Looking Back at Innovation in Adult

Thierry Arrondo

Innovation has a formula. It’s created by combining ideas in a new way. The process is often called lateral thinking. You take an idea that works somewhere and try it in a new place. When Steve Jobs brought calligraphy to the Macintosh he was combining beautiful writing with computing power. It had never been done before. It was innovative.

Jobs had a lot to say about innovation. He stole the phrase, “Great artists steal” from Picasso. Fitting.

[In the beginning], growth rates for adult matched internet adoption. It was really fast. The money was crazy. Companies could afford to try crazy ideas.

The most interesting innovation today is happening in the world of artificial intelligence (AI).

A very common question people ask about AI is, “can computers really be creative”? The answer is emphatically, “Yes.” How can a dumb machine that follows strict logic rules be creative? The answer has to do with combinations of ideas.

The best way to be innovative is to try out as many combinations of ideas as quickly as possible. Here computers have an advantage over humans. They can process certain types of information much more quickly than humans can.

Take the example of Google DeepMind’s AI that beat Lee Sedol at the game Go recently. Go is a game that originated in Asia. It’s considered much more difficult than chess (a game that AI has dominated since the 1990s). Lee Sedol is one of the top human players in the world. He comes from Korea where many of the brightest minds dedicate their days to mastering the game. He began learning to play Go as a child, showed promise, and was given access to master-level players. He knows the game inside and out and has risen to the highest level. Lee Sedol’s story fits our classic idea of innovation. Talent + Training + Time + Passion = innovation. We expect someone like him to invent new ways of winning.

The AI, on the other hand, taught itself to play Go by playing the game over a million times a day. That is orders of magnitude more game-play than any human like Lee Sedol could hope to engage in during a lifetime, much less a day. What did it do during those millions of games? It started out with a blank slate. It didn’t know the rules or have any ideas about how to win. It simply tried out new combinations. It learned what worked and what didn’t work by trial and error.

And the solutions it came up with were really new. A reporter asked Lee Sedol if playing the AI had given him a new perspective on the game he had dedicated his life to learning.“The typical, traditional, classical beliefs of how to play — I’ve come to question them a bit,” he responded.

The online adult industry used to be innovative. There were many firsts ... hundreds if not thousands. For example, Adult FriendFinder created the first affiliate program. But the consensus today in the online adult industry is that there is a lack of innovation.

Recently Wired magazine ran a story about adult online’s adoption of HTTPS. The author tried to call it the latest in a long example of adult-led innovation. It struck me as faint praise, as an exception proving the rule that adult isn’t innovative anymore.

How did we get here?

The complaint you hear most often is that people just copy each other. In other words, they are not doing lateral thinking. They are simply looking at the competition and doing what they are doing.

There are several reasons for the difference in innovation in the adult online industry today versus 20 years ago.

Necessity was the mother of invention.

The commercial internet had just been invented twenty years ago and there were many big holes to fill. In 1994 there was a young IBM engineer who liked to collect pictures of girls. He would trade them online. Quickly he realized that the people he traded with were specialists. They liked one kind of girl. A “girl next door” for example. The engineer was a generalist, he liked all kinds of girls. He also had the technical skills to learn how to operate on the early internet. He became the most important hub for trading pictures online.

Eventually people without pictures to trade wanted to give the engineer money to get access to his full collection. He had to set up a phone number for fans to call in and give him their credit card information. He would enter it manually into a credit card processing terminal. That was obviously not very efficient and led to the first online payments. When the money started rolling in he created a company, TopBucks, that helped shaped early adult. We live in the world that he, and other early pioneers, invented.

Today the majority of the tools you need to work on the internet have been built. Adult online doesn’t need to build them. There are, of course, new tools being built. But they aren’t coming out of adult shops. The real innovations are coming from four major players (Google, Apple, Amazon and Facebook) who either build new tools internally or buy smaller companies and bring their innovations to scale.

Adult was the only way to make money online.

It’s true. Adult was the only place online where you could make money in the late 1990s. If you were a tech nerd who wanted to get paid while building the internet then adult was your best option. It attracted crazy geniuses.

Today there is much more money to be made outside of adult than within it. Adult online is an approximately $2 billion industry. That is a laughably small amount of money for the four major internet companies. Those firms can obviously attract more talent and pay them more than adult. And they don’t have the stigma of adult. That means they get more crazy geniuses than adult. Their money pays for more combinations of ideas. Innovation is expensive, after all.

Adult was growing fast.

Growth rates for adult matched internet adoption. It was really fast. The money was crazy. Companies could afford to try crazy ideas. You see that today with Google investing in projects that seem ridiculous. Provide internet to the African continent from floating blimps? Why not?

When adult stopped growing the companies became more conservative and began focusing on what worked. They invested less in innovation. They went into survival mode. That reaction lead to even less innovation.

Everything was new.

Twenty years ago things were being built from scratch. Today those innovative companies have to deal with legacy systems that require an enormous amount of maintenance. That focus on keeping old systems alive can be exhausting. Creativity that went towards building the next new thing now goes into worrying about how to keep the old system online.

Without extra funds and a sense of optimism it is difficult to imagine new innovations coming into adult. It may happen but without the necessity, access to talent, growth and newness of other industries I wouldn’t bet on the average adult company driving innovations that will be adopted by the rest of the internet. For now, those days are over.

Today adult companies need to look at mainstream for innovation. We need to take ideas that work there and bring them into our industry. That’s lateral thinking. Mainstream is where we will find the new ideas we need to combine to form new, innovative solutions to our challenges.

Thierry Arrondo is the managing director of Vendo, which develops artificial intelligence systems that allow merchants to dynamically set prices for each unique shopper.