Recently I bought a pair of bright yellow socks for $31 after seeing them on Lil Miquela. The 19-year-old Brazilian-American model and Instagram star is not real herself but comments on real-world events (she’s an advocate for Black Lives Matter) and is paid to create sponsored content for real brands (ranging from Prada to Supreme). Most recently she launched a direct-to-consumer lifestyle brand called Club 404 – the first drop of neon-tinged crewnecks and long-sleeved T-shirts under the banner of ‘Digital Psychedelia’ is already sold out.
What compelled me to buy the socks? For years, I’ve believed that the future of commerce is personality-led (look at Kylie Jenner’s billion dollar success with Kylie Cosmetics). While I still believe that to be the case, I’ve started questioning whether these personalities will be made up of flesh and bones or, rather, algorithms and pixels.
Take Brud, the LA-based transmedia studio and creator of Lil Miquela. Founded in 2016, the startup has allegedly raised between $30-40m from funds including Sequoia and Spark Capital at a $125m+ valuation. As suggested by the diverse revenue streams already associated with Lil Miquela, I believe that algorithmically created personalities will change the rules of the game in branded content, personality-led DTC e-commerce and interactive media. Brand-specific influencers and body-manifestations of virtual assistants like Siri also appear exciting areas of opportunity.
Other investors argue that virtual influencers are a fad. The counter argument is that we love her by her very design. If you marry the concept of social prediction with the limitless nature of what a virtual influencer can be and do, CGI influencers will inherently be hard for the target market for whom they are created to dislike. After all, social prediction means using consumer-defined category data sets to analyse a subject of interest, in relation to all the other topics in that data set to predict trends that will resonate. If you let this data driven approach determine the very characteristics of the personalities you release into the wild, they should theoretically resonate by default, and always be mysteriously ahead of trends.
Regardless of whether bullish or bearish on the market, investors are just starting to form a thesis regarding what the value chain will look like. On the one hand there’s an array of companies perfecting different technical components of synthetic media production including GAN-based systems, CGI and synthetic voice-tech that some investors believe will be commoditised soon. Commercially, startups are starting to stitch together state-of-the-art technologies into compelling virtual personalities and distribute these to other startups, brands and new talent agencies that want access – a segment I hope to see more scalable B2B2C offerings in.
Looking ahead, virtual influencers are at the tip of a large synthetic media iceberg that will impact industries ranging from politics to our legal system in potentially scary ways. While regulation is a necessity, its introduction may jolt innocent commercial applications.
It’s hard to be scared, however, when wearing my new bright yellow socks and playing Lil Miquela’s latest single (yes, she has a music career on the side). In fact, with my slight bias toward young, dynamic, mission driven, and contrarian entrepreneurs I think I’d offer Lil Miquela a term sheet if she came to pitch me her next round. Combining the stardust and brand appeal of an A-list celebrity with the scalability and increasing returns of a software company sounds like a winning formula to me.
Clara Lindh Bergendorff is an investors at Firstminute Capital, focusing on commerce, next generation media and digital lifestyle companies.