14 ms·
Ask YC: Would you fund an adult themed start up?
First a preamble - I know and realize the history for big exits with these types of enterprises is notoriously bad and usually I think that is a mismanagement issue related to the senior leaders in these companies. But my question for HN would be - would you consider funding a adult themed start up for the YC program, and is there a line which you wouldn't cross?
Three categories of adult themed I might be thinking of:
"Maxim" style, where it's targetted at males, but doesn't have nudity.
"Playboy" style, which is similar to "Maxim" style but does have nudity.
"Porntube" style which is full on pornography.
Personally I think there is big potential in the disjointed and mostly pirated adult themed sites of today. Three benefits I see of this business could be:
- easy(easier) to gain traction, several sites I know which launched in the 2008-2009 time frame have reached top 100 sites globally.
- lack of innovation in this space, mostly pirated content and taking an existing paradigm and switching it to adult themed (playboy does an online version of their magazine, various you tube copy cats)
- large profit potential, I know several low(er) traffic sites which are making plenty off ads, there is an IPO potential here I'm sure
Long story short, I have several ideas for adult themed "hacks" which could be big.
But the fact reminds I know of no YC funded adult themed web sites and am not sure the YC program would support such a thing.
I posted this to HN also to generate some hopefully insightful discussion.
- trickjarrett 17y agoNo
- trickjarrett 17y agoSorry, I forgot myself and just said 'No' rather than 'No blah blah blah.'
- vaksel 17y agothe answer is no. p.s. "lack of innovation in this space"...I'm pretty sure it's the other way around. From what I understand porn has been driving innovation for a lot of things
- jacquesm 17y ago> From what I understand porn has been driving innovation for a lot of things Absolutely. First credit card payments, first (live) video delivery, first affiliate systems and so on.
- whatusername 17y agois that still the case? I heard how porn drives innovation, but I'm not sure I've seen too many examples in the last 4/5 years.
- jacquesm 17y agoHard to tell without being hip-deep in that world, but the number of players makes it an ultra-competitive market, possibly the most competitive segment of all online business. And that includes gambling / gaming and so on. Right now I think the major players in the market have all gone through several boom-bust cycles, and are concentrating on billing and other financials. Some of the larger ones own their own IPSPs and are facilitating payments for third parties, ironically most of them non-adult. This is to manage the charge-back rates, because historically large adult companies have been literally blown up by taking their banks down. I used to be fairly close to people working in the adult business, so my knowledge is at least a few years old, the innovation right now is centered more around business models, finance, diversification and other non-technical items. I think that is in part because all the basic components to run an online business are now well understood and there are plenty of ways to deliver media. edit: maybe mobile devices will really create a shift, but from what I've seen so far it will be an incremental thing rather than something that just hits one year and will leave the way we interact with online resources unrecognizable from the year before. I doubt if there will be any major technological development, inside or outside porn until we hit something like 'the street' from Stephensons novels.
- whatusername 17y agoThankyou. That makes complete sense - that competition would be driving innovation, and me not seeing it means that it's on the back-end. The process/model/non-tech stuff rather than the technology.
- jacquesm 17y agoI've by coincidence and lack of foresight become the owner of a site that has an adult component, even though that was not what we had in mind when we started out. We've had contact with VCs and some very large companies that we have partnered with, and invariably the one thing that floats to the top is brand damage. This is the big fear of any large player, as soon as there is even the remotest risk of that you have a problem. That pretty much rules out your second and third option, leaving the first. And YC being a tech oriented investor rather than a media company I figure that that would not be their cup of tea either, but in the end the best way to find out is to ask Paul Graham directly or to simply apply. My guess is you'll be turned down, but that's worth very little, it's just a guess. Based on the companies that they've invested in in the past and what I know about the people behind YC. The first is something that you'd have to spend quite a bit of time and money on mocking up to the point where you can show a potential investor what you're planning to do. The people you'd pitch to would probably be established players in the market that are looking at expanding their offering without taking on more employees. Personally, I'd rather get out than in to such a line of business, the website that I run with the 'adult component' has been quietly on the market for years but so far no takers.
- paraschopra 17y agoThen is there is an opportunity for adult-themed angel fund? Brand damage would be a non-issue for such a niche fund. (A fund on lines of fbFund or iPhone apps fund.)
- jacquesm 17y agoI just posted a link to something like that below, but I think they went under, there are some rumors of fraud. I don't think there is really room for such a fund, simply because the competition is so fierce that you would have to do 100's or more investments to get one that gives you a good ROI. The successful ones can bootstrap, the others die and try again. One of the more interesting observations that I read on the adult market somewhere (I can't find where, sorry) is that the adult and the gaming industry are the only two 'mature' internet industries, in the sense that the cards have been dealt and new entrants have a very hard time getting traction. That alone would be a reason to make an investor very skittish.
- leif 17y agoI wouldn't go for funding. Porn seems like the sort of thing you can bootstrap yourself. Hell, it seems like the sort of thing that would bootstrap itself. It also seems like the sort of thing that doesn't need a huge amount of attention (set up a simple uploading video server, set some upload caps so you don't get spam, and check back on it once in a while), so you can do it while you work somewhere else. Dang, this is starting to sound like a not bad idea. (I'm with vaksel too: remember Betamax? I don't, but I've heard stories that porn didn't choose it, so it died.)
- cookiecaper 17y agoNo, I wouldn't. I believe that peddling pornography is the same as peddling drugs -- both are addictive, dangerous substances that do great harm to families. No matter how much easy money is in it (and there's a lot), I would keep my name and any money I had as far away from it as possible.
- johnfn 17y ago> ..addictive, dangerous substances that do great harm to families. Wait, what? For one, I hardly think that porn the primary cause of any damage to a family; I would think that any family damage blamed on it probably has some deeper seated problems than porn. I further think that you would be hard pressed to prove that it is dangerous, especially when people are seeing actual naked people all the time without any damage. Addictive is arguable until the cows come home, mainly because addictive is a very subjective word.
- petercooper 17y agoStudies back up your hunches: And in every region investigated, researchers have found that as pornography has increased in availability, sex crimes have either decreased or not increased. And: Now let’s look at attitudes towards women. Studies of men who had seen X-rated movies found that they were significantly more tolerant and accepting of women than those men who didn’t see those movies, and studies by other investigators—female as well as male—essentially found similarly that there was no detectable relationship between the amount of exposure to pornography and any measure of misogynist attitudes. No researcher or critic has found the opposite, that exposure to pornography—by any definition—has had a cause-and-effect relationship towards ill feelings or actions against women. No correlation has even been found between exposure to porn and calloused attitudes toward women. Read more: Porn: Good for us? - The Scientist - http://www.the-scientist.com/2010/3/1/29/1/ http://www.the-scientist.com/2010/3/1/29/1/ The anti-porn brigade is just as bigoted as the anti video game brigade.
- jrockway 17y agoThe anti-porn brigade is just as bigoted as the anti video game brigade. Porn and video games are enjoyable. Enjoying your life is a sin! Don't you get it? Now get back down into that salt mine!
- qeorge 17y agoI doubt YC would fund an adult site, but who knows? I'm not categorically against it though. For one thing, porn is a proven money maker, and as evidenced here at least some of your potential competition won't touch it. Regarding the 3 styles, I think #3 (hardcore) is the only one that would work as a startup. To be blunt, the less hardcore the porn the prettier the models have to be, and you can't afford Maxim or Playboy tier models.
- philwelch 17y agoI think if you're producing the content yourself you're doing it wrong. There's a lot you can do in distribution and marketing without ever having to photograph a single naked woman.
- cperciva 17y agoThis question has come up before, and IIRC the answer was "no, because VCs don't want to touch porn sites".
- deleted 17y ago[deleted]
- jacquesm 17y agoHm, my earlier reply to you seems to have vanished. There was this thing called 'adultvest', but I think they've died. http://en.wikipedia.org/wiki/Adultvest http://en.wikipedia.org/wiki/Adultvest
- petercooper 17y agoYou're going to face a lot of problems, mostly cultural ones. Porn sites are like the "your parents have sex" realization in Internet business terms. We all know it's there and it happens, but we like to put our fingers in our ears over it. Even though most of us here are surely regular purveyors of pornography, not many people of a certain class/culture or over a certain age want to admit it or acknowledge they like porn. This love/hate relationship makes it easy to get traffic but hard to succeed (whether financially or to just get funding).
- samd 17y agoThe adult industry seems pretty good, anywhere you have people acting economically irrational is an opportunity to make money.
- jacquesm 17y agoIt is true that there is lots of money going around in that world but the pie has to be divided by a very large number of parties, who are very adept at analyzing and copying each others ideas and business models. To gain and keep an edge in that world is very hard work.
- samd 17y agoBut that's even more true of the Internet at large where queasiness isn't preventing throngs of people from competing.
- jacquesm 17y agoI think you have that backwards. Queasiness isn't preventing throngs of people from competing, the amount of $ going around in porn is what is encouraging lots of people to compete. The word 'sex' is present (according to google) 574 million times, and is probably the one of the heaviest SEOd keywords on the net outside of some medical bits & pieces.
- Jun8 17y agoI have also thought about this as well as many other people I guess: A porn site or Netflix-like company but run by techie people, not industry insiders, a Google-like no-nonsense approach if you will. Apart from the investor killer aspect (as well as the social stigma: e.g. how many women can accept that their fiancee/husband are the owner of a porn startup) that most people point out there are other problems: 1. Customers are indiscriminate: There are many well photographed sites but how many of your prospective customers are willing to shell out monthly fees when bad quality content also "does the trick". 2. Service providers may be jumpy. You might have difficulty using some of the channels that are common to early startups, e.g. Amazon's S3 once prohibited "obscene" content; they now have: 11.6.3. ensuring that any materials posted on your site or within your Application are not illegal and do not promote illegal activities, including without limitation any activities that might be libelous or defamatory or otherwise malicious, illegal or harmful to any person or entity, or discriminatory based on race, sex, religion, nationality, disability, sexual orientation, or age; What if someone at Amazon decides that some of your content falls into this category and yanks it off. Remember how quickly Apple booted off iPhone apps with such content. I think the best way to go about this is: (1) Go after a niche area to reduce the huge amount of competition, e.g. "porn for women" and (2) partner with a content provider so you don't get into the intricacies of producing content. I thought the Fyre Box (http://www.usatoday.com/tech/products/services/2008-01-10-porn-set-top-box_N.htm http://www.usatoday.com/tech/products/services/2008-01-10-po... had an excellent idea (streaming movies with detailed search functionality) but they have disappeared.
- dwaldman 17y agoI used to work at a content publisher with an adult focus that took in a significant amount of VC money from credible investors. It's true that many VCs will shy away from adult but not for the reasons you might think. Whether or not YC will back your "hack" should be secondary to whether or not you can create a credible business. Youporn was a "hack" created by 2 guys and is now despised by the rest of the industry and is largey credited as letting pandora out of the box. They're also not rolling in cash. If you have a solution to "solve" the current situation adult publishers face then you've got something of real value. The adult industry is in an awful state due to the rise of free sites and talent brain drain over the years. That makes for a perfect environment for companies to try and innovate in this sector and do what Apple did for music - but you've got to understand the business before you try to fix it. And being a consumer of the product is a lot different than creating a business out of it.
- wgj 17y agoThis doesn't answer the question about YC, but adult web startup Zivity started with real Silicon Valley VCs behind them. It looks like that relationship didn't last though. http://www.dailyfinance.com/story/company-news/amicable-split-for-zivity-and-vc-investors/19109225/ http://www.dailyfinance.com/story/company-news/amicable-spli... http://techcrunch.com/2009/07/23/zivity-splits-employees-execs-venture-funding-into-two-companies/ http://techcrunch.com/2009/07/23/zivity-splits-employees-exe...
- temporaryacct 17y agoYou left out a critical fourth category: the world's oldest profession. * This is LEGAL just about everywhere other than the US (including Australia and the UK). * The market size is huge * People will pay serious cash money, unlike online porn * Far less competition and tech in the business (see myredbook, cityvibe, and erosguide for the state of the art) * Given the dogfooding imperative, recruiting lonely male programmers would probably be very easy I say all this only half tongue in cheek. With a little bit of technology you could become the world's biggest pimp.
- wgj 17y agoother than the US It's legal in Nevada, except Las Vegas.
- philwelch 17y agoIt's "legal" in Nevada in the sense that the state allows it, but only in the particular counties which have chosen to legalize it. While the county Los Vegas is in hasn't legalized it, others have. Also, there are lots of regulations.
- ErrantX 17y ago> including Australia and the UK Prostitution is legal. Pimping is not. (at least here in the UK). This is standard across large parts of Europe (with a few obvious exceptions; Holland, Germany etc.)
- sailormoon 17y ago/me looks out the window at the "massage shop" across the road
- ErrantX 17y agohehe. Yeh ok (ironically there is one just round the corner from here too!). There are plenty of "escort" websites as well. But it's still illegal. In terms of a viable business you couldn't really hide it under coy terms like "massage parlor" and "escort services" if you had VC funding :D
- mattblalock 17y agoIn general, this conversation has left technology and gone into philosophy and ethics and some things I think I discussed in that Sociology 110 class I took in college. That's pretty much how all conversations about adult technology go for me too, though, so I understand. I'm in the adult industry, and it happens. We've approached several VC's, angels, and some other investor folks, and we get a lot of "You want to do what?" or "Did you say 'adult'?" We get slapped around, yelled at, and cursed, but honestly, we run a clean business. We've never had a chargeback in our 6 months with nearly 4,000 transactions. We receive a letter of praise on amazing customer service regularly, and with the exception of an eBay sale to Brazil, we've never had a complaint. No matter, there's no explaining it. Most VC's and angels run away, for they have some vision of lawsuits and chargebacks, but that aint the way it works these days. Sure, we're shunned, but honestly, its a hell of a lot of fun, and we're not doing too bad. So in my opinion, bootstrap it, e-mail me, or that guy who has unlimited risk allowance, and run with it. But be prepared for the fury of porn customers who will try to pretend they don't even know what exactly porn is.
- SwellJoe 17y agoThe investors I've heard speak on the subject have pointed out the unlikelihood of an exit, though that has very recently (as in the last five years) begun to change, though very slowly. Since VCs and angels in the valley need an exit to make money, they don't invest in porn. Given that we can count the number of really good exits for porn companies on one hand, and have fingers left over, I think it'll be a while before current tech investors start falling over themselves to get in on the trend. I don't think ethics, brand damage, or any other factor would keep investors out of the field if they thought they'd make a lot of money on a porn investment. Thus, I think investors still doubt the ability of most porn companies to have an exit. It doesn't mean porn companies aren't or won't make money, possibly even a lot of money, just that they probably won't do it in a way that leads to the investors making a lot of money.
- cookiecaper 17y agoThat merely requires a different pattern of investment. There is a ton of easy money in porn. One wouldn't have to have a big exit i.e. acquistion or IPO to make a lot of cash as an investor in such a business, just a pattern where you collect a certain percentage of the revenue stream for x years.
- SwellJoe 17y agoI think you overestimate the ease of making money in porn. It is a highly competitive space. But, yes, there could be other ways to structure deals that don't require an exit to make everyone happy. But most current high tech investors don't invest that way.
- olalonde 17y agoHey smakz, I'd be interested in getting in touch with you (see email in profile). I might have some things you'd be interested in.