ICT brought productivity gains across industrial sectors, delivering immense values to companies. However, Internet is going to destroy the values in many sectors. The transfer of most of the values, from the physical world to the digital one, will not be optimal. Some values will be “dissipated” during the “transduction”, the process of converting energy from one form (meatspace) to another (online).

At the early phase of Internet publishing, many digital publishers made money when Google AdSense (Google product that helps websites show ads) made much sense. But over time, it has become increasingly difficult to earn any decent income on digital publishing, especially when your contents are not premium to command subscription. When you engage in click-bait, people can live without you unlike WSJ which drives news that move billions of dollars around the world. So financial and business journalism will be fine in the age of digital subscription, but generalists will be totally commoditized. Even fighting for more users will not save the generalists. Why will you pay subscription to read Punch Nigeria when more than 80% of the contents are in either Sun or Vanguard?

Some brands are going through what I have called the Diminishing Abundance of Internet. I explained: “It is a construct that some companies become poorer even when they are growing in numbers of customers reached. That applies to industrial sectors like publishing and telecoms. The lesson here is that risk, in any business model, must be examined from the lens of this mirage abundance, which Internet has provided in some sectors”. One company that is going through that at the moment is the very popular Mashable which has evolved as a technology blog to anything-blog platform.

Yes, Mashable has agreed to sell itself to trade publisher Ziff Davis for $50 million, compared to its earlier $250 million valuation.

Digital-media firm Mashable has clinched a sale for the company — and it’s not for a price that founder Pete Cashmore or investors including Turner were looking for.

Ziff Davis, a tech, gaming and healthcare publisher, is buying the New York-based company for about $50 million, the Wall Street Journal reported, citing anonymous sources. That’s 20% of Mashable’s valuation of $250 million following a $15 million round of funding last year led by Time Warner’s Turner.

Mashable has been trying to sell itself or raise additional outside capital for months

That is a very small amount for a digital blog pioneer. It used to have so much influence until Facebook started abstracting publishers in the consciousness of readers.

The Transduction System

When meatspace systems and processes move online, value is always destroyed. When we started chatting via WhatsApp over using SMS, value was destroyed for companies like telcos that used to make money via SMS. When Skype took up the telcos, the same happened. The only good news is that the customers save, even when getting better experience. But the enterprises at the centers always struggle. You can call this disruption.

Yes, something is destroyed and disrupted. But most times, the company destroying does not really make so much money while redesigning the industry: it simply destroys values for the enterprises in the sector, as you do not pay Skype for the money you did not pay the telcos for the one hour Skype call from Lagos to New York.

Note that Mashable is not losing readers, at scale. Unfortunately, more users may not help it. The ad revenue model does not just add up any more unless you have a big syndicated ecosystem like the type Ziff Davis commands which allows it to push adverts across its platforms. That scale helps it win contracts from advertisers. And that is why they are looking for properties.

Yahoo, TechCrncuh and HuffPost parent, AOL, enjoys the same. The old era of one popular blog in the general category with strong revenue base is challenged. Those sole blogs decimated print publishers, but the unconstrained and unbounded Internet is now after them. In the unbounded Internet, aggregation becomes critical. Selling to enterprises like AOL and Ziff Davis is a quasi form of aggregation as that helps abstract the platforms, focusing on the gatekeepers who have scale.

Everything goes back to Facebook and Google which have emerged as top publishers without budgets for contents. Any digital business that does not examine how Google and Facebook will affect it does not have a comprehensive strategy. What happened to Mashable will keep happening. Gizmodo has since sold to Univision which added six to help it has scale to command ads. You just wonder how this transduction process from the physical world to digital will play out in ten years, even for the digital natives.

The relationship between acquisition cost and growth is at the heart of any startup operation. There are largely two paths to growth, and the one your startup follows will determine how fast you can grow through limitations imposed by marginal cost. When you follow the path that favors business models with scalable advantage tending towards “1”, your business will generate value faster.

When marginal cost goes low, a company can experience a virtuoso moment, anchored on network effects, where more users bring more partners, and more partners more users. But that happens to startups with certain characteristics which make it possible for them to INVERT the positioning of growth trajectory and acquisition cost typical in most traditional firms.  At scalable advantage of 1, the acquisition cost curve can even begin to flatten, and yet the growth will continue to experience positive slope. Google did not waste money in advertisement for years, and yet it was adding many users.

In this video, I explain the two most important plots that define how fast you can grow that business or startup, especially at the early phase, before maturity. It is about ascertaining the speed of growth through The Trajectory Advantage of a business.

You can revisit the Scalable Advantage video below.

Visa and MasterCard are on hangovers, doing everything possible to protect their current businesses. When you examine what they are doing in Africa, the mission is clear: on-board as many merchants as possible into the networks. By doing so, Visa and MasterCard will continue to enjoy their merchant fees, which are taxes imposed on merchants for their financial transactions passing through their networks.

But their minor competitor, American Express (AmEx), losing steam in many areas, is looking into the future. It is not protecting its network because it does not really have a large one, being a premium brand. But who cares if your card is “black” or red when the numbers are stored in digital wallets. Digital payment is attacking the heart of AmEx business, making what used to be luxury brand consistently irrelevant in the age of ecommerce.

In this video, I explain how AmEx is plotting its future with a product African fintechs should care more, over what Visa and MasterCard are marketing across African capitals and banking institutions. AmEx is  partnering with blockchain startup Ripple to use blockchain to move some international payments between the United States and Britain.

American Express has introduced instant blockchain-based payments using Ripple, a fintech startup, for U.S. corporate customers sending funds to U.K.-based businesses that bank with Santander U.K., the companies said on Thursday. American Express said its FX International Payments (FXIP) business had partnered with Ripple to provide real-time, trackable non-card payments from the United States to Britain. Customers are already using the service, the companies said, and it would be extended in the future.

While that is happening, innovators are soon going to make the use of cryptocurrencies to be as easy as using debit and credit cards. Square, a payment processing company, is experimenting with making it possible for users to sell and buy Bitcoin via its Cash mobile app. Simply, in near future, expect a Bitcoin credit or debit card and that will make Bitcoin mainstream, removing the geeky complexity for everyday person.

Payments company Square said it has started allowing select customers to buy and sell bitcoins on its Cash app, as it looks to tap into a craze that has sent the cryptocurrency up nearly sevenfold this year

This industry is moving very fast. MasterCard has filed a patent on a blockchain-based money transfer. Generally, I see a future where remittance fee will drop to near zero and commissions on payments will also. In a perfect Internet, there should not be a fee for moving money across the web, as I have explained on Tekedia. Blockchain will likely make that happen, as it removes frictions between buyers and sellers, and by that process removes the needs for companies to emerge,  to become intermediaries to fix those frictions.

AmEx is taking us to that future and our fintechs should take note because this is real. A partnership with AmEx will be more vital than what Visa and MasterCard are offering today in Africa, because AmEx operation is closer to the equilibrium point. Sure, AmEx focuses on richer people, which may not be common in Africa. Nevertheless, the forward thinking view on technology should be attractive for our leading banks to meet emerging business needs.

Always remember that blockchain can fix Africa’s intra-remittance. A company like AmEx may get there before most, with this bold vision.

In this videocast, I discuss the need to build a truly pan-African digital remittance/transfer banking product which is agnostic of location or currency in Africa. None of the products we have today meets that standard. Largely, I envisage a situation where all you need to buy and sell across Africa is one bank account in just one African Union country. With that, you do not have to even think about the specific currency of that account as technology will seamlessly make it possible to access other African markets for payments, transfer etc. The banks or fintech companies must still comply with all regulations related to inter-national transfers, forex etc. The only difference is that customers will not see them as they will be hidden with technology.