part by barracuda networks, cloud-connected security and store solutions that simplify it. city national bank, providing loans and lines of credit to help northern california businesses grow. scott mcgrew: tech companies have gotten so good at parting you from your money, you'll barely notice when they take more. plus, will adblock break the internet? our reporters, sarah lacy from the tech blog pando, and venture beat's dylan tweney, this week on "press:here." cc by aberdeen captioning 1-800-688-6621 www.abercap.com scott: good morning, everyone, i'm scott mcgrew. when my son was young, young enough to be in a stroller, he shoplifted. he was about three, and didn't know you can't just take a banana and let your dad stroller you out of the grocery store.

well, you can't now, but soon you'll be able to take all the bananas you want. the grocery store of the future will be able to see your banana or whatever it is you put in the cart, and just charge you for it automatically, no checkout, just roll and go. this is already the way uber works. just think back to the very first time you used uber, how odd it felt to just step out of the car and leave, no cash changing hands. recently, the golden gate bridge went to automatic tolls. and paybyphone, the company that allows you to feed the meter with your smartphone, is working on new payment technology for parking garages with no gates, no tickets. just drive in, drive out, no stopping. kush parikh is ceo of seattle-based paybyphone, the man who wants to make it easier for you to part with your money,

joined by dylan tweney of venture beat and sarah lacy of pando. thanks for being here. i think we're talking about friction, aren't we, this concept that if we can reduce the amount of pain between what i want to do and the payment, i'll just do more of that thing, right? kush parikh: that's absolutely right, that's absolutely right. i mean, if you look at parking as an example, when people use the paybyphone mobile application, you see transactions that are 40-50% hier than people that are using change, or people that are using their credit cards, because it's much easier to top up remotely, as an example, when you go park. so, if you're in the starbucks having coffee, you realize you're going to chat for another 30 or 40 minutes, you just click a button and continue your parking session. sarah lacy: does the city hate that you lose them so much money on fines and fees? like you've saved me thousands of dollars a year in san francisco. and i always felt like the reason they required quarters, and like you'd have like half your passenger seat with quarters in san francisco, is because they want to charge me huge fines. kush: yeah, well, it's interesting that you say that.

most cities, you know, actually do try to do the best they can as far as the good of the constituency. so, the fines are not something that they want to perpetuate. some cities actually, they do see that as a large revenue source, and they see that as a concern. but fundamentally, they see it much better in regards to saving costs. you don't have to deploy infrastructure. you don't have to spend $50 million, $100 million to deploy devices. scott: some guy to pick up the quarters. kush: yeah, the quarters, et cetera. where there's a lot of stealing, it's called shrinkage actually, where you see 20, 30%. scott: some guy's paying for a car in quarters. kush: yeah, people steal. people steal, which is quite amazing. so, from that perspective, cities save on capital costs, and then they also increase their revenue base. dylan tweney: now, this is just for parking now, correct? kush: currently, we do only parking in north america and europe. we do actually have one tolling service in vancouver, bc, where paybyphone is a really cool concept where folks cross the bridge, and if they don't have a toll tag, but they do have a paybyphone account, they get an alert that says, "do you want to

use your paybyphone account to pay for your tolling?" and your license plate is effectively your identity. and if they say yes, then they can just start crossing the toll seamlessly. scott: and in the uk, you're doing that concept of i just go into a parking garage--and i think this is cool, and it speaks to the whole concept of a grocery store and uber. where i could just go into the parking garage, park, leave. eventually i'm going to get a bill from paybyphone, but i never have to stop and do the ticket. there could be a whole world of this, where i just go through my life, and life bills me later. kush: that's exactly right. in fact, in the case of the uk, which is at the london underground, you basically drive into the lot, it basically takes a snap of your license plate. and then, as you exit, it's the same thing, so you don't even have to pull out your phone. sarah: but there's a lot of potential for sticker shock here. i mean, there are all these stories when uber came out of people who were like--got in an uber kind of drunk, not paying attention, got their bill, or realized at the end of the month how much they're spending on ubers, or lyfts in my case. and you know, and i think going through life like that, i mean,

it kind of terrifies me to think about having teenagers who are running on my account, like going through a grocery store, just like throwing stuff in a basket and not really thinking about what the bill you're racking up. dylan: that's true on the app store now, downloading apps to their phones. sarah: i remember i signed up for all these girl scout cookies once, and my mom was like, "just because you signed this form--" scott: do you remember also--i mean, there was a point in which you got a paycheck. i mean, you literally--somebody mailed you or handed you a paycheck, and then you went to the bank. sarah: and kissed it first. scott: kissed it first, went to the bank. and now, of course, it's all direct deposit, and you use a cash card. i rarely carry cash at all. so, i think already i'm somewhat divorced from the idea of cash. i don't--i still pay attention. dylan: you know, there are studies that show that the more abstracted you are from cash, the more willing you are to pay for things. and this is exactly why game tokens, or gold coins, or whatever, right? kush: that's right. sarah: exactly, we all pay more for transportation than we did several years ago, and more on parking, to your point. kush: that's right.

i mean, the tolling services, the parking services, many of these urban mobility services. for example, bike rental is another one, where paybyphone offers that service in france. and folks can use that same account for parking, as well as biking, and you know, even busing. sarah: it's so funny, the more we go down this road, you get really used to it. like, if you go to new york and take a cab, you just try to, like, get out of the car, and they're all like, "wait a minute." or like, you know, i'll leave my house because there's also so many places, if you, like, live in a neighborhood where they have your card on file, and you don't have to carry--i mean, i feel like half of the time i don't need--i need an id more than i need a credit card when i leave the house. kush: that's right, that's right. in fact, your identity in the case of paybyphone can be your license plate number, or it can be your phone number. and really, that's what your account is. and if you basically take that and abstract that to the grocery store or any number of things, that's how you ultimately end up paying. scott: kush, how does the privacy of the license plate work out? i mean, that you know in the--it's in great britain, but that you know who that--how did you get permission to do that? kush: so, when people sign up for their account, you know, to park, we have to know what their license plate

is for enforcement. scott: oh, they tell you? kush: that's correct. scott: i tell you what--okay. kush: the consumer tells me, so you tell me. scott: all right, you're not going through the equivalent of the queen's dmv or something. kush: data mining or anything like that, no. dylan: that's similar to a fastrak card, and the transponder will read it if it can. but if it doesn't, they have a picture of my license. sarah: in fact, fastrak allows me to do the same thing at the airport you're describing. so, in a market like san francisco, isn't something like fastrak better positioned to do this than you guys? kush: well, you know, a lot of it comes down to the mobile technology and the ability to engage with the consumer. in many of these cases, if you look at traditional parking operators, even tolling operators, et cetera, and you say, "what's your relationship with the consumer?" the answer is, "we wave goodbye to them as they pay their money." they have no way to engage with the consumer, whereas we have a whole platform, we have a way to say, "hey, there's a 49ers game this weekend, and you know, the parking rates are going to change," and therefore that's much more valuable to a consumer from that perspective. dylan: so kush, how long until we can actually buy bananas with paybyphone? kush: good question. scott: way to bring it around.

he's a pro. kush: well, i think actually, if you look at the movement of the industry, i think initially it's going to be with unattended retail. so, think about vending machines, or those little corner shops that you have inside the hilton hotel, or your spg type hotels. and then ultimately, that'll migrate to, you know, to the grocery store, which i think is a little bit more complex because you have so many more skus. but fundamentally, you know, i think it'll start happening next 3 to 5 years. scott: kush parikh is ceo of paybyphone. we appreciate you being with us this morning. kush: thank you very much. scott: up later, making a dent in your car insurance payments through disrupting through pay-by-mile. and next, something that really might break the internet when "press:here" continues. [music]

scott: welcome back to "press:here." there's a relatively new phrase, to break the internet, a phrase that refers to something that is so popular, or so lurid, it gets lots of views. and i am not above showing you an example. a photo spread of kim kardashian was said to have broken the internet with its popularity, though it did not break the internet. but there is something that could very well break the internet, or at least damage the financial model so many sites rely on. it's ad blocking, and it's one of the most recent updates to the apple operating system.

it began allowing ad blocking software on its devices. ad blocking does what it says it does, it blocks ads. lars albright is one of the brightest people in the world when it comes to mobile advertising, from working at quattro wireless, which apple bought, to being an executive at apple itself, and now is ceo and founder of sessionm, a consumer loyalty company. thanks for being with us. could it break the internet, this ad blocking? lars albright: it's unlikely to. and we're seeing--adblock has been around for a long time, and it's been particularly prevalent in europe. i mean, think about more wired, web-based surfing has been--they've been using ad blocking for quite some time, and it has had some impact. but here, there's a lot of uproar about the potential for what happened when ios9 came out. is this going to cause publishers to really lose money? and the answer really, in particular as it relates to mobile, has been no, it hasn't had a huge impact. sarah: how is that possible? lars: a couple of reasons so far. so, one is it's really just focused on predominantly the web-based environments of the mobile web,

and not applications. and the vast majority of the time, over 85% of the time, is spent in mobile applications. so that's something that-- sarah: even reading news, though? lars: i think from what we see in terms of the amount of ad dollars and ad spend and the percentage-- scott: these ad blockers can't get into my nyt now app is what you're saying? lars: not yet. and there's rumors of apps being launched, and trying to do it, and even trying to get on native apps within the apple store and google. so, but what we're seeing is that's not happening very much. and so, i think the reality is that it could have a big impact down the line. it's not in the short to mid-term. also, publishers aren't standing still either. they're saying that, "look, if you have an ad blocker on, we're going to minimize content availability." scott: yahoo mail did that recently. lars: "we're not going to make that as good an experience for you as a consumer." but i think it also--one thing i like more as a bigger discussion around this is it does bring into focus, is advertising really done in the right way? and what are ways that companies need to think about building more direct connections with their consumers, as opposed to

relying on standard ad placements that are largely ignored? dylan: well, the answer to your first question is easy, advertising on the internet is totally out of control. i think it's not done the right way, and that's why people are so eager to employ ad blockers. because i think most people don't have a problem with the idea that there are ads on their site, and that supports their free reading habits. it's that the ads are, you know, tracking-- scott: they cover up the content, you have to move up and down. dylan: they take up your bandwidth. sarah: but is it better to have a world where it's all sponsored content and native ads? i mean, that's the solution to a lot of this. you talk to a company like refinery29 says their solution to ad blockers is everything's going to be in stream, everything's going to be native. is that a better world? i mean, for someone like a women's lifestyle brand, maybe not such a big deal. for someone like the economist or the new york times, is it more of a big deal? lars: yeah, and i think it depends--it does depend on the content and the site. i think the challenge, though, is that native can also become much like the prior format of just having an out of control experience, where there's lots of banners. sometimes, native is deceptive, sometimes you're not quite sure where it is.

so, i think it's certainly a way that publishers can adapt and try to get around the more traditional placements. but i think the big challenge, back to your point, is that the traditional placements are largely ignored, and that's an issue that really people don't like to talk about is that probably only half a percent of people actually click and engage in these traditional ad formats. and that's where i think the best companies out there, companies that are thinking about, "how do i not rely on a third party, but how do i actually speak to my customers directly? and how do i build that relationship, where i'm able to provide them value, and maybe to learn about them in a way that they are opting into, and it doesn't feel like someone's watching all of my data?" because the big thing about ad blocking is really the revenue's one thing, but the data transfer is a huge thing. so, people talk about ads and not being able to serve ads, but you also don't necessarily know what people are doing on your web property, so you can't optimize the content, you can't make it better. scott: i'm loyal to the wall street journal, to the new york times, to the economist. i'm trying to think of anything else i pay for. you know, i mean, they give me such insight and such good--pando.

sarah: i was like-- scott: oh, my goodness, i've got to get pando. of course, i pay for that as well. they give me enough good content that i'm willing to pay for it. is there a way of building loyalty that isn't necessarily, "you give me great content, i give you money"? are there--what other models would work? lars: yeah, i think it goes back to this notion of value. so there is--there is value. i mean, loyalty, and we're seeing this whole new age of loyalty being really important. so, you look at companies, companies in telco, companies like sephora or starbucks, or others that are really using loyalty in an incredibly important way to build that connection and add value. so, there's successful tactics there. there's also a lot of value around relevancy and timeliness. so, if you are being given information in a relevant and timely way to you, based on your preferences, you'll see that as being value. and ultimately, hopefully that drives your customer loyalty. sarah: i think we're just having a change where people are more willing to pay than they weren't. and i think it's being driven by netflix, i think it's being driven by spotify, i think it's being driven by seamless transactions in, you know, a mobile universe.

i mean, i think it's a very slow, gradual thing. and i think it's more of a younger demographic that's willing to do it. but i mean, we turned on a subscriber model in june, and you know, it's been less than 6 months, and it already pays for half of our operating costs as a business. lars: yeah, and i think people are not only willing to pay, i also think they're willing to share more about themselves if they're getting value in return. and i think that's a big--when you're just getting blasted with ads and banners and different things, you're not as willing to--you don't feel as good about that exchange as you do if there's real-- sarah: if there's a relationship. lars: we're also seeing a big shift from just pure acquisition spending and into retention marketing, and more around the recognition that it could be 2x more expensive to acquire a new user than it is to retain a loyal one and build that loyalty over time. so, i think we're in the early phases of it, but you'll see more and more focus on retention marketing, loyalty, how do you provide value. and some of that can be for a paid model. some of that can be for what you're talking about, to get somebody to be willing to pay. dylan: i just wonder if there's any hope at all for advertising supported media, though. i mean, can you see a future where, you know, publishers and

the advertisers that advertise on their sites show enough restraint in the ads that they're running that people are like, "yeah, that's an acceptable trade off. i don't need an ad blocker"? lars: well, i think you're--i think that's probably the positive part of this discussion is that people--we're talking about it, other people are talking about it. i think there's now a recognition that the current approach is broken, it doesn't work. and consumers, that they're not going to sign up for advertisements. i do think that we can get back to a more natural equilibrium, and i also think that there can be different ways--there could be different ways that we see the models go, where you're talking about. sarah: yeah, the ones who are all doing it well are, you know, buzzfeed, vice, refinery29, these companies that are doing heavy custom, lots of custom. scott: well, and we've seen new creativity as well. i mean, in ads, there are times where you watch a youtube pre-roll and you find yourself, "i'm watching this whole thing. this is really well done." sarah: you really do that? scott: yeah. dylan: that's never happened to me. sarah: breaking: scott mcgrew needs a hobby. scott: what's the best customer retention you've seen?

i mean, not statistically, i mean method. lars: yeah, i think it goes back to--sort of goes back to i would point out loyalty that we've--i was just talking about so you look at program like starbucks. and they use--they're very data-centric. they're able to really build a profile of a customer in real time, and understand those customer's actions so they can message them and give them value. so i think that's--companies that are doing that more than going out and just blasting out acquisition marketing are the ones that are the most successful. scott: lars albright, ceo of sessionm. we appreciate you being with us this morning. lars: thanks. scott: car insurance per mile, not per month, a huge disruption and particularly useful in san francisco. we'll talk about it when "press:here" continues. [music]

scott: welcome back to "press:here." would you pay $5 to watch this tv show, or $5 to watch the 49ers play the bears on fox? five dollars just to watch a football game on television might seem steep, but when you consider the average cable bill is now $120 a month according to npd group, if you don't watch a lot of tv, paying per show instead of per month might make sense. but would you do it? recently, car insurance companies have started offering pay per mile insurance. you don't pay a monthly bill. you're tracked per mile driven, around six cents a mile. for those who don't drive much, it is a huge cost savings. dan preston is ceo of metromile, one of those insurance companies.

i did not invite dan on to sell his car insurance. sarah doesn't even own a car. but i would like to talk more about this idea of paying per event. let's call it a la carte as opposed to all you can eat. so, people see significant cost savings in places like san francisco, where they're not necessarily driving much. i mean, what kind of people see cost savings? dan preston: it's anybody who drives less than the average. so typically, the average driver is driving 10,000 to 12,000 miles a year. so, anybody driving less than that for decades now has been subsidizing the high mileage drivers. and so, largely it's been unfair for those low mileage drivers to be paying one flat rate for their insurance. dylan: wait, if you take that subsidy out, though, doesn't that affect the rates that everyone else is paying? dan: well, so your high mileage drivers would end up paying more in the end. scott: but to his point, your high mileage are not going to use your service, therefore where's the money come from? dan: that's right. well, we would really only be suitable for low mileage drivers. low mileage drivers are about 60% of drivers, and they're

typically in cities because you have a multitude of transport options, whether it's the train, biking, uber, lyft, whatever it might be. these are all different-- sarah: wait, 60% nationally? dan: nationally, yeah. scott: drive less than? dan: than the average. and that's because there's a long tail of people who drive 30, 40, 50,000 miles. so, 60% drive below the average, which is about 12,000 miles a year. sarah: wow. i mean, i remember when i lived in memphis, tennessee, like a typical, sprawling, decent-sized american city. i had a leased car, and i had to pay huge penalties because there was no way in hell i could keep that thing under 12,000. that's crazy for me to think 60% of people--is it just that many people live in urban cities now? dan: that's true. so, there's a trend generally of actually people driving less because-- scott: more options. dan: if you look at the millennial demo right now, in general you see people moving more and more into cities. it's just a general trend. and so, a very large portion of the us live in cities. but you're right, in more suburban or rural environments,

you'll drive a lot more. but cities, the average is less. sarah: is that good for you guys as a company? because it seems like you can really focus on the places--there's certain places where you're going to have a big bang for your marketing buck, versus having to roll this out to 50 american cities. dan: right, so we don't do tv ads. we focus on actually putting, like, billboards and things like that on buses and trains. i mean, these are places where people are commuting because they're not taking the car to work, but they need their car on the weekend, and they need it at night to do errands, other things. and so, yeah, we focus on the areas where we know people are driving less. scott: in fact, it's not in my viewing area, but you were just about to announce that you are expanding into-- dan: new jersey. scott: new jersey, why new jersey? because of the urban density of it? dan: yeah, actually it's the most densely populated state in the us, i believe. scott: did not know that. dan: yeah, and there are a lot of people who take the train into new york, or whatever it might be. so, we're really excited about it. it's going to be a great state for us. we've been moving more and more towards the east coast, and so this is obviously a great step for us. sarah: now, in terms of, like, the overall mindset of what scott was describing, i mean, i don't know if it's just

that i'm old and i'm busy, but the idea of having to think about how many shows i'm going to watch, and is this $5 more, and there's something about it for me that would create more friction. i would feel like, am i going to take my car to napa with friends, or am i going to try to get my friends to do it? even if it's not that much and i'm still losing money overall, there's this sense that every time you do something, you're paying. dan: yeah, i think you have to make it very seamless and frictionless. the way we did this was we made it so that it was retroactive in a month. you don't have to take a picture of the odometer or anything. you have a little device that plugs in. and you know, we've done some things to help out, like, for instance, road trips. you cap that at a certain amount of miles, so you don't have to pay for each mile. and i think to build a product that's successful that moves from a flat rate model to something that's more pay as you use, you need to make it very easy, frictionless so you don't have to make those kind of tradeoffs. dylan: it sounds like it only works too in markets where the same kind of that applies in the car insurance industry, where

you have low usage people who are effectively subsidizing the higher usage, right? which maybe that applies to cable or car ownership. scott: what else would this apply to? i mean, what else could you see that we're currently paying per month, but you know would make a heck of a lot more sense if we paid per trip. could you think of anything? dan: for cars, there are a few different things. if you look at, for instance, the way you lease a car. all right, you buy it as a package with 12,000 miles a year or 10,000, whatever it might be. but i mean, it's still mileage ultimately at the end. you can see it being priced per mile. you could ultimately--you know, gas is a thing that already is basically usage-based. you could see a world in which everything you do at a car is usage-based, and you only pay for what you use of that car. dylan: that's like zipcar, essentially. dan: yeah. scott: it's interesting to watch the different technological innovations. like surf air goes the other way. it says, "instead of paying for every flight, why don't you just pay us a flat fee and you can just knock yourself out, do what you want?" and at the same time, we're seeing metromile, which is the opposite, "don't pay a flat fee. do it individually."

sarah: yeah, i mean, netflix is the opposite of the example that you're talking about with shows. the fact that i pay an amount i've paid for, i don't know, 10, 15 years, and i used to do it to get dvds, and now i get all these amazing channels on part of it. i mean, that's part of why netflix is one of the best subscription businesses we've ever seen. scott: right, it's on demand, but for a giant flat fee. that makes perfect sense. you did--to sarah's point, you did find when she said that, you know, "oh, i drive less." actually, yale did a study using your data and found people do drive less. dan: yeah, about 6% less on average from people who switch from their existing insurance to metromile. we find that 6% less driving overall. and you know, i think this is ultimately--if you have the choice to bike to work versus taking your car, it makes it a little easier. you get a benefit for choosing that other option, which turns out is probably better in the end anyways. dylan: a little social engineering there. scott: and this has been the danger lately of low oil prices and things is people are buying bigger cars, they're driving more often. the pain--there is no pain point in trying to save, or take an uber or a train, or anything else. dan: right, you don't see the benefit of driving less today

with insurance. but with this, you end up getting that benefit, so. scott: all right, dan preston with metromile, appreciate you being with us this morning. "press:here" will be back in just a minute. [music]

scott: that's our show for this week. my thanks to my guests. kush parikh, the man who wants to make it easier for you to park with your money, is the ceo of paybyphone. lars albright, ceo and founder of sessionm, and dan preston from metromile. i'm scott mcgrew. thank you for making us part of your sunday morning. [music] [music]

[music] announcer: "press:here" is sponsored in part by barracuda networks, cloud-connected security and store solutions that simplify it. city national bank, providing loans and lines of credit to help northern california businesses grow.

damian trujillo: hello, and welcome to "comunidad del valle". i'm damian trujillo, and today we celebrate the fortieth anniversary of los mestizos de san jose. one half hour of danza on your "comunidad del valle." ♪ damian: they are los mestizos de san jose, and they are celebrating 40 years of danza all across the bay area. we're going to begin, actually, with my little girls. it's the pee-wee version of los mestizos. estella and malina are in this first segment. they are dancing from the region of michoacan. ♪