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Ashley Madison CEO Noel Biderman ends relationship with company he founded

Noel Biderman, chief executive of Avid Life Media Inc., which operates, poses during a photo session in Tokyo on Tuesday, April 1, 2014. Ashley Madison founder and CEO Noel Biderman is leaving Avid Life Media Inc. as part of a "mutual agreement" with the company. The website, which facilitates extramarital affairs for a membership fee, was the victim of a cyberattack a month ago.
Image Credit: THE CANADIAN PRESS/AP, Eugene Hoshiko
August 29, 2015 - 6:00 AM

TORONTO - Ashley Madison has made public relations mistakes but forgiveness may be out of reach for the adultery website as it hopes to salvage relationships with its members following the departure of CEO Noel Biderman.

The Toronto-based website announced Friday that Biderman had stepped down from the company he founded 14 years ago after a cyberattack left the personal details of its customers exposed to hackers.

His exit marks what could be the first step for the company on a long road of challenges.

"This change is in the best interest of the company and allows us to continue to provide support to our members and dedicated employees," Ashley Madison said in a statement on its website Friday.

"We are steadfast in our commitment to our customer base."

Ashley Madison and Biderman mutually agreed he should step down, the statement said. The company did not return messages for comment.

What remains to be seen is whether Ashley Madison can mend a damaged reputation that was built primarily on secrecy and trust.

"Basically, I think the brand is dead," said Bill Walker, president of crisis consultancy film MidtownPR in Toronto.

"It has gone from a place you go to cheat anonymously to the place where everybody gossips about it. No matter what you think of it in terms of its morality, they made a brand promise to people and failed to fulfil it."

The website, which facilitates extramarital affairs for a membership fee, was the victim last month of hackers who stole a list of names purported to be users of Ashley Madison, claiming the company refused to bow to their demands to shutdown the business.

The hackers also claimed to have exposed data on millions of spouses who signed up.

Only a few months ago, Ashley Madison was riding high on its reputation as a portal for married people to connect discreetly online. Biderman was talking up his plans to take the company public on the London Stock Exchange, an effort he said would help it grow into new markets.

When news that hackers infiltrated the company's computer systems spread online, details began to emerge about some of its questionable business practices, such as charging its customers extra money to completely delete their accounts, even though they were still being saved in a database.

Cleaning up the mess of such consumer deceptions could prove to be difficult. What happens from here is hardly a textbook case of crisis management, partly because Ashley Madison already operated on the fringes of common morality.

"It's sort of a Wild West frontier," said Walker. "A lot of the tried and true methods might not apply."

Such a massive leak would bury many technology companies, but Ashley Madison has the advantage of marketing its business on temptation, which could ultimately work to its advantage.

"This is a torpedo to the bow, but it isn't necessarily fatal," said Bruce Philp, an independent branding consultant in Toronto.

"The sheer numbers of desperate, largely men, who subscribe to that service proves there's an enormous market here. The fact of the matter is any market that big and keen is going to be serviced."

A lack of many reputable competitors could also give Ashley Madison more time in its rescue effort.

The company, whose slogan is "Life is short. Have an affair," purports to have nearly 40 million members around the world, though it has been nearly impossible to confirm how many of those accounts are legitimate.

Many of the profiles leaked earlier this month were tied to fake or borrowed email addresses, which users did not necessarily have to validate.

Ashley Madison said it continues to co-operate with police to apprehend those responsible for the hack and has offered a $500,000 reward for anyone with information that results in the identification, arrest and conviction of the person or people responsible.

In the meantime, the company's existing senior management team will lead the operations until a replacement CEO is found, it said.

They face potential class-action lawsuits from its customers and further questions about the security around its website.

"Fundamentally, at the core of every brand is the need for trust, and I think the Ashley Madison brand has had its trust compromised," said Matt Kelly, co-founder of Level5 management consultancy group.

"They clearly are in a tough spot."

News from © The Canadian Press, 2015
The Canadian Press

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