desmond. moderator: broadly speaking, are here any sort of trends you're seeing in terms of obviously online video is exciting, it's a making a lot of

money. randall: there's a bunch of stuff. seeing it actually evolve the years, so i of wouldn't say there's anything i've seen that's dramatically kind of one exception, kind of one exception, and that is the degree to which virtual reality narratives play.eally come into a lot of publishers are really working on virtual reality. insight that i've ot there, but also, i'm on the education board of the international center of photography, and we introduce a new media ogram and narratives over the past year so i've seen it there as well. thing there that's very exciting is two years ago, three occulus and i h thought oh, this is technology driven and this is kind of a of a problem arch and now it's become very clear to me, especially from looking new front that's become creatively driven, that creative in le are very interested

virtual reality narratives. so that's been a really -- i saw new york times is doing it. hearst is doing it. refinery 29 is doing it. hat was one big trend interesting to me. in terms of things that have been evolving that are pretty of the , the concept in-house agency or primarily nown as a content studio has now become a real fixture. fory previous job, i worked a big consulting firm, and we did a pretty big report in the 2000s in which one of our recommendations to publishers was look, you have to get into marketing services business. that was a very foreign concept in 2001-2002.back every majorould say publisher in the united states as a content studio where they content on behalf

of their clients or they're cocreating it and that's a very evolution. moderator: and for people who aren't sort of really involved basically it means basically there's a team either involved primarily or creatingip in terms of native advertising. randall: yeah. it's called native advertising. problem with the word native advertising is it means about 100 different things. report two years ago called the native advertising play book. mentioning ings i'm are free on the iab site so you can download it. that'sill the best study been done on native advertising nd we found so many different definitions that we had to kind of create a three dimensional what people rstand are talking about. so native adveritizing means from in-stream advertising, so the ads you see when you're flipping through on mobile, which are really not that different from

ads or magazine ads in that they're ads that kind of interrupt the flow of content in a very seamless and natural way. to customi hrough customized advertising that is content-based, narrative based, ooks like it is contextually relevant to the way a site is designed. those are two very, very different things. yes, content studios are creating all of the above. i like to think of them more as in-house agencies with ae creating content very specific and explicit knowledge of their audience, is a very nk important point. moderator: do you think there's clear division, here, you are the content studio. you're making this stuff. that's doing the real journalism? randall: well, everything that i ave seen from main stream publishers, yes. and also the federal trade very, very as been

clear on this. fool people, y to you will get hung. you'll get caught and you'll get and you should be. just c issued guidelines within the past couple of months n native advertising, where they talked in great detail about what the expectations are terms of disclosure and we've said from the very beginning, optional.e is not it is a must have. are there publishers who violate that? there are and there will be and the ftc is sort of looking for sample cases and salivating at taking some of them on to prove the point. senior ftc staff members up at the iab i think three year to meete past with publishers as they were developing the guidelines. so it was a very good i think process.

we don't agree with everything hat they said, but their instinct around disclosure is definitely in the right direction. moderator: i want to get back to a second and, you know, you've explained why opposed to using ad block ers and why the companies themselves aren't really great ecosystem but if your job is to sort of bring these different constituencies a solution, ind isn't part of your job to have a good conversation with the ad of kers since they're part the reality now? 200-odd: there are about ad blocking companies out there. of e actually had lots conversations with lots of them. we're trying to make a point that extortion is not a viable model.s i've got no argument with at trying to aim improve the user experience or of their own trol experience. i do have an argument with the flag of t fly

user benefit but whose actual model is based on stealing money out of the publishers, especially small publishers. this seems to me self evident. moderator: to you the key ad inction is if you're an blocker and you're making money rom advertising then you're an extortionist? randall: yeah, this dude thinks he's in the public service business. and do itt he open up for free in give me a break. you have a couple of hundred out there doing it for free. he should do it for free too. look, there is -- as i said, there is real truth in the issue that there are obstructions in the way of user experience. his is why iab has pioneered what we call the lean principles ad choice ncrypted supporting noninvasive advertising. introducing a re lean scoring mechanism, a market-based mechanism to drive

publish ersior from and advertisers. this is why we're doing all those things. are real issues too many load times, data calls from an advertising asset. horrible object latency. the tags and pixels. this is bad stuff that needs to be fixed. and utely agree with that we're doing everything we can to work with our publish ers and ad ers and others on this, but the idea that, you we're in it to improve the user experience when trying to extract tens of millions and hundreds of millions of dollars out of the publishers, that to me is not an argument. oderator: your argument is partly, okay, there are these problems and we're, you know -- but at the same time at sort of were you saying the iab is a trade organization. there's only so much we can do a lot of the issues

you're talking about or maybe you can point to, but a lot of foundational issues with online advertising. fixed?t ever going to get randall: i think a lot of it is actually foundational issues relating to the architecture of itself.ernet to me, the real. moderator: that sounds even more pessimistic then. randall: it's not pessimistic as it is being realistic. i think the fundamental underpinning and i think this is especially important for this and nce of technologists on the rs, is that internet at large, the source of our innovation is also the vulnerability and that is that we live in a very pen supply chain in which anyone can participate. you don't even have to have a it. of money to do as i've been saying for years, any 14-year-old can build a network with ion the apps that come built into a laptop or available on the cloud

knows a body here couple of 14-year-olds who have already paid for their college exactly that.oing that's a remarkable, remarkable thing. people who have made a living from the internet. calculations a couple of ears ago in 2009 that found a harvard study that more than 3% premised on s internet advertising. there was hundreds of in every of jobs congressional district in the united states, so this is a great thing. hand, everybody can play, no matter how immature, no co-opt in the sense of it's not well put together and no matter how criminal. a lot of the malware that's out you know, ased -- organized crime. interpol. we've been working with interpol department on

trying to fight the stem of non-human traffic that is based on malware derived nets. so the source of our innovation is the source of our vulnerability. that there are only three ways to deal with it. number 1 is you muddle along, you don't resolve the don't find a nies way to come together, ad blocking rises, and the ad of media diversity gets further and further and further pressed down. which we are seeing, is an increasing olopoly, a olig handful of giant platforms that control of their favored rs, become the platforms for media and advertising distribution, and number 3 is that the industry finds a way to come ogether and through self

regulatory activity and possibly ome regulatory activity resolves these problems. we are betting on way number 3 a i think way number 3 is better way because it preserves the diversity of the open interest. as a former journalist and still i thinklist in my soul, diversity of communications is of very high value. hold inest value that i life. moderator: it seems like as the head of the iab and part of your to push for number 3, what would you say is the odds hat numberley is the actual outcome? randall: i would say the odds not great i would 70%, and the 5 to reason i say that is because i there is a natural human mpulse to want to communicate and to want to communicate openly and freely, number 1, and natural ink there is a

human impulse to want to work for yourself rather than work for the man. the system nk that and the human beings that are he system and inhabit the system will work -- strive very hard to self regulate to preserve that openness. question for quick you before we run out of time is what do you think are the odds is sort of king going to kill my profession in a few years? randall: again, i don't think it happen. needless to say that for all the making, block plus is for all the money he's putting into his pocket, for all the disclosing re not about their finances and their finding aswhat we're we canvas our own publishers is not -- it's still not having that much of an impact of tech sites and gamer

sites. moderator: that's not much consolation for me. randall: no it's harder for you and for the folks in the got to consider how much you'll be willing to pay for a techcrunch subscription. lot. ator: pay a randall: mouhow much more you'r going to be willing to pay to to this conference or for you how much less you're going to be willing to work for it. moderator: i don't like ending note but let's end on that note. thanks a lot, randall. randall: thanks, >> next on c-span "washington journal" is live. after that a conversation on the future of naval aviation with vice admiral mike shoemaker. after that a town hall with enator ben cardin. former republican congressman bob inglis tells why he feels fellow republicans should join to democratics in an effort

reduce climate change then heather mcghee from demos action. now, "washington journal." host: good morning everyone on this august 18, 2016. we want to turn our attention to what happened in milwaukee over the weekend after the fatal shooting of civil smith who was shot by a black officer which led to rioting in the city's economically depressed and mostly black side of town. the milwaukee sheriff david clarke who gained national attention for his speech at the convention last month printed an op-ed