Starting a Sextech Company? Why Your Money’s No Good in Silicon Valley

The Horror of Sexual Health Companies

As a consultant-turned-entrepreneur, I’m a pretty big fan of lists. They’re efficient lil’ mechanisms for organizing your thoughts. Here’s one I made recently: JustWorks; Stripe; Intuit; Outbrain; Facebook; Instagram; Shark Tank; MTA; theSkimm; Pinterest; Newgistics Fulfillment; Taboola.

It’s a short list of companies that won’t take Unbound’s money. Some say it’s the “nature” of what we sell and some say nothing at all (despite our best efforts to try and understand our rejection – #millennial). If condom companies can advertise on Facebook and Viagra can plaster ads all over mainstream television, why are sexual health companies that champion women and non-binary folks penalized unfairly? Why is the male orgasm considered socially acceptable but everything else a threat?

The first time I pitched my sextech startup was to a room of 150 investors. Almost all of them were over 50, white, and male. The company that pitched before me was literal cow shit. As in, they took cow manure and turned it into fertilizer. I vividly remember taking the stage afterward and uttering my opening line: “Sex is hard to talk about, especially for women.” I panned the ballroom of circular white tables with starched linen tablecloths to find grown businessmen giggling. I guess cow shit is a serious matter but female sexuality is not.

Sex and Silicon Valley

I pitched Unbound for over two years before we closed our seed round. I received hundreds of nos. At one point, I made a 53 page Google Doc of every accelerator, angel investor, and VC in the country. I ticked off every name in that list before closing our seed round of $2.7M. Little did I know, that was the easy part.

The B2B startup marketplace has gotten unbelievably efficient at solving every potential pain point founders face. Payment processors, HR software, customer acquisition channels, office space, and cleaning crews all have their own mini-markets for consumer-facing startups to choose from. Except for sextech. If you are a company that is trying to improve the sexual wellness of your female and non-binary customers, be prepared to climb the Mt. Everest of SaaS, because your money’s no good in Silicon Valley.

For example, just last week, I received this email from Inuit (Quickbooks):

Dear Pauline,
We have made the decision to close your payments account for this reason: Your Credit Card processing has been terminated due to: Unacceptable Business Type. Your Check Processing has been terminated due to: Unacceptable Business Type.

And I received a similar one from Stripe.

In both of these instances, it’s the banking partners that back these companies that won’t allow them to do business with us. Both the people at Stripe and Inuit are lovely and amazing. Nonetheless, it’s an entire category of financial services that sextech startups don’t have access to.

Double Standards in Advertising

Advertising is a whole different animal. Facebook, Instagram, Pinterest and the MTA (Metropolitan Transportation Authority) have completely banned female sexual health companies from paid promotion. Our accounts are categorically denied from taking out any ads (we even tried to take out a sponsored ad of puppies on Facebook once. That, too, was denied).

Sometimes, just for kicks, we like to screenshot crazy ads we see and throw them in Slack. It is equally amusing and depressing that some of the ads that are approved, while ours are categorically denied. The New York City subway, for example, is laden with ads for breast augmentation and condoms. Condom companies are also allowed to advertise on Facebook because they’re “Family Planning Products.” I recently saw a Facebook ad that read, “What turns boys on? Truth or Dare game about sex – real students, real emotions… dare to watch it right now!” Ah, yes, what better way to “plan a family ” than by asking the age old question, what DOES turn boys on? Don’t get me wrong, I think condom companies should be allowed to advertise on Facebook, I just think that vibrators should be, too.

And I’m not writing this to just, like, whine (Unbound’s revenue went from $20k in 2015 to $550k in 2016 to $2.3M in 2017…we’re doin’ alright), but I think it’s crucial to highlight the increasing barriers to starting a sextech company at a time when we need them the most.

Sex Ed in America

Here’s another convenient list:

• Porn has become the #1 channel for kids to learn about sex
• Only 13% of states require sex ed to be medically accurate
• Americans were infected with more than 2 million new cases of gonorrhea, syphilis and chlamydia in 2016, the highest number of these sexually transmitted diseases ever reported
• 40% of women experience chronic difficulty in achieving orgasm
• 80% of women fake orgasms
• 48% of women say they’ve been sexually harassed at work

TL; DR America has got issues when it comes to sex.

“Oh, but doesn’t the government fund public institutions to deal with that?”

Eh, it did.

The Trump administration cut the funding Obama put forth for sex ed in America, choosing instead to default to “abstinence only” programming–which has been proven time and time again as ineffective. And as our social media feeds are flooded with #MeToo posts and stories recounting the rampant sexual harassment that has become the status quo in America…I think we’re all probably wondering: “OKAY BUT LIKE WHO IS GONNA CLEAN UP THIS MESS?” ANSWER: The Women of SexTech.

The Women of SexTech

The Women of SexTech is an organization I started in 2015 comprised of female and femme-identifying founded businesses that are dedicated to improving sexual health and wellness for humankind. These women hail from top universities and professional backgrounds all over the world. They’re building world-class products, technology, and platforms to fundamentally change the $22 BILLION dollar “adult” market (projected to be $52B by 2022) which historically has resembled a flaming dumpster of an industry. They are poised to be the next unicorns, revolutionizing one of the most fundamental human experiences we all face: sex.

Well, we will if we ever get the opportunity to scale our businesses. And open a bank account. And advertise. And raise capital. And… Ah, right, I should probably just make another list.

As the CEO of Unbound, Polly Rodriguez has always been drawn to turning terrible experiences into great ones for customers. With a background in strategy consulting, she started her career at Deloitte specializing in brand building and customer experience. She went on to scale the YCombinator startup Grouper which focused on the worst experience of all: dating in New York City (and subsequently globally). But there was always one shopping experience that she found to be the worst – buying your first vibrator as a woman. Years later, she’s now the CEO of Unbound, the first direct-to-consumer brand name in sexual wellness.