Which brings us neatly on to a recent article on CNNMoney about sex workers in Silicon Valley. (No wait; bear with us).
According to the article, call girls are making a fortune in the Valley servicing the needs of socially maladjusted dotcom millionaires who have big Ferraris but haven’t got over their teenage fears of talking to girls (First Round empathises).
One enterprising young lady called ‘Josephine’ apparently wears T-shirts emblazoned with slogans like ‘Geeks Make Better Lovers’ in her online ads, in a bid to target this very particular demographic, while another such ‘service provider’, ‘Karen’, says she made almost a million dollars last year alone. The mind verily boggles.
Anyway, this prompted First Round’s whizz-bang commercial brain to click into a top gear it reserves solely for the category of ‘buyout opportunities’. After all, there’s a lot to like about this industry: a large monetisable market; a client base whose need for your service is unlikely to dissipate in the short term; high barriers to entry (viz. social stigma, dubious legality etc) and a lack of transparency that allows for arbitrary price hikes to boost margins. And yet the market is fragmented and disorganised. In other words, it’s positively ripe for a buy-and-build.
What’s more, since the Valley is also home to a lot of venture zillionaires, you might even have the added bonus of providing a useful service to one or two of your private equity peers.
Picture that: you make a ton of money for yourself, your ‘providers’ and your LPs, while serving a valued social function. Now that’s what First Round calls a happy ending. n
N.B. PEI doesn’t really condone prostitution-based investment strategies – Ed.