Teching up the family

Family tech industry has potential

With Silicon Valley companies attracting roughly $7 billion in venture capitalist funding in the last financial quarter, and startups like ride-sharing app Uber getting a $1.2 billion investment, it's clear that the tech industry is reaching heights unheard of since the dot com boom in the late 1990s.

And Reno is by no means immune to the tech tidal wave, especially considering the so-called Startup Row on First Street and the launch (and ensuing legal fight) of Uber in Reno and Las Vegas.

But take a closer look at what tech companies actually get funding, and a trend becomes clear—the majority of apps and services that get funding appeal primarily to young adults with disposable incomes.

And while that business model has proven successful so far, it does raise the question—is the tech industry ignoring or missing out on other audiences and markets?

Take, for example, the area of so-called “family tech,” roughly defined as any software or tech business appealing primarily to family-oriented consumers—parents and children. The Marketing to Moms Coalition estimates that the U.S. has around 71 million mothers who make household purchases totaling in excess of roughly $2.1 trillion.

So presumably, there should be a ton of tech startups looking to cash in on the family market. Yet a combination of factors ranging from demographic differences to investor apathy has kept the family tech industry “underserved,” even in a period of rapid industry growth, 500 Startups managing partner Christine Tsai said.

“We actually think that there’s a huge opportunity and a lot of money in this space, and a lot of people don’t see it because it’s not trendy,” she said. “Family tech isn’t super attractive to Silicon Valley.”

Questions on how to improve the family tech business space led Tsai and her company to begin organizing a daylong conference called MamaBear centered on addressing issues facing family tech startups, like marketing or search engine optimization.

Although not held this year, the 2013 MamaBear family tech conference attracted partnerships with giants like Google and Amazon, as well as a number of speakers ranging from family tech startup founders to former Facebook executive Randi Zuckerberg (sister of founder Mark Zuckerberg).

And though conference host 500 Startups decided to focus on other events in 2014, the startup accelerator and seed funder is committed to investing in the area of family tech, Tsai said. Her company has pumped money into around 50 startups and businesses focusing on family-centric technology or software, and is continuing to look for investment opportunities in that field.

“We think [these companies are] solving painful problems,” she said. “We like companies that are solving real problems.”

Family tech serves as an umbrella term—startups falling under its scope can include everything from on-demand tutoring services to educational iPhone games. Even Reno’s burgeoning startup scene counts a family tech startup in Practickle, which sells reading guides designed to improve literary comprehension in children.

Despite the positivity from the conference, Tsai said family-oriented tech startups haven’t done as well as other subsections of tech startups for a variety of reasons.

Part of the problem boils down to demographics—Tsai said that typical tech workers in Silicon Valley are overwhelmingly young and male, and are more interested in building apps they would want to use and not really interested in building apps for older people or families.

“For better or worse, it’s not a ’cool’ thing to be working on, even though it is a big problem and a huge market,” she said.

In fact, a significant number of tech companies including Facebook, Twitter and Google released their internal employee demographics over the last few months, and all of them show a workforce that is dominated by primarily white and Asian men. Getting more female engineers and founders into the tech space could help with improving the perceived viability of family tech, Tsai said.

That lack of “traditional” tech entrepreneurs means that venture capitalists and other investors have been more hesitant to give out money due to a lack of success stories—what Tsai calls a “chicken and egg” problem.

She said representatives from several startups have told her that investors see the area of family tech as a niche market and have a higher bar than other startup areas—which doesn’t make much sense considering the purchasing power and financial acumen held by moms and parents making family purchases.

“It makes you want to tear your hair out,” Tsai said. “Like really? This is not a niche market.”

Even if a company develops a great mobile app for families, marketing to parents or children is very different than marketing toward young adults. Startups can’t rely on usual methods of marketing because parents and children consume media and advertising in very different ways, Tsai said.

“You’re not going to get them by just doing Facebook ads,” she said.

Much as the popularity of Groupon inspired other entrepreneurs to create similar apps, Tsai said the rapid growth of the “sharing economy” demonstrated through companies like Uber and Airbnb could serve as inspiration for the development of a family-tech app based on the sharing economy.

Overall, Tsai said she’s hopeful that the status of family tech startups will continue to improve.

“With moms … it’s just about knowing the audience,” she said.