SexTech Startups in a Hostile Business World

How is this environment fair? And who really pays in the end?

by Jennifer McEwen on September 8th, 2014

When I introduce myself to folks outside the adult industry, the initial reaction is shock.

“You don’t look like the sort of person who does that,” they say in disbelief. They find it difficult to consolidate their vision of a pornographer with the woman standing before them.

The author pointing to a neon sign that says 'Sex'.

Still they persist, hoping to find something to reinforce their presumptions about a woman in the adult industry.

“What do you parents think?” they ask in a tone of feigned concern. The truth is I’ve never asked my parents for their thoughts, because I don’t need to.

“But… it’s your company?” they wonder, because how can it be? Surely, women in the adult industry are in front of the camera, not behind it.

It’s usually around here where their presumptions are adequately shattered. The conversation moves forward, usually on the topic of sexuality and personal freedom. It will likely be open, honest, and positive. But occasionally, it takes a turn.

“You must be a sex freak!” some conclude, as if sexual appetite, not professional ambition, is the only logical reason why someone would choose this path.

And every so often, “Do you like to suck cock?”

Doubt. Disbelief. Dismissal. Disdain. Every step is a chance to challenge a misconception. Except for disdain. There’s nothing I can or will do to make them accept me at this point. It’s up to the other person to challenge themselves.

And so it goes for an individual in the adult industry, as it does for adult companies trying to operate in the mainstream business world.

Slut Shaming Adult Businesses

There are a few misconceptions about operating an adult business that many outside the industry believe. First, that no one pays for adult entertainment. Second, that the adult industry is a sure-fire way to make a lot of money. Third, that everyone in the industry is a scam artist. Not only are the first two beliefs contradictory, they all foster an unfriendly environment that thwarts real change in adult and tech.

The login screen for the MiKandi app.

By many accounts, my company should’ve been funded years ago. We’re a gender, race, religion, and culturally-diverse startup of engineers and designers, with a concept-proven first-to-market, industry-disrupting viable product accompanied by a strong portfolio of tech systems and developer tools, with millions of installs and thousands of contributors worldwide.

But we made a mistake. We built our product for adults.

As it turns out, a lot of people enjoy adult products, but few are willing to publicly back them. Aside from a handful of venture capitalists and angel investors who dared to venture into the adult space, most sextech startups find themselves left to their own devices. Hardly equipped with the tools necessary to navigate the anti-adult business climate they find themselves in, they begin to sink. Not because their business failed to resonate with customers, but rather due to the never-ending onslaught of restrictions placed on adult companies from mainstream companies. Often these restrictions are due to moral objections to the space we occupy.

There are tools and services many startups employ that either aren’t available to adult startups or that impose exorbitant fees on adult businesses, such as credit card transaction fees at an upwards of 13%, compared to mainstream’s 2.5-3%. Among these services are bank accounts, payment services, credit card processors, major app stores, newsletters, video encoding, in-app billing systems, crowd-funding campaigns, ad networks, public relations services, social networks, cloud storage, and even some SaaP. Take a quick look at your nearest Terms of Use and search for “sexual”, “pornography”, or “adult.” You’ll likely find yourself in the prohibited activity section.

Collectively, these restrictions are debilitating. The irony is that if they didn’t exist, my company, MiKandi, wouldn’t have the strong tech portfolio it has today. The majority of what we’ve built was done out of necessity. The rest was out of sheer engineering determination- the mindset of building before buying, and a dose of entrepreneurial stubbornness (“Oh, yes we fucking will!”). It’s that attitude that helps us weather this perpetual storm. When we encounter obstacles, we can build systems, features, and products around them. But since our accomplishments are either dismissed or acknowledged but not supported (if only we could pay our bills on props), we and other sextech startups need to work twice as hard to be taken seriously. Yet no matter how tech-first an adult company may be, eventually they’ll find themselves on precarious ground. There will be a time when the obstacles are too many and the resources too few. It’s then, when backed against a wall, the temptation to resort to spam and scam tactics is appealing. I’ve seen companies concede, “If we’re going to be punished for it, we had might as well do it.”

The belief that the adult industry is the fastest, surest way to make a lot of money is only true if one intends to use less than favorable tactics. One of the reasons why we’re in this predicament is because the industry is rife with shortsighted individuals and companies who are happy to cheat customers for a quick buck. These folks don’t tend to stick around long. Those who are trying to enact real change in the industry are left to suffer punishment from the mainstream business world. It’s an exhausting cycle.

MakeLoveNotPorn founder Cindy Gallop is all too familiar with this Ferris wheel from Hell. MLNP hopes to inspire social change through “real world sex.” Gallop is candid with the trouble she faces trying to fulfill her mission. After another disheartening rejection for a business bank account, she noted the hypocrisy next-generation adult companies endure in an anti-adult world. “We are open, transparent, and ethical about Make Love Not Porn’s business and banks refuse us,” she tweets. “Fake name + hide what we do = bank account.” Opening a business banking account is a simple quick task for most new companies. In MakeLoveNotPorn’s case, this has been a years-long battle.

How is this environment fair? And who really pays in the end?

Are You in Good Hands?

Anytime a new technology emerges that facilitates communication, sex is an inevitable part of the discussion. Since adult companies are prohibited from participating in new technologies, the responsibility of managing adult communities is passed on to mainstream tech companies, who are ill-equipped to do so. By denying that this natural progression of interaction exists and failing to create systems to manage it, mainstream apps and services end up with environments that are unsafe for children as well as adults.

Mainstream companies are not familiar with the legalities of adult entertainment and interaction or the methods of protection for the adults who participate. What we need are not more blanket restrictions, but more apps, services, and networks where consenting adults can safely interact with each other without judgment, and be supported in the process.

If any mainstream app should’ve been made for adults-only, it’s Secret. Secret is an app that lets you anonymously share your secrets with other users. Lo and behold, what’s on everyone’s minds, because we can’t talk about it freely anywhere else? Sex. Yet, Secret can’t and won’t publicly support its adult community without losing support from mainstream companies. They would encounter the myriad of obstacles sextech startups face as mentioned above.

Snapchat is the third most popular social network among Millennials. Of course it’s going to be used in a sexual way. The problem is that they can neither stop it nor support it in a positive way. Like Secret, the reasons are two-fold: 1) If Snapchat decided to support their adult users and stated that sharing nude photos are okay as long as community and legal guidelines are met, they would be kicked out of mainstream stores in a flash. And 2) an alternative, adults-only version would never be accepted by the same gatekeepers of morality.

FetLife for Android app on the MiKandi app store.

Communities create their set of principles. Since adult communities are pushed to the dark corners of these networks, they don’t have a chance to build the foundation of their values. If you wonder why this matters, consider FetLife, an adults-only social network for the BDSM, fetish, and kink communities. Sex is in context, relationships between users are nurtured, and the community is supported. Context changes everything.

For both Snapchat and Secret, users will continue to talk about sex, but sex will remain out of context, creating a titillating experience for some, and a hostile one for others.

Ethics vs. Morals

It’s problematic when entire groups of people can be forced out of ecosystems and markets because those holding the keys take moral objection to their sexual expression. The differences between ethics and morals may seem subtle, but the implications of regulating industries on one or the other are significant.

People often conflate ethics and morals, using the two interchangeably, when at times they’re almost the opposite of each other. Where ethics are objective and impartial, morals are subjective and intuitive. For those reasons they can be inconsistent because we don’t always critically and rationally examine our morals or the beliefs we base them on.

While morality is a private affair, it’s not possible to be ethical alone. Communities build a foundation of ethics by forming shared principles together. In an ethical system, the rules are known to all and are applied universally and consistently. Participants excel by playing by the rules, not by cheating the system.

Imagine what would happen if we operated industries on ethics instead of morals. By leveling the playing ground for sextech startups, we can promote safer adult environments, where sexual expression remains in context. But progress can only happen when industries begin to cooperate. Next-generation adult companies and the people who operate them must continue to challenge the way people think about adult startups through honesty, ethics, and great tech, and tech companies, investors, and banks must start to challenge the way they think about and treat adults.

Only then will we see a business climate where adults are given choice, where we can access legal, consensual content and experiences in safe environments from ethical companies, both adult and tech.