Sex sells, but can venture capitalists buy in? Thats the question as some investors contemplate funding monthsold Heatseek, a popular technology startup with a bawdy twist: It makes a browser desktop application intended to simplify-and make as private as possibleonline searches for adult content.
Heatseek could become an interesting, profitable business, and what youd call a really good idea from a venture funding point of view, says a renown Sand Hill Road VC who is familiar with the San Francisco-based company.
Certainly the founder and CTO of Heatseek, who engineered 90% of the application with two contractors, appears to have thought of everything. Built atop the Internet Explorer browser, Heatseek allows visitors to see and download encrypted files that are only available for viewing via the application, which also does its best to eliminate viruses, spyware and popups. (Credentials are needed just to open the browser.)
Other features include a button that can abruptly shut down the application should the need arise, the ability to bookmark scenes within video clips to save time, and a customizable icon that users can design to make look like another program on their desktop. Heatseek itself offers a list of choices to those with too little time or imagination, including an icon that reads Fishing Master 5.0.
Theres yet another application for the paranoid: The ability to customize how the tab looks in ones taskbar. To keep from tipping off a nosy passerby that Heatseek is running, it can look instead like the user has been diligently working on Microsoft Excel or Notepad.
Basically, we recognize that everyone looks at adult content,” says Heatseeks founder, who asked not to be named. Were just trying to enhance the user experience.
The founder would not say how much funding the company is looking to raise. He said it depends on its valuation and what percentage of the company that VCs may want to buy into.
The basic version of Heatseek is free, but for a one-time fee of $20, users are able to decode downloaded files for use with other appliances, such as media players. The company hopes that users will soon be given access to premium content via affiliate marketing programs with adult content publishers that Heatseek is currently negotiating. If talks are successful, the content companies will charge their subscribers slightly less if they also become Heatseek subscribers.
The benefit to the content providers is, potentially, long-term subscribers, along with quality leads. The benefit to Heatseek is shared revenue with those content companies. Customers, of course, would benefit by getting better content for less money, as well as greater peace of mind while they are sifting through that content.
Heatseek wouldnt disclose revenue, but the company says that since it was mentioned in the popular tech blog TechCrunch about a week ago, the site has signed up tens of thousands of new users. Meanwhile, Heatseek has been enjoying roughly 15 million page views per day, according to Alexa, a subsidiary of Amazon.com that is best known for its traffic rankings.
Obviously, the market opportunity is huge. Some analysts estimate that the online adult content market is valued at roughly $50 billion. Meanwhile, ComScore Media Metrix says that in June, there were 64.8 million unique visitors to its Adult Sites category, though the Web researcher doesnt provide information on individual adult sites-only topline figures. Still, 64.8 million is roughly half the number of unique visitors received by Yahoo during the same month.
All you need is to see traffic out there to know that [Heatseek] is a unique product and could be tremendously profitable, says the Sand Hill Road VC.
The company is potentially profitable and legal, too. But that doesnt mean that investors want their names around it. The aforementioned VC would only speak on the condition of anonymity because, as he puts it, We have some investors that would be really upset if we even considered investing in a company like this. We and a lot of other VC firms shy from [these kinds of companies] regardless of profitability because of the ancillary issues and public perception. As a firm, you might decide the cash it brings in is worth it, but you better be right because if you alienate your investors, it could be the last decision you make.
That the founder himself isnt prepared to disclose his name publicly is also telling of how Heatseek is being perceived by those in Silicon Valley. Indeed, he is quick to point out that while adult content is driving Heatseek’s adoption, he envisions other uses for Heatseeks applications, such as by government officials and military personnel who would want to keep information secure on their laptops, for example. Says the founder with a sigh, Were really a software and technology company, but because were dealing in adult content, people are quick to say, Oh, youre in the porn business.
A product of two Ivy League schools (he earned a bachelors degree at one and a masters at another, but wont disclose the universities), the founder says that he is a former employee of a major search company.
Ironically, suggests the founder, Heatseek is one application that many fearful investors might really use. Our privacy model is very much protecting the average user from his spouse or girlfriend of kids. Its not meant to be used for any illegal means or to break any work-related policies or to make anyone look bad.