How Sextech Pioneers Are Outsmarting Conservative Gatekeepers
Originally posted in Forbes.
March 19, 2019
For the past several years, sexual wellness has been one of the fastest growing sectors in global retail. The sector’s annual growth (CAGR) is a stunning 6.7%, and it’s projected to reach $122 billion by 2026. And yet, at nearly every stage — from investment to production to marketing — gatekeepers seem intent on hobbling it.
Any sextech entrepreneur will tell you the barriers they face are legion. Facebook and Google largely prohibit ads for sextech, including female sexual wellness products. Major app stores routinely ban apps related to sex, and increasingly restrict even what users say and do. Institutional investors and mainstream conferences often avoid the space out due to conservative boards.
But today’s sextech entrepreneurs aren't mistaking the gatekeepers’ power for invincibility — rather, the opposite. For many, a gatekeeper’s refusal to engage with sextech is a sign of their stagnation and obsolescence, and a weakness that can be used against them.
Take Osé. In January, the Consumer Electronic Show — one of the biggest gatekeepers in tech — famously rescinded an innovation award for the robotic massager, citing a morals clause. The company behind it, Lora DiCarlo, was even denied booth space on the CES show floor.
And yet Osé was possibly the most talked about launch at CES, garnering nearly two hundred press mentions — over $2M in free marketing and advertising, according to Lora DiCarlo founder Lora Haddock.
“CES doing that to us is probably the greatest thing done for us ever,” says Haddock. “It actually slammed us into the spotlight.”
But Haddock’s success wasn’t accidental. The Lora DiCarlo press team knew about the award issue for months. Rather than fold, they actively engaged with CES, and made the organization put into writing its dubious reasons for rescinding the award.
Then — right before the show started — Haddock’s team leaked the correspondence to the press.
“I think given their track record — the lack of female keynote speakers in 2017 and 2018, the booth babes for years and years and years, the other products that they have on the floor that are in sextech — I mean, to us, the whole thing was, to us, a shoo-in,” says Haddock, of turning CES’s regressive stance against them. “All it takes is one or two publications to pick up the press package.”
Haddock’s not the only one fighting back. Entrepreneurs in sextech have become increasingly adept at guerilla tactics, and it’s making sextech a smarter, stronger, more valuable industry.
Cyan Banister, the pioneering founder of the adult-themed social network Zivity, says that when payment processors like PayPal blocked her, she raised hell in the press, even going on television.
“If you believe in the space and want to build something in the space, you have to be willing to fight for it,” says Banister. “A lot of people said ‘Well, you’re an adult company, well what did you expect?’ … That made me angry, and I channeled that anger into finding solutions. I didn’t put all eggs into one basket, and found multiple processors.”
Banister, once fighting at the gates as a founder, is now a leading VC and counsels others in the space as to how to get around structural barriers.
“You have to come up with distribution strategies that are creative,” says Banister. “You can’t depend on some channels.”
(I can personally attest to her wisdom. She’s not only advised me, she’s also personally invested in my company, O.school.)
For others, the strategy is to bypass the gate and tunnel in.
Like Osé, sex toy company OhMiBod was denied a booth at CES — back in 2010. Rather than accept the decision, co-founders Suki and Brian Dunham took a different tack, relentlessly interrogating that ‘morals clause' until they got CES to admit the real reason — the conference was afraid of gratuitous advertising.
“We made a case and provided the organizers with information regarding the mainstream media outlets that had covered us [and] how we would represent our brand in our booth,” says Suki Dunham. “We needed to prove to the organizers that we would conduct ourselves in the professional manner on the show floor.”
OhMiBod is now one of the few sextech companies allowed at CES.
“Don't take no for answer,” says Dunham. The sex toy innovator has faced numerous gatekeepers in the past decade — banks that rejected their loans based on ‘prurience,’ accountants whose boards wouldn’t accept their business, mainstream magazines that wouldn’t take their ads.
“Present your case in the most professional way possible,” she recommends. “And if you still get a ‘no’ — get creative and find a way around the brick wall.”
Gatekeepers’ hesitance is part of the reason crowdfunding and other direct-to-consumer approaches have been so critical for sextech. Faced with massive hurdles to financing, companies like Dame, MysteryVibe, Crave and OhMiBod have used successful crowdfunding campaigns as proof of concept to bring on institutional investors.
“Crowdfunding is a great way to fund a project,” says Dunham, who has run multiple campaigns. “It's a powerful way to ‘advertise’ given the normal social media avenues of advertising do not exist for us. … One of the advantages to this way of funding is that it is also a great brand marketing tool and can often times expose your brand to people who were not familiar with you beforehand.“
Many mainstream startups never face such hurdles. Perhaps that’s their loss. As one investor told me, when you’re dependent on a platform, that platform owns you.
In the past six months, apps like Tumblr, Grindr, Scruff have made major changes to their products, seemingly in reaction to policies by Apple and Google. When YouTube demonetized sex educators last year, platform-dependant educators saw income plummet. Perhaps that’s why some VCs now say that a business dependent on Facebook or Amazon isn’t a real business — a change in policy or placement can decimate returns.
Sextech has never had the luxury of stability. It's never had easy clearance of gates, nor an old boy’s network that can provide it with loopholes. But this isn’t the disadvantage that it might seem. These hurdles have made the businesses — and the founders behind them — stronger and better able to survive even tectonic shifts. With constant threat or defunding or deplatforming, sextech entrepreneurs have built innovation and adaptability into the DNA of their businesses.
“When you’re a founder, it’s hard to be excluded from these institutions that represent capital and success,” says Banister. “It’s unfair to have to work harder, and fight for the access and accolades that seems to come so easily to those who play by the rules. But the work we do makes us stronger companies and better leaders. It’s like high-altitude running — and I’m firmly convinced that the leaders in sextech will one day be recognized not only as pioneers, not only as risk-takers, but as the most agile, determined and successful entrepreneurs in tech.”