One of the least supported trends by American VCs right now is SexTech — startups that deal with human sexuality and sex education. Against logic, there are a lot of SexTech startups right now — despite the climate of hostility in the US that is most represented by recent passage of SESTA/FOSTA. Why is this?
It’s because you don’t need deep pockets to make money if you have the right idea. And SexTech definitely makes money.
I can only point to my own experiences. About three years ago, I started KinkBNB. Of course it’s piggybacking on the huge amount of marketing dollars spent by AirBNB to build their brand — but AirBNB’s shortsightedness led to my startup taking off.
I’ve been doing startup work in San Francisco for 25 years. Most of the time I work for other people building their ideas for them. As a hobby, sometimes I build websites on a lark since it comes so easily to me. In February of 2015, my friend (and professional dominatrix) Eve Minax took to Facebook to complain about being kicked off their platform for leaving a sex toy in a photo. This is the aforementioned “climate of hostility” — more than likely they googled her and made a snap decision based on her profession despite her only offering a room as a side hustle.
Whatever the motivation, this made me think “Gee, there ought to be a version of AirBNB where people can show their sex toys or play spaces.” A few minutes later and I discovered that kinkbnb.com was expiring in a week. I snapped it up with the best $12 I’ve spent in years (we’ve never taken outside money).
A few days later I’d loaded an AirBNB PHP clone onto a server that a friend who runs IT for YCombinator let me spin up with his company very cheaply. Did I mention at this time I was barely surviving? San Francisco is very brutal to people as old as me — no startup there will hire older people (because they have to pay them what they are worth). I adapted by moving onto a sailboat at Pier 39 (cheapest rent in SF, and yet another story) and going on food stamps. I sent the URL to Eve and asked her to put her space on it as a test. What I did not tell Eve to do is tell all her friends — and I discovered she’d done this when an hour after I emailed her I had over 100 people signed up to the site I’d thrown together. This was my first clue that I had a tiger by the tail.
I decided I needed help, so I hunted for a cofounder. I found a great cofounder in Ryan Galliotto, a Chicago native who helped start Shibaricon (a Chicago convention that was devoted to the Japanese art of erotic rope bondage). We formed a company and I wrote a press release that I sent out on April 20th announcing our official launch on May 1st. The next day I went to go get my monthly food stamps.
While I was waiting in line at the food stamp office, Huffington Post called me and asked if I had time for an interview. I don’t know if you’ve ever gotten food stamps, but while you’re in line you have nothing BUT time. That was how I gave my first interview, and this article started the tsunami.
https://www.huffingtonpost.com/2015/04/21/kinkbnb_n_7111604.html
Our story was picked up by Associated Press, and before I knew it we were on the crest of a huge wave of traffic. My biggest fear was our single server would not be able to handle the traffic — but it did. We were featured around the world and I was interviewed by Playboy, Marie Claire, Cosmopolitan, and many more. At the height of our first wave of publicity, we were featured on the bonus round on Comedy Central’s show @Midnight with Chris Hardwick. As it turns out, sex attracts marketing eyeballs.
And it’s still got legs, which still surprises me. It’s three years later, and we have over 500 listings in 50 different countries, with over 40,000 users signed up to the system. We’ve learned a lot in the quest for monetization — the AirBNB model does not work at small scale, so we fell back on a membership system. In hindsight, I wish I’d done that to begin with while we had our initial traffic — six months after we instituted memberships we started turning a profit. We were just featured on the VICELAND channel in a 20 minute segment. You can’t buy that kind of publicity. It’s one of the many features I love about SexTech startups.
I’ve never been one to shy away from controversy and run-ins with the legal system. I will continue to do so, because I believe it’s more important than ever. My company supports decriminalizing sex work as a cause, and the irony of me writing this in a jurisdiction where Tom Dart has power is not lost on me. More important to me than telling my story is bringing to your attention the recent SESTA/FOSTA legislation. While being framed as an attack on sex trafficking (which is a problem!) it does little to nothing to alleviate that problem. Instead, it’s so vaguely written that it could be applied to ANY website — AirBNB, Facebook, etc. If you think it doesn’t matter, think about how Craigslist just shut off their personal ad section. This law could be used to shut down apps like Tinder, Grindr, OKCupid, and more. I’m investigating moving my servers out of the country as a result. While we can’t speculate on the agendas of the groups behind SESTA/FOSTA, we can study those same groups’ past advocacy work. Given that history, one could be forgiven for thinking that some of these groups see SESTA/FOSTA as a mere stepping stone to banning pornography from the Internet or blurring the legal distinctions between sex work and trafficking.
I hope sharing my story has inspired a few of you. To be honest, I feel a bit lonely in this space — SexTech as a niche is not very populated right now, but that’s changing as VCs and accelerators like YCombinator, who has several SexTech companies in their past two batches. SexTech is not a niche for everyone — but much like the budding cannabis space, if you are bold and want to make money there’s gold there. I’ll leave you with this nugget — the market for SexTech is projected to be $52 billion by 2022. If that doesn’t get your attention, nothing will.